Showing posts from September, 2013

IB Net Payout Yields Model

Hercules Technology Benefits From Limited Defaults

Small-Cap Insight Investors looking for a stock that provides large yields from investing in venture capital firms should look no further than Hercules Technology Growth Capital ( HTGC ) . Considering the company invests in early stage, venture backed firms; it might surprise the investment community that the company has a limited history of payment defaults. Historically, the net realized loss since inception only represents 1.1% of total commitments or an annualized loss rate of only a low 13 basis points. So if the company has historically lost only $42.8 million on a substantial investment portfolio over 10 years, why has the stock historically paid high dividends? Hercules Technology is a leading specialty finance company that focuses on loaning senior secured debt with floating interest rates to venture capital-backed companies in tech-related markets. The company has a high focus on the biotechnology, life science, and cleantech industries that historically are

Glu Mobile Must Prove Itself Now

After ten days of strong downloads for a new hit game followed up by strong stock gains, Glu Mobile ( GLUU ) must prove that its monetization platform actually works. Its successful Deer Hunter franchise released the latest version on September 18. Deer Hunter 2014 quickly jumped to the top of domestic iPhone download charts and reached the top ten grossing iPhone games in the U.S. and set company records for global revenues from a single game. The company is a leading global developer and publisher of freemium games for smartphones and tablets, but it has had a disappointing year with games that haven't monetized as expected; it spent a lot of money buying technology and hiring experts in the field to develop the GluOn platform. With Deer Hunter 2014 already starting to slip down the top grossing charts, the question that Glu Mobile needs to answer is whether the platform can deliver in keeping a game monetizing on top of the charts for months? Read the full art

Westport Innovations: A Must Own Secondary

Very few scenarios occur where a stock drops due to an event that's a major positive for new investors. A secondary stock offering can be harmful to existing shareholders, but new investors get the advantage of a stronger balance sheet or a major insider reducing a position possibly overhanging the stock. In the case of Westport Innovations ( WPRT ), the company is busy developing technology to take advantage of the switch to engines that can use the suddenly abundant and cheap natural gas supplies. In fact, a joint venture with Cummins ( CMI ) recently released the much hyped 12L engine needed for regional-haul trucks that don't daily return to the base of operations. As recently detailed in Westport: Joint Ventures Hide Major Catalysts , the release of this engine is one of several major catalysts that should propel the stock higher with one major catch at that point. That catch just happened to be the cash burn questions that he company solves in this offe

Playing the Power Shift to the CMO

Over the next 5-years, the marketing department is expected to spend more on technology than the IT department. This dynamic could create a shuffle in the C-suite during this time period that might impact the decision making process for software developers. The forecast by research firms such as Gartner that the chief marketing officer, or CMO, will become more important than the chief technology officer, or CTO, by 2017 is already starting to impact the development plans of software firms. The very real possibility exists that CMOs will seek alternative ways to buy technology, such as partnering with outside vendors rather than with the CIO. Software firms must adapt to not only the marketing department needing advanced analytic technology, but also the CMO might lead the buying decision making. Read the full article here . Disclosure: No Position. Please review the disclaimer page for more detail.

The Surprising Redevelopment Plans at Sears Holdings

The main theory for years has been that Sears Holdings ( NASDAQ: SHLD     ) would eventually take the vast real estate holdings and turn the company into a profitable real estate investment trust to match the likes of General Growth Properties ( NYSE: GGP     ) or Simon Property Group  ( NYSE: SPG     ) . The shorts always focus on the weak retail operations and the longs forecast what the real estate would be worth under new tenants. Most investors might be surprised to find that Sears is further along than they think on the path to redeveloping prime mall lots. The company has new concepts that involve greatly reducing the footprint of the existing Sears or Kmart stores while attracting new tenants that General Growth and Simon can't accommodate with prime malls nearly 100% leased. Read the full article here . Disclosure: Long SHLD. Please review the disclaimer page for more detail.

