2 Tech Stocks Under $10 Making Big Moves

DELAFIELD, Wis. (Stockpickr) -- At Stockpickr, we track daily portfolios of stocks that are the biggest percentage gainers and the biggest percentage losers.

>>5 Stocks Set to Soar on Bullish Earnings

Stocks that are making large moves like these are favorites among short-term traders because they can jump into these names and try to capture some of that massive volatility. Stocks that are making big-percentage moves either up or down are usually in play because their sector is becoming attractive or they have a major fundamental catalyst such as a recent earnings release. Sometimes stocks making big moves have been hit with an analyst upgrade or an analyst downgrade.

Regardless of the reason behind it, when a stock makes a large-percentage move, it is often just the start of a new major trend -- a trend that can lead to huge profits. If you time your trade correctly, combining technical indicators with fundamental trends, discipline and sound money management, you will be well on your way to investment success.

>>5 Breakout Trades for a Santa Claus Rally

With that in mind, let's take a closer look at a several stocks under $10 that are making large moves to the upside today.

Cyan

Cyan (CYNI) provides carrier-grade networking solutions that transform disparate and inefficient legacy networks into open, high-performance networks. This stock closed up 2.9% to $4.13 in Tuesday's trading session.

Tuesday's Range: $4.03-$4.28

52-Week Range: $3.61-$15.05

Thursday's Volume: 515,000

Three-Month Average Volume: 303,759

>>5 Rocket Stocks to Buy in December

From a technical perspective, CYNI jumped higher here right above some near-term support at $4 with above-average volume. This stock has been trending sideways for the last few weeks, with shares moving between $4 on the downside and $4.43 on the upside. Shares of CYNI are now starting to move within range of triggering a big breakout trade above the upper-end of its recent range. That trade will hit if CYNI manages to take out Tuesday's high of $4.28 to some more near-term overhead resistance at $4.43 with high volume.

Traders should now look for long-biased trades in CYNI as long as it's trending above some key near-term support at $4 or above more support at $3.61 and then once it sustains a move or close above those breakout levels with volume that hits near or above 303,759 shares. If that breakout hits soon, then CYNI will set up to re-test or possibly take out its next major overhead resistance level at $5.38. Any high-volume move above $5.38 will then give CYNI a chance to tag $6.




Imation

Imation (IMN) develops, manufactures, sources, markets and distributes removable data storage media products and certain consumer electronic products. This stock closed up 4.5% to $4.62 in Tuesday's trading session.

Tuesday's Range: $4.37-$4.66

52-Week Range: $3.32-$5.14

Tuesday's Volume: 89,000

Three-Month Average Volume: 101,533

>>5 Stocks Under $10 Set to Soar

From a technical perspective, IMN spiked sharply higher here right above its 50-day moving average of $4.23 with decent upside volume. This move is quickly pushing shares of IMN within range of triggering a near-term breakout trade. That trade will hit if IMN manages to take out Tuesday's high of $4.65 to some more near-term overhead resistance at $4.72 with high volume.

Traders should now look for long-biased trades in IMN as long as it's trending above Tuesday's low of $4.37 or above its 50-day at $4.23 and then once it sustains a move or close above those breakout levels with volume that hits near or above 101,533 shares. If that breakout hits soon, then IMN will set up to re-test or possibly take out its 52-week high at $5.14. Any high-volume move above $5.14 will then give IMN a chance to tag $5.50 to $6.

To see more stocks that are making notable moves higher today, check out the Stocks Under $10 Moving Higher portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS:

>>4 Stocks Rising on Big Volume

>>5 Hated Earnings Stocks You Should Love

>>5 Short-Squeeze Stocks Ready to Pop

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At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

Will Boeing Continue to Soar?

Top 10 China Companies To Buy Right Now

Although Boeing (NYSE: BA) had its early problems with the new 787-Dreamliner, there has certainly been nothing wrong with the performance of the company's stock.

For 2013, Boeing has soared by over 80 percent to around $135 a share. But there could even more growth ahead, as Mark Kingdon, of Kingdon Capital Management, sees Boeing at almost $170 a share.

Speaking at the recent "Invest for Kids" conference in Chicago, Kingdon was bullish on Boeing, the largest U.S. exporter by dollar value, for a variety of factors both micro and macro.

For the macro conditions, Kingdon is "generally positive" on both equities and the global economy. He is pleased by the changes taking place in Japan and China. That scenario is also bullish for Boeing, as both China and Japan are major players in air travel.

