What’s a Good Small Cap Real Estate Services Stock? CBG, JLL, KW & FSRV

Midcaps CBRE Group Inc (NYSE: CBG) and Jones Lang LaSalle Inc (NYSE: JLL) are probably the better known real estate services stocks with the latter surging 12.36% yesterday on impressive earnings, but small cap stocks Kennedy-Wilson Holdings Inc (NYSE: KW) and FirstService Corporation (NASDAQ: FSRV) are also important real estate services providers that you may have overlooked. After all, real estate services stocks like the following would offer exposure to real estate by being invested in property as well as generating revenue from transactions, property management and other services:   

Kennedy-Wilson Holdings Inc. Founded in 1977 as a real estate auction business, Kennedy-Wilson Holdings is an international real estate investment and services firm providing a diversified array of real estate investments and services from 24 offices in the US, UK, Ireland, Spain and Japan. Specifically, KW Investments covers multifamily, office and residential property acquisitions (including condominium conversions) as well as note purchases while KW Services includes property services for third-party and company-owned assets, auction and conventional sales, research and investment management. Last month, Kennedy-Wilson Holdings announced the pricing of its underwritten public offering of 6,000,000 shares of its common stock at a public offering price of $18.50 per share with the proceeds going for general corporate purposes (including future acquisitions and co-investments) and to repay the $50.0 million outstanding balance under its unsecured revolving credit facility. Kennedy-Wilson Holdings also acquired a portfolio of eight shopping centers out of administration and located throughout England and Scotland for £250 million ($388 million). In addition, Kennedy-Wilson Holdings announced that KW Residential, LLC, the company's unconsolidated Japanese venture, refinanced part of its multifamily portfolio with a $110 million eight year fixed-rate loan at 1.36% and it was noted that since 2010, they have been able to lower their average interest rate across the portfolio from 2.6% to 1.4% to save $22 million in interest payments over the term of the current loans. Otherwise and back in August, Kennedy-Wilson Holdings reported that Adjusted Net Income for the second quarter 2013 came in at $13.8 million verses Adjusted Net Income of $3.0 million. Kennedy-Wilson Holdings is also scheduled to report earnings on Tuesday, November 5, after the market closes. On Tuesday, Kennedy-Wilson Holdings rose 1.87% to $20.18 (KW has a 52 week trading range of $11.83 to $20.25 a share) for a market cap of $1.63 bil! lion plus the stock is up 47.5% since the start of the year, up 44% over the past year and up 124.5% over the past five years.

FirstService Corporation. Founded in 1989 by Jay Hennick from Superior Pools, the swimming pool management business he started as a teenager, FirstService Corporation has three service platforms: 1) Colliers International, one of the top global players in commercial real estate services, 2) FirstService Residential, North America's largest manager of residential communities; and the 3) Property Services division, one of North America's largest providers of property services delivered through company-owned operations, franchise systems and contractor networks. Last Wednesday, FirstService Corporation reported a 9% revenue increase to $608.3 million while adjusted EBITDA rose 11% to $55.4 million. The founder and CEO noted:

"Each of our service lines reported strong revenue growth; both Colliers International and FirstService Brands grew their EBITDA by more than 30%; we completed the re-branding at FirstService Residential; we redeemed our outstanding convertible debentures and we successfully completed the sale of Field Asset Services."

He ended by saying that FirstService Corporation is positioned better than ever to deliver strong growth in revenue and profits in the future. FirstService Corporation's FirstService Residential also recently acquired Curry Association Management, Missouri's largest residential property management company. On Tuesday, FirstService Corporation rose 0.80% to $41.34 (FSRV has a 52 week trading range of $26.88 to $42.55 a share) for a market cap of $1.41 billion plus the stock is up 50.3% since the start of the year, up 39% over the past year and up 270.4% over the past five years.

Finally, here is a look at the performance of small cap real estate services stocks Kennedy-Wilson Holdings Inc and FirstService Corporation verses midcaps CBRE Group Inc and Jones Lang LaSalle Inc:

As you can see from the above chart, the performance of small cap FirstService Corporation is pretty close to the performance of CBRE Group Inc while small cap Kennedy-Wilson Holdings has been the laggard albeit its still a decent performance for long term investors.

Is Yahoo! Poised For A Breakout Year?

Marissa Mayer has made big moves since taking over as Yahoo!'s

(NASDAQ:YHOO) CEO less than a year ago. Currently the fourth-most visited webpage on the Internet, Yahoo! has acquired more than ten companies since January — most notably the blogging site Tumblr. Rumors are circulating about the possible acquisition of Hulu, as the company seeks to expand its Internet presence. Yahoo's stock price has surged 61 percent in the Mayer era, but is the company positioned for long-term success? Let's use our CHEAT SHEET investing framework to determine whether Yahoo! is an OUTPERFORM, WAIT AND SEE, or STAY AWAY.

C = Catalysts for the Stock's Movement

Yahoo's stock price closed up 4 percent at $24.95 on Tuesday, as investors were upbeat after the company’s annual shareholders meeting. CEO Mayer announced that the number of daily users on photo-sharing site, Flickr, jumped 50 percent since last year, while the Yahoo’s mobile email user-base is up 70 percent. Mayer credited the company’s success over the past year to a new focus on mobile growth and improved employee morale.

Yahoo's board recently approved the acquisition of blogging website Tumblr for $1.1 billion. Mayer projects that the popular blogging website will increase Yahoo!'s Internet traffic by 20 percent. Shareholders criticized the high price of the acquisition, noting that Tumblr only generated $13 million in revenues last year; however, with the synergies resulting from the acquisition and Yahoo's proven success in advertising revenue growth, Tumblr is projected to generate a top line of $100 million in 2013. Still, with Tumblr's unproven success in generating revenues, it is unlikely that this acquisition will substantially boost company profits in the next few years.

While Yahoo's domestic search engine business has lost market share to Microsoft's (NASDAQ:MSFT) Bing and Google (NASDAQ:GOOG), the company has  capitalized on Asian search engines Yahoo Japan and Alibaba in China. In fact, these two businesses make up more than half of Yahoo's current market cap of $28.28 billion. At its IPO, Alibaba is expected to be valued between $60 billion and $80 billion. Alibaba has the ability to buy back half of Yahoo!’s 24 percent stake, from which Yahoo stands to make between $8 and $13 billion in cash at the IPO. Yahoo! could potentially use this cash in hand to initiate a share buyback, further raising its share price.

S = Support is Provided by Institutional Investors

Yahoo has been a popular investment for mutual funds in the past year. Mutual funds have increased their stake to 61 percent of Yahoo's outstanding shares, up 10 percent from last November. Support from mutual funds is an important indicator for Yahoo's future since these types of funds generally invest in companies they believe to be strong in the long-term.

E = Excellent Performance Relative to Peers?

Yahoo currently trades at a trailing price to earnings multiple of 7.35, which suggests that it is relatively less expensive than Google. Google, however, is a safer investment and has more growth prospects, so clearly it should be valued at a higher multiple. Yahoo enjoys a higher gross margin than its competitors, Google and AOL (NASDAQ:AOL). Yahoo's growth estimate is the highest of the group as well, for FY2013, as analysts believe that Mayer will enjoy continued success as CEO in expanding Yahoo!'s internet presence and mobile apps business.

	Yahoo!	Google	AOL
Trailing P/E	7.35	26.16	3.08
Gross Margin	0.68	0.58	0.31
Growth Est. (2013)	20.50%	15.80%	-86.70%

T = Technicals are Mixed

Yahoo! is currently trading at around $25.37, below its 50-day moving average of $26.24, but above its 200-day moving average of $22.82. Yahoo has been on a strong uptrend since Mayer assumed her role as CEO last July. Recently, after hitting a new 52-week high of $27.68, the price has been volatile and has not shown a definitive trend in either direction.

 

Conclusion

Mayer has put Yahoo in a good position to expand its Internet presence and profitability. Yahoo already has around 650 million users and has the potential for many more with the recent acquisition of Tumblr. Yahoo's mobile app strategy looks promising, but is relatively unproven at this time, especially since mobile devices do not generate as much advertising revenue as desktop web pages at this time.

Will Lockheed Martin Dominate the Competition?

With shares of Lockheed Martin (NYSE:LMT) trading around $107, is the company an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Lockheed Martin is a global security and aerospace company principally engaged in the research, design, development, manufacture, integration, and sustainment of technology systems and products. The company also provides a range of management, engineering, technical, scientific, logistic, and information services. It serves both domestic and international customers with products and services that have defense, civil, and commercial applications, with its principal customers being agencies of the U.S. government. It operates in five business segments: Aeronautics, Information Systems & Global Solutions, Missiles and Fire Control, Mission Systems and Training, and Space Systems. As a leading provider of global security and aerospace technology to the U.S. government, Lockheed Martin stands to see steady profits for many years. Defense products and services continue to be of great importance to the United States and a great source of revenue for Lockheed Martin.

T = Technicals on the Stock Chart are Strong

Lockheed Martin stock has experienced a bullish run extending back several years. Currently, the stock has broken-out to three-year highs and looks to be getting ready to test previous all-time high prices. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Lockheed Martin is trading above its rising key averages, which signals neutral to bullish price action in the near-term.

