High Income from Alternative ETFs

These three exchange-traded funds are part of the Alternative Income sector, as each is pegged to different and specialized segments of the market, suggests Doug Fabian, editor of High Monthly Income.

Each of these funds were chosen to help boost our total return in what we call a transitional bond market, meaning that these funds are likely to do well considering the volatility in bonds, the general rising interest rate environment, and the uncertainty inherent in a turbulent income world.

First Trust Senior Loan Fund (FTSL) is an actively managed ETF that seeks to provide high current income by investing primarily in a diversified portfolio of first lien senior floating rate bank loans.

Under normal market conditions, the fund will invest at least 80% of its net assets in senior loans that are made, predominantly, to businesses operating in North America.

But it also may invest up to 20% of its net assets in non-senior loan debt securities, including high-yield bonds, warrants, and equity securities.

FTSL tends to perform well in a rising interest rate environment, as the loans in its portfolio are far less subject to the adverse effects of rising bond yields.

The iShares Mortgage Real Estate Capped (REM) is an ETF that contains a basket of the biggest and best mortgage REITs on the market today.

This fund is pegged to the FTSE NAREIT All Mortgage Capped Index, a benchmark measure that includes top names in the space such as Annaly Capital (NLY), American Capital Agency Corp. (AGNC), Starwood Property Trust (STWD) and Two Harbors Investment Corp. (TWO).

With REM, you are getting exposure to the best of the best mortgage REITs available. You also are getting that exposure on a pullback, as REM's value tumbled during the June sell-off.

The PowerShares CEF Income Composite (PCEF) is an ETF pegged to the S-Network Composite Closed-End Fund Index.

This fund effectively gives you exposure to a basket of the best income-oriented, closed-end funds out there. These closed-end funds represent a montage of the equity and bond income universe.

Here you get dividend-paying closed-end funds, bond-oriented closed-end funds, and hybrids closed-end funds that contain both equities and bonds. Like REM, the recent pullback in PCEF represents a great, low-risk entry point.

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Helping Clients Navigate Short Sales And Foreclosures

5 Best Undervalued Stocks To Own Right Now

Homeowners facing financial hardships may be able to negotiate with their lenders for a loan modification or refinance that will reduce their monthly mortgage payment. In some cases, this is enough to allow the borrower to remain in the home. In other cases, however, the borrower may still be unable to meet the demands of the loan – because of factors like loss of a job, divorce, illness or death of a spouse – and may have to sell the home through a short sale or lose the home to foreclosure. As difficult as these situations are, a qualified real estate professional can help guide buyers and sellers successfully through the process.

Short Sales
A homeowner in financial distress may put his or her property on the market as a short sale in order to avoid foreclosure. A short sale, or pre-foreclosure sale, occurs when a property is sold for less than the amount due on the mortgage. This type of real estate sale can benefit the lender, who can avoid the lengthy and costly foreclosure process, and the borrower, who can eliminate or reduce mortgage debt and keep a foreclosure off their credit report.

A lender may agree to a short sale if the borrower has a personal financial hardship (such as job loss, divorce or medical emergency) and owes more on the mortgage than the home is worth. If the lender approves the short sale, any proceeds from the sale will go to the lender. Since the sales price falls short of the balance remaining on the mortgage, the difference may either be forgiven by the lender or the lender can seek a deficiency judgment against the borrower for all or part of the balance (a few states prohibit deficiency judgments following a short sale). The short sale process varies from state to state, but the steps generally include: Short sale package - A financial package is submitted by the borrower (seller) to the lender. This includes financial statements, a letter describing the seller's hardship and copies of financial records. Short sale offer - If the seller accepts the offer from an interested buyer, the listing agent sends the lender the listing agreement, an executed purchase offer, the buyer's preapproval letter and a copy of the earnest money check, and the seller's short sale package. Bank processing - The bank reviews the offer and either approves or denies the short sale. This can take several weeks to months. Helping Sellers
If it is an option, a short sale often makes more sense than a foreclosure. While a short sale will affect the borrower's credit report, it is not as damaging as a foreclosure. In addition, a short sale will make it easier to borrow money in the future than if the property had gone into foreclosure. The sooner the short sale process is started, the more likely the bank will approve the short sale. Falling further behind on payments will get the borrower closer to foreclosure, so time is of the essence. In fact, it is possible to pursue a short sale before ever falling behind on payments if the borrower's financial situation has changed due to hardship.

Another advantage to a short sale is that, unlike foreclosure, the seller remains in control of the sale – not the bank. That means sellers can know who is buying their home; for some people, that makes the transition a little easier.

As a real estate professional, you can help sellers: Determine the value of a property to see if it is eligible for short sale (valued at less than the mortgage balance) Develop a short-sale package and get qualified for short sales Set a price that will bring offers and be approved by the bank List the property as a short sale Negotiate with the bank to approve a purchase offer For Buyers
A short sale can provide an excellent opportunity for a buyer to get into a house at a reduced price. It should be noted, however, that a short sale is a complicated and time-consuming real estate transaction. The lender may take several weeks or months to approve the short sale, and it is not uncommon for a buyer to submit a short sale offer only to cancel because the process is too lengthy. In order to get the property at a discount, the buyer has to be willing and able to wait for short sale approval from the bank.

As a real estate professional, you can help buyers: Determine a fair offer Negotiate with the bank Foreclosures
Foreclosure is the process that allows a lender to recover the amount owed on a defaulted loan by selling or taking ownership of the property. While foreclosure laws vary from state to state, there are generally six phases: Payment Default - This occurs when a borrower has missed at least one mortgage payment. The lender sends a missed payment notice, and after two missed payments may send a Demand Letter. At this point, the lender is likely willing to work with the borrower to make arrangements to catch up on the missed payments.
Notice of Default (NOD) - A Notice of Default is sent following 90 days of missed payments. The loan is handed over to the lender's foreclosure department and the borrower is informed that the Notice will be recorded. The borrower is typically given 90 days to settle the payments and reinstate the loan.
Notice of Trustee's Sale - If the loan has not been made up within the allotted time, a Notice of Trustee's Sale will be recorded, and the lender will publish a notice in the local newspaper indicating that the property will be available at public auction.
Trustee's Sale - The property is placed for public auction and sold to the highest qualifying bidder. After the highest bidder is confirmed and the Trustee's Sale completed, a Trustee's Deed Upon Sale is provided to the winner. The property is then owned by the purchaser, who is entitled to immediate possession.
Real Estate Owned (REO) - If the property does not sell at the public auction, the lender becomes the owner and will attempt to sell the property on its own, through a broker or with the help of a REO Asset Manager. These properties are called "bank-owned."
Eviction - The borrower can stay in the home until it has sold or becomes bank-owned. An eviction notice is sent demanding that occupants immediately vacate the premises. The local sheriff will visit the property to remove people and belongings if necessary. For Sellers
Losing a home to foreclosure can be a heartbreaking and emotional experience. Throughout the foreclosure process, the lender may attempt to make arrangements to help the borrower get caught up on the loan and avoid foreclosure. Unfortunately, if a borrower has trouble making one mortgage payment, it becomes increasingly difficult to make catch-up payments to bring the loan up to date. If a borrower knows that he or she is likely to (or will definitely) fall behind on payments, it is in their best interest to speak with the lender as soon as possible about loan modification or refinance options to lower the monthly payments. In some cases, it will be enough so that the borrower can meet the reduced payments and avoid foreclosure.

If a lender starts the foreclosure process, it is important to note that they are not required to let a homeowner know if they have decided to dismiss the foreclosure. If the borrower is unaware of the foreclosure dismissal, he or she will be left with a zombie title – the right to ownership and possession of a home that remains with a person who believes the home was lost to foreclosure. The homeowner may have moved out while unwittingly still holding the property's title and still being liable for the costs and responsibilities of homeownership. Homeowners can protect themselves by making sure the foreclosure process is complete and that title legally transfers to another entity.

For Buyers
As with short sales, foreclosures can provide the opportunity for buyers to purchase a home at a discount. That said, buying a foreclosure – even at a steep discount – does come with drawbacks. These homes are generally sold "as is" with no guarantee of condition, and a buyer is often not able to inspect the property before making a bid. The result is that any money saved by purchasing a foreclosure could go toward making the home habitable and up to code.

As a real estate professional, you can help buyers: Find suitable properties Determine if the price is a good value Arrange inspections, when available Navigate the paperwork The Short Sales and Foreclosure Resource (SFR®) Certification
Confidently and successfully navigating short sales and foreclosures requires expertise and experience. Many buyers and sellers turn to real estate professionals for assistance, but not all have adequate experience in dealing with these types of transactions. You can increase your marketability as a real estate professional by gaining the knowledge and skills needed to effectively and efficiently handle short sale and foreclosure transactions.

