Economists see wages climbing in 2014

Tired of getting raises that you can jangle in your pocket? This year may be different.

After stagnating for years, wage gains will accelerate in 2014, a wide majority of leading economists predict in USA TODAY survey. The bigger paychecks should help fuel a more rapid recovery.

"This is kind of the final piece of the puzzle for the consumer," says Scott Anderson, chief economist of Bank of the West.

The 40 economists, surveyed May 2-6, also say economic and job growth will ratchet higher the rest of this year despite an economy that stalled in the first quarter.

Average wages have risen about 2% a year since the recovery began in mid-2009, and have been virtually flat after adjusting for inflation. The modest increases have held back consumer spending, which typically accounts for nearly 70% of U.S. economic activity.

But the jobless rate has been falling rapidly, to 6.3% from 8.1% in August 2012. Anderson is among economists who say that as unemployment approaches 6% by year's end, a more limited supply of available workers will force employers to step up pay hikes.

Last month, average hourly earnings were up just 1.9% from a year ago. But pay for production and supervisory employees rose 2.3% during that period — a sign that wages will drift higher for all types of workers, says economist Michael Gapen of Barclays Capital.

Wage pressures are already building in fields such as technology and construction as employers struggle to find skilled workers, says Stuart Hoffman, chief economist, of The PNC Financial Services Group.

But even low-wage employees could soon benefit from faster-growing paychecks. Since the Affordable Care Act lets workers buy moderately-priced insurance without having a full-time job, many retail, restaurant and other workers are likely to retire or scale back their hours, says Dean Baker, co-director of the Center for Economic and Policy Research. Employers, he says, will have to pay more to attract a smaller pool of remaining work! ers.

Anderson expects average pay increases of close to 3% this year. Robert Mellman of JPMorgan Chase forecasts more modest advances of about 2.2%.

The wage gains will likely coincide with stronger economic growth. The nation's gross domestic product expanded just 0.1% annualized in the first quarter, but much of the slowdown was temporary. Nearly 90% of the economists surveyed said bad weather affected the economy a lot or a fair amount the first three months of the year.

The economists predict the annual rate of GDP growth will be 3% or more in the current quarter and in the final two quarters of the year, according to their median estimate, the longest such stretch since 2005. They also say monthly job gains will average 210,000 in that period, up from an average 194,000 last year.

Michael Englund, chief economist of Action Economics, cites rising household wealth and lower debt, pent-up demand among businesses for new equipment and fewer federal budget cuts.

Bill Nygren Comments on General Motors

Our worst performer was General Motors (GM), down 15%, due to what we believe was the market's overreaction to GM's handling of a recent product recall.From Bill Nygren (Trades, Portfolio)'s Oakmark Fund first quarter 2014 commentary.
Also check out: Bill Nygren Undervalued Stocks Bill Nygren Top Growth Companies Bill Nygren High Yield stocks, and Stocks that Bill Nygren keeps buying

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Adviser reviews coming soon to a website near you

Financial advisers should keep an eye open for a new form of client feedback that's on its way — public reviews.

The guidelines issued last week by the Securities and Exchange Commission for how financial advisers can use testimonials in social media is expected to spur the creation of more online venues for the public to review and rate their financial advisers.

The SEC said advisers can now link to sites such as Yelp!, as long as the reviews are independent from the adviser and aren't organized to display only chosen testimonials, such as exclusively positive feedback. Regulators also said advisers may advertise on these third-party sites.

“I don't think that online searches for financial advisers is going to turn the world upside down in 2014, but long-term, the writing is on the wall,” said Grant Easterbrook, a senior research associate at consulting firm Corporate Insight.

(Take the quiz: Are your client review tactics compliant?)

Just as many Americans have learned to use online recommendations to pick restaurants, hotels and even doctors, the process of choosing a financial adviser is likely to incorporate a check of his or her online reviews.

(See Michael Kitces' take on the new guidelines.)

