As an active manager, I am always seeking a new and persuasive investment thesis with a good long-term strategy or a strong catalyst. Our discovery process is rigorous with a deep checklist which satisfies sound business and investing principals. These include: differentiation in the marketplace (so not to be riding with the heard); the ability to out-perform major indexes (as an alpha enhancing satellite or core investment); easy to explain (I do not want a herd and do not want to be alone either); and scalable (so serious money can be put to work). One that crossed my desk a couple of years ago has been brought to fruition. It is rules-based and is more passive a strategy than most of our offerings.

It is the Beacon Spin-Off Index (^CLRSO) which is tracked by the Claymore/Beacon Spin-Off ETF (NYSEArca: CSD). The basic premise is that spin-offs; companies which have recently been spun-off from larger corporations, have the opportunity to better focus on their core market segment, better align management compensation with performance, will ultimately outperform.

I have to admit, when a firm represents almost 10% of all retail in the US, there is going to be a major spot light on every move the firm makes. Frankly, I need to take the Vito Corleone approach when following Wal-Mart Stores Inc. (NYSE: WMT) meaning “I cannot judge what someone does for a living” as the Don would say, even if it seems predatory.

This week WMT announced that they are predicting that the 2009 holiday season would come late and it would progressively add discounts. It read to me like everyone should wait to shop until 12/18 and then go into a discount feeding frenzy at Wal-Mart.

Growth at a Reasonable Price or GARP investing began a long time ago. One of the early spotlight managers was Peter Lynch. He was an innovator and leader as he sought out growth companies that were fairly priced. Sounds like a simple plan, but good growth companies that are not already expensive can be hard to find in any market condition.

First, the attributes of GARP investing are typically firms with low PEG (price to earnings to growth) ratios and in many cases are undiscovered. Once discovered their multiples can perhaps be worth their growth potential to many investors, but not to GARP investors. We prefer to find the growing companies that are assigned a multiple based closer to today’s earnings, rather than a high PEG based on future expected growth.

In my firm the investment team discusses a variety of economic issues and fixed income strategies. As an equities manager, I am pleased to learn from my associate's experience and wisdom. Some of what they say sounds so simple, but is not always so easy to execute.

Right now interest rates are near zero. It is a good time to borrow money if there is a strategy behind the borrow. The strategy is key and it can be as simple as retiring old debt, refinancing to lower payouts and stretching payments for the long-term at very favorable rates.

It can be challenging to part with a stock that has performed so well and to hold another that has lagged all year. Yet I have sold Amazon.com (NasdaqGS: AMZN) and am holding Wal-Mart (NYSE: WMT).

Sure one stock is a Consumer Discretionary and the other a Consumer Staple so the two firms are not truly a direct comparison. Looking carefully; they are both low price retailers known for efficient back ends used to deliver products on the cheap. Yet they compete on different fields; Wal-Mart by car and Amazon by click. The world is changing as I observe these companies seeping into each other’s territories, tactics, and markets. This may accelerate direct competition.

I am an iPhone wannabe-owner. I would keep my Blackberry for work. I love the keyboard, the enterprise security and the personal privacy of two phone numbers. I am also crazy enough to carry two phones. I already carry my iTouch and Berry. It would be pretty much a straight swap from a weight/bulk perspective.

The issue as I have written about before is network coverage on the east coast. AT&T (NYSE: T) just does not have the reach or reliability to service my needs compared to Verizon (NYSE: VZ) who, I might add, could stand to add more towers in Berkshire and Hampden counties.

The Wall Street Journal published last month that Apple (AAPL) and Research in Motion (RIMM) rule the roost in smartphones when it comes to making money.

Let us start by crediting the pullouts and data to Paul McDougall at InformationWeek who published a piece back on 7/13/09. It seems everyone’s original “evil empire” is going to the web and free (kind of) model, perhaps seeking to offer bonus online features and gaining more users.

Microsoft (MSFT) on Monday outlined a host of new features that will be included in its forthcoming Office 2010 home and business productivity suite. Not surprisingly, many are geared toward users steeped in Facebook, YouTube, Twitter, and other popular Web 2.0 tools.

In previous posts, I cited several reasons for optimism regarding the U.S. healthcare industry. This includes new major revenue sources such as the expansion of coverage to the uninsured and aging baby boomers. We also export our expertise and the global population is swelling.

Although these developments remain strong indicators of a robust demand for the healthcare industry, they also paint a macabre picture of the future of our country, and its economic condition. In short, what is good for healthcare providers may not be good for America. Healthcare expenditures in the U.S. currently consume roughly 16-17% of our GDP and are rising at an alarming rate. From a 2008 study by the U.S. Department for Health and Human Services:

March 2008, the U.S. Food and Drug Administration was forced to recall the drug Heparin after a number of deaths were linked to the product’s use. According to the agency, the root of the problem was traced to contaminated Chinese factories that supplied the raw materials needed to manufacture the popular blood thinner. By the time the recall ended, the Heparin contamination had claimed at least 81 lives and affected more than 700 patients. Fortunately, such healthcare product deficiencies are uncommon. This was major headline news and Baxter International Inc. (NYSE: BAX) saw its stock drop significantly as well as all the additional ramifications of this event.

