Stock futures opened flat to slightly higher Monday evening after a selloff on Wall Street pushed the Dow and S&P 500 to their biggest one-day drops in more than a month. DES MOINES – While Iowa’s transportation revenue has been reduced with less driving during the COVID-19 pandemic, state planners say the negative impact has been less than feared and they likely won’t delay highway improvements and other construction projects they expected to complete during fiscal 2021. From Wikipedia, the free encyclopedia NEW YORK, Oct. 26, 2020 Today ARK Investment Management, LLC (“ARK”), a New York-based investment adviser focused solely on disruptive innovation, announced an… Stocks with billion dollar market caps are small enough that they haven’t yet been “discovered” by a lot of Wall Street firms, but big enough to have some heft and staying power. Here are 10 that fit the bill. One of Warren Buffett’s stock-picking lieutenants just bought a large stake in the department store operator.
With markets showing volatile movements in recent sessions – down one day, up the next – some of Wall Street’s analysts are showing a renewed interest in high-yield dividends. Not that they have ever shied away from these steady income generators; rather, the market boom of this past summer led the Street to focus on share appreciation as the source of profits. Market fluctuations since early September have analysts and investors both taking a closer look at defensive plays.The research analysts at JMP Securities have been searching the markets for the ‘right’ buys, and their picks bear a closer look. They’ve been tapping reliable, high-yielding dividend payers as an investment play of choice. The TipRanks database sheds some additional light on three of JMP’s picks – stocks with dividends yielding 7% or better – and that the investment firm sees with 20% upside or better. Annaly Capital Management (NLY)The first name on the list from JMP is Annaly Capital Management. The company inhabits the mortgage-backed security niche, with $104 billion in total assets, primarily mortgage securities backed by Freddie Mac and Fannie Mae. Annaly is one of the market’s largest REITs.The corona crisis was hard on Annaly, as the economic crush of the first quarter made it difficult for loan holders to make payments. As the economy bounced back in Q2, however, Annaly’s fortunes reversed and the steep losses from Q1 turned into modest gains. Q2 revenues came in at $979 million, with EPS, at 27 cents, beating the 23-cent forecast. Looking ahead, the forecast is a 26-cent EPS for Q3. It’s important to note that Annaly has beaten the earnings forecast in each of the past three quarters.Turning to the dividend, Annaly has remained a reliable dividend payer over the past several years, with a history of adjusting the payment to keep it sustainable. The current dividend is 22 cents per common share, and was paid out at the end of September; at that rate, the yield is 12.27%. In an era of near-zero rates from the Fed, NLY’s dividend return is sky-high.JMP analyst Steven DeLaney is impressed with NLY. The 5-star analyst pointed out, “The combination of dividends paid during the [second] quarter and the sterling book value gain—the company’s best quarterly gain since the Great Recession of 2008-09 […] We believe NLY shares should trade at a meaningful premium to peers based on the company’s size, scale, and, now, its internal management structure.”DeLaney rates the stock an Outperform (i.e. Buy) along with an $8.50 price target. This figure suggests a 20% upside potential from current levels. (To watch DeLaney’s track record, click here)Overall, there have been 8 recent analyst reviews of NLY shares, breaking down to 5 Buys and 3 Holds, giving the stock an analyst consensus rating of Moderate Buy. The $8.04 average price target implies a 13% growth potential from the current trading price of $7.10. (See NLY stock analysis on TipRanks)StoneCastle Financial (BANX)Next up, StoneCastle, is a management investment company, with a portfolio that includes moves into alternative capital securities and community banks. The company focuses its investment activity on capital preservation and current income generation, committing to returning profits to shareholders. StoneCastle’s investment portfolio totals over $133 million, of which 32% is credit securitization, 26% is debt securities, and 15% is term loans.During the second quarter, BANX saw over $2.6 million in net investment income, coming out to 41 cents per share. The company’s net asset value rose to $20.27 per share at the close of the quarter; that figure was $20.93 by September 30.BANX paid out a 38-cent quarterly dividend in Q2, a payment which the company has held up reliably – with one blip upwards in December 2018 – for the past three years. At $1.52 annually, the dividend yields an impressive 8%.5-star analyst Devin Ryan covers this stock for JMP, and he likes what he sees. “The company invested a healthy $36M during the [second] quarter, which included