There’s no such thing as a free lunch, but spinoff companies are as close to free as you can get.  When a company is spun off, there’s a high level of forced selling. One of the best ways to think about spinoffs: “There’s a natural constituency of sellers and not a natural constituency of buyers,” according to “Margin of Safety” author and hedge fund manager Seth Klarman. Simply, many shareholders who own shares of the… Read More

There’s no such thing as a free lunch, but spinoff companies are as close to free as you can get.  When a company is spun off, there’s a high level of forced selling. One of the best ways to think about spinoffs: “There’s a natural constituency of sellers and not a natural constituency of buyers,” according to “Margin of Safety” author and hedge fund manager Seth Klarman. Simply, many shareholders who own shares of the parent company are not interested in owning the spinoff. This can be for a variety of reasons, such as different business fundamentals, weak management, or negative cash flow. In most cases, investors are selling the company for no good reason. While on the other side, the buyers are limited, as the market is inefficient in digesting data on new spinoff companies.  Spinoffs Versus The Market  Yet, over the long term, spinoff… Read More

As the market reaches near record highs, it’s becoming harder to find value.  Historically, the average price-to-earnings (P/E) ratio of the S&P 500 is about 15.  Today, the average is 19. Read More

Here at StreetAuthority, we’re always on the lookout for catalysts that can help deliver quick and robust gains for a stock. Often, these catalysts are hidden from view, and we have to dig deep to spot them.  Other times, these catalysts stare us right in the face. They are practically begging to be noticed, even as the rest of the market may be focusing elsewhere. Robert Benmosche, the… Read More

Here at StreetAuthority, we’re always on the lookout for catalysts that can help deliver quick and robust gains for a stock. Often, these catalysts are hidden from view, and we have to dig deep to spot them.  Other times, these catalysts stare us right in the face. They are practically begging to be noticed, even as the rest of the market may be focusing elsewhere. Robert Benmosche, the CEO of American International Group (NYSE: AIG), went on CNBC in May and laid out a pair of time-tested stock catalysts: “As we continue to work on our capital plan and work with the Federal Reserve, our next priority would be to put a dividend on the stock, because we think that will increase the potential buyers. We’re also looking at potential stock buybacks as we progress through the… Read More

For the past few years, there’s been an anomaly in the global oil industry. Brent crude oil, which comes from the Middle East, Africa and Europe, has been far more expensive than West Texas Intermediate (WTI) crude, which is drilled right here in the U.S. Both Brent and WTI are known as light, sweet crude, which means they are easily processed into gasoline, diesel and other distillates. So why had Brent been trading for up to $20 more per barrel than WTI? Blame it on geography.#-ad_banner-# Although the U.S. has tapped into a mother… Read More

For the past few years, there’s been an anomaly in the global oil industry. Brent crude oil, which comes from the Middle East, Africa and Europe, has been far more expensive than West Texas Intermediate (WTI) crude, which is drilled right here in the U.S. Both Brent and WTI are known as light, sweet crude, which means they are easily processed into gasoline, diesel and other distillates. So why had Brent been trading for up to $20 more per barrel than WTI? Blame it on geography.#-ad_banner-# Although the U.S. has tapped into a mother lode of oil in the past few years, much of the produced oil had nowhere to go. Storage hubs were filled to capacity as a lack of pipelines kept all of the oil from flowing to U.S. Gulf Coast, the West Coast and the East Coast, where many oil refineries are located. All that has changed. The opening of many new pipelines in recent quarters has enabled the oil to start flowing more quickly, and as refiners boost demand for WTI crude and seek less Brent crude… Read More

As Standard & Poor’s gears up to prep the next group of companies to join the S&P 500, investors are trying to game the system by buying stocks that have a strong chance of graduating into this famous… Read More

I have a friend who suffers from a peculiar phobia. It’s so bad that her fear keeps her from driving many places.#-ad_banner-# She will drive a hundred miles in the wrong direction to avoid coming face to face with the cause of her… Read More

The truth will make you sick. Technically it’s public knowledge, but I can tell you — it’s Congress’ dirty little secret. Congress is rich. Unbelievably rich. And until just recently, insider trading laws didn’t apply to Congress. I don’t know which is worse: The fact that insider trading was legal for some of our nation’s wealthiest politicians… or that Congress refused to do anything about it for decades. “A few lawmakers proposed a bill that would prevent members and employees of Congress from trading securities based… Read More

The truth will make you sick. Technically it’s public knowledge, but I can tell you — it’s Congress’ dirty little secret. Congress is rich. Unbelievably rich. And until just recently, insider trading laws didn’t apply to Congress. I don’t know which is worse: The fact that insider trading was legal for some of our nation’s wealthiest politicians… or that Congress refused to do anything about it for decades. “A few lawmakers proposed a bill that would prevent members and employees of Congress from trading securities based on nonpublic information they obtain. The legislation has languished since 2006,” according to The Wall Street Journal. That was, the legislation languished until “60 Minutes” — one of the most respected investigative journalism programs on television — dedicated a segment to the issue. Here’s a portion of what they had to say… “In mid-September 2008, with the Dow Jones Industrial Average still above 10,000, Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke were… Read More

You’ve no doubt heard many times that one of the best ways to make money in the stock market is to buy stocks when they’re “hated.” In fact, Warren Buffett has followed this path to profits countless times and used it to amass his vast fortune. I don’t think I could find many stocks that have been more “hated” over the past few years than Bank of America… Read More

You’ve no doubt heard many times that one of the best ways to make money in the stock market is to buy stocks when they’re “hated.” In fact, Warren Buffett has followed this path to profits countless times and used it to amass his vast fortune. I don’t think I could find many stocks that have been more “hated” over the past few years than Bank of America (NYSE: BAC). From its role in the financial crisis and housing bubble to ongoing litigation issues associated with those dark chapters for the economy, it seems like the company can’t catch a break. But, of course, just because a stock is hated doesn’t mean you should buy it. To determine this, we have to look much deeper.#-ad_banner-# But before we do that, the first and most obvious thing to consider is that none other than Buffett himself has issued a vote of… Read More

The notorious bank robber Willie Sutton said he robbed banks “because that’s where the money is.” His words came to mind while I was thinking about which companies might benefit from rising interest rates. Certainly, banks have large cash balances, and for that reason, along with others — many of which were laid out recently by my colleague David Sterman — those institutions could be among the prime beneficiaries of soon-to-come higher interest rates. I… Read More

The notorious bank robber Willie Sutton said he robbed banks “because that’s where the money is.” His words came to mind while I was thinking about which companies might benefit from rising interest rates. Certainly, banks have large cash balances, and for that reason, along with others — many of which were laid out recently by my colleague David Sterman — those institutions could be among the prime beneficiaries of soon-to-come higher interest rates. I realized there are other pockets of hidden cash, less obvious than banks, that might benefit as much or more than banks when it comes to profiting from rising interest rates.#-ad_banner-# What other businesses have been sitting on huge sums of cash they can’t spend? Which companies have been forced to earn next to nothing in the form of interest — but should see a significant boost in their income streams as rates rise? Two came to mind. The first category you probably do business with often —… Read More

I am usually not much fun at parties or other social situations.  I’m not dour or unfriendly by any means, but most consider my interests and passions uninteresting at best and mind-numbingly boring at worst. Rather than keeping up with the Kardashians or Kanye West, I prefer to read magazines… Read More