As for Boeing itself, its management and position in the industry is very impressive. The 787 is turning out to be a fine plane with a pleasing customer experience. Due to its fuel savings, the 787 pays for itself in a relatively short period of time.

At present, the biggest customer for the 787 is United Continental (NYSE: UAL). Demand for the 787 is particularly strong from Asia, with an eight-year backlog.

The newest version of the twin-engine, medium range 737 has been selling well, too. That is the plane used by Southwest Airlines (NYSE: LUV) for its mid-range routes in the United States. It has always been the backbone of the air fleet for Southwest, the only American carrier never to file for bankruptcy. The plane is also ideal for expanding regional urban areas across Asia, too.

Kingdon projects free cash flow doubling in the next two years for Boeing.

Based on 14 times cash flow, Boeing should be at $168 a share. What makes that even more appealing to shareholders is the company's management has pledged to return 80 percent of the free cash flow to shareholders in dividends and buybacks.

At present, the dividend yield for Boeing is 1.46 percent. The payout ratio is very low at only 20.40 percent, so there is plenty of cash to increase the dividend or fund stock buybacks. The five-year dividend growth rate has been 2.75 percent.

A Dow 30 stock, the primacy of Boeing in its industry can be seen by the share price being up for the past week, month, quarter, six months, and year of market action. Much of that can be attributed to the success of the 787. With an eight-year backlog and demand strong from Asia, the share price for Boeing should be headed higher.

Posted-In: Airline Industry airlines airplanes aviation China Japan Mark Kingdon transportationLong Ideas News Emerging Markets Dividends Travel Global Markets Trading Ideas General Best of Benzinga

(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Is bull market morphing into Fed-driven bubble?

NEW YORK — Is the great stock market rally of 2013, which has been turbocharged by the Federal Reserve's easy-money policies, a boom to be savored — or a bubble to be feared?

The bubble debate has become increasingly murky in recent weeks as more of the traditional financial fingerprints Wall Street uses to identify a frothy market show up on investors' radar.

A growing chorus of Wall Street pros say a bubble is forming in the U.S. stock market. They blame the Fed's unprecedented stimulus, including its $85 billion in monthly bond purchases, for artificially inflating stock prices. There is concern that if the Fed does not dial back its asset purchases soon, stocks could shoot higher and become even more delinked from business fundamentals.

The Fed said this week that it would continue its asset purchases at the current level, once again delaying the inevitable tapering of a program designed to stimulate the economy by keeping interest rates low. The policy, however, has pushed rates so low that a lot of the $1 trillion the Fed is injecting into markets annually has made its way into the stock market.

"We believe a bubble is developing in stocks," says Patrick Adams, portfolio manager at PVG Asset Management. "Fed policy is forcing money into (stocks), pushing forward returns that would have come in future years. There are clear excesses. "

Signs of exuberance abound. The Dow Jones industrials and Standard & Poor's 500 are setting records at a pace not seen since 1999. And the year-to-date gains are huge. In a flashback to the 1990's dot-com stock craze, the Nasdaq composite is up almost 30%.

Similarly, the S&P 500's current price-to-earnings ratio, a gauge of how pricey stocks are, has ticked up as high as 16.7, says Bespoke Investment Group. That's the highest in a year and close to the 17-plus level seen near the market's last top in 2007, Thomson Reuters says. In another sign of optimism, Main Street investors who say they are "bearish," or think stock! s will fall, recently fell to less than 18%, its lowest since January 2012, says the American Association of Individual Investors.

"There's no bubble yet," although the potential for one is there, counters Rod Smyth, chief investment strategist at Riverfront Investment Group. "It's hard to say stocks are in a bubble when you look at the pace of earnings." He says stocks are simply getting back to fair value after a steep drop and reflect an improving global economy. The S&P 500 is up just 12% from its 2007 high while corporate earnings have nearly doubled since 2009, Smyth says.

"The bubble could get bigger," warns Adams. "The Fed looks like it will continue to blow the bubble up a little bit more, which will just make the pain worse on the downside."

Stock futures tumble with gov’t on verge of shu…

Stock futures on Wall Street were trading sharply lower Monday as investors braced for a potential government shutdown.

Dow Jones industrial average index futures declined 0.8%, Standard & Poor's 500 index futures lost 0.7% and Nasdaq index futures fell 0.5%.