some higher yielding and more attractive securities, which drove the sequential increase in net investment income… Given a strong quarter of investing, particularly into attractive yielding securities, net investment income stepped up solidly in 2Q20. Moving forward, given the strong 2H20 outlook for deployment, we believe it is likely that net investment income will continue to move higher… BANX continues to more than cover its current quarterly dividend of $0.38, and we believe this will continue to be the case in the coming quarters,” Ryan opined. Ryan’s is the only recent review on record for this stock, which is currently selling for $18.15. He rates BANX an Outperform (i.e. Buy), with a $22 price target that indicates a possible 21% upside for the next 12 months. (To watch Ryan’s track record, click here)BRT Realty Trust (BRT)Last but not least is BRT Realty Trust, a real estate investment trust focused on multifamily properties. The company acquires, owns, and manages apartment dwellings, and currently boasts a portfolio of 39 properties across 11 states, totaling over 11,000 individual apartments. The company has felt a serious hurt from the ongoing corona crisis, and reported a net loss of 25 cents per share for the calendar second quarter this year. At the same time, BRT did manage to collect 98% of rents in Q2, and saw average occupancy remain above 93%. This bodes well for the company, as it does not have to carry and maintain empty or non-paying units.Also on a positive note, BRT kept up its dividend payment. The company has been gradually raising the quarterly payout for the past three years, and the current dividend, of 22 cents per common share, annualizes to 88 cents and gives a yield of 7.1%. This is more than triple the average yield found among S&P-listed companies, and more than double BRT’s dividend-paying peers in the financial sector.JMP’s Aaron Hecht sees BRT holding a solid position in its niche, writing, “With a lower price point product spread across Sunbelt markets, the BRT portfolio is generating strong results compared to peers with high-density urban market exposure… Rent growth averaged 2.2% for renewals and 0.2% for new leases, while minimal concessions were given. Rate growth and occupancy were similar in July and August 2020 compared with 2Q20.”Hecht rates the stock an Outperform (i.e. Buy), with a $15 price target that implies a one-year upside of 20%. (To watch Hecht’s track record, click here.)Overall, BRT has a Moderate Buy rating from the analyst consensus, based on an even split between Buy and Hold reviews. The stock is selling for $12.56, and the average price target of $13.25 suggests a modest gain of 5%. (See BRT stock analysis on TipRanks)To find good ideas for dividend stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
Author: Emily McCormick·ReporterOctober 26, 2020, 3:15 PM·3 mins read
Financial hit on Iowa’s road fund not as bad as feared
DES MOINES — While Iowa’s transportation revenue has been reduced with less driving during the COVID-19 pandemic, state planners say the negative impact has been less than feared and they likely won’t delay highway improvements and other construction projects they expected to complete during fiscal 2021.
Receipts that flowed into the state’s road-use fund from June 20 to Oct. 20 from state taxes on fuel, vehicle registrations and car sales were about $40 million below the $744 million the state Department of Transportation had projected for that period, said Stuart Anderson, director of Iowa DOT’s planning, programming and modal division.
While the state’s share is running about 4 percent down from last fiscal year, the drop is nothing like what department officials feared shortly after the coronavirus pandemic hit Iowa in March and Gov. Kim Reynolds’ emergency shutdown order caused a 40 percent drop in traffic on Iowa roads.
“Back in the spring when all this started, we really had a lump in our throat,” said Scott Newhard, a spokesman for the Associated General Contractors of Iowa. “But as time progressed it wasn’t as bad as we thought it was going to be.”
Since then, Anderson said, overall vehicle traffic on Iowa roadways is about 90 percent of its normal volume, while commercial passenger numbers at Iowa airports are only about 35 to 40 percent of normal, although recent weekly numbers from the Transportation Security Administration have crept closer to 50 percent.
The decline in state aviation fuel tax has reduced the number of state-funded projects, but Anderson said the improving vehicle travel numbers has enabled transportation officials to proceed with plans to let highway construction projects that had been temporarily delayed.
“We did delay putting some projects out for bid just to make sure we had enough funding to get through the construction season without impacting any projects that are underway,” he said. “We feel like now that it is not as negative as we feared originally; that we will be able to go ahead and put those projects out for bid this year.”
