Seeking Alpha
  • Saturday, January 24, 2015

  • 8:26 AM
    • "I don’t see how the Fed can justify hiking rates when economic growth will disappoint, employment growth will fade, and inflation will overshoot on the downside," says Felix Zulauf at the Barron''s Roundtable. He wouldn't be shocked to see 2016 also pass by without tighter policy.
    • The iShares 20+ Year Treasury Bond ETF (NYSEARCA:TLT) is the largest position in his portfolio (the 30-year yield was 2.53% when the Roundtable took place earlier this month; it's 2.37% today). "The U.S. bond market is mispriced," he says, noting long-term yields on these shores tower over those in Europe (they tower far more after the ECB's QE this week).
    • Zulauf is also bullish on the dollar (NYSEARCA:UUP) - not exactly a contrarian view - but he says most don't understand the real reason for the greenback's strength: Basically the world is massively short greenbacks thanks to dollar weakness policies pursued by the Greenspan and Bernanke Feds. When the dollar corrects later this year on realization the Fed won't be lifting rates, it will be a good spot to get long.
    • Expecting a correction in U.S. stocks, Zulauf would then put money to work in the Market Vectors Retail ETF (NYSEARCA:RTH) - a strong dollar allows retailers to benefit by buying their overseas supplies cheaper.
  • 8:25 AM
    • In a low-yield world, the newly launched iBillionaire High Dividend Index - which tracks the trading moves of 25 investing-savvy billionaire investors such as Stanley Druckenmiller, James Dinan and Nelson Peltz - actually lives up to its name with a dividend yield of 5.34%.
    • At 24%, the index has a high allocation of energy shares, including OXY, TRP, CNP, COP, BP, ATLS, CVI, WMB, APL, RIG and ARP.
    • Also worth noting is that the index contains some high-yielding mortgage REITs, an area most investors hate right now but where billionaires seem to find value; examples are NRF, AGNC and CIM.
    • No mutual fund or ETF tracks this index, but it offers a fishing pond of income investment ideas to research further.
    • The top 20 holdings: TLM, CVC, GM, TIME, AEE, D, STAY, KMI, TROX, EXC, STNG, PPL, IRM, PFE, KKR, KAR, F, MIC, LO, ABBV.
  • Friday, January 23, 2015

  • 7:00 PM
    • Though Tableau's (NYSE:DATA) 2015 revenue consensus is only at $554M, and its license revenue currently ~2/3 of total revenue, Cowen's Jesse Hulsing thinks the business intelligence/analytics upstart can deliver $1B/year in license revenue by 2019.
    • Hulsing: "We think the business intelligence market is inflecting due to a confluence of cultural infatuation with data, more relevant data, cheaper infrastructure and better tools. We call this Measurement Mania." He sees Tableau as a major beneficiary (so do others), and believes the company can grow its BI license market share to ~30% in four years.
    • Nonetheless, Hulsing only assigns the richly-valued software vendor a Market Perform rating, and notes competition is growing. "While we think Tableau still has a lead over its competitors in the market, we think recent competitive responses have closed the gap (e.g., Qlik Sense) and new entrants create some threat of incremental competition ('s analytics cloud)."
    • Q4 results arrive on Feb. 4.
    | 1 Comment
  • 6:38 PM
    • "Similar to the 2012/13 bear raid on FB where the street was over-obsessed with 'declining engagement' only to see shares triple in a single quarter, we think the debate around Twitter’s (NYSE:TWTR) MAU adds should eventually move to the background in favor of new product initiatives the company is working on," says Deutsche's Ross Sandler, reiterating a Buy and steep $60 target for the microblogging platform ahead of its Feb. 5 Q4 report.
    • Sandler: "Consumer internet stories that have: 1) improving core products, and 2) are heavily undermonetized, tend to work themselves toward much higher valuations, and the best time to add to positions is when they are most out of favor. Twitter could be one of the best mean-reversion ideas for 2015."
    • He does admit the catalyst that propelled Facebook higher (soaring mobile ad sales driven by ad load and advertiser growth) isn't available for Twitter, given its platform is demand-constrained and has less than 5% of Facebook's advertiser density, but sees other possibilities. "The catalyst could be any of: 1) instant timeline (non-curated Twitter-light), 2) international subs, 3) video, 4) logged out experiences, 5) messaging, 6) a partnership with Google, or non-disclosed product innovations."
    • Co-founder/ex-CEO Evan Williams recently made a case for why MAUs provide an incomplete view of Twitter's value.
  • 12:37 PM
    • Copper puts are Goldman Sachs' favorite global macro hedge, as derivatives strategist John Marshall notes that options prices on copper remain at long-term average levels even as the 12-month copper price has declined 12% over the past month.
    • Freeport McMoRan (NYSE:FCX) provides the opportunity for a single-stock trade, as its options are 94% correlated with options on the underlying commodity; Goldman suggests buying FCX March $20 straddles for $2.79 when the stock was at $19.70.
    • The firm estimates three-month implied volatlity for FCX is 43%, below the 45% implied by oil, copper and gold options, and FCX volatility would surge to 65% if copper volatility surges as expected.
    • Earlier: Goldman gives in on mined commodities
  • 6:40 AM
  • Thursday, January 22, 2015