One way to show potential clients that you have the skills is through the Short Sales and Foreclosure Resource (SFR®) certification (offered by the National Association of REALTORS®). Holders of this certification have specialized training in short sales and foreclosures, qualifying sellers for short sales, negotiating with lenders and protecting buyers.

The Bottom Line
Financial hardships can take their toll on homeowners, yet provide good opportunities for buyers. Both buyers and sellers can benefit from your skills as a real estate professional experienced in dealing with short sales and foreclosures. With your expertise you can help clients navigate the process, value properties, list properties and negotiate with lenders.

Lilly/Boehringer Candidate Under EU Review - Analyst Blog

Best Blue Chip Companies To Buy For 2014

Eli Lilly and Company (LLY) and Boehringer Ingelheim recently announced that the European Medicines Agency (EMA) has accepted their marketing authorisation application (MAA) for LY2963016.

The companies are looking to get LY2963016 approved for type I and II diabetes under the EMA's biosimilar pathway. LY2963016 is a new insulin glargine product.

LY2963016 has been developed under a collaboration agreement between Eli Lilly and Boehringer Ingelheim which was signed in Jan 2011. The companies had signed a global agreement for the joint development and commercialization of several diabetes compounds.

The compounds covered by the agreement include Tradjenta (linagliptin) which is currently approved in the US, Japan, Europe and other countries, empagliflozin and the new insulin glargine product. Boehringer Ingelheim also has an option to co-develop and co-commercialize Eli Lilly's anti-TGF-beta monoclonal antibody.

We note that Eli Lilly and Boehringer Ingelheim had submitted a New Drug Application (NDA) for empagliflozin in the US earlier this year. Empagliflozin is also under regulatory review in the EU.

Eli Lilly currently holds a Zacks Rank #3 (Hold). The biggest near-term challenge for Eli Lilly will be to replace the revenues that will be lost to generic competition now that Zyprexa has lost US and EU exclusivity. The generic threat will continue to pose challenges for Eli Lilly with Cymbalta slated to lose patent protection in late 2013 and Evista in 2014.

On the flip side, the Animal Health business and the diabetes franchise should provide some downside support. We are encouraged by the company's efforts to strengthen its diabetes portfolio. We are also pleased to see Eli Lilly pursuing small acquisitions and in-licensing deals to boost its pipeline.

Companies that currently look attractive include San! tarus, Inc. (SNTS), Jazz Pharmaceuticals (JAZZ) and Auxilium Pharmaceuticals (AUXL). While Santarus and Jazz are Zacks Rank #1 (Strong Buy) stocks, Auxilium is a Zacks Rank #2 (Buy) stock.

Harley Keeps Rolling at Neutral - Analyst Blog

On Jul 12, we maintained our Neutral recommendation on Harley-Davidson Inc. (HOG). Though we are bullish about the company's improved performance in the first quarter of 2013 and higher shipment guidance in 2013, we remain concerned about its aging customer base and strong competition in the market.

Why the Reiteration?

On April 25, Harley-Davidson posted a 33.8% rise in earnings to 99 cents per share in the first quarter of 2013 from 74 cents in the same quarter of prior year, topping the Zacks Consensus Estimate of 97 cents.

Consolidated revenues improved 9.8% to $1.57 billion, exceeding the Zacks Consensus Estimate of $1.46 billion. The increase in sales and earnings during the quarter was attributable to higher motorcycle shipments and continued improvement in operating efficiencies.

Following the release of the first quarter results, the Zacks Consensus Estimate for 2013 decreased 0.3% to $3.31 per share. Meanwhile, the Zacks Consensus Estimate for 2014 remained constant at $3.87 per share.

Harley-Davidson enjoys a competitive advantage as it commands 50% market share in the U.S. It operates 706 independent dealers in the U.S., of which 55% exclusively market its products. Harley-Davidson has a network of 1,468 dealers across the world.

Harley-Davidson continues to benefit from the restructuring activities incorporated in 2009. In 2012, the company realized savings of $280.0 million from these restructuring activities. Upon completion of these activities in 2013, Harley-Davidson expects savings of $305.0 million in the year and annual ongoing savings of $320.0 million beginning in 2014.

However, Harley-Davidson faces challenges from its aging customer base. The young generation is more attracted toward smaller and cheaper bikes manufactured by Japanese manufacturers Honda Motor Co. (HMC), Suzuki and Yamaha.

Other Stocks to Look For

Some stocks that are performing well in the automotive industry include Visteon Corp. (VC) and WAB! CO Holdings Inc. (WBC). Both Visteon and WABCO retain a Zacks Rank #1 (Strong Buy).

Is UnitedHealth Group a Buy at All-Time Highs?

Top 10 Cheap Companies For 2014

With shares of UnitedHealth Group (NYSE:UNH) trading around $67, is UNH an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

UnitedHealth Group is a diversified health and well-being company. The company operates in four segments: Employer & Individual, Medicare & Retirement, Community & State, and Optum. Through its segments, UnitedHealth Group serves individual consumers and employers, the health needs of seniors, the public health marketplace (offering states Medicaid solutions), and health system participants (including consumers, physicians, hospitals, governments, and pharmaceutical companies).

Adequate healthcare is very important to most consumers and companies. In the United States, healthcare companies are seeing drastic changes in the industry, with an increasing number of healthcare companies coming under the spotlight. UnitedHealth Group is able to provide healthcare products and services to a growing number of concerned individuals and companies around the world.

T = Technicals on the Stock Chart are Strong

UnitedHealth Group stock has been trending higher over the last several years. This year, the stock has jumped to all-time high prices, and hasn’t show any signs of slowing just yet. Analyzing the price trend and its strength can be done using key simple moving averages.

What are the key moving averages? They are the 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, UnitedHealth Group is trading above its rising key averages, which signal neutral to bullish price action in the near-term.

(Source: Thinkorswim)

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

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
UnitedHealth Group Options	24.44%	13%	10%

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

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

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

On the next page, let’s take a look at the earnings and revenue growth rates, and what that means for shares of UnitedHealth.

E = Earnings Are Increasing Quarter-Over-Quarter

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

	2013 Q1	2012 Q4	2012 Q3	2012 Q2
Earnings Growth (Y-O-Y)	-11.45%	2.51%	28.21%	9.48%
Revenue Growth (Y-O-Y)	11.21%	11.01%	8.00%	8.05%
Earnings Reaction	-3.77%	1.37%	-1.06%	-2.41%

UnitedHealth Group has seen increasing earnings and revenue figures over the last four quarters. From these numbers, the markets have expected a little more from UnitedHealth Group’s recent earnings announcements.

P = Average Relative Performance Versus Peers and Sector

How has UnitedHealth Group stock done relative to its peers, Humana (NYSE:HUM), Aetna (NYSE:AET), WellPoint (NYSE:WLP), and the overall sector?

	UnitedHealth Group	Humana	Aetna	WellPoint	Sector
Year-to-Date Return	25.22%	23.36%	37.73%	38.54%	31.15%

In a strong sector, UnitedHealth Group has been average performer, year-to-date.

Conclusion

UnitedHealth Group is a diversified healthcare company that is seeing increased attention as healthcare concerns take center stage. The stock has been steadily trending higher, and is now trading near all-time high prices. Over the last four quarters, earnings and revenue figures have been on the rise, but investors in the company expected a little more. Relative to its strong peers and sector, UnitedHealth Group has had an average year-to-date performance. Look for UnitedHealth Group to continue to OUTPERFORM.

Best Blue Chip Companies To Buy For 2014

The Dow Jones Industrial Average (DJINDICES: ^DJI  ) eked out another win today, even as the two other major indexes closed lower, as earnings season continued to march on with a mixed bag today. With some help from United Technologies' (NYSE: UTX  ) strong report, the blue chips pushed up 22 points, or 0.14%. Shares of the parent of Otis elevators gained 3% as a jump in aerospace orders and cost-cutting helped the company beat earnings estimates. EPS improved from $1.62 to $1.70, while the experts had called for just $1.57. The company's acquisition of Goodrich last year helped drive a 16% increase in revenue to $16 billion, but that was short of the consensus at $16.37 billion. United also raised the low end of its full-year guidance up to $6.00 from $5.85, keeping the high end at $6.15.