Overall, Iowa DOT officials forecast state collections into the road-use tax fund in fiscal 2021 would total about $1.766 billion by June 30, 2021. While fuel tax receipts are lagging slightly, Anderson said, vehicle registration fees have remained steady and a high demand for used vehicles has offset a drop in new car sales.
“While we don’t like to see a reduction in the road-fund receipts, this is not as dramatic as other states have faced,” said Newhard, who praised Iowa officials for not relying solely on fuel tax revenue to finance transportation needs. “We’re dealing with realities of (the COVID-19 pandemic), but we’re not stymied by this so that’s a good thing.”
According to the Iowa DOT website, road-use tax fund money is distributed by formula with 47.5 percent going to the primary road system, 24.5 percent to secondary county roads, 8 percent to farm-to-market county roads, and 20 percent for city streets. That would mean the $40 million reduction is roughly split evenly among state and local governmental entities.
“While we were prepared for a more challenging situation, fortunately, at least on the highway side, the revenue has bounced back although at a lower-than normal level, Anderson said. “But we’re still able to proceed with our program pretty much intact.
“Forty million dollars is significant but it’s not as significant as we had expected or feared early on in the pandemic, so that’s actually significantly better than we had originally feared when we saw traffic drop by over 40 percent in mid-April,” he added.
Iowa DOT officials are monitoring the transportation numbers closely and could have to revisit the five-year plan recently passed by the Iowa Transportation Commission if the trend toward reduced vehicle traffic persists for an extended period, Anderson said. Also, discussions at the federal level over another COVID-19 stimulus package could provide funding to “backfill” lost revenue at the state level, he noted.
That five-year plan includes modernizing Iowa’s highway system and enhancing safety, though more than half the money over the next five years will be spend on rural projects.
A small share of transportation program funding comes from the state’s Rebuild Iowa Infrastructure Fund, which is funded by state gaming receipts also hit hard by the pandemic. The fiscal 2020 funding of $6.9 million has been cut to $3.65 million for things like the state recreational trails program and infrastructure programs for airports, public transportation and rail.
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Financial analyst – Wikipedia
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ARK Investment Management, LLC to Engage in a Strategic Review of its U.S. Distribution Currently Managed by Resolute Investment Distributors, Inc.
NEW YORK, Oct. 26, 2020 Today ARK Investment Management, LLC (“ARK”), a New York-based investment adviser focused solely on disruptive innovation, announced an important step toward strengthening its business and foundation for future growth. As part of this process, ARK has commenced a request for proposal (“RFP”) process to explore the potential replacement of Resolute Investment Distributors, Inc., an affiliate of ARK’s minority partner, Resolute Investment Managers, Inc., as a distributor of its U.S. retail and institutional products and services. Resolute Investment Distributors, Inc. will be considered in ARK’s evaluation and RFP process.
ARK Founder, CEO, and CIO Cathie Wood comments, “Since our founding in 2014, ARK has evolved a differentiated research and investment strategy that identifies technologically-enabled disruptive companies which, as reported by Morningstar, has resulted in top 1 percentile returns for multiple products over one, three, and five year periods. Thanks to our research and investing success, ARK now is one of the largest ETF issuers in the U.S. To maximize ARK’s potential, one of our priorities is to partner with shared-vision, best-in-class service providers.”
In the best interest of shareholders and stakeholders, ARK is commencing a process to evaluate potential strategic partners for U.S. distribution. As an organization that values transparency and disclosure, ARK is extending this search to all innovative U.S. distribution service providers. A successful proposal will embrace the accelerating pace of digitization and automation across the financial services industry and take advantage of the current market environment, particularly changing corporate cultures and work-remote policies. ARK is seeking proposals consistent with its ethos, opening the door for future growth across all market segments.
Please submit your indication of interest by December 1st, 2020 to [email protected] (Subject: RFP Distribution).
ARK has engaged STORY3 Advisors, LLC and Signum Growth Capital, LLC as financial advisors and Proskauer Rose LLP as legal advisors related to this strategic review of U.S. Distribution Services.
Headquartered in New York City, ARK Investment Management LLC is a federally registered investment adviser and privately held investment firm. Specializing in thematic investing in disruptive innovation, the firm is rooted in over 40 years of experience in identifying and investing in innovations that should change the way the world works. Through its open research process, ARK identifies companies that it believes are leading and benefiting from cross-sector innovations such as robotics, energy storage, DNA sequencing, artificial intelligence, and blockchain technology. ARK’s investment strategies, among others, include: Autonomous Technology and Robotics, Next Generation Internet, Genomic Revolution, Fintech Innovations, 3D Printing, Israel Innovative Technology, and the overall ARK Disruptive Innovation Strategy.