  • 8:58 AM
    • Arista Networks (NYSE:ANET): Price target $95 vs. current $64.28. Implied upside: 48%.
    • Stratasys (NASDAQ:SSYS): PT of $110 vs. current $75.19. Implied upside: 46%.
    • Ingram Micro (NYSE:IM): PT of $35 vs. current $25.49. Implied upside: 37%.
    • Synaptics (NASDAQ:SYNA): PT of $87 v. current $63.78. Implied upside: 36%.
    • FireEye (NASDAQ:FEYE): PT of $45 vs. current $34.22. Implied upside: 31.5%.
    • (NYSE:CRM): PT of $70 vs. current $57.71. Implied upside: 21%.
  • 6:40 AM
  • Wednesday, January 21, 2015

  • 3:59 PM
    • Credit Suisse thinks it is still too early to buy E&P equities but the picture should brighten by late in Q1, when the firm suggests the time could be right to make a play for the strong balance sheets offered by the likes of Anadarko Petroleum (NYSE:APC), Devon Energy (NYSE:DVN), EOG Resources (NYSE:EOG), Marathon Oil (NYSE:MRO) and Pioneer Natural Resources (NYSE:PXD).
    • E&P stocks historically have been highly anticipatory, the firm says, with the stocks moving ahead of crude oil, adding that the key leading indicator of U.S. drilling and completion activity is U.S. drilling permits.
  • 11:37 AM
    • To make the list, the stocks must be rated Outperform by the Baird team, have average or lower risk suitability, a dividend yield at least 1.5% above the 10-year Treasury rate, and an AFFO payout ratio under 100%.
    • Armada Hoffler Properties (AHH +1.3%) is a diversified REIT, owning and managing office, retail, and multifamily properties throughout the country.
    • Franklin Street Properties (FSP -1.1%) is an office property owner.
    • STAG Industrial (STAG +0.2%) owns 248 industrial properties in 36 states with about 47M square feet.
    • DuPont Fabros Technology (DFT) is a data center REIT with a current 4.6% yield.
    • BioMed Realty Trust (BMR +0.1%) has biotech and pharmaceutical companies as tenants, and owns or has interests in properties totaling 17.5M rentable square feet.
    | Comment!
  • 6:42 AM
  • Tuesday, January 20, 2015

  • 12:23 PM
    • Barrington Research's Ted Moreau, Jr. has upgraded Rudolph Technologies (NYSE:RTEC) to Outperform ahead of its Feb. 2 Q4 report, and set a $12.50 target.
    • Moreau: "When we updated our thoughts on our two semiconductor capital equipment stocks two weeks ago, we expressed continued concern about lingering softness for their back-end business. Since then, TSMC raised their 2015 capex budget by nearly $2 billion and we have grown more confident of Samsung's 14nm position in 2015. As such, we believe 2015 will be a good year for Rudolph's front-end business and so are raising our 2015 estimates."
    • Previously: Chip equipment makers take Intel/TSMC's capex budgets in stride
    | Comment!
  • 11:28 AM
    • Believing T-Mobile (TMUS +1.4%) will see "an inflection to positive and rapidly growing [free cash flow] in 2015," Goldman's Brett Feldman has upgraded the Un-Carrier to Conviction Buy from Neutral, and hiked its target by $10 to $37.
    • Feldman also thinks T-Mobile will provide strong 2015 EBITDA guidance, thanks to slowing expense growth and higher MetroPCS synergies. He forecasts 2015 EBITDA of $7.7B (above a $7.09B consensus), and has upped his 2015 net postpaid subscriber add estimate by 500K to 3.5M (implies further share gains).
    • Meanwhile, in comments that might be aimed at U.S. politicians and regulators more than investors, Deutsche Telekom (OTCQX:DTEGY) CEO Tim Hoettges insists T-Mobile's current approach isn't sustainable, and that a merger is the U.S. subsidiary's best long-term hope for achieving needed scale. "I was intrigued by the idea of having a combination with Sprint and being the ‘super-maverick’ in the market. I hope that the political environment will change at one point in time."
    • T-Mobile and (especially) Sprint plunged last year after Sprint abandoned its merger efforts in the face of FCC/DOJ opposition. T-Mobile's recent postpaid share gains likely influenced regulatory thinking.
    | Comment!
  • 6:42 AM
  • Monday, January 19, 2015

