Matrix Advisors Value Fund on the Mend

When you're a value investor, it pays to be patient. Consider David Katz, who has run Matrix Advisors Value since 1996. Recently, the fund has benefited from stocks, such as Charles Schwab and Teva Pharmaceutical, that Katz bought in 2011, when the market was in turmoil because of worries about Europe's future. The picks have helped put Matrix in the top 2% of large-company value funds over the past year.

SEE ALSO: 8 Great Dividend Mutual Funds

Katz relies on computers as well as hands-on analysis to find bargains with attractive prospects. He starts by screening the 1,500 largest U.S.-traded companies for such measures as price relative to earnings and dividend yield. The computer kicks out a fair value for each firm. Katz considers any stock that trades for at least one-third less than that fair-value figure. About 75 to 100 names pass muster. Katz buys the 30 to 40 most-promising stocks. He sells when a stock reaches its fair value, or if he sees deterioration in the quality of a firm's balance sheet or its earnings prospects.

Matrix's long-term record has been erratic. After beating Standard & Poor's 500-stock index each year from 1999 through 2003, the fund lagged the market in seven of the next nine years. But Katz believes the fund, which holds just $78 million in assets, is poised to continue its rebound. As long as investors focus on individual companies rather than big-picture issues, he says, such solid, well-priced holdings as Microsoft and JPMorgan Chase should do well.

Growing Home Sales to Boost Revenue For Homebuilders

In a report, the Commerce Department said new home sales vaulted 18.6 percent to a seasonally adjusted annual rate of 504,000 units, the highest level since May 2008. New home sales increased in all four regions. The sales hit a six-year high in the Midwest and were the highest since June 2008 in the South. An improving housing market and availability of different financing options, has led to a dramatic increase in the demand for new homes. Buyers who had previously delayed their home purchases are now motivated to buy, before home prices and interest rates rise in the future. High rental occupancy and rising rents have also triggered renters to reconsider purchasing a home. Three companies are poised to reap the rewards from the rising demand for new homes.

PulteGroup (PHM) witnessed a strong start in 2014, with first quarter results showing gains resulting from the strategies which focused on profitable growth and higher margins, rather than sales volume. For the quarter, the Company reported pretax income of $130 million, an increase of 58% over prior year pretax income of $82 million. Net income for the period was $75 million, or $0.19 per share, compared with prior year net income of $82 million, or $0.21 per share.

Rising mortgage rates don't affect these buyers, and they are more willing to explore different home options and upgrades, compared to the entry-level buyers. The company's Pulte and Del Webb brands, contribute mostly from its "move-up" sales. As a result, although total home purchases for PulteGroup were down 6% year-over-year, the gross margin increased by 580 basis points year-over-year to 23.8% in the first quarter of 2014.

Land acquisition is an important factor that boost the earning of the Company. As part of a comprehensive capital allocation process, PulteGroup maintains a disciplined land acquisitions and divestitures program designed to enhance long-term returns on invested capital. Land investments are evaluated through a formal risk weighting process, with a bias toward optioning rather than owning land positions.

Del Webb is going to be the growth driver for PulteGroup in the coming years. This is because Dell Webb's sales growth is higher than its other brands, and it contributes higher margins. Looking at booming market conditions, Del Webb began sales at its Carolina Arbors community in July 2013. The community sprawls across nearly 460 acres and has 1,275 new homes. The price of each home ranges between $198,990 and $344,990.

Taylor Morrison (TMHC) is the eighth-largest U.S. homebuilder in terms of revenue. The increase in home prices and strong demand for homes has made Southwest Florida a good investment option for residential construction companies. There are more buyers than sellers in this market, which is driving up home prices. Looking at the growth opportunity, the company is rapidly expanding in Southwest Florida and has undertaken several projects. It is developing a resort lifestyle community of 443 single-family homes and a Golf and Country Club community with 1,121 single-family homes. It expects to increase its community count by 30% in 2014. The rising number of communities is expected to increase Taylor Morrison's revenue by 53% to $2.19 billion in 2013 and around $3.01 billion in 2014 to $3.36 billion in 2015.

According to CoreLogic, a leading residential property information provider, around 850,000 residential properties have returned to a state of positive in 2014. Positive equity means that the value of the property is now more than the mortgage on the home. This will allow buyers to profit from the sale of their existing home and look for a new home. Taylor Morrison it purchased 87% of its owned plots in the U.S. during recession at a very low price. These plots will generate healthy returns and will improve its gross margin.

Conclusion

The improvements in the housing sector and rise in demand of new homes have helped these companies to expand their presence and increase their earnings. PulteGroup is concentrating on its move-up segment to increase its margin. It has begun home sales in its adult retirement community, Carolina Arbors, in keeping with its strategy. Taylor Morrison is expected to increase its community count and is prioritizing improving its margins.

I recommend a buy for both the stocks.

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3 Life Lessons Only A Real Summer Job Can Teach Teens

 

If you're wondering why a wealth advisor is writing about summer jobs for teens, it turns out that a big part of my role with my clients is helping them ensure that their wealth does not interfere with their children's ability to launch successful and independent lives.

In that vein, in my travels in the wealth advising industry, it's clear that the traditional summer job is becoming a thing of the past, replaced by a litany of enrichment and volunteer experiences carefully curated and tailored to provide maximum leadership experiences and resume impact.  That's unfortunate.  I've spent the last year and a half interviewing successful inheritors – kids raised around wealth who grew up to be content, grateful, motivated, and engaged – and a startling number of them remember their high school summer jobs as formative to their identity and work ethic.  It turns out that early work in the form of a real summer job – one where the child is held accountable on the basis of how they perform rather than who they are or where they come from – teaches affluent children key financial and life lessons they are hard pressed to learn elsewhere:

1. How to earn their own money and the value of a dollar – It is through a summer job that kids first experience earning their own money and the satisfaction of buying something with money they earned.  This is a thrilling, immensely satisfying and empowering experience for all kids, but especially for affluent children for whom money accumulation has always been their parents' domain.  The inheritors I spoke with all spoke to this phenomenon – no matter how many luxuries had been bought for them by their parents, the first thing they really appreciated was the thing they bought with money they themselves had earned.  And then there's the issue of the value of a dollar:  There's nothing like making $7/hour to show you how much that $500 skirt you bought on your parents' credit card really cost.  That is a perspective you can't buy your child.  They have to learn it for themselves.

GoPro driving tech stocks up

NEW YORK (CNNMoney) The Fourth of July is a week away, but there have been a few fireworks this Friday in the stock market.

The S&P 500 is hovering around flat. The Dow Jones Industrial Average is down slightly, and the Nasdaq is up 0.4%. The tech-heavy Nasdaq has been a star performer for the week. It's on tap to finish the week up 0.6%. The other two indexes will end the week down.

Here's what you need to know before you take off early on this summer Friday:

1. Investors ignore Michaels debut, but clamor for more GoPro: Shares in GoPro (GPRO), the sports-oriented camera maker whose shares started trading Wednesday, have continued to surge. The stock is up 16% Friday, nearly as strong a move after yesterday's momentous 30% spike.

To put that in perspective, the stock priced at $24 and is now trading at over $36.

Investors are less enthusiastic about crafts retailer Michaels (MIK). It started trading Friday morning -- eight years after private equity firms Blackstone and Bain Capital took it private -- on the Nasdaq with the symbol "MIK". The company's shares priced at $17 and have moved little since trading commenced. The company raised $472 million the IPO.

Perhaps the biggest news in the IPO world this week is that Chinese e-commerce giant Alibaba chose to take what could be America's largest-ever IPO to the New York Stock Exchange. Yahoo (YHOO, Tech30), which owns a stake in Alibaba, has enjoyed a nice bounce the past two days. It's up 2.3%.

2. It's the shoes: Nike (NKE) and sneaker store chain Finish Line (FINL) both gained after the companies reported earnings and sales that surpassed Wall Street expectations, though they have since settled and remain in positive territory.

Nike said in its earnings report that the best news is coming out of Europe, with 18% sales growth. And with all the focus on the World Cup in Brazil, it should come as no surprise that sales from the company's soccer segment were also up sharply.

Shares of Nike rival Adidas (ADDDF) closed slightly higher in Germany, and Finish Line competitor Foot Locker (FOOT) is up 2.5%.