While the FDA insists that it’s underfunded and insufficiently staffed to be able to police such potential problems, both the responsibility for monitoring these products and the blame for any errors lie at the agency’s door. All too often, though, it is companies and their investors that take the blame. In the case of the heparin contamination, Baxter International was vilified for their role in outsourcing production of the drug’s inputs to Chinese factories and it’s been a public relations nightmare for the company ever since.

I recently did an interview with the FT discussing the healthcare sector as a good defensive sector play. I answered of course that healthcare, along with utilities and consumer staples, are the classic defensive sectors. The stocks in those sectors tend to be lower beta and many are mature companies with good cash flow that pay dividends. We own many companies within the sector.

We watch the sector closely, as the head winds to growth are many, here are a few:

Throughout the credit crisis there has been an uncertainty in the air causing unwillingness, by many, to take a firm position on whether to be bullish or bearish on the market and particularly, the financial sector. Two high profile exceptions to this silence are Bill Miller, the outspoken bull of financials who is the portfolio manager at Legg Mason’s Value Equity Fund and Meredith Whitney, the former Oppenheimer analyst who gained celebrity status after she predicted the crash of financial sector stocks and who recently started her own firm, Meredith Whitney Advisory Group. You may be wondering how I can view both a bull and a bear as being correct at the same time about the same sector. The answer is that this is not a fair game nor is there a level playing field. The game is rigged, at least for now by the effects of government intervention on a global basis.

Let’s start with the bear view: Meredith Whitney’s reputation as a financial sector oracle began in October of 2007 with her remarks concerning Citigroup’s (NYSE: C) balance sheet worries. Since her famous call the financial sector (NYSE: XLF) has declined over 60% and Citigroup has not closed above $40 per share since. Also, since her call, a total of 61 financial institutions (25 in 2008 and 36 in 2009) have failed according to the FDIC many of them banks, some followed by SPDR KBW Bank (NYSE: KBE). She has described financials as “grossly overvalued” and claims that the earnings power of these banks are “negligible.” The economic climate, the housing market, and the recent credit card reforms enacted by the Obama administration all make Whitney’s argument reasonably convincing. Housing prices have fallen 32.2% from their peak and 19.1% in the first quarter of 2009. GDP declined 2.6% in the first quarter of 2009 and the unemployment rate probably jumped from 8.9% to 9.2% according to a survey recently conducted by MarketWatch. Clearly, things could be better, but will they get any worse? Have we reached bottom yet? Whitney doesn't think so.

The Wall Street Journal recently reported that the DJIA and S&P 500 have advanced ~30% and 35% respectively off their March 9 lows. The markets are also buoyed by the strong May performance of the Conference Board Consumer Confidence Index, which came in at 54.9 — this is the highest reported figure since September 2008 and a 14.1 increase from April. The recent performance of these indexes demonstrates that formerly weary investors are clearly responding bullishly to the government’s economic policy of active intervention in the banking system and select industries. Although positive sentiment is materializing, my good friend, market maven, Clear angel investor and uber blogger Roger Ehrenberg plays devil’s on his blog regarding continued economic troubles:

“As the US Treasury continues to run the printing presses, the Chinese would gradually build a compelling argument (and a powerful economic position) as to why the US Dollar should no longer be the global reserve currency and the basis of exchange in oil. Profligate spending coupled with fewer willing buyers will drive up US dollar long rates, debase the currency and set off a very unpleasant inflationary cycle.”

Google Inc. (GOOG), the internet search behemoth and undisputed king of online advertising, tracking and measurement has recently announced its presence in the world of network television advertising. Google TV Ads have reportedly begun booking upfront deals with key advertising agencies in an effort to establish itself as a major player in this lucrative market.

“Upfront” is a term used in the TV marketing biz to describe the glamorous meetings at which advertisers commit to purchase commercial airtime prior to the start of the television season. Major upfront events, which are held in New York during the third week of May, are typically characterized by elaborate presentations, five star restaurants, celebrity elbow rubbing, resulting in enormous monetary commitments. Google, however, is taking a different approach. The Google TV Ads platform, which has already secured seven-figure commitments from agency clients of Deutsch and Saatchi & Saatchi, employs an auction-based system that allows advertisers to gauge the impact of their ads on audiences during different time slots. This is intended to optimize ad spending. This should sound familiar since the platform employs a similar technology to that of Google’s wildly popular online search advertising system, AdWords.

As the world’s largest manufacturer of consumer products, a “dividend aristocrat,” and one of America’s largest companies sporting a market cap over $157 billion, it may be difficult to believe that Procter & Gamble (NYSE: PG) still has billions of untapped potential customers. PG currently sells its products in 180 countries and has launched a plan to reach billions of new potential customers living in emerging and developing countries.

Here are excerpts from a 5/9/09 article by David Holthaus published in the Cincinnati Enquirer that caught my attention and interest:

For about three years I have thought that POTS (plain old telephone service, aka Land lines) are no longer a necessity and I go as far as labeling them a needless home expense. Cable companies are providing phone service through VoIP and the phone companies were right behind and are now led by Verizon (VZ) with its FiOS service. Many people in this hard hit recession are also moving the nation forward technologically to save money, but they are going wireless.

Pete Carey of the Mercury News put the stats into an article on May 6th that caught my attention.