Saturday, October 12, 2013

Top 10 Bank Stocks To Own For 2014

European stocks declined from the highest level in almost five years as bank and airline shares retreated, overshadowing better-than-forecast retail sales data in the U.S.

Commerzbank AG sank the most in two months after Handelsblatt reported the lender will sell new shares this week. Standard Chartered Plc dropped to a four-month low as Carson Block, the short seller who runs Muddy Waters LLC, said he�� betting against the bank�� debt. Air France-KLM Group fell 4 percent. Lonmin Plc rallied 2.6 percent after the platinum producer returned to profit in the fiscal first half.

The Stoxx Europe 600 Index slipped 0.2 percent to 304.46 at the close of trading, snapping four days of gains. The gauge advanced 1.3 percent last week as companies from BT Group Plc to Hochtief AG posted better-than-expected earnings and European Central Bank President Mario Draghi said policy makers are ready to cut interest rates if needed. The measure has climbed 8.9 percent in 2013.

��e still expect the U.S. economy to hit a soft patch in the second quarter, but today�� numbers -- together with the recent labor-market news -- confirms that the underlying recovery is robust,��Witold Bahrke, who helps oversee $55 billion as senior strategist at PFA Pension A/S in Copenhagen, said in an e-mail. ��he risk is that the U.S. economy turns out to be too strong, which could put the sweet spot of decent growth and loose financial conditions at risk.���

Top 10 Bank Stocks To Own For 2014: State Street Corporation(STT)

State Street Corporation, a financial holding company, provides various financial products and services to institutional investors worldwide. The company?s Investment Servicing business line provides products and services, including custody, product- and participant-level accounting; daily pricing and administration; master trust and master custody; record-keeping; foreign exchange, brokerage, and other trading services; securities finance; deposit and short-term investment facilities; loan and lease financing; investment manager and alternative investment manager operations outsourcing; and performance, risk, and compliance analytics. This segment also offers shareholder services, which comprise mutual fund and collective investment fund shareholder accounting. Its Investment Management business line provides a range of investment management, investment research, and other related services, such as securities finance; and strategies for managing passive and active financ ial assets, such as enhanced indexing and hedge fund strategies for U.S. and global equities and fixed-income securities. The company serves mutual funds, collective investment funds and other investment pools, corporate and public retirement plans, insurance companies, foundations, endowments, and investment managers. State Street Corporation was founded in 1832 and is headquartered in Boston, Massachusetts.

Advisors' Opinion:
  • [By Tim Higgins]

    Harris Associates LP, State Street Corp. (STT) and Berkshire Hathaway Inc. (BRK/B) led purchases of General Motors Co. (GM) last quarter as the U.S. government continued selling shares and GM rejoined the Standard & Poor�� 500 Index.

  • [By Jon C. Ogg]

    Two additional banks with ratings previously placed on review for a credit rating downgrade also were�included in the review: Bank of New York Mellon Corp. (NYSE: BK) and State Street Corp. (NYSE: STT).

  • [By GuruFocus]

    Sold Out: State Street Corp (STT)

    Tom Gayner sold out his holdings in State Street Corp. His sale prices were between $56.51 and $67.44, with an estimated average price of $62.2.

Top 10 Bank Stocks To Own For 2014: Federal National Mortgage Association (FNMA)

Federal National Mortgage Association (Fannie Mae) is a government-sponsored enterprise (GSE) chartered by the United States Congress to support liquidity and stability in the secondary mortgage market, where mortgage-related assets are purchased and sold. The Company�� activities include providing market liquidity by securitizing mortgage loans originated by lenders in the primary mortgage market into Fannie Mae mortgage-backed securities (Fannie Mae MBS), and purchasing mortgage loans and mortgage-related securities in the secondary market for its mortgage portfolio. Fannie Mae operates in three business segments: Single-Family business, Multifamily Business (formerly Housing and Community Development (HCD)) and Capital Markets group. Its Single-Family Credit Guaranty and Multifamily businesses work with its lender customers to purchase and securitize mortgage loans customers deliver to the Company into Fannie Mae MBS.

The Company obtains funds to support its business activities by issuing a variety of debt securities in the domestic and international capital markets. Fannie Mae acquires funds to purchase mortgage-related assets for its mortgage portfolio by issuing a variety of debt securities in the domestic and international capital markets. It also makes other investments. Fannie Mae conducts its business in the United States residential mortgage market and the global securities market. It conducts business in the United States residential mortgage market and the global securities market. During the year ended December 31, 2011, the Company��

Single-Family Business

Single-Family business includes mortgage securitizations, mortgage acquisitions, credit risk management and credit loss management. Single-Family business works with the Company�� lender customers to provide funds to the mortgage market by securitizing single-family mortgage loans into Fannie Mae MBS. Its Single-Family business also works with its Capital Markets group to facilitate the pu! rchase of single-family mortgage loans for the Company�� mortgage portfolio. Fannie Mae�� Single-Family business prices and manages the credit risk on its single-family guaranty book of business, which consists of single-family mortgage loans underlying Fannie Mae MBS and single-family loans held in its mortgage portfolio. Single-Family business and Capital Markets group securitize and purchase primarily single-family fixed-rate or adjustable-rate, first lien mortgage loans, or mortgage-related securities backed by these types of loans.

The Company securitizes or purchases loans insured by Federal Housing Administration (FHA), loans guaranteed by the Department of Veterans Affairs (VA), and loans guaranteed by the Rural Development Housing and Community Facilities Program of the Department of Agriculture, manufactured housing loans, reverse mortgage loans, multifamily mortgage loans, subordinate lien mortgage loans and other mortgage-related securities. Its Single-Family business securitizes single-family mortgage loans and issues single-class Fannie Mae MBS. Fannie Mae�� Single-Family business securitizes loans solely in lender swap transactions, in which lenders deliver pools of mortgage loans to the Company, which are placed immediately in a trust, in exchange for Fannie Mae MBS backed by these loans. Generally, the servicing of the mortgage loans held in its mortgage portfolio or that backs its Fannie Mae MBS is performed by mortgage servicers on the Company�� behalf. Lenders who sell single-family mortgage loans to Fannie Mae service these loans for the Company. For loans it owns or guarantees, the lender or servicer must obtain its approval before selling servicing rights to another servicer.

Fannie Mae�� mortgage servicers collect and deliver principal and interest payments, administer escrow accounts, monitor and report delinquencies, perform default prevention activities, evaluate transfers of ownership interests, respond to requests for partial releases of s! ecurity, ! and handle proceeds from casualty and condemnation losses. Its mortgage servicers are the primary point of contact for borrowers and perform implementation of its homeownership assistance initiatives, negotiation of workouts of troubled loans, and loss mitigation activities. Mortgage servicers also inspect and preserve properties and process foreclosures and bankruptcies.

Multifamily Mortgage Business

Multifamily business works with the Company�� lender customers to provide funds to the mortgage market by securitizing multifamily mortgage loans into Fannie Mae MBS. Through its Multifamily business, Fannie Mae provides liquidity and support to the United States multifamily housing market principally by purchasing or securitizing loans that finance multifamily rental housing properties. It also provides some limited debt financing for other acquisition, development, construction and rehabilitation activity related to projects that complement this business. Fannie Mae�� Multifamily business also works with its Capital Markets group to facilitate the purchase and securitization of multifamily mortgage loans and securities for Fannie Mae�� portfolio, as well as to facilitate portfolio securitization and resecuritization activities.

The Company�� multifamily guaranty book of business consists of multifamily mortgage loans underlying Fannie Mae MBS and multifamily loans and securities held in Fannie Mae�� mortgage portfolio. Revenues for Fannie Mae�� Multifamily business are derived from a variety of sources, including guaranty fees received as compensation for assuming the credit risk on the mortgage loans underlying multifamily Fannie Mae MBS and on the multifamily mortgage loans held in its portfolio and on other mortgage-related securities; transaction fees associated with the multifamily business, and other bond credit enhancement related fees. As with the servicing of single-family mortgages, multifamily mortgage servicing is performed by the lenders who! sell the! mortgages to the Company. Fannie Mae�� Multifamily business is organized and operated as an integrated commercial real estate finance business.

Capital Markets

Capital Markets group's primary business activities include mortgage and other investments, mortgage securitizations, structured mortgage securitizations and other customer services, and interest rate risk management. Capital Markets group manages the Company�� investment activity in mortgage-related assets and other interest-earning, non-mortgage investments. It funds its investments primarily through proceeds the Company receives from the issuance of debt securities in the domestic and international capital markets. Its business activity is focused on making short-term use of its balance sheet rather than long-term investments. Activities Fannie Mae is undertaking to provide liquidity to the mortgage market include whole loan conduit, early funding, real estate mortgage investment conduit (REMICs) and other structured securitizations and dollar roll transactions. Whole loan conduit activities include its purchase of both single-family and multifamily loans principally for the purpose of securitizing them. During the year ended December 31, 2010, it was engaged in dollar roll activity. A dollar roll transaction is a commitment to purchase a mortgage-related security with a concurrent agreement to re-sell a similar security at a later date or vice versa.

Fannie Mae�� Capital Markets group is engaged in issuing both single-class and multi-class Fannie Mae MBS through both portfolio securitizations and structured securitizations involving third party assets. Its Capital Markets group creates single-class and multi-class Fannie Mae MBS from mortgage-related assets held in its mortgage portfolio. Fannie Mae�� Capital Markets group may sell these Fannie Mae MBS into the secondary market or may retain the Fannie Mae MBS in its investment portfolio. The Company�� Capital Markets group creates single-clas! s and mul! ti-class structured Fannie Mae MBS, for its lender customers or securities dealer customers, in exchange for a transaction fee. The Company�� Capital Markets group provides its lender customers and their affiliates with services that include offering to purchase a range of mortgage assets, including non-standard mortgage loan products; segregating customer portfolios to obtain optimal pricing for their mortgage loans, and assisting customers with hedging their mortgage business.