In fact, a Corporate Insight survey of American investors in December 2013 found that 67% of Generation Y/Millennials said they would definitely or probably use an online search tool to find an adviser. About 28% of baby boomers said they would use one, Mr. Easterbrook said. These online searches often include third-party sites that give a rating and testimonials to companies offering a given service.

Several general online research tools like Yelp!, AngiesList and FindtheBest already incorporate adviser reviews, but the number of reviews that have been posted are small. Personal-finance focused WalletHub also allows for adviser reviews.

Pinnacle Advisory Group's Michael Kitces on how review sites could impact the advisory business.

Financial information website Brightscope Inc. plans to add reviews in light of the new guidance, said Sonia Ahuja, the firm's executive vice president of strategy and business development. U.S. News and World Report also might considering adding reviews in the future for its new Advisor Finder directory, said Kirk Shinkle, senior editor for money and business.

The SEC's action is too late for the entrepreneurs who started TippyBob as a site for financial adviser ratings and reviews in 2012. They shut down the site last year because they couldn't “get enough traction,” said co-owner Annie Campbell.

“There was just too much regulation regarding testimonials at! that time,” she said.

WalletHub chief executive Odysseas Papadimitriou said he believes more advisers will advertise on WalletHub now that the SEC has given them the green light. That would help his firm generate revenue.

Wallethub created profiles for about 250,000 financial advisers based on public information before it launched in August 2013. Advisers can claim their profile and customize it for free. Mr. Papadimitriou said the firm doesn't know how many people have written adviser reviews.

The SEC's move last week “is validation to the importance of reviews in this space,” he said.

“The thing I get nervous about with third-party review sites is, there's always a bad apple who figures out how to game the site,” said Amy McIlwain, president of consulting firm Financial Social Media. “We don't want that to happen in the financial space.”

With some review sites, people can essentially buy a collection of positive reviews, she said, and that's not what the SEC has in mind. Adviser review sites also will have to have a strict policy about authenticating the people who are reviewing or rating advisers to make sure they aren't ex-employees or competitors posing as clients.

Advisers will have to be aware of where their names are popping up on third-party sites and interact with those profiles “to paint a clear picture of what they do from a business perspective,” Ms. McIlwain said.

“You don't want people going to a blank profile,” she said. “Advisers need to continually monitor their brand and online reputation.”

Advisers also have to accept that there likely will be negative reviews, as consumers often are more inspired to write about bad service than to compliment a positive experience, said Joanna Belbey, a social media and compliance specialist with Actiance Inc.

"Advisers will have to think about how they'll deal with bad reviews," she said.

Alan Moore, an adviser who mostly handles clients fr! om Genera! tions X and Y, said his clientele has been asking where they could offer online reviews of his service.

He's eager to see review sites become more robust.

“We're the only profession where you can't comparison shop online,” said Mr. Moore, founder of Serenity Financial Consulting. "Those of us in the good-apple bunch are going to benefit from this."

Don’t fall in love with your stocks

A previous version of this column incorrectly stated Andrea Frazzini's titles. It has been corrected.

Getty Images

Investors spend far more time searching for stocks to buy than thinking about when to sell. That is a potentially costly shortcoming, especially in a bull market that is approaching its fifth birthday, which is how old its predecessor was when it ended in 2007.

You should carefully analyze your stock holdings to decide which, if any, should be sold. One general rule of thumb is to subject your stocks to the same valuation criteria that you used when initially deciding to purchase them. If you bought a stock because its price/earnings ratio is well below the market's, for example, then you should consider selling it if its P/E is now well above.

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Researchers also have identified a handful of lesser-known indicators that you can use to help identify stocks you might want to unload. They derive from the aversion most investors have to selling. A stock that nevertheless is on the decline, or that a large number of analysts are betting is about to decline, must really have problems — and is a good bet to lag the market in coming months.