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(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Lockheed Martin options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Lockheed Martin Options	19.2%	70%	71%

What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts, as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
June Options	Flat	Average
July Options	Flat	Average

As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Mixed Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Lockheed Martin’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Lockheed Martin look like and more importantly, how did the markets like these numbers?

	2013 Q1	2012 Q4	2012 Q3	2012 Q2
Earnings Growth (Y-O-Y)	14.78%	-16.97%	5.24%	11.22%
Revenue Growth (Y-O-Y)	-1.97%	-0.92%	-2.06%	3.27%
Earnings Reaction	1.26%	-2.93%	2.14%	1.01%

Lockheed Martin has seen increasing earnings and decreasing revenue figures over most of the last four quarters. From these figures, the markets have generally been pleased with Lockheed Martin’s recent earnings announcements.

P = Poor Relative Performance Versus Peers and Sector

How has Lockheed Martin stock done relative to its peers, Boeing (NYSE:BA), Northrop Grumman (NYSE:NOC), Raytheon (NYSE:RTN), and the sector?

	Lockheed Martin	Boeing	Northrop Grumman	Raytheon	Sector
Year-to-Date Return	16.76%	32.87%	21.53%	17.77%	18.26%

Lockheed Martin has been a poor relative performer, year-to-date.

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Conclusion

Lockheed Martin provides valuable and essential security and aerospace technology to several companies and the U.S. government. The stock has been on a bullish run over the last few years and looks to be continuing higher and testing previous all-time high prices. Over the last four quarters, earnings have increased, while revenues have decreased, which has generally pleased investors in the stock. Relative to its peers and sector, Lockheed Martin has been a poor year-to-date performer. WAIT AND SEE what Lockheed Martin does this coming quarter.

Get Paid To Buy This Rebound Play, With A Shot At 80% Upside

The changes at Groupon (Nasdaq: GRPN) appear to be paying off. The departure of founder and CEO Andrew Mason in February marked an emotional low point. The stock has doubled since then, and it is now up nearly 250% from the extreme low in November.

 

The bottoming bounce from the $2.60 low to the $9.43 yearly high has support at the $6 midpoint of the range.

Looking at the bigger picture, the post-IPO high near $31 to the extreme lows has a recovery target of about $16, about 82% above the current price.

As of this writing, GRPN is trading around $8.80. If you are comfortable holding on to this inexpensive stock for a potential recovery, then selling put options could allow you to collect income while you wait to get into GRPN at a 14% discount.

Cash-Secured Put Selling Strategy
While the typical investor might use a limit order to buy a stock or ETF at a designated price or lower, the options trader can do one better by selling a cash-secured put.

This strategy has the same mathematical risk profile as a covered call. With put selling, there is an obligation to buy the stock at the strike price if it is assigned, allowing you to get into the stock at a discount. In fact, the true entry cost basis is even lower with the subtraction of the premium you earned from selling the puts.

And if the stock is not below the strike price at expiration, then the premium received is all profit. In other words, you're getting paid not to own the stock.

There are two rules traders must follow to be successful at selling put options.

Rule One: Sell puts only on stocks you want to own.
The intention of this strategy is to be assigned the stock as a long-term investment (each option contract represents 100 shares). So make sure you have the money ready to buy the stock at the options' strike price if a sell-off occurs. Paying in full ensures that no additional money is needed to hold the stock for potentially many months or even years until a price recovery.

Rule Two: Sell either of the front two option expiration months to take advantage of time decay.
Collect premium every month on put sales until you are assigned shares at a cost-reduced basis. Every month that you keep the premium is money subtracted from your entry price.

Action to Take --> Sell to open GRPN Aug 8 Puts at 40 cents or better. (This is a volatile stock, so I suggest using a limit order to get the desired price.)

This cash-secured put sale would assign long shares at $7.60 ($8 strike minus 40-cent premium), which is about 14% below GRPN's current price, costing you $760 per option sold. If the options expire worthless, you keep the $40 premium, earning a potential 5.3% return in 23 days.

But remember, you should only sell this put if you want to own GRPN at a discount to the current price. If you are assigned the shares, a September covered call can be sold against the stock to lower your cost basis even further.

If the stock does not fall below the strike price before expiration, then you keep the premium you collected, essentially getting paid not to buy the stock.

For more analysis on GRPN, see the video below (starting at 3:10):

This article was originally published at ProfitableTrading.com:
Get Paid to Buy This Stock at a Discount for a Chance at an 80%-Plus Rally

Jaguar Hopes This Car Will Rock the World

Jaguar's last compact sedan, the Ford-derived X-Type, left luxury buyers seriously unimpressed. Jaguar hopes its new car will do better. Photo credit: Jaguar Cars

Ever since India's Tata Motors (NYSE: TTM  ) bought Jaguar and Land Rover from Ford (NYSE: F  ) in 2008, one big question has been asked: Would Tata be willing (and able) to make the big investments needed to make Jaguar a competitive global luxury brand?

One part of that is being answered now, as Jaguar says it has the go-ahead to produce a much-needed new model, a compact luxury sedan to rival BMW's (NASDAQOTH: BAMXF  ) 3-Series. In this video, Fool.com contributor John Rosevear explains why the new baby Jag is so important to the company's chances -- and fills you in on when we can expect to see the new car hit dealers.

Jaguar is hoping its new compact sedan will help it gain ground in China, but it's already late to the party. A recent Motley Fool report, "2 Automakers to Buy for a Surging Chinese Market", names the two global giants already poised to reap big gains in China's booming auto market. You can read this report right now for free -- just click here for instant access.

Don't Get Too Worked Up Over Tidewater's Earnings

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

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 Tidewater (NYSE: TDW  ) , whose recent revenue and earnings are plotted below.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, Tidewater burned $226.6 million cash while it booked net income of $150.8 million. That means it burned through all its revenue and more. That doesn't sound so great. FCF is less than net income. Ideally, we'd like to see the opposite.

All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at Tidewater look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

With questionable cash flows amounting to only 0.4% of operating cash flow, Tidewater's cash flows look clean. Within the questionable cash flow figure plotted in the TTM period above, stock-based compensation and related tax benefits provided the biggest boost, at 8.9% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures. Tidewater investors may also want to keep an eye on accounts receivable, because the TTM change is 3.6 times greater than the average swing over the past 5 fiscal years.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.

Is Tidewater the right energy stock for you? Read about a handful of timely, profit-producing plays on expensive crude in "3 Stocks for $100 Oil." Click here for instant access to this free report.

We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.

Add Tidewater to My Watchlist.

Best Biotech Companies To Buy For 2014

In the following video, Fool contributor Maxxwell Chatsko updates investors on a recent development from biotechnology giant�Amgen��(NASDAQ:�AMGN) . The company announced new, positive phase 3 results for its metastatic colorectal cancer drug Vectibix when compared to competitor Erbitux. While investors continue to have high hopes for Vectibix, this clinical trial win is still just one small step in the drug�� journey to potential blockbuster status.

While you can certainly make huge gains in biotech and pharmaceuticals, the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of.�Click here now�to keep reading.

Editor's note: An earlier version of this article misidentified�Vectibix as an immunotherapy product. Also, the phase 3 trial was not for an expanded indication but instead a head-to head comparison in an indication for which it is already approved. The Fool regrets the error.

Best Biotech Companies To Buy For 2014: Galena Biopharma Inc (GALE.PH)

Galena Biopharma, Inc. (Galena), formerly RXi Pharmaceuticals Corporation, incorporated on April 3, 2006, is a biotechnology company focused on discovering, developing and commercializing therapies addressing unmet medical needs using targeted biotherapeutics. The Company is pursuing the development of cancer therapeutics using peptide-based immunotherapy products, including its main product candidate, NeuVaxTM (E75), for the treatment of breast cancer and other tumors. NeuVax is a peptide-based immunotherapy intended to reduce the recurrence of breast cancer in low-to-intermediate HER2-positive breast cancer patients not eligible for trastuzumab (Herceptin; Genentech/Roche). On January 19, 2012, the Company initiated enrollment in its Phase 3 PRESENT clinical trial for NeuVax (E75 peptide plus GM-CSF) vaccine in low-to-intermediate HER2 1+ and 2+ breast cancer patients in the adjuvant setting to prevent recurrence (Clinicaltrials.gov identifier NCT01479244). The Preven tion of Recurrence in Early-Stage, Node-Positive Breast Cancer with Low to Intermediate HER2 Expression with NeuVax Treatment study is a randomized, multicenter, multinational clinical trial that will enroll approximately 700 breast cancer patients. The Company�� Phase 2 trial of NeuVax achieved its primary endpoint of disease-free survival (DFS). On April 13, 2011, the Company completed its acquisition of Apthera, Inc.,(Apthera).

The Company focuses to start a Phase 2 trial comparing NeuVax in combination with trastuzumab (Herceptin) versus trastuzumab, alone, in a 300-patient, randomized study in the adjuvant breast cancer setting. The Company's second product candidate, Folate Binding Protein-E39 (FBP), is a vaccine, consisting of the peptides E39 and J65, aimed at preventing the recurrence of ovarian, endometrial, and breast cancers. On February 14, 2012, the Company announced the initiation of a Phase 1/2 clinical trial in two gynecological cancers: ovari an and endometrial adenocarcinomas. Folate binding protein! h! as very limited tissue distribution and expression in non-malignant tissue and is over-expressed in more than 90% of ovarian and endometrial cancers, as well as in 20% to 50% of breast, lung, colorectal and renal cell carcinomas.