  Nike 1, Adidas 0

3. Dollar store drama and coffee surge: Shares in Dollar ! General (DG) are down more than 7% after CEO Rick Dreiling announced that he was retiring in 2015. Activist investor Carl Icahn has a 9.4% stake in Family Dollar (FDO), which many suspect he wants to merge with Dollar General. Family Dollar stock is down 2%. Related company Dollar Tree (DLTR) is slightly negative as well.

Keurig Green Mountain (GMCR) shares are having a perky day, up over 4% to lead the S&P 500. Research firm Argus upgraded the stock to "buy" on estimates that sales and profits will improve.

4. BNP pares dividend: The Wall Street Journal is reporting that BNP Paribas (BNPQF), the French banking giant that's nearing a $9 billion settlement with the Justice Department, will be cutting its dividend by an unspecified amount because the payment will hurt its balance sheet. The Paris-listed shares of the bank closed flat.

London-listed Barclays (BCS), another big European bank in the spotlight because of a dark pool-related lawsuit from the New York Attorney General, also closed flat after yesterday's 6.5% drop.

5. International markets: Asian stocks finished the day mixed, with Chinese and Indian stocks closing slightly higher. European markets closed mixed today, but all ended the week in the red.

Chipotle and Yum! Brands Are Solid Long-Term Investments

When it comes to food and beverages, some of the foremost names that come to our mind are Chipotle Mexican Grill (CMG) and Yum! Brands (YUM). And this is no surprise as these companies have made a reputation for themselves over the years in the minds of consumers. They have expanded their network considerably and their stores can be seen throughout the world. Moreover, with changing tastes and preferences of the consumers, they have also experimented with their menu. The company has also put in lot of effort on the marketing front to increase sales.

As the network grows, so do the problems related to it. Price hike of various ingredients is a matter of concern for the entire food and beverages industry. The decline in beef production has caused prices to soar. And this increase in price has in turn affected sales; Chipotle and Taco bell have reported a decline in beef sales. In addition, rising prices also impact the company's margin, which again is a matter of concern for management. As a result of the declining production, out-of-stock displays have become common for Chipotle.

A close look at Chipotle

In terms of numbers, Chipotle Mexican Grill has become one of the fastest growing restaurant chains in the U.S. According to statistics, it has achieved more than $3 billion in annual sales with around 1,500 restaurant chains spread across various locations. Chipotle has established itself as a major name in the restaurant industry in the past 20 years and has redefined the fast food concept. The company claims that its fresh ingredients are free from antibiotic, which provides it an edge over its peers.

The stock price of Chipotle has increased more than 600% in the past five years. However, the company is concerned with declining margins. Its margins have declined around 1.05% due to which the stock has become expensive.

Along with beef, salsa ingredients, dairy, and poultry products have also joined the fleet, with an increase in their prices. In addition to this, rising costs in marketing along with cut throat competition has put further pressure on Chipotle's margins.

As already discussed, Chipotle has been experimenting with its menu. Consequently, it has converted its pinto beans menu into a strict vegetarian one by eliminating pork from it. This is a strategic move as it will increase its margins as even with a vegetarian menu, it charging the same price. Along with this, it has strengthened its portfolio by adding La Combe, which will serve coffee brewed from organic beans.

It has been estimated that coffee is one of the most popular beverages around the world with an annual consumption of 400 billion cups. This shows the massive potential of the coffee market, which can be tapped by Chipotle.

A look at Yum!

Chipotle has to face tough competition from its peers such as Yum! Brands. The company has three brands under its hood namely KFC, Taco Bell, and Pizza Hutt. Taco Bell has also altered it menu offerings and is going a step further by joining hands with Lorena Garcia to develop items such as Cantina Burrito bowl and Cantina Burrito.

In such a highly competitive market, price is a decisive factor. Taco Bell offers Burritos for $5, which is around $1.50 less than similar servings by Chipotle. But, management at Chipotle is not ready to lower its price, in fact it believes that it has loyal customers, who will not be lured by petty discounts such as these and will return to it because of their fine experience with Chipotle.

Yum! is focusing on emerging markets such as China. Management believes that China is one of the biggest overseas markets with around 3,800 KFC restaurants. However, KFC's sales have declined around 13% since the start of the year, which is mainly on account of the bird flu panic. But the company had some relief from Pizza Hut, which has offset the decline in sales at KFC.

Conclusion

Both Chipotle and Yum trade in the same industry and hence face the same challenges of price hike, which has been affecting their margins. But the management at both the companies is trying their level best to increase its margins, and this makes them solid investments.

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Big and bad: Ram blacks out heavy-duty pickup

It was already big. Now it's bad. Really bad.

Once again showing there's no limit to how blacked-out it can make a truck, Ram is going offer the monstrous Ram Heavy Duty in its Black Express package.

The look was already a hit with the already large Ram 1500. The Chrysler Group's truck unit apparently figured why stop there?

The Ram Black Appearance Group, as it's being called, will show up the Atlanta International Auto Show.

Merely painting the truck black just wouldn't do. This one has 20-inich black aluminum wheels, fog lamps, black grille surround with black horizontal inserts and just about anything else designers could figure out they could make black. There's not even any badging outside. Believe us, you'll know what it is if you see it.

"Ram has continually pushed the limits of truck design and paved new themes that have been copied by competitors," says Reid Bigland, President and CEO – Ram Truck Brand, Chrysler Group LLC. "The Black package on the Ram Heavy Duty is proof that our designers are passionate about trucks."

Really? Sounds like they are mostly passionate about black.

The 2014 Ram Heavy Duty Black package is available in Ram 2500 and 3500 short wheelbase, Crew Cab and Mega Cab, Big Horn/Lone Star and Laramie models with the choice of two- or four-wheel-drive. The truck starts at $42,140, plus $1,195 destination charge.

5 Stocks Setting Up to Break Out

DELAFIELD, Wis. (Stockpickr) -- Trading stocks that trigger major breakouts can lead to massive profits. Once a stock trends to a new high or takes out a prior overhead resistance point, then it's free to find new buyers and momentum players who can ultimately push the stock significantly higher.

>>5 Stocks Under $10 Set to Soar

One successful breakout trade that I flagged recently was cancer diagnostics player Biocept (BIOC), which I featured on June 13 at $5.70 per share. I mentioned then that shares of Biocept gapped up sharply higher back above its 50-day moving average of $5.13 a share with strong upside volume. That move was quickly pushing shares of BIOC within range of triggering a major breakout trade above some key near-term overhead resistance levels at $5.85 to $6 a share.

Guess what happened? Shares Biocept triggered that breakout on June 18 with heavy upside volume. Volume on that day registered 124,000 shares, which is well above its three-month average action of 27,117 shares. Shares of BIOC have continued to uptrend since breaking out that day, with the stock tagging an intraday high on Friday of $7.72 a share. That represents a large gain of over 30% in just a few trading sessions for anyone who bought shares of BIOC in anticipation of that breakout.

>>5 Blue-Chip Stocks to Trade for Gains

Breakout candidates are something that I tweet about on a daily basis. I frequently tweet out high-probability setups, breakout plays and stocks that are acting technically bullish. These are the stocks that often go on to make monster moves to the upside. What's great about breakout trading is that you focus on trend, price and volume. You don't have to concern yourself with anything else. The charts do all the talking.

Trading breakouts is not a new game on Wall Street. This strategy has been mastered by legendary traders such as William O'Neal, Stan Weinstein and Nicolas Darvas. These pros know that once a stock starts to break out above past resistance levels and hold above those breakout prices, then it can easily trend significantly higher.

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With that in mind, here's a look at five stocks that are setting up to break out and trade higher from current levels.

Controladora Vuela Compa

One regional airline player that's quickly moving within range of triggering a big breakout trade is Controladora Vuela Compa (VLRS), which provides air transportation services for passengers, cargo and mail in Mexico and internationally. This stock is off to a weak start in 2014, with shares down sharply by 35%.

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If you take a look at the chart for Controladora Vuela Compa, you'll notice that this stock recently formed a double bottom chart pattern at $8.13 to $8.17 a share. That bottom occurred right above its 50-day moving average. Since forming that bottom, shares of VLRS have now started to uptrend and break out above some near-term overhead resistance at $8.64 a share. That move is quickly pushing shares of VLRS within range of triggering a much bigger breakout trade above some key near-term overhead resistance levels.

