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  • EM Infrastructure ETFs: A Familiar Theme Worth Revisiting

    By Jason Raznick

    One of the more prevalent themes over the past couple of years regarding investing in emerging markets has been infrastructure On the surface, this theme has been almost too simple for its own good. Because they are “emerging,” countries such as the BRIC quartet and others simply don't have the same quality of roads, bridges, pipes, etc. that are found in the West.

    In other words, infrastructure in the emerging world is starting from such a low base, that should be pretty easy to make money on this theme, right? Maybe, maybe not. An EM infrastructure ETF is no different than any other infrastructure ETF or stock. There are simply no guarantees here.

    That said, Bank of America Merrill Lynch was out with a report last week that may have gone unnoticed because most of us were looking ahead to the long weekend. Bottom line in the report: The bank expects select emerging markets to spend $6 trillion on infrastructure projects over the next three years. Yep, that's trillion with a “T.”

    Water, transportation and energy investments will consume the bulk of these funds, accounting for 82% of total projected spending, Frank Holmes noted, citing the report.

    With that, let's look at some of the ETFs that could benefit from increased EM infrastructure spending.

    1) Pick A BIC There is no Russia-specific infrastructure ETF, but the folks at Emerging Global offer the Emerging Global Brazil Infrastructure ETF (NYSE: BRXX), the Emerging Global India Infrastructure ETF (NYSE: INXX
    ) and the Emerging Global China Infrastructure ETF (NYSE: CHXX).

    Each ETF merits attention for its own unique reasons. As been noted plenty of times in the past year or so, Brazil will need to bolster infrastructure for the 2014 World Cup and 2016 Summer Olympics. INXX is compelling because India's infrastructure is among the worst in the world and the country has almost no choice but to make improvements on this front. As for CHXX, China has shown a penchant for heavy infrastructure spending just in the name of job creation and that could be a catalyst for the ETF going forward.

    2) PowerShares Emerging Markets Infrastructure Portfolio (NYSE: PXR): China, Brazil and South Africa account for over 30% of this ETF's weight and the U.S. chimes at almost 9.5%, giving PXR a balanced approach to the global infrastructure theme. PXR spent much of May in a tailspin, but looks to be correcting an oversold condition as we speak. The ETF holds 75 stocks and has almost $236 million in assets under management.

    3) iShares MSCI Emerging Markets Infrastructure Index Fund (Nasdaq: EMIF): If you really can't decide between China and Brazil, EMIF looks like a sound bet as those two countries company for over 58% of the ETF's weight. EMIF is also one of just a handful of ETFs that offers any noteworthy exposure to the Czech Republic (6.33%). With over $147 million in assets under management, EMIF is one of the dominant ETFs in the EM infrastructure genre

    May 31 3:50 PM | Link | 1 Comment
  • Is Now the Time to Bet on AIG?

    By Luci Morland

    Has AIG (NYSE:AIG) gone from “too big to fail” to “too cheap to overlook”? Maybe.

    Conventional wisdom says that the smart money is found in leading the herd from pasture to pasture. However, it is unlikely you, a lone investor, have the financial means to move the entire market overnight, the way Goldman Sachs might.

    The next best way is to at least be part of the herd, moving from profit to profit, grazing some off the top as you make your way through time and space. That will keep your account funded and moving forward, assuming the herd doesn't pull a lemming and start jumping off cliffs.

    But the real money, the Warren Buffett money, comes from doing your homework and then going against the herd. The billionaire investor is famous for his saying “Try to be fearful when others are greedy and greedy when others are fearful.”

    Perhaps it is time to get greedy with AIG.

    The company has been the whipping boy of pundits, politicians, and professional whiners for three years. It was the poster boy for bailed out companies, requiring nearly $200 billion in funding to stave off potential global collapse.

    AIG thanked taxpayers by rewarding its executives with $165 million in bonuses in a year where the company damn near destroyed the entire financial world. While it was legally necessary, per the contracts in place at the time, it was the sort of political blunder that, in previous eras, might have triggered mass tarring and feathering.

    Despite all of this, the government bailed out the insurance giant. This week, the Treasury department sold some of its stake in the company on the market. The event was almost a disaster, and the government barely broke even in its offerings.

    Combined with investor concern that the company may never return to profit-generating days has the potential to drive the price of the stock down even further. It's already down huge on the year, including a 3% loss Wednesday.

    At some point, investors might wake up and realize what “too big to fail” actually means. By the time they do, it might be too late to get in on the ground floor of what could be a big gainer in future years.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Tags: AIG
    May 26 3:11 PM | Link | Comment!
  • Why I'm Bullish On LinkedIn

    History was made on May 19th as LinkedIn Corp (LKND) became the first mainstream social media site to go public.

    LinkedIn is planning to debut its shares for $45 apiece, which values the entire company at ~$4.2B. The historic offering would make LinkedIn the largest internet IPO since Google’s in 2004. Shares will begin trading on the New York Stock Exchange under the symbol $LNKD.

    Launched in 2003, LinkedIn calls itself the ”World’s Largest Professional Network”. LinkedIn is an online rolodex of the business community where users can upload their resume, build their profile, connect with co-workers, and share contacts. With over 100 million users strong and growing, LinkedIn is already one of the largest social networking sites and its user base is much more sophisticated than other social media sites.

    LinkedIn Corp (LKND) also offers job posting and recruiting services, which is already a stable revenue stream and should continue to grow in the years ahead. Social leverage is a key differentiator that should allow LinkedIn to compete with other mainstream job sites like Naturally, LinkedIn is already a “go-to” platform for both job seekers and recruiters alike. Job stability is not exactly at an all time high, which leads to people changing jobs more frequently. A platform liked LinkedIn provides tremendous value for individuals looking to gain a edge in their job search.

    Advertising is another key revenue source and differentiator for LinkedIn. If you told a marketer you had an advertising platform that could reach everyone in the business community, they would think you are joking! LinkedIn has just that.

    With over 37 million visits a month, the platform is already the 26th most visited website in the United States. Of all the popular social networking sites, LinkedIn has arguably the most appealing demographics to marketers, since their user base mainly consists of white collar professionals with above-average incomes. More marketing budgets are shifting towards online ads as opposed to traditional TV and radio ads. Advertising will definitely be a consistent and lucrative revenue stream for the company.

    As far as financials, in Q1 2011 the company generated revenues of $94M and they were profitable during 2010. Although the financial picture is important, the real value is derived from the actual LinkedIn platform itself. The company has cultivated a great social media platform that continues to grow at a fast pace. Generating revenue and profits is important, but at this stage building a solid platform and a dedicated userbase is much more critical.

    Most Web 2.0 companies liked LinkedIn are not concerned with maximizing short-term profits, instead they are more focused on positioning themselves for long-term growth. I think this is the right approach and this model has worked out well for companies like

    Some investors have lingering concerns about LinkedIn’s ability to generate profits. The same concerns about monetization arose with Google, Facebook, Amazon, and just about every high tech startup out there.

    I certainly think that LinkedIn provides a great opportunity for investors who are looking to gain exposure to social media. I would never pass up an opportunity to buy Facebook stock or Twitter stock or even Sina stock… so why would I pass up this golden opportunity?

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    May 20 12:34 PM | Link | Comment!
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