Although the Company�� Capital Markets group�� business activities are focused on short-term financing and investing, revenue from its Capital Markets group is derived primarily from the difference, or spread, between the interests it earns on its mortgage and non-mortgage investments and the interest it incurs on the debt the Company issues to fund these assets. Its Capital Markets revenues are primarily derived from the Company�� mortgage asset portfolio. Capital Markets group funds its investments primarily through the issuance of a variety of debt securities in a range of maturities in the domestic and international capital markets. Investors in the Company�� debt securities include commercial bank portfolios and trust departments, investment fund managers, insurance companies, pension funds, state and local governments, and central banks.

The Company competes with Freddie Mac, FHA and Ginnie Mae.

Advisors' Opinion:
  • [By Jessica Alling]


    FHFA Home Price Index: Using data from Fannie Mae (NASDAQOTCBB: FNMA  ) and Freddie Mac, this home-price index shows investors the current pricing information for conforming loans purchased by the two government-sponsored enterprises. This index can give bank investors a good idea of how prices are rising and the number of new conforming loans.
    New home sales: Last week we saw a 4.2% increase in existing-home sales from April to May. The new-home sales information will give a good reference to whether buyers are taking advantage of lower-priced existing homes and whether new construction is keeping pace with buyer demand. Bank investors will also be able to see how much new mortgage business has been able to walk through the banks' doors. Case-Shiller Price Index: We've been seeing home prices rise as demand beings to outpace current inventory. Though some have considered the rising prices to be a signal for trouble, this new rise may benefit banks by creating higher loan balances from which to generate interest income. Since some banks (NYSE: WFC  ) have noted a decrease in refinancing activity, the rising prices for new mortgages in the still-low interest-rate environment may help offset some of the lower volume in new-loan origination.


5 Best Casino Stocks To Own For 2014: EverBank Financial Corp (EVER.N)

EverBank Financial Corp, incorporated in 2004, is an unitary savings and loan holding company. The Company provides a range of financial products and services directly to customers through multiple business channels. Its operating subsidiary is EverBank. As of December 31, 2011, EverBank had $ 10.3 billion deposits. EverBank offers a range of banking, lending and investing products to consumers and businesses. EverBank provides services to customers through Websites, over the phone, through the mail and at 14 Florida-based Financial Centers. The Company operates in two operating business segments: Banking and Wealth Management, and Mortgage Banking. Its Banking and Wealth Management segment includes earnings generated by and activities related to deposit and investment products and services and portfolio lending and leasing activities. Its Mortgage Banking segment consists of activities related to the origination and servicing of residential mortgage loans. In April 201 2, the Company acquired MetLife Bank�� warehouse finance business. In October 2012, it acquired Business Property Lending, Inc.

Asset Origination and Fee Income Businesses

The Company has a range of asset origination and fee income businesses. The Company generates generate fee income from its mortgage banking activities, which consist of originating and servicing one-to-four family residential mortgage loans. It originates prime residential mortgage loans using a centrally controlled underwriting, processing and fulfillment infrastructure through financial intermediaries (including community banks, credit unions, mortgage bankers and brokers), consumer direct channels and financial centers. Its mortgage origination activities include originating, underwriting, closing, warehousing and selling to investors prime conforming and jumbo residential mortgage loans. From its mortgage origination activities, it earns fee-based income on fees charged to b orrowers and other noninterest income from gains on sales ! fr! om mortgage loans and servicing rights. During the year ended December 31, 2011, it originated six billion dollars of residential loans. It generates mortgage servicing business through the retention of servicing from its origination activities, acquisition of bulk mortgage servicing rights (MSR) and related servicing activities.

The Company�� mortgage servicing business includes collecting loan payments, remitting principal and interest payments to investors, managing escrow funds for the payment of mortgage-related expenses, such as taxes and insurance, responding to customer inquiries, counseling delinquent mortgagors, supervising foreclosures and liquidations of foreclosure properties and otherwise administering its mortgage loan servicing portfolio. It earns mortgage servicing fees and other ancillary fee-based income in connection with these activities. It services a portfolio by both product and investor, including agency and private pools of mortgages secured by properties throughout the United States. As of December 31, 2011, its mortgage servicing business, which services mortgage loans for itself and others, managed loan servicing administrative functions for loans with unpaid principal balance (UPB) of $54.8 billion.

The Company originates originate equipment leases nationwide through relationships with approximately 280 equipment vendors with networks of creditworthy borrowers and provide asset-backed loan facilities to other leasing companies. Its equipment leases and loans finance essential-use health care, office product, technology and other equipment. Its commercial financings range from approximately $25,000 to $1.0 million per transaction, with typical lease terms ranging from 36 to 60 months. Its commercial finance activities provide it with access to approximately 25,000 small business customers nationwide, which creates opportunities to cross-sell its deposit, lending and wealth management pro ducts. It focuses to offer warehouse loans, which are s! hort-! te! rm revo! lving facilities, primarily securitized by agency and government collateral. It provides financial advisory, planning, brokerage, trust and other wealth management services to its mass-affluent and high-net-worth customers through its registered broker dealer and recently-formed registered investment advisor subsidiaries.

Interest-Earning Asset Portfolio

As of December 31, 2011, the Company�� interest-earning assets were $11.7 billion. As of December 31, 2011, its loan and lease held for investment portfolio was $6.5 billion. As of December 31, 2011, the carrying values of its interest-earning assets are: residential, government-insured (residential), securities, commercial and commercial real estate, Bank of Florida (covered), lease financing receivables, and other.

Residential includes primarily prime loans originated and retained from its mortgage banking activities, acquired from third parties or held for sale to other investors. government-insured (residential) includes Government National Mortgage Association (GNMA) pool buyouts with government insurance, sourced from its mortgage banking segment and third-party sources. Securities include non-agency residential mortgage-backed securities (MBS) and collateralized mortgage obligation (CMO) purchased at significant discounts. This portfolio includes protection against credit losses from purchase discounts, subordination in the securities structures and borrower equity. Commercial and commercial real estate includes a range of commercial loans, including owner-occupied commercial real estate, commercial investment property and small business commercial loans. As of December 31, 2011, Bank of Florida (Covered) includes commercial, multi-family and commercial real estate loans with $71.3 million of purchase discounts. Lease financing receivables include covered lease financing receivables. As of December 31, 2011, the lease portfolio had $64.7 million of total discounts. Other includes home equity loan! s and lin! ! es of cre! dit, consumer and credit card loans and other investments.

Deposit Generation

As of December 31, 2011, the Company had approximately $10.3 billion in deposits. Its market-based deposit products, consisting of its WorldCurrency, MarketSafe and EverBank Metals Select products, provide investment capabilities for customers seeking portfolio diversification with respect to foreign currencies, commodities and other indices. Its financial portal includes online bill-pay, account aggregation, direct deposit, single sign-on for all customer accounts and other features. Its Website and mobile device applications provide information on its product offerings, financial tools and calculators, newsletters, financial reporting services and other applications for customers to interact with it and manages all of their EverBank accounts on a single integrated platform. Its new mobile applications allow customers using iPhone, iPad, Android and Blackberry devices to view account balances, conduct real time balance transfers between EverBank accounts, administer billpay, review account activity detail and remotely deposit checks.

The Company generates deposit customer relationships through its consumer direct, financial center and financial intermediary distribution channels. Its consumer direct channel includes Internet, e-mail, telephone and mobile device access to product and customer support offerings. Its direct distribution with a network of 14 financial centers in Florida metropolitan areas, include Jacksonville, Naples, Ft. Myers, Miami, Ft. Lauderdale, Tampa Bay and Clearwater. As of December 31, 2011, its financial centers had average deposits of $130.5 million, which is approximately double the industry average. In addition, it generates noninterest-bearing escrow deposits from its mortgage servicing business.

Top 10 Bank Stocks To Own For 2014: M&T Bank Corporation (MTB)

M&T Bank Corporation operates as the holding company for M&T Bank and M&T Bank, National Association that provide commercial and retail banking services to individuals, corporations and other businesses, and institutions. It offers business loans and leases; business credit cards; deposit products, such as demand, savings, and time accounts; and financial services, including cash management, payroll and direct deposit, merchant credit card, and letters of credit. The company also provides residential real estate loans; multifamily commercial real estate loans; commercial real estate loans; one-to-four family residential mortgage loans; investment and trading securities; short-term and long-term borrowed funds; brokered certificates of deposit and interest rate swap agreements related thereto; and branch deposits. In addition, it offers foreign exchange, as well as asset management services. Further, the company provides consumer loans, and commercial loans and leases; cred it life, and accident and health reinsurance; and securities brokerage, investment advisory, and insurance agency services. As of December 31, 2009, it had 738 banking offices in New York State, Pennsylvania, Maryland, Delaware, New Jersey, Virginia, West Virginia, and the District of Columbia; a commercial banking office in Ontario, Canada; and an office in George Town, Cayman Islands. The company was founded in 1969 and is headquartered in Buffalo, New York.

Advisors' Opinion:
  • [By Shauna O'Brien]

    Credit Suisse announced on Friday that it has downgraded financial services company M&T Bank Corporation (MTB).

    The firm has cut its rating on MTB from “Outperform” to “Neutral” due to a valuation call. Credit Suisse currently has a $122 price target on MTB, which suggests a 5% increase from the stock’s current price of $115.91.

    M&T Bank shares were mostly flat during pre-market trading Friday. The stock is up 18% YTD.

  • [By Amanda Alix]

    It was a long engagement, but the union between growth-oriented M&T Bank (NYSE: MTB  ) and Hudson City Bancorp (NASDAQ: HCBK  ) looks like it is definitely back on track.

Top 10 Bank Stocks To Own For 2014: Comerica Inc (CMA)

Comerica Incorporated (Comerica) is a financial services company. Comercia operates in four segments: the Business Bank, the Retail Bank, Wealth Management and the Finance Division. As of December 31, 2011, Comerica owned two active banking and 49 non-banking subsidiaries. The Company's Business Bank meets the needs of middle market businesses, multinational corporations and governmental entities by offering products and services, including commercial loans and lines of credit, deposits, cash management, capital market products, international trade finance, letters of credit, foreign exchange management services and loan syndication services. On July 28, 2011, Comerica acquired Sterling Bancshares, Inc. (Sterling), a bank holding company.