Best Blue Chip Companies To Buy For 2014: Panax Geothermal Ltd (PAX.AX)

Panax Geothermal Ltd engages in the identification, exploration, and development of geothermal resources primarily in Australia, Indonesia, and India. Geothermal energy is the source of renewable energy that replaces base load power generated using fossil fuels. It operates in Penola Trough, Other Limestone Coast, Cooper Basin, Indonesia, and Other International segments. The company holds 100% interest in the Penola, Limestone Coast Geothermal project covering an area of approximately 3,000 square kilometers located in the Limestone Coast, South Australia; and the Hutton Geothermal project covering an area of 949 square kilometers located in the Cooper Basin, South Australia. It also holds a 49% interest in the Puga Geothermal project covering an area of approximately 100 square kilometers located in the Himalayan region, Upper Indus Valley, northern India. In addition, the company holds a 45% interest in the Sokoria Geothermal project for a 30 MW geothermal development o n Flores Island; a 35% interest in the Ngebel Geothermal project for a 165 MW geothermal development on East Java; a 51% interest in the Dairi Prima Geothermal project for a 25 MW geothermal development in Northern Sumatra; and a 95% interest in the Jambi Geothermal project for a 80 MW geothermal development in Central Sumatra, Indonesia. Panax Geothermal Ltd is based in Adelaide, Australia.

Best Blue Chip Companies To Buy For 2014: Winmark Corporation(WINA)

Winmark Corporation operates as a franchisor of four retail store concepts that buy, sell, trade, and consign merchandise. The company franchises retail stores under the ?Plato?s Closet? name that sell and buy used clothing and accessories geared toward the teenage and young adult market; and under the ?Play It Again Sports? name, which sell, buy, trade, and consign used and new sporting goods, equipment, and accessories for various athletic activities, including hockey, wheeled sports, fitness, ski/snowboard, golf, and baseball/softball. It engages in franchising ?Once Upon A Child? branded retail stores that sell and buy used and new children?s clothing, toys, furniture, equipment, and accessories; and ?Music Go Round? branded retail stores that sell, buy, trade, and consign used and new musical instruments, speakers, amplifiers, music-related electronics, and related accessories for parents of children who play musical instruments, as well as for professional and amateur musicians. In addition, the company operates a middle-market equipment leasing business focusing on technology-based assets to serve large and medium-sized businesses; and a small-ticket financing business to serve small businesses. Further, it offers management services to Tomsten, Inc. As of September 24, 2011, the company had 923 franchises in operation. Winmark Corporation was founded in 1988 and is headquartered in Minneapolis, Minnesota.

Top 5 China Stocks To Own Right Now: MedAssets Inc.(MDAS)

MedAssets, Inc. provides technology enabled products and services for hospitals, health systems, and other non-acute healthcare providers in the United States. It operates in two segments, Spend and Clinical Resource Management, and Revenue Cycle Management. The Spend and Clinical Resource Management offers a suite of cost management services, supply chain analytics, and data capabilities; medical device and clinical resource consulting, which includes implantable physician preference items, utilization management, and service line consulting; supply chain outsourcing and procurement services; capital equipment lifecycle management; lean process and workforce optimization solutions; process improvement consulting; business intelligence tools; and performance analytics and data management tools, such as service line analytics, spend analytics and strategic information services, e-commerce, client master item file services, electronic contract portfolio catalog, and decision support services. The Revenue Cycle Management segment provides a suite of products and services spanning the revenue cycle workflow from patient access and financial responsibility; case management, coding, and documentation; charge capture and revenue integrity; strategic pricing; claims processing; denials management and reimbursement integrity; revenue cycle and supply chain integration; revenue recovery and accounts receivable management; and outsourced services. It delivers technology-enabled solutions primarily through the company-hosted software, software-as-a-service, or Web-based applications. As of December 31, 2011, the company served approximately 4,200 acute care hospitals and 100,000 ancillary or non-acute provider locations. MedAssets, Inc. was incorporated in 1999 and is headquartered in Alpharetta, Georgia.

Don’t Diss Bond Funds: Goldman Sachs

As interest rates rise and investors withdraw billions from bond funds, Goldman Sachs Asset Management is asking them to take a closer look at fund managers’ performance and asset allocations before heading for the exits.

Investors with portfolios of laddered individual bonds face the same duration risk as those with bond funds, and the only difference is that investors in bond funds can check the NAV daily whereas those in laddered portfolios only see their returns posted periodically on statements, said Jonathan Beinner, co-head of GSAM Global Fixed Income and Liquidity Management, at a press briefing in New York on Thursday.

“A lot of investors are exposed to interest rate risk and are just not aware of it,” said Beinner, who also serves as co-portfolio manager for Goldman Sachs Strategic Income Fund (Class A: GSZAX). “The duration is there whether you choose to acknowledge it or not. In the same way that a bond fund doesn’t mature, a laddered bond portfolio doesn’t mature.”

The GSZAX fund, which just marked its third-year anniversary on June 30, has earned 3.44% year to date as of July 17, according to Bloomberg data. Morningstar reports that the fund’s assets total $6 billion, and the expense ratio is 0.99%, while the turnover rate is 727%. The nontraditional fund ranks in the top 3% of the 241 funds in its Morningstar category.

Bogleheads Agree With Goldman

Even the Bogleheads community of individual investors, so named in honor of Vanguard founder John Bogle, agree that fixed income investors should take a close look at their bonds or bond funds before deciding whether to stay or go.

“The major factors in deciding between owning a bond fund versus individual bonds are: diversification, convenience, costs, and control over maturity,” says the Bogleheads wiki “Individual Bonds vs a Bond Fund.” “There is a common belief (promoted by Suze Orman, among others) that owning individual bonds is less risky than a bond fund, but this is not necessarily true if an appropriate bond fund or collection of funds is chosen. Duration is an essential attribute for understanding the riskiness of a fund or ladder over time.”

Top 5 China Stocks To Watch Right Now

Last Friday, Morningstar reported that June long-term bond fund and bond ETF flows had seen their worst month since 2008. Investors withdrew an estimated $43.8 billion from taxable-bond funds and $16.4 billion from municipal-bond funds, making June the worst month on record for bond funds in terms of total outflows. Long-term funds overall shed $47.3 billion, the largest monthly outflow since $105.6 billion in October 2008.

Floating Rate Loans, Flexible Mandates

GSAM’s Beinner acknowledged that the bond market’s 30-year-long “liquidity supercycle” was coming to an end, which explains why his firm has adopted an “unconstrained" fixed income strategy.

“An unconstrained approach reduces the baseline for duration risk to zero and allows for a more diverse set of global opportunities to drive returns,” writes the GSAM fixed income team in an April white paper, “The Case for Unconstrained Fixed Income.”

Specifically, Goldman is currently invested in bank loans and leveraged loans because they are floating-rate vehicles. In addition, the firm seeks hedged instruments such as nongovernment derivatives as well as currency swaps that offer an opportunity to invest outside of the U.S.

Similarly, smaller firms are adopting nontraditional strategies in fixed income in order to manage risk as interest rates climb higher. (Beinner predicts that within a couple of years, the new normal for long-term debt will be closer to 5%.)

DDJ Capital Management, a Waltham, Mass.-based institutional investment manager specializing in high-yield credit and senior loans, reported Thursday that it is seeing clients increasingly embrace a broader fixed income strategy that encompasses both traditional high-yield bonds and floating rate bank loans as they seek yield.

 “We are finding heightened interest from U.S. and international investors in flexible mandates that allow us to take advantage of market dynamics, in addition to continued demand for separate high-yield and bank loan strategies as investors seek income in this rate-challenged environment,” said David Breazzano, DDJ’s president and chief investment officer, in a statement.

As of June 30, DDJ managed approximately $6 billion, including $1.6 billion in bank loans across all of its investment strategies and approximately $114 million in a dedicated senior loan strategy.

Read June Long-Term Fund Outflows Worst Since 2008: Morningstar at AdvisorOne.

Why you should prefer long term investment

As far as the corporate world is concerned, there has been a sea change in the attitude of companies and their respective managements. While not many of them (companies) were talking about any business concerns then (January 2008 and before), disclosures were flooding in those days - disclosures relating to hidden losses, pledged shares, cash that never was, cooked up books and many like these.

Another contrast can be seen in the behaviour of stock prices to bad news. While such ill doings were not given any air and were casually passed off in the heydays of 2008 and before, the period following the market decline set companies' stocks to plummet even on a hint of negative news.

One of Warren Buffett's famous quotes is - "I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years." Imagine if that actually happened. And that too in the first week of January 2008! Most of us would have loved it considering that it was the peak of the bull-run.

Or to put things in a different perspective, imagine if there was a lock in period on every stock purchase - say, a five year lock-in period. A greater proportion of us would have been wiser in our stock picking methodology.
Coming back to the earlier point about the change in investors' attitudes - with the occurrence of the slowdown, investors' focus should have shifted on companies' long term performance rather than short-term performance. As such, the managements and their long term plans would be looked at with more detail.