Markets are under pressure as a budget battle in Washington threatens the first government shutdown in 17 years. Congress has just one day left to avert the crisis.

GOV'T SHUTDOWN: What to know

The U.S. government will reach its borrowing limit, or debt ceiling, on Tuesday. If Congress doesn't raise that limit, the government won't be able to pay all its bills and some 800,000 of the 2.1 million federal employees will not go to work.

On Friday, the Dow fell 0.5%, the S&P 500 dropped 0.4% and the Nasdaq lost 0.1%.

FRIDAY: Stocks fall as shutdown fears escalate

Global benchmarks were showing signs of jitters Monday ahead of the start to regular U.S. trading hours. Japan's Nikkei 225 index fell over 2% and stocks on Hong Kong's Hang Seng index were down 1.3%.

Markets in Europe were further exercised by renewed political crisis in Italy, where former prime minister Silvio Berlusconi said over the weekend that he will push for snap elections. A confidence vote on Prime Minister Enrico Letta's administration is due Tuesday. Italy's FTSE MIB index was down over 2%. Benchmarks across Europe also fell, many by around 1%.

Benchmark oil for November delivery fell $1.29 to $101.58 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 16 cents to close at $102.87 a barrel on the Nymex on Friday.

Contributing: Associated Press

PVH Corp. Posts Higher Q2 EPS; Beats Estimates (PVH)

PVH Corp. (PVH) announced its Q2 earnings after the bell on Monday, posting non-GAAP figures that showed an increase from last year’s Q2 EPS and revenues.

The New York, NY-based clothing company announced non-GAAP EPS of $1.39, which was up from last year’s Q2 EPS figure of $1.28, and above the analysts’ estimate of $1.37. GAAP results came in at a 20 cent loss per share due to acquisition, integration and restructuring costs associated with the company’s acquisition of Warnaco Group.

On the revenues front, PVH posted quarterly results of $1.965 billion, a 47% increase from last year’s Q2 figure, and above the analysts’ estimate of $1.89 billion. The uptick in revenues was primarily due to the revenues from the newly acquired Warnaco.

PVH shares were up $2.14, or 1.62%, at the end of trading on Monday. The company’s stock is up 16.25% YTD.

10 Worst Charities in America

Well-run charities in the U.S. use their own staff to raise funds, and spend most of the donations on easily verifiable activities. Experts say a charity should spend less than 35 cents on the dollar for fundraising.

The underbelly of the charity game looks a lot different.

A report published last week by the Tampa Bay Times and The Center for Investigative Reporting, based on a year-long investigation, identified some 6,000 charities that pay huge shares of their donations to for-profit companies to raise money for them.

These 501(c)(3) outfits gull donors by adopting popular causes or calling themselves names similar to those of well-known charities, according to the report. “The nation’s 50 worst charities have paid their solicitors nearly $1 billion over the past 10 years that could have gone to charitable works,” the report said.

Based on their names, 14 of the 50 charities supported law enforcers, firefighters or paramedics; 13 focused on children; 10 took up cancer as a cause; and six supported military veterans.

(Check out 6 Bad Athlete Charities on AdvisorOne.)

The report’s findings include the following:

Following are the 10 worst offenders based on cash paid to solicitors in the past decade as identified by the Times and CIR.

10. Children’s Cancer Fund of America

Total raised by solicitors: $37.5 million

Paid to solicitors: $29.2 million

Percentage spent on direct cash aid: 5.3%

 

9. American Association of State Troopers

Total raised by solicitors: $45 million

Paid to solicitors: $36 million

Top 5 Insurance Stocks To Buy Right Now

Percentage spent on direct cash aid: 8.6%

8. National Veterans Service Fund

Total raised by solicitors: $70.2 million

Paid to solicitors: $36.9 million

Percentage spent on direct cash aid: 7.8%

 

7. International Union of Police Associations, AFL-CIO

Total raised by solicitors: $57.2 million

Paid to solicitors: $41.4 million

Percentage spent on direct cash aid: 0.5%

6. Breast Cancer Relief Foundation

Total raised by solicitors: $63.9 million

Paid to solicitors: $44.8 million

Percentage spent on direct cash aid: 2.2%

 

5. Firefighters Charitable Foundation         

Total raised by solicitors: $63.8 million

Paid to solicitors: $54.7 million

Percentage spent on direct cash aid: 8.4%

4. American Breast Cancer Foundation

Total raised by solicitors: $80.8 million

Paid to solicitors: $59.8 million

Percentage spent on direct cash aid: 5.3%

 

3. Children’s Wish Foundation International

Total raised by solicitors: $96.8 million

Paid to solicitors: $63.6 million

Percentage spent on direct cash aid: 10.8%

2. Cancer Fund of America

Total raised by solicitors: $98 million

Paid to solicitors: $80.4 million

Percentage spent on direct cash aid: 0.9%

 

1. Kids Wish Network

Total raised by solicitors: $127.8 million

Paid to solicitors: $109.8 million

Percentage spent on direct cash aid: 2.5%

---

Check out 6 Bad Athlete Charities on AdvisorOne.

