AutoNavi Holdings prices IPO at $12.50, at high end of the range
June 30th, 2010 | Posted by Global InvestorsAutoNavi Holdings prices IPO at $12.50, at high end of the range
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Celebrity Charities: Good For Image, But What About Good Works?
June 30th, 2010 | Posted by Global InvestorsOprah, Rosie O’Donnell charities run high expenses. David Letterman, Alec Baldwin, Steve Martin keep costs low. View full post on Forbes.com: News
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Doc Rivers returning to coach Boston Celtics in 2010-11
June 30th, 2010 | Posted by Global Investors
Doc Rivers says he’s returning to coach the Celtics next season.
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The China Trade Deal and Taiwan ETFs
June 30th, 2010 | Posted by Global InvestorsChina and Taiwan have put pen to paper on an historic trade pact, which will solidify the relationship between one of the world’s fastest-growing economies and Taiwan’s biggest trading partner. Taiwan’s ETFs may reap the rewards of the deal.
The treaty could restore Taiwan’s competitiveness in the world’s third-largest economy and help bring in more agreements with other other trading partners, comments Frederik Balfour for BusinessWeek. China will reduce tariffs from Taiwan valued at $13.8 billion, or 16% of the island’s 2009 exports to the mainland, while Taiwan will reduce tariffs on $2.86 billion in goods, or 10.5% of the country’s shipments to Taiwan in 2009.
Taiwan vied for a trade deal so that it would secure the same preferential treatment for its companies that other Southeast Asian countries receive – China and the Association of Southeast Asian Nations have reached a separate trade accord that lowers tariffs on two-way trade.
Exports from Taiwan to China surged 68% in the first four months of 2010 year-over-year, and Taiwan investment jumped 44.7%. China and Hong Kong make up 43% of Taiwan’s exports.
Chu Yun-peng, an economist with National Central University, believes that Taiwan’s government should update the island’s traditional industries so that Taiwan maintains its competitiveness after the economic cooperation framework agreement (ECFA) with China takes affect, report Hsieh Chun-wei and Frances Huang for Focus Taiwan. Additionally, Chu suggests Taiwan should introduce foreign funds since foreign firms may be eager to use Taiwan as a stepping stone into the mainland market after the trade treaty is signed.
The government has already stated that it will spend $3 billion over the next 10 years to restructure its old economy sector.
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Max Chen contributed to this article.
Disclosure: None
Want A $99 iPod Nano? This Is Why Woot Works
June 30th, 2010 | Posted by Global InvestorsAmazon bought deal-a-day startup Woot. Why? Deals like this. View full post on Forbes.com: News
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Gold ETF Surges to a New Milestone
June 30th, 2010 | Posted by Global InvestorsNot everyone is getting hurt in the market’s volatility. In fact, the world’s largest gold ETF is marking a major milestone as a result of it.
SPDR Gold Shares (GLD), the ETF backed by physical bullion, recently surpassed $50 billion in assets. Several factors have contributed to the spike in assets: concerns over the eurozone sovereign debt crisis, fears of a double-dip recession, possible inflation worries and a need for a general safe haven for assets.
Carolyn Cui for The Wall Street Journal reports that GLD now hoards a record total of 1,316.18 metric tons of gold, a level that rivals most of the world’s central banks. If GLD were a central bank, it would rank fifth – just below France and above China.
Gold prices are continuing their climb today on worries about a struggling labor market in the United States. Excluding today’s move, gold prices are up 13% so far this year and is near all-time highs.
The next step for GLD? It is on cue to become one of the largest ETFs ever, if assets can surpass the $75.6 billion mark.
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Tisha Guerrero contributed to this article.
Disclosure: None
How to Find Low Risk Dividend Stocks
June 30th, 2010 | Posted by Global InvestorsA stock with a high yield doesn’t mean much if the dividend is cut or eliminated, and the stock price declines significantly. Sometimes it is desirable to accept higher risk for a higher yield. Other times we may be accepting higher risk and are not being adequately compensated for the additional risk. What can we do to help gauge the risk of an individual stock?
In my dividend database I track over 180 stocks, with each having a minimum of 10 years of historical information. This data is gathered from various sources deemed reliable. Most data is generic and can be pulled from various internet sites. I then combine this information into metrics that I consider relevant in determining the stocks ability to sustain and grow its dividend.
Risk is one of the key factors I look at. Risk can have as many definitions as the number of people you ask to define it. Ultimately, we are trying to access how likely is it that something bad will or will not happen. As a quantitative first pass, I consider the following factors:
One important metric in accessing the likelihood of future dividend increases is past performance. The logic here is the longer a company raises its divided, the more committed it is to dividend increases and is less likely to stop unless dire financial circumstances dictate it. I use the following criteria to assign the A, B or C risk rating:
A is assigned to companies that have increased their dividends for more than 25 years (numeric value of 1).
