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Church & Dwight -- >>> 3 Reasons to Buy Church & Dwight
By Philip Saglimbeni
April 9, 2014
http://www.fool.com/investing/general/2014/04/09/3-reasons-to-buy-church-dwight.aspx
Any investor who took the time to read the latest conference call from Church & Dwight (NYSE: CHD ) had to come away at least a little excited. The enthusiasm from management, particularly Executive Chairman and CEO James Craigie, was great to witness and should inspire confidence in investors regarding the future of the relatively small company.
Of particular interest were CEO Craigie's top reasons to be excited for the future of Church & Dwight. Together, the reasons form a compelling argument for investing in the small consumer goods company over larger competitors like Procter & Gamble (NYSE: PG ) .
Craigie's top three
In the company's most recent investor's presentation, CEO Craigie laid out 10 reasons Church & Dwight can continue to deliver superior total shareholder returns compared to competitors going forward. The first three are especially worth considering since they pertain to overall brand strength.
The first reason is that Church & Dwight has a recession-proof portfolio thanks to its mix of both premium and value brands. The company breaks its product mix down to 55% premium and 45% value. For instance, the company's laundry detergent brands Ultra and Xtra offer consumers a 50%-65% discount to Procter & Gamble's Tide brand. Church & Dwight's fabric softeners are also marked 50% lower than Procter & Gamble's Bounce brand. So, in tough economic times, the company's value brands will shine.
A second reason is that management at Church & Dwight is now focusing intensively on four main brands: ARM & HAMMER, OxiClean, Trojan, and the company's vitamin division, which includes Vitafusion and Lil' Critters.
Together, these brands have grown revenue over 50% since 2008 and currently represent approximately 60% of the company's total sales and profits. Therefore, they are vital to Church & Dwight's overall growth. With a more intense focus, management can better direct marketing efforts to what it refers to as its mega brands going forward.
Some of management's stated benefits of focusing on only four brands are that advertisements become more cost-effective, there's greater licensing potential, money for research and development can be used more effectively, and the company can reduce organizational costs.
A third reason to invest in Church & Dwight is that it continues to defend its brands and market share. Management has done this over the years through innovative new product introductions and increased advertisement spending.
For example, when Procter & Gamble attacked the laundry detergent market in 2009 with an aggressive marketing campaign for its Tide brand, Church & Dwight responded by strengthening its OxiClean brand. Through new product spinoffs, clever co-branding tactics and increased advertising, Church & Dwight actually grew the OxiClean brand's market share by 3% from 2009 to 2013.
Superior growth
Also a highlight for CEO Craigie is Church & Dwight's stellar performance for shareholders over the last decade. CEO Craigie enthusiastically explained, "Look at the total shareholder return of this company over the past 10 years, which is my tenure as Chairman and CEO. I mean, I just want to stop at this slide for the next hour. But just look at this, 394% return since July of 2004, blows away anybody else in this industry, about 6 times the S&P 500."
He then highlighted the company's impressive dividend achievements. The company has raised its dividend 10 times in the last 10 years at an average annual dividend growth rate of 30%. This compares favorably to Procter & Gamble, which has raised its dividend 10 times in the last decade as well, but at a substantially lower annual growth rate of 10.6%.
Growth projections for Church & Dwight also beat out those of larger competitor PG. The company is projected to grow revenue 3.2% and EPS 9% in 2014 compared to PG's respective 1.1% and 4.2%.
Bottom line
It is not often that investors are presented with such enthusiasm from company management. However, Church & Dwight's CEO Jim Craigie has a lot to be excited about, as his company is currently firing on all cylinders and gaining ground on its larger competitors.
With a tighter focus on its four mega brands going forward, management at Church & Dwight appears set to increase the company's overall brand awareness among consumers and continue to outperform peers in the process.
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Stericycle -- >>> 2 Growth Stocks for Your 2013 Roth IRA Contribution
By Nicole Seghetti
March 19, 2014
http://www.fool.com/investing/ira/2014/03/19/2-growth-stocks-for-your-2013-roth-ira-contributio.aspx
With less than one month to go before the tax-filing deadline, it's time to fund your Roth IRA. Here are two attractive stocks worth considering for your Roth contribution dollars. Both boast exciting growth prospects and competitive positions in their respective industries.
Snap-on (NYSE: SNA ) Primarily known for its Snap-on tools and focus on automotive repair, the Wisconsin-based company has broadened its focus to reach other industries, including aviation, agriculture, and mining. This has allowed Snap-on to diversify its revenue stream and fuel growth, which should drive earnings in the future. Beyond tools, Snap-on also sells diagnostic equipment and software, which are extremely profitable compared with Snap-on's other business segments. With an attractive margin profile and the potential for growth, this segment should help drive stronger sales and earnings growth. Snap-on is also expanding into emerging markets, specifically China and India. Only 10% of Snap-on's 2013 sales were derived from Asia, signifying a lot of growth potential.
Over the past three years, Snap-on's revenue has averaged annual growth of 5%, while earnings have averaged 22% growth. The company's recent P/E ratio has been just under 19, while the industry average P/E is close to 23. Snap-on's forward-looking P/E, based on next year's earnings, is less than 15. Snap-on's future growth prospects and enticing current valuation makes it a great candidate for your 2013 Roth IRA contribution dollars.
Stericycle (NASDAQ: SRCL ) Stericycle collects and treats regulated medical waste such as syringes and gloves. The company also provides training on medical-waste handling, manages patient communications, and offers a service to manage customer returns and recalls of pharmaceuticals or medical devices. The Illinois-based company has established itself as the market leader in medical-waste collection and disposal through its extensive collection network. The disposal of medical waste is heavily regulated. As such, hospitals and medical clinics continually outsource the handling of medical waste to experts. New regulations provide additional avenues of growth for Stericycle. The rising and aging U.S. population should also drive an increase in medical procedures and prescribed medications, which will increase the quantity of medical waste. Stericycle is well-positioned to benefit from this trend.
Over the past three years, Stericycle's revenue has averaged annual growth of 14% and earnings have also averaged 14%. The company's recent P/E ratio has been around 32, while the industry average P/E is about 46. Meanwhile, Stericycle's forward-looking P/E is 24. Be sure to consider Stericycle for your 2013 Roth IRA contribution.
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Symrise -- >>> Symrise AG produces, markets, and sells flavors, fragrances, aroma chemicals, and cosmetic ingredients. Its Flavor & Nutrition segment provides flavors and functional ingredients in liquid, powder, granulated, or paste forms for use in confectionery, bakery, cereal, ice cream, and dairy products; culinary and snack food products; non-alcoholic, alcoholic, and dry beverages; food supplements, health care products, and specialties. This segment offers its products under the naturally citrus!, BrewTopia, and simply vanilla brands. The company?s Scent & Care segment provides fragrances, including perfume oils used in perfumes, hair-care products, washing lotions, skin creams, deodorants, and washing products; and a range of mint aromas and intermediate products for toothpaste, oral care products, and chewing gums. This segment also offers life essentials that are used in skin care and hair care products, suntan lotions, aftershave balsams, shower gels, washing lotions, anti-dandruff shampoos, and deodorants; and aroma molecules in liquid or crystalline forms for use in various applications. In addition, Symrise AG provides biofunctional and bioactive ingredients and substances to the health and personal care sectors. The company serves companies in the perfume, cosmetics, and food industries, as well as the manufacturers of household products in Europe, Africa, the Middle East, North America, the Asia Pacific, and Latin America. Symrise AG was founded in 1874 and is headquartered in Holzminden, Germany. <<<
Sensient -- >>> Flavours firm Wild to go on sale for 1.5 bln euros-sources
By Arno Schuetze
http://finance.yahoo.com/news/flavours-firm-wild-sale-1-121441405.html
FRANKFURT, March 7 (Reuters) - German drink and food flavours maker Wild is putting itself up for sale in a deal that could value the company at 1.5 billion euros ($2.1 billion), three people familiar with the matter said on Monday.
Citigroup Inc, which is organising the transaction, will send out information packages to a small group of pre-selected bidders later this month, the people said, adding first bids are expected to be due by the end of April.
Simultaneously, a potential stock market listing is being prepared, the sources said.
Hans-Peter Wild, son of founder Rudolf Wild, owns 65 percent of Wild Flavors, while buyout group KKR owns 35 percent. Wild is also the owner of a separate company which makes the Capri-Sun drink.
Potential buyers are likely to value the company at between 1.4 billion euros and 1.7 billion, or 10 to 12 times Wild Flavor's expected 2014 core earnings (EBITDA) of 140 million euros, the sources said.
That would be in line with the valuation of competitors which trade at about 11 times expected operating earnings, according to Thomson Reuters data.
Peers such as Givaudan, Symrise, IFF , Sensient Flavors, Ingredion and Ajinomoto are likely to show interest in Wild, although some may face antitrust issues as Wild is the world's sixth-biggest flavour provider.
Separately, private equity groups such as Advent, EQT, Cinven, BC Partners, CD&R and Permira are also likely to be invited to the auction, the sources said.
"One possible outcome, which should not be ruled out, is that the auction is mainly a price-finding exercise and may result in KKR buying out Wild or vice versa," one banker working on the transaction said.
Bankers have also started preparing debt packages of about 1 billion euros, or 7.5 times Wild's operating earnings, another source said.
Any buyer of Wild will get access to a large variety of flavours, extracts, seasonings and colours derived from natural sources, which are crucial components of processed foods and beverages. Customers have of late been showing increasing appetite for foods comprising only natural components.
Wild, headquartered in Zug, Switzerland, was founded in 1931 in Heidelberg, Germany, as a producer of ingredients for non-alcoholic beverages. About 20 years later it started selling Libella, Germany's first carbonated juice drink based on natural ingredients only.
Wild Flavors posted 2013 sales of almost 900 million euros.
Since KKR's investment in Wild, the flavour maker has bought several companies, including Cargill's juice blends business, mint oil maker A.M. Todd and natural extracts maker Alfrebro.
KKR, Givaudan, Symrise, Ajinomoto, BC Partners, EQT, Advent and CD&R declined to comment, while Wild, IFF, Sensient Flavors, Ingredion and Cinven were not immediately available for comment.
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RigNet -- >>> 3 Undervalued Stocks With Significant Upside Potential
By Anjum Khan
September 26, 2013
http://www.fool.com/investing/general/2013/09/26/three-undervalued-stock-with-significant-upside-po.aspx
RigNet (NASDAQ: RNET ) is an oil field communication provider; the company provides upstream oil and gas industry (both offshore and onshore) with network-based services. RigNet, a small company with a market cap of $566 million and good growth prospects, started its business in 2001 and had an IPO in 2010.
The company's revenue growth has been robust, with a compound annual growth rate of 19% from fiscal 2009 to 2012. Adjusted EBITDA has also increased from $29 million in 2009 to $44 million in 2012, indicating increased operating-level efficiency and profits. Superior operating efficiency is also indicated by an improvement in operating and free cash flow.
The company is currently trading at a P/E of almost 40, with estimated growth of 43% in 2013. A PEG of 0.8 does suggest undervaluation and thus potential upside. RigNet's offshore market share has risen from 7% in 2005 to 30.5% in 2012, and this is indicative that the company has done well with its products and services in a competitive market.
A similar trend can be seen in the company's onshore market, where its market share is 16.5% for the United States. The company is in plans to expand its onshore and offshore market share by penetrating the market of newly built rigs, while at the same time acquiring existing rigs from competitors .
The graph below represents the global fixed and floating rigs that are scheduled to be delivered. With the delivery of these new rigs, the potential market size of the company's business will increase, translating to higher growth.
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Sigma Aldrich -- >>> Sigma-Aldrich Corporation Declares Increased Quarterly Dividend
PR Newswire
February 11, 2014
http://finance.yahoo.com/news/sigma-aldrich-corporation-declares-increased-224000324.html
ST. LOUIS, Feb. 11, 2014 /PRNewswire/ -- Sigma-Aldrich Corporation (SIAL), a leading Life Science and High Technology company (the "Company"), announced an increase of 7% in its quarterly cash dividend to $0.23 per share. The increased dividend was approved by the Company's Board of Directors on February 11, 2014 and is payable on March 14, 2014 to shareholders of record at the close of business on February 28, 2014.
About Sigma-Aldrich: Sigma-Aldrich is a leading Life Science and High Technology company whose biochemical and organic chemical products, kits and services are used in scientific research, including genomic and proteomic research, biotechnology, pharmaceutical development, the diagnosis of disease and as key components in pharmaceutical, diagnostics and high technology manufacturing. Sigma-Aldrich customers include more than one million scientists and technologists in life science companies, university and government institutions, hospitals and a wide range of industrial companies. The Company operates in 37 countries and has approximately 9,000 employees whose objective is to provide excellent service worldwide. Sigma-Aldrich is committed to accelerating customer success through innovation and leadership in Life Science, High Technology and Service. For more information about Sigma-Aldrich, please visit its website at www.sigma-aldrich.com.
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NewMarket Corp -- >>> Don't Miss Out On NewMarket Corp.
Dec. 26, 2013
http://seekingalpha.com/article/1917571-dont-miss-out-on-newmarket-corp?source=yahoo
NewMarket Corp. (NEU) is a holding company involved in formulating and manufacturing a variety of petroleum additives. In addition to additives, lubricants and similar products, NEU diversified its operations to include real estate development through its NewMarket Development Corporation.
Real Estate Development News
As of this writing, NEU's real estate development is limited to Foundry Park I LLC in Richmond, Va. In FY 2012, NewMarket used proceeds from a debt restructuring scheme to pay off its Foundry Park property mortgage. Then, in July 2013, NewMarket's real estate operations succeeded in a profitable property sale.
The takeaway is that NewMarket's foray into real estate development hints at smart management that can manage debt and construction costs/risks without compromising other critical operations and financial stability. If NEU continues its real estate development operations in a manner similar to its Foundry Park I project, such moves would bode very well for the company and its shareholders.
Business Strategy
The core of NewMarket's business is petroleum additives and petroleum-derived lubricants. Afton Chemical is a NewMarket subsidiary that invests in R&D and manufacture of additives for the following:
•Metalworking and hydraulic industrial use
•Fuels, including heating oils
•Gear oil and related driveline additives
•Engine oil for personal, heavy-duty and motorcycle engines
Afton seems optimistic about future demand for its additives. In 2012, the company announced a substantial, long-term investment in a Singapore additives manufacturing facility. This makes intuitive sense since the Asian region is very likely to see consistent economic growth and with it, more demand for vehicles and associated oils and fuels -- therefore, additives.
Product Formulation Overview
A comprehensive analysis of oil additive chemistry in one article is unfeasible. Nevertheless, a synopsis of an Afton specialty will help prospective investors to chow down the dynamics and considerations of oil additive production. Some professional investors and money managers emphasize understanding business products and other deliverables more than technical stock price movement analysis or an exclusive focus on financial statements. The following section will help readers to do just that with regard to NEU's main profit drivers.
Oil additives exist for a variety of purposes. Some additives reduce oxidation of both oil and mechanical components. Others fight the accumulation of thick oil sludge deposits and/or particulate clogs composed of suspended soot and dirt. Still others protect mechanical components from friction and corrosion encountered during normal operations. Here, the focus is on calibrating oil viscosity through additives.
Regarding viscosity: if oil is too viscous, flow to all engine parts is not optimal. Excessively thick oil may miss small nooks and crannies that rely on proper lubrication and other types of protection mentioned above. Thick oil becomes a bigger concern in cold environments. Vehicle components that are insufficiently coated in oil suffer accelerated mechanical damage, cracks, friction-induced wear and tear, and oxidative corrosion (rust). On the other hand, if oil viscosity is too low -- if the oil is too "thin" -- it will not have sufficient staying power to coat and lubricate engine parts. Thus, oil viscosity is a very important variable that needs to be fine-tuned in order to avoid quick wear and tear. A viscosity index (VI) is used to summarize oil viscosity in response to changing temperatures.
Seeing as how engine parts experience a wide temperature range, oil needs to be within acceptable viscosity range in all points at those temperatures. Temperatures of 38 and 99 Celsius are used for reference viscosity measurements that are then applied in a calculation to categorize general VI of a given oil/additive blend. Note that even though VI uses 99 degrees Celsius as a reference measurement, engine parts can heat up to 200 degrees Celsius. Therefore, all oil/additive combinations delivered for customer use must be rigorously tested for viscosity at or even above 200 Celsius. Among other desired properties, an oil additive has to be chemically stable so that oil viscosity can remain optimal or near-optimal for a long time.
Risks
Relying on only a few key suppliers and production facilities is NEU's most prominent weakness. Vulnerability from supply disruptions is a substantial risk that can hurt NEU operations. The company is also subject to considerable concentrated production risk. Operations and are sales subject to potentially large losses in case of a severe, high-cost facility problem such as a major fire or direct hit by a powerful natural disaster.
There is substantial risk inherent in R&D projects. Though improvements and breakthroughs can yield great profits for NEU, there is a substantial chance that research will eat up costs without a corresponding payoff. The good thing for NEU and its Afton Chemical subsidiary is that these R&D risks are also present in all existing and any potential competitors. Furthermore, Afton's strong intellectual property portfolio with regard to oil additive science and formulations mean that it has a substantial moat around its edge in the oil additives market. Despite the uncertain nature of R&D, it is unlikely to be a significant drain on future stock prices considering Afton's already-strong position and intellectual-property "fortification" in that regard.
NewMarket does not shy away from using financial derivatives. Despite an air of reckless gambling surrounding derivatives since the 2008-09 recession, NewMarket makes it very clear in its FY 2012 10-K that it uses derivatives only for hedging against currency and interest rate fluctuation risk, not to execute speculative trades.
Net Margin and Revenue History
NEU's net profit margin has had a pretty good run. There's little reason to expect this trend will end. The only time net profit hit negative territory was in FY 2001 when it dropped to -14.5%. The slump did not last, with FY 2002 seeing 1.45%, with subsequent years giving consistently better results. What's particularly encouraging is that the 2008-09 recession did not impact NewMarket heavily. In fact, net profit margin increased from 4.53 percent in 2008 to 10.61% in 2009. This is especially impressive since NEU revenues fell from $1.62B in 2008 to $1.53B in 2009.
NewMarket has a record of smart cost control. In the face of shrinking revenue, cutting wildly is tempting. The trick is to do so without harm to current operations and future earnings prospects. NEU's margin and revenue history shows that it can function in a tough economic environment without short-changing current or prospective shareholders.
Summary
As outlined in its latest 10-K, NewMarket has substantial supplier and production risk. An interruption at either stage of its value chain will cut deeply. Also, investors would be smart to consider NEU's recent phenomenal rise. It's tempting to think that NEU's run is over when stock price increased more than 800 percent in the last five years. However, despite the risk and stock price stumbling points mentioned above, the company is still a "Buy." NewMarket is very likely to reward investors with plenty of capital gains in years to come.
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Church & Dwight -- >>> World-Famous, But Little-Known Dividend Growth Champion
Feb. 26, 2014
http://seekingalpha.com/article/2051683-church-and-dwight-world-famous-but-little-known-dividend-growth-champion?source=yahoo
Among my favorite kinds of investments are those that are world famous, but little known. By this, I mean that the company sells famous products that are household names, yet the parent company isn't widely recognizable. This allows for the ability to earn outsized returns from relatively boring, dependable dividend growers such as the company I'm going to analyze.
Church & Dwight (CHD) has long been a favorite dividend growth stock of mine and one I was happy to add to my real world experimental dividend growth portfolio (you can see the portfolio here). My goal with this article is to illustrate that you can generate long term and market smashing returns with something as boring as a seller of baking soda, condoms and household cleaners.
Company Overview:
Church & Dwight was founded in 1846 and is an international seller of consumer and industrial goods. They operate in 3 segments.
Consumer Domestic:
This segment sells household names such as Arm & Hammer baking soda and cat litter, OxiClean, First Response pregnancy tests, Trojan condoms, Xtra laundry detergent, Spinbrush toothbrushes, Nair, Orajel, AIM toothpaste, Vitafusion and L'il Critters gummy vitamins. The company calls these 9 segments their "power brands". Each of them has #1 market share in their respective markets. Trojan condoms, for example, have 70% market share and L'il Critters vitamins have 60% of children's vitamin market.
60% of sales result from what the company calls its 4 "mega Brands": Vitafusion/L'IL CRITTERS, Trojan, Arm & Hammer and OxiClean. The main difference between power brands and mega brands is a better return on investment when it comes to R&D, advertising, licensing and organizational costs.
Consumer International: Sells the above products in countries such as Canada, France, Australia, the United Kingdom, Mexico, and Brazil.
Specialty Products:
Offers specialty chemicals, such as performance grade sodium bicarbonate, potassium carbonate, and potassium bicarbonate; animal nutrition products, including feed grade sodium bicarbonate, rumen fermentation enhancers, feed grade potassium carbonate, rumen bypass fat and lysine, omega 3 and omega 6 essential fatty acids, and natural sodium sesquicarbonate; and specialty cleaners for commercial, professional, and industrial applications.
Competitive Advantages and Plans for Growth:
As presented in the last investor presentation management's focus has the following priorities:
1. Growth of mega and power brands through EPS accretive mergers and acquisitions.
•An example is the acquisition of Avid health maker of Vitafusion and L'il Critters gummy vitamins, for $650 million. The purchase became accretive to EPS in 2013.
•At the end of 2013, the company had $2.6 billion in potential liquidity to make acquisitions.
2. New Product Development
•Since 2007 fully 32% of company sales have come from new products. An example of this has been the growth of the Arm & Hammer brand (in 86% of American homes) to include things such as diaper pails, vacuum bags, air filters, cat litter, toothpaste and deodorants.
•Current R&D is focused on Clump and Seal cat litter, which the company claims holds in odor for 7 days, teeth whitening toothpastes under the truly radiant name brand, and Highly fragranced laundry detergents.
3. Cap-ex for organic growth
•An example of this is the $67 million the company spent on a new laundry detergent plant in 2013. The more modern and automated plant resulted in improved margins.
4. Return of cash to shareholders
•Church & Dwight has paid 452 consecutive dividends which is 113 years of uninterrupted income to shareholders. The company has increased dividends 16 consecutive years at 14.47% CAGR. In the last 5 years, the rate of dividend growth has exploded with 47.11% CAGR. However, due to the rate of growth exceeding earnings, the payout ratio has reached 40%, a level management sees as ideal. This means that the dividend growth in the future will have to track the growth in earnings. With analysts anticipating 10.8% annual EPS growth over the next 5 years and the company's 13 consecutive years of double digit EPS growth, it is likely that the dividend will continue to grow at 10-11% over the half decade.
5. Paying down debt
Balance Sheet
Total Cash (mrq): 496.90M
Total Cash Per Share (mrq): 3.58
Total Debt (mrq): 803.30M
Total Debt/Equity (mrq): 34.93
Current Ratio (mrq): 1.71
Book Value Per Share (mrq): 16.55
Cash Flow Statement
Operating Cash Flow [TTM]: 499.60M
Levered Free Cash Flow : 426.77M
As seen from this table, Church & Dwight's debt is very manageable. The current ratio, a proxy for short term liquidity, is near the ideal level of 1.6. In addition, the company generates massive free cash flow, with 13.4% of sales being converted to FCF. This represented a 14% increase over 2012 and indicates that the company has no problems servicing its debt.
The current ratio is the assets/liabilities of a company and a number too low, less than 1, means the company may have a hard time paying interest on its debts should credit markets freeze up as they did during the financial panic. Too high, however, means that management is stockpiling cash. This might be to prepare for a large well thought out acquisition or because management doesn't know how to invest the company's resources.