The reluctance of investors to part with stocks they once loved enough to buy plays out in many ways. For example, investors typically sell a stock only when they need cash to buy another one about which they have become particularly excited, according to Terrance Odean, a finance professor at the University of California, Berkeley. Furthermore, he says, they often resist selling any stock they are holding at a loss — something that, needless to say, has nothing to do with its potential.

As a result, Odean says, "for most investors, buying is a forward-looking activity and selling is a backward-looking activity."

This inertia tends to lead to a protracted selloff of unloved stocks, says Andrea Frazzini, a finance professor at New York University and a principal at AQR Capital Management, a firm that manages several hedge funds and other investment offerings and has nearly $100 billion in assets. The takeaway, he says: Bite the bullet on a stock that has significantly lagged the market over the past 12 months.

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Individual investors aren't the only ones who exhibit a strong aversion to selling; Wall Street analysts do, too. Currently, for example, just 25 stocks within the S&P 1500 index (SPSUPX)  have a consensus analyst recommendation to either sell or underweight, according to FactSet. Two-thirds fall into the "buy" or "overweight" categories.

We therefore should pay particular attention when analysts do actually say "sell." In one academic study conducted in the 1990s, the average consensus sell-rated stock lagged the market by 8.3 percentage points a year — more than twice as much as the margin by which the typical stock with a consensus "buy" rating outperformed the market.

Brad Barber, a finance professor at the University of California, Davis, and one of the co-authors of that study, says that while more recent studies reached broadly similar results, he isn't aware of any that have updated it. He says that the message of the research is that it makes more sense to follow a consensus sell signal from Wall Street analysts than a consensus buy.

A third indicator you can use when deciding to sell: Traders whose very focus is to bet against stocks they think are going to fall in price. This group is known as short sellers, who sell borrowed shares in hopes of repaying with cheaper shares later.

Adam Reed, a finance professor at the University of North Carolina at Chapel Hill, says that stocks tend to significantly trail the market if they have a high degree of short interest, which is calculated by dividing the number of a company's shares that currently are sold short by the total number of shares outstanding. In fact, he says, "short interest is one of the strongest return predictive signals in the academic literature."

You don't have to actually sell a stock short to follow short sellers' lead, Frazzini adds. You can instead use the short-interest data to determine which of the stocks you currently own that you might want to sell first.

The following list contains all stocks from the S&P 1500 broad-market index that have declined at least 5% over the past year, according to FactSet. (The index itself has gained 20% over that period.) Each also has a below-average consensus rating from Wall Street analysts, and the number of shares currently sold short amount to at least 10% of shares outstanding.

The stocks are C.H. Robinson Worldwide (CHRW)  , a freight-transportation company; chip maker Cirrus Logic (CRUS)  ; independent oil company Forest Oil (FST)  ; investment bank Greenhill & Co. (GHL)  ; Intrepid Potash (IPI)  , a fertilizer company; retailer J.C. Penney (JCP)  ; Quest Diagnostics (DGX)  , a medical diagnostic company; Strayer Education (STRA)  , a for-profit college; Tower Group International (TWGP)  , an insurance company; and Windstream Holdings (WIN)  , a rural telecommunications firm.

Even if you get smarter at selling, though, you can't overcome a bad buying decision. As Odean points out, there is no evidence the average individual can pick stocks that outperform the market. That is why he recommends investing in a broad-based index fund. One of the very cheapest and most diversified is the Vanguard Total Stock Market ETF (VTI)  , with an expense ratio of 0.05%, or $5 per $10,000 invested.

More from MarketWatch:

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Is Warren Buffett laughing at you for selling?

You're invited to ... Bitcoin: Boom and Bust

The rise of bitcoin has triggered a lively debate over the risks and rewards of virtual currencies. If you're interested in bitcoin, and will be in New York on Tuesday, March 4, you're invited to join us for an evening of cocktails and conversation on the topic. MarketWatch Senior Columnist Robert Powell will moderate a panel discussion with guests Todd Harrison, founder and CEO of Minyanville Media, and Mark T. Williams, a banking and risk management expert and a professor at the Boston University School of Management. This MarketWatch Investing Insights event is free, but space is limited. To attend, just RSVP to MarketWatchevent@wsj.com by Friday, Feb. 28.