B is assigned to companies that have increased their dividends for 15-25 years (numeric value of 2).
C is assigned to companies that have increased their dividends for less than 15 years (numeric value of 3).
In determining the quality of the dividend, I look at the company’s financial quality by focusing on Free Cash Flow payout and Debt to Total Capital. I assign a 1, 2 or 3 Quality Rating based on:
1 is assigned to companies if their Free Cash Flow Payout % is less than 60% and if their Debt to Total Capital is less than 45%.
2 is assigned to companies if the sum of their Free Cash Flow Payout % plus their Debt to Total Capital is less than 100%.
3 is assigned to companies if the sum of their Free Cash Flow Payout % plus their Debt to Total Capital is greater than 100%.
As part of my quantitative analysis, I calculate a “Buy Below” price. If the current price is within plus or minus 10% of the calculated price then this portion of the calculation is assigned a value of 1 (low risk). Results between plus or minus 10% but less than 20% is assigned a value 2 (medium risk), while anything plus or minus 20% or greater is assigned a 3 (high risk).
Dividend yield is an indication of market sentiment, and often an early warning for a troubled stock. In this portion of the calculation, the current yield is compared to predetermined levels and a risk value is assigned. Currently, I am assigning a 1 (low risk) to yields less than 5%, a 2 (medium risk) to values from 5% to less than 8% and a 3 (high risk) for values 8% and greater. The predetermined levels are purely arbitrary and subject to future calibration.
Some might argue that it is “normal” for certain industries to pay out a higher yield, such as 10%. However, I think that “normal” higher yield could be indicative of the implicit higher risk of that industry. Blue water shipping (ocean going) would be an example of this. Also, certain industries, such as utilities, tend to sustain a higher yield due to their lack of growth opportunities.
My Risk Rating is calculated by averaging the four numeric values above, as such:
(R + Q +P +Y)/4 = Risk Rating
This calculation will yield values between 1 and 3. I divided this range into thirds and assigned an overall rating based on this table:
1.00 to less than 1.67 = Low Risk
1.67 to less than 2.34 = Medium Risk
2.34 to 3.00 = High Risk
Based on calculations from this past weekend, below are ten stocks with a low risk rating:
| Company | Analysis | Risk # | Yield |
| ADP, Inc. (ADP) | - | 1.00 | 3.29% |
| Chubb Corp. (CB) | - | 1.00 | 2.82% |
| Medtronic, Inc. (MDT) | - | 1.00 | 2.42% |
| AT&T Inc. (T) | Link | 1.25 | 6.76% |
| Kimberly-Clark (KMB) | Link | 1.25 | 4.27% |
| Genuine Parts (GPC) | Link | 1.25 | 4.03% |
| J&J (JNJ) | Link | 1.25 | 3.57% |
| Clorox Co. (CLX) | - | 1.25 | 3.30% |
| Pepsico, Inc. (PEP) | - | 1.25 | 3.10% |
| Wal-Mart (WMT) | Link | 1.25 | 2.46% |
There are other factors that can affect the risk of an individual stock such as industry, geopolitical factors, technology, et. al. Needless to say, all these must be considered as we make our decision to buy or sell a stock.
Full Disclosure: Long JNJ, PEP, PG, UTX, WMT. See a list of all my income holdings here.
PowerShares’ New 3x Leveraged Treasury ETN Duo: Turning Treasury Bonds Into Unsecured Debt
June 30th, 2010 | Posted by Global InvestorsInvesco PowerShares was all set to launch a pair of new ETNs back on June 15. When I looked into them, I found they were going to be 3x leveraged Treasury ETNs. My initial thought was these are ridiculous products. Who, in their right mind, would want to buy “guaranteed by the U.S. government” Treasury securities packaged as “unsecured debt obligations” of a foreign company? The launched was pulled at the last minute. Ah, “cooler heads have prevailed” I thought.
Turns out the launch wasn’t scrapped entirely as it should have been, it was just delayed a little. Yesterday (6/29/10), they became a reality. Two new ETNs were listed on the NYSE:
As exchange-trade notes, these two products are unsecured debt obligations of Deutsche Bank, with a maturity date of 5/31/2040.
Each ETN will have its 3x leverage reset monthly and have an expense ratio (investor fee) of 0.95%. Additional information can be found at the new PowerShares Fixed Income Portal and in the combined product fact sheet (pdf).
