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Calling all Buffetteers
Tweet Share on Facebook February 29, 2008 CommentWarren Buffett's annual letter to shareholders, which is to be released late this afternoon, will probably provide more insight into Buffett's bond insurance plan but will most likely leave us guessing about his successor at Berkshire Hathaway. Be sure to find a comfy chair: Last year's letter was 22 pages long and contained some 13,000 words. Got a question for Buffett? Submit it to CNBC for Buffett to answer on Squawk Box Monday morning.
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Zipcar Revs Up
Tweet Share on Facebook February 29, 2008 CommentZipcar is hoping to position itself as the Whole Foods of the rental-car industry, CEO Scott Griffith tells Fast Company. The Cambridge, Mass.-based Zipcar, which absorbed Seattle-based Flexcar in late 2007, "is ready to shift into second gear driving toward an IPO, 2 million customers, and $1 billion in annual revenue. High oil prices and environmental concerns should ease its path," according to the story. Zipcar faces some stiff competition from industry giants Enterprise, Hertz, and Thrifty, which are all now offering hourly rentals.
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SEC Green-Lights First Actively Managed ETF
Tweet Share on Facebook February 28, 2008 Comment (1)It's official: PowerShares got the go-ahead from the Securities and Exchange Commission to launch the first actively managed exchange-traded fund. Technically, there will be four ETFs (they have not yet begun trading). Here are the proposed names:
• PowerShares Active AlphaQ Fund: seeks to outperform the Nasdaq 100 index with a portfolio of 50 Nasdaq-listed securities.
• PowerShares Active Alpha MultiCap Fund: seeks to outperform the S&P 500 with a portfolio of 50 securities.
• PowerShares Active Mega-Cap Fund: seeks to outperform the Russell Top 200 by investing in mega-cap stocks.
• PowerShares Active Low Duration Fund: seeks to outperform the Lehman Brothers 1-3 Year U.S. Treasury Index by investing in a portfolio of U.S. government and corporate bonds.
Although the funds all aim to beat a specific index, the key here is that they don't track or replicate a benchmark, as traditional ETFs do. The funds' portfolio holdings will be disclosed daily on the PowerShares website.
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Toll Brothers Sounds Off on 'Ceaseless' Recession Talk
Tweet Share on Facebook February 27, 2008 Comment (5)Endless recession talk is apparently cramping Toll Brothers' profits. According to CEO Robert Toll in the company's first-quarter earnings release: "Ceaseless talk of a recession continues to dampen the mood of consumers, in general, whether or not a recession actually occurs." He added, "For home buyers, we believe this drumbeat, coupled with concerns over mortgages, the direction of home prices, and foreclosures, has kept pent-up demand on the sidelines." Toll Brothers, the country's largest luxury home builder, posted a loss of $96 million, or 61 cents a share, in its fiscal first quarter.
Are we too gloomy on the economy? Money manager and Forbes columnist Ken Fisher might agree with Toll.
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Stick Figures to Blame for the Housing Crunch
Tweet Share on Facebook February 27, 2008 CommentTired of trying to figure out how something as simple as getting a mortgage ballooned into a disaster threatening to sink the world's biggest economy? Let these guys give you a quick primer.
Warning: The slideshow includes some salty language. Stick figures are edgy!
BoingBoing, via Making Light
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How About an All-ETF Portfolio?
Tweet Share on Facebook February 26, 2008 CommentMurray Coleman at IndexUniverse says he's made the switch from index funds to a portfolio made up purely of exchange-traded funds (with one lone holdout: a bond index fund that's in the process of being converted).
Coleman says it's "illogical to keep buying higher-priced versions of the same benchmarks I've been investing in up to this point." Managed through a no-commission brokerage, Coleman's new portfolio, which takes a total stock market approach, has a total expense ratio of 0.15 percent per year. You can't beat that.
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A Bit of Stagflation
Tweet Share on Facebook February 20, 2008 Comment (2)At a January 29-30 meeting, just a bit over a week after slashing interest rates by three quarters of a point, Federal Reserve officials decided to cut again by an additional half a point. Today, newly released minutes from that meeting offer hints at why they made the biggest cuts in interest rates in recent memory.
Lower growth: Fed policymakers saw fourth-quarter growth in gross domestic product slowing to between 1.3 percent and 2 percent, down from an earlier estimate of 1.8 percent to 2.5 percent. (The Commerce Department's initial growth estimate for the quarter, released January 30, was even worse—a meager 0.6 percent.) Economists agree that cooling could easily sink into negative and possibly recessionary territory.
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More Plays on the News in Cuba
Tweet Share on Facebook February 19, 2008 Comment (1)My first thoughts on Fidel Castro's handing off power to his brother Raúl:
Buy: Casinos.
Sell: Classic car part distributors, Dominican cigar companies.
Turns out I wasn't that far off.
A while back, Louis Capital Markets put out a note speculating on which stocks might get a boost if the U.S. embargo on trade with Cuba comes to an end. The firm picked Imperial Tobacco, whose Altaldis subsidiary makes cigars, hotel operator Sol Melia, and mining giant Freeport McMoran. Plus, the United States still has claim to some $7 billion worth of Cuban assets. Big holders include Starwood Hotels (HOT) and OfficeMax (OMX), which have stakes in Cuban telecom and electricity assets, though collecting isn't likely to be much easier under Raúl Castro than his brother.
Shares of the only Cuba ETF, the closed-end Herzfeld Caribbean Basin Fund, shot up 22 percent this morning on the news.
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Investing in a Post-Castro Cuba
Tweet Share on Facebook February 19, 2008 Comment (9)Here's a fund that should have a wild ride this week (with Cuban President Fidel Castro announcing his retirement): Herzfeld Caribbean Basin (symbol CUBA). The closed-end fund, which trades on an exchange like a stock, invests in U.S. and Latin American companies that could benefit if trade resumes between the United States and Cuba.
These include Trailer Bridge, a marine freight carrier that runs a fleet of vessels made for shallow waters; Copa Holdings, a Latin American airline that makes daily flights to Havana; Watsco, a Florida-based manufacturer of air-conditioning and refrigeration equipment; Consolidated Water, which supplies potable water in the Caribbean; and Carnival and Royal Caribbean Cruises.
Shares of closed-end funds can be worth more or less than the assets they hold, depending on investor demand. This fund has often traded at a discount to its net asset value over the years, but news events can cause swings in its share price (in February 1996, for example, shares plunged when Cuba shot down two U.S. civilian aircraft). As of last week, the Herzfeld fund was trading at a 7.5 percent discount to its NAV. Jon Ogg at 24/7 Wall Street points out that the fund's total share count is small and its market capitalization is just $12.5 million, so today's moves could be quite exaggerated.
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Recessionproof Your Portfolio With ETFs
Tweet Share on Facebook February 15, 2008 Comment (1)ETFtrends.com offers five categories of exchange-traded funds that may help cushion your portfolio in a downturn: agriculture, gold, silver, foreign currency, and bonds.
In a stateside slowdown, Motley Fool likes ETFs that invest overseas, such as Vanguard All World (symbol VEU), which has half of its assets invested in Europe and a third in Asia. Fool also favors dividend payers, which populate the iShares Dow Jones Select Dividend Index (DVY).
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