Apple Stock Slammed by Poor iPhone Sales

Apple (Nasdaq: AAPL) stock plunged more than 8% in after-hours trading after it announced that it sold fewer iPhones than analysts expected in its Q1 of 2014.

Apple sold just 51 million iPhones versus analyst expectations of 56 to 57 million. The iPhone contributes about half of Apple's earnings.

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Not helping was that Apple revenue guidance for the current quarter was also below expectations. The company's mid-point of $43 billion missed the $45.74 billion consensus.

However, Wall Street's main beef was with the iPhone miss.

Overlooked is that Apple's other businesses made up for the iPhone's shortcomings. Apple beat expectations on earnings per share - $14.50 versus $14.35 - and barely missed on revenue - $57.6 billion versus $58 billion.

That was made possible in part by the iPad selling more units than expected, 26 million versus 24 to 25 million, and more Macs, 4.8 million versus 4.6 million.

Original post from 1 p.m.:

It's the worst of both worlds: Apple (Nasdaq: AAPL) stock will get hard if it reports lousy earnings today after the closing bell, but good earnings won't affect the Apple stock price much at all.

That's the unfortunate legacy of Apple's mega-boom years from 2010-2012, when it posted 50% or higher earnings growth for nine consecutive quarters.

Apple's long streak of outstanding earnings distorted Wall Street's expectations to the point where only a huge beat is enough to move Apple stock up significantly. But even a minor disappointment will result in a major pullback, particularly in the generally weak market we've seen since the start of the New Year.

Analysts are looking for a strong quarter from Apple, the first of the company 2014 fiscal year and historically its most lucrative because of heavy holiday sales.

The quarter is also an important barometer for how Apple will fare for the rest of the year, as it hints at how the tech giant's new offerings, introduced over the course of the fall, are likely to sell through subsequent quarters.

Here's what to expect from Apple earnings:

Breaking Down Apple (Nasdaq: AAPL) Earnings Expectations

The consensus numbers on AAPL are for earnings per share of $14.35 on revenue of $58 billion. Both would be new all-time highs, and would represent growth of 6.6% on the top line and 4% on the bottom line.

As usual, most investor attention will be focused on iPhone sales, as that iconic product accounts for about half of Apple's earnings. This quarter will tell us how the iPhone 5C is doing, the slightly cheaper and less capable brother to the iPhone 5S.

Most reports have indicated the 5S is much more popular, which will help boost Apple's margins, something that tends to please analysts. Expectations are for a gross margin of 37.5%.

Actual iPhone unit sales are expected to be 56-57 million, about 10 million more than the year-ago-quarter. And that's without the deal with China Mobile, which did not go into effect until after the quarter ended but will open up the iPhone to 700 million new customers.

Analysts are looking for 24-25 million iPad units, a slight increase over last year's 22.86 million.

With regard to the iPhone and iPad, analysts will likely grill Apple over the declining market share of those products in its competition with smartphones and tablets running Google Inc.'s (Nasdaq: GOOG) Android software.

And Mac sales should be about 4.6 million, which would represent a healthy 13.3% gain in a slumping PC market.

One issue that will definitely come up during the conference call will be activist investor Carl Icahn's continued demands for Apple to buy back more shares.

So far Apple has been polite with Icahn, and has bought back at least 47 million shares over the past year (which has improved its EPS, by the way), and that has helped buoy the Apple stock price, currently trading at about $550. But the company may not be willing to do much more.

What Will Move Apple Stock Higher

One thing you won't hear about in Apple's earnings call is plans for new products, such as the long-rumored iWatch or Apple television. CEO Tim Cook will say that Apple has exciting products in the pipeline, but won't get any more specific.