We hope this brings about a change in investors' approach towards investing. Especially when the scenario is again uncertain with regards to the economy, making the need for long term investing and careful stock selection all the more pronounced. The lost art of carefully studying a stock before making the purchase, we believe, needs to make comeback. Understanding the nuances of profit and loss accounts, balance sheets, and cash flow statements has always been pertinent, more in recent times than ever before.

So, let's begin the journey to educate ourselves towards a fruitful investing experience. In a series of articles following this, we will try to bring to you the basics of investing by acting as guideposts to unraveling the mystery behind the financial statements.

While soft qualitative metrics like corporate governance and management quality will continue to be clouded under subjectivity, our effort will be to arm you with a better understanding of the ways companies can be researched.

Equitymaster.com

Basic steps to follow before buying a stock

How to analyse key financial statements of a company

Top 10 China Stocks To Own For 2014

Baidu (NASDAQ: BIDU  ) continues to court naysayers.

There were 15.5 million shares of China's leading search engine sold short as of June 14. That may not seem like a big number, but when you consider Baidu's share price, we're talking about nearly $1.5 billion betting against the company.

Baidu has seen its number of shares sold short nearly triple over the past year, and the mid-June mark tops the record of 13.9 million shares being held short at the end of May.

Why are so many investors down on Baidu these days? The emergence of Qihoo 360 (NYSE: QIHU  ) as an alternative search engine has been the biggest contributor to Baidu's downfall.

The Web browser and security software specialist has turned heads since rolling out its own search platform last summer. Despite the stock running up in response -- Qihoo shares have nearly tripled over the past year -- the push higher has helped shake loose some of the skeptics. Qihoo 360's short interest has fallen from 14.8 million to 17.9 million over the past two months!

Top 10 China Stocks To Own For 2014: CNinsure Inc.(CISG)

CNinsure Inc., together with its subsidiaries, provides insurance brokerage and agency services, and insurance claims adjusting services in the People?s Republic of China. The company offers property, casualty, and life insurance products underwritten by domestic and foreign insurance companies operating in China. Its property and casualty insurance products include automobile, individual accident, commercial property, homeowner, cargo, hull, liability, and construction insurance; and life insurance products comprise individual whole life insurance, term life insurance, education annuity, and health insurance, as well as universal insurance and group life insurance. The company also offers insurance claims adjusting services, which include pre-underwriting survey, claims adjusting, disposal of residual value, loading and unloading supervision, and consulting services, as well as damage assessment, survey, authentication, and loss estimation to insurance companies and the i nsured; and value-added services to its customers in conjunction with distributing automobile insurance products. As of April 15, 2010, its distribution and service network consisted of 49 insurance agencies, 3 insurance brokerages, and 4 claims adjusting firms, with 571 sales and service outlets. The company was founded in 1998 and is headquartered in Guangzhou, the People?s Republic of China.

Top 10 China Stocks To Own For 2014: SmartHeat Inc.(HEAT)

SmartHeat Inc. manufactures, sells, and services plate heat exchangers (PHE) in the People?s Republic of China. It offers PHE units, which combine PHEs with various pumps, temperature sensors, and valves and automated control systems; heat meters for use in commercial and residential buildings; and spiral and tube heat exchangers. The company?s products are used in various applications that include energy conversion for heating, ventilation, and air conditioning; and industrial use in petroleum refining, petrochemicals, metallurgy, food and beverage, and chemical processing. SmartHeat sells PHE units under the brand name of Taiyu; and PHEs under the brand names of Taiyu and Sondex. It sells its products through sales force and a network of national distributors. The company is headquartered in Shenyang, the People?s Republic of China.

Hot Financial Stocks To Buy For 2014: China Mobile(Hong Kong)

China Mobile Limited, an investment holding company, provides mobile telecommunications and related services primarily in the Mainland China. It offers various services comprising local calls, domestic long distance calls, international long distance calls, domestic roaming, and international roaming. The company also provides voice value-added services, including caller identity display, caller restrictions, call waiting, call forwarding, call holding, voice mail, and conference calls; customer-to-customer messages and corporate short message services; and mobile Internet access services. In addition, it engages in other data businesses, which primarily include multimedia messaging services; color ring services that enable users to customize the answer ring tone from various selection of songs, melodies, sound effects, or voice recordings; and mobile reading, mobile gaming, mobile video, mobile payment/wallet, mobile TV, mobile market, and Internet data center services. F urther, the company offers telecommunications network planning, design, and consulting services; roaming clearance services; technology platform development and maintenance services; and mobile data solutions, and system integration and development services, as well as operates a network and business coordination center. Additionally, China Mobile Limited sells mobile phone handsets and devices. As of March 31, 2011, it served approximately 600.8 million customers. The company was formerly known as China Mobile (Hong Kong) Limited and changed its name to China Mobile Limited in May 2006. China Mobile was founded in 1997. The company is based in Central, Hong Kong, and is considered a Red Chip company due to its listing on the Hong Kong Stock Exchange. China Mobile Limited is a subsidiary of China Mobile Hong Kong (BVI) Limited.

Top 10 China Stocks To Own For 2014: 51job Inc.(JOBS)

51job, Inc. provides integrated human resource services primarily in the People?s Republic of China. . The company provides recruitment related advertising services, including print advertising services through 51job Weekly, which is a city-specific recruitment advertising publication that is published once a week and is distributed as an insert in local newspapers and/or on a stand-alone basis; and online recruitment services through its Website, www.51job.com. It also offers other human resource related services, such as business process outsourcing, which consist of social insurance and welfare payment processing, regulatory compliance, and payroll processing; and executive search services, as well as conducts training seminars in the areas of business management, leadership, sales and marketing, human resource, negotiation skills, financial planning and analysis, public administration, manufacturing, secretarial, and other skills for the general public and corporate cl ients. In addition, the company provides campus recruitment services; conducts salary, employee retention, and other human resource related surveys; organize and host annual human resource conferences and events, which include lectures, seminars, workshops, and networking opportunities for human resource professionals; and provides assessment tools to assist human resource departments in evaluating capabilities and dispositions of job candidates and existing employees, aiding employee placement, and allocating employee resources, as well as hiring and support services to employers on select recruitment projects. It provides recruitment and other human resource related services to employers through its sales offices, as well as through its sales and customer service call center. The company was founded in 1998 and is based in Shanghai, the People?s Republic of China.

Advisors' Opinion:

• [By Robert Hsu]

  51Job, Inc. (JOBS) reported its financial results for the second quarter of 2011 on August 4. Some highlights:

  Total revenues came in at 332.4 million yuan, an increase of 26.7% from 262.4 million yuan year-on-year. Revenues from online recruitment services climbed a whopping 49%, while print advertising revenues declined 27.8%. Gross profit for the second quarter increased 34.1%, while gross margin expanded to 71.8%, compared with 68% year-on-year. Net income for the second quarter increased 53.6% to 83.5 million yuan, representing earnings per share of 2.82 yuan.

  Looking forward, the company expects for revenue to come in at a range of 335 million yuan to 345 million yuan. Overall, the company continues to make progress on its strategic initiatives, and has strongly increased spending per employer in its online business, as well as expanding its customer base in existing and new geographic regions.

  Shares sold off slightly after the earnings report, since EPS just slightly missed analyst expectations, but investors quickly realized that the long-term growth story was still intact and shares quickly climbed back. Going forward, one day of volatility will not affect fundamentals of this company and I remain bullish on JOBS. Buy it.

Top 10 China Stocks To Own For 2014: Spreadtrum Communications Inc.(SPRD)

Spreadtrum Communications, Inc., through its subsidiaries, operates as a fabless semiconductor company that designs, develops, and markets baseband processor and RF transceiver solutions for wireless communications and mobile television markets. It offers a portfolio of integrated baseband processor solutions that support a range of wireless communications standards, including global system for mobile communication (GSM), general packet radio service (GPRS), enhanced data rates for GSM evolution (EDGE), time division synchronous code division multiple access (TD-SCDMA), and high speed packet access (HSPA), as well as offer an array of multimedia capabilities, such as MP3 digital audio playback, touch screen, JAVA acceleration, digital camera support, motion JPEG, MPEG4, AVS and H.264 digital video playback, and 64-channel polyphonic ringtone playback. The company also provides single-chip CMOS multi-mode RF transceivers that perform across various standards covering GSM/GP RS, EDGE, wideband code division multiple access, TD-SCDMA, and high speed uplink/downlink packet access. In addition, it designs, develops, and markets a CMMB-based channel demodulator and audio/video decoder processor solution for the mobile television market. The company sells its products directly, as well as through distributors to brand manufacturers, independent design houses, and original design manufacturers primarily in China, Hong Kong, and Macau. Spreadtrum Communications, Inc. was founded in 2001 and is headquartered in Shanghai, the People?s Republic of China.

