The Insider Report

Where the market is going-JP Morgan

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According to JP Morgan:US macro update – the big problem for this tape remains the same – a lack of catalysts. The fundamental landscape still isn’t as gloomy as it’s being made out to be but this won’t become apparent for several more weeks at least. It still seems like downside risk from present levels is minimal but the market needs clarity on two big issues (China growth and Fed liftoff timing) before it can materially bounce (remember: the recent bout of instability can trace its bloodline back to the 8/17 CNY devaluation while the Fed’s indecisive and muddled message … Read more

Value versus Growth- which is better? which is riskier?

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They teach you in business school that value investing is riskier than growth stock investing.  The primary reason is something referred to as the value trap.  A value investor tends to buy stocks when they are trading below what is perceived as intrinsic value.  The most common way to determine that is the discounted cash flow analysis.  The DCF analysis is an attempt to value the future stream of earnings and discount it back to todays dollar using some kinds of discount rate (the return you demand on your money). This is the method Warren Buffet is known to use … Read more

Insiders Beat Market Before Event Disclosure: Study

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Corporate executives and board members regularly make market-beating returns from buying and selling their companies’ stock in the days before disclosing a significant event, according to a study that says it has found a link between insider knowledge and investment profits. Source: Insiders Beat Market Before Event Disclosure: Study

Market Plunge Provides Harsh Lessons for ETF Investors

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I am afraid this is the shot across the bow.  ETFs are destroying the markets in my opinion. One only has to observe the action last Monday on the Dow’s 1000 point plunge at the open to understand the instability they wrought.  Huge temporary declines in some exchange-traded funds, including Vanguard Dividend Appreciation (VIG) and SDPR S&P Dividend (SDY), show pitfalls during stretches of stock-market stress Source: Market Plunge Provides Harsh Lessons for ETF Investors

Briefing.com analysis is right on

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Floor talk Thursday 14:35 Don’t look now, but the Dow Jones Industrial Average, Nasdaq Composite, and S&P 500 are all positive for the week.  That’s not always such a laudable thing, but considering how they started on Monday, it’s downright astounding. Briefly, at their Monday lows hit soon after the open, the Dow, Nasdaq, and S&P 500 were down 6.6%, 8.8%, and 5.3%, respectively.  At their highs today, they were up 8.4%, 12.3%, and 6.6% from those lows, respectively. Generally speaking then, the indices have pivoted from being oversold on a short-term basis to being overbought on a short-term basis. … Read more

Southern Company sees selling $3B of stock to fund AGL Resources deal

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Says AGL (GAS) acquisition better positions Southern Company (SO) to succeed in future with increasing gas prices. Says now is the right time for this transaction. Expects natural gas use in the U.S. will increase. Sees natural gas use to rise as much as 2.2 BCF per day by 2020. AGL Resources planning $5B in capital spending over the next five years. Southern Co. sees equity sales beginning later this year. Comments taken from companies’ conference call discussing the transaction. In morning trading, Southern Company shares were down 2.88% to $44.48 and AGL Resources shares were up 27.14% to $60.85.

School-Loan Reckoning: 7 Million Are in Default – WSJ

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This is really an incredible statistic and if it weren’t for all the other economic stories unfolding, this would be front page and center or should be. School-Loan Reckoning: 7 Million Are in DefaultFigure translates into about 17% of all borrowers being severely delinquent Updated Aug. 21, 2015 6:56 p.m. ET547 Nearly 7 million Americans have gone at least a year without making a payment on their federal student loans, a high level of default that suggests a widening swath of households are unable or unwilling to pay back their school debt.As of July, 6.9 million Americans with student loans … Read more

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Whenever you have a chance to listen to Chanos, take it.  He’s not a boaster, admits he has no idea where the market is going but has some controversial opinions that have proven to be far more right than wrong. Short seller Chanos on China: ‘It’s worse than you think’Jacob Pramuk | @jacobpramukFriday, 21 Aug 2015 | 12:07 PM ETCNBC.com Lingering concerns about China have helped drive stock selling, but investors may still underestimate how much the world’s second-largest economy has slowed, short seller Jim Chanos said Friday.”It’s worse than you think. Whatever you might think, it’s worse,” he said. … Read more

Fading Economy and Graft Crackdown Rattle China’s Leaders – The New York Times

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Fading Economy and Graft Crackdown Rattle China’s LeadersBy MICHAEL FORSYTHE and JONATHAN ANSFIELDAUG. 22, HONG KONG — It was hardly an unusual start to the day for a senior Chinese leader in a country grappling with an economic slowdown. On the morning of July 24, Zhou Benshun attended a meeting to promote one of President Xi Jinping’s signature projects, a plan to boost growth by building a “supercity” that would integrate Beijing with the region around it.But by 6:10 p.m. that day, Mr. Zhou’s career was over, and he faced years in prison. Source: Fading Economy and Graft Crackdown Rattle … Read more