But one of those new products - or both, or something else - is what the company needs to push Apple stock back to its previous all-time high just north of $700 and beyond.

The deal with China Mobile certainly helps, but there simply isn't enough growth left in the smartphone and tablet markets to move Apple stock in a big way. The company needs a new product category to create a fresh conduit of profits in order to again start chasing that elusive $1,000 price target.

The phenomenal growth of Apple since the 2007 introduction of the iPhone is a grand illustration of why tech is where investors can find huge profits. That's why we've identified several tech trends that are on the verge of experiencing exponential growth. This is how savvy investors can double their money...

After Takeoff in 2013, Time for Airlines to Reach Cruising Altitude

The big airlines–Delta Air Lines (DAL) and American Airlines (AAL), among them–took off in 2013. Can they reach cruising altitude in 2014?

EPA

Absolutely, says Cowen’s Helane Becker. She writes:

2013 proved to be a very strong year for the airlines, trading up 57.6%. Our 2013 thesis of capacity discipline, last major airline merger and the beginnings of capital deployment announcements played out in line with expectations. We expect 2014 to be a strong year for the group, as the airlines have really only benefited from merger
announcements rather than merger synergies. We expect [United Continental (UAL)] and American to continue rationalizing capacity, helping with the pricing environment. United will announce their return of capital plans in late 2014 to be executed in 2015, while Delta will announce further capital deployments at their annual meeting in June.

Becker’s top picks: Southwest (LUV), United Continental, Delta and American.

Top picks they may be, but they haven’t all performed that way. While American Airlines has gained 1.6% to $26.96, Delta Air Lines has risen just 0.2% to $29.28, United Continental has ticked down 0.1% to $39.90 and Southwest Airlines has dropped 1.3% to $19.17.

Is this the result of a shift into American from other airlines?

Order a Tesla Now and Get It in March

Even as America’s well to do continue to buy cars in impressive numbers, pushing inventories of some models low, most luxury vehicles can still be given as Christmas gifts. Not so the products of Tesla Motors Inc. (NASDAQ: TSLA). The wait time for the once-popular car now is four months. Buy a Tesla S online, and have it by March — at the earliest. The deposit is only $2,500.

The demand for Tesla autos, which probably dropped on concerns about engine battery fires, likely will rise again. Tesla recently announced that one of its Model S vehicles and its battery charger were not the cause of a fire in a California garage last month. German investigators concluded a recent investigation into Tesla’s safety and said they found no manufacturer’s defects.

Tesla has said on a number of occasions that it cannot produce enough cars to keep up with demand. The car fire frenzy may have changed that math and allowed supply to build. At least investors may think so. Despite some recent recovery, Tesla’s share price is down 15% over the past three months, while the S&P 500 is up 5%. If investor sentiment is a reasonable proxy for a public company’s prospects, then assurances about the safety of Tesla cars have not caused a complete rebound in enthusiasm about the car, or dampened all worries that the blemish on the Tesla brand will be gone soon.

Presumably, a four-month wait for a car is a four-month wait, whether the car is bought at a dealer or online. Tesla has continued to battle the efforts of car dealers to block sales through Tesla-owned stores. The legal wrangling is likely to go on for some time as the challenges to the Tesla retail model move from state to state. Analysts who follow Tesla sometimes wonder what its sales would be if customers could walk directly into dealers, drive the cars and order them on the spot — as is the case with virtually every other luxury car in the world.

Dealers or not, the problem of a four-month wait for a new car cuts two ways. Some buyers will walk away to places where they can get a car right away. Others can brag to friends that they are on the Tesla wait list — at least until March.

Finra will be in charge of crowdfunding platforms

Usually the thought of Finra regulation sends a shudder through the target, but online platforms that will conduct equity sales in startup companies contend that they welcome the prospect.