Dick's $10 Billion Plan Requires Patience

Anyone who follows the sporting goods sector or retail in general probably identifies Dick's Sporting Goods ( NYSE: DKS     ) as a premier operator in the industry. The company has long generated strong margins and profits while expanding its retail base to grab market share from struggling competitors such as Sports Authority . Unfortunately as Dick's store base recently surged beyond 500 locations, the rate of growth has considerably stalled, leaving investors wondering if the growth years are in the rear view mirror. During the recent analyst day, the management team laid out a 5-year plan of growing the revenue base to $10.0 billion from the $5.8 billion generated in 2012 and expanding margins via several initiatives. One of the major goals is to develop a store concept beyond the maturing Dick's brand. Read the full article here . Disclosure: No position mentioned. Please read the declaimer page for more details.

Trucking Along With Clean Energy Fuels

Lost in the shuffle over the last couple of months have been the recent industry developments that could finally make Clean Energy Fuels ( NASDAQ: CLNE     ) a major winner. Due to cheap and abundant supplies of domestic natural gas, Clean Energy embarked on a dramatic plan to build America's Natural Gas Highway. The plan was to develop a network of liquefied natural gas (LNG) fueling stations in order to encourage trucking companies to purchase LNG regional haul trucks. Read the full article here . Disclosure: Long CLNE. Please review the disclaimer page for more details.

Glu Mobile Has Finally Produced a Major Winner

After a year of failures, Glu Mobile ( NASDAQ: GLUU     ) finally has developed a winning game in Deer Hunter 2014 . The game was released on September 18 and quickly jumped to the top of iOS charts for free game downloads according to . Now the question will be whether the game has staying power to garner the success of games like Angry Birds and the recent hit Candy Crush . Read the full article here . Disclosure: Long ZNGA. Please review the disclaimer page for more details. 

Are the Glory Days Over for This Driller?

With the gains in drilling-rig efficiency limiting demand, are the glory days over for Helmerich & Payne ( NYSE: HP     ) ? According to this WSJ article , the company and the CEO are credited with developing the next-generation drilling rigs used to create the U.S. energy boom. With oil above $100, one would expect a driller to trade well. The domestic land-drilling market, however, has faced lower drilling-rig demand due to plunging natural gas prices and more importantly the dramatically improved efficiencies gained in the last couple of years. The stock is sitting close to all-time highs. Now investors must analyze whether future natural gas export demand and possible demand from Mexico can offset a weak domestic climate. Read the full article here . Disclosure: No position mentioned. Please review the disclaimer page for more details. 

Focusing on the Long Term at Zillow

When a stock drops by more than 6% in one day due to a research report, long-term investors need to see if any issues were brought up that change the investment thesis. On Friday, Zillow ( NASDAQ: Z     ) plunged nearly $10 at one point on the back of a negative report by Citron Research. In some regards, the situation is even more pressing in a stock such as Zillow, which had gained more than 330% off the bottom prior to the report on Friday. Read the full article here . Disclosure: No positions mentioned.

GSV Capital: So Much More Than Twitter

The recent tweet of the pending Twitter IPO sent GSV Capital ( NASDAQ: GSVC     ) soaring, and rightfully so. The company is heavily invested in Twitter and no doubt will benefit from a big gain in an IPO. The business development company (BDC) that invests in venture-backed or pre-IPO companies is so much more than Twitter, though. It has several other stocks in the IPO pipeline and recently raised nearly $70 million in a convertible offering for further investments. Read the full article here . Disclosure: Long GSVC. Please review the disclaimer page for more details.

Unconventional Play on Rental Properties

Numerous companies are attempting to take advantage of the previously weak housing prices and the surging demand for rental properties. So far, all of the models are unproven as the complexity of managing houses with individual characteristics at a corporate level faces many hurdles to reach an efficient scale. The traditional model has been to purchase distressed properties in housing markets hit by the financial crisis and turn the houses into rental properties. Altisource Residential ( NYSE: RESI ) purchases distressed mortgage loan portfolios with a strategy to work with borrowers to modify and refinance loans to either keep them in their homes or convert the unmodified loans into renovated rental properties. Read the full article here . Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Viacom's Massive Buyback Signals Good Times Ahead

Back when it released its  Q2 2013 earnings report , Viacom ( NASDAQ: VIAB     ) announced that it would double its stock buyback plan to $20 billion from the previous $10 billion. Most investors have a negative view of stock buybacks, but research shows that significant buybacks that reduce share counts tend to outperform the market. The diversified media entertainment sector appears overly competitive, but the sector in general has outperformed the S&P 500 over the last couple of years. One thing that the general group has shared as a whole is the desire to buy shares back over time. Some of the companies like Walt Disney ( NYSE: DIS     ) and Time Warner ( NYSE: TWX     ) weren't as aggressive in the last year, but the buybacks have continued to set the group apart. Read the full article here . Disclosure: Long TWX. Please review the disclaimer page for more details. 