The Company's Retail Bank includes small business banking and personal financial services, consisting of consumer lending, consumer deposit gathering and mortgage loan origination. In addition to a range of financial services provided to small business customers, this business segment offers a range of consumer products, including deposit accounts, installment loans, credit cards, student loans, home equity lines of credit and residential mortgage loans.

Wealth Management offers products and services consisting of fiduciary services, private banking, retirement services, investment management and advisory services, investment banking and brokerage services. This business segment also offers the sale of annuity products, as well as life, disability and long-term care insurance products. The Finance segment includes Comerica�� securities portfolio and asset and liability management activities. This segment is engaged in managing Comerica�� funding, liquidity and capital needs, performing interest sensitivity analysis and executing strategies to manage Comerica�� exposure to liquidity, interest rate risk and foreign exchange risk.

The Other category includes discontinued operations, the income and expense impact of equity an! d cash, tax benefits not assigned to specific business segments and miscellaneous other expenses of a corporate nature. In addition, Comerica delivers financial services in its four markets: Midwest, Western, Texas and Florida. The Midwest market consists of Michigan, Ohio and Illinois. The Western market consists of the states of California, Arizona, Nevada, Colorado and Washington. California operations represent the the Western market. The Texas and Florida markets consist of the states of Texas and Florida, respectively. Other Markets include businesses with a national perspective, Comerica�� investment management and trust alliance businesses, as well as activities in all other markets, in which Comerica has operations, except for the International market. The International market represents the activities of Comerica�� international finance division, which provides banking services to foreign-owned, North American-based companies and to international operations of North American-based companies.

Advisors' Opinion:
  • [By Shauna O'Brien]

    Goldman Sachs announced on Tuesday that it has lifted its rating on Comerica Incorporated (CMA) to “Neutral.”

    The firm has upgraded CMA from “Sell” to “Neutral,” and has raised the company’s price target from $38 to $42. This price target suggests a 2% upside from the stock’s current price of $40.83.

    An analyst from the firm noted: “The market has shown willingness to price the shares at a premium based on CMA�� absolute rate upside, which we do not expect to change much over time.”

    “That said, near-term expectations could be at risk given the ~4% decline in loans in 3Q, which if it continues could weigh on its longer-term earnings profile,” the analyst added.

    Looking ahead, the firm has lowered its FY2013 earnings estimates from $2.85 to $2.81 per share. FY2014 estimates have been reduced from $2.95 to $2.90 per share and FY2015 estimates of $3.30 per share were maintained.

    Comerica shares were mostly flat during pre-market trading Tuesday. The stock is up 35% YTD.

  • [By The Part-time Investor]

    The following stocks met the criteria in January of 2008 and were put into the initial portfolio:

    Abbot Labs (ABT)Advanced data processing (ADP)Associated Banc-Corp (ASBC)Bank of America (BAC)BB&T Corp. (BBT)Bemis Company (BMS)Anheuser Busch (BUD)The Chubb Corporation (CB)Clorox (CLX)Comerica Inc. (CMA)Diebold Inc. (DBD)Emerson Electronics (EMR)First Dollar Corp. (FDO)First Third BanCorp. (FITB)Gannett Co, Inc. (GCI)General Electric (GE)Hershey (HSY)Illinois Tools Works (ITW)Johnson and Johnson (JNJ)Leggett and Platt (LEG)Eli Lilly (LLY)La-Z-Boy (LZB)McDonald's (MCD)Marsh and Ilsley (MI)M&T Bancorp (MTB)PepsiCo (PEP)Pfizer (PFE)Procter & Gamble (PG)Pentair Ltd. (PNR)Regions Financial Corp. (RF)Rohm and Haas (ROH)RPM International (RPM)Sherwin Williams (SHW)Sysco Corp. (SYY)UDR Inc. (UDR)

    Historical quotes were taken from Yahoo Finance. $10,000 was put into each position, to the nearest whole share, so a total of $349,262.89 was invested. From 1/15/08 through 5/16/13 all dividends were reinvested back into the stock that paid them. If a dividend cut was announced, that stock was sold on the ex-div date of the new, lower dividend.

  • [By Rich Duprey]

    Financial-services specialist�Comerica (NYSE: CMA  ) announced yesterday its third-quarter dividend of $0.17�per share, the same rate it's paid for the past two quarters after raising the payout 13% from $0.15 per share.

Top 10 Bank Stocks To Own For 2014: Citigroup Inc.(C)

Citigroup, Inc., a global financial services company, provides consumers, corporations, governments, and institutions with a range of financial products and services. The company operates through two segments, Citicorp and Citi Holdings. The Citicorp segment operates as a global bank for businesses and consumers with two primary businesses, Regional Consumer Banking and Institutional Clients Group. The Regional Consumer Banking business provides traditional banking services, including retail banking, and branded cards in North America, Asia, Latin America, Europe, the Middle East, and Africa. The Institutional Clients Group business provides securities and banking services comprising investment banking and advisory services, lending, debt and equity sales and trading, institutional brokerage, foreign exchange, structured products, cash instruments and related derivatives, and private banking; and transaction services consisting of treasury and trade solutions, and securiti es and fund services. The Citi Holdings segment operates Brokerage and Asset Management, Local Consumer Lending, and Special Asset Pool businesses. The Brokerage and Asset Management Business, through its 49% stake in Morgan Stanley Smith Barney joint venture and Nikko Cordial Securities, offers retail brokerage and asset management services. The Local Consumer Lending business provides residential mortgage loans, retail partner card loans, personal loans, commercial real estate, and other consumer loans, as well as western European cards and retail banking services. The Special Asset Pool business is a portfolio of securities, loans, and other assets. Citigroup Inc. has approximately 200 million customer accounts and operates in approximately 160 countries. The company was founded in 1812 and is based in New York, New York.

Advisors' Opinion:
  • [By David Hanson and Matt Koppenheffer]

    Bank of America's (NYSE: BAC  ) stock doubled in value in 2012, and its rise turned many bears into bulls. On the other hand, over the past year, shares of Citigroup (NYSE: C  ) have had one of the quietest 84% rises you may ever see.

  • [By Jessica Alling]

    Citigroup (NYSE: C  ) is on another run this morning as more positive legal news gives investors another sense of relief. In the wake of the financial crisis, Citi and other banks have been struggling to shed their legacy issues, many of which have turned into legal battles. With Citi taking one step further away from the crisis, investors are rewarding it this morning with a 1.28% gain as of 10:30 a.m. EDT.

  • [By David Hanson]

    In the following video, Motley Fool financials analyst David Hanson responds to a Fool reader on Facebook, who writes, "Citigroup (NYSE: C  ) is much better than Bank of America (NYSE: BAC  ) �-- better PEG/PE." David tells investors why looking at the price to earnings ratio may not be the best way to evaluate banks because bank earnings are often very lumpy. Instead, he gives us a better way to measure banking stocks that will show which of these two banking giants is truly the better buy.

Top 10 Bank Stocks To Own For 2014: U.S. Bancorp(USB)

U.S. Bancorp, a financial services holding company, provides various banking and financial services in the United States. It generates various deposit products, including checking accounts, savings accounts, money market savings, and time certificates of deposit accounts. The company originates a portfolio of loans comprising commercial loans and lease financing; commercial real estate; residential mortgage; and retail loans consisting of credit cards, retail leasing, home equity and second mortgages, and other retail loans. It also offers wholesale lending, equipment finance, small-ticket leasing, depository, treasury management, capital markets, foreign exchange, and international trade services to middle market, large corporate, commercial real estate, and public sector clients. In addition, U.S. Bancorp provides telebanking and automated teller machine (ATM) services, as well as cash management services. The company, through other subsidiaries, provides trust, private banking, financial advisory, investment management, retail brokerage services, insurance, and custody and fund services; and payment services, including consumer and business credit cards, stored-value cards, debit cards, corporate and purchasing card services, consumer lines of credit, and merchant processing. U.S. Bancorp primarily serves individuals, estates, foundations, business corporations, and charitable organizations. It operates a network of approximately 3,031 banking offices and 5,310 ATMs. The company was founded in 1863 and is headquartered in Minneapolis, Minnesota.

Advisors' Opinion:
  • [By Sean Fox]

    Optimizing the branches
    The largest banks in the U.S. are categorized as having $50 billion or more in assets. With approximately $355 billion in assets, U.S. Bancorp (NYSE: USB  ) is certainly a large bank. However, it tends to have a regional focus instead of an omnipresent feel like some of the megabanks. For comparison, Bank of America (NYSE: BAC  ) has over $2.2 trillion in assets and is one of the four largest banks in the country. This regional focus has enabled U.S. Bancorp to make its size go farther than the numbers indicate.

Top 10 Bank Stocks To Own For 2014: Credicorp Ltd (BAP)

Credicorp Ltd. (Credicorp), incorporated on October 20, 1995, is a financial services holding company. The Company is organized in four operating segments: Banking, Insurance, Pension funds and Brokerage and other. Credicorp is engaged principally in banking (including commercial and investment banking), insurance (including commercial property, transportation and marine hull, automobile, life, health and underwriting insurance), pension funds (including private pension fund management services), and brokerage and other (including the structuring and placement of primary market securities issues and the execution and trading of secondary market transactions.). Its four operating subsidiaries are : Banco de Credito del Peru (BCP), Atlantic Security Bank (ASB), El Pacifico-Peruano Suiza Compania de Seguros y Reaseguros, and Prima AFP.

Banking segment

Banking includes handling loans, credit facilities, deposits and current accounts, and providing investment banking services, including corporate finance, both for corporate and institutional customers. Banking also includes handling deposits consumer loans and credit cards facilities for individual customers. The Company conducts banking activities in Bolivia through BCP Bolivia, a service commercial bank. Its banking business is organized into wholesale banking activities, which are carried out by BCP�� wholesale banking group (which includes the corporate banking operations of ASB), and retail banking activities, which are carried out by BCP's retail banking group. Its deposit-taking operations are managed by BCP'�� retail banking group and and ASB's private banking group.