The Financial Industry Regulatory Authority Inc. will oversee the portals under the Jumpstart Our Business Startups Act, which eases securities registration for small companies. On Wednesday, the Securities and Exchange Commission and Finra released proposed rules for implementing the so-called crowdfunding provision of the measure.

“Equity crowdfunding will not survive if there aren't rules to help protect both [issuers and investors],” said Ryan Caldbeck, co-founder and chief executive of CircleUp Network Inc., a crowdfunding site that focuses on consumer and retail companies. “Having a governing body overseeing those rules is positive for all the parties involved.”

Finra already regulates Mr. Caldbeck's site, which conducts equity crowdfunding for accredited investors. The rules that were proposed on Wednesday would extend access to crowdfunding to ordinary investors, who could buy equity offerings in small amounts.

“We've had a productive and positive relationship [with Finra],” Mr. Calbeck said. “They're receptive to how we're trying to help investors and companies connect.”

Finra's regulation of crowdfunding portals will be less stringent than its oversight of broker-dealers, according to Robert Colby, the regulator's chief legal officer. Portals will not be allowed to engage in brokerage activities, such as soliciting investments, making recommendations or maintaining custody of client funds.

“This is one of our first efforts to create a slimmed-down rule book for a limited-purpose type of entity,” Mr. Colby said. “It is lighter than regulation of brokers consistent with what [portals] do.”

Finra will be monitoring the relationships between portals and brokers.

“We want to make sure the conduct stays in the right channels,” Mr. Colby said. “What I worry about is that in the go-go [online] environment, funding portals may not understand that they cannot go into full sales operations.”

MicroVentures, another crowdfunding site that works with accredited investors, has been overseen by Finra for the last three years. It has been examined twice by Finra in the past three years.

“It's never easy,” said Bill Clark, founder and president of MicroVentures. “They're very thorough. They follow up on everything. For us, it wasn't very painful. It's just time-consuming.”

He said that his portal has two full-time compliance officers and spends about $100,000 to $150,000 annually on ensuring that all regulations are followed.

Judd Hollas, founder and chief executive of Equitynet, said that he is not concerned about Finra regulation. But, he noted, it will pos! e a burden for new crowdfunding sites, most of which are small startups themselves.

“I'm assuming that a lot of crowdfunding operators would view regulatory oversight as an added challenge to their already full plates,” Mr. Hollas said. “It's certainly going to be a material cost in the tens of thousands of dollars at a minimum.”

Finra's more relaxed approach to this sector can be seen in part by the faster approval process for new portals than for new brokerages – 60 days compared to 180 days, according to Jilliene Helman, chief executive of Realty Mogul Co.

“It seems that their oversight of funding portals is going to be less onerous than their oversight of broker-dealers,” Ms. Helman said. “It suggests Finra understands how quickly things move in the tech world.”

Taking on regulation of crowdfunding portals won't distract Finra from its traditional broker-dealer constituency, according to Mr. Colby. The organization currently oversees about 4,200 securities firms. The SEC estimates that fewer than 100 crowdfunding portals will be operating when rules are approved. Finra has communicated with about 39 portals in a voluntary pre-registration initiative.

“If there are 50 to 100 portals, that's not a material change,” Mr. Colby said.

Mr. Clark said that he doesn't detect a culture clash between Finra and the online capital-formation community.

“The people I work with in [Finra's] Dallas district and in New York are open to crowdfunding, as long as they can have access to information they need to protect investors, which is the No. 1 goal,” Mr. Clark said.

Fidelity target date funds pile on stocks

Fidelity Investments is increasing the stock allocation across its target date funds after research found that investors are OK with more risk in retirement accounts and the outlook for bonds dims.

The biggest reason for the change was new research Fidelity conducted on how 401(k) plan participants reacted to the stock market plunge in 2008, the worst decline since the Great Depression. The firm's research uncovered no discernible change in the 401(k) participation rate or in fund turnover across the 12 million participants in its record-keeping platform.