Traders should now look for long-biased trades in VLRS if it manages to break out above some near-term overhead resistance levels at $8.84 to $9 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average volume of 264,347 shares. If that breakout gets underway soon, then VLRS will set up to re-test or possibly take out its next major overhead resistance levels at $10 to $10.50 a share. Any high-volume move above $10.50 a share will then give VLRS a chance to re-fill some of its previous gap-down-day zone from February that started at $11.50 a share.

Traders can look to buy VLRS off weakness to anticipate that breakout and simply use a stop that sits right below those double bottom support zones or around its 50-day moving average of $7.81 a share. One can also buy VLRS off strength once it starts to take out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Novavax

A clinical-stage biopharmaceutical player that's starting to trend within range of triggering a big breakout trade is Novavax (NVAX), which focuses on discovering, developing and commercializing recombinant protein nanoparticle vaccines and adjuvants. This stock hasn't done much over the last three months, with shares up around 7%.

>>3 Big Stocks Getting Big Attention

If you take a look at the chart for Novavax, you'll see that this stock recently gapped down back below both its 50-day and 200-day moving averages with heavy downside volume. Following that gap, shares of NVAX have started to rebound higher with the stock moving back above those key moving averages and with NVAX now quickly moving within range of triggering a big breakout trade above some key near-term overhead resistance levels.

Traders should now look for long-biased trades in NVAX if it manages to break out above some near-term overhead resistance levels at $5.09 to $5.20 a share with high volume. Look for a sustained move or close above those levels with volume that registers near or above its three-month average action of 4.70 million shares. If that breakout begins soon, then NVAX will set up to re-test or possibly take out its next major overhead resistance levels at $5.75 to $6 a share, or even $6.50 to its 52-week high of $6.95 a share.

Traders can look to buy NVAX off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $4.37 a share or around more support at $4.09 a share. One could also buy NVAX off strength once it starts to clear those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Allscripts Healthcare Solutions

Another stock that's starting to move within range of triggering a near-term breakout trade is Allscripts Healthcare Solutions (MDRX), which is a provider of clinical, financial, connectivity and information solutions and related professional services to hospitals, physicians and post-acute organizations. This stock has been under some selling pressure over the last three months, with shares off by 18%.

>>4 Biotech Stocks Under $10 to Watch for Breakout Trades

If you take a glance at the chart for Allscripts Healthcare Solutions, you'll notice that this stock recently formed a major bottoming chart pattern, since shares have found buying interest each time it has pulled back to around $14.60 to $14.40 a share. Shares of MDRX have now started to spike higher above those support levels and its trending back above its 50-day moving average of $15.32 a share. That move is quickly pushing shares of MDRX within range of triggering a near-term breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trades in MDRX if it manages to break out above some near-term overhead resistance levels at $15.57 to $15.74 a share and then once it takes out its 200-day moving average of $15.76 a share with high volume. Watch for a sustained move or close above those levels with volume that hits near or above its three-month average action of 1.68 million shares. If that breakout triggers soon, then MDRX will set up to re-test or possibly take out its next major overhead resistance levels at $17.34 to $18.50 a share, or even its 52-week high of $19.68 a share.

Traders can look to buy MDRX off weakness to anticipate that breakout and simply use a stop that sits just below some near-term support at $15 a share or around those major support zones at $14.60 to $14.40 a share. One can also buy MDRX off strength once it starts to move above those breakout levels share with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Idera Pharmaceuticals

Another stock that's starting to trend within range of triggering a major breakout trade is Idera Pharmaceuticals (IDRA), which is engaged in the discovery and development of novel therapeutics that modulate immune responses through toll-like receptors in the U.S. This stock has been hit hard by the bears so far in 2014, with shares off sharply by 33%.

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If you take a glance at the chart for Idera Pharmaceuticals, you'll notice that this stock has been uptrending a bit for the last month and change, with shares moving higher from its low of $2.34 to its recent high of $3.49 a share. During that uptrend, shares of IDRA have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of IDRA within range of triggering a major breakout trade above some key near-term overhead resistance levels.

Traders should now look for long-biased trades in IDRA if it manages to break out above some near-term overhead resistance levels at $3.35 to $3.49 a share and then once it takes out more key resistance at $3.68 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average volume of 2.88 million shares. If that breakout materializes soon, then IDRA will set up to re-test or possibly take out its next major overhead resistance levels at $4.50 to $4.80 a share, or even $5.50 to $6 a share.

Traders can look to buy IDRA off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $2.68 or at $2.30 a share. One can also buy IDRA off strength once it starts to bust above those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Ohr Pharmaceutical

My final breakout trading prospect is biotechnology player Ohr Pharmaceutical (OHRP), which focuses on the development of its two products: OHR/AVR118 for the treatment of cancer cachexia and Squalamine for the treatment of the wet form of age-related macular degeneration using an eye drop formulation. This stock has been blasted by the sellers over the last three months, with shares off by 41%.

If you look at the chart for Ohr Pharmaceutical, you'll see that this stock has been uptrending strong for the last month and change, with shares pushing higher from its low of $6.01 to its recent high of $9.85 a share. During that uptrend, shares of OHRP have been making mostly higher lows and higher highs, which is bullish technical price action. Shares of OHRP have now started to spike higher right above its 50-day moving average of $8.99 a share with strong upside volume. That spike is starting to push shares of OHRP within range of triggering a major breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trades in OHRP if it manages to break out above some near-term overhead resistance at $9.85 to $10.20 a share and then once it clears more past resistance at around $11 a share with high volume. Look for a sustained move or close above those levels with volume that registers near or above its three-month average action of 275,619 shares. If that breakout kicks off soon, then OHRP will set up to re-fill some of its previous gap-down-day zone from April that started right around $14 a share. If OHRP gets into that gap with strong volume, then it could easily explode higher towards $12 to $13 a share.

Traders can look to buy OHRP off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $8.99 a share or around more key support levels at $8.27 to $8 a share. One can also buy OHRP off strength once it starts to clear those breakout levels with volume and then simply use a stop that sits a conformable percentage from your entry point.

To see more breakout candidates, check out the Breakout Stocks of the Week portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS:

>>Move In to Hedge Funds' 5 Favorite REITs This Summer

>>5 Retail Stocks to Trade for Gains in June

>>2 Big-Volume Tech Stocks to Keep on Your Radar

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

Is Las Vegas Sands a Buy?

Since the depth of the financial crisis, Las Vegas Sands (NYSE: LVS  ) has been the top-performing stock in gaming and has become a $60 billion behemoth in the industry. Macau has clearly been the major driver, with Las Vegas Sands owning four major resorts in the world's largest gaming market, and Singapore's Marina Bay Sands is the company's second most profitable resort, expanding exposure to Asia.

LVS data by YCharts.

However, with the equity and net debt value (enterprise value) of Las Vegas Sands now 13.4 times the EBITDA (a proxy we use for cash flow) it has created over the past 12 months, the stock is a higher risk than it once was. Let's take a look at whether this is still a great stock for investors.

Well positioned in Macau
When comparing casino operators in Macau, one of the first things to look at is the location of their resorts. The old gaming region on the Macau Peninsula is becoming more and more like Downtown Las Vegas, with smaller and older casinos than the megaresorts of Cotai. Cotai is an area of reclaimed land between Taipa and Coloane islands in Macau, creating a blank slate where Las Vegas Sands made a huge bet on the future of gaming.

Las Vegas Sands has kept its casinos busy as the Asian middle class has grown. Source: Las Vegas Sands.

The company built The Venetian Macau before anyone else ventured onto Cotai, and it now has three megaresorts on the area of reclaimed land, with others following its lead. Melco Crown's City of Dreams was the second major resort on Cotai and has been the major driver of Melco's value over the past few years. But MGM Resorts, Wynn Resorts, and SJM are currently relegated to the Macau Peninsula and are feverishly building on Cotai just to access this massive market.

The draw of Cotai is that it has a lot of space and it's becoming the huge draw for the mass market, where there's more growth and margins are higher than in the VIP market. Given the billions of potential customers in China and surrounding countries, the mass market is an incredible opportunity for Las Vegas Sands to grow organically, even if it weren't building The Parisian next to its other resorts on Cotai.