Stock
Ind Avg
Price/Earnings TTM 24.1 21.0
Price/Book 4.0 5.2
Price/Sales TTM 3.0 2.2
Rev Growth (3 Yr Avg) 7.3 -12.9
Net Income Growth (3 Yr Avg) 13.4 -13.8
Operating Margin % TTM 19.5 15.6
Net Margin % TTM 12.4 10.4
ROA TTM 9.4 8.4
ROE TTM 18.1 21.4
Debt/Equity 0.3 0.5
As seen from this table from Morningstar.com, Church & Dwight is growing faster than competitors such as Procter & Gamble (PG), Colgate-Palmolive (CL) and Kimberly-Clark (KMB). In addition, it is more profitable, has less of a debt burden and has very high return on assets and shareholder equity. These last two metrics are important signs of quality management. High ROA and ROE combined with a current ratio of 1.7 means that management is hard at work putting shareholder cash and resources to work in efficient and profitable ways.
Past Performance:
It's this track record of long term managerial excellence and disciplined acquisitions that has led Church & Dwight to remarkable growth in revenues, earnings and share price.
CHD Revenue Chart
Revenues over the last 28 years have grown 16.3 fold, representing a 10.7% compound annual growth rate [CAGR] for over a quarter century.
CHD EPS Diluted Chart
Over the last 28 years, earnings have grown 28.8 fold. This represents a stunning 12.9% CAGR.
With the growth in earnings and a management that is strongly committed to returning cash to shareholders, the dividend has been a strong grower.
CHD Dividend Chart
A 38 fold increase in the dividend since 1985 represents a 14% CAGR. This is similar to the 14.5% CAGR that Church & Dwight has shown since it began its 16 year streak of dividend increases.
Due to strong growth in earnings and dividends, Church and Dwight has been an incredibly profitable long term investment for shareholders.
CHD Chart
Here is Church & Dwight's CAGR performance over several periods of time:
•since 2004 (current CEO): 19.4%, 21.1% with dividend reinvestment
•since 1988: 17.7%, 19.1% with dividend reinvestment
•since 1977: 14.6%, 16.25% with dividend reinvestment
A $10,000 investment in Church & Dwight in 1977 would today be worth $1.371 million. Had dividends been reinvested, that figure would be $2.26 million, which is a difference of $890,000 from just a 1.6% difference in CAGR. This shows not only the power of Church & Dwight to grow investors' wealth long term, but how important growing dividends and their reinvestment is to long term total returns.
Valuation:
Given its massive success recently, has Church & Dwight grown too fast? Is it still a good buy today? If so, what returns can new investors expect?
DCF Analysis: Using historical performance and analyst projected growth rates to model the present day value of future earnings.
•Assumptions: current EPS: $2.79
•5 year EPS growth: 10.8%
•Growth over next 28 years: 12.9% (historical performance)
•Discount rate: 9%, the CAGR of the stock market since 1871
Under those assumptions, the current fair value of Church & Dwight is $163.77 which indicates the current stock price has a 59% baked in margin of safety. This means, should the company falter in the future, investors are protected from market underperformance by a large amount.
Projected Future Returns:
CHD PE Ratio Chart
Over the last 5 years, Church & Dwight has averaged a PE of 23.64. Today's PE of 24.34 represents a slight premium in this regards.
Assuming 10.8% EPS growth for 5 years, we model 2018 EPS of $4.66/share. Applying the historical PE multiple, we get a projected 5 year price target of $110.14. Adding in 5 years of projected dividends, we get a total share value of $117.83, which results in a 12.23% CAGR. This rises to 14.4% CAGR with dividend reinvestment.
This approach models probable 5 year performance based purely on earnings growth.
However, Church & Dwight is also a dividend growth stock, so we can also model the future performance using dividend yield, which has averaged 1.4% over the past 5 years.
CHD Dividend Yield Chart
In the latest investor presentation, management indicated that they wish to keep the payout ratio stable. This means that dividends will have to grow at the rate of earnings over the next 5 years.
Using a 10.8% annual rate of growth, I project a 2018 annual dividend of $1.87, resulting in a share price of $132.86, (assuming the yield reverts to the mean). Add in the $7.69 in expected dividends, and we get a total share value of $140.55. This represents 16.2% CAGR which rises to 17.8% CAGR with dividends reinvested.
Finally, we can take the DCF fair value and assume that the current stock price will achieve this level in 5 years. This results in a total return of 20.3% CAGR rising to 22% CAGR with dividend reinvestment.
Taking an average of the estimates we get a projected 5 year total return of 16.23% CAGR that rises to 18.1% CAGR with dividend reinvestment.
Note that the returns projected are all within the historical returns that Church & Dwight has returned over the course of its history. This indicates that the current price is a good one for new investors to open positions and current shareholders to add to.
However, it is always a good idea to use basic technical analysis to see what current pricing trends say about the timing of a purchase.
Technical Analysis:
Currently, the short term trend is neutral with a mildly bullish medium term trend. There is massive support at $65.32, indicating the stock is unlikely to dip below this level without a catalyst such as a general market correction or bad news from the company. The last candlestick pattern is a bearish Doji star which is a very bearish indicator. This might indicate that Church & Dwight may trade range bound for the short term.
Summary:
Given the fundamental strengths of the Church & Dwight which include the expected growth of the company's mega brands around the globe, I recommend interested investors buy the stock at these prices. Management has exhibited a long track record of excellence when it comes to disciplined, accretive acquisitions and organic growth. A firm commitment to maximizing profitability, production efficiencies and returning cash to shareholders means a continuation in the strong dividend growth, though not at the breakneck pace of the last 5 years. Given the anticipated 16-18% CAGR total returns over the next 5 years, it seems likely Church & Dwight will double the historical returns. This makes Church & Dwight a solid "BUY NOW" at this price.
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Clorox -- >>> Keep Your Portfolio Sparkling With This Cleaning Company
By Marshall Hargrave
February 10, 2014
http://www.fool.com/investing/general/2014/02/10/keep-your-portfolio-sparkling-with-this-cleaning-c.aspx
Peter Lynch always said "invest in what you know." Lynch believed that everyday investors could match the performance of professional money managers by simply investing in products that they knew. There's a very good chance that you know Pine-Sol, Formula 409, Kingsford charcoal, Hidden Valley dressing, and Burt's Bees. These are stable brands that sell well despite the broader economy.
What many investors don't know is that The Clorox Co. (NYSE: CLX ) owns all of these brands and more. It's much more than just a bleach company. The company is internally diversified, with four segments that each make up 30% or less of its total revenue.
Quite a diversified company
Cleaning is Clorox' top segment, with its other segments being household, lifestyle, and international. Other major Clorox cleaning products include Liquid-Plumr, S.O.S, and GreenWorks. Beyond cleaning brands, Clorox also makes and sells charcoal, plastic bags, charcoal, cat litter, and water filters. As mentioned, these brands are fairly insulated from the broader economy, hence Clorox's 0.45 beta.
Toward the end of last year, Clorox introduced its 2020 strategy. The idea is to promote Clorox's long-term profitability. This new strategy is expected to yield long-term sales growth of between 3%-5%, and expand its earnings before interest and taxes margin by 25-50 basis points. To achieve those goals, Clorox is looking to expand geographically. This is a big positive, as the company currently gets around 80% of its revenue from the U.S.
Going forward, Clorox will focus on Brazil, Russia, India, and China. Beyond geographical expansion, Clorox is also looking to expand its current product lines. For example, Clorox plans to expand its Hidden Valley brand into sandwich spreads and pasta salads.
Dividends and share buybacks should entice investors
While the growth opportunities are appealing, investors shouldn't overlook Clorox as a total yield play. What should get investors really excited about the 2020 strategy is that it should boost free cash flow to between 10%-12% of sales, versus 10% for fiscal 2013.
Clorox's dividend payments are robust. It has upped its quarterly dividend payment for 37 consecutive quarters. In just the last three years, it has increased its dividend payment by 42%. Clorox's dividend yield is also very enticing. Its dividend yield is 3.2%, which is well above its peer-average dividend yield of 2.5%. Also, the company has managed to repurchase nearly 40% of its outstanding shares over the last decade.
What's the competition look like?
The cleaning and consumer goods space is no stranger to competition, with other major players including Church & Dwight (NYSE: CHD ) and Colgate-Palmolive (NYSE: CL ) . However, Clorox offers investors the top dividend yield in the group and is the cheapest company in the group.
Clorox's dividend yield is upwards of 3.2%, while C&D only yields 1.7% and Colgate yields 2.1%. Meanwhile, Clorox trades at 20 times earnings; C&D trades at 24 times earnings and Colgate trades at 26 times earnings. Clorox's return on invested capital is a very impressive 23%, whereas the peer average is closer to 15%.
Although both of Clorox's major competitors are a bit expensive, they both have solid recession-proof business models. C&D offers one of the most resilient products. Its Arm & Hammer product sales rose by double-digits during the economic downturn, most notably in 2009 . Back in November, C&D announced fiscal third-quarter results that showed earnings up 15% year-over-year, driven by its Arm & Hammer and Trojan brands. If C&D posts gross margin expansion for its latest quarter, the fiscal fourth quarter, it will be the sixth straight quarter of expansion.
As for Colgate, it offers the various Speed Stick, Palmolive, Colgate, and Hill's Pet Nutrition brands, among others. Analysts expect the company to post 6% growth in earnings year-over-year for its most recent quarter; results are due out next week. The real beauty for Colgate is that it owns nearly half of the global market share for toothpaste.
Bottom line
Clorox is one of the cheapest companies in the cleaning and consumer goods space while it also offers investors a fairly solid dividend yield. The company operates in a variety of key consumer products areas, from trash bags to salad dressing. Even as the economy strengthens, the products that Clorox sells should continue to perform nicely. It also has a beta of only 0.5, which suggests it's relatively insulated from the broader market.
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Ecolab -- >>> Ecolab Acquires German Pest Service Provider
By Zacks Equity Research
March 6, 2014
http://finance.yahoo.com/news/ecolab-acquires-german-pest-provider-175205027.html
Ecolab Inc. (ECL) expanded its footprint in Europe by acquiring Germany’s leading commercial pest elimination service provider, AK Kraus & Hiller Schädlingsbekämpfung. Following the announcement, shares of the company rose 1.3% yesterday.
ECL supports more than 127,000 customers in pest management. Its Integrated Pest Elimination (IPE) approach combines IPE techniques with zero pest tolerance.
ECL believes the acquisition will be able to establish itself as a global leader in commercial pest elimination services industry. Annual revenues of AK Kraus & Hiller Schädlingsbekämpfung amount to $4 million.
ECL’s adjusted earnings per share (excluding special gains and charges) of $1.04 for the fourth quarter of 2013 rose about 17% from 89 cents in the same quarter of 2012 but missed the Zacks Consensus Estimate by a penny.
The rise in adjusted earnings was attributable to strong sales growth and operating margin gains owing to cost efficiency programs and synergies. Adjusted net earnings rose nearly 20% to $318.4 million from $265.9 million in the fourth quarter of 2012.
Revenues grew 16.9% year over year (18% at constant exchange rate or CER) to $3,559.5 million. Excluding acquisitions and divestures, adjusted fixed currency revenues increased 6%. Revenues were slightly higher than the Zacks Consensus Estimate of $3,537 million.
For the first quarter of 2014, ECL expects adjusted gross margin of 46% and adjusted earnings per share of 71 to 75 cents. The Zacks Consensus Estimate of 74 cents for the quarter lies within the guided range.
For full year 2014, ECL anticipates adjusted gross margin of 46% and higher adjusted earnings per share between $4.10 and $4.20 compared with 2013. The Zacks Consensus Estimate of $4.17 for the year lies within the guided range.
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Lorillard -- >>> How You Can Profit From Possible M&A in the Tobacco Industry
By Ted Cooper
March 8, 2014
http://www.fool.com/investing/general/2014/03/08/how-you-can-profit-from-possible-ma-in-the-tobacco.aspx
The Financial Times recently reported on speculation that Reynolds American (NYSE: RAI ) will acquire Lorillard (NYSE: LO ) . If the deal goes through, it would combine the second- and third-largest U.S. tobacco companies in a move that would create the single-largest competitor to Altria Group (NYSE: MO ) -- the largest U.S. tobacco company.
Moreover, a merger could provide an opportunity for British American Tobacco (NYSEMKT: BTI ) , which owns a large minority stake in Reynolds, to expand its U.S. footprint. If Reynolds acquires Lorillard and British American Tobacco acquires Reynolds, investors stand to benefit in multiple ways. However, only one strategy offers investors the most reliable way of making money from the takeover speculation.
Scenarios and implications
Lorillard is an attractive acquisition target for two reasons: (1) Newport is the leading menthol brand in the only stable category in the industry; and (2) Blu is the leading U.S. e-cigarette in the largest growth category in the tobacco industry.
It is not yet clear whether Reynolds intends to acquire all of Lorillard or just part of it. If it does not acquire the entire company, it will likely acquire the cigarette business. That would make Altria and Reynolds the clear No. 1 and No. 2 U.S. tobacco companies with no large competitors in sight. It would also leave Lorillard with the valuable Blu e-cigarette brand, which commands a 47% share of the nascent market.
Lorillard's menthol cigarette business, led by its flagship Newport brand, is especially attractive. Regulators have been slow to clamp down on menthol cigarettes because of the high proportion of African-Americans who smoke the cigarettes, which give a cooling sensation and minor pain relief to smokers. About half of adult menthol cigarette smokers are from minority groups and more than 70% of adolescent African-American smokers report smoking menthol cigarettes. As a result, attempts to eliminate mentholated cigarettes from the market have been met with fierce opposition in the name of racism.
The appealing cooling sensation enables menthol cigarettes to maintain sales volume even as overall cigarette volume declines. As a result, Lorillard is able to grow its market share without making acquisitions -- a rarity in the highly regulated tobacco industry.
If Reynolds acquires Lorillard's $6.7 billion cigarette unit -- which includes menthol and non-menthol cigarettes -- it would double Reynolds' sales of smokable tobacco products to $13.4 billion. That is still a far cry from Altria, which boasts nearly $22 billion in smokable tobacco sales. However, Newport, which makes up 85% of Lorillard's sales, would give Reynolds an opportunity to grow its share over time.
The true reason behind Lorillard acquisition?
Although Reynolds' acquisition of Lorillard would give it a valuable asset in Newport cigarettes -- and, if it acquires the e-cigarette business too, a leading position in a high-growth market -- there could be a deeper, slightly sinister reason behind the acquisition.
British American Tobacco, which has only a small share of the U.S. market outright, has a stake 42% in Reynolds. After it took its stake nearly 10 years ago, British American Tobacco agreed to stop purchasing additional shares and also agreed that it would not attempt a hostile takeover of Reynolds. That agreement expires in July, exposing Reynolds to a hostile takeover.
Sometimes, in an effort to thwart a hostile takeover, management takes on debt to acquire a smaller company and make itself a less-attractive acquisition target. This is what clothing retailer Jos. A Bank (NASDAQ: JOSB ) likely had in mind when it bought Eddie Bauer for $825 million while being pursued by Men's Wearhouse (NYSE: MW ) .
Reynolds may be thinking that same thing, which could lead it to overpay for Lorillard in an attempt to get a deal done no matter what the cost. Financial Times sources say that any offer for Lorillard would have to be more than $20 billion, which is where it trades now that takeover speculation has hit the market. A $20 billion acquisition would be about 17 times Lorillard's 2013 net income. If Reynolds is forced to pay much more than this amount, it may end up overpaying.
Reynolds has $1.5 billion in cash on hand, so it would either have to raise substantial debt or acquire Lorillard with stock -- or both. My guess is that Reynolds will do a cash-and-stock offer, raising just enough debt to thwart a British American takeover but not so much that it endangers the company.
If the deal is done in all stock or mostly stock, however, Reynolds could then be acquired by British American Tobacco, making Reynolds shareholders a hefty pile of cash.
How to place your bets
It is usually not a good idea to invest on the thesis that a stock will be acquired. However, buying a decent stock that has the potential of being acquired can be a good strategy.
As it turns out, Reynolds and Lorillard are both trading at about 17 times earnings. In this case, it is better to choose the smallest fish in the pond -- the one with the highest chance of getting gobbled up. If Reynolds overpays for Lorillard, Lorillard shareholders win and Reynolds shareholders lose. In that case, Reynolds would also be less attractive to British American Tobacco, thus taking away the possibility of a quick shareholder return. As a result, investors looking to make money on possible consolidation in the tobacco industry should consider buying Lorillard.
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Stepan -- >>> 2 Hidden Gems in the Chemical Space
By Philip Saglimbeni
March 5, 2014
http://www.fool.com/investing/general/2014/03/05/2-hidden-gems-in-the-chemical-space.aspx
When it comes to growth investing, companies operating in trendy industries are among the most popular stock choices among investors. As a result, the majority of long-term investors overlook many utilitarian, small-cap companies. This scenario is a positive for investors seeking value along with growth, as it often means great growth at cheaper valuations.
Perhaps no industry is more overlooked than the chemicals space. The primary reason is that the industry creates products designed to operate behind the scenes and out of the public's purview.
Balchem (NASDAQ: BCPC ) and Stepan (NYSE: SCL ) are two of the best long-term investments in the space; both offer great growth, solid dividend performance and currently trade at relatively cheap valuation multiples.
Exciting growth
While Balchem's and Stepan's chemical businesses may be boring, the growth both companies have been churning out is anything but. In fact, Balchem and Stepan are expected to continue to grow at robust rates going forward. The following is a breakdown of the companies' projected growth in 2014 compared to industry behemoth Dow Chemical (NYSE: DOW ) :
Company
Revenue Growth
EPS Growth
Balchem 9.4% 15.9%
Dow Chemical 3.4% 18.1%
Stepan 6.3% 21.4%
Both Balchem and Stepan are projected to grow sales in 2014 at much faster rates than larger peer Dow Chemical. Even though Balchem is expected to lag both competitors in the earnings-per-share category, 15.9% growth in EPS is still admirable.
Additionally, considering the above-average growth, forward-looking valuation multiples for Balchem and Stepan are not too expensive. Balchem's forward P/E of 24.8 and Stepan's forward P/E of 12.1 are lower than many popular growth stocks growing at comparable levels.
Perhaps most impressive is that despite superior growth all around, Stepan's forward P/E of 12.2 is still cheaper than Dow Chemical's 14.1.
Growth drivers
For Balchem, continued success in its animal nutrition and health department is important. The company's latest expanded alliance with Versus Animal Nutrition assures this. Versus, formerly a supplier to Western Canada only, is now teaming up with Balchem to offer the company's animal nutrient and mineral solutions to all parts of Canada, which vastly expands the company's business in the region.
Additionally, Balchem recently announced an agreement with Taminco to construct and operate a choline chloride facility in Louisiana. Together, Balchem and Taminco will invest to build the facility into a large scale producer of choline chloride, servicing consumers around the world. The facility is expected to go online in 2015.
On the other hand, Stepan's growth in 2014 is expected to come primarily from improving economic conditions around the world as well as positive trends in the company's main consumer markets. Continued global growth in polypol, which is used as energy saving insulant in foam installation, is expected to add significant volume growth in Stepan's polymer segment.
Additionally, the company's latest acquisition of Bayer's North American polyester resin business is now fully integrated and is set to contribute a full year of operation under Stepan control.
On continued international expansion, President and CEO F. Quinn Stepan Jr, explained, "We plan to build a new plant in China to participate [in] what we expect will become the largest polyol market in the world. Overall, the health of our balance sheet remains strong and will facilitate investments in growth and efficiency opportunities. And that will deliver value to you, our shareholders."
Dividend champions
Also worth noting are both companies' impressive track record of paying dividends to investors. Balchem is especially impressive in this regard. Although the company only pays a dividend of $0.26, equal to a yield of 0.50%, Balchem has raised its dividend every year in the last decade and has averaged annual dividend growth of 34.3% in that time.
Stepan's dividend of $0.68, equal to a yield of 1.10%, is more substantial. However, despite consistently raising its dividend each year, the company has only averaged annual dividend growth of 5.5% in the last decade.
Source: Balchem
Bottom line
Flashy companies in trendy industries are not investors' only options for growth. Often times, the smaller and lesser-known companies are better alternatives, particularly because they usually carry significantly less headline risk.
Balchem and Stepan are perfect examples of the benefits of boring but beautiful growth companies. With practical and reliable business mixes, both companies look like viable long-term investments currently trading at value prices.
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Artist Roger Dean -
http://en.wikipedia.org/wiki/Roger_Dean_(artist)
>>> Year
Artist
Album
1968 The Gun Gun
1969 Earth and Fire Earth and Fire
1970 Nucleus Elastic Rock
1970 Lighthouse One Fine Morning
1970 Dr. Strangely Strange Heavy Petting
1970 Clear Blue Sky Clear Blue Sky
1971 Midnight Sun Midnight Sun
1971 Osibisa Osibisa
1971 Keith Tippett Group Dedicated to You but You Weren't Listening
1971 Ramases Space Hymns
1971 Mike Absalom Mike Absalom[5]
1971 Billy Cox Nitro Function
1971 Osibisa Woyaya
1971 Pete Dello and Friends Into Your Ears
1971 Yes Fragile
1971 Atomic Rooster In Hearing of Atomic Rooster
1972 John Dummer Band Blue
1972 Gracious! This Is...Gracious!!
1972 Yes Close to the Edge
1972 Uriah Heep Demons and Wizards
1972 Gentle Giant Octopus
1972 Babe Ruth First Base
1972 Budgie Squawk
1972 Midnight Sun Walking Circles
1972 Third Ear Band Music from Macbeth
1972 Uriah Heep The Magician's Birthday
1972 Paladin Charge!
1972 Various Motown Chartbusters Vol. Six
1973 Greenslade Greenslade
1973 Magna Carta Lord of the Ages
1973 Yes Yessongs
1973 Budgie Never Turn Your Back on a Friend
1973 Yes Tales from Topographic Oceans
1973 McKendree Spring Spring Suite
1973 Del Richardson Pieces of a Jigsaw
1973 Badger One Live Badger
1973 Greenslade Bedside Manners Are Extra
1973 Snafu SNAFU
1974 Gravy Train Staircase to the Day
1974 Yes Relayer
1974 Yes Yesterdays
1975 Steve Howe Beginnings
1976 Dave Greenslade Cactus Choir
1977 John Lodge Natural Avenue
1979 Steve Howe The Steve Howe Album
1980 Yes Drama
1980 Yes Yesshows
1981 Yes Classic Yes
1982 Asia Asia
1983 Asia Alpha
1983 Barry Devlin Breaking Starcodes
1984 Nightwing My Kingdom Come
1985 Asia Astra
1989 It Bites Eat Me in St. Louis
1989 Anderson Bruford Wakeman Howe Anderson Bruford Wakeman Howe
1990 Asia Then & Now
1991 Yes Union
1991 Steve Howe Turbulence
1991 Yes Yesyears
1992 Yes Yesstory
1993 Anderson Bruford Wakeman Howe An Evening of Yes Music Plus
1993 Symphonic Music of Yes
1993 Rick Wakeman Rick Wakeman's Greatest Hits
1994 Steve Howe Not Necessarily Acoustic
1994 Asia Aria
1995 Uriah Heep Sea of Light
1995 Various artists Tales from Yesterday
1996 Various artists Supernatural Fairy Tales: The Progressive Rock Era
1996 Yes Keys to Ascension
1996 Budgie An Ecstasy of Fumbling - The Definitive Anthology
1997 The London Philharmonic Orchestra Us and Them: Symphonic Pink Floyd
1997 Space Needle The Moray Eels Eat The Space Needle
1997 Yes Keys to Ascension 2
1997 Yes Open Your Eyes
1997 The London Symphony Orchestra Symphonic Rock: American Classics
1997 The London Symphony Orchestra Symphonic Rock: The British Invasion, Vol. 1
1998 The London Symphony Orchestra Symphonic Rock: The British Invasion, Vol. 2
1998 Ad Infinitum Ad Infinitum
1998 Various artists Yes, Friends and Relatives
1998 Yes Keys to Ascension Volumes 1 and 2
1999 Yes The Ladder
1999 Rick Wakeman Return to the Centre of the Earth
2000 Various artists Yes, Friends and Relatives Volume 2
2000 Yes House of Yes: Live from House of Blues
2001 Uriah Heep Acoustically Driven
2001 Yes Keystudio
2001 Uriah Heep Remasters: The Official Anthology
2001 Atomic Rooster Resurrection
2001 Asia Aura
2002 Yes In a Word: Yes (1969–)
2002 Vermilion Flattening Mountains and Creating Empires
2003 Birdsongs of the Mesozoic The Iridium Controversy
2003 Steve Howe Elements
2004 Yes The Ultimate Yes: 35th Anniversary Collection
2005 Glass Hammer The Inconsolable Secret
2005 Yes The Word Is Live
2006 Alan White White
-2006 Electric Sheep Sweep
2008 Asia Phoenix
2010 Asia Omega
2010 Various artist Wondrous Stories – A Complete Introduction To Progressive Rock
2010 Various artist Wondrous Stories – 34 Artist That Shaped The Prog Rock Era
2011 Yes Fly from Here
2011 Ben Craven Great & Terrible Potions
2011 Yes In the Present - Live from Lyon
2012 Asia XXX
2012 Focus Focus X
Video game covers[edit]
1986 Brataccas, Mindscape Inc./Psygnosis
1987 Barbarian, Psygnosis
1987 Terrorpods, Psygnosis
1988 Chrono Quest, Psygnosis
1988 Obliterator, Psygnosis
1989 Shadow of the Beast, Psygnosis/Reflections
1989 Stryx, Psyclapse
1990 Infestation, Psygnosis
1990 Shadow of the Beast II, Psygnosis/Reflections
1991 Amnios, Psygnosis
1992 Agony, Psygnosis
1992 Faceball 2000, Bullet-Proof Software
2001 Tetris Worlds, THQ
2007 Tetris Splash, Tetris Online, Inc. (title screens)
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>>> Bitcoin exchange's collapse is probed by U.S. and Japanese regulators
The separate investigations are launched as critics and supporters of the virtual currency weigh in on its future after the Mt. Gox exchange shutdown.