Advisors' Opinion:

• [By Roberto Pedone]

  Spreadtrum(SPRD) is a fabless semiconductor company that designs, develops and markets baseband processor, radio frequency transceiver and turnkey solutions for the wireless communications and mobile television market. This stock is trading up 10% at $22.85 in recent trading

  Today's Volume: 1.4 million shares.

  Average Volume: 1.5 million shares

  Volume % Change: 88%

  Shares of SPRD are ripping higher today after the company said its revenue may exceed previous forecasts. Spreadtrum said in a statement today that it's on track to meet or exceed its fourth-quarter revenue forecast of $188 million to $194 million.

  From a technical standpoint, SPRD is starting to bounce hard right near its 200-day moving average of $19.42 today on high volume. Market players should now look for the next buy point to trigger if SPRD can sustain a high-volume move and close back above its 50-day moving average of $23.85.

  If we see that action, then look for this stock to re-test some near-term overhead resistance at $27.

Top 10 China Stocks To Own For 2014: DAQQ New Energy Corp.(DQ)

Daqo New Energy Corp., together with its subsidiaries, manufactures and sells polysilicon in China. The company sells its polysilicon to photovoltaic product manufacturers for use in the processing of ingots, wafers, cells and modules for solar power solutions. It also produces and sells mono-crystalline and multi-crystalline modules to photovoltaic system integrators and distributors in China and internationally under its Daqo brand. The company was formerly known as Mega Stand International Limited and changed its name to Daqo New Energy Corp. in August 2009. Daqo New Energy Corp. was founded in 2006 and is headquartered Wanzhou, the People?s Republic of China.

Advisors' Opinion:

• [By Kevin1977]

  DAQQ New Energy Corp.(NYSE: DQ) closing price in the stock market Tuesday, Jan. 3, was $1.84. DQ is trading -4.75% below its 50 day moving average and -59.53% below its 200 day moving average. DQ is -87.71% below its 52-week high of $14.97 and 30.50% above its 52-week low of $1.41. DQ‘s PE ratio is 0.60 and its market cap is $64.66M .

  DAQQ New Energy Corp. manufactures and sells polysilicon in China together with its subsidiaries. DQ sells its polysilicon to photovoltaic product manufacturers for use in the processing of ingots, wafers, cells and modules for solar power solutions.

Top 10 China Stocks To Own For 2014: KongZhong Corporation(KONG)

KongZhong Corporation, together with its subsidiaries, provides wireless interactive entertainment, media, and community services to mobile phone users in the People's Republic of China. It also involves in the development, distribution, and marketing of consumer wireless value-added services, including wireless application protocol, multimedia messaging services, short messaging services, interactive voice response services, and color ring back tones. In addition, it offers interactive entertainment services, such as mobile games, pictures, karaoke, electronic books, mobile phone personalization features, entertainment news, chat, and message boards; and through Kong.net offer news, community services, games, and other interactive media and entertainment services; and sells advertising space in the form of text-link, banner, and button advertisements. Further, the company develops and publishes mobile games, including downloadable mobile games and online mobile games cons isting of action, role-playing, and leisure games. As of December 31, 2009, it had a library of approximately 300 internally developed mobile games. Additionally, it develops online games; and provides consulting and technology services, as well as media and net book services. The company was formerly known as Communication Over The Air Inc. and changed its name to KongZhong Corporation in March 2004. KongZhong Corporation was founded in 2002 and is headquartered in Beijing, the People?s Republic of China

Advisors' Opinion:

• [By Wyatt Research Staff]

  As a Chinese ADR, KONG is the leading provider of 2.5G wireless interactive entertainment, media and community services in terms of revenue to customers of company China Mobile. Institutions snatched up shares at an alarming rate with an increase of 26.7% in institutional ownership over the past three months.

  A consensus of analysts expect earnings to increase by 16.9% in 2011 and 19.6% in 2012. Company earnings are estimated to increase by 62.1% this year.

Top 10 China Stocks To Own For 2014: New Oriental Education & Technology Group Inc.(EDU)

New Oriental Education & Technology Group Inc. provides private educational services primarily in the People?s Republic of China. It offers a range of educational programs, services, and products consisting primarily of English and other foreign language training; test preparation courses for admissions and assessment tests; primary and secondary school education; development and distribution of educational content; software and other technology; and online education. The company?s language training courses primarily consist of various types of English language training courses, and other foreign languages, including German, Japanese, French, Korean, and Spanish. It offers test preparation courses for language and entrance exams used by educational institutions in the United States, the People?s Republic of China, and commonwealth countries. The company also operates primary and secondary schools in Yangzhou. In addition, New Oriental Education & Technology Group Inc. deve lops and edits content for educational materials for language training and test preparation, such as books, software, CD-ROMs, magazines, and other periodicals. It distributes these materials through various distribution channels consisting of own classrooms and bookstores, as well as third-party distributors. Further, the company offers various online education programs on its Web site, koolearn.com. Additionally, it provides consulting services to help students through the application and admission process for overseas educational institutions, as well as post-secondary educational programs to help students seek career opportunities; and operates two pre-schools. The company offers educational services under the ?New Oriental? brand name. As of May 31, 2010, it offered education programs, services, and products through a network of 48 schools, 319 learning centers, and 25 bookstores. The company was founded in 1993 and is headquartered in Beijing, the People?s Republic of China.

Advisors' Opinion:

• [By Kevin1977]

  The demand for English-language education is particularly strong in China right now, and people are willing to pay a lot of money for training that will enable them to communicate and conduct business globally. As China’s largest private education services company, New Oriental Education & Technology (EDU) is the way to play this powerful trend.

Top 10 China Stocks To Own For 2014: Clean Diesel Technologies Inc.(CDTI)

Clean Diesel Technologies, Inc. engages in the manufacture and distribution of emissions control systems and products for heavy duty diesel and light duty vehicle markets. The company operates in two divisions, Heavy Duty Diesel Systems and Catalyst. The Heavy Duty Diesel Systems division designs and manufactures verified exhaust emissions control solutions that are used to reduce exhaust emissions created by on-road, off-road, and stationary diesel and alternative fuel engines, including propane and natural gas. Its products include closed crankcase ventilation systems, diesel oxidation catalysts, diesel particulate filters, Platinum Plus fuel-borne catalysts, ARIS selective catalytic reduction reagents, catalyzed wire mesh diesel particulate filters, alternative fuel products, and exhaust accessories. This division offers its products for original equipment manufacturers of heavy duty diesel equipment, such as mining equipment, vehicles, generator sets, and construction equipment, as well as retrofit customers consisting of school districts, municipalities, and other fleet operators. The Catalyst division produces catalyst formulations using its proprietary MPC technology for gasoline, diesel, and natural gas induced emissions. Its products comprise catalysts for gasoline engines, diesel engines, and energy applications. This division supplies its catalysts to automotive manufacturers and large heavy duty diesel engine manufacturers. The company sells its products through a network of distributors and dealers, and its direct sales force worldwide. Clean Diesel Technologies, Inc. is based in Ventura, California.

Advisors' Opinion:

• [By CRWE]

  Clean Diesel Technologies, Inc. (Nasdaq:CDTI), a cleantech emissions control company, will be a presenter at the 3rd Annual Craig-Hallum Capital Group Alpha Select Conference. The presentation is scheduled for 2:10 p.m. ET on Thursday, September 27, 2012 at the Sentry Centers in New York.

• [By cnAnalyst]

  Clean Diesel Technologies, Inc. (NASDAQ:CDTI) is the 3rd best-performing stock last month in this segment of the market. It was up 90.97% for the past month. Its price percentage change was -13.07% year-to-date.

Top 10 China Stocks To Own For 2014: Home Inns & Hotels Management Inc.(HMIN)

Home Inns & Hotels Management Inc. develops, leases, operates, franchises, and manages a chain of economy hotels in the People?s Republic of China. The company operates its hotels under the Home Inn brand name. As of April 28, 2011, it had approximately 800 Home Inns in operation and 1,000 Home Inns sealed in franchise agreements. The company was incorporated in 2001 and is headquartered in Shanghai, the People?s Republic of China.

Advisors' Opinion:

• [By Conrad]

  Home Inns & Hotels Management (HMIN) is the largest hotel chain in China. Growth is as easy as opening new hotels & hellip; the cookie-cutter growth model. The company has no debt, unlike most hotel chains, and profit margins were 19.6% in the latest quarter.

3 Things You Need To Know About Preferred Stock ETFs

Preferred stocks are just one popular market segment accessible through ETFs. Almost every corner of the global financial landscape can be traded via ETF, and with U.S. interest rates at all time lows, preferred shares and the ETFs associated with them are attracting additional investor attention .