Upside in Asia
Macau is Las Vegas Sands' biggest market, and its resort in Singapore generated $1.4 billion in EBITDA, but this may just be the start in Asia. Japan is mulling a bill that would allow megaresorts to be built in limited numbers there, which may create a similar opportunity as Singapore. 

South Korea is another country Chief Executive Officer Sheldon Adelson has his eyes on. It approved the first foreign-owned casino resort earlier this year in an effort to capitalize on growing Chinese tourism.  

Marina Bay Sands is the flagship of Las Vegas Sands' portfolio. Source: Las Vegas Sands.

There are only a handful of companies with the gaming experience and balance sheet to compete in these new locations, and Las Vegas Sands is one of them.

Little risk in the balance sheet
The major change over the last five years is the risk Las Vegas Sands' balance sheet presents to investors. In 2008, Sheldon Adelson had to step in to save the company, raising $2.1 billion of capital, much of it from Adelson himself. 

Today, that position has changed dramatically and Las Vegas Sands has $7 billion of net debt and generated $5.1 billion of EBITDA in the past 12 months. The reduction in leverage along with a new 2.7% dividend yield make this a much lower-risk investment than casino stocks have been since the '80s, and make this an attractive stock for even risk-averse investors.

Is Las Vegas Sands a buy?
Given the value on the balance sheet and growth opportunities in Macau and elsewhere in Asia, I think there's still decent value for long-term investors even with a 13.4 enterprise value/EBITDA multiple. But keep in mind that gaming stocks can be very volatile, and if Macau's growth slows in coming months, the stock could slide as it has done in recent months.

Long-term, the investment thesis is very strong, so buying a small position now and adding on any dips is the best strategy. The gaming market as a whole should do very well as more Asian consumers look for entertainment, and Las Vegas Sands is leading the pack with the scale to take advantage of new markets that may arise. The growth story is far from over for Las Vegas Sands.

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5 Key Takeaways From Buffett's 2013 Letter To Shareholders

Some say you get what you pay for.  That's not true with Warren Buffett.  He's been dishing investing wisdom for decades, and his advice is both free and priceless. He's living proof that price is what you pay, value is what you get.

His annual letters to Berkshire Hathaway Berkshire Hathaway shareholders house his best advice.  The collection of letters should be the first thing any new investor reads.  As a shareholder, I study his letters every year.

He repeats himself.  The same themes crop up in his letters year after year.  I suppose he'll continue to repeat himself until investors finally listen.

Here are 5 lessons Buffett teaches that every investor should learn (quotes are from the 2013 letter).

1.  Stock repurchases:  Companies often repurchase shares at the expense of shareholders.  Management has a knack for buying back shares at inflated prices.  The cynic in me assumes management is trying to increase the price of a share to goose the value of its options.  Just as likely, though, management is as bad as most everybody else at investing.  The letters 'CEO' affixed to a name does not a Buffett make.

Here, Buffett leads by example:

As I've long told you, Berkshire's intrinsic value far exceeds its book value. Moreover, the difference has widened considerably in recent years. That's why our 2012 decision to authorize the repurchase of shares at 120% of book value made sense. Purchases at that level benefit continuing shareholders because per-share intrinsic value exceeds that percentage of book value by a meaningful amount. We did not purchase shares during 2013, however, because the stock price did not descend to the 120% level. If it does, we will be aggressive.

Clear. Concise. Consistent.  CEOs and investors alike would do well to follow his example.

2.  America's future:  Buffett is bullish on America.

Charlie and I have always considered a "bet" on ever-rising U.S. prosperity to be very close to a sure thing. Indeed, who has ever benefited during the past 237 years by betting against America? If you compare our country's present condition to that existing in 1776, you have to rub your eyes in wonder. And the dynamism embedded in our market economy will continue to work its magic. America's best days lie ahead.

His optimism isn't just talk.  Berkshire's purchase of BNSF in 2009 was, as Buffett describes it, an "all-in wager on the economic future of the United States." Similarly, he's instructed the trustee who one day will manage money Buffett leaves to his wife to invest 90% of it in a low cost, S&P 500 index fund.  The other 10% goes to a short term U.S. government bond fund.

As Buffett sees it, "America's best days lie ahead."

3.  You invest in businesses, not stocks:  Imagine you wanted to buy a real live honest to goodness business.  You learn that a local business, say a gas station, is for sale for $1 million.  Without knowing more, would you buy it?  Of course not.  You'd want to understand its revenue, expenses, growth potential, assets, liabilities, and a host of other information.

Yet when it comes to stocks, many investors "play the market" knowing very little about the businesses they are buying.  Rather than focus on the underlying business, we are all too often consumed with market quotations.

Buffett takes a different approach:

With my two small investments [referring to two properties he had purchased], I thought only of what the properties would produce and cared not at all about their daily valuations. Games are won by players who focus on the playing field – not by those whose eyes are glued to the scoreboard. If you can enjoy Saturdays and Sundays without looking at stock prices, give it a try on weekdays.

4.  Focus on per share results:  Throughout his letter to shareholders, Buffett focuses on per share results.  He compares the growth in Berkshire's book value per-share to the performance of the S&P 500.  Buffett explained his "goal of not simply growing, but rather increasing per-share results."  And he described how he would achieve that goal:

With this tailwind working for us, Charlie and I hope to build Berkshire's per-share intrinsic value by (1) constantly improving the basic earning power of our many subsidiaries; (2) further increasing their earnings through bolt-on acquisitions; (3) benefiting from the growth of our investees; (4) repurchasing Berkshire shares when they are available at a meaningful discount from intrinsic value; and (5) making an occasional large acquisition. We will also try to maximize results for you by rarely, if ever, issuing Berkshire shares.

Dilution matters.  A company that grows earnings in the aggregate, but reduces them through dilution on a per share basis, proves the axiom–A rising tide sinks all boats.

5.  Bull markets are fun, until they're not: For those enjoying the recent rise in the market, Buffett teaches like only he can:  "Remember the late Barton Biggs' observation: 'A bull market is like sex. It feels best just before it ends.'"

The market is feeling pretty good right now.

#PreMarket Primer: Monday, March 17: Crimea Votes To Secede

Related BZSUM Benzinga Weekly Preview: Share Markets Have A Tough Road Ahead Market Wrap For March 14: Ukraine Tension Drag Markets Lower

On Sunday, more than 95 percent of Crimeans voted to leave Ukraine and join Russia in a move that deepened tension between Russia and world leaders.

Now that the decision has been made, many wonder if Moscow will annex the small peninsula within a matter of weeks, or take its time to conduct negotiations with Ukraine and world powers as the US is hoping.

The vote, which Western lawmakers have said they refuse to recognize, sparked more pro-Russian protests across Ukraine, which could prompt further Russian military intervention.

Top News

In other news around the markets:

The search for a missing Malaysia Airlines jet has taken several twists and turns over the past week, but officials have yet to locate the plane. Authorities have said they now believe there could have been foul play and are looking into the plane's crew and passengers for more insight into what happened. On Sunday, the UK's Vodafone came to an agreement with Spanish cable operator Ono to buy the company for more than seven billion euros. The agreement will need regulatory approval before moving forward, but will help Vodafone gain market share in Spain as a provider of fixed-line services like cable TV and land line telephone services. South Korean government officials reported that North Korea fired 10 short range missiles to the east of the Korean peninsula over the weekend in routine test of its arsenal. North Korean short range missile launches are permitted under UN sanctions, but the US State Deparmtment responded by saying it was closely monitoring the situation. Twitter CEO Dick Costolo is set to visit Shanghai and meet with government officials this week, the company's first show of interest in breaking into the complicated Chinese market. The social networking site has been banned in China since 2009, but if the company can navigate the nation's government controls, it could break into a lucrative market of 600 million internet users.

Asian Markets

Asian markets were mixed as the problems in Ukraine weighed on shares. The Japanese NIKKEI lost 0.35 percent, Australia's ASX 200 fell 0.22 percent and the Hang Seng index was down 0.23 percent. However, China's Shanghai composite gained 0.96 percent, the Shenzhen composite rose 1.77 percent, and the South Korean KOSPI was up 0.40 percent.

European Markets

Europe's markets improved; the UK's FTSE was up 0.38 percent and the eurozone's STOXX 600 gained 0.70 percent. The German DAX rose 0.80 percent, France's CAC 40 was up 0.67 percent, and the Spanish IBEX gained 1.20 percent.

