The Power of Many in the Market

Jul28
2011 Leave a Comment Written by Tony Kau

It can be daunting to sort through the myriad investment theories, strategies, and tools that promise to enhance our portfolios.

Many rely on value investing to acquire underperforming stocks that are likely to outpace the market. (See Pump Some Value Into Your Portfolio.) Others turn to industry professionals, looking for their (hopefully) educated analysis or a chance to imitate their allocations. (See Investing Like a Wall Street Professional.) More recently, it’s become popular to look to the collaborative opinion of a large number of individual investors.

It’s all part of the crowd-sourcing revolution.

The past two decades have turned the investing world upside down with the technology of instantaneous news dissemination, information propagation, and worldwide collaboration, courtesy of our friend, the Internet. Amazingly large amounts of data are publicly available in nearly real-time. This helps level… (Continue reading on InvestorUprising.com)

Posted in Trading Strategy

Investing Like a Wall Street Professional

Jul26
2011 Leave a Comment Written by Tony Kau

With almost as many investment strategies as market participants, how can we possibly identify the ideal strategy for our situation and goals? Some investors turn to value investing — buying beat-down stocks with a positive outlook — in the hopes of outperforming the market and minimizing risk. Others, as we’ll explore today, try to emulate the professionals or “experts.” Still others, as we’ll discuss next time, would rather follow the wisdom of the masses, since market sentiment can be a self-fulfilling prophecy.

First, let’s put Wall Street equity research analysts in context. You know these guys by their “Buy-Sell-Hold” recommendations. Typically, they have a business relationship with the company they are analyzing. They’ve met and interviewed the executives, spent time with the staff, and poured over financials, reports, news, and future project details, investing hours numbering in the hundreds. If an analyst wants to be received positively (and receive helpful information) the next time he returns, he would benefit from concluding with a buy rating. This bias alone is enough to take published analyst work with a grain of salt.

Second, many independent investment research firms provide… (Continue reading on InvestorUprising.com)

Posted in Trading Strategy

Pump Some Value Into Your Portfolio

Jul21
2011 Leave a Comment Written by Tony Kau

I’m always on the lookout for innovative strategies to improve returns and generate alpha for my portfolio (isn’t everyone?), so I’m going to take the next few posts to create a series on the results of my research. Today, we’ll look at which factors can add value to your portfolio. Later, we’ll evaluate strategies that follow the “experts” and discuss how to glean our wisdom from the “crowd.”

Historically, investors in the US stock market have seen a positive return in the neighborhood of 6% to 8% over the long term. Of course, the precise average depends on whom you ask and a wide variety of factors, but the reality is that none of us is really in the marker for that kind of “long-term.” We don’t have 100 years to ride out the full story of ups and downs and may, in fact, lose money through the course of a decade or two or three by owning a stake in a market index.

The US is also in a different place than it was 100+ years ago. We aren’t growing at exponential rates, as we were as a developing nation. But there are opportunities… (Continue reading on InvestorUprising.com)

Posted in Trading Strategy

Investors Wonder Whether Cogo Will Get Going

Jul18
2011 Leave a Comment Written by Tony Kau

Cogo Group Inc. (Nasdaq: COGO) investors are trying to reconcile the company’s apparent strength with a steep drop in stock prices. Although shares of the China-based mobile handset and telecom equipment designer slumped 47% this year, the company is still poised to achieve its seventh consecutive year of growth. Is there an upside here?

As a company, Cogo seems to be doing relatively well. Its primary competitive advantage is designing custom technology component modules that help its clients achieve a quicker time-to-market and a lower production cost.

This is certainly a desirable service for… (Continue reading on InvestorUprising.com)

Posted in Stock Writeups - Tagged COGO

Got Money? Get a Green Card

Jul14
2011 Leave a Comment Written by Tony Kau

The going rate for a US Green Card: as much as $1 million. According to the federal Citizen and Immigration Services office, 1,885 foreigners paid $500,000 to $1 million last year to buy their way into the US. How long has this been going on? Is this even legal? Maybe Emma Lazarus’s famous poem should read, “Give me your entrepreneurs, your wealthy, your successful families.”

The Immigration Act of 1990 set aside 10,000 EB-5 visas per year for foreign nationals who invest a minimum of $500,000 in a business that creates at least 10 US jobs. And while the ethics of the program can be the subject of debate, the business implications are clear. In these recessionary times, the program helps two of our biggest problems — employment and business funding — while providing an opportunity for well-to-do foreigners to reside in the US on the path to permanent residency.

Since 2005, the EB-5 program has generated $3.3 billion worth… (Continue reading on InvestorUprising.com)

Posted in Uncategorized

Chinese Firm Insures New Investors a Pop

Jul12
2011 Leave a Comment Written by Tony Kau

CNinsure Inc. (Nasdaq: CISG) hit my radar the other day as a fundamental value-buy opportunity with a decent growth trend. But I wondered why consensus estimates are near the current trading levels.