Credicorp�� insurance segment includes commercial property, transportation and marine hull, automobile, life, health and pension fund underwriting insurance. Private hospital services are also included under this operating segment. The Company conducts its insurance operations Grupo Pacifico and its subsidiaries, whic! h provide a broad range of insurance products. Grupo Pacifico property and casualty insurance through Pacifico Seguros, life and pension insurance through Pacifico Vida, and health care insurance through Pacificosalud EPS.. Grupo Pacifico sells its products both directly and through independent brokers and agents.

Pension funds

Credicorp�� pension funds segment provides private pension fund management services to customers. Credicorp conducts all of its pension fund activities through its private pension fund administrator Prima AFP. Credicorp through its subsidiary Prima AFP, focuses mainly on obtaining new affiliates, by providing permanent information and diverse channels of communication.

Brokerage and other

The Company�� brokerage and others segment includes the structuring and placement of primary market issues and the execution and trading of secondary market transactions. This segment also includes offers of local securitization structuring to corporate entities, management of mutual funds and other services. The majority of its trading and brokerage activities are conducted through BCP, ASB and Credicorp Securities Inc. Its asset management business is carried out by BCP in Peru, through its subsidiary Credifondo, and by ASB. It offers Brokerage and other services through BCP and ASB. BCP offers clients a range of such products and services, such as brokerage, mutual funds and custody services through its branch network in Lima and throughout the rest of Peru. In addition, ASB also offers brokerage and other services.

The Company competes with BCP, BBVA Banco Continental, Scotiabank Peru, Interbank and Banco Interamericano de Finanzas.

Advisors' Opinion:
  • [By Chuck Carnevale]

    Credit Corp. Limited (BAP)

    My first featured aggressive financial candidate is Credit Corp. Limited, a Bermuda-based financial services holding company, and the largest financial holding company in Peru. Although the company is headquartered in Bermuda and operates in Peru, its long-term track record is exceptional. Once again, I will let the F.A.S.T. Graphs��speak for themselves, other than to say in addition to a great track record, this ADR is expected to offer above-average growth and appears to be very attractively valued at today�� levels.

Top 10 Bank Stocks To Own For 2014: Morgan Stanley(MS)

Morgan Stanley, a financial holding company, provides various financial products and services to corporations, governments, financial institutions, and individuals worldwide. It operates in three segments: Institutional Securities, Global Wealth Management Group, and Asset Management. The Institutional Securities segment offers financial advisory services on mergers and acquisitions, divestitures, joint ventures, corporate restructurings, recapitalizations, spin-offs, exchange offers, and leveraged buyouts and takeover defenses, as well as shareholder relations, capital raising, corporate lending, and investments. This segment also engages in sales, trading, financing, and market-making activities, including equity trading, commodities, and interest rates, credit, and currencies, as well as financing services, such as prime brokerage, consolidated clearance, settlement, custody, financing, and portfolio reporting services. The Global Wealth Management Group segment provide s brokerage and investment advisory services covering various investment alternatives comprising equities, options, futures, foreign currencies, precious metals, fixed income securities, mutual funds, structured products, alternative investments, unit investment trusts, managed futures, separately managed accounts, and mutual fund asset allocation programs; education savings programs, financial and wealth planning services, and annuity and insurance products; credit and other lending products; cash management services; retirement services; and trust and fiduciary services. The Asset Management segment offers products and services in equity, fixed income, and alternative investments, such as hedge funds, fund of funds, real estate, private equity, and infrastructure to institutional and retail clients through proprietary and third party distribution channels. This segment also involves in investment and merchant banking activities. The company was founded in 1935 and is headq uartered in New York.

Advisors' Opinion:
  • [By Rubicon Associates]

    Morgan Stanley (MS) is in the market today with a new preferred stock issue.

    Morgan Stanley, a bank holding company, provides diversified financial services on a worldwide basis. The Company operates a global securities business which serves individual and institutional investors and investment banking clients. Morgan Stanley also operates a global asset management business.

  • [By Lee Jackson]

    Morgan Stanley (NYSE: MS) has seen its business improve dramatically in multiple areas, including investment banking and trading. The company is completing its purchase of Smith Barney, and the added salesforce is beginning to contribute to retail brokerage revenues. The bank also is not burdened with the mortgage mess that some of its competitors are. The consensus price target for the stock is $30. Investors are paid a 0.73% dividend. Morgan Stanley closed Wednesday at $27.12.

  • [By Jonathan Morgan]

    Mediaset (MS) climbed 2.8 percent to 2.90 euros after Credit Suisse raised its price target on the broadcaster to 4.40 euros from 2.65 euros. The brokerage cited growing evidence that the television-advertising markets in Italy and Spain have bottomed.

Top 10 Bank Stocks To Own For 2014: Northern Trust Corporation(NTRS)

Northern Trust Corporation, through its subsidiaries, provides asset servicing, fund administration, asset management, and fiduciary and banking solutions for corporations, institutions, families, and individuals worldwide. The company offers corporate and institutional services, including global master trust and custody, trade settlement, and reporting; fund administration; cash management; investment risk and performance analytical services; investment operations outsourcing; and transition management and commission recapture services. It also provides personal financial services, such as personal trust, investment management, custody, and philanthropic services; financial consulting; guardianship and estate administration; brokerage services; and private and business banking services, as well as customized products and services. In addition, the company offers active and passive equity and fixed income portfolio management, as well as alternative asset classes comprisin g private equity and hedge funds of funds, and multi-manager products and advisory services. Further, it engages in fund administration, investment operations outsourcing, and custody business that provides specialized services to a range of funds, which include money-market, multi-manager, exchange-traded funds, and property funds for on-shore and off-shore markets. Additionally, the company provides administrative and middle-office services consisting of trade processing, valuation, real-time reporting, accounting, collateral management, and investor servicing. Northern Trust Corporation was founded in 1889 and is based in Chicago, Illinois.

Advisors' Opinion:
  • [By Holly LaFon]

    In the fourth quarter, Yacktman�� biggest additions to his holdings were Research In Motion (RIMM) and Avon Products (AVP). He also surprised followers by venturing into financials, with new positions in Goldman Sachs (GS), Bank of America (BAC), State Street Corp. (STT) and Northern Trust Corp. (NTRS).

Friday, October 11, 2013

5 Best Clean Energy Stocks To Invest In 2014

It's been a long time coming for both natural gas and solar as viable sources of energy in the United States. Both have been struggling with a lack of consumer and industrial buy-in, but both could be right around the corner. Is either one standing out at the moment?

The debate is on
In the following video, Motley Fool analysts Joel South and Taylor Muckerman each weigh in on how natural gas and solar have been performing lately and which companies are taking the lead. Both options have made progress recently, with Clean Energy Fuels (NASDAQ: CLNE  ) building out its "America's Natural Gas Highway" initiative and SunPower (NASDAQ: SPWR  ) producing more efficient solar panels.

Has Clean Energy Fuels solved the "chicken-or-the-egg" debate?
The movement toward alternative energy is gaining momentum. One potential opportunity in this field is Clean Energy Fuels, which focuses its natural gas efforts primarily on trucking and fleets. It's poised to make a big impact on an essential industry. Learn everything you need to know about Clean Energy Fuels in The Motley Fool's premium research report on the company. Just click here now to claim your copy today.

5 Best Clean Energy Stocks To Invest In 2014: Confederation Minerals Ltd (CFM.V)

Confederation Minerals Ltd., a junior resource company, engages in the acquisition, exploration, and development of mineral properties. The company primarily focuses on precious and base metals properties. It holds an option agreement to acquire up to 70% of the Newman Todd gold project in the Red Lake mining district of northern Ontario, as well as 100% ownership in 2 other properties in the Red Lake mining district of Ontario in Canada. The company was formerly known as Sienna Minerals Ltd. and changed its name to Confederation Minerals Ltd. in April 2007. Confederation Minerals Ltd. was founded in 2005 and is headquartered in Vancouver, Canada.

5 Best Clean Energy Stocks To Invest In 2014: RealPage Inc.(RP)

RealPage, Inc. provides on demand software solutions for the rental housing industry in North America. It offers property management systems, including OneSite to manage leasing and rents, facilities, purchasing, accounting, budgeting, and living of multi-family, housing and urban development (HUD), tax credit, privatized military housing, and student housing; and Propertyware for accounting, maintenance and work order management, marketing spend management, and portal services, as well as screening, renter?s insurance, and payment solutions. The company also provides on premise property management systems that include RentRoll for small conventional apartment communities; HUD Manager for small HUD, rural housing services, and tax credit subsidized apartment communities; Tenant Pro for small conventional properties; Spectra, an apartment and commercial modular property management system; and i-CAM and Management Plus property management software that automates and streaml ines rental activities. In addition, it offers software-enabled value-added services, such as LeaseStar, a system that manage marketing and leasing operations and enable owners and managers to originate, capture, track, manage, and close leads; YieldStar, a scientific yield management system, which enables owners and managers to optimize rents; LeasingDesk, a risk mitigation system to reduce delinquency, liability, and property damage risk; and Velocity that offers billing and utility management services; OpsTechnology that offers spend management systems that enable owners and managers to control costs; shared cloud services, which are integrated with property management systems and software-enabled valued added services; and RealPage Senior Living, an integrated care management, community management, and marketing management platform. The company sells its software and services directly through its sales force. RealPage, Inc. is headquartered in Carrollton, Texas.

Advisors' Opinion:
  • [By Seth Jayson]

    Calling all cash flows
    When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on RealPage (Nasdaq: RP  ) , whose recent revenue and earnings are plotted below.

  • [By Jon C. Ogg]

    RealPage Inc. (NYSE: RP) was downgraded to Underperform from Neutral with a $20 price target (versus a $23.40 close) at Credit Suisse.

    Royal Dutch Shell PLC (NYSE: RDS-A) was raised to Buy from Sell with a $71 price target (versus a $65.88 close) at Goldman Sachs.