The Complete History of the SPY

The S&P 500 SPDR (SPY) is the oldest and best-known exchange-traded fund. Here's a quick primer on the history of SPY, by the numbers:

Vital StatsBelow are some stats that put SPY into perspective:

Oldest U.S.-listed ETF (launched 1993)Largest U.S. listed ETF ($141.6 billion in AUM)Most Heavily Traded U.S. listed ETF (ADV of 5.2 million shares)Year by YearBetween its first full year of trading in 1994 and 2012, SPY has turned in 15 positive annual performances and lost ground in four years:

Combined together, that translates into an aggregate performance of about 331% between inception and June 30, 2013:

Since it launched in 1993 (and through June 2013), SPY's winning sessions outnumber its losing ones by about 1.17 to one. Visualized another way:

Visualized another way, here's a look at the daily performance of SPY since its inception (note the significant increase in volatility throughout 2008 and 2009):

Here's yet another way to look at the daily historical volatility of SPY:

To put the volatility of the recent recession and recovery in perspective, here's that same chart for 2008 and 2009 only:

Of the 29 sessions in which SPY has moved by 5% or more, here's the chronological breakdown:

Over one week (five session) periods, SPY has gained as much as 19.4% and lost as much as 19.8% of its value:

Here's a look at SPY's biggest swings over a 10-session period of time:

Fun FactsWith $145.44 billion in assets, SPY represents about 9.7% of the total ETF universeSince inception, more than 411 billion shares of SPY have been tradedApproximately 25.7 million shares, or 3% of total shares outstanding, trade hands every dayDividend HistoryHere's a look at every dividend SPY has paid since its launch, as well as the yield based on the stock price at the time:

ExpensesSPY charges an annual management fee of 0.09%, making it one of the cheapest ETFs out there. With assets of 149.6 billion, that means SPY genera! tes about $141 million annually, or about $16,000 every hour.

Disclosure: No positions at time of writing.

3 Predictions for Next Week

I went out on a limb last week, and now it's time to see how that decision played out.

I predicted that Intuitive Surgical (NASDAQ: ISRG  ) would close higher on the week. The company behind the da Vinci surgical robotics system took a hit a week earlier after revealing that sales were soft in its latest quarter. I figured the bad news was already out of the way heading into Thursday's report. Unfortunately, the report was an even bigger disappointment. The stock fell 8% on the week. I was wrong. I predicted that the tech-heavy Nasdaq would outperform the Dow Jones Industrial Average. (DJINDICES: ^DJI  ) . This has been a tricky call lately, so how did it play out this time? Well, this was a close race until tech stocks fell on Friday. The Nasdaq moved 0.3% lower, and the Dow managed to close 0.5% higher. I was wrong. My final call was for CSX (NYSE: CSX  ) to beat Wall Street's income estimates in its latest quarter. The railroad giant has been posting blowout quarterly results over the past year, and I was banking on seeing the trend continue. Analysts were looking for a profit of $0.47 a share during the quarter, and it came through with net income of $0.52. I was right.

One out of three? I can do better than that.

Let me once again whip out my trusty, dusty, and occasionally accurate crystal ball to make three calls that may play out over the next few trading days.

1. Apple will close higher on the week
It's time for Apple (NASDAQ: AAPL  ) to shine. The consumer-tech giant has been a disappointing investment since the iPhone 5 came out, and it probably doesn't help matters that many of Apple's tech peers posted uninspiring quarterly results this past week.

However, Apple has been beaten down too far. Everybody knows that margins are being squeezed at this stage in the product cycle of the tech bellwether's main products. There's so much pessimism baked into the numbers that the market should give a positive interpretation to even a ho-hum report on Tuesday.

My first call is for Apple to close higher on the week.