In April 2011, the Company acquired Apthera Inc and its NeuVax product candidate. The Company focuses on developing a pipeline of immunotherapy product candidates for the treatment of various cancers based on the E75 peptide, the advanced of which is NeuVax, which is targeted at preventing the recurrence of breast cancer. NeuVax has had positive Phase 1/2 clinical trial results for the prevention of breast cancer recurrence in patients who have had breast cancer and received the standard of care treatment (surgery, chemotherapy, radiotherapy and hormonal therapy as indicated). The Company had also initiated its Phase 3 PRESENT clinical trial of NeuVax for the prevention of breast cancer recurrence in early-stage low-to-intermediate HER2 breast cancer patients. NeuVax directs killer T-cells to target and destroy cancer cells that express HER2/neu, a protein associated with epithelial tumors in breast, ovarian, pancreatic, colon, bladder and prostate cancers. NeuVax is comprised of a HER2/neu-derived peptide called E75. E75 is a nine-amino acid sequence that is immunogenic (produces an immune response) and GM-CSF is a commercially available protein that acts to stimulate and activate components of the immune system such as macrophages and dendritic cells.

The Company also develops novel applications for NeuVax based on preclinical studies and phases 2 clinical trials which suggest that combining NeuVax and trastuzumab (Herceptin; Genentech/Roche) can increase antigen presentation by tumor cells by promoting receptor internalization and subsequent proteosomal degradation of the HER2 protein. The Company also is pursuing additional therapeutic indications for NeuVax that are in Phase 1/2 clinical trials. RXI-109, is a dermal anti-scarring therapy that ! targ! ets! conne! ctive tissue growth factor (CTGF) and that may inhibit connective tissue formation in human fibrotic disease.

The Company competes with Roche Laboratories, Inc., Pfizer Inc., Bayer HealthCare AG, Sanofi-Aventis, US, LLC, Amgen, Inc., GlaxoSmithKline plc, Renovo Group plc, CoDa Therapeutics, Inc., Sirnaomics, Inc., FirstString Research, Inc., Merz Pharmaceuticals, LLC, Capstone Therapeutics, Halscion, Inc., Garnet Bio Therapeutics, Inc., AkPharma Inc., Promedior, Inc., Kissei Pharmaceutical Co., Ltd., Eyegene, Derma Sciences, Inc., Healthpoint Biotherapeutics, Pharmaxon, Excaliard Pharmaceuticals, Inc., Alnylam Pharmaceuticals, Inc., Marina Biotech, Inc., Tacere Therapeutics, Inc., Benitec Limited, OPKO Health, Inc., Silence Therapeutics plc, Quark Pharmaceuticals, Inc., Rosetta Genomics Ltd., Lorus Therapeutics, Inc., Tekmira Pharmaceuticals Corporation, Arrowhead Research Corporation, Regulus Therapeutics Inc. and Santaris.

Best Biotech Companies To Buy For 2014: Incyte Corporation(INCY)

Incyte Corporation focuses on the discovery and development of proprietary small molecule drugs for hematologic and oncology indications, and inflammatory and autoimmune diseases. Its product pipe line includes INCB18424, which is in Phase III clinical trial for myelofibrosis; Phase III trial for polycythemia vera; Phase III trial for essential thrombocythemia; Phase I/II trial to treat solid tumors/other hematologic malignancies; and Phase IIb trail for the treatment of psoriasis. The company?s portfolio also includes INCB28050, a Phase IIb clinical trial product for rheumatoid arthritis; INCB28060, a Phase I/II product for solid tumors; INCB7839, a Phase II product for breast cancer; and INCB24360, a Phase I/II product for solid tumors. It has a collaborative research and license agreements with Novartis International Pharmaceutical Ltd.; Eli Lilly and Company; and Pfizer Inc. The company was founded in 1991 and is headquartered in Wilmington, Delaware.

Advisors' Opinion:

• [By John McCamant]

  Incyte's (INCY) crackerjack medicinal chemistry team continues to show that they can create better and differentiated drug candidates from the competition.

  The key near-term driver for INCY is Jakafi growth, and with the increased sales guidance, the company is delivering. The drug's overall profile continues to improve and the recent survival data proves that Jakafi does much more for myelofibrosis patients than just control symptoms.

• [By Maxx Chatsko]

  The company was also hoping to crack into the rheumatoid arthritis market with tabalumab, which kept the streak of ineffective treatments going for shareholders. Despite losing out on this massive market initially, Eli Lilly does have a promising JAK inhibitor (baricitinib) being developed with Incyte (NASDAQ: INCY  ) for the disease and an additional trial for psoriasis. If successful, safe, and effective, the oral treatment could be more convenient for patients currently taking injectable biologics. �

• [By Maxx Chatsko]

  The best part about being a buy-and-hold investor is that when volatility strikes and analysts and pundits are panicking, you can calmly go about your business and steal great companies at bargain prices. One of the stocks on my top watchlist is Incyte (NASDAQ: INCY  ) , which is a growing biotech company focused on developing oncology and anti-inflammatory drugs. The company's shares have recently fallen below $20 for the first time since early February, which I think warrants a deeper look. In the following video, I'll break down the pros and cons of adding Incyte to your portfolio, although I think the company has a lot of potential in its pipeline.

Top Undervalued Stocks To Own Right Now: StemCells Inc (STEM)

StemCells, Inc. (StemCells), incorporated in August 1988, is engaged in the research, development, and commercialization of stem cell therapeutics and related tools and technologies for academia and industry. The Company is focused on developing and commercializing stem and progenitor cells as the basis for therapeutics and therapies, and cells and related tools and technologies to enable stem cell-based research and drug discovery and development. The Company�� primary research and development efforts are focused on identifying and developing stem and progenitor cells as potential therapeutic agents. The Company has two therapeutic product development programs, including its CNS Program, which is developing applications for HuCNS-SC cells, its human neural stem cell product candidate, and its Liver Program, which is characterizing the Company�� human liver cells as a therapeutic product.

CNS Program

The Company in its CNS Program, is in clinical development with its HuCNS-SC cells for a range of disorders of the central nervous system. The CNS includes the brain, spinal cord and eye. In February 2012, the Company had completed a Phase I clinical trial in Pelizeaus-Merzbacher Disease (PMD), a fatal myelination disorder in the brain.

The Company�� CNS Program is focused on developing clinical applications, in which transplanting HuCNS-SC cells protect or restore organ function of the patient before such function is irreversibly damaged or lost due to disease progression. The Company�� initial target indications are PMD, and more generally, diseases in which deficient myelination plays a central role, such as cerebral palsy or multiple sclerosis; spinal cord injury, disorders in which retinal degeneration plays a central role, such as age-related macular degeneration or retinitis pigmentosa. The Company�� product candidate, HuCNS-SC cells, is a purified and expanded composition of normal human neural stem cells. Its HuCNS-SC cells can be directly transp! lanted.

Liver Program

Liver stem or progenitor cells offer an alternative treatment for liver diseases. A liver cellular therapy or cell-based therapeutic provide or support liver function in patients with liver disease. The Company held a portfolio of issued and allowed patents in the liver field, which cover the isolation and use of both hLEC cells and the isolated subset, as well as the composition of the cells themselves.

The Company�� range of cell culture products, which are sold under the SC Proven brand, includes iSTEM, GS1-R, GS2-M, RHB-A, RHB-Basal, NDiff N2, and NDiff N2B27. Its iSTEM is a serum-free, feeder-free medium that maintains mouse embryonic stem cells in their pluripotent ground state by using selective small molecule inhibitors to block the pathways, which induce differentiation. RHB-A is a defined, serum-free culture medium for the selective culture of human and mouse neural stem cells and their maintenance and expansion as adherent cell populations. RHB-Basal is a defined, serum-free basal medium. When supplemented with specific growth factors, this media is formulated for the propagation and differentiation of adherent neural stem cells. RHB-Basal can also be tailored to specific-cell type requirements by the addition of customer preferred supplements.

The Company�� NDiff N2 is a defined serum-free scell culture supplement for the derivation, maintenance, expansion and/or differentiation of human and mouse embryonic stem (ES) cells and tissue-derived neural stem cells supplement. Its NDiff N2-AF is a serum-free and animal component-free version of NDiff N2. Its NDiff N2B27 is a defined, serum-free medium for the differentiation of mouse embryonic stem cells to neural cell types. NDiff N27-AF is a serum-free and animal component-free version of NDiff N27. Its GS1-R is a serum-free media formulation shown to enable the derivation and long-term maintenance of true, germline competent rat embryonic stem cells without the add! ition of ! cytokines or growth factors. Its GS2-M is a defined, serum- and feeder-free medium for the derivation and long-term maintenance of true, germline competent mouse iPS cells.