Top 10 Dividend Stocks To Invest In 2014: Ridley Inc (RCL.TO)

Ridley Inc. engages in the commercial animal nutrition business in North America. The company manufactures and markets a range of animal nutrition products, including formulated complete feeds, premixes, and feed supplements; block supplements, such as low moisture, pressed, compressed, composite, and poured blocks as well as loose minerals; vitamin and trace mineral premixes, small packaged specialty products, medicated and non-medicated feed additives, and micro feed ingredients; and animal health products. It also provides nutrition and sales support services for retailers. The company offers its products in bulk, as well as in various sizes, bags, and barrels. It primarily serves consumers, commercial producers, dealers, and mass merchandisers; livestock and poultry breeders and growers; and the equine, companion animal, and hobby farm segments directly, as well as through distributor and dealer channels. The company is headquartered in Mankato, Minnesota. Fairfax Fina ncial Holdings Limited is a subsidiary of Fairfax Financial Holdings Limited.

5 Best Clean Energy Stocks To Invest In 2014: CPB Inc. (CPF)

Central Pacific Financial Corp. operates as the bank holding company for Central Pacific Bank that provides commercial banking services to businesses, professionals, and individuals in Hawaii. Its deposit products include non-interest bearing and interest-bearing demand deposits, savings and money market deposits, time deposits, time certificates of deposit, and checking accounts. The company�s loan portfolio comprises residential, commercial, commercial mortgage, and construction loans to small and medium-sized companies, business professionals, and real estate developers, as well as consumer loans. It also offers debit cards, Internet banking, cash management services, traveler�s checks, safe deposit boxes, international banking services, night depository facilities, and wire transfers. In addition, the company offers wealth management products and services, such as non-deposit investment products, annuities, insurance, investment management, asset custody, and general consultation and planning services; and trust and retail brokerage services. It operates 34 branches and 120 ATMs in the state of Hawaii. The company was founded in 1954 and is based in Honolulu, Hawaii.

5 Best Clean Energy Stocks To Invest In 2014: SAGICOR FINANCIAL CORP COM NPV(SFI.L)

Sagicor Financial Corporation, through its subsidiaries, provides a range of financial products and services in the Caribbean, Latin America, the United Kingdom, and the United States. Its Life Inc segment offers life and health insurance, retirement accumulation savings, annuities, mortgages, and pension investment and pension administration services in Barbados, Trinidad and Tobago, the Eastern and Dutch Caribbean Islands, Belize, and Panama. The company?s Life Jamaica segment conducts insurance business under the Sagicor brand, and banking and other financial services under the PanCaribbean Financial Services brand in Jamaica and the Cayman Islands. This segment?s principal products and services include life insurance, critical illness and health insurance, annuities, pension administration, investment management, securities dealing, and commercial banking. Its Europe segment offers property and casualty insurance products principally consisting of personal accident, property, liability, and motor vehicle policies primarily in the United Kingdom. The company?s USA segment provides single premium life insurance and annuity products in the United States. Sagicor Financial Corporation also involves in loan and lease financing, deposit taking, farming and real estate development, mutual fund, property and casualty reinsurance, and insurance agency businesses. The company was founded in 1840 and is based in St. Michael, Barbados.

4 Questions Raised By the Glee Tribute Episode to Cory Monteith

Fox's (NASDAQ: FOX  ) Glee aired its eagerly awaited tribute to Cory Monteith last night, leaving us with four key questions concerning how the entertainment industry deals with death.

Monteith, who played kindhearted singing quarterback Finn Hudson, died on July 13 from a toxic mix of alcohol and heroin.

The episode, in which the main characters paid a musical tribute to Monteith's character, blurred the lines between reality and fantasy -- Finn, who had been at the show's core from the very first episode, was eventually erased without a clear explanation of his death.


The episode likely either satisfied or saddened fans of the show, but in the end a clear message was delivered -- the show must go on.

Perhaps Glee's producers and cast did Monteith justice by letting the show's fans remember him in his fictional form, but Fox's decision to continue airing the show raises four broader questions.

Question 1: How do people deal with death in the age of social media?

In the weeks following Monteith's death, social networks like Twitter and Facebook (NASDAQ: FB  ) were flooded with messages of grief about his passing. Monteith's own final tweet before his death was a humorous quip about the film Sharknado, and his Twitter account remains there as a digital tombstone filled with his final thoughts.

To address this kind of issue, where the dead continue eerily living online, Facebook allows personal pages to be turned into memorial pages upon notification of death where people can share their thoughts.

Yet an uneasy feeling remains. With today's advanced sharing technologies, information on the Internet stays there forever, boosting people's sense of self-importance and immortality. Therefore, today's world is one in which reality and fantasy are increasingly blurred, and dead celebrities come back to posthumously release albums and movies.

Question 2: Can anyone really rest in peace in the entertainment industry?

Throughout last night's show, Cory Monteith sang several songs by the late King of Pop, Michael Jackson. His stirring rendition of "Man in the Mirror" during season 3 was particularly poignant, considering his own struggles with drug addiction.

Yet just like Jackson, Monteith is living on after his death, raising the question -- does the entertainment industry ever let anyone rest in peace?

In October 2009, Sony (NYSE: SNE  ) released Michael Jackson's This Is It, splicing together footage of the late singer's final concert rehearsals into a final film. The production of the film by AEG Live, which was accused of overworking the late singer prior to his death, was vehemently criticized by the Jackson family and fans, who launched a Facebook campaign against the film entitled "This Is Not It".

Ultimately, those protests did little to stop Sony from releasing the film, which grossed $261 billion worldwide on a production budget of $60 million.


Many other musical artists have continued generating revenue for recording studios after their deaths with posthumous releases. 2Pac, who was gunned down in 1996, released a whopping seven albums posthumously between 1996 and 1999.

Question 3: Should Fox have canceled Glee?

While Michael Jackson and 2Pac's posthumous productions were a result of them passing away at the peak of their popularity, Fox's decision to continue airing Glee after the loss of Monteith, one of the central characters of the show, is a bit tougher to understand.

As seen in the following chart, Glee's viewership has been declining ever since its highly successful first two seasons.


Premiere viewers

Year-over-year change

Finale viewers

Year-over-year change

Season 1

9.62 million


10.92 million


Season 2

12.45 million


11.8 million


Season 3

9.21 million


7.46 million


Season 4

7.41 million


5.92 million


Source:, author's calculations

It's not hard to see where Glee was headed, with fewer viewers returning season after season. Fox's aging American Idol, by comparison, still reported 17.9 million viewers for its season 12 premiere and 14.3 million during its finale.

In an interview following Monteith's death, Glee producer Ryan Murphy stated that the decision to finish filming the fifth season was ultimately made by Lea Michele, Monteith's real-life girlfriend who also plays his love interest Rachel Berry on the show, for the sake of keeping everyone involved in the show employed.

Yet judging from Glee's declining ratings and the loss of Monteith, it looks increasingly unlikely that the show will be renewed for a fifth season. Monteith wasn't the only actor with his passing written into a show -- other abrupt deaths such as Phil Hartman in NewsRadio and John Ritter in 8 Simple Rules were also written directly into their storylines.

Question 4: Do businesses strive to live forever as well?

The ability of famous people to live past their deaths in business extends far beyond the world of show business, however.

After the death of Steve Jobs, Apple (NASDAQ: AAPL  ) attempted to keep his memory alive for as long as possible, and widely publicized that the iPhone 5 was the last handset that Jobs had worked on. To this day, Jobs, not Tim Cook, is still widely seen as the face of Apple, publicized by posters, books, and even two new movies.

The same can be said about the retail apparel industry. Designers like Louis Vuitton, Christian Dior, Coco Chanel, and Perry Ellis passed away long ago, but their names have taken on a life of their own. Even the Fox Network still bears the name of William Fox, the company's founder who lost control of his company in 1930.

Therefore, companies are very much like celebrities in showbiz -- the top ones never really die, they simply keep evolving over the years. Even though celebrities like Michael Jackson and Marilyn Monroe are gone, they are immortalized through their music and films, which are passed down from generation to generation.

A final thought

Cory Monteith appeared to be destined for greatness, and his bright star burned out far too soon.

I was saddened by his untimely death, but the show glossed over some important lessons for viewers of the show -- that addiction kills and young people should treasure their health and their lives.

The denial of "the end" -- whether it be for individuals or the industries that they work in -- is worth discussing. Is it what makes us all stronger, by extending our future ambitions beyond death, or does it desensitize us to it?

The 6 Most Popular Dow Stocks

All 30 stocks in the Dow Jones Industrials (DJINDICES: ^DJI  ) are well-known companies that are leaders in their respective fields. But some Dow stocks are more popular than others, especially among Wall Street's trading elite. The question you have to answer is whether those popular stocks are the ones you ought to buy, or whether you ought to look past the in-crowd to get better performance elsewhere.

To answer that question, let's take a look at the six most heavily traded stocks in the Dow and see how those popular stocks have performed over the past five years. That look should give us some hints about whether popularity among traders translates into smart long-term investments.

Telecom leads the list
At the top of the volume-leader list are AT&T (NYSE: T) and Verizon. AT&T trades almost 70 million shares on a typical day, while Verizon is lower at 47 million. Even when you take Verizon's higher share price into account, AT&T still tops its rival on a dollar-volume basis.

Clearly, part of the popularity of telecoms recently has come from Verizon's blockbuster $130 billion deal to take full control of its Verizon Wireless business. Verizon investors believe that retaining all of the profits of that lucrative division is the best opportunity for further growth, with the hope that having complete power to dictate its future direction will help it top AT&T. For AT&T, on the other hand, the move has investors speculating about whether it will seek a partner or acquisition target of its own to try to bolster its own growth prospects.

Over the past five years, Verizon's total cumulative returns have almost doubled AT&T's, with Verizon more than doubling investors' money over the time frame. AT&T's roughly 60% total return is close to the Dow's overall return since late 2008.