2.The Nasdaq Composite will beat the Dow this week
Tech has been a big winner in recent years, so betting on tech over stodgy blue chips has been a good bet for me more often than not.

I'm going to stick with this pick. Most of the names in the composite are just too cheap at this point, and tech should be what carries us through the economic recovery. Yes, last week's earnings reports were rough out of some of the big names in the index, but the long-term outlook is still quite favorable.

The market is ripe for the tech-stacked secondary stocks to continue to outpace the 30 megacaps that make up the Dow Jones Industrial Average.

3. RF Micro Devices will beat Wall Street's earnings estimates
Some stocks are just flat-out better than others.

RF Micro Devices (NASDAQ: RFMD  ) is a chipmaker that's fared well in getting its smartphone chips into devices of the world's two biggest players in this growing space. Another thing it does is make analysts look like perpetual underachievers. If analysts say the company posted a profit of $0.07 a share in its latest quarter, I'll argue that it held up better than that. History's on my side!

One of my best tricks to beating the market is finding stocks that perpetually land ahead of the prognosticators. Let's go over the past year of earnings reports.

Quarter

EPS Estimate

EPS

Surprise

Q1 2013	$0.01	$0.01	0%
Q2 2013	$0.01	$0.03	200%
Q3 2013	$0.08	$0.06	33%
Q4 2013	$0.05	$0.06	20%

Source: Thomson Reuters.

Things can change, of course. We've seen reports of weakening demand for iPhones and Samsung devices. Wall Street also may seem to be a bit aggressive in targeting 42% top-line growth for RF Micro Devices in its latest quarter.

However, it's hard to argue against the trend. Everything seems to be falling into place for another market-thumping quarter on the bottom line.

Three for the road
Well, there are three predictions right there. Let's see how I fare this week.

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Can Barrick Gold Move Higher?

With shares of Barrick Gold (NYSE:ABX) trading around $18, is ABX an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Barrick Gold is engaged in the production and sale of gold as well as exploration and mine development. The company also produces copper and holds other interests, which include a nickel development project. Barrick Gold's business is organized into seven primary operating segments: four regional gold businesses, a global copper business unit, an oil and gas business, and a capital projects group. Its gold, copper, nickel, and oil and gas businesses and interests are dispersed around the world.

Barrick Gold shares have fallen 6.24 percent in pre-market trading as the miner announced it's shutting down work on its Pascua-Lama mine on the border of Chile and Argentina. Barrick, which has already spent $5 billion on the mine, said the project is being stopped indefinitely when it reported third-quarter earnings on Thursday. In addition, Barrick announced plans for a bought-deal public offering that will help the miner raise $2.6 billion.

T = Technicals on the Stock Chart are Mixed

Barrick Gold stock has not done well in the past couple of years. The stock is currently trading sideways as it attempts to search and find value. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Barrick Gold is trading between its rising key averages which signals neutral price action in the near-term.

(Source: Thinkorswim)

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

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Barrick Gold Options	41.80%	3%	1%

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

	Put IV Skew	Call IV Skew
November Options	Average	Average
December Options	Average	Average

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

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Decreasing Quarter-Over-Quarter

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

	2013 Q3	2013 Q2	2013 Q1	2012 Q4
Earnings Growth (Y-O-Y)	-73.85%	15.38%	-18.27%	-418.65%
Revenue Growth (Y-O-Y)	-12.18%	-2.35%	-5.68%	11.35%
Earnings Reaction	-5.41%	-0.94%	7.50%	2.59%

Barrick Gold has seen decreasing earnings and revenue figures over the last four quarters. From these numbers, the markets have had mixed feelings about Barrick Gold’s recent earnings announcements.

P = Weak Relative Performance Versus Peers and Sector

How has Barrick Gold stock done relative to its peers, Goldcorp (NYSE:GG), Newmont Mining (NYSE:NEM), Freeport McMoRan (NYSE:FCX), and sector?

	Barrick Gold	Goldcorp	Newmont Mining	Freeport McMoRan	Sector
Year-to-Date Return	-48.30%	-34.00%	-43.80%	7.25%	-30.71%

Barrick Gold has been a poor relative performer, year-to-date.