“We looked at investor behavior in 2008 and our conclusion was that people can tolerate a lot more equities than we thought in their retirement planning,” said Bruce Herring, group chief investment officer of the global asset allocation division within Fidelity.

The most change will be in Fidelity's longer-dated target date funds. Freedom Fund investors will now hold a 90% allocation to stocks until they are about 20 years away from their retirement date. Currently, they invest in less than 75% equities at the same point.

“To start de-risking 25 years before the retirement date is too conservative,” Mr. Herring said. “We've never had a drawdown that hasn't been fully recovered within 19 years.”

Near-term target date funds will also see a boost in equities. The Fidelity Freedom 2020 Fund (FFFDX) will increase its stock holdings to 61%, from 53%, and decrease its bond allocation to 39%, from 47%.

Fidelity's outlook for the bond market played a role in the increased stock holdings.

Fidelity's capital market assumption team looks at 20 years of historical returns and current valuations to forecast asset class returns. The team's outlook for stocks is largely in line with historical averages but with the today's interest rates, it's not expecting bonds to perform the way they have.

“We think it's unrealistic the next 20 years will have the same returns of the last 20 years,” Mr. Herring said.

The alterations to the glide path are the latest change to the Fidelity target date funds as the mutual fund giant fights to hold on to its top spot in the target date fund world.

Late last year, Fidelity added new funds managed by superstar stock managers Will Danoff and Joel Tillinghast to the target date funds' underlying holdings. They each manage around 7% of the domestic stock allocation.

Fidelity target date funds are the largest in the industry, with $170 billion in assets, but its biggest competitor is catching up quickly.

The Vanguard Group Inc.'s $124 billion target date fund lineup had organic growth of 21% in 2012, more than double the rate of the Fidelity target date funds, according to Morningstar Inc.

Combined, the two fund companies manage approximately 58% of all target date fund assets.

Top Insider Trades: MVC VRX WBMD PACW

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By Jonathan Moreland, founder of Insider Insights and author of Profit From Legal Insider Trading.

NEW YORK (TheStreet) -- It is a victory for common sense. Tracking the trading behavior of company executives, directors and large shareholders in the stocks of firms they're registered in as "insiders" has proven to be profitable, according to both academic studies and (more importantly) the experience of professional investors.

Below are lists of the top 10 mainly open-market insider purchases and sales filed at the Securities and Exchange Commission Tuesday, Sept. 17, 2013 as ranked by dollar value. Please note, however, that these are only factual lists, not buy and sell recommendations. Dollar value is only one metric to assess the importance of an insider transaction, and, frankly, often not even the most important metric that determines if an insider transaction is significant. At InsiderInsights.com, we find new investment ideas just about every day using these and more intricate insider screens to determine where we should focus our subsequent fundamental and technical analysis. And while stocks don't (or shouldn't) move up or down based on insider activity alone, insiders tend to be good indicators of when real stock-moving events like earnings surprises, corporate actions, and new products may be in the offing. So use these regular Top Insider Trades columns as the initial research tools they are meant to be, and click the links in the tables to analyze a company's or insider's full insider history. Also feel free to contact us with any questions on our proprietary insider data, and how it is best analyzed.