Did Green Mountain Coffee Peak On NASDAQ-100 Inclusion?

While shareholders typically cheer the inclusion of their stock in a major index such as the NASDAQ-100 ( QQQ ) , research and history tells a different story. Not only is inclusion typically based on a few years of excellent results, but also the process of being included in index funds can create a temporary peak in the stock. In the case of Green Mountain Coffee Roasting ( GMCR ), the specialty coffee and single serve beverage innovator had soared over the last year and comes amidst continuing questions regarding accounting procedures. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Zynga's First Close Above The 200ema

From a technical standpoint, Zynga (ZNGA) is finally sitting in a bullish position after nearly two years of being public. The social game maker has struggled repeatedly to replicate the success of the original games such as FarmVille. The game maker continues to struggle, but the stock is starting to show some life. Now the question is whether this move is based more on hope or reality. The stock closed above the 200ema for the first time in history on Friday. Next week should be interesting as this can portend a bullish move higher. The new CEO hasn't made many announcements other than a reorg and the plan to continue focusing on the social gaming sector. The stock could just as quickly plunge back to recent lows without some solid fundamental improvements in the business. For now though, investors are finally digging this stock. Disclosure: Long ZNGA. Please review the disclaimer page for more details. 

Fly Leasing: 6.5% Yield With Potential For 30% Gain

Small Cap Insight The amazing part about the financial crisis is that numerous stocks that trade below audited book values are still feeling the lingering effects on investors' willingness to buy the stocks. No matter what the financials say quarter after quarter, the stocks continue trading below the accounting value and in some cases extremely below those levels while also generating profits. In the case of FLY Leasing ( FLY ), the stock trades considerably below the established book value while earning substantial income. The company focuses on leasing airplanes to airlines all around the world with a renewed focus on buying new planes to replace an aging fleet compared to the competition. Both larger public competitors in Air Lease ( AL ) and AerCap Holdings ( AER ) have significantly newer fleets with longer average leases, but does that mean that FLY can't generate a solid return for investors? Read the full article at Seeking Alpha. Disclosure: Lo

ClickSoftware: Could The Stock Double Back To Reclaim Highs?

Small Cap Insight Over the last couple of years numerous software stocks have gone through the grueling transition to the cloud. In most cases, the stocks have suffered as the company takes a hit from the lower current quarter revenue and higher expenses. A perpetual license that previously went directly to revenue during the quarter of the signed contract now becomes a subscription recorded over two to three years of monthly revenue. One software firm that has been impacted is ClickSoftware ( CKSW ) that provides automated mobile workforce management and optimization solutions for such industries as utilities, telecom, and home security. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Is Westport Finally Back on Track?

Throughout 2011 and into 2012, the high cost of oil-based fuels and the low cost of natural gas stoked excitement over several stocks designing vehicles that run on alternative energy. Among this crowd, two companies have really stood out -- and ironically, they've taken opposite directions during the last year, providing a potential catch up period for the laggard. With a focus on natural-gas engines for trucks, Westport Innovations ( NASDAQ: WPRT     ) soared into the start of 2012. But the stock has spent the last 18 months losing 40% of its value. Conversely, Tesla Motors ( NASDAQ: TSLA     ) focused on building premium electric cars and had a more muted stock performance before its well-discussed 400% gain over the past 12 months. Now, the question is whether Westport can reignite its previous excitement, and catch up to Tesla's gains. Read the full article here . Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Buy This Copper Producer on Lack of New Discoveries

With questions regarding China's demand, most commodities collapsed in the last year but copper prices have held up relatively well. A couple of factors have contributed to the resilient prices of copper outside of the supply situation at the LME. For one, China's demand continues to grow at 10% per year while the country accounts for 40% of the global demand. The other is that new copper deposits haven't been found in decades. So while copper inventories in China and the LME have remained high over the last year, copper prices have maintained a strong stance above $3 per lb.One of the main reasons is that regardless of inventories, copper remains one of the most difficult commodities to mine and find new supplies. Read the full article here . Disclaimer: No positions mentioned. Please review the disclaimer page for more details. 