Conclusion

Barrick Gold is a gold mining firm that also has interests in copper, nickel, oil, and gas projects around the world. The company's shares have fallen 6.24 percent in pre-market trading as the miner announced it's shutting down work on its Pascua-Lama mine on the border of Chile and Argentina. The stock has not done well in the past couple of years and is currently searching for value. Over the last four quarters, earnings and revenues have been declining. However, investors have mixed feelings about recent earnings announcements. Relative to its peers and sector, Barrick Gold has been a weak year-to-date performer. STAY AWAY from Barrick Gold for now.

Mid-America Completes Apartment Community Acquisition

Apartment-only real estate investment trust Mid-America Apartment Communities (NYSE: MAA  ) added yet another multi-family housing community to its portfolio, announcing yesterday it had completed the acquisition of Station Square at Cosner's Corner, a 260-unit upscale multi-family apartment community located in Fredericksburg, Va.

MAA is a self-administered, self-managed apartment-only REIT currently owning, or having ownership interest in, 49,873 apartment units. The Station Square property was developed in 2012 as a NAHB Research Center "Green Certified" property, and offers residents a mix of one-, two- and three-bedroom floor plans.

Mid-America EVP and CFO Al Campbell said, "We feel its upscale amenities and  central location to major employment hubs in combination with our proven operating platform provides an appealing choice for the rental market and will generate a terrific long-term investment for MAA."

Multi-family housing has been one of the bright spots in the housing market. According to the CoStar Multifamily Price Index, vacancies dropped by 220 basis points between 2009 and 2012, while apartment rents grew 4.3% annually.

MAA's new property is definitely not down-market as it features an Internet cafe area, state-of-the-art fitness center, private movie screening room, resort-style saline pool, and even a dog park.

The property was bought from Johnson Development Associates. The sales price of the property has not be disclosed.

“What Tax Bracket Am I In?" -- "It’s Complicated.”

It's common for us taxpayers to think about, and occasionally look up, our tax bracket, to see how big a tax hit we're taking. But many people misunderstand the tax bracket concept.

You might, for example, glance at the table below, which features the tax brackets for the current tax year, and note that your taxable income of $50,000 parks you in the 25% bracket. You might then assume that your tax rate for those 50,000 dollars (as a single person) is 25%. Wrong!

Tax Rate

Single filers

Married filing jointly

or qualifying

widow/widower

Married filing

separately

Head of household

10%	Up to $8,925	Up to $17,850	Up to $8,925	Up to $12,750
15%	$8,926-$36,250	$17,851-72,500	$8,926-$36,250	$12,751-$48,600
25%	$36,251-$87,850	$72,501-$146,400	$36,251-$73,200	$48,601-$125,450
28%	$87,851-$183,250	$146,401-$223,050	$73,201-$111,525	$125,451-$203,150
33%	$183,251-$398,350	$223,051-$398,350	$111,526-$199,175	$203,151-$398,350
35%	$398-351-$400,000	$398,351-$450,000	$199,176-$225,000	$398,351-$425,000
39.6%	$400,001 or more	$450,001 or more	$225,001 or more	$425,001 or more

Source: Bankrate.com 

Here's what really happens: Your first $8,925 of taxable earnings are taxed at 10%. Then, your next $27,325 is taxed at 15%. Finally, the remainder of your taxable income, $13,750, is taxed at 25%. So actually, most of your dollars got hit with a 15% tax rate. Still, the answer to the question, "What tax bracket am I in?" isn't 15%.

Instead, when someone refers to your "tax bracket," it usually means the highest rate at which you're being taxed – and the rate at which your next dollar of taxable income will be taxed. That's also referred to as your "marginal" tax rate. Most of us have more than a single rate that affects us, though. For example, someone with taxable income of, say, $500,000, will actually pay taxes at every bracket's rate. In our example, your tax bracket, and your marginal tax rate, would be 25%.

The marginal tax rate matters for planning purposes. If you're wondering whether to generate more income in the year, for example, you'll know that it will be taxed at your marginal rate. Just remember to keep things in perspective: If additional income kicks you into a higher bracket, it doesn't mean that all your income will suddenly get taxed at that rate. Not at all.

The tax rate that should usually interest you most is your "effective" tax rate. That's the tax rate you actually pay on your taxable income. In the example above, you'd pay $892.50 (that's 10% of $8,925), plus $4,098.75 (that's 15% of your next $27,325), and $3,437.50 (that's 25% of your final 13,750). Add them up, and your total tax paid would be $8,428.75. Divide that by the $50,000 you started with, and you'll see that your effective tax rate is 0.17, or 17%. That's much more attractive than 25%, right?