Commodities

Energy futures fell slightly on Monday morning, Brent futures for May delivery were down 0.23 percent and WTI futures for April delivery lost 0.01 percent. Gold gained 0.36 percent but silver was down 0.06 percent. Industrial metals were lower with copper posting the largest loss, down 0.81 percent.

Currencies

The euro lost 0.25 percent against the dollar and traded at $1.3879 and the pound was down 0.04 percent against the greenback. The dollar gained 0.20 percent against the yen but lost 0.45 percent against the Australian dollar.

Earnings

Notable earnings released on Friday included:

Brown Shoe Company (NYSE: BWS) reported fourth quarter EPS of $0.14 on revenue of $600.00 million, compared to last year's EPS of $0.14 on revenue of $640.18 million. ANN INC (NYSE: ANN) reported fourth quarter EPS of $0.10 on revenue of $623.30 million, compared to last year's EPS of $0.05 on revenue of $607.68 million. Buckle, Inc (NYSE: BKE) reported fourth quarter EPS of $1.23 on revenue of $339.00 million, compared to last year's EPS of $1.28 on revenue of $360.62 million.

Pre-Market Movers

Stocks moving in the Premarket included:

Walt Disney Co (NYSE: DIS) gained 0.79 percent in premarket trade after falling 2.60 percent last week. Lorillard Inc (NYSE: LO) was up 0.75 percent in premarket trade after gaining 1.67 percent on Friday. Carnival Corp (NYSE: CCL) rose 0.73 percent in premarket trade after choppy trading took the stock down 2.73 percent over the past five days. JP Morgan Chase and Co (NYSE: JPM) was down 0.09 percent in premarket trade after losing 4.38 percent last week. Earnings

Notable earnings releases expected on Monday include:

LAN Chile S.A. (NYSE: LFL) is expected to report fourth quarter EPS of $0.24 on revenue of $3.50 billion, compared to last year's EPS of $0.02 on revenue of $3.48 billion. JA Solar Holdings, Co. Ltd (NASDAQ: JASO) is expected to report EPS of $0.03 on revenue of $291.75 million, compared to last year's loss of $2.65 per share on revenue of $268.09 million. Sterling Construction Company, Inc (NASDAQ: STRL) is expected to report a fourth quarter loss of $1.47 per share on revenue of $153.07 million, compared to last year's EPS of $0.18 on revenue of $158.09 million.

Economics

Monday's economic calendar is set to be quiet and will include eurozone CPI, US industrial production, Venezuelan GDP and the release of the Reserve Bank of Australia's policy meeting minutes.

For a recap of Friday's market action, click here.

Tune into Benzinga's pre-market info show with Dennis Dick and Joel Elconin here.

Posted-In: Crimea Dick Costolo Malaysian Airlines Vladimir PutinEarnings News Eurozone Futures Commodities Previews Forex Events Global Economics Federal Reserve Pre-Market Outlook Markets Movers Trading Ideas Best of Benzinga

© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

  Most Popular Earnings Expectations For The Week Of March 17: FedEx, Nike, Oracle And More Keurig, Office Depot And Others Insiders Have Been Buying Weekly Highlights: iOS 8 Maps Strike Back, Dreaming Of Tim Cook's Retirement And More Barron's Recap: Detroit Will Rise Again The Fall of Ratings King 'American Idol' Benzinga's Weekend M&A Chatter Related Articles (ANN + BKE) #PreMarket Primer: Monday March 17: Crimea Votes To Succeed Market Wrap For March 14: Ukraine Tension Drag Markets Lower Express Inc. Down to Strong Sell - Analyst Blog Buckle Reports Q4 And FY13 Results: FY Net Sales Positive Mid-Day Market Update: Ulta Salon Jumps After Strong Earnings Report; Aeropostale Shares Fall Mid-Morning Market Update: Markets Mixed; Ann To Lower Around 100 Jobs

General Electric: Consumer Credit IPO Good News, No Panacea

The market has been waiting for General Electric (GE) to finally act on its plan to exit consumer lending–and it finally has.

Bloomberg News

General Electric filed to IPO its consumer-credit card business, which counts the Gap (GPS) and Wal-Mart (WMT) among its customers–with the company operating under the name Synchrony Financial.

Bernstein’s Steven Winoker calls the move “a net positive” for General Electric. He explains why:

[We] see the exit from North America Retail Finance as a net positive for GE over time, provided the price is right and capital is deployed wisely. Management has stretched further out to 2015 and beyond to find a story that will show they can offset the dilutive impact of the IPO and tax efficient share exchange. We think that provided management keeps their share buyback promises, investors will favor the higher industrial earnings weighting over time. There may be issues on the industrial side as well but overall, we still believe those earnings deserve a much higher multiple than “banking” earnings given the differences in relative volatility, leverage and ROE.

Still, Winoker isn’t a big fan of General Electric’s shares. For starters, its stock looks pricey trading at a 40% premium to tangible book for GE Capital and 17 times 2014/2015 earnings, and leaves little room for shares to rise. GE Capital, meanwhile, won’t start growing until 2016, Winoker says. All told, Winoker rates General Electric as Market-Perform with a $28 price target.

Shares of General Electric dropped 1.6% to $25.34 today, while 3M (MMM) fell 1.3% to $130.81 and Danaher (DHR) declined 1.8% to $74.43. Shares of the Gap dipped 0.1% to $41.27, while Wal-Mart finished off 0.8% at $74.93.

Muni regulator pursues rule to increase price transparency

As a new study shows that hidden costs make municipal bonds more expensive for retail investors than corporate bonds, the industry regulator is poised to make moves that it hopes will bring more transparency to the market.

On Tuesday, the S&P Dow Jones Indices released a report that found a hidden transaction cost of 1.73% built into muni-bond markups.

The transaction cost of investment-grade corporate bonds was 0.87%.

The Wall Street Journal was the first to report the findings.

The $3.671 trillion muni-bond market increasingly is made up of retail investors who are trying to cut through the murky atmosphere when making purchases.

“The issue du jour is price transparency,” said Andrew Kintzinger, a partner at Hunton & Williams. “The market is opaque.”

The Municipal Securities Rulemaking Board is trying to address that problem with a rule that would require for the first time that muni securities dealers seek the best execution prices for retail investors. The rule is designed to promote market competition and efficiency.

“Everything we do boils down to that fundamental fairness, to ensure the retail investor gets a fair price,” said MSRB executive director Lynette Kelly.

The best-execution rule, which is modeled on a similar Financial Industry Regulatory Authority Inc. rule for equity and fixed-income markets, was proposed Feb. 19. The deadline for public comments is March 21.

(See also: MSRB to follow Finra regarding suitability rules)

When the MSRB put out a concept release on the proposal last year, it received criticism from some financial firms, who said that the idea was unworkable because of the stark liquidity differences between muni and equity markets.

In an Oct. 7 letter on the concept proposal, Wells Fargo Advisors said that the MSRB should keep in place its present rule, which calls for firms to offer fair and reasonable prices.

“A more prescriptive best-execution rule could slow down the execution process in many municipal securities,” wrote Robert J. McCarthy, director of regulatory policy at Wells Fargo Advisors. “The 'best execution' requirements may cause dealers to delay execution of a municipal security at a fair market value to fulfill the Finra rule's multifactor 'reasonable diligence' analysis.”

Despite the certainty of industry push-back, the prospects for the rule are good, according to Mr. Kintzinger.

R! 20;The MSRB has been aggressive in taking on the topics of price transparency and disclosure in the market,” he said. “Investment advisers and brokers are going to want to keep a real focus on what the MSRB is proposing.”

Rules proposed by the MSRB, a self-regulatory organization whose board comprises public and industry representatives, must be approved by the Securities and Exchange Commission.

There will probably be modifications to the best-execution rule along the way because if underwriters must give the best price to investors and a fair and reasonable price to issuers, both groups could be hurt, said Nathan Howard, an attorney at Affinity Law Group.

“What it ultimately looks like at the end of the day is hard to say,” Mr. Howard said.

“There will be some best execution,” he said. “We won't see the MSRB walking away from it.”

In addition to the price transparency rule, the MSRB also has plans to upgrade its Electronic Municipal Markets Access website. By the end of April, the regulator will add a feature that allows investors to compare muni-bond offerings in similar geographic regions or with similar credit ratings and other characteristics.