Tech still commands respect
Of the remaining four spots among the top six, tech stocks take all but one. Cisco Systems (NASDAQ: CSCO  ) and Microsoft (NASDAQ: MSFT  ) both have daily share volumes in the 33 million to 34 million range, while Intel (NASDAQ: INTC  ) is well back at 22.6 million. Microsoft finishes well ahead of its two rivals in terms of dollar volume, as both Cisco and Intel have significantly lower share prices than Microsoft.

In many ways, all three of these companies face big challenges. For Cisco, finding the right mix of business between its enterprise and government sectors is essential in order to produce greater revenue growth. Microsoft is going through a leadership crisis, as Steve Ballmer's decision to step down as CEO and calls for Bill Gates to vacate the chairman role raise broader issues about whether Microsoft can find a strategic vision that will take full advantage of its many resources. Intel, meanwhile, is struggling to catch up on the mobile bandwagon, with new systems and chip architectures designed to help target underserved and likely lucrative areas of the market. Those struggles are a big part of why all three have put in lackluster performance, with Cisco trailing the group with just a 15% total return since 2008.

Lighting up your life
Finally, General Electric (NYSE: GE  ) comes in at No. 4 on the list, with 33.3 million shares trading daily. The stock hasn't done all that well since 2008, returning 35% as it was among the hardest hit on this list during the financial crisis and therefore had more ground to recover.

Arguably, though, GE has done the best job of identifying new growth opportunities. Returning to its roots and building up a big presence in energy, taking advantage of both its early mover status in the renewable energy industry to pushing harder more recently into the oil and gas services and infrastructure segment. Its most recent $600 million contract to help build a huge liquefied-natural-gas project in Russia is only the latest sign of the demand that GE is benefiting from, and you can expect further deals like it in the future.

Popularity isn't everything
As you can see, just because stocks have high volume doesn't mean they're good performers. Sometimes, you have to look beyond the most popular stocks to find the top returns.

Another great way to separate out the best from the rest is to look for strong dividend stocks. Find out about some of the great prospects among Dow stocks in The Motley Fool's brand-new special report, "The 3 Dow Stocks Dividend Investors Need." It's absolutely free, so simply click here now and get your copy today.

Thursday, October 10, 2013

Stocks Slip as Budget Impasse Keeps Fed Employees Grounded

Best Companies To Buy Right Now

NEW YORK (TheStreet) -- Major U.S. stock markets opened weaker Friday in the absence of a government jobs report and as investors chose to maneuver cautiously heading into the weekend given that Washington still hasn't found a way to break a budget impasse that is keeping hundreds of thousands of federal employees furloughed.

Because of the halt in many government services, the Bureau of Labor Statistics is operating with a skeleton crew and said Thursday that it won't publish the September jobs report, which was scheduled for Friday.

As the threat of a U.S. public default mounts, House Speaker John Boehner is reportedly proposing there be a combined fiscal package that addresses both the budget legislation and raising the debt ceiling ahead of the Oct. 17 deadline. There reportedly also has been talk of getting a budget negotiation done in exchange for the repeal of a medical device tax tied to the Patient Protection and Affordable Care Act provided that there would be an agreement to keep the government funded for the next six months.

The S&P 500 was down 0.07% to 1,677.55. The Dow Jones Industrial Average was off 0.12% to 14,978.69. The Nasdaq was flat at 3,774.20. Twitter, the microblogging site led by CEO Dick Costolo, filed plans with the Securities and Exchange Commission to go public. Twitter could raise up to $1 billion, a number that for now is just a placeholder used to calculate fees. According to the filing, Twitter's revenue in 2012 was $316.9 million. Revenue for the first six months of 2013 was $253.6 million. The benchmark 10-year Treasury was falling 4/32, lifting the yield to 2.623%. Follow @atwtse -- Written by Andrea Tse in New York >To contact the writer of this article, click here: Andrea Tse.>

Wednesday, October 9, 2013

5 Best Value Stocks To Own For 2014

Every quarter, many money managers have to disclose what they've bought and sold, via "13F" filings. Their latest moves can shine a bright light on smart stock picks.

Today let's look at Tocqueville Asset Management, a portfolio manager with a contrarian bent, believing that "the best investment results over time are achieved outside the mainstream consensus" and seeking "undervalued companies that possess long-term earnings power."

The company's reportable stock portfolio totaled $8.8 billion in value as of March 31, 2013.

Interesting developments
So what does Tocqueville's latest quarterly 13F filing tell us? Here are a few interesting details.

The biggest new holdings are The Finish Line�and Aeropostale. Other new holdings of interest include biotech company Exelixis (NASDAQ: EXEL  ) , which received FDA approval last year for its thyroid cancer drug, Cometriq. The drug may also get approved to treat prostate cancer, and the company is looking at treating as many as nine different cancers with it. On the other hand, Cometriq is expensive, and the company's debt has been growing, along with its share count.

5 Best Value Stocks To Own For 2014: Schlumberger N.V.(SLB)

Schlumberger Limited, together with its subsidiaries, supplies technology, integrated project management, and information solutions to the oil and gas exploration and production industries worldwide. The company?s Oilfield Services segment provides exploration and production services; wireline technology that offers open-hole and cased-hole services; supplies engineering support, directional-drilling, measurement-while-drilling, and logging-while-drilling services; and testing services. This segment also offers well services; supplies well completion services and equipment; artificial lift; data and consulting services; geo services; and information solutions, such as consulting, software, information management system, and IT infrastructure services that support oil and gas industry. Its WesternGeco segment provides reservoir imaging, monitoring, and development services; and operates data processing centers and multiclient seismic library. This segment also offers variou s services include 3D and time-lapse (4D) seismic surveys to multi-component surveys for delineating prospects and reservoir management. The company?s M-I SWACO segment supplies drilling fluid systems to improve drilling performance; fluid systems and specialty tools to optimize wellbore productivity; production technology solutions to maximize production rates; and environmental solutions that manages waste volumes generated in drilling and production operations. Its Smith Oilfield segment designs, manufactures, and markets drill bits and borehole enlargement tools; and supplies drilling tools and services, tubular, completion services, and other related downhole solutions. The company?s Distribution segment markets pipes, valves, and fittings, as well as mill, safety, and other maintenance products. This segment also provides warehouse management, vendor integration, and inventory management services. Schlumberger Limited was founded in 1927 and is based in Houston, Texas.

Advisors' Opinion:
  • [By Matt DiLallo]

    Along with announcing earnings, both Halliburton (NYSE: HAL  ) and Schlumberger (NYSE: SLB  ) announced multi-billion-dollar stock buybacks. With so much money on the line, investors have to ask if this is the right move for these two oil-field service giants. Are these stocks cheap enough to warrant the buybacks or should these companies consider other options for those funds?

  • [By Matt DiLallo]

    Investors may wonder if peers like�Halliburton� (NYSE: HAL  ) �and�Schlumberger� (NYSE: SLB  ) �were pressured this quarter as well. Both companies have waded through the sluggish North American market by relying on growth overseas. If that trend continues, it should continue to mute some of the weakness Nabors experienced.

  • [By Sean Williams]

    Finally -- and to keep with today's theme of earnings-driven moves -- oil services contractor Schlumberger (NYSE: SLB  ) added 5.4% after topping the Street in the second quarter. Overall, revenue rose 8%, to $11.18 billion, with net income soaring 50%, to $2.1 billion, or $1.57 per share. Excluding one-time gains, Schlumberger topped EPS estimates by $0.05 and slid by revenue projections by $60 million. Schlumberger can thank robust drilling activity overseas in China and Australia, as well as domestically in the Gulf of Mexico, for its market-beating results. To add the icing on the cake for shareholders, Schlumberger also announced a new $10-billion share repurchase program. Investors would be smart to keep their eyes on Schlumberger moving forward.

  • [By David Smith]

    As June came to an end, the company finalized a joint venture, OneSubsea, with Schlumberger (NYSE: SLB  ) . The intriguing partnership -- in which Cameron has a 60% interest, with the remainder Schlumberger's -- will develop products, systems, and services for the subsea oil and gas market.

5 Best Value Stocks To Own For 2014: Dollar Tree Inc.(DLTR)

Dollar Tree, Inc. operates discount variety stores in the United States and Canada. Its stores offer merchandise primarily at the fixed price of $1.00. The company operates its stores under the names of Dollar Tree, Deal$, Dollar Tree Deal$, Dollar Giant, and Dollar Bills. Its stores offer consumable merchandise, including candy and food, and health and beauty care, as well as household consumables, such as paper, plastics, household chemicals, in select stores, and frozen and refrigerated food; variety merchandise, which includes toys, durable housewares, gifts, party goods, greeting cards, softlines, and other items; and seasonal goods, such as Easter, Halloween, and Christmas merchandise. As of April 30, 2011, it operated 4,089 stores in 48 states and the District of Columbia, as well as 88 stores in Canada. The company was founded in 1986 and is based in Chesapeake, Virginia.

Advisors' Opinion:
  • [By Brendan Byrnes]

    Brendan: Not a problem at all. What about the surprising amount of dollar-store companies that are public? You have Family Dollar (NYSE: FDO  ) , Dollar Tree (NASDAQ: DLTR  ) , Dollar General (NYSE: DG  ) . You mention, in particular, Family Dollar, which is the lowest market cap out of all of those, as doing the best, an exceptional company. Why?

  • [By John Maxfield]

    If you're anything like me, two things went through your head when you saw this. First, you regret that you missed out on the investment opportunity. Since the end of 2009, shares in all three of these companies, led by Dollar Tree (NASDAQ: DLTR  ) , have simply trounced the broader market. Even the worst performer of the bunch, Family Dollar (NYSE: FDO  ) , beat it by nearly a factor of two.