So, next time you ask yourself, "What tax bracket am I in?" be sure to look at the big picture, not just your marginal tax rate.

The best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report, "3 Stocks That Will Help You Retire Rich," names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

Is Rockwell Medical (RMTI) Really a Sell? DVA, FMS & NXTM

Small cap dialysis stock Rockwell Medical Inc (NASDAQ: RMTI) looks set to decline when the market opens after Brean Capital initiated coverage with a sell rating and a price target of $4.00, meaning it might be time to take a closer look at what is going on with the stock along with the performance of large cap dialysis stocks DaVita Healthcare Partners (NYSE: DVA) and Fresenius Medical Care (NYSE: FMS) along with small cap dialysis stocks NxStage Medical, Inc (NASDAQ: NXTM). 

What is Rockwell Medical?

Small cap Rockwell Medical is a fully-integrated biopharmaceutical company targeting end-stage renal disease (ESRD) and chronic kidney disease (CKD) with innovative products and services for the treatment of iron deficiency anemia, secondary hyperparathyroidism and hemodialysis. Rockwell Medical calls itself a leader in producing and delivering hemodialysis concentrates (solutions and powders) along with related ancillary products to dialysis providers located throughout the US and abroad. In addition, the company is further developing brand extensions and new drug opportunities in the areas of anemia for women's health, oncology, gastroenterology and parenteral nutrition, as well as new drugs for other targeted renal therapies and indications.

As for dialysis stock peers, DaVita Healthcare Partners is a provider of dialysis and administrative services; Fresenius Medical Care is a Germany-based vertically integrated holding and kidney dialysis company operating in the fields of dialysis products and dialysis services; and small cap NxStage Medical is a medical device company that develops, manufactures and markets products for the treatment of kidney failure, fluid overload and related blood treatments and procedures.

What You Need to Know About or Be Warned About Rockwell Medical?

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Brean Capital analyst Jonathan Aschoff initiated coverage on Rockwell Medical with a sell plus he commented that:

"Triferic did not appear to reduce total ESA use versus placebo in the PRIME trial, and did not reduce ESA use versus baseline, by contrast to what is seen with IV iron and Zerenex. The CRUISE trials had a questionable design that we view as unlikely to result in approval. Both CRUISE trials did not allow IV iron use or changes in ESA use, which is utterly inconsistent with current dialysis center practice under bundled reimbursement. More than 80% of the patients in all CRUISE arms did not complete the 48-week treatment period, making the primary endpoint evaluation period (defined as the last 1/6 of time on treatment) highly variable among patients. A key employee termination and resulting lawsuit further speaks to inadequate Triferic testing, in our view, where a former VP of Drug Development and Medical Affairs warned Rockwell that its Phase 2b trial did not adequately show efficacy or dose-ranging information to proceed directly to Phase 3."

Aschoff's sell rating and assertions have caused a reaction on StockTwits with someone noting a blog post from 2007 complaining about his "daily bashing of Provenge," a drug to help prostate cancer patients in the late stage of disease from Dendreon Corporation (NASDAQ: DNDN) which apparently works just fine (see the Wikipedia entry for the drug here). The blog post goes on to note that:

"He was caught impersonating a doctor in order to get confidential information a few years ago. Why respected publications such as Barrons and Forbes continue associate themselves with this medical impersonator is baffling to say the least."

The whole story can be found here in a Wall Street Journal article about biotech analysts like Aschoff using questionable tactics to peek into drug trial results – meaning one has to wonder what kind of information he may have obtained and how he obtained it.

With that said, Aschoff also commented:

"Sales of Rockwell's drugs have been stagnant ($60 million, $49 million, and $50 million in 2010, 2011, and 2012, respectively) and we project flat future growth."

A look at Rockwell Medical's financials does show flat revenues of $49.84M (2012), $48.97M (2011), $59.55M (2010) and $54.73M (2009) for the past four years along with increasingly large net losses of $54.02M (2012), $21.44M (2011), $2.68M (2010) and $5.50M (2009) plus $31.22M in cash and short term investments to cover $18.07M in current liabilities and $19.43M in long term debt. Those financials are something investors should consider but of course FDA approval of Triferic would change all of that (Note: Stifel Nicolaus analyst Annabel Samimy says annual sales of Triferic could reach $200 million a year).