‘s drop in the S&P 500 worst day since August 2011

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Thursday’s 43.88 pt. plunge in the S&P 500 was  the worst one day drop in actual points (not percentages) since August 2011.   That was when the U.S. got their debt downgraded.  Volume was not out of the ordinary either so there is no sign of a capitulation sell off.  Reasons for the plunge vary widely but most explanations tied back to sinking price of crude oil, China slow down or worse, and fear of the Fed raising rates, etc.  As they say the usual suspects. The Dow lost nearly a hundred points in the last 15 minutes.  It felt like margin call selling … Read more

Notes from Enercom Day 3- The Death March Continues & the Conclusions

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The average company’s stock presenting at Enercom plummeted 4% today.  Presenter after presenter referred to the normal world where prices of oil would return to $50-60$ per barrel although there is no real evidence that this is about to happen anytime soon. My market experience tells me that until the last wildcatter gives up on this fantasy, the price of oil will probably continue to drift lower.  My experience tell me bottoms occur when everyone gives up  talking about it much less calling it.  We are not there yet. The lunchtime presenter was Cheniere Energy’s (LNG) CEO,  Charif Souki. Cheniere … Read more

‘s The Oil & Gas Conference Day 2

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The crowds are bigger this year than last. I guess I should not be surprised. A building on fire draws a crowd too. The test will be next year if oil stays at these depressed levels. I doubt if the crowds will come back to watch the smoldering ruins. We came to EnerCom looking for shorts and bargains. We have not been disappointed. Every producer is a short. There were two notable things today from Continental Resources, CLR, the biggest producer in the Bakken (North Dakota).  CLR is increasing production guidance with reduced production cost and CAPEX. This theme is recurrent; … Read more

‘s The Oil & Gas Conference ® – Denver

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Notes from EnerCom’s The Oil & Gas Conference ® 2015 – Denver www.theoilandgasconference.com/ 8-17-15 DENVER   We have been attending this well-known oil and gas conference for a few years. This year seems special. Many of the companies presenting there have stock prices below $5. Some will probably not survive to the next show a year from now. Others must be astounding values as prices are down 90% from the peak in some cases . Ryan and I grabbed an Uber from the Denver airport to the Westin downtown. Cost $39.61 with tip- Eric our driver when asked told us … Read more

Saudi Arabia’s Sabic Considering Shale Gas Investments in U.S.

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It’s good to see someone playing the long game with America’s trodden down energy MLP’s. Saudi Basic Industries Corp., the world’s second-biggest chemicals manufacturer, plans to expand investment in U.S. shale gas projects through joint ventures, according to acting Chief Executive Officer Yousef al Benyan. Sabic, as the company is known, signed an agreement with Houston, Texas-based Enterprise Products Partners L.P. to get shale gas, al-Benyan said in an interview in Riyadh. The company may use the feedstock in the U.S. or export it to other countries such as the U.K., he said. Sabic has converted crackers at U.K. plants … Read more

Thoughts on Apple quarter

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Apple reported an impressive quarter yet the stock sold off sharply after hours.  Fortunately we had lowered our position in the name a little before earnings came out as we were a little too overweight it.  As I have said many times before, Apple is a very cheap stock, a little cheaper today but a great value in a fully to over-valued market.  I expect the stock to rebound nicely in the coming months.  Here’s our thesis on owning Apple. Apple is a cheap stock on fundamentals, selling at 16.03 times earnings, a discount to the S&P price earnings ratio. This … Read more

History Shows Iran Could Surprise the Oil Market – Bloomberg Business

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History Shows Iran Could Surprise the Oil MarketMost analysts are far too pessimistic about Iran’s ability to bounce back, International Energy Agency Saysby Javier BlasJuly 19, 2015 — 5:00 PM MDTSEx Iran could restore oil production halted by sanctions faster than anyone anticipates if the history of previous shutdowns is any guide. Source: History Shows Iran Could Surprise the Oil Market – Bloomberg Business Our comments: Short S&P Oil and Gas Exploration (XOP) It’s hard to see anything positive about the oil and gas exploration sector from an investor’s perspective. The advent of shale drilling technologies in the U.S. is … Read more

Investors Brace for Fewer Winners

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As stocks’ returns dry up, some people take more risks. It could be time to save more. Source: Investors Brace for Fewer Winners Not likely we will have a big sell-off when there are bearish headlines like this.  I’m still in the camp of positive S&P returns for 2015 but negative return year in 2016.