  • [By Rising Dividend Investing]

    Falling Stock Correlation: What It Says About Consumer Spending

    As we mentioned in the Take Aways from the August 26th Investment Policy Committee meeting, the correlation index has been steadily declining. In 2008-09, macroeconomic events drove nearly every stock downwards. Specific sectors and stocks moved in tandem with one another. Today, stocks and sub-industries within each sector are performing very differently – which indicates a return to a more normal stock market environment.
    The Consumer Discretionary (also known as Consumer Cyclicals) sector is an example of an industry that has been rewarded for its fundamental success over the past 12 months. As a whole, the sector grew sales 6.1% and earnings 9.2% in the second quarter - much better than the 1.4% sales and 3.3% earnings growth of the S&P 500. While the overall sector did well in the second quarter, the table below shows how differently the 5 sub-categories of Consumer Discretionary performed:

    (click to enlarge)
    As we drill down even further, sub-categories of sub-sectors differ even more dramatically. Below is a snapshot of the Retailing sub-sector and its notable components:

    (click to enlarge)
    Specific stocks within each sub-category are varying in performance as well. General Merchandise retailers were significantly differentiated in the second quarter. Target’s (TGT) adjusted EPS were up 6.1% from 2012, while Dollar General (DG) and Dollar Tree’s (DLTR) earnings were up nearly 12% and 9%, respectively.
    The differences in sales and earnings growth amongst these different industries tell a story. The economy is not improving enough that people feel like they can let go and spend money on pure pleasures, but it is improving enough that they can afford to replace their cars and fix the doors on their houses. As these items wear out and need to be replaced, we expect the pent up demand will drive increased economic activity from cons

Top 10 Undervalued Companies To Invest In Right Now: Caterpillar Inc.(CAT)

Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide. It operates through three lines of businesses: Machinery, Engines, and Financial Products. The Machinery business offers construction, mining, and forestry machinery, including track and wheel tractors, track and wheel loaders, pipelayers, motor graders, wheel tractor-scrapers, track and wheel excavators, backhoe loaders, log skidders, log loaders, off-highway trucks, articulated trucks, paving products, skid steer loaders, underground mining equipment, tunnel boring equipment, and related parts. It also manufactures diesel-electric locomotives; and manufactures and services rail-related products and logistics services for other companies. The Engines business provides diesel, heavy fuel, and natural gas reciprocating engines for Caterpillar machinery, electric power generation systems, marine, petrol eum, construction, industrial, agricultural, and other applications. It offers industrial turbines and turbine-related services for oil and gas, and power generation applications. This business also remanufactures Caterpillar engines, machines, and engine components; and offers remanufacturing services for other companies. The Financial Products business provides retail and wholesale financing alternatives for Caterpillar machinery and engines, solar gas turbines, and other equipment and marine vessels, as well as offers loans and various forms of insurance to customers and dealers. It also offers financing for vehicles, power generation facilities, and marine vessels. The company markets its products directly, as well as through its distribution centers, dealers, and distributors. It was formerly known as Caterpillar Tractor Co. and changed its name to Caterpillar Inc. in 1986. Caterpillar Inc. was founded in 1925 and is headquartered in Peoria, Illinois.

Advisors' Opinion:
  • [By Dan Caplinger]

    But sales trends remain abysmal in many parts of the market, especially in the former growth hot-spot of the Asia-Pacific region. Rival Caterpillar (NYSE: CAT  ) has seen sales in the region swing from year-over-year gains as recently as November to declines of 20% or more in each of the past three months. Latin America has been a bright spot for Caterpillar, but otherwise, the rest of the world has seen a substantial slowdown, with overall sales down 13% in April.

  • [By Ben Levisohn]

    For one day at least, this CAT is not a dog.

    Caterpillar (CAT) has gained 2% to $86.22 today, its largest gain since in a month and the largest gain among the Dow components. The machinery manufacturer has dropped 11% during the past six months, however, as a slowdown in China and cost-cutting at mining companies have hit its shares.


    Susquehanna’s Ted Grace offers reasons for optimism, even as he lowers his 12-month price target to $97 from $104:

    CAT remains Positive rated with 15% upside to our $97 price target and upside-downside of 1.2-to-1 (which, like most of our machinery names, is admittedly shy of the 2-to-1 or better ratio we prefer). Despite our 2014-15 EPS being ~6% below consensus, we view our updated estimates as closer to buyside expectations while noting that consensus appears to embed a low tax rate that explains over half of the variance. While there remains plenty of uncertainty on 2014/15, particularly in mining, we believe CAT shares currently discount reasonable top-line expectations while recent meetings with mgmt suggest potential for structural cost savings that could drive better than expected margins/ incrementals. While difficult to identify discernible catalysts, if CAT’s framework for flat-to-better RI revenue growth in 2014 proves correct (admittedly not assumed in our estimates), this would almost certainly debunk the core of the bear thesis and be meaningfully positive for shares.

    Investors waiting for the stock to actually, you know, rise can take comfort in Caterpillar’s $2.40 dividend per share and its more than $3 per share in buybacks in 2013, Grace says.

    Caterpillar’s 2% gain has trumped the Dow Jones Industrial Average’s 0.04% rise, and United Technology’s (UTX) 0.1% drop, while competitor Deere (DE) has gained 1.9% to $83.22.

  • [By Matt Thalman]

    The big losers
    Earth-moving company Caterpillar (NYSE: CAT  ) lost 0.42% of its value over the past few trading days, as precious metals and other natural resources had a terrible Friday. On the last day of the week alone, gold lost 3.13%, sliver declined by 4.89%, and platinum and copper slid 1.51% and 3.45% respectively. Caterpillar is a big player in mining equipment sales, and when the commodity prices of the resources which are mined fall, demand for heavy machinery usually will follow suit. �

5 Best Value Stocks To Own For 2014: Tupperware Corporation(TUP)

Tupperware Brands Corporation operates as a direct seller of various products across a range of brands and categories through an independent sales force. The company engages in the manufacture and sale of kitchen and home products, and beauty and personal care products. It offers preparation, storage, and serving solutions for the kitchen and home, as well as kitchen cookware and tools, children?s educational toys, microwave products, and gifts under the Tupperware brand name primarily in Europe, Africa, the Middle East, the Asia Pacific, and North America. The company provides beauty and personal care products, which include skin care products, cosmetics, bath and body care, toiletries, fragrances, nutritional products, apparel, and related products principally in Mexico, South Africa, the Philippines, Australia, and Uruguay. It offers beauty and personal care products under the Armand Dupree, Avroy Shlain, BeautiControl, Fuller, NaturCare, Nutrimetics, Nuvo, and Swissgar de brand names. The company sells its Tupperware products directly to distributors, directors, managers, and dealers; and beauty products primarily through consultants and directors. As of December 26, 2009, the Tupperware distribution system had approximately 1,800 distributors, 61,300 managers, and 1.3 million dealers; and the sales force representing the Beauty businesses approximately 1.1 million. The company was formerly known as Tupperware Corporation and changed its name to Tupperware Brands Corporation in December 2005. The company was founded in 1996 and is headquartered in Orlando, Florida.

Advisors' Opinion:
  • [By Eric Volkman]

    Tupperware Brands (NYSE: TUP  ) is reaching into its corporate bowl for a fresh payout to shareholders. The company has declared a quarterly dividend of $0.62 per share. This will be paid on July 8 to stockholders of record as of June 19. That amount matches the firm's previous distribution, which was paid in early April. Prior to that, Tupperware Brands was rather less generous, handing out $0.36 per share.

  • [By Arie Goren]

    After running this screen on May 21, 2013, before the markets' open, I discovered the following eight stocks: Sunoco Logistics Partners LP (SXL), Leggett & Platt Inc (LEG), Copa Holdings SA (CPA), RPC Inc. (RES), Tupperware Brands Corp. (TUP), Herbalife Ltd. (HLF), John Wiley & Sons Inc. (JW.A) and C.H. Robinson Worldwide Inc. (CHRW).

Leap Wireless International, Inc. (LEAP): Best Way To Gain Upside From Lower 700 Block A Spectrum

Recent industry developments have cleared a path to unlocking the value of the previously impaired Lower 700 A Block Spectrum. The biggest issue, device support, has been addressed and should lead to widespread device availability for use within this spectrum.

License holders are pushing the FCC to resolve the remaining issue in the near term - Channel 51 interference. Even if the FCC doesn't act, the 600 MHz auction in late 2014/1H2015 should resolve channel 51 interference.

The best way to play the increasing value of the Lower 700 Block A Spectrum is through the purchase of Leap Wireless International, Inc. (NASDAQ:LEAP) stock now in order to own the remaining stub after the rest of the LEAP's assets are acquired by AT&T, Inc. (NYSE:T) for $15 a share.

"After the expected deal closes in 1Q2014, the remaining Leap stub will be a non-transferable equity interest in this Lower 700 Block A Spectrum license. Stub holders will be paid when the spectrum is sold to a third party, which we think will happen in the next two years," BMO Capital Markets analyst Kevin Manning wrote in a note to clients.

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In July, AT&T agreed to acquire all of Leap Wireless except for the lower 700 MHz A Block Spectrum that Leap owned in Chicago. This structure was used as AT&T did not want to own the spectrum because of the potential inference issues, it didn't support the spectrum at the time, and Leap was unable to find a buyer at the price Leap wanted.

Leap bought this spectrum from Verizon Communications, Inc. (NYSE:VZ) last year as part of a transaction in which Leap largely sold AWS spectrum to Verizon.

Following the close of the deal with AT&T, current Leap shareholders will hold a proportionate share in a contingent valuation right (CVR) in the spectrum. The 700 MHz license will be transferred to a licenseco, and a stockholders' repres! entative has been formed with three current Leap board members serving on the board.

The board will include Mark Rachesky, who is currently Leap's chairman and largest shareholder, as well as the current CEO and another current director.

"We believe it's in Mr. Rachesky's best interest to maximize the price received for the CVR as he likely will be the largest shareholder in the CVR," Manning said.

The stockholders' representative has two years to enter into an agreement to sell the spectrum and can incur up to $10 million in expenses before requiring approval from AT&T. If the stockholders' representative has not entered into a sales agreement within two years, AT&T will be allowed to sell the spectrum with proceeds distributed to the CVR holders.