  • 7:22 AM
  • Sunday, January 18, 2015

  • 1:32 PM
    • Whereas the front cameras on smartphones have historically featured resolutions of 2MP and lower, CES saw the unveiling of a slew of phones with high-res front cameras (5MP-13MP) optimized for selfie shots. OEMs also rolled out (to some social media mockery) "selfie stick" accessories that make taking shots easier, and (in Lenovo's case) a $29 selfie flash that plugs into a phone's audio jack.
    • Rosenblatt's Brian Blair observes image sensor vendor OmniVision (NASDAQ:OVTI) benefits from this trend, as more powerful front cameras bring with them higher sensor ASPs and gross margins. "We expect to initially see this [trend] at the high end of the market, but we anticipate the trend will quickly filter into mid-tier models as well."
    • Blair, who recently launched coverage on OmniVision with a Buy rating, expects the company to post calendar 2015 revenue of $1.4B and EPS of $1.81, well above a consensus of $1.33B and $1.54. OmniVision closed on Friday at $27.40, and has over $10/share in net cash/investments.
    • For its part, OmniVision used CES to show off: 1) Image sensors containing an advanced eye-tracking software platform (provided by partner SMI). 2) A solution that pairs a 23.8MP image sensor with a high-speed (MEMS-based) autofocus from startup Wavelens. 3) A partnership with 3D imaging processor firm Intuitive to create "a reference design for building compact modules that enable 3D imaging in consumer electronics."
    | Comment!
  • Saturday, January 17, 2015

  • 8:25 AM
    • Cowen analysts this week offered a how-to guide for playing the oil price fluctuation, identifying more than 60 stocks that could benefit in a declining oil price environment.
    • Among the various nuggets of wisdom, the report notes that given the minimal contribution of petroleum to U.S. electricity generation, there is little, if any, displacement of coal burn; within the coal sector, lower crude prices mean lower diesel fuel prices, which Cowen thinks favors the operating cost structure of surface mining producers in the Powder River Basin, particularly Arch Coal (NYSE:ACI) given its diesel hedge strategy which protects it from elevated diesel levels and enables it to benefit fully in the downside of fuel costs.
    • Also best able to cope with falling oil prices: ARLP, CLD, CNX, FELP, HNRG, JEC.
    • Among airlines, American (NASDAQ:AAL) should not suffer the cost headwinds related to mark-to-market hedge losses, unlike peers that hedge jet fuel; Delta (NYSE:DAL) can expect a $2B hedge-related loss, Southwest (NYSE:LUV) should see a $500M loss and United (NYSE:UAL) a $200M loss.
    • Cowen thinks consumers are on pace for 2015 gas savings of $100B-$150B, but the upside will not be distributed equally among retailers; the firm sees broadline retailers, namely Wal-Mart (NYSE:WMT) and Target (NYSE:TGT), as best positioned to benefit from gas deflation.
  • Friday, January 16, 2015

  • 6:55 PM
    • Miller Howard Investments veteran portfolio manager Roger Young has been buying energy stocks for 40 years, and he expects more bad news ahead for the sector but also sees certain MLPs providing long-term value to investors.
    • MLPs haven’t escaped the energy wreckage due to worries that lower oil prices will lead drillers to cut back on production, but Young sees MLPs as a way to invest without having to rely on “if you build it, they will come” business models popular elsewhere throughout the energy E&P and services groups.
    • With a backlog of projects just being completed or starting construction, all with contracts, “you would have growth of distributions for the next three years" even if no new projects were started, according to Young.
    • Among his favorite MLP investments: EPD, ETE, MMP.
    | 1 Comment
  • 3:11 PM
    • Genesee & Wyoming (GWR +2.5%) is upgraded to Buy from Hold with a $99 stock price target at Stifel as it updates its Q4 earnings estimate to incorporate higher volume, a slightly higher benefit from the lag impact associated with fuel surcharges, and the short-line tax credit.
    • With GWR having dropped nearly 20% since the end of November and with the potential for strong earnings growth over the coming years despite uncertainty around oil, the firm thinks the stock looks attractively valued at current levels.
    | Comment!
  • 2:44 PM
    • South Jersey Industries (NYSE:SJI) boasts the most upside of any gas and electric utility stock, Brean Capital analysts say, believing many aspects of SJI’s operations - including its roles in the PennEast pipeline project, CNG refueling stations, liquefaction operations and its solar investment are not fully priced into the stock.
    • Among water utilities, Brean sees improving fundamentals at American Water Works (NYSE:AWK) while noting that the stock is undervalued compared to its closest peer, Aqua America.
    • In flow technology, Brean believes Xylem (NYSE:XYL) will continue to use its free cash flow to make strategic water technology acquisitions that will contribute to strong future growth.
    • In clean energy, the firm thinks First Solar (NASDAQ:FSLR) is well positioned for long-term growth but its stock is extremely undervalued at current levels.
    | 1 Comment
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