The Company also markets a number of antibody reagents for use in cell detection, isolation and characterization. These reagents are also under the SC Proven brand and it includes STEM24, STEM101, STEM121 and STEM123. Its STEM24 is a human antibody that recognizes human CD24, also known as heat stable antigen (HSA), a glycoprotein expressed on the surface of many human cell types, including immature human hematopoietic cells, peripheral blood lymphocytes, erythrocytes and many human carcinomas. Its CD24 is also a marker of human neural differentiation. Its STEM101 is a human-specific mouse antibody that recognizes the Ku80 protein found in human nuclei. Its STEM121 is a human-specific mouse antibody that recognizes a cytoplasmic protein of human cells. Its STEM123 is a human-specific mouse antibody that recognizes human glial fibrillary acidic protein (GFAP).

The Company�� Other products marketed under SC Proven include total cell genomic DNA (gDNA), RNA and protein lysate reagents purified from homogenous stem cell populations for intra-comparative studies, such as Epigenetic fingerprinting, Southern, Western and Northern blots, PCR, RT-PCR and microarrays. This range of purified stem cell line lysates includes mouse embryonic stem (ES) cells propagated in SC Proven 2i inhibitor-based GS2-M media and mouse ES cell-derived and fetal tissue-derived neural stem (NS) cells propagated in SC Proven RHB-A media.

Advisors' Opinion:

• [By John Udovich]

  The results of a recent Pew Center Poll regarding attitudes towards abortion and various forms of stem cell research could be a good sign for the stem cell industry along with small cap stem cell stocks like StemCells Inc (NASDAQ: STEM), NeoStem Inc (NASDAQ: NBS), Neuralstem, Inc (NYSEMKT: CUR),�International Stem Cell Corp (OTCMKTS: ISCO) and BioRestorative Therapies (OTCBB: BRTX). Basically, Americans think that having an abortion is a moral issue with 49% of American adults believing abortion is morally wrong, 23%�view it not as a moral issue and and 15% view it as morally acceptable. However and when Americans were asked about issues surrounding�human embryos, such as stem cell research or in vitro fertilization, as a matter of morality, their views were different.

Best Biotech Companies To Buy For 2014: Prosensa Holding NV (RNA)

Prosensa Holding N.V., formerly Prosensa Holding B.V., is a biotechnology company engaged in the discovery and development of ribonucleic acid-modulating (RNA)-modulating, therapeutics for the treatment of genetic disorders. The Company�� primary focus is on rare neuromuscular and neurodegenerative disorders with a large unmet medical need, including Duchenne muscular dystrophy, myotonic dystrophy and Huntington�� disease. The Company�� clinical portfolio of RNA-based product candidates is focused on the treatment of Duchenne muscular dystrophy (DMD). The Company�� platform technology allows the development of RNA-modulating therapeutics that either interferes with splicing (exon skipping, exon inclusion, or splice mutation correction), remove mutant RNA, or block RNA expression, for different indications.

DMD is a rare, severe muscle wasting disease that occurs in up to 1 in 3,500 male births. It is commonly diagnosed between the ages of three to five, when boys begin to show signs of impaired motor development. PRO044, the Company�� product candidate, addresses a separate sub-population of DMD patients. The Company developed PRO044 using its exon-skipping technology to generate a product candidate with the same mechanism of action that is used by drisapersen.

Advisors' Opinion:

• [By Keith Speights]

  Successful launch
  You couldn't even buy stock in Prosensa (NASDAQ: RNA  ) just a few weeks ago. The biotech launched its IPO on June 28. To say that launch has gone successfully is an understatement. Shares are now more than double the IPO price and climbed 41% this week.

• [By Keith Speights]

  An "alley-oop" from the opponent
  Prosensa (NASDAQ: RNA  ) shares made something of a slam dunk this week, jumping more than 16%. That dunk was made with what amounts to an "alley-oop" from its primary rival, Sarepta Therapeutics (NASDAQ: SRPT  ) .

• [By Brian Orelli]

  Ironically, phase 3 data from Sarepta's direct competitor -- GlaxoSmithKline (NYSE: GSK  ) and Prosensa's (NASDAQ: RNA  ) drisapersen -- that's due in the fourth quarter could help the FDA answer the question about whether dystrophin is an acceptable surrogate endpoint. If increases in dystrophin correlate with clinical outcomes, it would support approving eteplirsen with less data. It's not clear to me whether Glaxo and Prosensa would have to share that correlation with the FDA -- the clinical phase 3 data should be sufficient for approval -- and if it does make those calculations whether the FDA could legally use it to support the approval of another drug since NDA data is proprietary while under patent.

Best Biotech Companies To Buy For 2014: Quintiles Transnational Holdings Inc (Q)

Quintiles Transnational Holdings Inc. is a provider of biopharmaceutical development services and commercial outsourcing services. The Company operates in two segments: Product Development and Integrated Healthcare Services. The Company�� Product Development segment operates as a contract research organization (CRO) focused primarily on Phase II-IV clinical trials and associated laboratory and analytical activities. The Company�� Integrated Healthcare Services segment is a global commercial pharmaceutical sales and service organizations and Integrated Healthcare Services provides a range of services, including commercial services, such as providing contract pharmaceutical sales forces in geographic markets, as well as healthcare business services for the healthcare sector, such as outcome-based and payer and provider services. In August 2012, it acquired Expression Analysis, Inc.

Product Development

Product Development provides services and that allow biopharmaceutical companies to outsource the clinical development process from first in man trials to post-launch monitoring. The Company�� service offering provides the support and functional necessary at each stage of development, as well as the systems and analytical capabilities. Product Development consists of clinical solutions and services and consulting. Clinical solutions and services provides services necessary to develop biopharmaceutical products, including project management and clinical monitoring functions for conducting multi-site trials (generally Phase II-IV) (core clinical) and clinical trial support services that improve clinical trial decision making and include global laboratories, data management, biostatistical, safety and pharmacovigilance, and early clinical development trials, and strategic planning and design services that improve decisions and performance. Consulting provides strategy and management consulting services based on life science and advanced analytics, as well as regulatory and comp! liance consulting services.

The Company competes with Covance, Inc., Pharmaceutical Product Development, Inc., PAREXEL International Corporation, ICON plc, inVentiv Health, Inc. (inVentive), INC Research and PRA International.

Integrated Healthcare Services

Integrated Healthcare Services provides the healthcare industry with both geographic presence and commercial capabilities. The Company�� commercialization services are designed to accelerate the commercial of biopharmaceutical and other health-related products. Service offerings include commercial services (sales representatives, strategy, marketing communications and other areas related to commercialization), outcome research (drug therapy analysis, real-world research and evidence-based medicine, including research studies to prove a drug�� value) and payer and provider services comparative and cost-effectiveness research capabilities, clinical management analytics, decision support services, medication adherence and health outcome optimization services, and Web-based systems for measuring quality improvement.

The Company competes with inVentiv, PDI, Inc., Publicis Selling Solutions, United Drug plc, EPS Corporation and CMIC HOLDINGS Co., Ltd.

Best Biotech Companies To Buy For 2014: Cell Therapeutics Inc (CTIC.A)

Cell Therapeutics, Inc. (CTI), incorporated in 1991, develops, acquires and commercializes treatments for cancer. The Company�� research, development, acquisition and in-licensing activities concentrate on identifying and developing new ways to treat cancer. As of December 31, 2011, CTI focused its efforts on Pixuvri (pixantrone dimaleate) (Pixuvri), OPAXIO (paclitaxel poliglumex) (OPAXIO), tosedostat, brostallicin and bisplatinates. As of December 31, 2011, it developed Pixuvri, an anthracycline derivative for the treatment of hematologic malignancies and solid tumors. Another late-stage drug candidate of the Company, OPAXIO, is being studied as a potential maintenance therapy for women with advanced stage ovarian cancer, who achieve a complete remission following first-line therapy with paclitaxel and carboplatin. As of December 31, 2011, it also developed tosedostat in collaboration with Chroma Therapeutics, Ltd. (Chroma). On May 31, 2012, CTI completed its acquisi tion gaining worldwide rights to S*BIO Pte Ltd.'s (S*BIO) pacritinib.

Pixuvri

As of December 31, 2011, the Company developed Pixuvri, an aza-anthracenedione derivative, for the treatment of non-Hodgkin�� lymphoma (NHL), and various other hematologic malignancies, and solid tumors. Pixuvri was studied in the Company�� EXTEND, or PIX301, clinical trial, which was a phase III single-agent trial of Pixuvri for patients with relapsed, refractory aggressive NHL who received two or more prior therapies and who were sensitive to treatment with anthracyclines. On September 28, 2011, CTI announced that a second independent radiology assessment of response and progression endpoint data from its PIX301 clinical trial of Pixuvri was achieved with statistical significance. The results of the EXTEND trial met its primary endpoint and showed that patients randomized to treatment with Pixuvri achieved a significantly higher rate of confirmed and unconfirmed co mplete response compared to patients treated with standard! c! hemotherapy had a significantly increased overall response rate and experienced a statistically significant improvement in median progression free survival. Pixuvri had predictable and manageable toxicities when administered at the proposed dose and schedule in the EXTEND clinical trial in heavily pre-treated patients. In March 2011, the Company initiated the PIX-R trial to study Pixuvri in combination with rituximab in patients with relapsed/refractory diffuse large B-cell lymphoma (DLBCL). Pixuvri has also been studied in patients with HER2-negative metastatic breast cancer who have tumor progression after at least two, but not more than three, prior chemotherapy regimens. In the second quarter of 2010, the NCCTG opened this phase II study for enrollment. The study is closed to accrual and results are expected to be reported by the NCCTG later in 2012.