The Chinese insurance agency and brokerage firm distributes life, property, and casualty insurance underwritten by domestic and foreign insurance companies operating in China. The company went public with an offering worth $188.19 million in October, 2007. But Yinan Hu, the company’s co-founder and CEO, recently made a move to take the company private for the equivalent of $19/ADR — a 32% premium on the market price at the time of the announcement.

The stock closed yesterday at $14.99. This is a significant discount… (Continue reading on InvestorUprising.com)

Posted in Stock Writeups - Tagged CISG

Marathon Investors Gain as Share Price Falls

Jul06
2011 Leave a Comment Written by Tony Kau

Marathon Oil (NYSE: MRO) shares got cheaper but more valuable when the markets closed last Thursday. The Houston-based energy company completed along awaited spinoff of its lower-margin refining business, creating a second investment for shareholders of record. Investors received one share of Marathon Petroleum Corp. (NYSE: MPC) for every two shares of Marathon Oil they held.

Marathon Petroleum, based in Findlay, Ohio, will handle refining, marketing, and distribution. Marathon Oil was reborn a smaller oil and gas exploration company with a focus on unconventional plays in shale basins including the Eagle Ford field in Texas, the Niobrara field in Colorado and Wyoming, and the Bakken field in North Dakota and Montana.

What’s it all mean for investors? Marathon Oil share prices… (Continue reading on InvestorUprising.com)

Posted in Stock Writeups - Tagged MPC, MRO

Options Play on Johnson Controls: Capture the Pullback With Less Risk

Jul06
2011 Leave a Comment Written by Tony Kau

Looking at a 2011 price chart for Johnson Controls, Inc. (JCI) could leave you scratching your head about where it’s headed. The channel-constrained trading is not event-driven as I mentioned in my recentJohnson Controls valuation article, where I dig deeper into the fundamental valuation, but simply an amplification of broad market movements.

Johnson Controls has three main lines of business: automotive interiors (51% of sales), building efficiency (35% of sales), and power solutions (14% of sales) which focuses on automotive batteries. Revenues are increasing, but not faster than what the market has priced in.

The latest outlook from Johnson Controls’ management expresses an extremely optimistic… (Continue reading on SeekingAlpha.com)

Posted in Stock Writeups - Tagged JCI

Johnson Controls Waxes & Wanes

Jul05
2011 Leave a Comment Written by Tony Kau

Johnson Controls, Inc. (NYSE: JCI) seems like it’s been trapped on a rollercoaster all this year. Will we see the stock break out to new historical highs, or will it crest the hill to another downward slope? Looking at the driving forces behind this recent push to $42, I’m looking for another go-round.

A leading producer of automotive interiors and batteries, as well as building efficiency solutions, Johnson Controls appears to be coasting on its high beta of 1.88, essentially exaggerating S&P movement over the course of the last 3 months. Apart from the Japanese earthquake disrupting auto production, followed by a handful of analyst upgrades, there appears to be nothing happening to explain the ride. That’s our first clue that this recent rally will likely be short-lived.

A vast majority of Johnson Controls’ forecasted growth is in its car battery division as the new wave of start-stop hybrid motors demand more powerful… (Continue reading on InvestorUprising.com)

Posted in Stock Writeups - Tagged JCI

Options Play on Biogen: Achieve a Better Return With Less Risk

Jul04
2011 Leave a Comment Written by Tony Kau

On Thursday, I completed a valuation on Biogen Idec Inc. (Nasdaq: BIIB), suggesting that the stock is overbought, and should be considered a short play at this point. Biogen produces therapeutics for neurology, immunology, hemophilia, and oncology, and 75% of its sales stem from 2 main products: Avonex and Tysabri, which are treatments for multiple sclerosis. The vast majority of the remainder of revenue comes from Rituxan, used to treat certain types of non-Hodgkin’s lymphoma.

Looking over a variety of factors, I adjusted consensus numbers to reflect what I believe to be a more realistic view of how future events are likely to play out. I brought down the growth rate since we’re looking at a reduced product pipeline with only 10 products achieving phase two or higher.

Based on that outlook and other factors I mentioned in the valuation article, I arrived at… (Continue reading on SeekingAlpha.com)

Posted in Stock Writeups - Tagged BIIB

CHECK OUT my new site: TrendExhaustion.com

The Power of Many in the Market

Investing Like a Wall Street Professional

Pump Some Value Into Your Portfolio

Investors Wonder Whether Cogo Will Get Going

Got Money? Get a Green Card

Chinese Firm Insures New Investors a Pop

Marathon Investors Gain as Share Price Falls

Options Play on Johnson Controls: Capture the Pullback With Less Risk

Johnson Controls Waxes & Wanes

Options Play on Biogen: Achieve a Better Return With Less Risk

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