Top 10 Net Payout Yield Stocks For September 2013

This article is a continuation of a monthly series highlighting the top net payout yield stocks ( NPY ) that was started back in June, 2012 (see article ) and explained in August, 2012 (see article ). The series highlights the best stocks for the upcoming month. Please review the original articles for more information on the net payout yield concept. August Returns Below are two charts highlighting the monthly returns of the top-10 stocks from August (see list here ). Due to limitations with YCharts, the chart was broken into the Top 5 and Next 5 lists. Read the full article at Seeking Alpha. Disclosure: Long AMP, CTL, DTV, KSS, MSI, NLY, T. Please read the full disclaimer page for more details. 

Can A Qdoba Turnaround Push Jack Higher?

Small Cap Insight Over the last couple of years Jack in the Box ( JACK ) has over gone a corporate shift that has helped push the stock higher. Now with the CEO leaving and a store shuffle on going at the Qdoba subsidiary, can the stock shoot even higher? The San Diego based company operates and franchises over 2,250 Jack in the Box (JIB) restaurants in 21 states and around 600 Qdoba Mexican Grill restaurants in 45 states. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Sears Holdings' Incredible Hidden Value

Anybody following Sears Holdings ( NASDAQ: SHLD     ) over the last few years knows that several major investors have proclaimed that the value of the real estate holdings vastly exceed the current stock valuation. The rub with Sears remains that the retail operations are difficult for the average investor to separate from the valuation of the assets that go far beyond the real estate holdings. Investor after investor proclaims the company worthless due to a lack of profits from the retail operation, but the company has a vast array of assets worth billions upon billions that are hidden. Read the full article here . Disclosure: Long SHLD. Please review the disclaimer page for more details. 

US Airways Poised to Prosper Alone

With all of the debates regarding the US Airways ( NYSE: LCC     ) merger with American Airlines ( NASDAQOTH: AAMRQ     ) , the market has missed the strong results of US Airways as a stand-alone company. Though the airline might need the merger to compete equally with the other major carriers, US Airways appears poised for better days regardless. The companies originally announced the merger back in February, but the Department of Justice (DOJ) shocked the markets by filing to block the merger in August. The stock plummeted on fears that the inability to further consolidate the industry would lead airlines to the price wars of the past. The August data doesn't suggest that scenario is actually occurring, or will occur. Read the full article here . Disclosure: Long LCC. Please review the disclaimer page for more details. 

Twitter Files S-1, GSV Capital To Soar

Anybody following this blog, knows that we've been bullish on the pre-IPO concept of GSV Capital (GSVC) . The company is heavily invested in Twitter and will benefit greatly from a high flying IPO of Twitter.  With the news after hours that Twitter has filed the S-1 to go public, investors should expect GSV to soar from now to the IPO. The company had Twitter listed as the largest investment valued at roughly $37M or 15% of the assets. With that valuation based on Twitter being worth rough $10B, GSV Capital will gain big time if it goes public in the $15B to $20B range. Remember that GSV has plenty of other promising IPO candidates that could send the NAV soaring higher, but Twitter remains the highest profile and largest investment. As of writing this post, the stock is up some 17% after hours. Disclosure: Long GSVC. Please review the disclaimer page for more details. 

3 Firms to Benefit from Mexican Energy Reform

As the Mexican government moves to reform the slumping energy industry, a whole slew of firms in the US stand to benefit. According to a Merrill Lynch report  , analysts estimate that Mexico spent about $8 billion on drilling and completion (D&C) services in 2012 and expect that number to jump another $2.5 billion in the next two years. Merrill Lynch lists a slew of stocks that will benefit from the hydrocarbon surge in Mexico. The firms include the typical large oil service and equipment providers, as well as offshore drilling specialists. Remember that a prime reason for the decline in oil output from Mexico has been a lack of expertise in drilling complicated offshore wells. While this might be a scenario where a rising ship raises all boats, a few stocks stand out to benefit the most. Read the full article here . Disclosure: Long WFT. Please review the disclaimer page for more details. 