The failure of the Mt. Gox bitcoin exchange may have included the theft of almost 750,000 bitcoins worth more than $300 million
By Chris O'Brien
February 26, 2014
http://www.latimes.com/business/la-fi-bitcoin-fallout-20140227,0,436944.story#axzz2uTtfitLE
U.S. and Japanese regulators are investigating the collapse of the world's largest exchange for trading bitcoins, the virtual currency that has grown in popularity among technophiles for buying products and services online.
The separate investigations were launched Wednesday as supporters of the virtual currency insisted that the shutdown of Mt. Gox was only a temporary setback for the novel monetary system.
The failure of the Tokyo exchange, which may have included the theft of almost 750,000 bitcoins worth more than $300 million, was seen by critics as derailing prospects for the virtual currency.
But several high-profile bitcoin investors came forward in its defense Wednesday.
"Mt. Gox had to die for bitcoin to thrive. Its former role from early bitcoin days has been supplanted by better, stronger entities," said Marc Andreessen, a Web browser pioneer whose venture firm Andreessen Horowitz has invested about $50 million in bitcoin start-ups. "Every important new technology has birthing pains. PC did, Web did, bitcoin does."
Still, the shutdown of Mt. Gox came as a shock to many. According to an unverified document that purports to be from Mt. Gox, thieves have hijacked hundreds of thousands of bitcoins, about 6% of all bitcoins in circulation, which probably can't be recovered.
On Wednesday, Mt. Gox Chief Executive Mark Karpeles posted a new statement on the company's website.
"As there is a lot of speculation regarding Mt. Gox and its future, I would like to use this opportunity to reassure everyone that I am still in Japan, and working very hard with the support of different parties to find a solution to our recent issues," he wrote.
He did not say what those issues were.
Meanwhile, a Japanese government spokesman confirmed at a news conference that an investigation of Mt. Gox was underway.
There were also reports that the office of Preet Bharara, the U.S. attorney in Manhattan, and the FBI had launched investigations into Mt. Gox and other related bitcoin businesses. Bloomberg cited sources that said the agencies have requested documents from companies that offer bitcoin services.
Banking regulators stepped up calls for greater scrutiny of virtual currencies.
"While all the facts surrounding the situation at Mt. Gox in Japan are not yet clear, these developments underscore that smart, tailored regulation could play an important role in protecting consumers and the security of the money that they entrust to virtual currency firms," Ben Lawsky, New York state's first superintendent of financial services, said in a statement this week.
Sen. Joe Manchin III (D-W.Va.) went one step further and called for a ban. Manchin made his case in a letter to several agencies, including the Treasury Department, the Federal Reserve and the Securities and Exchange Commission.
"This virtual currency is currently unregulated and has allowed users to participate in illicit activity, while also being highly unstable and disruptive to our economy," he wrote. "I urge regulators to take appropriate action to limit the abilities of this highly unstable currency."
Bitcoin was created in 2009 by a programmer using the pseudonym Satoshi Nakamoto. Bitcoin is a set of Internet protocols that run across a wide number of servers around the world for regulating the creation and trading of bitcoins. It is not controlled by any nation, governing body or business.
Mt. Gox was, until recently, one of the first and largest bitcoin exchanges, a place where people could buy and sell bitcoins. As the company experienced glitches and legal issues over the last year, bitcoin traders began migrating to other exchanges that seemed more stable.
Despite the hit to bitcoin's credibility this week, many of its boosters are rallying to show that their support for it hasn't wavered. Indeed, many argue that the Mt. Gox collapse is a welcome development.
"There have been red flags around Mt. Gox for some time, which in part led to it losing its role as the dominant bitcoin exchange," said Jeremy Liew of Lightspeed Venture Partners. "Hopefully now there will be an opportunity for a U.S.-based regulatory compliant exchange to build meaningful liquidity."
Others argued the $300-million loss and the ensuing bad publicity would be a short-term issue. Indeed, they noted that after declining for a couple of weeks, the price of bitcoins has begun to rise again.
"Bitcoin is already very volatile, and the negative PR from the experience is definitely a setback for the ecosystem," said Adam Draper, who founded the start-up accelerator Boost. "But the community is rallying behind bitcoin very heavily in response, and I think it will have limited impact."
Fred Wilson, a partner at Union Square Ventures, which has invested in Coinbase, a digital wallet for using bitcoins, said on his blog that he went out and bought some bitcoins because he feels "good buying when there is blood in the streets in any market. It is my favorite time to buy."
<<<
Sotheby's -- >>> Pissarro to Van Gogh Boost Sotheby’s $267 Million Auction
By Katya Kazakina
Feb 5, 2014
http://www.bloomberg.com/news/2014-02-06/pissarro-to-van-gogh-boost-sotheby-s-267-million-auction.html?cmpid=yhoo
A restituted Pissarro painting, a Van Gogh canvas and prominent dealer’s collection fueled Sotheby’s (BID) record auction in London yesterday as collectors from 44 countries competed for Impressionist, modern and Surrealist art.
The evening sale tallied 163.5 million pounds ($266.8 million), up 57 percent from a year ago and surpassing its high presale estimate of 128.4 million pounds. Of 89 offered lots, 10 failed to find buyers, Sotheby’s said.
Christie’s International tallied 177 million pounds during its evening sale on Feb. 4, kicking off auctions that represent the first big test of the art market this year. Modern and Impressionist art sales have been trailing those of postwar and contemporary art with fresh material of high quality harder to obtain. Demand from new wealthy buyers in China, Russia and other emerging markets is boosting prices for classic works, said Helena Newman, Sotheby’s worldwide head of the Impressionist and modern art department.
“It’s a truly global market and that’s why the prices are so strong,” Newman said in a telephone interview. “We had a combination of great material and conservative estimates.”
The top lot at Sotheby’s sale, Camille Pissarro’s 1897 view of Paris’s Montmartre on a spring morning, fetched 19.7 million pounds, almost doubling its presale high estimate of 10 million pounds. The prices include buyer’s premium; the estimates do not. About 60 percent of sold lots surpassed their high estimates, Sotheby’s said.
Nazi Victim
The Impressionist canvas was originally owned by Max Silberberg, a Jewish industrialist who was forced by the Nazis to sell his prized collection of 19th and 20th century art. Silberberg perished in 1942 during the Holocaust. The Pissarro was restituted to his heir in 2000 by the Israel Museum.
Vincent Van Gogh’s 1889 painting, “L’Homme Est en Mer (The Man Is at Sea)” fetched 16.9 million pounds, more than doubling the high estimate of 8 million pounds. Painted at the Saint-Remy asylum, it depicts a young woman cradling a child.
The work was previously sold for $7.15 million at Sotheby’s in New York in 1989. The anonymous consignor bought the piece in 1993 for an undisclosed price, Sotheby’s said.
A group of 37 works from the private collection of Geneva art dealer Jan Krugier, a Holocaust survivor who died in 2008, took 53.3 million pounds, almost twice its presale high estimate of 27.1 million pounds. Each lot offered from Krugier sold yesterday and an additional 82 pieces from the collection will go on the auction block today.
Picasso, Giacometti
The group’s highlights included Picasso’s “Composition au Minotaure (Composition Minotaur),” which sold for 10.4 million pounds, above the high estimate of 2.5 million pounds. Alberto Giacometti’s “Homme Traversant une Place par un Matin de Soleil (Man Crossing a Place for a Morning Sun)” generated 8.5 million pounds, above the high estimate of 5 million pounds.
In November, 155 lots from the Krugier collection, including 29 Picassos, were offered at Christie’s in New York. The auction brought $113.7 million, more than 30 percent below the low estimate.
At the time, dealers said many pieces were part of Krugier’s gallery inventory and not fresh to the market.
“What we sold tonight was a group of drawings that came from the private collection of Jan and his wife,” Newman said. “The works hung in their home.”
One of the biggest surprises at yesterday’s sale was the stark 1956 painting “Le Passage (the Passage)” by American Surrealist Kay Sage (1898-1963), which fetched 4.3 million pounds, or 48 times its high presale estimate. Since 1958 the work had been in the collection of Stanley Seeger, a collector who died in 2011.
<<<
>>> Sotheby's operates as an auctioneer of authenticated fine art, decorative art, and jewelry. The company operates in three segments: Auction, Finance, and Dealer. The Auction segment primarily acts as an agent by offering works of art for sale at auction and by brokering private sales of artwork. The Finance segment provides financing secured by artworks to collectors and art dealers. This segment offers secured loans, including advances secured by consigned property to borrowers who are contractually committed to sell the property at auction in the near term; and general purpose term loans secured by property not presently intended for sale. The Dealer segment operates as an art dealer that sells works of art from inventory directly to private collectors and museums. This segment also acts as a broker in private purchases and sales of art; and is involved in the purchase and resale of artworks, and retail of wines. The company also engages in licensing Sotheby?s International Realty and related trademarks; and licensing its Sotheby?s brand name for use in connection with the art auction business in Australia, art education services in the United States and the United Kingdom, and print management services. Sotheby?s has operations in the United States, the United Kingdom, China, Switzerland, France, and internationally. The company was founded in 1744 and is headquartered in New York, New York. <<<
Ultra rare Sam Koontz guitars - only approx 200 made prior to his death in 1981 -
Rare Guitars as an investment -- >>> Family seeks to sell off set of 31 vintage guitars
Late resident had collected hand-crafted guitars made by New Jersey’s Sam Koontz
http://buyavintageguitar.com/collection-time-sale/
BY KATHY CHANG Staff Writer
It’s a story that might make William Shakespeare proud. “We’ve got passion, we’ve got love, we have beauty, we have death and we have suicide … it’s everything that Shakespeare would have written about,” said Christopher Wylde, who had been a professional musician in England before moving to Milltown 15 years ago.
Above: A mirror reflects an image of Christopher Wylde playing a Sam Koontz guitar in a video shown at the Pines Manor in Edison Dec. 15. Wylde, of Milltown, hosted the Koontz guitar celebration with 31 hand-crafted guitars owned by the late Howard Krive of Metuchen. Left: A guitar from the collection is exhibited. More photos at gmnews.com. PHOTOS BY JEFF GRANIT staff Wylde’s part in the story is to fulfill the wish of his late friend Howard Krive of Metuchen. Just before his untimely death in 2008 after battling cancer, Krive asked that his coveted collection of 31 Sam Koontz guitars be sold off as one collection.
“I’m not sure if we can actually make this happen, but the collection in itself should be recognized, as well as Sam and Howard,” Wylde said.
That is why Wylde, along with the likes of guitarist and vocalist Ed Laub, guitarist Jerry Topinka and guitarist Walt Bibinger, came together to honor the lives of Sam Koontz, who made his first classical guitar in 1959, and Howard Krive, who had a love and passion for his guitars, at the Pines Manor in Edison on Dec. 15. Guitar enthusiasts were able to observe and play the 31 guitars displayed at the large hall.
As a lasting legacy and final tribute to both Koontz and Krive, the guitars will be featured in a PBS documentary with noted player Bob Miles, host of “World of Guitar” and “Miles of Music.” The musical and entertaining program will allow viewers to fully understand and appreciate Koontz’ work, courtesy of Krive’s guitar collection. The documentary is expected to air in 2011.
The guitars will be featured in a multi-part PBS documentary on Koontz and his work. Wylde showed a clip of the film at the event in Edison.
“I met Howard in 1995 at the Sam Ash store on Route 27 in Edison,” he said. “I had just moved to New Jersey and didn’t know anybody besides my wife’s family. We struck up a conversation and had a nice friendship from there, sharing a passion for music and guitars in particular.”
Krive would visit Wylde in Milltown and bring his latest “toy” from his collection.
“It was always spectacular,” he said.
Krive had collected roughly 150 guitars, including the 31 Koontz guitars.
“I really didn’t know how much he had, but I knew he loved Sam Koontz guitars in particular,” he said. “He had visions of writing a book about Sam before he passed away.”
Wylde said he was flabbergasted when Krive’s parents invited him to sift through the collection.
“I opened a case for a Sam Koontz guitar 31 times,” he said. “It was just shocking to me. It is a story within itself. These are the moments in life that just take your breath away.”
Wylde said it is different when talking about master guitar builders such as D’Angelico, D’Aquisto, W.E. Moll, Benedetto, Gibson and others.
“D’Angelico and D’Aquisto guitars have global appeal and the 1,000-plus guitars have always been found for sale,” he said. “With Sam Koontz, he only made a little over 200 guitars before he committed suicide in 1981. So the 31 Koontz guitars were definitely a rare find.”
Wylde said many of the Koontz guitars could sell for $30,000 to $40,000, though there is one, described as “the cream of the crop,” which could go for as much as $50,000.
“Just the design and craftsmanship, some with the scroll patterns on the guitars, are amazing,” he said. “Koontz would travel all the way to Germany and purchase the wood for his guitars.”
Professional guitarist Wayne Wesley Johnson wrote about the Koontz guitars. The guitar maker created a “Studio One” version just for him. In his article, he explained that Koontz set up his own guitar shop in Linden in 1970. He worked as a shop foreman for the Framus line importer and later designed guitars for the Framus factory.
He was then assigned the task of developing the Standel and Harptone guitar lines, including the manufacturing procedures. In some cases, he even designed the machinery that was used to manufacture the instruments.
In his Linden shop, Koontz continued to fashion guitars with custom work and repairs.
“An innovative craftsman, he was continually looking for and working toward improvements and refinements for fretted instruments,” Johnson wrote.
Wylde said it is amazing that one of the greatest guitar craftsmen was based in Linden.
“When you think of Linden, you think of industry, factories, the [nearby] airport … not the creativity and talent that was there,” he said.
Krive was born in Brooklyn, N.Y., but moved as a young boy to New Jersey and found himself living close to Koontz’s shop.
“He got to know Koontz and so began a love affair with his guitars,” Wylde said.
It could be said that Krive had a polygamous relationship with his guitars, according to Wylde.
“That was his love … he just lived for those guitars,” he said.
Wylde said he does not believe that Koontz made a guitar for Krive.
“He just began trading other guitars to make room for more Koontz guitars,” he said.
Krive’s younger brother, Alan, said the whole event was a legacy of his brother’s dying wish to pass on his collection so that it is housed in one place. Alan attended the recent event in Edison with his parents.
“In this day and age, it will be worth millions, and that is a lot to throw around,” he said. “It is a tough promise, but at least we will try … maybe there is one person out there.”
Alan said he honored his brother’s passion.
“I don’t even play, but I know this was a big part of my brother’s life,” he said. “My brother was the kindest and gentlest person; he would give you the shirt off his back.”
Wylde said that, besides the Koontz collection, he has already sold 75 pieces from Krive’s overall collection on behalf of the family.
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>>> 14 cannabis stocks to watch in 2014
The move toward legalization of marijuana for both medical and recreational use has boosted cannabis-related companies.
By Benzinga
http://money.msn.com/investing/14-cannabis-stocks-to-watch-in-2014-1
The green rush is here
More than 20 states have approved marijuana use for medicinal purposes, and Colorado and Washington are opening up the plant for recreational use. Marijuana companies rose more than 50 percent in 2013 and opened 2014 with a bang, rising almost 150 percent in just three weeks.
This list gives an overview of publicly traded marijuana stocks worth over $50 million, including hydroponic companies, vaporizer producers and research houses for medicinal purposes. Note that most are small and trade over the counter, which means extra risk to go with that potential growth.
Medbox
Medbox (MDBX) rose from $23 to $93 a share in a matter of five trading sessions, with the peak on Jan. 8. This is a great example of uninformed investors pouring their money into a hot name. The company makes automated dispensing solutions for medications, including marijuana. Medbox has the largest market capitalization of cannabis focused stocks, close to $1.2 billion. It also does not file with the SEC.
AVT Inc.
Started in 2001, AVT (AVTC) began producing vending machines, but recently transitioned to automated retail machines. Marijuana investors took interest in the stock when Medbox announced a purchasing agreement. Medbox spends about half a million dollars a year buying dispensary units from AVT. The company has a market cap of $119 million.
Advanced Cannabis Solutions
Currently focused on Colorado, Advanced Cannabis Solutions (CANN) buys growing facilities and leases them to growers. The company looks for an ROI over 25 percent and 10-year deals for contracts. With an experienced management team, Advanced Cannabis Solutions is looking to build a consulting and other marijuana-related businesses. CEO Robert Frichtel stated, "Every new state that legalizes MMJ creates hundreds of new opportunities, so we're looking to evolve with the industry's needs." Advanced Cannabis Solutions does file with the SEC.
CannaVest
CannaVest is one of the bigger players in the industry with a market cap near $1 billion. The company produces Cannabidiol, a marijuana concentrate, from hemp. CannaVest hopes to grow a test crop of industrial hemp in 2014. The company does file with the SEC.
Cannabis Sciences
This is one of the most followed marijuana stocks, although it has one of the smallest market caps ($70 million). Cannabis Sciences (CBIS) is staffed with PhDs, the company is a leader in THC product research for medicinal markets. Two preclinical drugs focus on HIV and cancer. A key concern for the company is a huge amount of share dilution, with the amount of common stock 24 times greater than it was three years ago. The company does file with the SEC.
Fusion Pharm
Fusion Pharm's (FSPM) PharmPod product is a "plug-and-grow" hydroponics solution. The company looks to capitalize on commercial growers and small operations with its scaleable product. The company emphasizes that the PharmPod only requires 20 percent of the water of a more traditional growing solution and is very customizable. The company does not file with the SEC.
GW Pharma
GW Pharma (GWPRF) is one of the few cannabis stocks that trades on a major exchange (Nasdaq), meaning its financial information is much more closely regulated. The company is a biotech, however, meaning it has its own set of risks. Based in the UK, GW Pharma is developing cannabinoid medications, primarily for multiple sclerosis and cancer. The company has one of the largest market caps at $930 million.
Hemp Inc.
Using hemp as a key ingredient, Hemp's (HEMP) supplements seem to fall in three key categories: protein, sexual performance and general nutrition. Hemp does not file with the SEC.
mCig
mCig (MCIG) has an interesting product: a $10 mini-vaporizer for bud and wax. Just over 5 inches long, mCig is very portable and even offers three different heat settings. The company launched the first generation of its product at the end of October and sold out in several days. The second generation began selling at the start of the year. mCig does file with the SEC.
Medical Marijuana
Medical Marijuana (MJNA) produces a series of cannabinoid oil products, advertising the health benefits of consuming CBD. These include a chewing gum, shampoo and lotion, and liquid CBD oil. CannaVest, mentioned above, was spun out from Medical Marijuana, which is now a minority shareholder. The company recently had a lawsuit filed against it, which suggests potential fraud; the company does not file with the SEC.
Nuvilex
Nuvilex (NVLX) was a big winner in 2013, with shares gaining 258 percent. Nuvilex is a biotech company with research focused on "live-cell encapsulation," a process to protect healthy cells from disease. The company hopes to use its research primarily to fight breast cancer, pancreatic cancer and diabetes. Although its market cap is just $78 million, the company does file with the SEC.
GrowLife
GrowLife (PHOT) is a favorite among marijuana investors in a recent survey: 48 percent expect GrowLife to gain the most value in 2014. The company makes equipment for growing cannabis, selling 150,000 units over 25 years. The Phototron system, which includes a pod for each stage of growth, is advertised to speed up harvesting by three to four times. Growlife does file with the SEC.
Vape Holdings
Vape Holdings (PLPED) will change its ticker symbol to VAPE on Feb. 2. Investors are very interested in a ceramic nail the company is producing for dabbing. The ceramic nail is expected to be superior to the glass or titanium because it is easier to clean, more durable and lasts longer. The company is expected to sell 10,000 units in January, the majority of which have been preordered. Vape does file financial statements with the SEC.
Terra Tech
Terra Tech (TRTC) is another investor favorite with 17 percent of 420 Investor members expecting shares to gain the most value in 2014. The company currently uses hydroponics to grow vegetables and herbs, but plans to focus on marijuana or hemp when legally feasible. The company's produce is currently available in Fairway markets in New Jersey, Connecticut and New York.
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found this board by mistake, care to look into binary options with me? :)
http://www.google.com/trends/explore?q=binary+options#q=binary%20options&cmpt=q
WTF ?? -- >>> Francis Bacon painting sells for record $142.4M at auction
November 13, 2013
http://www.foxnews.com/leisure/2013/11/13/francis-bacon-painting-sells-for-record-1424m-at-auction/
NEW YORK – A 1969 painting by Francis Bacon set a world record for the most expensive artwork ever sold at auction and a sculpture by Jeff Koons broke a world auction record for a living artist at a Manhattan sale on Tuesday.
"Three Studies of Lucian Freud" was purchased for $142.4 million at Christie's postwar and contemporary art sale Tuesday evening. The triptych depicts Bacon's artist friend.
The work sold after "6 minutes of fierce bidding in the room and on the phone" to Acquavella Galleries in Manhattan, Christie's said in a statement. The price included the buyer's premium.
The price tag surpassed the nearly $120 million paid for Edvard Munch's "The Scream," which set a world record when it was sold at Sotheby's in a 2012 sale.