For more information about ARK, its offerings, and original research, please visit www.ark-invest.com.
SOURCE ARK Investment Management LLC
Author: ARK Investment Management LLC
Netgear, Smith Wesson And 8 Other Mid-Cap Stock Buys
Many investors put most of their money in the largest companies. I’m fond of companies that straddle the borderline between small and mid-sized.
I define large-capitalization stocks as those with a market value above $10 billion, mid-cap stocks as $1 billion to $10 billion and small-cap stocks as those under $1 billion.
I like the vicinity around $1 billion. At that size, a stock is small enough so that it hasn’t yet been “discovered” by a lot of Wall Street firms, but big enough to have some heft and staying power.
To illustrate this concept, each year I construct what I call my Billion Dollar Portfolio. It features ten companies that are near that sweet spot. The average one-year return on the previous 15 such portfolios has been 14.4%, compared to 11.8% for the Standard & Poor’s 500 Index. Ten of the 15 portfolios have beaten the S&P 500, and 12 have been profitable.
Bear in mind that my column recommendations are hypothetical: They don’t reflect actual trades, trading costs or taxes. These results shouldn’t be confused with the performance of portfolios I manage for clients. Also, past performance doesn’t predict future results.
Here are ten stocks hovering near my billion-dollar sweet spot now.
City Holding (CHCO) is the parent to City National Bank in Charleston, West Virginia. One mark of merit for a bank is a return on assets above 1%. City Holding has exceeded that mark in each of the past 15 years. The stock also offers a nice dividend yield of 3.7%
Down 18% in the past year, Encore Wire (WIRE) may now be at a good buy point. Based in McKinney, Texas, the company makes electrical building wire. It is debt free, a quality I always like—and especially like during a recession.
Green Brick Partners (GRBK) is a homebuilding company based in Plano, Texas. I’m bullish on the homebuilding industry and I respect David Einhorn, a hedge fund manager who is a prominent investor in this company.
Malibu Boats (MBUU) makes “performance sports boats” for waterskiing, waterboarding and wake surfing. It has a nice growth record, but I passed on it in March when the recession started, reasoning that such boats are frills during a recession. Guess what? The stock is up 54% this year. Profits did weaken in the June quarter, however.
Based in Houston, Texas Orion Engineered Carbons SA (OEC) produces rubber carbon black, used in making car tires. It also makes carbon black, used as a pigment. The company’s CEO, Corning Painter, bought $635,000 of its stock in September.
Based in Cypress but listed directly on the New York Stock Exchange, Qiwi Plc (QIWI) offers electronic payment systems in Russia, Eastern Europe, the United Arab Emirates and other countries. It has reported a profit in each of the past ten years, and offers a dividend yield of 6.1%. I think it’s risky but interesting.
Firearms are loved by some, abhorred by others. Smith Wesson Brands (SWBI) is a leading maker of hunting rifles and handguns. It has debt of only 15% of stockholders’ equity, and has almost as much cash as debt. Gun control? I’m in favor, but I think it won’t happen.
Stewart Information Services (STC) was on this list last year, and turned in a 16% gain (respectable, but a fraction below the S&P 500). I think that title insurance, Stewart’s specialty, is one of those highly profitable but unglamorous niches that are often overlooked.
Semiconductor manufacture requires extraordinarily clean environments, and that is where Ultra Clean Holdings (UCTT) gets its name. The firm, based in Hayward, California, makes a variety of equipment for semiconductor manufacturing. It posted a loss last year, but appears to be on the comeback trail.
My Billion Dollar Portfolio picks from a year ago gained 4.6% but trailed the S&P 500, which notched a 16.2% return. My best pick was Livent (LTHM), a lithium producer and processor, which returned 55%. My worst was National Western Life Group (NWLI), down 30%.
Disclosure: I own Green Brick Partners for one of my clients.
John Dorfman is chairman of Dorfman Value Investments in Boston. His firm of clients may own or trade securities discussed in this column. He can be reached at firstname.lastname@example.org.