Gliding Higher With AerCap Holdings

As an airplane leasing company, most investors probably envision the stock of AerCap Holdings ( NYSE: AER     ) trading inline with the airline industry. In fact though, it typically trades more like the financials so one should not be surprised that it currently trades below book value. The company is one of the largest airplane-leasing firms. Currently, only Air Lease Corporation ( NYSE: AL     ) trades with a larger market cap due its extremely fast growth from start up to the current level and a well respected management team that moved over from ILFC, a subsidiary of AIG . As AerCap finally trades closer to book value, investors face the interesting dilemma of whether this stock should trade closer to historical values of multiples of book value or if a new normal exists. Read the full article here . Disclosure: Long AER. Please review the disclaimer page for more details. 

SodaStream: Plenty of Growth Left

As with any Israeli company, the threat of war in the Middle East always causes investors to pause on investments in the region. Recent threats of military action in neighbor Syria only add to those fears. Possibly this is part of the reason that, despite all the positive news, SodaStream ( NASDAQ: SODA     ) continues to trade at market low multiples, even compared to slower growing Green Mountain Coffee Roasters ( NASDAQ: GMCR     ) and Monster Beverage ( NASDAQ: MNST     ) . While threats of war probably won't ever go away, the market for home beverage machines has plenty of catalysts to reach its goal of $1 billion in revenue by 2016. Read the full article here . Disclosure: Long SODA. Please review the disclaimer page for more details. 

Why Verizon Investors Shouldn't Be So Excited About The Verizon Wireless Deal

Last week Verizon ( VZ ) and Vodafone ( VOD ) reached the historic deal for Verizon to obtain sole ownership of the much coveted Verizon Wireless asset. Regardless of your position on the transaction, the stock action of the two stocks since the leak of the purchase discussions at the end of April tells the story. In the couple of years prior to the news of the talks heating up, Verizon had easily outperformed Vodafone. Remember that Verizon owns 55% of Verizon Wireless while Vodafone owns the rest. Partially due to the focus on the better performing US market, Verizon had easily outperformed Vodafone over that time period. This fact was greatly enhanced due to Vodafone being focused on Europe and emerging markets outside of the Verizon Wireless ownership. Read the full article at Seeking Alpha. Disclosure: Long VOD. Please review the disclaimer page for more details. 

Clean Energy Finally Has The Major Catalyst In Production

Small Cap Insight In the past, Clean Energy Fuels ( CLNE ) was a stock to be bearish on as the company developed America s Natural Gas Highway while the trucks needed to fill up at those fueling stations weren't in production yet. Conversely, the company wasn't able to open numerous LNG fueling stations and the quarterly numbers for the firm were not overly impressive. The concept was something that investors could get behind, but investing is about finding ones that make financial sense and this was one didn't at the start. The company is the leading provider of natural gas fuel for transportation in North America. It builds and operates compressed natural gas (CNG) and LNG fueling stations Read the full article on Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Will Low Cost iPhones Actually Lower Apple Margins?

The standard response by the media and traders is that a low cost iPhone and signing up of China Mobile ( CHL ) as a customer will send Apple ( AAPL ) margins cratering. Even the Options Action crew on CNBC Friday night immediately returned to the same old theory that a lower cost phone automatically means lower margins. Even if the phones create lower margins, it isn't necessarily bad if it helps garner market share for the iOS and traffic for the app store and iTunes. Investors without kids or ones that missed what happened in the PC race in the early days probably don't realize or remember that the lack of a low cost option kept many consumers out of the crucial Apple ecosystem. Another concern should be these consumers going to the Android operating system due to the lower cost that may never return to the iOS once snarled in that platform. Read the full article at Seeking Alpha. Disclosure: Long AAPL. Please review the disclaimer page for more details