The previous record for Bacon's artwork sold at auction was the British artist's 1976 "Triptych." That sold for $86 million in 2008.
Also up for sale at Christie's evening auction was Koons' whimsical "Balloon Dog (Orange)," a 10-foot-tall stainless steel sculpture resembling a twisted child's party balloon. It sold for $58.4 million, a world auction record for the artist and a world auction record for a living artist, said Christie's. The auction house did not reveal the buyer.
It is one of five balloon dogs Koons has created in different colors. All are in private hands. It was sold by newsprint magnate Peter Brant to benefit his Brant Foundation Art Study in Greenwich, Conn.
A 1977 painting by Willem De Kooning, "Untitled VIII," sold for over $32 million, a world auction record for the artist. In 2006, De Kooning's "Untitled XXV," sold for $27.1 million.
Other highlights at Christie's included an iconic Andy Warhol, "Coca-Cola (3)," which fetched $57. 2 million. It was estimated to sell for $40 million to $60 million. The Warhol auction record is $71.7 million for "Green Car Crash (Green Burning Car I)," sold in 2007.
Also on sale was a bright orange-yellow and white oil painting by Mark Rothko. Reminiscent of a radiating sunset, the 1957 large-scale "Untitled (No. 11)" garnered over $46 million. In May 2012, Christie's sold Rothko's "Orange, Red, Yellow" for $86.8 million, a record for any contemporary artwork at auction.
The auction also featured a masterpiece by German painter Gerhard Richter from the collection of Eric Clapton. Painted in gold and orange hues, the 1994 "Abstract Painting" sold for $20.8 million. Richter's photo-based "Cathedral Square, Milan" brought $37 million at Sotheby's in May, setting a then record for any living artist at auction.
Roy Lichtenstein's "Seductive Girl" was purchased for $31.5 million. The artist's auction record is $56 million for "Woman With Flowered Hat," sold at Christie's in May.
Christie's said the Tuesday sale brought in over $691.5 million, which it said is the highest total for any single auction in history.
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Volvo P-1800 -- >>> Irv Gordon crosses 3 million miles in his Volvo P1800
Volvo enthusiast has driven nearly every road in the U.S. in his original, 47-year-old Swedish coupe.
By Clifford Atiyeh
http://editorial.autos.msn.com/blogs/autosblogpost.aspx?post=2d9f3c31-eff9-45e6-abd4-a7ace0aa0b80&icid=autos_4748
For the sake of nothing but himself and an old red Volvo, Irv Gordon has driven more miles in a single-owner car than anyone on earth. As of Tuesday, he just hit 3 million.
Gordon, a retired science teacher from Long Island, N.Y., has been in the news for the past 30 years, simply for his obsessive passion for driving and sightseeing -- and for doing it all in one of the prettiest Volvos ever made, a 1966 P1800 coupe.
On Tuesday, his odometer -- modified to roll over through seven digits -- passed 3 million on a stretch of Alaska Highway 1. Even at age 74, Gordon has managed to average nearly 64,000 miles a year since he purchased the P1800 new in 1966 (imagine the dealer's surprise when he returned three days later for his 1,500-mile service).
Gordon has driven nearly every single road in the U.S., while having to rebuild his engine only twice. Needless to say, he never misses an oil change. While he worked as a teacher, his 125-mile round-trip commute was a mere walk in the park.
“It’s not about getting to the 3 million miles; it’s about the trips that got me to the 3 million miles,” Gordon said to Volvo. “I never had a goal to get to 1 million, to 2 million. I just enjoyed driving and experiencing life through my Volvo.”
Even though Volvo has capitalized on Gordon's mileage in advertising campaigns, Gordon is less keen for publicity stunts than his love for American roads. One sign of proof: He doesn't have air conditioning.
"The best way to explore America is by car," he said. "I challenge everyone to go out and see as much as possible. Find your own journey and reason to believe because you only have one life to live."
In 1987, he hit 1 million miles in New York's Central Park and reached 2 million in 2002 while driving through Times Square. In 1998, he first made the Guinness Book of World Records for the most miles driven by one car owner in a non-commercial vehicle. Gordon says that he probably won't make the next million, but that the car should have no trouble.
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>>> Art as investment? Only if you love it
It is unlikely to provide you immediate liquidity but grows in value over time
Aug 2013
http://www.business-standard.com/article/pf/art-as-investment-only-if-you-love-it-113082600036_1.html
Recently, auction house Christie's announced it would hold its inaugural auction in India this December. It would be the first international auction house to conduct sales in India. In recent auctions, Sotheby's sold a painting for $30 million, while Christie's sold 66 paintings worth $495 million.
These reports make one wonder about the benefits of investing in art.
As an industry, art has always been underrated and undervalued. Of late, its awareness has been increasing. In terms of being a commercially viable sector, art is still nascent and unconventional. Investments in art are extremely vulnerable, as these primarily depend on public taste. You can never guess the right price or the right time to buy or sell a piece. Bhavna Kakar, owner and founder of Latitude 28, an art gallery in New Delhi, says, "Art is not a commodity like property, stocks or gold, and it is best that way. Buy it only if you love it and can live it; else, stick to conventional investment options."
The Indian art market is expected to see enormous growth through the next 10 years. "People have become used to hearing about multi-million dollar sales of works by Tyeb Mehta, S H Raza or M F Husain. Now, the art market is viewed by many as an active commercial sector, with auctions and exhibitions held all over the world," says Harry Hutchison, associate director of the Aicon Gallery, New York, a premier art gallery in the US selling Indian art works.
When asked about art as an investment, Anu Ghosh Mazumdar, vice-president (Indian and South East Asian art) at Sotheby's, said, "We do not encourage people to buy art as an investment. Rather, we encourage them to buy what they love, so that they can live with their art works despite the vagaries of the market. Art has a legacy; it is much more than mere investment."
To buy art as an investment, one should have good knowledge of the artist, the medium, the time period, previous buyers, the category, etc. Menaka Kumari Shah, country head, Christie's India, says, "The best investment is to buy what you like and then, regardless of its value, you still have a work of art you like. We always advise our clients to buy the best work available in their budget, and buy with passion for the art."
Kakar says though entry prices for works by some artists have plateaued, one should also consider those yet to make a mark and whose art comes at reasonable prices.
An important question is when is the right time to buy and how does one know about it? If you are interested in buying art, you should be in constant touch with art galleries and auction houses. "Some pieces come in the market only twice in 100 years, and these will always be desirable, no matter in which cycle the market is in," Shah says. However, some say anytime is a good time to buy a piece of art. "There is never a best time to buy. If you like it and want it on your wall, now is the time," Kakar says.
To own a piece of art, one must have very deep pockets. Prices could vary from $1,000 (Rs 64,032 at a rate of 64.03 against a dollar) to millions, depending on the medium and the size of a work. For modern art, one might have to spend at least $30,000 for a canvas and $2,000 for a drawing. Each auction has a minimum bidding price. At Sotheby's, the least price for an art work is $5,000. But some auction houses such as Saffronart and Astaguru have no reserve auctions; so, bidding starts at really low prices.
Hutchison says, "With regard to contemporary art, one can buy terrible street art for very little. But art that might, in the future, be worth investing in would cost more, as the odds are not in your favour of selecting a large canvas from a soon-to-be-super star at his/her first solo show for a cheap price. By the time they are on your radar, they would co st more to invest in. I would estimate at least $1,000 for a drawing and $3,000 for a canvas but depending on the size of the work, this figure could, of course, go up."
In case one doesn't have this much money, there are other ways in which he/she can be a part of this segment - one can lease art, accumulate credit and eventually buy the piece through companies such as Art Remba, which allows members to rent art pieces from top galleries and artists for their home or office.
Returns on investments (RoIs) for art work are never fixed. Those involved in this sector say if one wants fixed RoIs, they should stick to investments in real estate, stocks or gold. RoIs in art depend on the artist, the chain of ownership and the art time cycle, among other factors. "A person should own an art work for at least five years before selling it. Also, returns vary from 20 per cent to 200 per cent," says Ajay Seth, chief mentor at Copal Art, an art advisory board and bank that researches, procures and makes Indian art works available to clients. He adds the rate of price appreciation for an art work is 8-10 per cent a year. So, the longer one owns these, the more price he/she gets. Hutchison agrees. "In most cases, one shouldn't look for returns before the five-year mark. Also, one should not invest more than 18 per cent of their net worth in art."
It isn't necessary to buy art physically; one may also invest in units of art funds electronically. The rise in demand for Indian art has prompted a few art houses to launch mutual funds to enable investments in the art market. For instance, institutions such as Copal Art, Edelweiss Securities and Osian have launched such funds. International organisations such as Aicon Gallery also have various art funds, though the response to these is varied. While Seth from Copal Art says he is against the concept of art funds in India, as the art market here isn't big, Aicon's Hutchison says art funds are very successful. After its first art fund, two others by Aicon are up and running.
But art funds are risky, too. Osian art fund, started by Neville Tuli in June 2006, had to be wrapped up in 2009 after a poor performance. It had also faced a probe by the Securities and Exchange Board of India and is still in the process of returning money to investors. In recent times, Fine Art Fund (www.thefineartfund.com) has been one of the most successful. Its stock comprises impressionist, modern, contemporary, post-war and old-master paintings.
Art is an illiquid asset, which might not necessarily generate income. It needs maintenance, proper storage and security, all of which aren't cheap. "The key is to familiarise yourself with the works available and take plenty of advice. Any investment can go up or down, and a lot of the possible upside can only be realised after many years of owning and enjoying a piece," says Shah.
To reduce the risk involved in art investments, Seth says one should consider three important aspects - prominence and authenticity of the artwork, the entire chain of its ownership and the title of the art work.
So, if you like an art work and think you could own it for life, go ahead and buy it. Get to know the work and have passion for it. A good piece of art is a treasure to behold.
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>>> Music memorabilia is Rocking All Over The World
2010
http://www.paulfrasercollectibles.com/News/MEMORABILIA/2010-News-Archive/Music-memorabilia-is-Rocking-All-Over-The-World/3501.page
Continuing growth of music festivals could spell a bright future for the memorabilia investment markets
Last weekend marked the 40th anniversary of Glastonbury Festival. One hundred and seventy seven thousand music fans headed to Pilton, Somerset to enjoy performances from around 700 acts playing on over 80 stages.
The event continues to represent the pinnacle of the summer festival season, with tickets selling out in a record time this year. Today, with CD sales continuing to suffer, festivals and live concerts represent the primary source of income for many within the music business.
This has resulted in an increased level of corporate sponsorship and involvement in these events. Alongside this, we are also witnessing a new more mature, middle class audience with more of the disposable income required to engage in these events.
More significantly, this increased interest in live music is occurring on a global scale. Brazil and Russia, two nations with newly developing economies and an increasing middle class population, have played host to some of the world's biggest music events. In 2006, the Rolling Stones played to over 250,000 fans in Rio de Janeiro, while "back in the USSR" Paul McCartney played to some 100,000 Moscow fans in 2004.
The increasing global interest in live music experiences coupled with the high levels of disposable income in the consumer market has led to many fans investing in unique pieces of music memorabilia.
Autographed music collectibles and other unique memorabilia investment offer fans a unique opportunity to engage with the work of a favourite musician and gain insight into the artistic process. A prime example of this type of memorabilia is a hand written set of lyrics, seen as the Holy Grail for many music collectors and investors.
These collectibles are scarce and today can fetch impressive auction prices, making them an ideal investment for collectors and fans alike.
For instance, the lyrics to 'A Hard Rains A-Gonne Fall', penned by Bob Dylan, sold at auction for over £33,840 ($51,000) against an initial estimate of £20,000 ($30,000). Back in 1997, George Harrison's handwritten lyrics to 'My guitar gently weeps' also sold for £300,000 ($452,000).
Here the top ten most valuable music memorabilia collectibles sold at auction.
10. John Lennon's 1970 Mercedes-Benz- In April 1989, John Lennon's 1970 Mercedes-Benz 600 Pullman limousine sold for £137,500 ($207,000) at Christie's in London.
9. Buddy Holly's Gibson acoustic guitar- Presented in a tooled leather case made by Holly himself this Gibson acoustic guitar sold for £139,658 ($210,500) in Sotheby's, New York, on June 23, 1990.
8.Lyrics to "Getting Better"- These Handwritten lyrics date back to 1967 and sold for £161,000 ($242,000) at Sotheby's in London on September 14, 1995.
7. Jimi Hendrix's Fender Stratocaster- The guitar used by Jimi Hendrix at the famous 1969 Woodstock concert, sold on April 25, 1990, at Sotheby's for £198,000 ($298,400.)
6. Lyrics to "Candle in the Wind"- The handwritten and rewritten Bernie Taupin lyrics for Elton John's famous song were auctioned off at Christie's in LA for £278,512 ($419,740) on February 11, 1998.
5. Eric Clapton's "Brownie" guitar- Used to record the popular "Layla," this guitar remains one of Eric Clapton's most sought after collectibles and sold for £313,425 ($472,353) at Christie's in New York on June 24, 1999
4. Jerry Garcia's "Wolf" guitar- One of two custom made guitars, the Grateful Dead front man sold "Wolf" for a massive £523,860 ($789,500) at Guernsey's auction on May 9, 2002 at Studio 54.
3. Jerry Garcia's "Tiger" guitar - On May 9th 2002, Garcia also raised an additional £635,339 ($957,500) for the second of his custom-made guitars.
2. John Lennon's Steinway piano- Used to compose "Imagine," the legendary Steinway Model "Z" upright piano, complete with cigarette burns, was auctioned on October 17, 2000 at Fleetwood-Owen's online for a truly impressive £1,450,000 ($2,185,250) to singer George Michael.
1. John Lennon's Rolls-Royce- Coming with psychedelic paintwork, this 1965 Rolls-Royce Phantom V tour limousine sold for a record sum of £1,768,462 ($2,665,200) in Sotheby's, New York, on June 29, 1985.
As demonstrated, the top ten consists of rare and unique memorabilia investments. When investing in collectible music memorabilia, it is important to remember, the more unique the item, the higher its potential value to a collector.
Today, autographed music memorabilia investment represents one of the fastest growing markets. If we look at the top 40 most sought after celebrity autographs, we find that over 32% of these come from within the music industry. Furthermore, the last decade has seen a massive increase in the prices surrounding these autographs.
Name
Type
2000 (£)
2010 (£)
Inc %
Beatles , The
Signed album
2,950
8,500
188.1%
Beatles, The
Signed photo
5,500
22,500
309.1%
Carpenters, The
Signed photo
295
1,600
442.4%
Dylan, Bob
Signed photo
895
1,950
117.9%
Harrison, George
Signed photo
195
2,250
1053.8%
Hendrix, Jimi
Signed album
995
4,950
397.5%
Jackson, Michael
Signed photo
175
750
328.6%
Lennon, John
Signed album
695
5,950
756.1%
Madonna
Signed photo
375
895
138.7%
McCartney, Sir Paul
Signed photo
175
1,500
757.1%
Presley, Elvis
Signed photo
750
3,250
333.3%
Rolling Stones, The
Signed photo
995
5,500
452.8%
Starr, Ringo
Signed photo
195
795
307.7%
Music memorabilia prices can often increase due to the passing of an artist. Karen Carpenter's demise played a significant role in the increased interest in autographed items from The Carpenters, with the value of these collectibles rising by 442.2% in just ten years, due to their scarcity, as well as the group's popularity and the tragic nature of her death.
More recently, the past year has witnessed a massive surge of interest in all memorabilia related to the late King of Pop, Michael Jackson. In 2009, the rhinestone glove worn by Jackson when he introduced us to the iconic Moonwalk dance at the 1983 Grammy awards, sold for over £211,700 ($319,000), well above its £33,000 ($50,000) estimated value, to Hong Kong businessman Hoffman Ma.
More recently, a glove, worn by Jackson during the farewell Jackson 5 "Victory" tour, sold for an impressive £126,000 ($190,000) in Las Vegas.
Jackon's 'Holy Grail' rhinestone glove
However, in terms of unique autographed items, the highest selling piece of Jackson memorabilia has been his handwritten and signed lyrics for the 1983 hit 'Beat It.' This single propelled the Thriller album to becoming the highest selling album of all time.
The pen-scrawled Beat It lyrics went under the hammer with an estimate of £1300-2700 ($2,000-4,000) but eventually sold for an incredible £40,000 $60,000. The sale easily places Jackson amongst the big hitters in today's autograph market. To put that into perspective, this market includes historical figures like George Washington, King Henry VIII and Neil Armstrong.
Yet the music memorabilia market remains relatively new and as such, there are numerous opportunities for investment in rare and potential valuable collectibles.
A prime example would be the undisputed Queen of Pop, Madonna.
Having enjoyed a career spanning thirty years, Madonna remains as popular as ever. Her most recent "Sticky and Sweet" world tour grossed $408 million, the highest ever for a recording solo artist. To date, Madonna has had thirty-seven top ten singles in the United States and the most number one UK albums ever, records that place her popularity above even Elvis Presley.
In terms of her status, Madonna also shares similarities to Marilyn Monroe in her image as both a sex symbol and icon. Following Monroe's demise, autographed collectible memorabilia of all kinds from clothes and pianos, to autographs and pictures, became highly sought after. Today, it represents one of the best investments in rare celebrity memorabilia.
The interest in Monroe memorabilia was not limited to the Western World either, with many Chinese collectors looking to invest. Yet again, parallels appear with Madonna.
Considering Madonna's global popularity coupled with the interest in pop stars like Michael Jackson from eastern collectors like Hong Kong Businessman Hoffman Marr, there is the potential for a huge worldwide market of Madonna memorabilia collectors.
This huge collector base has the potential to increase demand for items like autographs, thus driving up prices and making an investment now, something with huge growth potential.
The popularity of collectible memorabilia related to the late Michael Jackson has set a clear precedent. While it may be difficult to determine when music memorabilia related to Madonna will surge to these levels, now is an excellent time to invest. A signed Madonna photo, has seen a 138.7% increase in value over the past decade. Yet, they remain relatively cheap to any would be investor with a price around £895 (£1350).
Memorabilia such as hand written lyrics or unique autographed items offer yet another exciting opportunity for investment with an even bigger potential for growth to any would be collector or investor.
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>>> Let it grow: How Clapton's guitar can make you rich
By Tony Maddox, CNN
March 10, 2011
http://www.cnn.com/2011/BUSINESS/03/09/clapton.guitars/index.html?hpt=C2
A selection of the Eric Clapton guitars on sale.
Bonhams auctioneers selling more than 70 Eric Clapton guitars
Collector, CNN editorial chief and sometime musician Tony Maddox explains the joy of guitars
Provenance and a star owner are often key to a good sale price, Maddox says
In 2004 Clapton's Blackie guitar sold for $959,000; this sale has a reproduction of the iconic instrument
Editor's Note: CNN's Tony Maddox has been playing guitar for more than 30 years, although you may find that hard to believe if you heard him. He owns, or "has invested in" as he puts it, more than 20 guitars.
(CNN) -- The more I think about it the more I am convinced I need one of Eric Clapton's old guitars.
Bonhams is hosting an auction of "Slowhand's" gear in New York. I really should be there and as a responsible parent make some investments for my children's futures.
Now nobody should take financial advice from a washed-up, failed rock guitarist like me. But if you will just go with me on this, I do think I may be onto something.
No doubt, vintage guitars made by the right company, at the right time, and played by the right people, are a serious investment opportunity.
Headlines were made in 2004 when Clapton's Blackie guitar sold for $959,000. Actually that guitar broke one of the usual rules for collectors because it was not all original. He had swapped parts from other guitars, which usually kills the resale value.
But what it did have was provenance. And what provenance. This was the guitar that Clapton had used over two decades, both in the studio and on stage. It also had a lot of people who wanted to buy it -- baby boomers who grew up with Clapton, the provider of soundtracks for their lives. And you can own the very guitar he played those tunes on? If you had just under a million bucks burning a hole your pocket it would be crazy not to.
There is nothing that iconic at these sales, but there is a range of very tasty Clapton stuff. Beyond guitars there are amplifiers (also very collectable), stage clothes and other memorabilia. As an investment, provided you avoid bidding frenzy, these would be instruments of unquestioned authenticity, many of which have been used on record and in public performance by a star who has been making music and selling out concerts for nearly 40 years.
The money Clapton raised in these sales goes to the Crossroads Centre, which he founded, which treats drug and alcohol addiction. So, it's for a good cause, it's a good investment, and you finish up with a really cool guitar.
Guitars can be a great investment. Key vintage Fender guitars more than doubled in value in the last decade. If you have an original "Strat" from the 1950s or early 1960s in what as known as a custom color (taken from popular auto colors of the period), you could be looking at a value of up to $50,000 -- not bad for something that would not have cost more than $100 when new.
Of course most people who bought them back then did not do so thinking they were long-term investments so parts were changed, the finishes were battered and repainted and value was subsequently diminished.
I bought a 1961 Strat all original expect for having been stripped down to the wood. It cost between half and a third of what it would have done if the paint had still been on.
Now there is a thriving trade in so called "relic guitars" which are new but treated to give the impression of a battered old road warrior.
Worrying, there are also a lot of guitars being sold as original vintage pieces, which have had parts changed out.
The money involved makes it worthwhile for the fakers who go to great lengths to disguise the changes. So the buyer beware, and always seek out what provenance and guarantees you can.
There is one guitar that is the Stradivarius for collectors. It is the Gibson Les Paul Standard, made between 1958 and 1960. If you had bought one back then -- and you may well have got a discount because it was not a big seller at the time -- you would now be sitting on a guitar which can change hands for well in excess of $250,000.
How does that happen? Well, it brings us back to Clapton. He played a Les Paul on an album by John Mayall and Blues Breakers. The recording is legendary among guitar players.
Suddenly the discontinued Les Paul was in demand. Its value rose, and then soared as it was adopted by one superstar after another. We are talking Keith Richards, Fleetwood Mac's Peter Green, Led Zeppelin's Jimmy Page.
Music world honors Les Paul
Clapton's Les Paul is thought to have been stolen while he was in rehearsals with his band Cream. Now if that ever showed up, Blackie might well end up being the second most valuable guitar sold in open auction.
So if you want to buy a vintage guitar and have a partner who takes an alternative perspective, point out you are doing it for them, for their future.
And if you find yourself bidding against some heavy set, balding guy, who looks like he knows he really should not be there, give him a break and let him win.
<<<
>>> Music Memorabilia Investment Goes Mainstream -
March 12th, 2011
Scott Tilson
http://www.psychedelicart.com/concertposters/music-memorabilia-investment-goes-mainstream/
It’s no secret that we live in interesting financial times. We are just now emerging from the largest financial collapse of the past 70 years. In order to facilitate the recovery, The United States is printing paper money at truly historic levels. This has led to a precipitous drop in the value of the Dollar.
Investors here and abroad are scared of seeing the hard earned savings devastated by this monetary inflation. There is now renewed focus on all tangible, “hard assets.” The result is record high prices for Gold and Silver, as well as extremely strong markets for collectibles such as rare coins, stamps, art, and yes concert posters. All you need to do is review the prices realized in our most recent auction for verification of this fact.
Please look at the attached high profile article that appeared on CNN. Note that high-grade guitars bring $1,000,000 while the most fantastic, rarest posters of all are still in the $10,000-$25,000 range, with dozens of super rarities worth well BELOW $10,000!!
We never believe you should buy for investment purposes only. It’s the true collector that seems to ALWAYS make out like a bandit in the end. See previous posts for why. But the fact remains there ARE people doing this and that means prices are headed much higher.
If you want to build a world class collection of vintage concert posters, now is clearly the time to do it!