OPAXIO

OPAXIO is the Company�� biologically-enhanced chemotherapeutic agent that links pacli taxel to a biodegradable polyglutamate polymer, resulting in a new chemical entity. As of December 31, 2011, the Company focused its development of OPAXIO on ovarian, brain, esophageal, head and neck cancer. OPAXIO was designed to improve the delivery of paclitaxel to tumor tissue while protecting normal tissue from toxic side effects. In November 2010, results were presented by the Brown University Oncology Group from a phase II trial of OPAXIO combined with temozolomide (TMZ), and radiotherapy in patients with newly-diagnosed, high-grade gliomas, a type of brain cancer. The trial demonstrated a high rate of complete and partial responses and a high rate of six month progression free survival (PFS). Based on these results, the Brown University Oncology Group has initiated a randomized, multicenter, phase II study of OPAXIO and standard radiotherapy versus TMZ and radiotherapy for newly diagnosed patients with glioblastoma with an active gene termed MGMT that reduces respons iveness to TMZ. A phase I/II study of OPAXIO combined ! with r! a! diothera! py and cisplatin was initiated by SUNY Upstate Medical University, in patients with locally advanced head and neck cancer.

Tosedostat

In March 2011, the Company entered into a co-development and license agreement with Chroma Therapeutics, Ltd. (Chroma), providing the Company with marketing and co-development rights to Chroma�� drug candidate, tosedostat, in North, Central and South America. Tosedostat is an oral, aminopeptidase inhibitor that has demonstrated anti-tumor responses in blood related cancers and solid tumors in phase I-II clinical trials. Interim results from the phase II OPAL study of tosedostat in elderly patients with relapsed or refractory acute myeloid leukemia (AML) showed that once-daily, oral doses of tosedostat had predictable and manageable toxicities and results demonstrated response rates, including a high-response rate among patients who received prior hypomethylating agents, which are used to treat myelodysplastic synd rome (MDS), a precursor of AML.

Brostallicin

As of December 31, 2011, the Company developed brostallicin through its wholly owned subsidiary, Systems Medicine LLC, which holds rights to use, develop, import and export brostallicin. Brostallicin is a synthetic deoxyribonucleic acid (DNA) minor groove binding agent that has demonstrated anti-tumor activity and a favorable safety profile in clinical trials, in which more than 230 patients have been treated as of December 31, 2011. The Company uses a genomic-based platform to guide the development of brostallicin. A phase II study of brostallicin in relapsed, refractory soft tissue sarcoma met its predefined activity and safety hurdles and resulted in a first-line phase II clinical trial study that was conducted by the European Organization for Research and Treatment of Cancer (EORTC).

The Company competes with Bristol-Myers Squibb Company, Sanofi-Aventis, Pfizer, Roche Group, Genentech, Inc., Astellas Pharma, Eli Lilly and Company, Cel! gene, Tel! ik! , Inc., T! EVA Pharmaceuticals Industries Ltd. and PharmaMar.

Best Biotech Companies To Buy For 2014: Algeta ASA (ALGETA.OL)

Algeta ASA is a Norway-based biotechnology company engaged in the development of targeted cancer therapies based on its alpha-pharmaceutical platform. The Company�� principal product is Alpharadin for the treatment of bone metastases resulting from castration-resistant prostate cancer. The Company�� pipeline also includes Alpharadin for the treatment of bone metastases resulting from breast cancer, a combination of Alpharadin with Taxotere for the treatment of bone metastases resulting from prostate cancer and Thorium-227 showing various cancer indications. The Company develops Alpharadin in a development and marketing cooperation with Bayer Schering Pharma. Algeta ASA is active through the two wholly owned subsidiaries, Algeta Innovations AS and Algeta UK Limited. On April 12, 2012, the Company announced that it estabilished a subsidiary active in the United States, Algeta US.

Best Biotech Companies To Buy For 2014: Inergetics Inc (NRTI)

Inergetics, Inc., formerly Millennium Biotechnologies Group, Inc., incorporated on November 9, 2000, is a holding company for its sole operating subsidiary, Millennium Biotechnologies, Inc. (Millennium). The Company through its subsidiary Millennium, engages in the research, development, and marketing of specialized nutritional supplements as an adjunct to medical treatments for select medical conditions, as well as for athletes seeking improved recovery and advanced performance. The Company markets products, which are targeted toward immuno-compromised individuals undergoing medical treatment for diseases, such as cancer, as well as wound healing and post-surgical healing and geriatric patients in long-term care facilities among other conditions. In January 2013, the Company acquired Bikini Ready and SlimTrim brands from Whole Products Group.

The Company�� product portfolio include, Resurgex Select, Ready-To Drink Resurgex Essential and Ready-To-Drink Resurgex Essential Plus. Resurgex Select is a whole foods-based, calorically dense, high-protein powdered nutritional formula developed for cancer patients undergoing chemotherapy or radiation treatments. Resurgex Essential and Resurgex Essential Plus represent Millennium�� Ready-to-Drink product line and are being sold into the Long-Term Care geriatric markets.

Resurgex Select

Resurgex Select is a whole foods-based nutritional product that is designed to be used throughout the course of cancer treatment (chemotherapy, radiation, etc.), as many times patients lose weight and cannot consume adequate nutrition. This product combines dietary fiber (3 g), low sugar (5 g), and high protein (15 g) with no added antioxidants to be a high-calorie (350 calorie) supplement. It is available in three flavors (Vanilla Bean, Chocolate Fudge, and Fruit Smoothie) and each can be mixed with water, milk, juices, or in soft cold foods, such as yogurt, apple sauce or pudding.

Surgex

Surgex (www.surgexspor! ts.com), is a nutritional support formula that aims to address the concerns of many elite athletes who suffer from symptoms, such as fatigue, lean muscle loss, lactic acid buildup, oxidative stress, and stressed immune systems. This formula is designed to improve recovery parameters in efforts to enhance the performance of professional and collegiate athletes.

Resurgex Essential

The Essential line is a ready-to-drink alternative to Ensure and Boost designed to be marketed into the long-term care channel. Resurgex Essential has 250 whole food calories containing no corn syrup or corn oil. The product also contains fruit and vegetable extracts, and FOS Fiber to provide calories and taste.

The Company competes with Nestle and Abbott Laboratories Inc.

AIG Should Be Doing Better Than It Is Today

An hour and a half into trading, American International Group (NYSE: AIG  ) is up 0.65%, continuing last week's steady, upward performance that was strong enough to beat Friday's market correction. But while AIG is beating the market today, it's not quite keeping up with its financials sector peers. In part at least, chalk this up to a game of chicken AIG played with Bank of America (NYSE: BAC  ) , and subsequently lost.

Can't we all just get along
Late last Thursday, Reuters reported that B of A rejected AIG's offer to resettle out of court an $8.5 billion dispute over bad mortgages sold by Countrywide Financial. The multibillion-dollar settlement had been agreed upon in 2011, but it was later challenged as unfair by AIG and other investors.

Angling for more money, AIG and company got the case back into in a New York State courtroom at the start of June. But when presiding judge Barbara Kapnick had to temporarily halt proceedings due to scheduling conflicts, she suggested that all parties involved -- which includes bond giants BlackRock (NYSE: BLK  ) and PIMCO -- try to settle the case in mediation. 

Foolish bottom line
B of A refused the offer, obviously feeling confident enough in its case to take its chances in the courtroom. Under siege and under pressure for so long now over the reemergence of this old case, the tide may have turned in B of A's favor, at least from the market's perspective. As a result, AIG now looks like the weaker party for making an epic fuss and then trying to settle out of court, perhaps hampering its performance in the market today -- at least relative to its peers.

There's also the market wave to consider: After markets around the globe tanked in the wake of the Federal Reserve's announcement that it might start tapering quantitative easing later this year, they've rebounded much more quickly and powerfully than this Foolish analyst predicted. And AIG is certainly riding that wave; it even managed to fight back against last Friday's market correction.

That said, there's still plenty of volatility out there. Investors continue to be uneasy over a potential credit crunch developing in China. On top of that, the big June jobs report is out this Friday. And with the market crutch of quantitative easing hanging in the balance, investors can't make up their minds about whether to be bullish on good economic news or bearish.

Always do your best to tune out market noise, fellow Fools, and tune in to the fundamentals of the companies you're invested in: AIG or otherwise. Take the long-term view, and leave the daily ticker check-ins to the day traders. Your portfolio will thank you, even if your broker won't. 

Many investors are terrified about investing in big banking stocks after the crash, but the sector has one notable stand-out. In a sea of mismanaged and dangerous peers, it rises above as "The Only Big Bank Built to Last." You can uncover the top pick that Warren Buffett loves in The Motley Fool's new report. It's free, so click here to access it now.

Monday Closing Bell: Market Muddles from Mixed Open to Mixed Close

October 21, 2013: U.S. markets opened mixed Monday morning after a couple of weak earnings reports. The report on existing home sales showed a drop in September and the delayed report on crude oil inventories showed another large gain. There was not much momentum among traders today, either to the high side or the low side. On the whole, stocks ended the day just as mixed as they were in the morning.

European closed higher today while Asian and Latin American markets were mixed again.