What's the Appeal?A preferred share is like a hybrid between a common stock and a bond. When you buy preferred shares, you own a piece of the company and in exchange receive fixed dividend payments, which are set at issuance, along with the par value of the preferred stock.

The main benefits of owning preferred shares are:

Tax-efficient yield: unlike a bond, the payments you receive are dividends and therefore taxed at a preferential rate to interest income.Predetermined dividend rate: With a preferred share you know what the dividend is. Unlike a common share where the dividend rate can be changed at any time, with a preferred share all provisions are laid out at issuance so you know your expected return. It is important to note though that there are different types of preferred shares. "Rate Reset" preferreds pay a fixed dividend up to the reset date, at which point the company can implement a new rate that will remain in effect until the next reset day .Diversification: Preferred shares typically have a low correlation with bonds and common stocks since they are hybrid of the two.Higher Capital Structure Rank: In the event the company goes insolvent, preferred shareholders rank higher than common shareholders in their right to liquidation proceeds. Preferred shareholders are also paid out their dividends before common equity holders receive theirs. This provides more security than common shares.Lower Volatility: Preferred shares typically trade around the par value, making them less volatile than common stock, but more volatile than bonds. Preferreds represent the middle ground between bonds and common stock.The main drawbacks are that capital appreciation is likely to be lower th! an what is available in the common equity market, and preferred shareholders don't receive voting rights.

ETFs offer a way to own a basket of preferred shares, which provides more diversification than just owning a single stock, and is more efficient than buying multiple stocks. The iShares S&P 500 US Preferred Stock Index Fund (PFF) and the PowerShares Preferred Portfolio (PGX) are two of the largest and most popular ETFs in the space.

Interest Rates MatterLike a bond, interest rates have an inverse effect on the price of preferred shares. When interest rates rise, this puts downward pressure on the price. When interest rates fall, this puts upward pressure on the price of preferred shares.  This is because the dividend payment is fixed, so if interest rates rise, the price will fall so that the new yield on the security is market competitive. Similarly, when interest rates fall, the price will rise to reduce the yield and once again make it market competitive .

As Mariela Jobson–Vice President and portfolio manager at iShares–points out though, preferred shares are a hybrid; therefore you can't expect the same direct price-to-interest rate relationship that's seen in the bond market. Like common stock, a rosy outlook and rising interest rates due to a strong economy may also help bolster preferred shares, somewhat offsetting the negative price effect of rising interest rates.

The current Federal Reserve policy has been to keep rates low. The current target rate midway through 2013 is 0 to 0.25%, and has been since late 2008. The low yield offered in money market instruments has increased the popularity of higher yielding preferred shares. Preferred shares are likely to continue to hold prominence in a low interest rate environment, but will decline if interest rates are forced up. Unlike bonds though, preferred share ETFs are a hybrid, and therefore will likely be less negatively affected by rising interest rates.

Not All Preferred Stock ETFs Offer Hig! h YieldsO! ne of the key benefits of preferred shares are that they typically offer attractive yields, but not all ETFS actually deliver on that.

For the 10 ETFs in the ETFdb Preferred Stock category, the range in yield varies from 6.02% down to 0.71% as of July 2, 2013. When putting investment dollars to work, picking the right preferred shares ETF matters.

Below, we highlight the top performing funds in the category according to dividend yield (as of July 10, 2013)  .

Ticker SymbolETF NameAnnual Dividend Yield (%)Expense Ratio

SPFF	Global X SuperIncome Preferred ETF	6.15%	0.58%
PGX	PowerShares Preferred Portfolio	6.09%	0.50%
PGF	PowerShares Financial Preferred Portfolio	6.01%	0.60%
PSK	SPDR Wells Fargo Preferred Stock ETF	5.00%	0.45%

Bottom LinePreferred shares are a hybrid between common stocks and bonds, offering a fixed dividend but no voting rights. An ETF allows you to buy a diversified basket of preferred shares with the convenience of one purchase. Not all preferred share ETFs are created equal, though, and annual dividend yields vary drastically, so choose carefully. Preferred share prices move inversely to interest rates, so if interest rates rise this will put downward pressure on the price. But since preferreds also have common stock characteristics, the negative impact of rising interest! rates is! likely to be somewhat subdued relative to the impact on bonds.

5 Best Stocks For 2014

Disclosure: No positions at time of writing.

5 points to note when investing in equities for 1st time

Below is the verbatim transcript of Roongta's interview with CNBC-TV18.

Q: If a small investor was to begin investing in the equity market directly, how he should go about doing it. What are the top five-six things that he needs to keep in mind?

A: This is a topic, which is lingering on the minds of all the investors that we meet specially the small investors who have not entered the equity markets as yet. I would like to take one step behind before we get on to how to exactly go about doing it. The first and foremost is that if one has a medical emergency or a complexity, do consult the person who is specialising in the field.

Therefore, my first advice and the first step would be to seek the help of professional who is in the financial field. Second, before taking a plunge into investing in equities, first draw up an asset allocation plan. That will only determine based on one's age or risk profile or time horizon that one have. How much money should exactly go into equities? Once that has been identified, only that portion of money is strictly needs to be allocated to equities.

'S' for Shopping or Saving?

For a new investor to identify stocks; there are couples of things he needs to do a detailed research upon because there are fundamental analysis and technical analysis of a company. Researching on a company is a science in itself. So, I would recommend for a new investor, for a person who just wants to enter into equity, into the stock market to first choose an index exchange-traded funds (ETFs). Index ETFs are listed on stock exchanges.

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Jeff Auxier of Auxier Asset Management Is Taking GuruFocus Readers Questions

GuruFocus welcomes Jeff Auxier, president and CEO of Auxier Asset Management, an investment advisor firm with about $524 million in assets under management, to answer our readers' questions about investing. To ask your question, post it in the comments section below.

Jeff has been managing the Auxier Focus Fund since 1999, achieving a cumulative 127.71% return versus 26.64% for the S&P 500, and an annualized return of 6.68% versus 1.87% for the S&P, since inception.

Jeff's aversion to risk and dedication to companies whose fundamentals promise long-term performance has helped him earn consistent returns through a period that includes the worst decade for U.S. stock returns in history. In his first quarter letter, he shares his fund's current positioning:

"The current portfolio is comprised of businesses that have strong free cash flow and, we believe, the ability to increase dividends. The average earnings yield of the portfolio is well in excess of bond yields. Returns on invested capital are high, while mandatory capital spending tends to be low. Generally our buys are bargain priced, and 'hopelessly out of favor,' on the flip side of momentum-driven markets in which IPOs are the focal point."

He is avoiding Apple (AAPL) and IPOs, as they remind him of 1983, the year he learned the beauty of boring when blue chips such as Waste Management (WM) and Pepsico (PEP) were stumbling and selling cheap, while 30 glitzy PC stocks went public and soared. Since then, the blue chips have overcome their problems and rose in value again, and most of the PC companies are gone.

These are his top holdings:

Company	% of Assets
Pepsico (PEP)	3.4
Philip Morris (PM)	2.3
Tesco PLC ADR (TSCO)	2.1
Molson Coors Brewing (TAP)	2.1
Microsoft (MSFT)	1.9
Merck (MRK)	1.9
Procter & Gamble (PG)	1.8
Avon Products (AVN)	1.6
Wal‐Mart (WMT)	1.6
Medtronic	1.6
Hospira (HSP)	1.5
BP (BP)	1.4
Medco Health Solutions (MHS)	1.3
Johnson & Johnson (JNJ)	1.3
Unilever NV (UL)	1.3

Jeff is also optimistic about natural gas and believes the recession in Europe could be setting up "a generational buying opportunity."

To learn more about Jeff and his outlook on the economy, read his quarterly letter here. Also see more of his holdings in his portfolio here.

Ask Jeff your investing question by leaving them in the comments box below. We'll be posting his answers soon.

Related links:Jeff AuxierQuarterly letter hereHere

Is Altisource Portfolio Solutions Going to Burn You?

There's no foolproof way to know the future for Altisource Portfolio Solutions (Nasdaq: ASPS  ) or any other company. However, certain clues may help you see potential stumbles before they happen -- and before your stock craters as a result.

A cloudy crystal ball
In this series, we use accounts receivable and days sales outstanding to judge a company's current health and future prospects. It's an important step in separating the pretenders from the market's best stocks. Alone, AR -- the amount of money owed the company -- and DSO -- the number of days' worth of sales owed to the company -- don't tell you much. However, by considering the trends in AR and DSO, you can sometimes get a window onto the future.

Sometimes, problems with AR or DSO simply indicate a change in the business (like an acquisition), or lax collections. However, AR that grows more quickly than revenue, or ballooning DSO, can, at times, suggest a desperate company that's trying to boost sales by giving its customers overly generous payment terms. Alternately, it can indicate that the company sprinted to book a load of sales at the end of the quarter, like used-car dealers on the 29th of the month. (Sometimes, companies do both.)