Read the article here:
http://www.cnn.com/2011/BUSINESS/03/09/clapton.guitars/index.html?hpt=C2
<<<
>>> To catch a thief: Masked man hunted after $136M Cannes jewel heist
http://worldnews.nbcnews.com/_news/2013/07/29/19753875-to-catch-a-thief-masked-man-hunted-after-136m-cannes-jewel-heist?lite&ocid=msnhp&pos=1
In a brazen heist, a masked man allegedly armed with a pistol walked into the legendary Carlton Hotel in Cannes, France, and stole about $53 million of jewels that were being set up for display. NBC's Michelle Kosinski reports.
By Michelle Kosinski and Alastair Jamieson, NBC News
CANNES, France – The estimated value of diamonds and jewels stolen from a glamorous French Riviera hotel more than doubled on Monday to $136 million, making it one of the world’s biggest heists in recent years.
Police previously estimated the worth of the stolen collection to be around $53 million, but a more complete inventory conducted by the Dubai-based organizer of the diamond show resulted in the value of the stolen goods to sky rocket even higher, a French state prosecutor told the Associated Press.
The audacious raid prompted one security expert to speculate that the notorious "Pink Panther" jewel thief gang was "on the warpath again."
The lone robber walked into the Carlton Intercontinental Hotel in Cannes late morning Sunday and demanded to be handed several bags containing jewels and diamond-encrusted watches.
"Everything happened very quickly," a judicial source told Reuters, adding that there was no violence.
Philippe Vique, an assistant prosecutor in the Riviera town of Grasse, said Monday that the man covered his face with a scarf, cap and wore gloves while pulling off the logistically simple crime.
Vique told the Associated Press that the man broke in through French doors, held up participants of the show with a handgun and fled on foot.
The robbery took only about one minute, and three private security guards were on hand, along with two vendors and a manager of the sale exhibit, according to the AP.
No customers were present during the crime.
The hotel, a haunt of the rich and famous, was where Alfred Hitchcock filmed scenes from the 1955 film "To Catch a Thief", starring Cary Grant as burglar alongside Grace Kelly.
It was hosting a temporary jewelry exhibit over the summer from the prestigious Leviev diamond house, which is owned by Israeli billionaire Lev Leviev.
The heist came two months after two smaller jewelry robberies hit the annual Cannes film festival, where many of the world's top movie stars are lent gowns and gems to parade on the red carpets and at glamorous parties.
The crime follows recent jail escapes by Pink Panther gang members.
Jonathan Sazonoff, U.S. editor for the Museum Security Network website and an authority on high-value crime, told The Associated Press that police would likely probe whether the heist is linked to the escapes.
On Thursday, gang member Milan Poparic escaped his Swiss prison after accomplices rammed a gate and overpowered guards with bursts from their AK-47s.
"The brazen drama of it is their style... The possibility of the reemergence of the Pink Panther gang is very troubling and taken seriously by law enforcement worldwide," Sazonoff said. "The theft of high value diamonds is exactly what they do, so it's not a great leap to assume they are on the warpath again. They are a crime wave waiting to happen."
The heist would appear to top a raid of a store in Paris in 2008 that netted more than $100 million worth of gems and jewelry.
"It's a huge theft,” Sazonoff told The AP. “Anytime you talk about a heist with many millions of dollars it turns heads and feeds the imagination.”
In a statement seen by Reuters, Leviev said: "Company officials are cooperating with local authorities investigating the loss and are relieved that no one was injured in the robbery."
“There are three types of jewel thieves,” said financial crime author Jeffrey Robinson. “There’s the idiot who walks into a jewelry store with a shotgun smashes and grabs and gets caught, then there’s the people who break into your home and try to steal a wedding ring.
“But then this third type - and this is the important one - he is the professional businessman. And his business is jewel thievery.”
<<<
>>> Bitcoin Operator's Accounts Seized By U.S. Authorities
Reuters
By Brett Wolf
05/17/2013
http://www.huffingtonpost.com/2013/05/17/bitcoin-operator-accounts-seized_n_3293937.html
ST. LOUIS, May 17 (Thomson Reuters Accelus) - U.S. authorities have seized two accounts linked to a major operator in the booming Bitcoin digital currency market, Tokyo-based exchange Mt. Gox. The move may prevent the firm from facilitating the purchase and sale of Bitcoins in U.S. dollars at a time when use of the currency and its value has mushroomed.
Bitcoin, which unlike conventional money is bought and sold on a peer-to-peer network independent of any central authority, has grown popular among users who lack faith in the established banking system.
The price of the volatile currency ballooned in March as a result of the Cyprus bank crisis. Authorities worry that a lack of regulation has left the currency vulnerable to money launderers and other criminals.
A seizure warrant obtained Tuesday by the Department of Homeland Security froze an account that an Iowa-based online payment processor, Dwolla Inc, held at Veridian Credit Union in the name of Mutum Sigillum LLC.
An affidavit filed by an agent with the department's investigations unit states that Mutum Sigillum, a Mt. Gox subsidiary incorporated in Delaware, was operating as an unlicensed money transmitter, in violation of federal law.
Treasury's anti-money laundering unit, the Financial Crimes Enforcement Network (FinCEN), in March issued guidance that dubbed digital currency exchanges money transmitters, a finding that obliged such businesses to register with FinCEN and obtain any mandated state licenses.
A search of FinCEN's online registration database Friday morning suggested that neither Mt. Gox nor Mutum Sigillum had registered. The affidavit cited Mutum Sigillum's failure to register with FinCEN as sufficient grounds to seize its accounts.
Both Mutum Sigillum and Mt. Gox, which says it handles 80 percent of Bitcoin trading, are owned by Mark Karpeles, the affidavit states. It adds that Karpeles opened an account in Mutum Sigillum's name at Wells Fargo in May 2011, and that when doing so completed a form in which he said it was not a money transmitter.
Karpeles did not immediately respond to a request for comment. Nor did Dwolla.
The Wells Fargo account was seized earlier this month as part of the same investigation that prompted the seizure of Mutum Sigillum's Dwolla account at Veridian Credit Union, the affidavit states.
It also notes that those wishing to use U.S. dollars to buy Bitcoins deposited money with Dwolla and directed that it be forwarded to Mt. Gox. When people wanted to cash out, Mt. Gox wired funds from an account at Sumitomo Mitsui Bank in Japan to the Wells Fargo account and U.S. dollars were sent to Dwolla.
An Homeland Security department informant based in Maryland engaged in such transactions, the affidavit states, presenting the informant's Bitcoin exchanges as evidence of Mutum Sigillum's purported status as a money transfer firm.
The seizure of the Mt. Gox-linked accounts may threaten the exchange's ability to do business in U.S. dollars. The impact on the overall Bitcoin market is unclear.
Some Mt. Gox customers have already taken to message boards to express concern about their ability to buy Bitcoins with U.S. dollars or liquidate existing investments. One user posting on a Bitcoin question and answer site suggested this problem was a grave one for the currency and Mt. Gox.
"Most of the trading volume is in dollars at Gox if I'm not mistaken, so this might be the death blow for them," the user's post stated.
Thomson Reuters' Compliance Complete reported last month that Karpeles said all of Mt. Gox's U.S.-dollar activity was accomplished via a Dwolla account.
When Compliance Complete asked at the time whether Mt. Gox had registered with FinCEN in the wake of the March guidance, Karpeles said that it had not, but that it planned to do so. He added that Mt. Gox and Dwolla were "discussing compliance issues on a regular basis."
A spokeswoman for Homeland Security declined to comment on whether the agency, or any foreign law enforcement agency with which it may be cooperating, plan to seize any other accounts linked to Karpeles, Mt. Gox, or other Bitcoin exchanges.
<<<
>>> Coffee, chocolate for your portfolio
Gold isn't the only commodity taking a beating this year and poised for a turn. So if sky-high stocks are making you nervous, take a stake in something like . . . steak.
Michael Brush, MSN Money
May 2013
http://money.msn.com/exchange-traded-fund/coffee-chocolate-for-your-portfolio
Not-so-hot commodities
With the stock market holding up near record highs, a lot of pundits are wringing their hands about an "inevitable" pullback in stocks and how big it will be.
So if you're tempted to buy stocks but are worried about getting burned by buying at the top, commodities may be the way to go. They've already had their pullback.
While the sharp decline in gold has grabbed all the headlines, any number of traded commodities, including coffee, sugar, wheat, copper and platinum, have also been hit hard this year.
Several of these look like buys right now, for three reasons.
Commodities are weak on concerns that the global economy is slowing -- fears that are probably overblown. We've seen a spring slowdown for the past few years, and each time, the economy rebounded. Morgan Stanley commodity expert Adam Longson thinks global growth will speed up in the second half of 2013, one reason he likes commodities in this pullback.
Long term, big global population growth supports a sustained uptrend in commodity prices. By 2040, the world's population will grow 28%, to 9 billion people, says Ashmead Pringle of GreenHaven Group, a commodities investment firm. And a lot of people around the world will join the middle class, with the budget to buy better food, for example. "Commodities are still in a 10- to 15-year up-cycle," says Pringle. Several commodities -- including wheat, coffee, cocoa and natural gas -- should be strong near term as well, because supplies and inventories are low.
Commodities offer a kind of portfolio insurance. When fears grow about some global calamity -- think European meltdown, Mideast war or inflation caused by the stimulus policies of central banks -- precious metals spike as investors flock to them for safety. At some point, those fears will return.
Coffee
Wholesale coffee prices have fallen 53%, to $1.40 a pound, since early 2011, a decline so sharp that coffee looks like a buy now. "I think it is pretty cheap," says Pringle, of GreenHaven Group.
Global inventories are low, and a leaf rust fungus threatens Central American production. Medium term, coffee consumption should increase around the globe as the population grows, and more people join the middle class in emerging economies, says Erica Rannestad, a commodities analyst with CPM Group, a commodities research firm.
Don't stock up in your pantry, since prices at the consumer level swing less dramatically than wholesale prices.
A good way to get exposure to commodities is through exchange-traded funds and exchange-traded notes, which are essentially a bank promises to pay out the returns on commodities.
For agricultural commodities like coffee and some of the others that follow, the best ETFs and ETNs are: GreenHaven Continuous Commodity Index (GCC) fund, PowerShares DB Agriculture (DBA), and the Elements Rogers International Commodity Index Agriculture (RJI). Also consider PowerShares DB Commodity Index Tracking (DBC), though it offers less exposure to agricultural commodities since it is more weighted toward energy.
You can also try the iPath Pure Beta Coffee ETN (CAFE), one of several specialized funds tracking specific commodities offered by Barclays.
Chocolate
Wholesale cocoa prices are down 38% since 2011 and 14% since the second quarter of last year, trading recently at $2,360 per metric ton.
That's sweet. But it might not last.
Supplies may be tight since production is in deficit this year, in part because farmers in Ivory Coast aren't replacing aging trees which yield less, says Rannestad, of CPM Group. Ivory Coast produces much of the world's cocoa.
Meanwhile, demand could be heating up soon. In Europe, the largest chocolate-consuming region, consumers have been saying non merci! to chocolate, because of the hard times there. But European demand might pick up soon if the economy improves as governments there back away from austerity as a fix for the region's budgetary woes, says Pringle, of GreenHaven Group.
There's a specialized fund for this, iPath Pure Beta Cocoa ETN (CHOC), or you can use the agricultural ETFs I mentioned earlier.
Wheat
Wheat prices fell hard at the end of March, when the U.S. Department of Agriculture issued a bearish demand forecast. That exacerbates an ongoing, sharp decline in wheat prices, which have fallen 24%, to $6.90 per bushel, since last summer.
But the price declines may not last. Lingering droughts last fall and unusually cold weather in March and April hurt the hard red winter wheat planted last October for July harvest in Texas, Oklahoma, Kansas and Colorado. More than 50% of the crop is in poor or very poor condition in most of the region, says Jim Dunn, professor of agricultural economics at Penn State. Meanwhile, inventories are low. "With a little bit of bad weather, wheat prices could go up a lot because wheat is in bad shape," says Dunn.
Will this happen? Possibly, says Dale Mohler senior meteorologist specializing in commodities forecasting at AccuWeather. He predicts wheat-growing regions of Texas and southern Oklahoma could get a mini-heat wave, taking temperatures into the mid-90s in the middle of May.
Meanwhile, there's bad news on the international front. Supplies are tight in Russia, typically a major exporter. The USDA questions China's estimates on how much it will produce, say commodity analysts at Credit Suisse. Drought in Australia and floods in Argentina raise concerns about production there, say commodity sector analysts at Morgan Stanley.
Sugar
The price of wholesale sugar has been cut in half since early 2011, to trade recently at about 17 cents a pound, in part because of expectations for a strong sugarcane crop out of Brazil. "It's on the cheap side now," says Pringle, who thinks sugar could rebound to 23 cents to 24 cents a pound over the next nine months.
What might get it there? Any surprise supply disruption caused by bad weather could spike prices because so many investors are "short" sugar. This means they've borrowed sugar for delivery in the future and sold it to someone else, hoping to replace it at lower prices later. A supply problem could spark a "short-covering rally" as these speculators rush to buy sugar to close out short positions.
Another potential boost: Rising gasoline prices in Brazil could spark demand for ethanol. That would bid up sugarcane, which is used to make ethanol. Long term, population growth and expansion of the middle class in emerging-market countries support higher sugar prices.
There's a specialized ETN covering sugar, too, the iPath Pure Beta Sugar ETN (SGAR).
Gold
Gold bugs like to look at the yellow metal as a "safe haven," but lately gold has been anything but safe. It's tanked 18% since last fall, trading recently at about $1,460.
What's going on? Investors who bought gold for safety have been switching into stocks, on the theory that risks of major disasters like Europe blowing up or the U.S. slipping into prolonged recession are receding.
But gold looks like a buy in the pullback, believes Thomas Winmill of the Midas Fund (MIDSX), since all of the same potential problems lurk around the globe. Besides Europe, a big issue that could have people driving up gold again is the huge monetary easing by central banks and the deficit spending by governments around the world. These moves can easily rekindle worries about inflation -- and investors often buy gold to hedge against inflation.
Many gold bugs think the metal is always a buy, but it does make sense to hold some gold in your portfolio as insurance against investor panics caused by fears of war, a meltdown in Europe or a bad turn in the U.S. economy. In these scenarios, gold would rise, offsetting declines in your stocks. To invest in gold, consider the Midas fund, iShares Gold Trust (IAU) or SPDR Gold Shares (GLD).
Copper
Many investors refer to the red metal as "Dr. Copper," because copper prices often forecast economic trends. If copper prices are down because manufacturers are buying less, that's a sign they see weakness ahead in orders for copper wire, cable and pipes, and appliances that use a lot of copper, like air-conditioners.
But Dr. Copper can make mistakes, and I think that's the case now. Since the start of February, copper has declined 17%, trading recently at about $3.20 a pound, on worries that the economies of China and the U.S. -- two of the biggest growth engines at the moment -- are slowing down.
But the spring economic weakness in the U.S. economy may turn out to be temporary, as it did in the past two years. There are still lots of signs of economic strength in the U.S. and China, particularly in construction, which uses a lot of copper. Goldman Sachs commodity analysts are bullish on copper, citing continued strength in Chinese construction and expected strength in the U.S. economy.
Brian Hicks, a portfolio manager with U.S. Global Investors, thinks these factors could push copper up to $3.85 a pound over the next year. To bet on higher copper prices, consider the iPath Dow Jones UBS Copper Total Return Sub-Index ETN (JJC).
Platinum
Platinum is like a hybrid of gold and copper. Like gold, it's viewed as a hedge against inflation and geopolitical disasters. So it, too, serves as portfolio insurance. And platinum is popular for jewelry in China, especially for wedding bands, says Rannestad, of CPM Group.
But as with copper, there's solid underlying industrial demand for platinum. Mainly, it's a must-have for diesel engine catalytic converters. Substituting palladium is not an option, as with gas-engine catalytic converters.
Meanwhile, supply is constrained, since most platinum comes from South Africa, where labor issues and the political risks of expropriation and higher taxes have prospectors lightening up on mine investments, says Winmill, of the Midas fund.
The bottom line: Platinum has fallen sharply recently, like gold and copper, but you can expect platinum prices to rise from here. You can get exposure through ETFS Physical Platinum Shares (PPLT).
Coal
Coal prices have fallen 26% to $59 per ton since the end of 2010 as users such as utilities switched over to cheaper natural gas. Gas prices had been in a downtrend due to the increasing supply resulting from fracking (hydraulic fracturing).
Now, though, with natural gas prices on the rise, coal prices will rise, too, as users switch back to coal from natural gas, predicts Pringle, of GreenHaven Group. Exports to China and India will support prices, too.
Arch Coal (ACI) and Peabody Energy (BTU) will benefit from rising coal prices. A China-based coal company, Yanzhou Coal Mining (YZC), just got upgraded to four stars, out of five, at Morningstar. The ETFs Market Vectors Coal (KOL) and PowerShares Global Coal Portfolio (PKOL) offer exposure to a broader basket of coal producers.
Natural gas
Bucking the overall trend, several commodities are in a strong uptrend and are attractive buys as well.
Natural gas is a good example. The March cold snap had a lot of homeowners turning up the heat. That upped the use of natural gas, drawing down much of the huge inventory surplus. This bid up the price.
It recently traded at about $4.19 per million British thermal units, up about 40% from the $3 level last September. Prices also jumped because U.S. production has flattened out, says Will Riley, co-manager of the Guinness Atkinson Global Energy (GAGEX) fund. Production levels are not likely to change soon since the number of rigs dedicated to producing natural gas has declined to under 400, from above 900 in late 2011.
If this summer is hot, natural gas usage will remain elevated as people turn on the air-conditioning. That could push natural gas up to $4.50 this summer, says Hicks of U.S. Global Investors. And, in this scenario, we could enter next winter with low inventories -- conditions that could push natural gas up to $5, he says. Likewise, Riley thinks natural gas will trade between $4 and $5 per million BTUs over the next year.
Long term, it seems like natural gas prices should go up, since the ratio of oil prices to natural gas prices is unusually high. With oil at around $90 per barrel, that ratio is above 20. Historically, it's around 6 to 9.
Medium term, natural gas-powered vehicles and the construction of petrochemical plants, which use natural gas, could push prices higher, says Riley. Riley's fund owns U.S. natural gas producers like Ultra Petroleum (UPL), Bill Barrett (BBG) and Chesapeake Energy (CHK), which should benefit. There's also the iPath Dow Jones UBS Natural Gas Total Return Sub-Index ETN (GAZ).
Timber
Timber is another commodity that has been hot, and the reasons are obvious. The housing market has been rebounding rapidly, says Hicks, at U.S. Global Investors. Demand from China is strong. And lumber producers shut down a lot of capacity during the recession. So supplies are tight.
At about $350 per thousand square feet, lumber is up 47% from the start of last year. Hicks thinks it could go up to $500, if the housing market stays strong and more builders switch from apartment buildings to single-family homes, which use more lumber.
The U.S. Global Investors Global Resources (PSPFX) fund gets exposure to rising timber prices by owning timber real estate investment trusts like Weyerhaeuser (WY) and Plum Creek (PCL). The fund has outperformed competing funds by 5 percentage points a year, annualized, over the past 10 years, according to Morningstar.
Beef
Sorry to break it to you, but the steaks and burgers you'll want for summer cookouts are probably going to cost even more this year. The prices for live cattle have been in an uptrend since late 2009, hitting $1.27 per pound recently, from 80 cents a pound back then.
That trend will probably continue. What's going to put the spurs to beef prices?
The overall size of the cattle herd is now about as low as it's been in 50 years, so beef supplies are tight, explains Pringle of GreenHaven Group.
Droughts last year sent grain prices soaring. So ranchers cashed out on their cattle early rather than continue to feed them expensive grain. Export demand has been strong, too, in part because of the growing middle classes in emerging economies who can afford more steak.
To hedge against the rising cost of your summer barbecue that all of this will create, consider buying the commodity ETFs and ETNs such as the GreenHaven Continuous Commodity Index Fund, PowerShares DB Agriculture and the Elements Rogers International Commodity Index Agriculture.
That way, if your burgers cost more, you might have more in your brokerage account to cover it.
<<<
Bitcoin -- >>> Bitcoin Crash Spurs Race to Create New Exchanges
4-11-13
By Matt Clinch | CNBC
http://finance.yahoo.com/news/bitcoin-crash-spurs-race-create-141650753.html
The rush to build a more reliable exchange for the virtual currency bitcoin is under way after another price crash on Wednesday disgruntled customers who directed their anger against the alternative currency's major exchange.
Mike Caldwell, a software engineer, holds a 25 Bitcoin token at his shop in Sandy, Utah. Caldwell mints physical …Bitcoin proved once again that it's not for the faint hearted as it lost 60 percent of its value on Wednesday with the biggest exchange Mt.Gox citing increased demand leading to a slowdown with its systems.
This follows a 20 percent crash last Thursday which Mt.Gox blamed on a type of hacking attack called a distributed denial-of-service attack (DDoS) -- which slows down the website -- delaying orders and panicking sellers. Another DDoS was again reported by the exchange on Thursday morning, coinciding with another price drop.
"People started to panic, started to sell bitcoin in mass, resulting in an increase of trade that ultimately froze the trade engine," Mt.Gox said in a press release after Wednesday's fall caused bitcoin to close at $105 from an all-time high of $266.
(Read More: Bitcoin Utopia? Interest Is Sky High in One Country )
Mt.Gox is the biggest exchange for bitcoins and the company claims it currently handles over 80 percent of all bitcoin-USD trades.
"The number of new [accounts] opened went from 60,000 for March alone to 75,000 new [accounts] created for the first few days of April! We now have roughly 20,000 new accounts created each day," the company said, adding that account creation had tripled in the last 24 hours.
Despite Mt.Gox working around the clock to fix problems and adding new servers, people took to Facebook to vent their frustrations.
Daily turnover for the exchange is close to $30 million, according to Bitcoinwatch.com. Jon Matonis, a senior member of the Bitcoin Foundation and an e-money researcher told CNBC.com that the prize for an exchange that can prove its stability is "potentially massive".
Recent crashes prove bitcoin's over-reliance on a sole exchange, he said, adding that the market is still maturing and exchanges are springing up around the globe taking market share away from Mt.Gox.
(Read More: Bitcoin Bubble: How 'Geeks' Sent Prices Parabolic )
Bitcoin is a virtual currency allowing users to exchange online credits for goods and services. While there is no central bank that issues them, bitcoins can be created online by using a computer to complete difficult tasks, a process known as mining.
Bitcoin prices have surged around 400 percent over the past month due to growing uncertainty over fiat currencies, growing media interest and the turmoil in Cyprus. Opinion has been sharply split over the currency, however, with analysts differing on whether it's an advancement in the monetary system or just a ponzi scheme that should be avoided.
On top of dealing with DDoS attacks, a surge in customer demand and implementing anti-money laundering (AML) checks, these new bitcoin exchanges have the added worry that new regulations for separate jurisdictions will hit trading further.
American broadcaster Max Keiser, a former Wall Sreet stock broker and inventor of the technology behind web-based game Hollywood Stock Exchange told CNBC.com that he was providing consulting for a new exchange to be set up in London.
"The 'market making' design for [Mt.Gox] is weak; as is the case across all the bitcoin exchanges. This is where we'll see some new initiatives - many are already in the pipeline," he said.
(Read More: Bitcoin Great for Narco-Dollar Traffickers: Pro )
"I'm consulting on a project now in London with some excellent people who are part of what I would call the core bitcoin community of developers and financiers and it looks to be very exciting."