Westport: Joint Ventures Hide Major Catalysts

Small Cap Insight After disappointing revenue guidance for the remaining of 2013, Westport Innovations ( WPRT ) slumped 11% to start August. This placed the stock back at a level originally reached in late 2011 on the back of the hype of natural gas as a transportation fuel for the trucking industry. With low domestic natural gas prices and plenty of supplies, the maker of engines that use natural gas stands at the intersection of huge potential and dwindling stock support. The confusing part about the Westport situation is that the vast majority of the promising future of the company is tied up in two major joint ventures (JVs). These businesses are booming with promising developments, yet the ownership percentage prevents the loading of the revenue into the financials. The rareness of this situation appeared to even have the analysts confused on the earnings call . The typical question focused on the honestly unimportant revenue of the 100% owned business units. Re

Are These 3 Restaurant Stocks Worth a Bite?

Investing in restaurant stocks can be a simple, yet frustrating, pursuit. Developing a successful concept that can easily be duplicated across the country is easier said than done. While a good plan in theory, restaurants can quickly come in and out of favor. Very few successfully make the trek from a strong regional play to a truly national company. Investors crave the successes of Chipotle Mexican Grill or Panera Bread , which quickly spread nationwide and provided huge gains for early investors. Now a new set of restaurant stocks hope to replicate that success, from relatively new public firms  Chuy's ( NASDAQ: CHUY     ) and Noodles & Company ( NASDAQ: NDLS     ) to recent turnaround Jack in the Box ( NASDAQ: JACK     ) . All three stocks have market valuations of less than $2 billion compared to the $12 billion valuation of Chipotle. Read the full article here . Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

The Not So Fresh Market

Small Cap Insight After disappointing guidance, The Fresh Market ( TFM ) slumped 13% due in a large point to very high expectations for the grocery chain. Sure the organic and fresh grocer plays in a compelling secular trend, but it also faces a tough competitive environment with several companies raising significant funds to expand regional footprints. Not to mention the sector leader has made a big deal about driving down prices to produce growth. The company operates 136 stores in 26 states and expects to open 21 to 22 stores this year with a high concentration in Q3. With the U.S. supermarket listed as a $600 billion industry, Fresh Market has plenty of room to grow. The Nutrition Business Journal estimates that spending on the natural and organic sector has been growing at a rate of 10% annually with sales only reaching $43 billion in 2011. That growth rate would produce a total of just over $51 billion in 2013, but a number that wouldn't even reach 10% of

Berkowitz Remains Bullish On Sears Holdings

Very interesting interview with Bruce Berkowitz on CNBC today. Bruce is the famous founder and manager of Fairholme Capital Management. The interview is mostly regarding the bets on Fannie Mae and Freddie Mac preferreds, but he does confirm that the Sears Holdings (SHLD) investment thesis remains intact. He still sees a 10x increase in the value of Sears to match the value of the real estate holdings. He makes some compelling statements regarding investing in Fannie and Freddie. Maybe we need to check those out considering some our investments match his. Instead of American Int'l Group (AIG) , we chose to invest in Hartford Financial (HIG) and Lincoln Financial (LNC) to obtain exposure to insurers trading under book value. After all, investing in stocks trading below the long-term value is a core position of Stone Fox Capital. Disclosure: Long HIG, LNC, and SHLD. Please review the disclaimer page for more details. 

Firsthand Technology Fund: Pre-IPO Cash Hoarder

Small Cap Insight To investors frustrated with being locked out of the pre-IPO market, business development corporations (BDC) such as Firsthand Technology Value Fund ( SVVC ) offered potential for participating in the large IPO gains of hot stocks. The reality hasn't reached the hype from back in 2012 when the Facebook ( FB ) IPO blew up. Now over a year later and with Facebook soaring, one might expect the stock to offer huge upside potential, but one glaring issue exists. The company is a publicly traded venture capital fund that invests in technology and cleantech companies prior to an IPO. It is run by well-known tech investor Kevin Landis that charges management fees of 2% of gross assets and 20% of capital gains. The company competes for investments with venture capitalists, accredited investors and other public funds such as GSV Capital ( GSVC ) and Keating Capital ( KIPO ) . Read the full article at Seeking Alpha. Disclosure: Long GSVC. Please revie