Why might an upstanding firm like Altisource Portfolio Solutions do this? For the same reason any other company might: to make the numbers. Investors don't like revenue shortfalls, and employees don't like reporting them to their superiors.

Is Altisource Portfolio Solutions sending any potential warning signs? Take a look at the chart below, which plots revenue growth against AR growth, and DSO:

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. FQ = fiscal quarter.

The standard way to calculate DSO uses average accounts receivable. I prefer to look at end-of-quarter receivables, but I've plotted both above.

10 Best Small Cap Stocks To Buy For 2014

Watching the trends
When that red line (AR growth) crosses above the green line (revenue growth), I know I need to consult the filings. Similarly, a spike in the blue bars indicates a trend worth worrying about. Altisource Portfolio Solutions's latest average DSO stands at 59.9 days, and the end-of-quarter figure is 66.1 days. Differences in business models can generate variations in DSO, and business needs can require occasional fluctuations, but all things being equal, I like to see this figure stay steady. So, let's get back to our original question: Based on DSO and sales, does Altisource Portfolio Solutions look like it might miss its numbers in the next quarter or two?

Investors should watch the top line carefully during the next quarter or two. For the last fully reported fiscal quarter, Altisource Portfolio Solutions's year-over-year revenue grew 7.0%, and its AR grew 75.3%. That's a yellow flag. End-of-quarter DSO increased 62.0% over the prior-year quarter. It was up 13.9% versus the prior quarter. That demands a good explanation. Still, I'm no fortuneteller, and these are just numbers. Investors putting their money on the line always need to dig into the filings for the root causes and draw their own conclusions.

Add Altisource Portfolio Solutions to My Watchlist.

How Marks & Spencer Will Deliver Its Dividend

LONDON -- I'm looking at some of your favorite FTSE 100 companies and examining how each will deliver their dividends.

Today, I'm putting iconic high street retailer Marks and Spencer Group  (LSE: MKS  ) under the microscope.

Dividend history: cut No. 1
All was rosy with M&S in the mid-1990s. Within its final results for the year ended March 1998, the company was able to toast five-year earnings-per-share growth of 62% and dividend growth of 77%. The 1997-1998 dividend was covered around twice by both adjusted and statutory EPS -- a healthy level of cover, you might think, with little imminent risk to shareholders' income.

However, M&S suffered a terrible second half the following financial year. Profits collapsed, the final dividend was held flat, and the total dividend for the year (14.4 pence) was barely covered by adjusted EPS and uncovered by statutory EPS.

The next year -- 1999-2000 -- profits fell again as a result of restructuring charges. M&S slashed the dividend by 37.5%, the payout representing the entirety of the company's profits for the year.

Dividend history: cut No. 2
M&S was soon able to begin increasing the dividend again from the "rebased" level, but it was not until 2005-2006 that the payout got back to being twice covered by EPS -- although the dividend itself of 14 pence was still below the 1998-1999 level. The company told us its dividend policy going forward: "With dividend cover now restored to over two times, the Board's future policy is to grow dividends broadly in line with adjusted EPS growth for each half of the financial year."

Within two years M&S had increased the dividend to a record level of 22.5 pence... then came the great recession. In announcing its 2008-2009 results, the company said it would be rebasing the dividend to 15 pence -- a 33% cut, and almost back to the level of a decade ago. Shareholders heard a familiar refrain: "The Board's policy regarding future dividends is to rebuild cover toward two times and thereafter, to grow dividends in line with adjusted EPS."

The current state of play
M&S has paid a dividend of 17 pence a share for each of the last three years. The table below shows how the payout has measured up against the policy of having a twice-covered dividend growing in line with adjusted EPS.

Metric 

2010/11

2011/12

2012/13

2013/14
forecasts

2014/15
forecasts

Adjusted EPS (pence)	34.8	34.9	32.7	34.6	37.3
Dividend per share (pence)	17.0	17.0	17.0	17.9	19.0
Dividend cover	2.0 times	2.1 times	1.9 times	1.9 times	2.0 times

As the table shows, M&S has paid dividends in line with its policy over the past three years. Analyst dividend expectations for the next two years of 5% to 6% annual growth are also in line with the company's twice-covered-by-earnings target -- assuming, of course, that the analyst earnings forecasts are on the money.

Summing up
M&S may not have grown its dividend over the past three years, but the dividend has been covered around two times by earnings as per the Board's policy, and analyst expectations for the next two years don't look unreasonable.

However, as I've shown you, M&S' earnings in the past have been capable of taking a sudden and dramatic turn for the worse, with a consequent unwelcome effect on the dividend.

This is not unique to M&S, but something to which companies in the general retailer sector are broadly vulnerable. The sector is invariably one of the hardest hit during recessions, but even when economic conditions are benign there are so many ways for businesses that rely on the fickle consumer and fast-changing fashions to get their offer wrong.

Investors who are particularly interested in a steadily growing income should bear in mind that M&S -- and other general retailers -- are always likely to give you a bumpy dividend ride.

One way you can smooth the bumps in your portfolio is to balance companies such as M&S with companies from more stable sectors. To help you on your way, the Motley Fool has just published this brand-new free report.

Our top analysts have identified a select handful of blue-chip companies as "5 Shares to Retire On." The fab five, which include a utility group "with nearly guaranteed returns" and a health care company with "prodigious cash generation," are some of the highest-quality businesses you'll find within the FTSE 100.

10 Best Low Price Stocks To Invest In Right Now

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Jack in the Box Beats on EPS But GAAP Results Lag

Jack in the Box (Nasdaq: JACK  ) reported earnings on May 15. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended April 14 (Q2), Jack in the Box met expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue shrank significantly. Non-GAAP earnings per share increased significantly. GAAP earnings per share shrank significantly.

Gross margins increased, operating margins grew, net margins dropped.

Revenue details
Jack in the Box booked revenue of $355.6 million. The 16 analysts polled by S&P Capital IQ looked for net sales of $359.1 million on the same basis. GAAP reported sales were 30% lower than the prior-year quarter's $506.6 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.33. The 14 earnings estimates compiled by S&P Capital IQ forecast $0.31 per share. Non-GAAP EPS of $0.33 for Q2 were 22% higher than the prior-year quarter's $0.27 per share. GAAP EPS of $0.30 for Q2 were 38% lower than the prior-year quarter's $0.48 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 23.2%, 690 basis points better than the prior-year quarter. Operating margin was 8.3%, 290 basis points better than the prior-year quarter. Net margin was 3.7%, 60 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $369.2 million. On the bottom line, the average EPS estimate is $0.42.

Next year's average estimate for revenue is $1.55 billion. The average EPS estimate is $1.61.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 325 members out of 364 rating the stock outperform, and 39 members rating it underperform. Among 127 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 122 give Jack in the Box a green thumbs-up, and five give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Jack in the Box is outperform, with an average price target of $36.38.

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Add Jack in the Box to My Watchlist.

Top 5 Dividend Companies To Own For 2014

With recent volatility in the Dow and other major market averages, investors have started to see the stock market as increasingly dangerous. But another market has even greater risks for investors, many of whom are likely unaware of the potential for declines.

In the following video, Fool markets analyst Mike Klesta talks with Fool contributor Dan Caplinger about this vulnerable market and the impact it could have on investors. Dan notes that the collateral impact of a market decline could affect many different types of investments and makes some suggestions on how to position yourself to protect against a decline.

One investment that many people have been worried about for a long time is Annaly Capital. It pays a great dividend, but can investors count on that payout sticking around? In The Motley Fool's premium research report on Annaly, senior analysts Ilan Moscovitz and Matt Koppenheffer uncover the key challenges the company faces and divulge three reasons investors may consider buying it. Simply click here now to claim your copy today!

Top 5 Dividend Companies To Own For 2014: McDonald's Corporation(MCD)

McDonald?s Corporation, together with its subsidiaries, operates as a worldwide foodservice retailer. It franchises and operates McDonald?s restaurants that offer various food items, soft drinks, coffee, and other beverages. As of December 31, 2009, the company operated 32,478 restaurants in 117 countries, of which 26,216 were operated by franchisees; and 6,262 were operated by the company. McDonald?s Corporation was founded in 1948 and is based in Oak Brook, Illinois.

Advisors' Opinion:

• [By Jeff Reeves]

  McDonald’s (NYSE:MCD) isn’t quite as dramatic as Apple when it comes to stock performance. The company has “only” doubled since 2007 and “only” tripled since 2005 — compared with 330% gains since 2007 and 900% gains since 2005 for Apple.