Tuesday's calendar includes the following scheduled data releases and events (all times Eastern).

8:30 a.m. – Employment situation (delayed from October 4th due to government shutdown) 10:00 a.m. – Construction spending (delayed) 10:00 a.m. – Richmond Fed manufacturing index 10:30 a.m. – EIA weekly petroleum status report (delayed from last Thursday) 11:30 a.m. – 4-week bill auction

Here are the closing bell levels for Monday:

S&P500 1744.64 (+0.14; +0.01%) DJIA 15391.88 (-7.64; -0.05%) NASDAQ 3920.05 (+5.77; +0.15%) 10YR TNOTE 2.609% (-0.21875) Gold $1,315.80 (+1.20; +0.1%) WTI Crude oil $99.22 (-1.59; -1.6%) Euro/Dollar: 1.3680 (-0.0005; -0.03%)

Big Earnings Movers: McDonald's Corp. (NYSE: MCD) is down 0.6% at $94.59 after a so-so report and a downbeat forecast. Halliburton Co. (NYSE: HAL) is down 3.4% at $50.67 on added caution for the current quarter. V.F. Corp. (NYSE: VFC) is up 3.4% at $211.24. SAP AG (NYSE: SAP) is up 3.6% at $76.38. NVR Corp. (NYSE: NVR) is down 4.1% at $893.40.

Stocks on the Move: Crosstex Energy Inc. (NASDAQ: XTXI) is up 71.5% at $35.33 on a merger with Devon Energy Corp. (NYSE: DVN). Crosstex Energy LP (NASDAQ: XTEX) is up 33.9% at $27.25 on the same news. Voxeljet AG (NYSE: VJET) is up 22.7% at $35.34. J.C. Penney Co. Inc. (NYSE: JCP) is down 8.4% at $6.42, after posting another record low today.

In all, 338 NYSE stocks put up new 52-week highs today, while only 9 stocks posted new lows.

A Closer Look at 5 FTSE Boardrooms

LONDON -- Management can make all the difference to a company's success -- and thus its share price.

The best companies are those run by talented and experienced leaders with strong vested interests in the success of the business, held in check by a board with sound financial and business acumen. Some of the worst investments to hold are those run by executives collecting fat rewards as the underlying business goes to pot.

In recent weeks, I've assessed the boardrooms of five companies within the FTSE 100: Admiral Group (LSE: ADM  ) , Babcock International (LSE: BAB  ) , Capita (LSE: CPI  ) , InterContinental Hotels (LSE: IHG  ) and Legal & General (LSE: LGEN  ) .Today I am going to summarize what I found.

Five FTSE boardrooms
I analyze management teams from five different angles, giving each a score out of five to make a maximum score of 25. Here's my overall assessment:

Company 

Reputation

Performance

Composition

Admiral	4	5	3
Babcock	3	5	4
InterContinental Hotels	4	3	3
Legal & General	3	3	3
Capita	3	3	1

 

Company

Remuneration

Shareholdings

Overall
Score

Admiral	4	4	20
Babcock	3	5	20
InterContinental Hotels	3	4	17
Legal & General	3	4	16
Capita	3	3	13

A tale of two start-ups
Admiral is one of those few companies that have grown from a start-up to an FTSE 100 member under the same management. CEO Harry Engelhardt and chief operating officer David Stephens were both in at the beginning in 1993. They have below-market remuneration and multimillion-pound shareholdings to align their interests with investors. A well-qualified chairman and nonexecutive team provide checks and balances to the entrenched management.

Like Admiral, public-sector outsourcer Capita grew from a start-up to an FTSE 100 company with members of the current management, but the similarity stops there. The CEO and finance director have been with the company since its formation in the 1980s, though the company lost founder Sir Rodney Aldridge in 2006 when it emerged that he had secretly lent £1 million to the Labor Party.

Whereas Admiral has established the best of corporate-governance practices, Capita contravenes the Governance Code by having a majority of executive directors, which it justifies by the "complexity" of its business. It previously had an executive chairman and appointed a nonexec from the executive ranks. Perhaps it's no coincidence that Capita's directors have few cross-directorships with other FTSE boards.

Ten-bagger
Babcock has a relatively long-serving CEO. Peter Rogers has been at the helm since 2003. He has grown the company organically and through acquisition, increasing the market cap from £150 million to £4 billion and multiplying the share price 10 times. It's a clever board, with the four executives having respective qualifications in accountancy, surveying, engineering, and law. With half its business coming from the Ministry of Defense, the presence of the former U.K. Security and Intelligence Coordinator must be a great help.

InterContinental Hotels' CEO has only been in the role since 2011 but has worked for the company and its predecessors since 1992 and was finance director for eight years. He looks a safe pair of hands, but the chairman and other executives are also relatively new in their current roles. The executives have substantial shareholdings.

Legal & General has announced a new management structure since my review last week. It has appointed one of the divisional directors to the finance director vacancy. However, the CEO has only been in the role since June of last year, having been finance director previously, and his overseas expansion strategy has yet to be tested. The board is almost entirely composed of people with finance-sector or finance-director backgrounds.

I've collated all my FTSE 100 boardroom verdicts on this summary page, and you can read more by following the individual company links.

Buffett's favorite FTSE share
Legendary investor Warren Buffett has always looked for impressive management teams when picking stocks. His recent acquisition, Heinz, has long had a reputation for strong management. Indeed, Buffett praised its "excellent management," as well as its high-quality products and continuous innovation.

So it's important to tell you about the FTSE 100 company in which the billionaire stock-picker has a substantial stake. A special free report from The Motley Fool -- "The One U.K. Share Warren Buffett Loves" -- explains Buffett's purchase and investing logic in full. And Buffett, don't forget, rarely invests outside his native United States, which makes this British blue chip -- and its management -- all the more attractive. So why not download the report today? It's totally free and comes with no further obligation.

At Work: Holiday hiring expected to increase th…

This news should snap you out of your government-shutdown blues and frustration with Washington:

Nearly 40% of retailers say they will beef up hiring for the holidays. That's up from 36% last year at this time and 29% in 2011, according to CareerBuilder's annual survey conducted by Harris Interactive.

STORY: Amazon to deliver 70K holiday jobs
STORY: Another firm predicts less holiday help

This includes high-end retailers like Macy's, which is expected to hire 83,000 for its stores, call centers, distribution centers and online fulfillment centers, and Wal-Mart, which says it will hire 55,000 seasonal workers.

Don't despair if retail is not your thing but short-term work is.

Other types of corporate settings have opportunities as companies wrap up the year and need extra hands to help them handle everything from customer service, sales and marketing to shipping and delivery, inventory management, clerical work, and accounting and finance.

Where are these employers? They're in information technology, leisure and hospitality, and financial services. And just as hiring goes the other nine months of the year, they like to hire people they know.

So the majority will re-hire some folks they've hired before.

But they also like to recruit: 45% tend to target college students. More than 50% will seek out retirees and experienced workers who are not retired.

Now is the time to apply since most companies won't be accepting applications after October.

Across the country nearly 40,000 welding jobs have been added since fall 2010, according to a CareerBuilder survey.(Photo: Digital Vision, Getty Images)

Also, think about who else needs help as we enter the holiday season and what kinds of jobs that could! mean. Some include jobs for recruiters who would look for people to fill seasonal jobs, people with the skills to help companies design window displays and decorations, people to put up and take down decorations, and operational and customer service representatives at companies that fulfill seasonal requests.

Another ray of sunshine comes from a different CareerBuilder survey that found that "middle-skill" or "middle-wage" jobs in the United States are thriving — at least in some fields and geographic areas.

This is particularly heartening news since Federal Reserve research shows that the share of these jobs had dropped from 25% in 1985 to just above 15% today. Factors such as automation and companies moving positions out of the country are to blame.

For the purpose of this study, which was done with Economic Modeling Specialists, middle-wage jobs are defined as those paying $13.84 to $21.13 an hour.

Even though more high-wage and low-wage jobs are available overall, some areas of manufacturing, health care and energy have middle-wage jobs that are stable and growing.

These positions include the following:

• Customer service representatives, up 6%.

• Tractor-trailer truck drivers, up 7%.

• Bookkeeping, accounting and auditing clerks, up 4%.

• Machinists, up 14%.

• Inspectors, testers, sorters, samplers and weighers — they review raw materials and assembled parts and products — up 8%.

• Welders, cutters, solderers and brazers — workers who join metal parts — up 11%.

• Computer-controlled machine-tool operators, up 17%.

• Oil, gas and mining service unit operators, up 38%.

Wyoming has had the highest percentage of these jobs added since the recession; 45% of new jobs created in the state since 2010 have been middle-wage.

Most of this work requires experience or certificates and degrees that are offered at community colleges. Some employers give on-the-job training.

Looking further at! the brig! ht side, remember that you can start out part time or doing work you hadn't planned. But your position always can turn into more if you prove to be invaluable.

Who knows, maybe you'll start out doing one kind of work and discover you like the company enough to see where else things might go.

Career consultant Andrea Kay is the author of This Is How To Get Your Next Job: An Inside Look at What Employers Really Want. Reach her at andrea@andreakay.com. Twitter: @AndreaKayCareer.