The first American bitcoin exchange Tradehill relaunched and rebranded itself back in March in the hope that it can provide a "more professional, cleaner, faster and more effective operation." The exchange even includes engineering talent from Google.
Matonis cited Tradehill and BitStamp as two exchanges that were alternatives to Mt.Gox. Over 50 exchanges are currently in existence and Matonis said he expects new leaders among exchanges will rise up separately in the U.S., Europe and Asia, with the currency never truly being centralized.
Germany's Bitcoin.de is another exchange vying to take market share. It's currently in negotiations with banks and it's looking to develop its marketplace model as well as adding more staff to its books and more servers to its current set-up.
"I think our colleagues at Mt.Gox do a great job! Nobody is immune from attack," Oliver Flaskamper, manager at Bitcoin.de told CNBC.com.
"The growth in the last three months was so strong that even we were surprised at Bitcoin.de of the influx of new registrations," he said, adding that the rush of users on Wednesday evening was "too much."
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>>> Hedge Fund Titan Buys Hamptons Property for $60 Million
28 Mar 2013
By: Peter Lattman
http://www.cnbc.com/id/100600036
An oceanfront house in East Hampton owned by Steven A. Cohen, founder of SAC Capital Advisors.Steven A. Cohen is known for his rapid-fire trading style, moving in and out of stocks with dizzying speed at his hedge fund SAC Capital Advisors.
He seems to be taking a similar approach to his real estate.
Mr. Cohen reached a deal last week to pay $60 million for an oceanfront property on Further Lane in East Hampton, on Long Island, according to a person with direct knowledge of the sale. The home, which was listed for sale late last week, is down the road from one he already owns. At the same time, he has put on the market his duplex apartment in the Bloomberg Tower on the East Side of Manhattan, this person said. His asking price: $115 million.
News of Mr. Cohen's real estate activity surfaced a day after reports that he purchased Picasso's "Le Reve" for $155 million from the casino owner Stephen A. Wynn. The acquisition is one of the priciest private art deals ever completed. He has quietly offered other works from his vast collection up for sale, according to several dealers.
Play VideoPicasso's La Reve: World's Best Investment?
CNBC's Robert Frank reports Steve Cohen has purchased a Picasso painting for $155 million.
Mr. Cohen's conspicuous consumption comes amid continuing scrutiny of his business practices. SAC is at the center of the government's broad investigation into insider trading at hedge funds. Earlier this month, Mr. Cohen, 56, signed off on two settlements in which the fund agreed to pay federal securities regulators $616 million to resolve accusations of illegal conduct at SAC.
(Read More: SAC Capital Affiliate Settles Record Insider Trading Case)
On Thursday morning, Judge Victor Marrero of Federal District Court in Manhattan is set to hold a hearing to consider the terms of the agreement, which requires his approval. SAC has resolved the cases without admitting nor denying wrongdoing, a settlement practice used by the government that has come under criticism from some judges for being too lenient.
Mr. Cohen is not expected to attend the settlement hearing, but if Judge Marrero signs off on the agreement, the $616 million will effectively come out of Mr. Cohen's pocket. The fine is being paid by the SAC management company, of which Mr. Cohen owns 100 percent. SAC investors will not absorb any of the cost.
Steven Cohen, Chairman and CEO of SAC Captial Advisors LP.The $616 million would put only a modest dent in Mr. Cohen's net worth, which is said to be nearly $10 billion, according to the Bloomberg Billionaires Index. He is one of a handful of hedge fund managers who have redefined wealth on Wall Street. Investors like John Paulson of Paulson & Company, which made a fortune betting against the mortgage market, and Carl C. Icahn, the activist investor currently bidding for Dell, have recently earned billions of dollars in a single year.
Many of them have homes in the Hamptons, a favorite summer getaway of the Wall Street set. In 2007, Mr. Cohen bought a home there on Further Lane, one of the Hamptons' most desirable addresses because of its water views, for about $18 million. But it is behind an oceanfront property owned by James Chanos, another hedge fund manager.
Now Mr. Cohen can claim an ocean view. A couple of doors down from his other house, his new 10,000-square-foot home sits on seven acres with a tennis court and pool. "High ceilings, antique oak and limestone floors, barn-style double-height family room, media room, large oceanview master suite plus six additional bedrooms," said the listing. Mr. Cohen's house is a quarter mile from the Maidstone golf club, where he is not a member.
The property was previously owned by Robert B. McKeon, a founding partner of the investment bank Wasserstein Perella. Mr. McKeon committed suicide in September at the age of 58.
The $60 million purchase is among the most expensive real estate sales transacted on Long Island's South Fork. It is unclear whether Mr. Cohen is selling his first Further Lane house.
Ed Petrie, the real estate broker at Sotheby's International Realty who had the exclusive listing, declined to comment, as did Jonathan Gasthalter, an SAC spokesman.
Mr. Cohen is a charter resident of the Bloomberg Tower on Lexington Avenue, which also goes by the name One Beacon Court. He paid about $24 million in 2005 for the 10,000-square-foot property on the 51st and 52nd floors.
If Mr. Cohen got the $115 million that he is asking for his Bloomberg Tower pad, it would be the highest-priced sale to date of a Manhattan apartment.
Two duplexes at One57, a tower now under construction in Midtown, are under contract with unnamed buyers for $90 million. If completed, those deals would surpass the $88 million sale of a penthouse at 15 Central Park West owned by the financier Sanford I. Weill to a Russian billionaire, for his daughter.
Mr. Cohen's primary dwelling is a home in Greenwich, Conn., which has a basketball court and a two-hole golf course, and he owns other real estate in New York. Last year, he purchased a property in the West Village on Washington Street for $38.8 million.
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>>> What's Juicing Stocks, Real Estate and Old Stamps
11 Apr 2013
By: Robert Frank
CNBC
http://www.cnbc.com/id/100634655
Source: Christie's
Francis Crick DNA letter sets $5.3m auction record.For most investors, the big news this week was the S&P index reaching new highs.
But there were two more obscure headlines that actually tell us much more about what's happening with stocks and the global economy.
The first was this: "Francis Crick DNA Letter Sells for $6 million." The news was that a 60-year-old letter written by Francis Crick – who co-discovered the structure of DNA – to his son was sold by Christie's auction house.
(Read more: Picasso, the Hamptons. Now That's a Buying Spree!)
The price was an astounding six times the low estimate of $1 million. "I'm sort of in a state of shock," said Michael Crick, the son who received the letter in 1953 and sold it.
London's famed Park Lane Hotel.Then there was earlier news that an investment fund backed by Qatar has bought London's famed Park Lane Hotel for more than $475 million. The price marked a whopping 62 percent premium to the price asked for the hotel in December. In the first quarter alone, commercial property sales in London were up 71 percent compared to 2012. And two thirds of those sales were by foreign buyers.
Stocks, old letters and London hotels all reaching new highs. What's the connection?
Global asset reflation. That may sound technical, but economists say that the somewhat baffling rise in U.S. stocks can be best explained by looking at asset values more broadly around the world. The river of money coursing around the globe is now approaching the flood stage, fed by a downpour of cash from the Federal Reserve and now from the Bank of Japan.
Play Video Soaring Return on Stamps
Pimco Bill Gross' stamp collection is one of the top 3 in the world, reports CNBC's Robert Frank. Returns on stamps are up 9 percent in 1 year.All that cash is searching for a home, and unlike water, cash tends to seek higher ground rather than the lowest. So all of the world's cash is pouring into higher quality assets with little concern for underlying values or economic fundamentals.
It's not that old letters, stocks and London hotels have suddenly become inherently more valuable. The amount of money chasing those assets has grown.
The swollen supply of money is pouring into everything from rental properties in Las Vegas and condos in Miami, to farmland in Brazil and office towers in Hong Kong to 1950s Ferraris, Gerhard Richter paintings and even old U.S. stamps. The bond king Bill Gross sold off around 370 lots from his prized stamp collection this week, fetching nearly $2 million for charity. Some of the lots went for twice the estimated price.
As a bond trader, Bill Gross knows the link between central banks and asset values better than just about anyone. As he once told the Washington Post, talking about stamp collecting: "The liquidity provided by central banks over the past two, three, four, five years has led to asset appreciation not just of homes, but of stamps and collectibles."
Of course, not everyone buys the money-supply theory of asset values. Plenty of stock markets around the world are underperforming. Carl Weinberg, founder and chief economist of High Frequency Economics, points out that outside of the United States, monetary easing has not substantially increased the supply of credit.
(Read more: Higher Taxes Won't Stop Wealthy from Spending)
Weinberg added that the rally in stocks and alternative assets "may be an argument for irrational expectations," rather than an oversupply of cash.
"Unfortunately there is no good data to prove this one way or the other," he said. "There are people who want to believe central banks have created asset bubbles. But it's hard to prove."
Unless of course, you follow the stamp market as well the stock market.
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>>> Sotheby's Sells 74 Carat Diamond for $14 Million
18 Apr 2013
By: Robert Frank
CNBC
http://www.cnbc.com/id/100653266?__source=yahoo%7Csingaporeandswitzerland%7C&par=yahoo
Source: Sotheby's Between 2001 and today, stock prices are up about 30 percent. Diamonds, however—at least certain huge diamonds – have done far better.
Sotheby's yesterday sold a 74.79 carat white diamond for $14.2 million, far above the pre-sale estimate of $9 million to $12 million. Five bidders were vying for the unnamed rock, which has a coveted "D" color designation.
Sotheby's says the same diamond sold in 2001 for $4.3 million, meaning the value more than tripled and provided an annual return of more than 20 percent.
(Read more: What's Juicing Stocks, Real Estate and Old Stamps)
The pear-shaped diamond was part of a record-breaking jewelry sale for Sotheby's, which brought in $53.5 million—the most ever for a spring jewelry auction. Many of the pieces were from the family of Jay Gould, the financier, railroad magnate and archetypal "robber baron" of the 19th century.
One sale doesn't make a trend, and the jewel market is highly prone to fakes, theft and sudden price shifts. But the white diamond's sale offers further evidence of the roaring bull market in hard assets (diamonds being the hardest of assets). From collectible cars and coins to stamps, wine, art and real estate, the wealthy continue to move more of their money into investments they can touch, feel and, if possible, enjoy.
Especially in today's volatile financial markets, top-quality hard assets have become increasingly attractive as safe stores of value. The Sotheby's sale follows a string of other big diamond sales in recent years, including the $115 million Liz Taylor jewelry sale in 2011.
(Read more: Picasso. Hamptons. Now That's a Buying Spree!)
"I generally think of top-quality diamonds not in terms of wealth creation, but instead as wealth retention, tangible assets that have global appeal and global value," said Lisa Hubbard, chairman of Sotheby's North and South American International Jewelry division
Sotheby's released very little information about the age or origin of the $14 million stone. It would only say that it's not "historic" in terms of age.
Still, the pear-shaped super-bling was a great investment for the seller. And, if nothing else, a great accessory for the buyer.
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>>> Wealth Flees Switzerland for Shelter in Singapore
4-22-13
By Robert Frank
CNBC
http://finance.yahoo.com/news/wealth-flees-switzerland-shelter-singapore-134709388.html
Thanks in part to its generous tax regime, Singapore has been a millionaire haven for years. But a new report says the tiny island state may soon overtake Switzerland as the world's largest offshore wealth hub.
The report, by WealthInsight, a London-based research firm, says Singapore is the fastest growing wealth center in the world, with $550 billion in assets under management - up from $50 billion in 2000. About $450 billion of that is offshore.
Switzerland has $2.8 trillion in assets under management, with $2.1 trillion of that coming from offshore wealth. Switzerland accounts for 34 percent of the $8.15 trillion in total global wealth.
(Read more: Diamonds Are Investors' Best Friends )
Yet the report said Singapore could overtake Switzerland in offshore assets under management by 2020. It said Swiss offshore assets could fall below $2 trillion by 2016, while Singapore's assets could more than quadruple by then.
15 Surprising Technology CitiesThe reason: Switzerland may be falling out of favor with the wealthy, while Singapore is attracting more of the new wealth from Asia. Recent offshore wealth scandals and prosecutions in the United States and Europe have pierced the veil of Switzerland's vaunted bank secrecy laws. Western countries are also tightening their tax codes and chasing tax shelters more aggressively.
"The Swiss wealth management model is under intense pressure," the report states. "Offshore centers have suffered significant reputational damage in the past four years and advanced economies are increasing their oversight of cross-border banking and tax havens."
While the West is cracking down on wealth in Switzerland, however, Singapore is opening its arms to all the new rich from Asia. Millionaires and billionaires in Asia, especially China, are pulling hundreds of billions of dollars out of their country to stash overseas.
(Read more: Are Billionaires Smarter Than the Rest of Us?)
Much of that is going to Singapore and Hong Kong. More than half of Singapore's offshore assets come from China, WealthInsight says.
"Rapid growth in Asian economies such as China, India, Indonesia and Malaysia will continue to see new investments in the years ahead," the report stated.
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>>> What Social Security Changes Are Coming in 2013?
Key numbers can affect taxes and benefits
by: Stan Hinden
AARP
October 23, 2012
http://www.aarp.org/work/social-security/info-10-2012/social-security-changes-in-2013.html
Q. I hear that each fall, Social Security announces changes to its benefits for the following year. What changes will take place in 2013?
A. You've probably already heard of the most important one, a 1.7 percent cost-of-living adjustment (COLA), which will go to 56 million Social Security beneficiaries starting next January. The 8 million people who receive Supplemental Security Income (SSI), a separate benefit, will get their increased payments starting in December of this year.
The COLA is based on the percentage increase of the Consumer Price Index of the third quarter of 2012 compared with the figure for the third quarter of 2011.
But at this time of year, Social Security also recalculates other crucial numbers that can affect the taxes you pay and the benefits you receive.
• Maximum Taxable Earnings. In 2012, workers paid Social Security taxes on income up to $110,100. In 2013, the figure will rise to $113,700, based on an increase in average wages. There's no income limit on the taxes that workers pay for Medicare taxes.
• Social Security Credits. When people work and pay Social Security taxes, they earn credits toward retirement and other benefits. In 2012, workers received one credit for each $1,130 of earnings, up to a maximum of four credits a year. In 2013, it will take $1,160 to earn one credit. Generally, a worker needs 40 credits (10 years of work) to be eligible for benefits.
• Retirement Earnings Test. When people age 62 to full retirement age (currently 66) receive retirement benefits and continue to work, they face a limit on what they can earn before they have to "give back" some of their benefits.
In 2012, workers had to give back $1 in benefits for every $2 in earnings above the limit of $14,640. In 2013, that limit will rise to $15,120.
This formula applies only until the year in which the worker reaches full retirement age. For the months up to the month of the birthday, a different formula applies: In 2012, Social Security was holding back $1 in benefits for every $3 that such a worker earned above $38,880. In 2013, that limit will increase to $40,080.
The earnings limit goes away beginning the month that the worker reaches full retirement age.
In any event, benefits that are taken back this way from workers are returned to them later on, because when they reach full retirement age, Social Security recalculates their payments upward.
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Social Security -- >>> Don't Fall Into These Social Security Traps
By Kandice Bridges | Bankrate.com
Apr 9, 2013
http://finance.yahoo.com/news/don-t-fall-into-these-social-security-traps-165521850.html
If you're looking forward to turning age 62 so you can begin collecting Social Security benefits and live on easy street, you might get caught off guard. Some of the Social Security rules can be frighteningly complex. Because it will likely represent a large portion of your retirement income, it's important to understand how the government program works.
For instance, there are limits on how much you can earn while collecting benefits, and if you exceed those limits, your Social Security benefits will get cut substantially. That's just one of the snares that could trip you up.
Make sure you plan appropriately to avoid these six Social Security traps.
Trap No. 1: Social Security may be taxable
If your earnings exceed a certain level, up to 85 percent of Social Security benefits may be taxable. Even income sources that are normally tax-exempt, such as income from municipal bonds, must be factored into the total income equation for the purpose of computing tax on Social Security benefits.
Eric Levenhagen, CPA and Certified Tax Coach with ProWise Tax & Accounting, says to find out whether any of your Social Security benefits are taxable, "Look at your total taxable income plus half of your Social Security benefit. Make sure you add back any tax-exempt interest income."
When your taxable income, tax-free income and half of your Social Security benefit exceed $25,000 ($32,000 for married couples filing jointly), that's when you're in the zone to pay taxes on Social Security income.
Check out our Your Money 101 page for more personal finance content here.
Another unexpected income source that could impact taxes on Social Security: proceeds from a Roth conversion.
If you're thinking about doing a Roth conversion, do so before receiving Social Security benefits, says Steve Weisman, an attorney and college professor at Bentley University. "A lot of people considering converting a traditional (individual retirement account) into a Roth IRA should be aware that if they do that, they will end up paying income tax on the conversion, which will also be included for determining whether Social Security benefits are taxable," he says.
Trap No. 2: Must take required minimum distributions
Required minimum distributions, or RMDs, must generally be made from tax-deferred retirement accounts, including traditional IRAs, after a person reaches age 70 ½. The distributions are treated as ordinary income and may push a taxpayer above the threshold where Social Security benefits become taxable.
"This is a double-edged sword," says Weisman. "If you are over 70 ½ , you are required to begin taking distributions from IRAs (except Roth IRAs) and other retirement accounts."
"Here again, you take half of the Social Security benefits plus all other income to determine whether Social Security benefits are taxable. RMDs will be included and drive that up," says Levenhagen.
You can't avoid required minimum distributions, but you can avoid being surprised at tax time.
Trap No. 3: Some workers don't get Social Security
Most people assume Social Security is available to seniors throughout the U.S., but not every type of work will count toward earning Social Security benefits. Many federal employees, certain railroad workers, and employees of some state and local governments are not covered by Social Security.
"Some of my clients have participated in retirement programs offered by employers that don't pay into Social Security," says Charles Millington, president at Millington Financial Advisors LLC in Naperville, Ill. "If your employer does not participate in Social Security, then you should be covered under the retirement program offered by your employer."
However, certain positions within a state government may be covered by Social Security.
Find out whether your employer participates in Social Security or not and if not, whether your position may be covered by Social Security. Make sure you understand where your retirement benefits will be coming from.
Trap No. 4: Early benefits could be a big mistake
If you opt to take Social Security as soon as you are eligible, you may be doing yourself an injustice.
"If you delay taking benefits until age 70, you will see as much as an 8 percent increase in benefits for each year you delay," says Steve Gaito, Certified Financial Planner professional and director of My Retirement Education Center. "In addition to receiving a higher benefit, the annual cost-of-living adjustment will be based on the higher number."
"It's hard to find that kind of rate of return on regular investments, so it's good to delay if you can," says Weisman.
Of course, life expectancy plays a part in the decision of when to begin drawing benefits. "You generally know how healthy you are and what your family medical history is," says Ryan Leib, vice president of Keystone Wealth Management. "We advise clients to determine whether they think they will live longer than age 77. If so, delaying until age 70 will net you more in benefits than opting to start collecting benefits early."
If you're able to live off other funds and delay taking Social Security, you should seriously consider doing so. "Delaying taking Social Security until age 70 could mean the difference between cat food and caviar in retirement," says Leib.
Trap No. 5: Windfall elimination provision
If you work for multiple employers in your career, including both employers that don't withhold Social Security taxes from your salary (for example, a government agency) and employers that do, the pension you receive based on the noncovered work may reduce your Social Security benefits.
"Many people are not aware that their actual Social Security benefit may be lower than the amount shown on their statements or online because the windfall elimination provision reduction does not occur until the person applies for their benefits and (the Social Security Administration) finds out they are entitled to a pension," says Charles Scott, president of Pelleton Capital Management in Scottsdale, Ariz.
Social Security applies a formula to determine the reduction. In 2012, the maximum WEP reduction was $383.50. There is a limit to the WEP reduction for people with very small pensions.
If you have worked for both noncovered and covered employers, don't let the windfall elimination provision catch you by surprise.
Trap No. 6: Limits on benefits while working
You are allowed to collect Social Security and earn wages from your employer. However, if your wages exceed $15,120 in 2013, your Social Security benefits will be reduced by $1 for every $2 you earn above that level, says Mark Spittell, senior director at Alvarez & Marsal Taxand.
During the year in which you reach full retirement age -- which ranges from age 65 to 67, depending on your birth year -- you can earn up to $40,080 before $1 of your Social Security benefits will be deducted for every $3 you earn above that threshold. However, the money isn't lost forever. You will be entitled to a credit, so your benefits will increase beginning the month you reach full retirement age.
At full retirement age, no income restrictions apply. "There is no penalty for additional income earned," says Gaito.
If you plan on working beyond age 62 and anticipate earning more than $15,120 per year, strongly consider putting off Social Security benefits.
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>>> 10 Things Everyone Should Know About Social Security
Every working American should understand these important facts about Social Security
By Emily Brandon
February 19, 2013
http://money.usnews.com/money/retirement/articles/2013/02/19/10-things-everyone-should-know-about-social-security
Nearly every working American pays into the Social Security program, but not everyone understands the benefits they qualify for due to their contributions. And most workers will no longer get paper statements that explain how much they have paid into the system and what benefits they are likely to receive in retirement. Here are 10 things everyone should know about Social Security:
You contribute 6.2 percent of your income. Workers pay 6.2 percent of their earnings into the Social Security system, up to $113,700 in 2013. Employers pay a matching 6.2 percent for each worker. Self-employed workers must contribute 12.4 percent of their income annually.
How your benefit is calculated. Social Security payments are calculated based on your 35 highest-earning years in the workforce, and are also adjusted for inflation. If you don't have 35 years of earnings, zeros are averaged in for the years you didn't pay into Social Security.
[Read: 7 New Social Security Rules for 2013.]
Your full retirement age. You can collect the full amount of Social Security you have earned at what the Social Security Administration calls your full retirement age, which varies based on your birth year. The full retirement age used to be 65 for people born in 1937 or earlier. But the full retirement age was gradually increased in two-month increments from 65 and two months for people born in 1938 to 65 and 10 months for those born in 1942. The full retirement age is 66 for baby boomers born between 1943 and 1954. It's scheduled to further increase from 66 and two months for Americans born in 1955 to 66 and 10 months for people born in 1959. And the full retirement age is 67 for everyone born in 1960 or later. Workers who begin receiving Social Security benefits before their full retirement age will receive reduced payments for the rest of their lives.
You get bigger checks if you delay claiming. You can increase your Social Security checks by delaying when you sign up for Social Security. For example, people born in 1943 or later will get 8 percent larger payments for each year they delay claiming after their full retirement age, up until age 70. After age 70, there is no additional benefit to delaying claiming Social Security. "If you're going to err, err on taking in later," says William Reichenstein, a Baylor University professor and principal of Social Security Solutions. "The risk of running out of money in your lifetime is obviously greatest if one or both of you live a long time, and if that's the case, then it pays to wait. You can't outlive the Social Security benefit."
Married couples have additional claiming options. Married couples are entitled to claim Social Security based on their own work record, or payments worth up to 50 percent of the higher earner's benefit. And when one spouse dies, the surviving spouse will receive an amount equal to the higher earner's benefit. "The higher earner should base his benefits decision on the age he would be when the second spouse dies," says Reichenstein. "What would probably be the best strategy is for him to wait until he turns 70 because after the death of the first spouse, the survivor keeps the higher benefits." Ex-spouses are also eligible for Social Security benefits if the marriage lasted at least 10 years.
Couples who have reached their full retirement age can even claim spousal payments, and then later switch to payments based on their own work record, which will then be higher due to delayed claiming. "The spouse with the higher salary can file and suspend and the other could receive 50 percent of that one's benefit for four years and then still get the delayed retirement credit," says Jim Blankenship, a certified financial planner for Blankenship Financial Planning in New Berlin, Ill., and author of A Social Security Owner's Manual.