Author: John Dorfman
A Berkshire Hathaway Investment Manager Bought Dillard’s Stock — Why?
We recently learned that Ted Weschler, who is one of Warren Buffett’s two stock-picking investment managers at Berkshire Hathaway (NYSE:BRK-A)(NYSE:BRK-B), bought a sizable amount of Dillard’s (NYSE:DDS) stock. To be clear, this purchase was made with Weschler’s personal funds, not Berkshire’s, but it still makes one wonder what could this high-profile stock-picker possibly see in this particular department store operator. Here’s what two of our industry experts think about it.
Jason Moser: Let’s, before we wrap up here, Matt, one thing I did want to bring up, because this is not really directly related to Berkshire Hathaway, but this was the headline that hit this morning, which I thought was pretty fascinating. Dillard’s, the old department store from the mall — I mean, we talked about the challenges malls are facing. It was very interesting to see this news that Ted Weschler, who is an investment manager for, of course, Berkshire Hathaway, bought a massive stake in Dillard’s. And Dillard’s stock is up around 40% right now on this news. It’s not a Berkshire Hathaway investment, though, from what I can understand, this is a Ted Weschler investment, correct?
Matt Frankel: It is, and that’s what makes it all the more surprising. I wouldn’t really put it past Buffett to do like a deep value play like this. But Ted Weschler and Todd Combs, they’re two investment managers. They’re the ones who, you know, buy Amazon and Snowflake and StoneCo and those types of companies recently. You know, they’re not buying Coca-Cola and AmEx, like Buffett is. They’re buying the tech plays.
So it kind of surprised me. I mean, it’s definitely a value play, in my mind. The thing that I’m — I mean, obviously, no one knows what he’s thinking. But one thing that came to my mind is that maybe it’s kind of like the Best Buy (NYSE:BBY) effect. When you think of Best Buy 10 years ago, they had Circuit City competing against them. hhgregg, a few other big ones. What happened? The weaker competitors went out of business. And even though Best Buy was competing with Amazon and e-commerce, there was still some need for a physical electronics-store presence, so they picked up all that market share that Circuit City and hhgregg left behind. And now they’re that much stronger as a result.
So Dillard’s is — I mean, no department store is terribly strong right now. But I would put Dillard’s, I mean, obviously in a category above, like, J.C. Penney, which is already bankrupt. But even above Macy’s or some of the other ones, Dillard’s seems to be doing better than all of its peers. So I’m thinking maybe they’re thinking it might be like a last man standing type of play. I don’t know. What are your thoughts on that?
Moser: Just to me, yeah, it’s difficult to really fully reconcile. I mean, I always look at something like this and I feel like, you know what, these guys have access to a lot more information and they’re certainly very talented, very smart investors. There’s clearly something there that we maybe can’t see based on information that they have. I don’t know that.
It reminds me of the Buffett-Bank of America deal. This is probably something, this is something where they’re able to do something through this investment that your typical retail investor probably wouldn’t be able to accomplish, and maybe —
Frankel: I wouldn’t be surprised if he got a board seat or something like that out of the deal. [laughs]
Moser: Right, exactly. And maybe that is something to come, but you know what, it’s easy to look at that big absolute number and think that’s, wow, that’s a big absolute number. But remember, I mean, they’re dealing with big numbers every day. And so for them it’s not necessarily this crazy of a — at least on the outside, it’s not necessarily as crazy looking an investment as maybe some might think. It’s a really difficult time for those department stores and malls and retailers right now. So maybe this is a “Hey!” trying to buy a good operator in a bad time. And I certainly appreciate that style of investing and that way of thinking, so it’ll be really fun to watch that play out and to see how that ends up working. I don’t think Dillard’s is some kind of a serious story, though. I think there’s probably some value there that it could end up helping to bring out a little bit more value.
Frankel: Well, I mean, it’s the same reason. That’s the same reason I bought Simon Property Group. It’s not because I necessarily think that malls are a great business right now, it’s that they’re the best in breed, and I think that it’s going to consolidate around them and they’re going to kind of be the wave of the future, when this is all said and done. Not necessarily that I think the mall business is a great one to be in right now, just like the department store business is clearly not a great one to be in right now. But maybe he knows something there, like you said. [laughs]
Author: Matthew Frankel, CFP