Shorting BlackBerry: What You Need To Know

Most investors are aware that BlackBerry (BBRY) shares are heavily shorted, but do not understand the implications fully. I have read many comments from Seeking Alpha readers that illustrate confusion with the current shorting situation, and I am concerned that some assumptions will lead to incorrect investment decisions. The point of this article is to outline the present situation with BlackBerry, and how the shorting situation is being used by investors and traders. Being informed is the only way to make investment decisions.

Present Situation

BlackBerry shares have been trading between $14 and $16 a share since the launch of BB10. Within this timeframe there has been an ongoing battle between the "shorts", and the "longs". These battles are usually noted by price fluctuations, and a flood of negative and positive articles. If you are a follower of BlackBerry, this is not a surprise. The daily trading volume has decreased significantly as both sides appear to be reaching a stalemate.

Last week the financial quarter ended for BlackBerry, and the results will be announced on June 28th 8am EST. Many investors are waiting for this day in anticipation of a catalyst that will definitively drive the stock price one way or the other. I truly believe that there will be more questions raised than answered. Remember, the results will only contain 1 month's worth of sales data for the Z10 in the United States, and limited numbers for the Q10 depending on the market. While it will shed some light on the future health of BlackBerry, the September financial earnings call will be more definitive.

The BB10 rollout from BlackBerry is calculated and gradual. This has also allowed for a gradual buildup in the short interest for BlackBerry. It currently is around 170 million shares out on loan, and still increasing.

8/15/! 2012

Settlement Date	Short Interest	Avg Daily Share Volume	Days To Cover
5/15/2013	170,632,578	29,749,364	5.735671
4/30/2013	164,664,363	25,624,110	6.426150
4/15/2013	164,340,145	35,892,399	4.578689
3/28/2013	155,699,090	67,075,106	2.321265
3/15/2013	155,005,574	53,212,793	2.912938
2/28/2013	147,214,984	45,208,011	3.256392
2/15/2013	136,511,698	81,221,373	1.680736
1/31/2013	129,491,496	96,276,614	1.344994
1/15/2013	135,121,295	50,178,584	2.692808
12/31/2012	137,065,866	51,326,252	2.670483
12/14/2012	119,621,568	41,062,428	2.913164
11/30/2012	113,693,228	57,474,757	1.978142
11/15/2012	104,202,426	23,119,389	4.507144
10/31/2012	95,397,618	13,252,696	7.198356
10/15/2012	95,478,104	23,520,126	4.059421
9/28/2012	87,545,698	44,631,517	1.961522
9/14/2012	82,637,081	16,214,596	5.096463
8/31/2012	87,479,971	12,013,429	7.281849
86,666,209	22,117,373	3.918468
7/31/2012	89,556,616	16,988,533	5.271592
7/13/2012	92,143,011	28,181,362	3.269644
6/29/2012	85,415,857	25,280,116	3.378776
6/15/2012	73,419,586	16,658,064	4.407450

With 515 million shares outstanding, this equates to 33% of all shares being shorted. It should also be noted that Prem Watsa's Fairfax Financial Holdings (FRFHF.PK) is holding 51.8 million BlackBerry shares. Prem Watsa stated at the annual FairFax shareholders meeting that Fairfax is holding a long position with BlackBerry and anticipates shareholder value increasing over the next 2-3 years. The cost basis for FairFax financial holdings is approximately $17 per BlackBerry share.

Michael Lazaridis has a personal position in BlackBerry and holds 29.9 million shares. It is our understanding that Michael Lazaridis, as the founder of BlackBerry, maintains a similar outlook to Prem Watsa.

Assuming both of these investors will not loan out their shares, this implies a short interest around 40%.

There are a few more significant holders of BlackBerry stock including PrimeCap Management, but to extrapolate the short interest would not be accurate. The reason is that some of these shares may be on loan as per the internal policies and security commission rules. More on this later.

The table below illustrates the recent activity that has been occurring with BlackBerry shares from institutional investors. There does not appear to be any significant trends except for various institutions entering and exiting their positions. The net effect appears to be near zero.

Ownership Analysis	# of Hol! ders	Shares
Total Shares Held:	308	282,468,787
New Positions:	58	15,599,674
Increased Positions:	147	60,613,747
Decreased Positions:	127	82,963,002
Holders With Activity:	274	143,576,749
Sold Out Positions:	51	18,788,507

As illustrated with the short interest versus price below, the increasing short interest is not sustainable with the increasing stock price.

(click to enlarge)

Share Availability

Currently, shares available to be lent out to the "shorts" are becoming scarce. As the short interest increases, there are less shares available for loan.

Scotia iTrade (BNS) is one of the largest brokers in Canada. Last week I had a conversation with a Trading Manager and was told "there are no shares currently to be lent out." This changes on a daily basis, but has been the norm for the past month.

Other brokerage firms are reporting low supplies of BlackBerry loanable shares. I have checked Interactive Brokers (IBKR) about loanable shares, and they reported 250,000 available for shorting last week. Currently they have increased their loanable share supply to 550,000 shares.

Why would someone long BBRY loan out their shares?

Money.

Each BlackBerry share has a value, and the value is what the market will currently bear. If a BlackBerry share is loaned out, credit is being extended. As the owner of the share, compensation would be appropriate for loaning the share. Currently, Interactive Brokers is charging 8.25% with 8.16% being remitted to the share owner. Since these shares are cal! lable at ! any time, it makes sense to loan the shares out while waiting for the stock price to appreciate.

Also, if you truly believed that the shares will appreciate over time and a short squeeze is likely, adding to the short interest could be desirable. While there would be short-term downward pressure on the stock price, the increased probability of a short squeeze would be desirable.

SYM	NAME	CON	ISIN	REBATERATE	FEERATE	AVAILABLE
BBRY	Research In Motion Ltd	4817436	CA7609751028	-8.16	8.25	250000

Data from Interactive Brokers

Not all brokers will compensate the stock holder for loaning out the shares. Scotia iTrade charges a flat charge of prime + 1.5%. This equates to a carrying cost of 4.5% per annum for being short. As a side note, this also illustrates the revenue generation available for brokerages, where Scotia iTrade could theoretically lend out the shares at 8%.

Misconceptions

There are many rules to shorting shares that the SEC regulates. Additionally, every brokerage has a set of internal rules that must be followed. I am not trying to go over every rule, but to highlight the general principles so sound investment decisions can be made.

I have heard of a technique to stop the brokerage house from lending out the shares that investors hold in long positions. Many believe a standing sell order at an artificially high price will stop the lending out of the shares. First, shares from many types of accounts cannot be lent out. Registered retirement accounts fall into this category as most cannot be margin accounts. Even within non-registered accounts (i.e. straight cash account) some brokers will not lend out the shares to the "shorts". Generally, if the account is setup on margin then the s! hares may! be loaned out. This will be stipulated in the brokerage agreement that was signed when the account was created.

A quick reality check will verify if your shares have been loaned out. When shares are loaned out to the "shorts", voting rights are also loaned out. Of course these shares are callable at any time, but if the shares were loaned out, voting information would not be sent out to you from your broker.

Many investors apply a black and white logic that either you are "long" or "short" the stock. This logic is treated as exclusively, either or. It is possible that some investors can be long and short the stock, it all depends on the timeframe. If the investor feels that things will get worse before it gets better, then shorting the stock until it hits the investors floor price may be called for. The important concept is that some investors that take a short-term "short" position can fundamentally believe in the company. While I do admit playing both sides of the line is not the norm, it does occur and retail investors need to be aware.

What will the trigger be?

I have calculated the average entry price for traders shorting BlackBerry shares over the last 12 months to be $11.70 USD. The question now becomes how long can the "shorts" wait, and how high of a share price can the "shorts" tolerate. The high cost of borrowing around 5% to 8% is offset by the potential upside for the "shorts". With the share price being undervalued, there is little room for miscalculations at this stage of the game. I would anticipate that the end of September financial earnings call would be a significant day for decision making with investors. With the share price approaching $18 - $20 per share, I would expect some short covering. With nearly 50% of the outstanding shares owned by institutional investors, most of the "shorting" likely is being conducted by the non-retail investor. This is concerning as institutional ! investors! have the resources to absorb some stock price appreciation, but I would not expect institutional investors to incur unnecessary losses.

I believe that the next two earnings calls will not be a definitive catalyst for the stock price. The current analysts' reports that are "short" BlackBerry shares, have articulated various reasons why the earnings calls are not indicative of long term success.

A major catalyst would likely require major news being released from BlackBerry, or a major carrier definitively acknowledging customer acceptance. Verizon (VZ) appears to be working closely with BlackBerry, and as a major U.S. carrier could initiate a short squeeze indirectly. This is likely not to occur until well after the next earning call.

There have been discussions about a short squeeze occurring by the loaned out shares being recalled for the annual shareholders meeting. This date was May 21st and is not a potential catalyst. The annual shareholders meeting information is included below and was obtained directly from BlackBerry or Research in Motion as it is officially known; At least until July 9th.