Payments are adjusted for inflation. Social Security payments are adjusted each year to keep up with inflation, as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers. Since automatic cost-of-living adjustments were added to Social Security in 1975, they have ranged from 14.3 percent in 1980 to zero in 2010 and 2011.
Insurance benefits for younger people. Social Security isn't just for retirees. Working-age people who become disabled and are no longer able to work can qualify for Social Security payments. And when a worker dies, his or her spouse and children are often eligible for monthly payments.
Electronic payments are now required. Your Social Security check probably won't come via mail. New Social Security recipients have been required to select an electronic payment option since May 2011, and approximately 93 percent of Social Security and Supplemental Security Income payments are already directly deposited into a bank or credit union account or loaded onto a prepaid debit card. "It costs the government and ultimately taxpayers a little over a dollar for paper checks and about 10 cents for each electronic transaction," says Walt Henderson, director of the electronic fund transfer strategy division at the Treasury Department.
You can view your Social Security statement online. The Social Security Administration has stopped mailing paper Social Security statements to most workers to cut costs. If you want to view your complete earnings history, taxes paid into the system, and get a personalized estimate of your expected payments, you'll need to create a Social Security online account and log in to view your statement. It's a good idea to periodically check your statement to make sure your information is being recorded correctly and to make decisions about when to claim Social Security. "I recommend that everyone get in the habit of checking their online statement each year, around their birthday, for example," says Michael Astrue, the former Commissioner of Social Security. You can also now sign up to receive benefits, change your direct-deposit information, and access a benefit verification letter online.
[Read: Social Security Statements Now Available Online.]
The trust fund has a projected deficit. The assets in the Social Security trust funds are expected to be exhausted in 2033, according to the Social Security Board of Trustees' annual report. After that, incoming tax revenue will provide enough income to pay out about three-quarters of promised benefits. "If nothing else is done, certainly payments would be reduced dramatically to just what the tax rolls were bringing in each year, but we can always increase the Social Security tax," says Blankenship. Possible changes that might correct the problem include tax increases, benefit cuts, or a combination of the two approaches. The trustees found that an immediate payroll tax increase of about 1.3 percent for workers and employers or an immediate benefit reduction of 16.2 percent would both correct the projected deficit and restore the program to solvency for the next 75 years.
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>>> 10 Things Everyone Should Know About Medicare
By Emily Brandon
U.S.News & World Report
Apr 1, 2013
http://finance.yahoo.com/news/10-things-everyone-know-medicare-133701041.html
Almost all Americans who work pay into the Medicare system, but not everyone knows about the benefits they will become eligible for when they turn 65. Here's a look at the valuable health insurance you will get in retirement:
Tax rate. Most workers pay 1.45 percent of their earnings into the Medicare trust fund, and companies pay a matching 1.45 percent per employee. Self-employed workers pay 2.9 percent of their earned income into the trust fund. Beginning in 2013, the Affordable Care Act enacted an additional Medicare tax equal to 0.9 percent of earnings over $200,000 for individuals and $250,000 for couples.
When to sign up. You can sign up for Medicare beginning three months before you turn 65, and coverage can start as soon as the first day of your birthday month. The initial enrollment period lasts until three months after your 65th birthday. If you fail to sign up during the seven-month window around your 65th birthday, you can sign up between January 1 and March 31 each year (and get coverage that begins on July 1), but you may be required to pay permanently higher premiums for late enrollment. Monthly Part B premiums increase by 10 percent for each 12-month period you were eligible for Medicare but didn't sign up for it. If you or your spouse is employed and covered by a group health plan at work, you must sign up within eight months of leaving the job or the coverage ending to avoid the higher premiums. "It's really important to plan in advance and to sign up during that time," says Nicole Duritz, vice president for health and family at AARP. "If you choose to sign up later, it will end up costing you more."
[Read: 10 Things Everyone Should Know About Social Security.]
Premium costs. Most retirees don't pay a premium for Medicare Part A hospital insurance. The standard premium amount for Medicare Part B medical insurance is $104.90 per month in 2013, but retirees who earn more than $85,000 ($170,000 for couples) pay higher premiums.
Other out-of-pocket expenses. Just as with private health insurance, Medicare has deductibles, copays and coinsurance. The Part B deductible is $147 in 2013, after which Medicare typically pays 20 percent of the Medicare-approved amount of the service. There's no annual limit on what you might need to pay out-of-pocket.
Supplemental coverage. It's difficult to predict how much your out-of-pocket costs will be with traditional Medicare, so many retirees supplement their Medicare coverage with a Medicare Advantage or Medigap plan. These plans charge an additional premium, but fill in many of Medicare's cost-sharing requirements and sometimes cover additional services that traditional Medicare doesn't cover. "For many people, purchasing a Medigap policy will give people some peace of mind that those expenses will be covered if they have very high medical expenses," says Juliette Cubanski, a Medicare policy analyst at the Kaiser Family Foundation. There is a one-time Medigap open-enrollment period that starts the month you turn 65 and enroll in Part B and lasts six months. During this period, you have a guaranteed right to buy any Medigap policy sold in your state regardless of your health condition. After this period, you could be denied coverage or pay higher premiums. "No one can say no to you, no matter what your health status is during that six-month period," says Duritz. "After that six months, there is no guarantee that a plan will accept you and offer you a supplemental plan."
[Read: What People Who Live to 100 Have in Common.]
Free physicals. You can get a free "welcome to Medicare" preventative care doctor's visit during the first 12 months that you have Medicare Part B, which generally includes a review of your medical history and recommendations about preventative care. Once you've had Medicare for a year, you become eligible for annual wellness visits to a doctor to make a personalized plan to prevent disease. "The new 'welcome to Medicare' physical exam gives people an opportunity to get a check-up and get a run-down of all the prevention benefits that they might be entitled to," says Cubanski. "It's a nice opportunity for people when they come on to Medicare to get into the system and perhaps into a plan of prevention and health promotion that they might not have had an opportunity to take advantage of prior to signing up for Medicare."
Free preventative care. Many preventative services are now covered without a deductible or other cost-sharing requirements, due to provisions of the Affordable Care Act, including bone mass measurements and breast cancer screenings. But additional costs could be charged if a problem is found. For example, colonoscopies are covered at no cost, but if a polyp is found and removed during the colonoscopy, you may then have to pay 20 percent of the Medicare-approved amount for the doctor's services and/or a copayment to the medical facility.
How to pick a Part D plan. Retirees get to choose a new Medicare Part D prescription drug plan each year during an annual enrollment period from October 15 to December 7. It's a good idea to shop around for a new plan even if you're happy with your current coverage because premiums, covered medications, out-of-pocket costs and the plans offered change each year. "While you're always automatically renewed in the same plan from one year to the next, it is smart to take a look, ideally every year, to see what's happened with your own plan, whether the premium has increased and whether your needs have changed," says Jack Hoadley, a health policy analyst at Georgetown University. "You can often save money simply by making a new choice." If you don't join a Medicare prescription drug plan when you're first eligible or go without prescription drug coverage for a period of 63 or more days in a row after you qualify, you may have to pay a late-enrollment penalty. There's also a coverage gap in many Medicare Part D plans, often called the "donut hole," but the gap is scheduled to be gradually eliminated by 2020.
[In Pictures: States Where People Live the Longest.]
What is not covered. There are a variety of medical services commonly used by older people that Medicare doesn't cover, including routine dental or eye care, dentures and hearing aids. Medicare also does not cover extensive long-term care in a nursing home or assisted living facility.
Funding deficit. The Medicare hospital insurance trust fund is expected to be depleted earlier than the Social Security trust funds. The trust fund has paid out more in hospital benefits and other expenditures than it received in income since 2008, and is projected to be exhausted in 2024, according to the 2012 Social Security and Medicare Boards of Trustees reports. Potential strategies to fix the funding shortfall include increasing the payroll tax from 2.9 percent to 4.25 percent, reducing expenditures by 26 percent or some more gradual combination of the two approaches.
<<<
>>> Social Security in the crosshairs
3/28/2013
|
By Philip Moeller, U.S. News & World Report
http://money.msn.com/retirement-plan/social-security-in-the-crosshairs
As Congress works to bring the federal budget deficit under control, entitlements for older Americans are certain to be affected.
Social Security is never far from the congressional budget ax. Although it's been spared actual cuts to date, program defenders have already lost their battle to keep it from being considered for cuts. The battleground thus will be moving to specific reform proposals. Depending on who's talking, Social Security is either a runaway fiscal disaster that needs to be overhauled or a healthy program that has done its job and needs only a tweak or two.
First, a little background. Social Security is funded by payroll taxes, paid equally by employees and employers. Since 1990, each has paid 6.2% of covered wages up to a ceiling, which is currently the first $113,700 in annual earnings. This tax supports the Old-Age, Survivors and Disability Insurance (OASDI) program, which has two parts -- Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) -- that pay monthly benefits to retirees and their families and to disabled workers and their families.
There is also a payroll tax for Medicare that is 1.45% each for employees and employers; there is no earnings ceiling for Medicare taxes. The total tax for both programs for most taxpayers is thus 15.3 percent. Self-employed wage earners must pay this entire amount.
The health-care reform law has tacked on higher Medicare taxes for wealthier taxpayers. They will rise an additional 0.9% on wage incomes of more than $200,000 in 2013 ($250,000 for couples). These same income limits are also being used to trigger a 3.8 percent annual tax on net investment income.
The last time Social Security was "reformed," in the early 1980s, payroll taxes were raised to make the program self-supporting, and big surpluses began to accrue. By law, Social Security must place its surpluses in a special issue of U.S. Treasury securities, and the interest on these securities is added to Social Security revenues. The program is also credited with some of the tax revenues that the IRS receives from income taxes on Social Security benefit payments.
Every year, the trustees of the Social Security program issue a detailed annual report on the program's financial outlook. According to the 2012 report, Social Security will be able to pay all obligations in full until the year 2033 — 50 years after the last round of reforms was enacted. After that, it would be able to continue paying about 75 percent of its obligations for retirement and disability benefits. However, the DI component of the program will exhaust its funds by 2016, so something needs to be done soon. The trustees' report contains lots of variables that administrators acknowledge are uncertain: multiple projections for employment, inflation, economic growth, population, and health and longevity, just to name some big categories.
With the spin doctors in high gear, here are factual answers to key statements about the program:
Social Security is spending more money in benefits than it's taking in. It's broke. Social Security is not broke, regardless of how you define the term. Program expenses do exceed the amount of payroll taxes taken in by the program. However, the program is still in the black if you include its interest and other income.
We can't afford Social Security. Affordability ultimately comes down to whether you think current payroll tax rates are too steep, benefits are too big, or some combination of the two. There has been nearly no discussion that payroll tax rates should come down, so the affordability question hinges on benefits. There has been some talk of trimming future benefits for higher-income wage earners and perhaps trimming the annual cost-of-living adjustment (COLA). Studies show that lower-income workers wind up receiving more from Social Security than they paid in taxes, while the opposite is true for higher-income wage earners.
Social Security is adding to the deficit. The deficit was a contentious Social Security topic even before Al Gore's infamous "lock box" statements during the 2000 presidential race. Narrowly speaking, Social Security is distinct from the rest of the federal budget, and its defenders say it can neither add to nor reduce the federal deficit. It has its own dedicated tax and relies solely on that tax and the income it earns from investing surplus tax collections.
During 2011 and 2012, the employee payroll tax was reduced from 6.2% to 4.2%. But this economic stimulus was intended to put more money in consumers' hands. The Social Security program happened to be an effective way to accomplish this goal. Social Security was made whole for the cuts, and its overall financial position was not affected. Did this stimulus add to the deficit? Yes, but that's not the same thing as saying Social Security did so.
This issue becomes murkier, however, because of the legal requirement that Social Security place its excess money into U.S. Treasury securities. It's not as if the feds are holding the program's $2.5 trillion surplus in, well, a lock box. They spent that money a long time ago to fund government operations and gave Social Security an I.O.U., just as they do to everyone else who owns U.S. Treasury debt. Under this view, when Social Security must begin cashing in its U.S. securities to fund its operating deficits, Uncle Sam will have to go out and find the real dollars to repay Social Security. How will it find those dollars? Of course, it will need to sell more U.S. Treasury securities, adding to the national debt and to the deficit. In this indirect way, at least, Social Security's looming shortfalls would add to the deficit. The villain in this story, if there is one, would seem not to be the Social Security program itself but overall government fiscal policy.
Proposed changes to Social Security will hurt current retirees. Generally, major reform proposals issued so far would have little effect on people 55 and older, and would not change benefits for retirees for upwards of 20 years. This primarily involves raising the retirement age and any specific proposals that would affect benefits. An exception could be if the annual COLA were made less attractive. That might take effect sooner, although opening up the COLA for discussion will also bring out lots of proposals to increase it, particularly to reflect sustained inflation in health-care costs. Another likely reform measure would raise the annual ceiling on taxable earnings, but this would affect workers, not retirees. There will also be proposals to means-test Social Security benefits, which could affect payments to more affluent retirees. The key there will be the effective date of any changes.
We're all living longer, so raising the retirement age is a logical and easy fix. Yes and no. Wealthier people are certainly living longer. People in white-collar jobs may be living longer. Poorer people are not living longer. The longevity revolution has not worked its magic on them. Many lower-income Americans take early retirement, at 62, because they are worn out by physically demanding jobs. Suggesting that these people work until they're 70 is not realistic. Extending the full retirement age -- now at 66 and headed to 67 for people born after 1959 -- thus may have its greatest impact on these early retirees. Most proposals that raise the retirement age can pay for themselves only by reducing the relative level of benefits for early retirees. Social Security has analyzed the major reform proposals and assessed their impact on the program's long-term sustainability.
<<<
Vitamin Blue -- >>> Vitamin Blue Announces up to 5 Million Shares Buyback in Open Market Starting Week of March 4
Company Looking to Enter 7 Billion USD Eco Surfing Market
http://www.otcmarkets.com/stock/VTMB/news
COSTA MESA, CA, Mar 01, 2013 (MARKETWIRE via COMTEX) -- Vitamin Blue, Inc. (OTCQB: VTMB), a developer, producer and distributor of water boardsports apparel, accessories and related products, today announced that it will buy up to 5 million shares in the open market starting the week of March 4.
CEO Frank Ornelas commented, "Our share structure has remained the same and our market cap is much lower than last month. We decided that it will be a good investment going forward to buy back shares. We believe our fair value is much greater than our current share price. We are currently in talks with a world renowned Surfer, and have several exciting developments within the next coming days."
In addition, Vitamin Blue is currently looking to enter the 7 billion USD Eco Surfing market. Surfing materials mostly contain potentially toxic neoprene and other accessories like leashes, wax and wax comb, all of which are derived from petroleum. They will take centuries to biodegrade.
Vitamin Blue wants to take eco-friendly practices in the surfing industry as manufacturers begin to experiment with materials that are recycled, biodegradable and not derived from petroleum. Whether it is boards, wetsuits, waxes, or leashes, most surfers will only buy an eco-friendly product if it performs well and is around the same price as the more toxic products. The company wants to position itself ahead of the curve to become a pioneer in this new market.
About Vitamin Blue, Inc. (www.vitaminblue.com): Vitamin Blue designs, develops, produces and distributes water boardsports apparel, accessories and related products. Founded in 1999, the Costa Mesa, California based company is part of the consumer goods sector and non-durables industry.
SOURCE: Vitamin Blue, Inc.
<<<
IceWeb -- >>> IceWEB Lands Another Significant IceBOX Customer
Recurring Revenue Business Pivot Is Working, Says Howe
Press Release: IceWEB, Inc
Feb 6, 2013
http://finance.yahoo.com/news/iceweb-lands-another-significant-icebox-133000671.html
STERLING, Va.--(BUSINESS WIRE)--
IceWEB, Inc.™ (IWEB), a leading provider of Unified Data –Storage appliances for cloud and virtual environments as well as secure, infinitely scalable Cloud Services, today announced that it has signed another large IceBOX Private Cloud customer, a large, faith-based non-profit. Initially, a 500 user license BYOD (Bring Your Own Device) rollout, the new implementation includes IceWEB Unified Storage Appliances as well and has the expectation for a far greater number of users as the systems come on line.
“We have definitely found a market sweet spot with our IceBOX Private Cloud product, serving companies that need to deploy BYOD solutions for their employees and constituents. This is the critical business pivot I have been leading the company through to add the all-important recurring revenue to our business model while also continuing to grow our hardware revenue. IceBOX is the vehicle through which that is happening, and it is happening fast. This latest IceBOX customer was especially concerned about security and our ability to rapidly deploy a turnkey system for them to operate from their own Data Center. They had a major problem with security leakage using the public cloud scenario, and they wanted to be able to control their data assets while giving their users the kind of functionality they were accustomed to having,” said Rob Howe, IceWEB CEO.
“The ability for their users to access their secure IceBOX from anywhere and on any mobile device—smartphone, tablet, notebook—and any Operating System (iOS, Android, Blackberry, Apple OS, Windows or Windows Mobile) was a critical success factor for us. We are daily demonstrating that our IceWEB unified storage appliances coupled with our cloud-based ecosystem of services is a winning solution. We will be making more significant announcements about our success with IceBOX very soon—this segment is on fire.” Howe concluded.
Driven by BYOD, the fastest growing area of cloud services, IceBOX features very high security level availability such as forced passcode, erase data options and 256bit Encryption. IceBOX integrates with LDAP or Active Directory authentication, utilizes encryption and the broadest range of device support available (iPhone, iPad, Android Phone and Tablet, Blackberry, Windows, Windows Mobile and Kindle).
About IceWEB : For more information please call 800-465-4637 or visit www.iceweb.com. To become part of the Company's e-mail list for industry updates and press releases, please send an e-mail to ir@iceweb.com.
<<<
Shorting paired 3X ETFs -- >>> An Almost Risk-Free Way For Annual Return Of 50%+ <<<
http://seekingalpha.com/article/1066111-an-almost-risk-free-way-for-annual-return-of-50
The 1-year gain is 57.3%, but there are times when this portfolio will drop up to 16%. This got me curious, and I decided to try this out for all pairs of leveraged ETFs offered by Direxion over the time period December 9, 2011 to December 9, 2012. The ETFs included are SPXL, SPXS, DRN, DRV, MIDU, MIDZ, XPP, FXP, TECL, TECS, FAS, FAZ, TNA, TZA, ERX, ERY, DZK, DPK, YINN, YANG, EDC, EDZ, SOXL, SOXS, RUSL, RUSS, GASL, GASX, NUGT, and DUST.
>>> There are two things going on here:
First, you pick up their transaction costs when you short both sides.
Second, the excess return he picks up is related to the particular patterns of ups and downs of the underlying index. What happens is that after a move in one direction, you no longer have an equally weighted hedge - you are now net long or net short. So now the next move magnifies that effect.
In practical terms these ETFs are mostly unshortable anyway. <<<
http://www.siliconinvestor.com/readmsg.aspx?msgid=28607613
Accuride -- >>> Accuride Discusses Softening Industry Conditions and Key Customer Developments
Press Release: Accuride Corporation
Wed, Oct 10, 2012
http://finance.yahoo.com/news/accuride-discusses-softening-industry-conditions-130000261.html
EVANSVILLE, Ind.--(BUSINESS WIRE)--
Accuride Corporation (ACW) – a leading supplier of components to the North American commercial vehicle industry – indicated that softening industry conditions and key customer developments are creating a challenging near-term environment. Class 8 truck orders continue to be weak and have led to rapidly declining build schedules at Accuride’s major OEM customers. In addition, Navistar and Paccar notified the Company that they will no longer offer Gunite hub and drum assemblies as standard equipment on their vehicles beginning in the third and fourth quarters of 2012, respectively. Fleets will continue to have the option to specify Gunite products when ordering vehicles.
The Company is taking the necessary actions to respond to these changing business conditions. The closure of the Elkhart facility and the consolidation of the Brillion machining operations into Gunite’s Rockford facility have been pulled ahead to the fourth quarter of 2012. The Company has also reduced its corporate salaried workforce by 14 percent, along with other cost reduction efforts.
Due to the uncertainty in the business environment, the Company’s expected 2012 performance will be below its previously announced guidance for 2012. As of September 30, 2012, the Company had $20.3 million of cash with $20.0 million outstanding on the $100.0 million commitment of the ABL revolver. Strong cash generated from operations during the third quarter was offset by the $14.7 million semi-annual interest payment on our senior secured notes and capital expenditures.
“In spite of the near-term industry challenges, our plan to ‘Fix & Grow’ Accuride is on track,” said Accuride President and CEO Rick Dauch. “We are taking the actions necessary to reduce our cost structure in the face of challenging and rapidly changing industry conditions, without jeopardizing our operational turnaround and long-term strategic objectives. Our Aluminum Wheel and Gunite manufacturing equipment launches and the consolidation of manufacturing operations at Gunite and Imperial will be completed by year-end. Long-term industry fundamentals remain intact, pointing to a recovery over the next several years. We are confident that the actions we are taking will make Accuride a much stronger and more dependable company for our customers and shareholders.”
As previously announced, Accuride will be presenting at Deutsche Bank’s 20th Annual Leveraged Finance Conference where it will discuss the Company’s response to changing industry conditions. The Company will webcast its presentation on Wednesday, October 10, 2012. Rick Dauch, Accuride President & CEO, and Greg Risch, Vice President & Chief Financial Officer, will speak to the investment community beginning at 3:00 p.m. Pacific Time.
Accuride's presentation will be broadcast live through an audio webcast available at the Investor Information section of the Company’s website – www.accuridecorp.com. Presentation slides will be available for download at the site and the webcast will be available for replay for 30 days following the event.
About Accuride Corporation
With headquarters in Evansville, Ind., USA, Accuride Corporation is a leading supplier of components to the commercial vehicle industry. The company’s products include commercial vehicle wheels, wheel-end components and assemblies, truck body and chassis parts, and other commercial vehicle components. The company’s products are marketed under its brand names, which include Accuride®, Gunite®, ImperialTM and BrillionTM. Accuride’s common stock trades on the New York Stock Exchange under the ticker symbol ACW. For more information, visit the Company’s website at http://www.accuridecorp.com.
<<<
Accuride -- >>> Accuride hits all-time low as it warns on outlook
Accuride hits all-time low as co. says full-year results will be below its previous forecast
Associated Press
Oct 10, 2012
http://finance.yahoo.com/news/accuride-hits-time-low-warns-165202452.html
NEW YORK (AP) —
Accuride's stock plunged to an all-time low on Wednesday as the company said it would not do as well as it had thought this year.
THE SPARK: Accuride, which makes parts for commercial vehicles, previously predicted a full-year loss of 5 cents to 12 cents per share. That included a loss of 6 cents per share related to the closing of its Elkhart, Ind. plant. Revenue is expected between $1 billion and $1.03 billion.
The company did not release a new prediction for net income, but analysts polled by FactSet were already forecasting a loss of 30 cents per share on revenue of $967.8 million.
The Evansville, Ind. company says its performance has been hurt by soft Class 8 truck orders. It is also being dragged down by Navistar and Paccar's decision to no longer offer its Gunite hub and drum assemblies as standard equipment on their vehicles.
Accuride said it is dealing with the difficult conditions through various cost-cutting efforts, including reducing its workforce by 14 percent.
SHARE ACTION: Shares of Accuride Corp. tumbled $1.23, or 27 percent, to $3.33 in afternoon trading. The stock dropped to $3.26 earlier in the session, its lowest point since going public in March 2010. For the year to date, the shares are down 38 percent.
