Reframing the Picture

Economic data and securities prices always provide a picture of investor sentiment regarding the outlook for the economy and financial markets.  That picture is never static, of course, and it often is wrong.  It changes in response to new developments and data points.  Previous obsessions with key variables eventually fade away.  New ones take their place.  In just the past few weeks, that picture appears to be reframing once again.  Our job as analysts and investors is to determine whether and where we agree and to position our portfolios to reap the benefits (assuming that we are right). Continue reading

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Denbury Resources 2015 Third Quarter Update

Last year’s bounce did not signal a bottom for Denbury Resources (DNR).  The company’s financial and stock price performance this year has been driven by the collapse in the price of oil.  But there is obviously more to the story.  Year-to-date, through Nov. 11, Denbury’s stock is down 53.6%.  By comparison, the price of West Texas Intermediate crude oil is down 19.8%, the S&P 500 Energy Sector Index is down 15.0% and the Dow Jones U.S. Exploration and Production Sector Index is down 11.9%. Continue reading

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Consolidated Water (CWCO) 2015 Third Quarter Update

Consolidated Water (CWCO) reported 2015 third quarter earnings of $0.12 per share, compared with $0.13 per share in the prior year comparable quarter. Revenues of $14.6 million, were down 14% from $17.0 million last year.  Both earnings and revenues fell short of consensus views, but this was a quarter in which I had no expectations for any significant changes in the company’s performance, either up or down. Continue reading

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UMH 2015 Third Quarter Update

UMH Properties (UMH) reported 2015 third quarter normalized FFO of $0.15 per share, up from $0.12 in the prior year period. On a GAAP basis, the company’s net loss was $0.03 per share, less than last year’s third quarter loss of $0.06 per share. Continue reading

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Brightcove 2015 Third Quarter Update

The company reported a third quarter GAAP loss of $0.04 per share, much better than last year’s $0.12 loss. Adjusted (non-GAAP) EPS, which excludes (non-cash) stock-based compensation and merger-related costs was positive at $0.03, a reversal of last year’s $0.03 loss. I was anticipating a GAAP loss of $0.08 and a non-GAAP loss of $0.02, so the company’s performance exceeded my expectations (and also the Street’s, since my earnings projection was in line with the consensus estimate). Continue reading

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The Fed Tries to Thread the Needle

Last week, the Federal Open Market Committee decided to leave the target Fed Funds rate unchanged at 0%-0.25%. This was consistent with the views expressed in the pricing of Fed Funds futures, but it was still a disappointment to those who believe that the time has come for the Fed to begin to back away from the unprecedented levels of monetary policy accommodation that it has provided to the financial markets since 2008. Continue reading

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Ready for Another Dive?

It really looks too easy.

Even though the S&P 500 is up 4.9% from its August 25 low, market sentiment has become decidedly negative. That the market is headed for a retest of its October 15 low is fast becoming the prevailing view. For the S&P 500, a retest would represent a potential decline of 7% from the current level of 1958.03. Continue reading

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After Last Week’s Sell-Off, A Market Correction Is More Clearly Underway

Stock markets around the world got clobbered last week. The U.S. was down 5%-6%. Europe fell 5%-8%. China and nearby countries also dropped 5%-8%. Latin America was mixed, but still down 1%-8%. Continue reading

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Consolidated Water (CWCO) Update

Consolidated Water reported net income attributable to stockholders of $2.23 million or 15 cents per share for the 2015 second quarter ended June 30. This was below last year’s $2.76 million or $0.19 per share and also a penny short of the consensus estimate. Continue reading

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Good Opportunities in Income-Producing Stocks

For many investors, the U.S. economy’s gain of 215,000 jobs in July “sealed the deal” for a Fed Funds rate hike in September. A 25 basis point rate hike is now more likely, according to the futures market. The current September contract for Fed Funds futures, according to my estimates, implies a 44% probability of no increase and a 56% probability of a 25-basis point increase at the upcoming September 17 FOMC meeting. Alternatively, the CBOE’s black box puts the odds of no increase at 55%. (Of course, the probability calculations are sensitive to the assumptions used. The fact that the current Feds Fund target rate is a range between 0.00% and 0.25% complicates the analysis.) Continue reading

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