The Annual and Special Meeting of the shareholders (the "Meeting") of Research In Motion Limited (the "Company") will be held on July 9, 2013, at the Humanities Theatre, University of Waterloo, 200 University Avenue West, Waterloo, Ontario N2L 3G1, at 10:00 a.m. (Eastern Daylight Time)

To our shareholders,

We have decided to use the new "notice-and-access" system recently adopted by the Canadian Securities Administrators for delivery of this year's proxy materials. Under notice-and-access, you still receive a proxy or voting instruction form enabling you to vote at the Research in Motion Limited ("BlackBerry") annual and special meeting. However, instead of a paper copy of the management information circular and other proxy materials, you have received this notice, which contains information about how to access these materia! ls electr! onically at the following website: envisionreports.com/BlackBerry. Electronic delivery reduces the cost and environmental impact of producing and distributing paper copies of documents in very large quantities. It also provides shareholders with faster access to information about BlackBerry.

WHO CAN VOTE

Holders of BlackBerry common shares as of 5:00 p.m. (Eastern Daylight Time) on May 21, 2013.

Source: Shorting BlackBerry: What You Need To Know

Disclosure: I am long BBRY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)

Taking A Hard Look At The Dollar

The range of the dollar index is roughly 75 to 85 and presently sits just under 80; 80 is where we have been many times before over the last 30 years. Yet, we read and hear almost daily that the dollar has been devalued due to QE over the last many years, that the dollar is falling, that it will lose its reserve currency status, etc, etc.

The fact is the dollar has been stable for years. It was where it is now at the end of 2010. I have personally hardly mentioned it in my articles more than a few times over the years. It simply hasn't been an issue. But as of last week I noticed its trend looks to be breaking down. It has marginally broken through 80 and if it falls through 79 it may well be signaling a return to past lows.

One reason is dwindling confidence in the U.S. government's ability or willingness to pay its bills. Another is the appointment of Janet Yellen, who is admittedly more concerned about unemployment than inflation. And over the weekend China criticized the U.S. for threatening default and recently a Chinese rating agency downgraded the dollar. Meanwhile China has been expanding the role of its own currency in world trade.

All of these factors are real reasons for the dollar to drift lower. Some are predicting this will lead to higher gold and commodity prices - and that may happen. However, I am not one who believes that a falling dollar necessarily means rising gold, or a rising gold price means the dollar will fall. That's because I've lived through periods where both the dollar and gold rose together. 2001 to about 2006 was such a period. And in fact, within the last few months the CRB, gold, and the dollar have all fallen simultaneously. But, the dollar is an important factor to keep an eye on, and could be signaling a shift in sentiment and investor confidence.

For example, if the dollar were to fall sharply from here and become an issue in the press for a period, it could lead to a sustained rise in gold and other commodities. A lot depends on why it's ! falling. Perhaps even more to the point is to keep an eye on the factors pushing the dollar down.

For years there has been talk of the dollar losing its reserve currency status. I've never taken the talk seriously. The depth of the dollar market is too big to lose it's trading use any time in my life time. Even assuming its use will diminish, it will still be used as reserves by governments and as money by people all over the world. Even if the dollar was not the reserve currency, individuals and governments would still use it as they do today because it's the most acceptable and accessible currency in the world.

China will eventually have a currency that competes with the dollar - it's almost inevitable. But it will have no more affect on American's than the creation of the euro which now is used as a currency and accumulated as a competing reserve asset throughout the world. The dollar has been diminished by the euro, but not replaced by it. The same may be true of the Chinese currency as the years go by. It will no doubt grow in use, but will be far from able to replace the dollar.

The fact is that no other country offers the transparency, the court system, or the reputation developed over centuries as does the U.S. This will not change anytime soon unless the U.S. actually commits financial suicide by defaulting on its creditors, which it has never done. The fact is that the U.S. has over 10 times the amount of money coming into the Treasury as it owes in interest to service its debt. It would take an act of intentional default not to pay our creditors. And since we are not at war with any of them there's no reason to choose to default.

Meanwhile, China for all it's attempts to establish a world wide currency, has no court system to protect creditors as does the US. It has no reputation to trust. And it's currency is not convertible and has no market value of its own -- it's tied to the dollar. For China to rival the dollar would take years of independent sound monetary polic! y, a conv! ertible currency, and a reputation of trust. Not until people are clamoring for Chinese money, euros, (or gold for that matter) rather than dollars, will the reserve status of the dollar end involuntarily.

This is not to say the dollar is immune to plunging or soaring in value at any given time. But since the mid 1980s the dollar has never been a major factor in determining the gold price, inflation rate, or interest rates. It's range has been contained with 80 being about par. That's where we are right now, and why we will watch it closely for any sign of it breaking down.

The recent budget fight has dented the reputation of the United States throughout the world. We may see a subtle but continuous shift away from dollars and toward gold and other currencies and assets in an attempt to diversify investments and reserve assets held by governments. The physical demand for gold has risen sharply during this debt ceiling battle, and as I type this, the price of gold is up over 30 dollars and the dollar index is breaking lower. The question now is whether this is the beginning of a trend.

Source: Taking A Hard Look At The Dollar

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)

Don't Give Up on the American Funds

Virtually every investor knows by now that the average actively managed mutual fund fails to beat its benchmark. A variety of studies have come to slightly different results, but about two-thirds of actively managed funds fall short of their index.

See Also: Should You Give These Former Star Fund Managers Another Chance?

That has led to a long-standing question: Can individuals or, for that matter, professional investors identify funds that will beat their benchmarks in the future? (I stress the word future because it's a piece of cake to spot funds that have beaten their bogeys in the past.)

The American funds, the nation's largest actively managed fund group, have now entered the fray with a provocative study. It asserts that the American funds have, for the most part, beaten their indexes over the long term. And it argues, convincingly, that they may well continue to do so.

If you're a do-it-yourself investor, you may not be terribly familiar with the American funds. That's hardly surprising. You can only buy them through a broker or adviser (or a workplace retirement plan), and the fund firm's salespeople usually communicate only with those kinds of intermediaries. American officials and fund managers almost never talk with the media, which makes the new PR offensive all the more interesting.

But if you look at the pattern of money flowing into and out of the funds, you'll understand why they decided to "go public." The American funds have lost more than $200 billion in assets over the past few years. The firm is still huge, with $1 trillion under management, but it's hurting.

At first blush, the flood of redemptions is puzzling because the American funds are so good. The stock and balanced funds have, for the most part, beaten their relevant indexes over most periods. The study includes the firm's Class A shares over rolling one-, three-, five- and ten-year periods from 1934 through 2012. Over those periods respectively, 57%, 62%, 67% and 73% of the time the funds, in aggregate, topped their benchmarks. (Rolling periods represent different stretches of time. For example, rolling 12-month returns would look at returns from September 30, 2012, through September 30, 2013; August 30, 2012, through August 30, 2013; and so on.)

More-recent performance—over the past ten years—is even more impressive. The study also looked at rolling one-, three-,and five -year periods, as well as the ten-year period ending last December. In those four spans respectively, 58%, 69%, 77% and 92% of the time the funds, in aggregate, beat their benchmark.

Tom Lloyd, a Capital Group vice-president who coauthored the study, says he doesn't expect the funds to beat their benchmarks over every short-term period. It's over the long term that the funds have excelled, he says. He's right.

Then why are so many people dumping their American funds? Russel Kinnel, director of mutual fund research at Morningstar, offers a compelling explanation that starts with the 2000-02 bear market, during which the American funds held up remarkably well.

After the downturn ended, Kinnel says, the company "ramped up its sales operation." The American funds have always been good about touting their long-term record, not short-term performance. But many advisers, brokers and clients inferred, "Hey, these guys are bear-market-proof."

The funds recorded massive inflows from 2003 through 2007, a period of generally solid stock-market performance. Assets peaked in October 2007 at $1.2 trillion—more than in any other fund firm, if you exclude money markets.

Unfortunately, the devastating decline that began on October 9, 2007, was much broader than the 2000-02 bear market. Some sectors managed to advance during the earlier slump. But in the 2007-09 bear market, during which Standard & Poor's 500-stock index plunged 55.3%, there was no place to hide. The American stock and balanced funds performed about in line with or even a little better than their benchmarks, but many investors, particularly new ones, were deeply disappointed. What's more, the American bond funds failed to keep up with their benchmarks.

The firm is contrite about its bear-market performance. "We know we disappointed people," says spokesman Chuck Freadhoff. "We disappointed ourselves. People had expectations that we'd be recession-proof. We didn't meet those expectations."

Today, the shoe is on the other foot. All the buzz is about index funds and exchange-traded funds. Most ETFs track one index or another, and some follow indexes that were invented solely to be used by an ETF. Hardly anyone wants to hear about actively managed funds.

The people in charge at the American funds are trying to stem the bleeding—and they have a good story to tell. Managers and analysts often stay at the company throughout their careers. Their funds have always charged below-average fees. Of course, if you buy one of the funds through an adviser or broker, you'll also have to pay a sales charge or an asset-based management fee.

Studies have found that low costs are the best predictor of superior fund returns. The second-best predictor is good long-term, risk-adjusted returns under the same manager or group of managers. Morningstar has also found some predictive ability in its subjective measure of corporate culture. In all of these areas, the American funds excel.

In short, I believe American is the best large fund family that specializes in actively managed funds. My favorite American funds are Fundamental Investors (ANCFX), New World (NEWFX) and New Perspective (ANWPX). I don't care for Smallcap World (SMCWX), and I'm not a fan of American's bond funds. But all the rest of the choices are solid.

Steven T. Goldberg is an investment adviser in the Washington, D.C. area.