<<<
Otelco -- >>> Otelco Reports Second Quarter 2012 Results
Press Release: Otelco Inc. – Tue, Aug 7, 2012 5:00 PM EDT
http://finance.yahoo.com/news/otelco-reports-second-quarter-2012-210000338.html
ONEONTA, Ala.--(BUSINESS WIRE)--
Otelco Inc. (OTT) (OTT-UN.TO), a wireline telecommunications services provider in Alabama, Maine, Massachusetts, Missouri, New Hampshire, Vermont and West Virginia, today announced results for its second quarter ended June 30, 2012. Key highlights for Otelco include:
• Total revenues of $24.7 million for second quarter 2012.
• Operating loss of $148.1 million, reflecting the impact of $144.0 million in goodwill impairment and $8.6 million in physical and intangible asset impairment (as explained below).
• Adjusted EBITDA (as defined below) of $10.8 million for second quarter 2012.
“Second quarter results produced Adjusted EBITDA of $10.8 million, which represented a 6% decrease over the first quarter of 2012,” said Mike Weaver, President and Chief Executive Officer of Otelco. “Our results were negatively impacted by approximately $0.5 million of non-recurring expenses, including termination pay associated with organization re-engineering implemented in June. The Adjusted EBITDA results represent a small operational improvement for the quarter, given that first quarter includes the annual CoBank dividend of $0.3 million. Our cash balance, adjusted to reflect the payment of second quarter interest on our IDS debt on July 2, 2012, increased by $3.5 million to $19.5 million. We continued a moderate pace of $1.2 million of capital improvements in the business.
“As we look forward to the remainder of this year and beyond, our results will be negatively impacted by the FCC’s Inter-Carrier reforms and the previously announced expiration of the Time Warner Cable contract,” Weaver continued. “The FCC reforms, which affect both our RLEC and CLEC operations, have various implementation dates and there remains a great deal of uncertainty and confusion surrounding some aspects of the order. In addition, numerous groups have challenged the FCC order and the appeals process could result in additional changes and modifications to the existing order. One aspect of the FCC’s order that materially impacts our operations took effect on July 1, 2012. The order requires that intrastate access rates be lowered to the applicable federal access rates over the next three years and then move rapidly to a ‘bill and keep’ – no inter-carrier payment – basis.
“On April 20, 2012, we announced the anticipated expiration of the Time Warner Cable contract for wholesale network connections provided by Otelco. Official notice of non-renewal by Time Warner Cable was received in June and a transition agreement to provide services through June 2013 is being negotiated. Under the terms of the agreement, the revenue stream from the contract is unaffected through the end of this year. During the transition period in 2013, the revenue will decline as customers are moved from the Otelco service platform to Time Warner Cable,” Weaver explained.
“Based on our financial results through the second quarter and estimating the impact of the FCC reforms on our operations for the second half of the year, our Adjusted EBITDA outlook for this year is in the range of $41 to $43 million,” noted Weaver. “Reflecting the impact of the FCC’s order and the Time Warner Cable transition, our outlook for 2013 Adjusted EBITDA is in the $34 to $35 million range. For 2014, we would anticipate Adjusted EBITDA in the range of $29 - $33 million.
“Because of the negative impact of the FCC order and the expiration of the Time Warner Cable agreements, we are exploring our strategic alternatives to address the existing levels of debt and strengthen our balance sheet,” added Weaver. “We have engaged Evercore Partners, an investment banking firm, to assist us in the process. Evercore’s areas of expertise include debt and capital market transactions, restructuring of balance sheet obligations and mergers and acquisitions advice.”
“Our immediate response to the anticipated decline in revenue and cash flow has been to reduce operating costs and carefully control capital expenditures. In the second quarter, we reduced our work force by 13%, reduced the total targeted compensation for senior management by 33% and reduced board of directors’ fees by 20%,” Weaver noted. “When the Time Warner Cable contract transition is completed in 2013, we anticipate another reduction in our staff. When fully implemented, these cost reductions will generate a savings of approximately $4 million annually, including overhead and benefits.
“In order to conserve cash, the board of directors suspended dividends on our common stock beginning with second quarter 2012. In addition, the board of directors has exercised its contractual right under the indenture governing our senior subordinated notes to defer interest on the senior subordinated notes for third quarter 2012. Under the indenture, the board is permitted to defer interest on up to four occasions with respect to up to two quarters per occasion before resuming interest payments, including interest on the deferred interest. The deferral of the interest for third quarter will conserve $3.5 million cash.
“In addition to working on cost reductions and cash conservation, we have introduced new products in our service areas. In Alabama, we recently introduced security services to residential and business customers. In addition, we were awarded a five year contract to provide fiber backbone for the school systems in one of the counties we serve. This contract will take us outside our existing RLEC boundaries and provides an opportunity for growth. In New England, we introduced Microsoft hosted Exchange products in partnership with a third party provider. We recently added additional sales professionals to work in our expanded New Hampshire operations. Our Missouri operations continue to see growth in both the wireless Internet products and providing fiber transport for wireless carriers.
“We will continue to review our operations and cost structure, making every effort to improve efficiency and further reduce costs,” concluded Weaver. “Modest price increases have been implemented where allowed by regulatory agencies, existing contractual obligations and market conditions.”
GOODWILL AND LONG-LIVED ASSET IMPAIRMENT
The Company announced on April 20, 2012, the non-renewal of the Time Warner Cable contract. Coupled with the resulting change in the market price of OTT on the NASDAQ Global Market and the expected impact of the FCC reforms, these circumstances are considered a triggering event for reviewing goodwill and other long-term assets on the Company’s balance sheet for impairment. The Company performed the required analysis and determined that long-lived assets should be reduced from $81.7 million to $73.1 million or a reduction of $8.6 million. In addition, goodwill should be reduced from $189.0 million to $45.0 million or an impairment of $144.0 million. The financial statements and tables in this earnings release reflect the impact of these non-cash charges.
Second Quarter 2012 Financial Summary
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended June 30,
Change
2011
2012
Amount
Percent
Revenues
$
25,501
$
24,714
$
(787
)
(3.1
)
%
Operating income (loss)
$
7,327
$
(148,061
)
$
(155,388
)
*
Interest expense
$
(6,199
)
$
(5,655
)
$
(544
)
(8.8
)
%
Net income (loss) available to stockholders
$
1,283
$
(128,011
)
$
(129,294
)
*
Basic net income (loss) per share
$
0.10
$
(9.68
)
$
(9.78
)
*
Adjusted EBITDA(a)
$
11,887
$
10,814
$
(1,073
)
(9.0
)
%
Capital expenditures
$
3,508
$
1,242
$
(2,266
)
(64.6
)
%
* Not a meaningful calculation
Six Months Ended June 30,
Change
2011
2012
Amount
Percent
Revenues
$
50,893
$
50,088
$
(805
)
(1.6
)
%
Operating income (loss)
$
12,647
$
(141,444
)
$
(154,091
)
*
Interest expense
$
(12,369
)
$
(11,488
)
$
(881
)
(7.1
)
%
Net income (loss) available to stockholders
$
1,288
$
(127,192
)
$
(128,480
)
*
Basic net income (loss) per share
$
0.10
$
(9.62
)
$
(9.72
)
*
Adjusted EBITDA(a)
$
23,300
$
22,290
$
(1,010
)
(4.3
)
%
Capital expenditures
$
6,351
$
2,545
$
(3,806
)
(59.9
)
%
* Not a meaningful calculation
Reconciliation of Adjusted EBITDA to Net Income (Loss)
Three Months ended June 30,
Six Months ended June 30,
2011
2012
2011
2012
Net income (loss)
$
1,283
$
(128,011
)
$
1,288
$
(127,192
)
Add: Depreciation
2,307
2,747
5,829
5,475
Interest expense - net of premium
5,857
5,313
11,685
10,804
Interest expense - amortize loan cost
342
342
684
684
Income tax expense (benefit)
357
(25,713
)
359
(25,189
)
Change in fair value of derivatives
(480
)
-
(986
)
(241
)
Loan fees
19
19
38
38
Amortization - intangibles
2,202
3,136
4,403
4,930
Goodwill impairment
-
143,998
-
143,998
Impairment of long-lived assets
-
8,622
-
8,622
Restructuring expense
-
361
-
361
Adjusted EBITDA
$
11,887
$
10,814
$
23,300
$
22,290
Reconciliation of Projected Adjusted EBITDA to Net Loss
Twelve months ended December 31,
2012
2013
2014
Low
High
Low
High
Low
High
Net loss
$
(154,904
)
$
(152,904
)
$
(2,334
)
$
(1,334
)
$
(5,414
)
$
(1,414
)
Add: Depreciation and amortization
21,897
21,897
16,075
16,075
13,201
13,201
Interest expense
21,510
21,510
21,461
21,461
21,940
21,940
Income tax benefit
(180
)
(180
)
(853
)
(853
)
(904
)
(904
)
Change in fair value of derivatives
(241
)
(241
)
-
-
-
-
Goodwill impairment
143,998
143,998
-
-
-
-
Impairment of long-lived assets
8,622
8,622
-
-
-
-
Loan fees
76
76
76
76
76
76
Projected Adjusted EBITDA
$
40,778
$
42,778
$
34,425
$
35,425
$
28,899
$
32,899
(a) Adjusted EBITDA is defined as consolidated net income (loss) plus interest expense, depreciation and amortization, income taxes and certain non-recurring fees, expenses or charges and other non-cash charges reducing consolidated net income. Adjusted EBITDA is not a measure calculated in accordance with generally acceptable accounting principles (GAAP). While providing useful information, Adjusted EBITDA should not be considered in isolation or as a substitute for consolidated statement of operations data prepared in accordance with GAAP. The Company believes Adjusted EBITDA is useful as a tool to analyze the Company on the basis of operating performance and leverage. The definition of Adjusted EBITDA corresponds to the definition of Adjusted EBITDA in the indenture governing the Company’s senior subordinated notes and its credit facility and certain of the covenants contained therein. The Company’s presentation of Adjusted EBITDA may not be comparable to similarly titled measures used by other companies.
Otelco Inc. - Key Operating Statistics ?²?
(Unaudited)
Quarterly
% Change
December 31,
March 31,
June 30,
from
2010
2011
2012
2012
March 31, 2012
Otelco access line equivalents(1)
99,639
102,378
101,885
101,184
(0.7)
%
RLEC and other services:
Voice access lines
45,461
46,202
45,200
44,546
(1.4)
%
Data access lines
20,852
22,904
23,105
23,156
0.2
%
Access line equivalents(1)
66,313
69,106
68,305
67,702
(0.9)
%
Cable television customers
4,227
4,201
4,216
4,163
(1.3)
%
Satellite television customers
125
226
229
231
0.9
%
Additional internet customers
6,975
5,414
5,159
4,896
(5.1)
%
RLEC dial-up
393
301
273
248
(9.2)
%
Other dial-up
4,300
2,797
2,501
2,266
(9.4)
%
Other data lines
2,282
2,316
2,385
2,382
(0.1)
%
CLEC:
Voice access lines
29,944
30,189
30,476
30,355
(0.4)
%
Data access lines
3,382
3,082
3,104
3,127
0.7
%
Access line equivalents(1)
33,326
33,271
33,580
33,482
(0.3)
%
Wholesale network connections(3)
149,043
157,144
159,560
161,766
1.4
%
For the Years Ended
For the Three Months Ended
December 31,
March 31,
June 30,
2010
2011
2012
2012
Total Revenues (in millions):
$
104.4
$
101.8
$
25.4
$
24.7
RLEC
$
58.4
$
57.4
$
14.2
$
14.1
CLEC
$
46.0
$
44.4
$
11.2
$
10.6
(1) We define access line equivalents as voice access lines and data access lines (including cable modems, digital subscriber lines, and dedicated data access trunks).
(2) We acquired STC on October 14, 2011. At December 31, 2011, STC had 3,309 voice access lines and 1,672 data access lines, or 4,981 access line equivalents, and 55 dial-up internet customers which are included in the Key Operating Statistics.
(3) Time Warner Cable is the source for approximately 98% of wholesale network connections.
FINANCIAL DISCUSSION FOR SECOND QUARTER 2012:
All financial information includes the acquisition of Shoreham Telephone Company Inc. (“Shoreham”) on and as of October 14, 2011.
Revenues
Total revenues decreased 3.1% in the three months ended June 30, 2012, to $24.7 million from $25.5 million in the three months ended June 30, 2011. Declines from the traditional loss of RLEC voice access line related revenues and one-time settlements in the CLEC were partially offset by the addition of Shoreham. The table below provides the components of our revenues for the three months ended June 30, 2012 compared to the same period of 2011.
Three Months Ended June 30,
Change
2011
2012
Amount
Percent
(dollars in thousands)
Local services
$
11,940
$
11,419
$
(521
)
(4.4
)
%
Network access
8,076
7,498
(578
)
(7.2
)
Cable television
707
794
87
12.3
Internet
3,458
3,687
229
6.6
Transport services
1,320
1,316
(4
)
(0.3
)
Total
$
25,501
$
24,714
$
(787
)
(3.1
)
Local services revenue decreased 4.4% in the quarter ended June 30, 2012 to $11.4 million from $11.9 million in the quarter ended June 30, 2011. Shoreham added $0.2 million and hosted PBX and wholesale revenue increased $0.2 million. The increase was offset by an RLEC revenue decrease of $0.4 million reflecting the decline in RLEC voice access lines and one-time fiber installation revenue of $0.1 million plus one-time CLEC revenue in 2011 of $0.4 million. Network access revenue decreased 7.2% in the second quarter 2012 to $7.5 million from $8.1 million in the quarter ended June 30, 2011. Shoreham added $0.3 million which was offset by declines in interstate and intrastate switched access revenue. Cable television revenue in the three months ended June 30, 2012, increased 12.3% to $0.8 million in the quarter ended June 30, 2012 compared to $0.7 million for the same period in 2011. Growth in IPTV subscribers, video on demand and the shift to high-definition packages in Alabama was offset by the decline in basic cable subscribers. Internet revenue for the second quarter 2012 increased 6.6% to $3.7 million from $3.5 million in the three months ended June 30, 2011. Growth in broadband data lines, including Shoreham, and fiber rent more than offset the loss of dial-up subscribers. Transport services revenue decreased 0.3% to remain at $1.3 million in the three months ended June 30, 2012 and 2011.
Operating Expenses
Operating expenses, excluding goodwill and long-lived asset impairment, in the three months ended June 30, 2012, increased 10.9% to $20.2 million from $18.2 million in the three months ended June 30, 2011. Cost of services and products decreased 1.0% to $10.6 million in the quarter ended June 30, 2012, from $10.8 million in the quarter ended June 30, 2011. Shoreham added $0.4 million which was more than offset by reduced RLEC expenses, long distance costs and overhead expenses. Selling, general and administrative expenses increased 24.5% to $3.6 million in the three months ended June 30, 2012, from $2.9 million in the three months ended June 30, 2011. Shoreham added $0.1 million. Severance costs, restructuring and related legal expenses and the write-off of shelf registration deferred charges accounted for $0.6 million. Depreciation and amortization for second quarter 2012 increased 30.5% to $5.9 million from $4.5 million in second quarter 2011. Shoreham accounted for an increase of $0.2 million. Amortization of intangible assets associated with the Country Road acquisition increased $1.2 million, reflecting the shorter remaining life of the Time Warner Cable contract. Impairment of goodwill and long-lived assets increased expense by $144.0 million and $8.6 million in second quarter 2012. There were no comparable expenses in second quarter 2011. The non-renewal of the Time Warner Cable contract and the projected impact of the FCC’s Inter-Carrier Compensation order will materially reduce revenue and net income in the next several years. Following the appropriate Financial Accounting Standards Board guidelines, the amounts were written down to their fair value levels. These charges do not have an effect on cash.
Interest Expense
Interest expense decreased 8.8% to 5.7 million in the three months ended June 30, 2012, from $6.2 million in the quarter ended June 30, 2011. The decrease in interest expense was primarily driven by the lower effective interest rate on the outstanding balance on our long-term notes payable upon the expiration of our interest rate swaps in first quarter 2012.
Change in Fair Value of Derivatives
The Company had two interest rate swap agreements intended to hedge changes in interest rates on its senior debt that expired during first quarter 2012. The liability for the swap increased $0.5 million in second quarter 2011, accounting for the difference.
Adjusted EBITDA
Adjusted EBITDA for the three months ended June 30, 2012, was $10.8 million compared to $11.9 million for the same period in 2011 and $11.5 million in the first quarter of 2012. See financial tables for a reconciliation of Adjusted EBITDA to net income (loss).
Balance Sheet
As of June 30, 2012, the Company had cash and cash equivalents of $23.0 million compared to $12.4 million at the end of 2011. The second quarter distribution of $3.2 million in interest to our shareowners, and $0.3 million in interest to our bond holders, occurred on July 2, 2012 as June 30, 2012 was a non-banking day.
Capital Expenditures
Capital expenditures were $1.2 million for the quarter, reflecting continued investment in infrastructure and cost saving projects.
Second Quarter Earnings Conference Call
Otelco has scheduled a conference call, which will be broadcast live over the internet, on Wednesday, August 8, 2012, at 10:00 a.m. ET. To participate in the call, participants should dial (719) 325-4833 and ask for the Otelco call 10 minutes prior to the start time. Investors, analysts and the general public will also have the opportunity to listen to the conference call free over the internet by visiting the Company's website at www.OtelcoInc.com or www.earnings.com. To listen to the live call online, please visit the website at least 15 minutes early to register, download and install any necessary audio software. For those who cannot listen to the live webcast, a replay of the webcast will be available on the Company's website at www.OtelcoInc.com or www.earnings.com for 30 days. A one-week telephonic replay may also be accessed by calling (719) 457-0820 and using the Confirmation Code 6504766.
ABOUT OTELCO
Otelco Inc. provides wireline telecommunications services in Alabama, Maine, Massachusetts, Missouri, New Hampshire, Vermont and West Virginia. The Company’s services include local and long distance telephone, network access, transport, digital high-speed data lines and dial-up internet access, cable television and other telephone related services. With more than 101,000 voice and data access lines, which are collectively referred to as access line equivalents, Otelco is among the top 25 largest local exchange carriers in the United States based on number of access lines. Otelco operates eleven incumbent telephone companies serving rural markets, or rural local exchange carriers. It also provides competitive retail and wholesale communications services through several subsidiaries. For more information, visit the Company’s website at www.OtelcoInc.com.
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Durect -- >>> Remoxy Remains High on Pfizer's List of Drug Candidates
Press Release: PropThink
Sept 25, 2012
By Jake King
http://finance.yahoo.com/news/propthink-remoxy-remains-high-pfizers-190003543.html
Pfizer has of late been signaling development progress for its tamper-proof version of oxycodone, Remoxy. The drug is a time-release oxycodone formulation developed in part by Durect Corp. (DRRX), a creator of tamper-resistant technology for drugs that are prone to abuse. Durect stands to benefit significantly if Remoxy makes it to market; the company will receive royalties of 6% to 11.5% of net revenues, depending on sales volume. Analysts are projecting that Remoxy, with its abuse-resistant formulation and well-known ingredient, may reach sales over $1B. The key for Durect lies in Pfizer submitting a New Drug Application and getting approval for Remoxy, which is becoming more likely as Pfizer signals progressing development.
Pfizer received a Complete Response Letter for Remoxy last year and had been quiet on the subject until earlier in 2012. Speculation was that Pfizer was either preparing for a resubmission or halting development of the product, which it picked up in 2011 when it acquired King Pharmaceuticals. Recent evidence, however, indicates that a resubmission may happen in the near-term, as Pfizer has been pointing to Remoxy as a key product in late-stage development. In its most recent investor presentation at the UBS Global Life Sciences Conference, Pfizer included a slide that listed Remoxy as a "Key Late Stage Asset" for the company, which you can see here, in PropThink`s article from Tuesday. We view the inclusion as a strong indication that Pfizer is committed to the development of Remoxy, particularly because the FDA`s Complete Response Letter hinged on manufacturing inconsistencies, and indicated that further clinical trials were not necessary for a resubmission or approval. We anticipate the NDA might be resubmitted as soon as late October or November. For a company as small as Durect, the upside potential from Remoxy`s approval could be enormous.
For more information on Remoxy and Durect, see PropThink`s September 11 report.
About PropThink
PropThink is an intelligence service that delivers long and short trading ideas to investors in the healthcare and life sciences sectors. Our focus is on identifying and analyzing technically-complicated companies and equities that are grossly over or under-valued. We offer daily market coverage, weekly feature stories, and a newsletter to investors who subscribe on PropThink.com. To learn more, follow us on Twitter or visit us at http://www.propthink.com.
<<<
Knight Capital -- >>> ‘Knight’mare Triggered Volume Plunge at Knight Capital Dark Pool.
Bloomberg
By Matt Jarzemsky and Steven Russolillo
9-25-12
http://blogs.wsj.com/marketbeat/2012/09/25/knightmare-triggered-volume-plunge-at-knight-capital-dark-pool/?mod=yahoo_hs
It’s no secret that trading volumes were unusually low over the summer. But one venue operated by Knight Capital KCG +2.30%Group, the brokerage firm roiled by a trading snafu last month, really took it on the chin.
A dark pool operated by Knight Capital saw volume plunge 44% in August from a month earlier, outpacing the 4% to 17% declines other dark pools suffered in a sluggish month overall, according to research provided by Tabb Group.
Dark pools are electronic venues that match up trades without publicly displaying bids and offers. Trades are published on the tape only after completion. Money managers generally prefer executing large orders “in the dark” because it lessens the odds of tipping the market.
Knight’s trading malfunction, which stemmed from software errors, resulted in $440 million in losses for Knight and prompted the firm to seek rescue funding from a group of six financial firms, including Jefferies Group JEF +0.14%TD Ameritrade AMTD -1.22%and Stifel Financial SF +1.46%, customers of Knight.
“This is a good opportunity to reiterate just how much reputation and trust plays into trading,” says Cheyenne Morgan, a research analyst at Tabb Group. ”Trust has always been the name of the game in trading and becomes even more critical when trading off-exchange.”
A Knight spokeswoman confirmed Tabb’s data were accurate, but said the slide in volume stemmed from business disruptions as the firm regrouped from its Aug. 1 trading problems, not customers’ perception of the firm.
“Market share rebounded really quickly with the recapitalization announcement,” the Knight spokeswoman said in a chat with MarketBeat. “It wasn’t a reputational issue. It was a business disruption, and our strong reputation is why our market share came back.”
Knight declined to give details on September trading volumes, saying the information will be released Oct. 17, the day Knight is set to report earnings.
Knight last week said the average daily dollar amount of shares traded by its market-making group fell 34.5% in August from a month earlier. Daily average equity volume at its Knight Direct unit, which provides electronic trading tools to broker-dealers and investors, tumbled 47.9%.
The firm fared better during the month than some expected. Sandler O’Neill analysts last week reduced the amount of per-share losses they expect Knight to report for the third quarter, saying the volume decline was not as steep as they expected.
Average daily trading levels in August clocked in at their lowest levels since 2007. Dark pools across the board saw month-over-month volumes decline. Platforms operated by Credit Suisse CSGN.VX +0.25%and Goldman Sachs sa GS +1.90%w volumes decline by 14% and 2%, respecitvely, while BIDS Trading and Liquidnet each experienced 17% declines in August, according to Tabb.
For Knight, its Knight Match platform suffered the most out of all the dark pools compiled by Tabb.
“As we push through to the end of September, it will be interesting to see if Knight can regain trust and recover from those volumes lost in August or if their relationships suffered some permanent damage,” Cheyenne says. “Only time will tell.”
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