Sprint (S) SoftBank BO 1,954,015 13,130,981 MVC (MVC) Goldstein P DIR 157,879 2,005,063 Sunday, May 10, 2015 Twitter: Yes or No at the New, Higher, IPO Price? Clearly the hype and demand surrounding Twitter’s IPO this week is building. The company upped its price range to $23-$25 a share from $17-$20 Monday, and there are reports out that it priced the IPO above the increased range. That's still unlikely to price many investors out. The folks handling Twitter’s IPO have learned a thing or two from Facebook's(FB) notorious debut last year. Twitter is looking to raise much less than Facebook did, offering fewer shares, and pricing them lower. Forget for a moment that Facebook was a bigger company, and profitable, at the time of its IPO. Facebook raised the number of shares it was selling, the number of shares insiders would sell and the pricing in the days before it began trading. Facebook raised $16 billion. But the stock priced plunged and struggled for much of the next 12 months. Twitter’s is selling 70 million shares, priced between $23-$25. If all goes as planned, they’ll raise around $2 billion, the smaller offering will be met with overwhelming demand, and shares will jump. Given the results of some other IPOs this year - Container Store Group, for example, doubled on its first day of trading on Friday – Twitter shares could rise rapidly. “The obvious question is should you still participate?” analyst Richard Greenfield of BTIG wrote on Monday. At the higher price range, shares will equal nine times the firm’s 2015 revenue estimate and 5.9 times its 2016 revenue estimate. Another ratio, EV/EBITDA (enterprise value to earnings before interest, taxes, depreciation and amortization) now sits at 52 times 2015 revenue estimate and 24 times 2016. “We would participate within the $23-$25 range,” Mr. Greenfield writes. But the firm’s view was that Twitter could go to $30 “over the next year.” That level might come much sooner than people think. One aspect of the company that Mr. Greenfield likes is that Twitter’s monetization efforts are still at an early stage. “Advertising on Twitter only began in the middle of 2010,” he wrote, “not to mention, mobile advertising did not even really exist before 2010.” The company has a light “ad load” (roughly 1% of the tweets on mobile devices are ads), which gives it room to increase ads. “We expect a lot of growth ahead in advertising.” Still, Twitter is operating from a smaller base than Facebook, and is likely to continue operating from a smaller base. “We believe investors should assume that Twitter’s penetration and user base will be materially smaller than Facebook’s,” Sanford Bernstein wrote. The firm sees Twitter with about 100 million active users monthly in the U.S., and 575 million overseas, by 2018. Facebook has more than 1 billion monthly active users. The bottom line that investors can’t completely dispense with, though, is this: Twitter is not profitable, and might not turn a profit for several years. While it’s unlikely that another competitor could completely supplant Twitter, the way Facebook did to MySpace, for example, a new competitor could come along and siphon off some of the audience and eyeballs. Heard of Knotch, for example? No? Well, that won’t be the last one you hear about. Twitter may be “sticky,” as the cool kids say, but that doesn’t mean it won’t face rivals, and that will add another pressure to its bottom line. The hashtag #twitterprofits is going to be a lonely space for the time being. At $30 and above, Barron’s Andrew Bary wrote, Twitter’s valuation becomes harder to justify. “Barron’s tends to be cautious on richly valued stocks,” he wrote, “but Twitter would look appealing at an IPO price of $20. Pay much more than that, however, and you might be tweeting your regrets later.” Subscribe to: Comments (Atom) Blog Archive ►  2019 (37) ►  March (16) ►  February (21) ►  2018 (21) ►  August (1) ►  July (9) ►  June (3) ►  May (8) ▼  2015 (88) ►  July (1) ►  June (11) ▼  May (11) Economists see wages climbing in 2014 Bill Nygren Comments on General Motors Adviser reviews coming soon to a website near you Don’t fall in love with your stocks Apple Stock Slammed by Poor iPhone Sales After Takeoff in 2013, Time for Airlines to Reach ... Order a Tesla Now and Get It in March Finra will be in charge of crowdfunding platforms Fidelity target date funds pile on stocks Top Insider Trades: MVC VRX WBMD PACW Twitter: Yes or No at the New, Higher, IPO Price? ►  April (5) ►  March (13) ►  February (17) ►  January (30) ►  2014 (245) ►  December (19) ►  November (4) ►  October (12) ►  September (8) ►  August (11) ►  July (16) ►  June (49) ►  May (32) ►  April (31) ►  March (24) ►  February (11) ►  January (28) ►  2013 (163) ►  December (24) ►  November (28) ►  October (29) ►  September (17) ►  August (23) ►  July (42) ►  2012 (1) ►  May (1) About Me Hong Mei View my complete profile Simple theme. Powered by Blogger.