The MSRB also soon will put out a concept release to add a centralized transparency platform to the website that would provide pre- and post-trade information on muni bonds.

“We have this transparent website which is unprecedented in the securities markets,” Ms. Kelly said. “It's incredibly exciting.”

For momentum to be sustained, the SEC also will have to be on board. In July 2012, the SEC released a report containing several recommendations to improve muni-market structure and disclosure.

“I don't think municipal securities rule making is going to be at the top of the [SEC] agenda,” said Hester Peirce, a senior research fellow at the Mercatus Center at George Mason University.

“They just have other priorities right now,” he said. &! #8220;The! y haven't devoted many regulatory resources to municipal securities.”

The SEC didn't respond to a request for comment.

Cut Money, Time, Frustration When Filing Your Taxes

Getty Images As the deadline for filing federal income taxes nears, have you thought about how you can cut money, time or frustration in how you file your return? The Internal Revenue Service's Free File allows for a no-cost federal return if your household's 2013 adjusted gross income was $58,000 or less. You can use its online fillable forms or brand-name tax software by selecting a service provider to file listed on the site. Depending on which state you live in, you may need to pay for your state return. Some "e-file partner" companies provide free state returns; check the company's website. Regardless of whether you meet the $58,000 limit, these providers offer many free federal filing options. 1040EZ forms are offered for free preparation and filing by e-Smart Tax and TaxSlayer. TaxACT has a variety of IRS tax forms and schedules for free preparation and filing. Basic IRS forms can be prepared and filed for free with TurboTax, which will import W-2 information, so tax filing requires less time to complete. State returns may have a fee to file, and more complex federal forms can bring additional costs. IRS-certified volunteers offer free help for taxpayers who qualify. Volunteer Income Tax Assistance covers electronic filing for those who meet the $52,000 or less threshold. People 60 years old and older can get help with taxes -- and issues related to pension and retirement -- through the Tax Counseling for the Elderly Program. Active duty members of the military can use TaxSlayer's free federal version.

Nu Skin: On Second Thought…

Nu Skin’s shares plunged yesterday after the company released strong fourth-quarter earnings but said 2014 would be impacted by China’s investigation into its selling practices. It also postponed the release of its 10-K

Bloomberg

Today, however, investors are reconsidering, as Nu Skin’s shares head higher thanks to supportive analysts. JPMorgan’s John Faucher and team, for instance, are “encouraged by the language in the press release.” They explain why:

The company did not really provide any additional color on recent events on the conference call. However, in the press release they indicated that they “are diligently preparing to resume normal business activities [in China] as soon as possible, subject to resolution of the China regulatory review". Management is already improving their sales leader training processes and we expect more changes in the model in China, as the situation evolves. Once a resolution is reached, we do
expect the company's China business to be largely intact.

Deutsche Bank’s Bill Schmitz and team call Nu Skin’s valuation compelling:

While China overhang persists, company is working closely with government to find a speedy resolution, which likely includes changes to training and recruiting policies. In the interim, growth will clearly slow as company stops recruiting in this core market but we believe this is already more than priced into the stock at these levels and continue to see a product and channel driven growth stock priced like a broken value story.

Valuation supports Buy rating and $110 target…DCF yields $110 target price, assuming 4.6% sales growth and 0.3 pts of annual margin expansion through 2021 (8% WACC based on CAPM). Downside risks include continued headline risk, developing markets slowdown, geopolitical challenges, legal, regulatory and corruption issues, stronger dollar and disappointing new product results.

Shares of Nu Skin have gained 5.4% to $78.63, while Herblife (HLF) has risen 1.5% to $66 and Usana Health Sciences (USNA) has advanced 5% to $75.53.

Why Air Products And Chemicals (APD) Stock Continues To Climb On Wednesday

NEW YORK (TheStreet) -- Shares of Air Products and Chemicals (APD) continue to rise, up 0.21% to $131, in after-hours trading today.

By the end of trading, 8.99 million shares of Air Products exchanged hands as compared to its average daily volume of about 721,000 shares.

The company, which is a worldwide supplier of industrial gases and equipment, specialty and intermediate chemicals, and environmental and energy systems, reached a high of 7.50% to $130.72 before the close, after announcing it has named Rockwood Holding Inc. (ROC) CEO Seifi Ghasemi as its new CEO beginning in July.

Must Read: Warren Buffett's 25 Favorite Stocks  STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more

Ghasemi spent 13 years with Rockwood and is replacing retiring Air Products CEO John McGlade. Separately, TheStreet Ratings team rates AIR PRODUCTS & CHEMICALS INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation: "We rate AIR PRODUCTS & CHEMICALS INC (APD) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, solid stock price performance and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity." Highlights from the analysis by TheStreet Ratings Team goes as follows: Despite its growing revenue, the company underperformed as compared with the industry average of 11.2%. Since the same quarter one year prior, revenues slightly increased by 3.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share. Net operating cash flow has increased to $478.50 million or 47.50% when compared to the same quarter last year. In addition, AIR PRODUCTS & CHEMICALS INC has also modestly surpassed the industry average cash flow growth rate of 38.34%. AIR PRODUCTS & CHEMICALS INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, AIR PRODUCTS & CHEMICALS INC increased its bottom line by earning $4.73 versus $4.66 in the prior year. This year, the market expects an improvement in earnings ($5.73 versus $4.73). Compared to its closing price of one year ago, APD's share price has jumped by 26.11%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels. You can view the full analysis from the report here: APD Ratings Report STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more

Chicago Bridge & Iron Company N.V. (CBI): Should Investors or the Shorts Be Worried? JEC, KBR & FLM

Mid cap infrastructure construction stock Chicago Bridge & Iron Company N.V. (NYSE: CBI) fell 7.23% after being trashed in an article by an apparent short seller posted on Seeking Alpha, meaning its worth taking a closer look at the stock along with the performance of potential benchmarks like Jacobs Engineering Group Inc (NYSE: JEC), KBR, Inc (NYSE: KBR) and First Trust ISE Global Engineering and Construction Index Fund ETF (NYSEARCA: FLM).

What is the Chicago Bridge & Iron Company N.V.?

Founded in 1889 in Chicago, mid cap Chicago Bridge & Iron Company N.V. calls itself the most complete energy infrastructure focused company in the world and a major provider of government services. In fact, Chicago Bridge & Iron Company N.V. is one of the most complete providers of a wide range of services including design, engineering, construction, fabrication, maintenance and environmental services.

As for potential performance benchmarks or peers, Jacobs Engineering Group Inc is one of the world's largest and most diverse providers of technical professional and construction services with around $12 billion in revenues last year; KBR, Inc is a global engineering, construction and services company supporting the energy, hydrocarbons, power, industrial, civil infrastructure, minerals, government services and commercial markets; and First Trust ISE Global Engineering and Construction Index Fund ETF tracks the ISE Global Engineering and Construction Index (which includes companies that are involved in the engineering, designing, planning, consulting, project managing and/or constructing of large civil and capital projects) through 61 holdings.

What You Need to Know or Be Warned About Chicago Bridge & Iron Company N.V.

On Tuesday, an article appeared on Seeking Alpha from Prescience Point Research Group entitled: Chicago Bridge & Iron: Acquisition Accounting Shenanigans Dramatically Inflate Profitability - Prescience Point Initiates At Strong Sell. It's a rather lengthy piece filled with pretty charts, lots of numbers to digest and various innuendos while comments to the article are an interesting read as it sounds like the only "fraud" so far exposed by Prescience Point involved a Chinese small cap that, like many others, has since been delisted.

Nevertheless, Prescience Point alleges that after Chicago Bridge & Iron Company N.V. acquired the Shaw Group in 2013, it made retroactive adjustments to its purchase price allocation, enabling it to create a reserve of about $1.56B. The company then allegedly used the fund to significantly inflate its 2013 profits and gross profit margin to "mask" its "increasingly fragile financial condition." Prescience Point believes Chicago Bridge & Iron Company N.V. will be forced to take a goodwill write-down or restate its results, triggering a debt default and possibly leading to a liquidity crisis.