Distributable proceeds of the sale of the spectrum, whether by the shareholders' representative or AT&T, will be net of expenses incurred in the administration and maintenance of the asset, as well as any contingent claims. Additionally, any proceeds in excess of Leap's $169.1 million cost basis will be taxed at 38.5 percent before distribution

"We think the Leap stub is the best way for certain investors to capitalize on the trend. We believe Leap's share price is valuing the spectrum at $64 million; in two years, we estimate after sale proceeds to investors of $306 million, or ~ $255 million after discounting for time, cost of capital, and illiquidity," Manning said.

Once all impediments are removed, and the spectrum can be used to augment adjacent spectrum blocks, the value of this stub will be closer to $306 million, enabling investors to capture the upside when it is sold.

The key roadblock could come from the operators of Channel 51 in larger markets who are reluctant to relocate to another channel owing to the potential to miss out on proceeds from the upcoming incentive auction. Leap and other carriers continue to press the FCC to implement incentives to encourage current Channel 51 broadcasters to! relocate! to another channel prior to the incentive auction.

"We believe this is a possibility. Leap has stated that it does not believe there is substantial interference between its 700 MHz license and Channel 51. However, it would still need the broadcasters' concurrence before it could commence operation," Manning noted.

If Leap manages to mitigate the interference issues with Channel 51 before the incentive auction, we believe potential buyers could range from investors to speculators. Recently, the market has seen investors buy Lower A Block Spectrum with the pending sale of 10 licenses by Cox to an entity backed by venture capital investors (Columbia Capital).

Verizon is the most logical acquirer. Although it did sell the spectrum to Leap in the first place, that was part of a larger spectrum purchase Verizon made from Leap and was also when Verizon was trying to sell 700 A & B spectrum as part of getting approval for its AWS purchase from Spectrumco. Verizon does own the A block in 80 percent of the top 25 markets already. In addition, Verizon has said it will deploy any spectrum it couldn't sell.

"If they are going to deploy the spectrum in other top markets we believe this would benefit from using the spectrum in Chicago as well," Manning added.

Leap would realize maximum returns by waiting until after the 600 MHz incentive auction. The existing Channel 51 will likely become uplink spectrum contiguous to the A block in 692 to 698 MHz, and the holders of this spectrum license would also likely find the A Block attractive for the ability to have a larger block of contiguous spectrum.

Finally, the spectrum could have value as a stand-alone license. Chicago has one of the highest population densities in the country, and A block spectrum is well suited to provide widespread coverage with excellent propagation. 

Tuesday, October 8, 2013

The New Rules of Maintaining Eye Contact (Hint: Don't Do It)

#fivemin-widget-blogsmith-image-110394{display:none}.cke_show_borders #fivemin-widget-blogsmith-image-110394,#postcontentcontainer #fivemin-widget-blogsmith-image-110394{width:570px;height:411px;display:block} What's the Right Amount of Eye Contact? A new study is casting doubt on the idea that maintaining eye contact is the best way to get ahead in life. Writing in the journal Psychological Science, a group of psychologists described a number of experiments they conducted to determine the role of eye contact in successfully persuading other people to your viewpoint. What they found was at odds with most traditional views of powerful body language. "Popular belief holds that eye contact increases the success of persuasive communication, and prior research suggests that speakers who direct their gaze more toward their listeners are perceived as more persuasive," the authors write in the paper's abstract. "In contrast, we demonstrate that more eye contact between the listener and speaker during persuasive communication predicts less attitude change in the direction advocated." In one experiment, they had subjects watch video of a speaker advocating various views while eye-tracking software recorded where they were looking. Those who focused on the speaker's eyes turned out to be less persuaded by the argument. Another experiment, in which the subject was predisposed to disagree with the speaker, found that eye contact was counterproductive to winning over a skeptical audience.

Monday, October 7, 2013

Legg's list: International equity shop wanted

legg mason, money manager, equities, fixed income, international, joseph sullivan Fred Scharmen

Legg Mason CEO Joseph Sullivan has mounted an aggressive plan to dump the company's money-losing affiliates while searching for a way to fulfill his biggest initiative yet: expanding the company's equity offerings beyond the U.S.

“We need to add or build a non-U.S. equity brand,” Mr. Sullivan said in an interview. ”We need to move aggressively on that because we need a better capability.”

Several of Baltimore-based Legg Mason Inc.'s investment affiliates have international equity strategies, including ClearBridge Investments and Royce & Associates. But none is sizable, he said.

“We don't have a singular brand that we can build and leverage in the international space,” he said.

Mr. Sullivan said an acquisition would be the fastest way to build a non-U.S. equity franchise, but noted the process can be long. He said he is open to other possibilities, such as a combination of an acquisition and organic growth.

Analysts say buying a major international equity franchise might prove difficult for Mr. Sullivan. But without it, he is going to have a hard time achieving the growth he wants.

Robert Lee, an equity analyst at Keefe, Bruyette & Woods Inc. in New York, said Mr. Sullivan needs to fix Legg Mason's investment offerings to keep pace with competitors in such areas as alternatives and international equities. He said a non-U.S. equity franchise is key.

“Not having a broad global capacity has certainly hurt,” said Mr. Lee.

Legg Mason will not be able to compete adequately in overseas markets without offering major international equity strategies, said Greggory Warren, a senior stock analyst at Morningstar Inc. in Chicago. He said overseas investors will not be satisfied with just buying U.S. strategies.

“The only real growth is going to be overseas,” he said.Rising interest rates

Growing the firm's equity capabilities is important as bond managers, such as Legg Mason's largest affiliate, Western Asset Management Co., Pasadena, Calif., face the prospect of rising interest rates.

WAMCO, which had $435.6 billion under management as of June 30, was hit hard by the financial crisis, as its overweight positions in housing and financial company securities led to investment losses and large outflows. Investment performance has improved over the last several years, and outflows have stabilized, analysts say.

But now there is a new issue.

David J. Chiaverini, an equity analyst with BMO Capital Markets in New York, said fixed-income and liquidity assets combined make up about 75% of Legg Mason's total AUM, a larger concentration than at other major asset managers.

A large majority of those Legg Mason assets are managed by WAMCO, making the firm and its parent not as well-positioned as other major money managers for a great rotation from fixed income to equities that Mr. Chiaverini predicts will occur gradually over the next three to four years.

“As the great rotation occurs from fixed income to equity, I fear that their fixed-income assets may dwindle while their equity assets may not grow as fast,” he said.

Mr. Chiaverini estimates Legg Mason's inflows will continue to grow in coming years, but only at 1% annually, less than the 3% he estimates for publicly traded money managers in general.

While Mr. Sullivan has made building an international equity franchise a top priority for Legg Mason, Mr. Chiaverini said the depressed multiple at which Legg Mason trades — 13� times earnings, compared with an average of 16� for the typical publicly traded money manager — would make it more difficult to expand through a large acquisition.

“It would be difficult for Legg Mason to make a sizable accretive acquisition,” Mr. Chiaverini said.

He added that an international equity manager with top performance and strong asset growth could sell for ! 20 times its earnings. Thus, in an all-stock deal, it would be dilutive for Legg Mason to issue stock at 13� times earnings for a company that was trading at a much larger multiple.

He said an all-cash deal for a smaller manager is possible. He noted Legg Mason has $667 million in cash on hand, but most likely would want to keep at least half in reserve. Mr. Chiaverini also said Legg has used cash to fund some of the more than $1 billion it has spent on a stock buyback program over the last few years.

Mr. Sullivan might be forced to follow the slower process of building an international franchise organically, or making a smaller acquisition of a manager or team and then using that as a platform for growth.Daunting task

Mr. Sullivan was named CEO in February, after four months as interim CEO. He was tasked with turning around a publicly traded money manager that started losing its footing as investment performance slipped ahead of the financial crisis.

Today, Legg Mason stock trades at less than 25% of what it did in 2006. The firm reported assets of $654 billion as of July 31, down 35% from the high of $1 trillion in 2007.

Mr. Sullivan has been quick to make changes, reducing the number of Legg affiliates to eight from 11, while purchasing an alternative investment firm.

In January, when he was interim CEO, Mr. Sullivan merged Legg Mason Capital Management, Baltimore, with ClearBridge Investments, New York. Legg Mason Capital was a shell of its former self; its assets had plummeted to $7 billion at the time of the merger from around $70 billion in 2007. That affiliate had been the parent company's most visible public face because of William Miller, its chief investment officer and star portfolio manager, who had outperformed his benchmark for 15 straight years until 2006, when he went on a severe losing streak. One of the key mutual funds Mr. Miller managed lost almost 66% of its assets in 2008 while another lost 55%. Mr. Miller has since regained his footing.

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Last March, Legg Mason acquired London-based Fauchier Partners LLC for an undisclosed amount. The $6 billion funds-of-funds manager's operations will be integrated into Permal Group, a Legg affiliate specializing in alternative investments.

On July 25, Legg Mason announced it was selling Private Capital Management, an equity manager in Naples, Fla., to its management team. The affiliate's assets were down to $1.2 billion as of June 30; vs. $32.5 billion eight years earlier, according to data provider eVestment LLC, Marietta, Ga.

Earlier this month, Legg Mason announced it was closing Esemplia Emerging Markets, with! $500 million under management in emerging markets and Chinese equities, and returning investors their money. Legg Mason formed London-based Esemplia after purchasing Citigroup's global asset business in 2005. At its peak in 2007, the firm managed $6.8 billion, eVestment data show.Not salvageable

Sources with knowledge of Legg Mason corporate decisions said company officials felt the brand was not salvageable because investment results were poor.

Meanwhile, Mr. Sullivan got some good news: Legg Mason reported $200 million in inflows in long-term invested assets for the quarter ended June 30, the first inflows since 2007. The company had net outflows of $8.5 billion in the quarter if money market funds are included.

During an earnings conference call on July 25, Mr. Sullivan called the inflows “modest” and said he was “very pleased, though not satisfied” that inflows had turned positive.

Improved investment performance at Legg Mason's key investment affiliates has helped stem the tide of outflows that have plagued the company for years, said Keefe, Bruyette & Woods' Mr. Lee.

“I don't know if it's off to the races, but they are certainly in a better position today."

(Randy Diamond is a reporter at sister publication Pensions & Investments.) Like what you've read?