In their first day of trading there were no takers. Combined volume for the two ETNs was zero. Someone at PowerShares obviously believes in them, perhaps thinking the monthly leverage reset feature will be embraced. However, that data point does not receive any play in the marketing literature. Meanwhile, if 3x leveraged long-term Treasurys fit into your portfolio, then take a look at the “secured” 3x Treasury ETFs with daily reset available from Direxion.
Disclosure covering writer, editor, and publisher: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.
Inside a Corporate Innovation Camp
June 30th, 2010 | Posted by Global InvestorsMany large companies face the problem of how to find viable innovation opportunities that might result in significant new revenue streams. One approach that can deliver results is an intensive innovation camp. I recently helped facilitate such an event for Amdocs, a $3 billion company that provides software and services for most of the world’s leading service providers, including AT&T (T), Sprint Nextel (S), and Vodafone (VOD).
This is the second such event that Amdocs has held. Organized by the company’s chief scientist, Tal Givoly, its format is loosely based on gatherings such as Kinnernet or FooCamp, with emphasis placed on unleashing energy and creativity from the attendees. Last year’s camp generated an idea known as Tera-play, which has become integral to Amdocs’ products. It focuses on helping clients cope with the reality of a world in which trillions of devices—most of them not phones—are connected to the network and it addresses the systems, processes, and infrastructure to support this world.
This year, the camp was held in a pleasant parkland hotel in northern Israel during the first week of June. Hundreds of employees applied for the 75 spots, with participants selected on the basis of creativity, originality, and diversity.
The purpose of the camp is to identify entirely new business opportunities worth at least $100 million apiece in additional revenues. The first day consisted solely of a variety of wacky, mind-expanding activities, including learning skills such as origami, juggling, astronomy, and improvisational theatre. The stimulating diversions were intended to jolt people out of their normal thinking routines and to prepare them for important challenges.
On the second day, we refocused on Amdocs. Customers (representatives from nine clients attended), employees, and other participants mingled to generate radical ideas for new ventures. I led one session using a lateral thinking technique—"What if?" Magician and creativity expert Dimis Michaelides led another, challenging participants to come up with ideas through the use of analogies. From here, we selected the 35 most promising ideas based on the following criteria: Is there a customer need? Is it feasible? Can we generate significant revenues and profits from this? Does it play to our strengths?
The next morning, the Amdocs employees brainstormed to generate hundreds of additional ideas for innovations in products, services, and markets. We whittled these down to the best 50, leaving a long list of 85 potential new business concepts. These were displayed on large post-it notes around the room. Working in silence, individuals walked around, studied the ideas, and put colored stickers on those they considered the most inspirational (red), the most immediately practical (blue), and those that were attractive but probably impossible (yellow). Greater weight was given to ideas with red stickers, and this allowed us to select the 15 leading ideas. Each was worked up into a poster and presented to the clients, who commented on the ideas and then rated them. That helped the group narrow down the prospects to merely three.
Now the hard work began. The three ideas were divided among three groups of 25 people; each team spent the rest of the third day and most of the fourth researching its idea and preparing a short presentation. Each had a facilitator to help, but for the most part managed on its own. Typically teams divided into smaller groups to tackle such tasks as preparing demos, drawing up development or business plans, researching competition, and so on.
At the end of the fourth day each team made a 15-minute presentation to a panel of five management members who had joined via videoconference from the corporate head office in Chesterfield, Mo. They had the power to approve the ideas and release resources and funding. The presentations were professional but still managed to display some of the creativity and fun that had imbued the first days of the camp. Then the participants had to field tough questions from the executives: Why would customers need this? How can we make money from this idea? What technical challenges would we face to do this in the real world?
After short deliberation the judges delivered their verdicts. Two proposals were given immediate initial approval and funded for proof-of-concept work. The third proposal was more controversial. It divided the judges, who identified further risks and so did not give it the go-ahead.
The whole event cost over $100,000, not including the employees’ time away from the office. Some people probably considered most of the activities of the first two days to be frivolous. Others were doubtless disappointed that the ideas they favored did not make it through the fierce screening process. However, the event brought Amdocs some powerful outcomes. The two innovation projects that were immediately approved promise significant future revenues. Other short-listed ideas can now be examined in greater detail. Delegates, meanwhile, made useful connections and learned more about other parts of the company. They also learned some practical thinking techniques, divergent and convergent. Above all they went away energized, empowered, and encouraged to continue exploring the innovation process within their own teams.
Ford Trims Debt To Firm Up Balance Sheet
June 30th, 2010 | Posted by Global InvestorsAutomaker cuts amount it owes by $4 billion, mostly by repaying money owed to UAW retiree medical trust. View full post on Forbes.com: News
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