For its part, Chicago Bridge & Iron Company N.V. issued a brief statement pointing out that Prescience Point Research Group is a short seller, adding:

CB&I's second quarter financial results are scheduled to be released in late July 2014. The company is confirming today that it expects to report results within the ranges of its current guidance for the year.

With that said, consider who are Chicago Bridge & Iron Company N.V's major investors according to Yahoo! Finance data:

HolderShares% OutValue*Reported

Berkshire Hathaway, Inc	9,550,755	8.88	832,348,298	Mar 31, 2014
Vanguard Group, Inc. (The)	5,887,124	5.48	513,062,856	Mar 31, 2014
SouthernSun Asset Management, Inc.	3,268,822	3.04	284,877,837	Mar 31, 2014
Balyasny Asset Management, LP	2,950,241	2.74	257,113,503	Mar 31, 2014
Wellington Management Company, LLP	2,869,385	2.67	250,066,902	Mar 31, 2014
BlackRock Institutional Trust Company, N.A.	2,620,288	2.44	228,358,099	Mar 31, 2014
Calamos Advisors LLC	2,341,596	2.18	204,070,091	Mar 31, 2014
Columbia Wanger Asset Management, L.P.	2,155,000	2.00	187,808,250	Mar 31, 2014
Westpac Banking Corporation	2,127,159	1.98	185,381,906	Mar 31, 2014
State Street Corporation	1,769,503	1.65	154,212,186	Mar 31, 2014

 

On the other hand, there has also been a awful lot of insider sales this year:

Insider Transactions Reported

DateInsiderSharesTypeTransactionValue*

Jun 3, 2014	STOCKTON WESTLEY S.Officer	4,627	Direct	Automatic Sale at $81.19 per share.	375,666
Jun 3, 2014	STOCKTON WESTLEY S.Officer	4,627	Direct	Option Exercise at $8.19 - $47 per share.	N/A
Jun 2, 2014	ASHERMAN PHILIP KOfficer	17,757	Direct	Option Exercise at $9.28 - $23.65 per share.	N/A
Jun 2, 2014	ASHERMAN PHILIP KOfficer	75,000	Direct	Automatic Sale at $81.27 - $81.77 per share.	6,114,0002
May 13, 2014	BALLSCHMIEDE RONALD AOfficer	1,035	Direct	Disposition (Non Open Market) at $0 per share.	N/A
May 12, 2014	UNDERWOOD MICHAEL LDirector	310	Direct	Disposition (Non Open Market) at $0 per share.	N/A
May 9, 2014	UNDERWOOD MICHAEL LDirector	192	Direct	Disposition (Non Open Market) at $78.85 per share.	15,139
May 9, 2014	KISSEL W CRAIGDirector	351	Direct	Disposition (Non Open Market) at $78.85 per share.	27,676
May 9, 2014	UNDERWOOD MICHAEL LDirector	786	Direct	Automatic Sale at $78.63 per share.	61,803
May 9, 2014	BOLCH JAMES RDirector	491	Direct	Disposition (Non Open Market) at $78.85 per share.	38,715
May 9, 2014	WILLIAMS MARSHA CDirector	477	Direct	Disposition (Non Open Market) at $78.85 per share.	37,611
May 9, 2014	MCVAY LARRY DDirector	452	Direct	Disposition (Non Open Market) at $78.85 per share.	35,640
May 9, 2014	FLURY L RICHARDDirector	468	Direct	Disposition (Non Open Market) at $78.85 per share.	36,901
May 1, 2014	MCVAY LARRY DDirector	2,175	Direct	Acquisition (Non Open Market) at $0 per share.	N/A
May 1, 2014	MILLER JAMES HDirector	2,175	Direct	Acquisition (Non Open Market) at $0 per share.	N/A
May 1, 2014	UNDERWOOD MICHAEL LDirector	2,175	Direct	Acquisition (Non Open Market) at $0 per share.	N/A
May 1, 2014	WILLIAMS MARSHA CDirector	2,175	Direct	Acquisition (Non Open Market) at $0 per share.	N/A
May 1, 2014	FRETZ DEBORAH MDirector	2,175	Direct	Acquisition (Non Open Market) at $0 per share.	N/A
May 1, 2014	BOLCH JAMES RDirector	2,175	Direct	Acquisition (Non Open Market) at $0 per share.	N/A
May 1, 2014	KISSEL W CRAIGDirector	2,175	Direct	Acquisition (Non Open Market) at $0 per share.	N/A
May 1, 2014	FLURY L RICHARDDirector	2,175	Direct	Acquisition (Non Open Market) at $0 per share.	N/A
Apr 30, 2014	MILLER JAMES HDirector	N/A	Direct	Statement of Ownership	N/A
Apr 10, 2014	BAILEY BETH AOfficer	5,000	Direct	Automatic Sale at $85.55 per share.	427,750
Apr 4, 2014	MULLEN PATRICK KOfficer	2,637	Direct	Automatic Sale at $89 per share.	234,693
Apr 1, 2014	KISSEL W CRAIGDirector	24	Direct	Acquisition (Non Open Market) at $74.14 per share.	1,779
Mar 27, 2014	WILLIAMS MARSHA CDirector	6,500	Direct	Automatic Sale at $82.99 per share.	539,435
Mar 26, 2014	CHANDLER RICHARD E JROfficer	20,801	Direct	Automatic Sale at $84.60 - $85.52 per share.	1,769,0002
Mar 26, 2014	RAY EDGAR C.Officer	102,068	Direct	Automatic Sale at $84.10 - $85.37 per share.	8,649,0002
Mar 26, 2014	RAY EDGAR C.Officer	41,607	Direct	Option Exercise at $8.19 - $47 per share.	N/A
Mar 26, 2014	FLURY L RICHARDDirector	12,410	Direct	Automatic Sale at $84.95 - $85.5 per share.	1,058,0002
Mar 25, 2014	MCCARTHY DANIEL M.Officer	26,029	Direct	Automatic Sale at $85.92 per share.	2,236,411
Mar 18, 2014	STOCKTON WESTLEY S.Officer	2,054	Direct	Automatic Sale at $85 per share.	174,590
Mar 18, 2014	MULLEN PATRICK KOfficer	5,000	Direct	Automatic Sale at $86 per share.	430,000
Mar 11, 2014	STOCKTON WESTLEY S.Officer	2,095	Direct	Automatic Sale at $83.62 per share.	175,183
Mar 7, 2014	SCORSONE LUKE V.Officer	17,472	Direct	Option Exercise at $8.19 - $47 per share.	N/A
Mar 7, 2014	SCORSONE LUKE V.Officer	34,977	Direct	Automatic Sale at $84.40 - $85.28 per share.	2,967,0002
Mar 6, 2014	MULLEN PATRICK KOfficer	365	Direct	Disposition (Non Open Market) at $0 per share.	N/A
Mar 3, 2014	ASHERMAN PHILIP KOfficer	75,000	Direct	Automatic Sale at $82.70 - $83.16 per share.	6,220,0002
Mar 1, 2014	CHANDLER RICHARD E JROfficer	1,817	Direct	Disposition (Non Open Market) at $84.19 per share.	152,973
Feb 24, 2014	BALLSCHMIEDE RONALD AOfficer	18,471	Direct	Automatic Sale at $80.34 - $81.05 per share.	1,491,0002
Feb 21, 2014	SCORSONE LUKE V.Officer	997	Direct	Disposition (Non Open Market) at $79.17 per share.	78,932
Feb 21, 2014	RAY EDGAR C.Officer	985	Direct	Disposition (Non Open Market) at $79.17 per share.	77,982
Feb 21, 2014	CHANDLER RICHARD E JROfficer	1,057	Direct	Disposition (Non Open Market) at $79.17 per share.	83,682
Feb 21, 2014	BALLSCHMIEDE RONALD AOfficer	1,468	Direct	Disposition (Non Open Market) at $79.17 per share.	116,221
Feb 21, 2014	BAILEY BETH AOfficer	1,016	Direct	Disposition (Non Open Market) at $79.17 per share.	80,436
Feb 21, 2014	ASHERMAN PHILIP KOfficer	4,650	Direct	Disposition (Non Open Market) at $79.17 per share.	368,140
Feb 21, 2014	MCCARTHY DANIEL M.Officer	1,139	Direct	Disposition (Non Open Market) at $79.17 per share.	90,174
Feb 21, 2014	STOCKTON WESTLEY S.Officer	438	Direct	Disposition (Non Open Market) at $79.17 per share.	34,676
Feb 21, 2014	MULLEN PATRICK KOfficer	862	Direct	Disposition (Non Open Market) at $79.17 per share.	68,244
Feb 20, 2014	SABIN JAMES W.Officer	1,190	Direct	Statement of Ownership	N/A
Feb 20, 2014	STOCKTON WESTLEY S.Officer	2,940	Direct	Automatic Sale at $79.86 - $80.06 per share.	235,0002
Feb 20, 2014	RAY EDGAR C.Officer	8,960	Direct	Disposition (Non Open Market) at $79.86 per share.	715,545
Feb 20, 2014	STOCKTON WESTLEY S.Officer	1,768	Direct	Disposition (Non Open Market) at $79.86 per share.	141,192
Feb 20, 2014	STOCKTON WESTLEY S.Officer	9,426	Direct	Acquisition (Non Open Market) at $0 per share.	N/A
Feb 20, 2014	MCCARTHY DANIEL M.Officer	12,134	Direct	Disposition (Non Open Market) at $79.86 per share.	969,021
Feb 20, 2014	RAY EDGAR C.Officer	27,985	Direct	Acquisition (Non Open Market) at $0 per share.	N/A
Feb 20, 2014	MCCARTHY DANIEL M.Officer	38,153	Direct	Acquisition (Non Open Market) at $0 per share.	N/A
Feb 20, 2014	CHANDLER RICHARD E JROfficer	8,547	Direct	Disposition (Non Open Market) at $79.86 per share.	682,563
Feb 20, 2014	SCORSONE LUKE V.Officer	8,748	Direct	Disposition (Non Open Market) at $79.86 per share.	698,615
Feb 20, 2014	SCORSONE LUKE V.Officer	28,163	Direct	Acquisition (Non Open Market) at $0 per share.	N/A
Feb 20, 2014	ASHERMAN PHILIP KOfficer	232,375	Direct	Acquisition (Non Open Market) at $0 per share.	N/A
Feb 20, 2014	ASHERMAN PHILIP KOfficer	72,064	Direct	Disposition (Non Open Market) at $79.86 per share.	5,755,031
Feb 20, 2014	BALLSCHMIEDE RONALD AOfficer	15,457	Direct	Disposition (Non Open Market) at $79.86 per share.	1,234,396
Feb 20, 2014	BALLSCHMIEDE RONALD AOfficer	47,905	Direct	Acquisition (Non Open Market) at $0 per share.	N/A
Feb 20, 2014	BAILEY BETH AOfficer	9,289	Direct	Disposition (Non Open Market) at $79.86 per share.	741,819
Feb 20, 2014	SABIN JAMES W.Officer	5,266	Direct	Acquisition (Non Open Market) at $0 per share.	N/A
Feb 20, 2014	MULLEN PATRICK KOfficer	21,364	Direct	Acquisition (Non Open Market) at $0 per share.	N/A
Feb 20, 2014	BAILEY BETH AOfficer	28,478	Direct	Acquisition (Non Open Market) at $0 per share.	N/A
Feb 20, 2014	CHANDLER RICHARD E JROfficer	30,980	Direct	Acquisition (Non Open Market) at $0 per share.	N/A
Feb 19, 2014	STOCKTON WESTLEY S.Officer	321	Direct	Disposition (Non Open Market) at $79.96 per share.	25,667
Feb 19, 2014	BALLSCHMIEDE RONALD AOfficer	1,648	Direct	Disposition (Non Open Market) at $79.96 per share.	131,774
Feb 19, 2014	SCORSONE LUKE V.Officer	964	Direct	Disposition (Non Open Market) at $79.96 per share.	77,081
Feb 19, 2014	RAY EDGAR C.Officer	868	Direct	Disposition (Non Open Market) at $79.96 per share.	69,405
Feb 19, 2014	MULLEN PATRICK KOfficer	407	Direct	Disposition (Non Open Market) at $79.96 per share.	32,543
Feb 19, 2014	BAILEY BETH AOfficer	914	Direct	Disposition (Non Open Market) at $79.96 per share.	73,083
Feb 19, 2014	ASHERMAN PHILIP KOfficer	7,984	Direct	Disposition (Non Open Market) at $79.96 per share.	638,400
Feb 19, 2014	MCCARTHY DANIEL M.Officer	890	Direct	Disposition (Non Open Market) at $79.96 per share.	71,164
Feb 17, 2014	RAY EDGAR C.Officer	648	Direct	Disposition (Non Open Market) at $79.42 per share.	51,464
Feb 17, 2014	BALLSCHMIEDE RONALD AOfficer	1,043	Direct	Disposition (Non Open Market) at $79.42 per share.	82,835
Feb 17, 2014	ASHERMAN PHILIP KOfficer	4,302	Direct	Disposition (Non Open Market) at $79.42 per share.	341,664
Feb 17, 2014	BAILEY BETH AOfficer	647	Direct	Disposition (Non Open Market) at $79.42 per share.	51,384
Feb 17, 2014	STOCKTON WESTLEY S.Officer	205	Direct	Disposition (Non Open Market) at $79.42 per share.	16,281
Feb 17, 2014	MULLEN PATRICK KOfficer	244	Direct	Disposition (Non Open Market) at $79.42 per share.	19,378
Feb 17, 2014	SCORSONE LUKE V.Officer	706	Direct	Disposition (Non Open Market) at $79.42 per share.	56,070
Feb 17, 2014	MCCARTHY DANIEL M.Officer	672	Direct	Disposition (Non Open Market) at $79.42 per share.	53,370
Feb 16, 2014	RAY EDGAR C.Officer	529	Direct	Disposition (Non Open Market) at $79.42 per share.	42,013
Feb 16, 2014	BALLSCHMIEDE RONALD AOfficer	809	Direct	Disposition (Non Open Market) at $79.42 per share.	64,250
Feb 16, 2014	SCORSONE LUKE V.Officer	670	Direct	Disposition (Non Open Market) at $79.42 per share.	53,211
Feb 16, 2014	MULLEN PATRICK KOfficer	211	Direct	Disposition (Non Open Market) at $79.42 per share.	16,757
Feb 16, 2014	STOCKTON WESTLEY S.Officer	194	Direct	Disposition (Non Open Market) at $79.42 per share.	15,407
Feb 16, 2014	MCCARTHY DANIEL M.Officer	830	Direct	Disposition (Non Open Market) at $79.42 per share.	65,918
Feb 16, 2014	ASHERMAN PHILIP KOfficer	2,257	Direct	Disposition (Non Open Market) at $79.42 per share.	179,250
Feb 16, 2014	BAILEY BETH AOfficer	589	Direct	Disposition (Non Open Market) at $79.42 per share.	46,778
Feb 10, 2014	RAY EDGAR C.Officer	472	Direct	Option Exercise at $14.12 per share.	6,664
Jan 2, 2014	BALLSCHMIEDE RONALD AOfficer	1,999	Direct	Automatic Sale at $82.21 - $82.22 per share.	164,0002
Jan 2, 2014	KISSEL W CRAIGDirector	25	Direct	Acquisition (Non Open Market) at $69.33 per share.	1,733

 

Share Performance: Chicago Bridge & Iron Company N.V. vs. JEC, KBR & FLM

On Tuesday, mid cap Chicago Bridge & Iron Company N.V. fell 7.23% to $68.26 (CBI has a 52 week trading range of $56.04 to $89.22 a share) for a market cap of $7.38 billion plus the stock is down 16.5% since the start of the year, up 15.7% over the past year and up 402.6% over the past five years. Here is a look at the long term performance of Chicago Bridge & Iron Company N.V. verses Jacobs Engineering Group Inc , KBR, Inc and First Trust ISE Global Engineering and Construction Index Fund ETF:

As you can see from the above chart, Chicago Bridge & Iron Company N.V. has been a clear outperformer.

Finally, here are the latest technical charts for Chicago Bridge & Iron Company N.V., Jacobs Engineering Group Inc, KBR, Inc and First Trust ISE Global Engineering and Construction Index Fund ETF:

The Bottom Line. Chicago Bridge & Iron Company N.V. will be interesting to watch for the rest of this week and into next week to see if the accusations actually stick. If not, chalk this up as another failed attempt by the shorts to profit from trashing a stock.