  But you have to admit, those gains still are incredibly impressive — especially for a mammoth blue chip like McDonald’s that is dominant worldwide.

  Also worth consideration is the fact that, since 2007, McDonald’s has paid dividends totaling $9.26 per share. Since McDonald’s stock was trading around $45 four years ago, that means on top of doubling your money via the share appreciation, you would have gotten back about 20% of your initial investment via dividends alone. Or if you reinvested those funds, you really could have supercharged your returns even more.

  Looking forward, McDonald’s shows no signs of slowing down. It has surpassed analysts’ expectations in?four of its past five earnings reports, most recently with second-quarter numbers boasting a 15% increase in profits. While its revenue has risen at a modest 3.6% annual rate during the past five years, net income has surged at a 14.6% annual rate — proving MCD can maintain margins and grow profits even if sales don’t soar.

  McDonald’s, like Apple, knows how to deliver small-cap gains despite its blue-chip size. That makes this pick a keeper.

• [By JON C. OGG]

  McDonald’s Corporation (NYSE: MCD) is at $85.08 and analysts have a consensus price target objective of $97.68.  It carries a 2.9% dividend yield and the stock is down 5% from its 52-week high.  McDonald’s trades at close to 6-times book value, but its return on equity is 37%.  S&P carries an “A” local long-term rating on the Golden Arches.  In the “you gotta eat somewhere” theory, McDonald’s seems to keep winning over and over and its shares and same-store sales keep rising handily.

Top 5 Dividend Companies To Own For 2014: Freeport-McMoran Copper & Gold Inc.(FCX)

Freeport-McMoRan Copper & Gold Inc. engages in the exploration, mining, and production of mineral resources. The company primarily explores for copper, gold, molybdenum, silver, and cobalt. It holds interests in various properties, located in North and South America; the Grasberg minerals district in Indonesia; and the Tenke Fungurume minerals district in the Democratic Republic of Congo. As of December 31, 2010, the company?s consolidated recoverable proven and probable reserves totaled 120.5 billion pounds of copper, 35.5 million ounces of gold, 3.39 billion pounds of molybdenum, 325.0 million ounces of silver, and 0.75 billion pounds of cobalt. The company was founded in 1987 and is headquartered in Phoenix, Arizona.

Advisors' Opinion:

• [By Mel Daris]

  Finally shifting stateside, we have Freeport-McMoRan (FCX), a Phoenix-based company with mines throughout North America, South America, and in the Democratic Republic of Congo. The stock changes hands for $37 and pays a solid 3.30% dividend. It owns 120 billion pounds of proven copper reserves, 330 million ounces of silvers, and 34 million ounces of gold. Its mining portfolio also includes some trace elements, such as molybdenum and cobalt.

• [By Keith]

  Freeport McMoRan Copper & Gold. Like a lot of basic materials stocks, Freeport MacMoRan took a beating in 2008, falling from more than $100 to $25 recently. Even so, the world's largest copper producer is a play on inflation and the weakening dollar, Resendes says. "As the stimulus package progresses and winds its way into reality, there will be an increased demand for metals and Freeport McMoRan is in a nice spot to satisfy that demand. He adds: "It's not an obvious play in this economy, but shareholders will be rewarded in the long term."

10 Best Gold Stocks To Invest In 2014: S&P GSCI(GD)

General Dynamics Corporation, an aerospace and defense company, provides business aviation; combat vehicles, weapons systems, and munitions; military and commercial shipbuilding; and communications and information technology products and services worldwide. Its Aerospace group designs, manufactures, and outfits various large and mid-cabin business-jet aircraft; provides maintenance, repair work, fixed-based operations, and aircraft management services; and performs aircraft completions for aircraft. The company?s Combat Systems group offers tracked and wheeled military vehicles, weapons systems, and munitions. Its product lines include wheeled combat and tactical vehicles; battle tanks and infantry vehicles; munitions and propellant; rockets and gun systems; and axle and drivetrain components and aftermarket parts. This group also manufactures and supplies engineered axles, suspensions, and brakes for heavy-load vehicles for military and commercial customers. The company Advisors' Opinion:

• [By Dave Friedman]

  The shares closed at $62.77, up $1.59, or 2.6%, on the day. They have traded in a 52-week range of $55.46 to $78.27. Volume today was 2,338,444 shares, against a 3-month average volume of 2,440,760 shares. Its market capitalization is $22.71 billion, its trailing P/E is 8.95, its trailing earnings are $7.01 per share, and it pays a dividend of $1.88 per share, for a dividend yield of 3.10%. About the company: General Dynamics Corporation is a diversified defense company. The Company offers a broad portfolio of products and services in business aviation; combat vehicles, weapons systems and munitions; shipbuilding design and construction; and information systems, technologies and services

• [By Dave Friedman]

  The shares closed at $62.77, up $1.59, or 2.6%, on the day. They have traded in a 52-week range of $55.46 to $78.27. Volume today was 2,338,444 shares, against a 3-month average volume of 2,440,760 shares. Its market capitalization is $22.71 billion, its trailing P/E is 8.95, its trailing earnings are $7.01 per share, and it pays a dividend of $1.88 per share, for a dividend yield of 3.10%. About the company: General Dynamics Corporation is a diversified defense company. The Company offers a broad portfolio of products and services in business aviation; combat vehicles, weapons systems and munitions; shipbuilding design and construction; and information systems, technologies and services

• [By Vatalyst]

  General Dynamics (GD) operates in the aerospace/defense industry, is the fifth largest military contractor and one of the world’s largest makers of corporate jets. Its Gulfstream jet is one of the world’s most popular corporate aircraft.

  The common stock currently trades at price to earnings ratio of 8.9, well below industry average of 13.1 and its historical average of 13. Price to book ratio is 1.62 while price to cash flow ratio is 7.

Top 5 Dividend Companies To Own For 2014: Integrys Energy Group(TEG)

Integrys Energy Group, Inc., through its subsidiaries, operates as a regulated electric and natural gas utility company in the United States and Canada. It provides natural gas utility services in Chicago, Wisconsin, Michigan, and Minnesota. As of December 31, 2009, the company served approximately 1,669,000 residential, commercial and industrial, transportation, and other customers. It had approximately 22,000 miles of natural gas distribution mains; and approximately 1,010 miles of natural gas transmission mains. The company also generates and distributes electric energy form coal, natural gas, fuel oil, hydroelectric, and wind resources in Wisconsin and Michigan. It served approximately 489,000 residential, commercial and industrial, wholesale, and other customers. In addition, Integrys Energy offers nonregulated energy supply and services; and electric transmission services. The company was formerly known as WPS Resources Corporation and changed its name to Integrys En ergy Group, Inc. in February 2007. Integrys Energy Group, Inc. was founded in 1883 and is based in Chicago, Illinois.

Top 5 Dividend Companies To Own For 2014: Kohlberg Capital Corporation(KCAP)

Kohlberg Capital Corporation is a private equity and venture capital firm specializing in buyouts and mezzanine investments. It focuses on mature and middle market companies. The firm structures its investments through senior debt, second lien debt, secured and unsecured subordinated debt, mezzanine debt, and equity. It invests in all sectors except cyclical industries. The firm invests equity in both minority and control transactions alongside other equity investors. It invests through its own balance sheet. Kohlberg Capital Corporation is based in the New York, New York.

Telenav Beats on Both Top and Bottom Lines

Telenav (Nasdaq: TNAV  ) reported earnings on April 25. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q3), Telenav beat expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue dropped. GAAP earnings per share dropped significantly.

Margins dropped across the board.

Revenue details
Telenav logged revenue of $55.0 million. The four analysts polled by S&P Capital IQ expected net sales of $52.7 million on the same basis. GAAP reported sales were the same as the prior-year quarter's.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.09. The two earnings estimates compiled by S&P Capital IQ anticipated $0.02 per share. GAAP EPS of $0.09 for Q3 were 47% lower than the prior-year quarter's $0.17 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 60.6%, much worse than the prior-year quarter. Operating margin was 7.4%, much worse than the prior-year quarter. Net margin was 7.0%, 570 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $43.9 million. On the bottom line, the average EPS estimate is $0.05.

Next year's average estimate for revenue is $192.4 million. The average EPS estimate is $0.14.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 110 members out of 115 rating the stock outperform, and five members rating it underperform. Among 21 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 20 give Telenav a green thumbs-up, and one give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Telenav is outperform, with an average price target of $7.45.

Software and computerized services are being consumed in radically different ways, on new and increasingly mobile devices. Many old leaders will be left behind. Whether or not Telenav makes the coming cut, you should check out the company that Motley Fool analysts expect to lead the pack in "The Next Trillion-dollar Revolution." Click here for instant access to this free report.

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