Share Performance: Rockwell Medical vs. DVA, FMS & NXTM

On Monday, small cap Rockwell Medical rose 1.13% to $13.47 (RMTI has a 52 week trading range of $3.16 to $15.85 a share) for a market cap of $538.77 million plus the stock is up 67.3% since the start of the year and up 298.5% over the past five years. Here is a look at the long term performance of Rockwell Medical verses large cap dialysis stocks DaVita Healthcare Partners and Fresenius Medical Care plus small cap NxStage Medical:

As you can see from the above chart, small cap dialysis stock NxStage Medical peaked in January 2011 and has trended down since then while Rockwell Medical bottomed out before the summer. Meanwhile, large caps Fresenius Medical Care has been relatively flat and DaVita Healthcare Partners has been steadily trending upward.

Finally, here is a quick look at the technical charts for all four dialysis stocks:

The Bottom Line. Irrespective of what Brean Capital analyst Jonathan Aschoff says, his track record and any ulterior motives he may have (e.g. they are shorting the stock), its really the FDA that will make or break small cap dialysis stock Rockwell Medical. So stay tuned…

Thompson Creek Metals Company Inc (USA) (NYSE:TC): Can Thompson Mitigate Debt Concerns

Investors of Thompson Creek Metals Company Inc (USA) (NYSE:TC) (TSE:TCM) are concerned with the company's high debt levels and may impact the long-term investment case due to the need to repay debt versus invest in new projects.

Thompson Creek is one of the largest molybdenum miners in the world. It produces molybdenum at its 100 percent-owned Thompson Creek Mine in Idaho and Langeloth Metallurgical Facility in Pennsylvania and its 75 percent-owned Endako Mine in northern British Columbia. The company is in the final stages of ramping up its Mt. Milligan mine in British Columbia.

As of Sept. 30, 2013, Thompson Creek's $926.0 million debt position consisted of the following important notes:

[Related -CIBC Revises Rating On Thompson Creek Metals (TC) After Amended Royal Gold (RGLD) Agreement]

9.75 percent Senior Secured Notes – $350 million. The notes mature on December 1, 2017 and require semi-annual interest payments onFebruary 1 and August 1 of each year.

7.375 percent Senior Unsecured Notes – $350 million. The notes mature on June 1, 2018 and require semi-annual interest payments on June 1 and December 1 of each year.

12.5 percent Senior Unsecured Notes – $200 million. The notes mature on May 1, 2019 and require semi-annual interest payments on May 1 and November 1 of each year.

As of Sept.30, 2013, the company had cash and cash equivalents of $322.8 million. Cash flow from operations was $19.5 million. Concern in the market exists on how the company will repay the notes. 

[Related -One Of The Most Important Commodities Of The 21St Century Is On Sale]

The company's ability to pay is largely a function of how smoothly and quickly the Mt. Milligan ramp-up progresses, how much cost cutting can be achieved at the other operations and head office and of course the path of commodity prices in the coming years.

CIBC analyst Tom Meyer, who did not forecast any near-term liquidity issues in his current outlook, emphasized that the ! company is in the early stages of the ramp-up of Mt. Milligan, which will take a few more quarters.

The ease and cost of debt-restructuring is largely a function of the environment and outlook at the time the debt is being restructured. Commodity prices must trend higher by about 30 percent versus current spot prices to avoid debt restructuring (US$12.48/lb Molybdenum, US$4.23/lb copper and US$1,638/oz. gold). Below those levels, some form of debt restructuring would be required. Molybdenum oxide is currently trading around $9.60/lb.

In other words, all else being equal, the company would require a debt restructuring before early 2018, should prices remain unchanged from current levels. Under this scenario, both the 7.375 percent $350 million note and the 12.5 percent $200 million note would require restructuring.

Should commodity prices return to the first quarter of 2011 levels when the base metal valuations last peaked, the concerns about debt levels would fall away, Meyer said.

In another scenario, commodity prices must remain higher that current spot prices by at least 20 percent in order to pay off the two $350 million notes. The remaining 12.5 percent $200 million note would require restructuring before May 2019.

The importance of the Mt. Milligan project to the company should not be ignored as it essentially transforms the company into a diversified miner. Molybdenum as a percentage of sales falls to 40 percent in 2014 from 100 percent at present.

While molybdenum remains out of favor and prospects of a successful start-up of the company's Mt. Milligan copper-gold project are high, the shares correctly reflect the medium-term outlook for the company.

Sources of positive surprises for the shares would include a rebound in molybdenum prices, which seems unlikely given the current economic malaise in the larger western economies.

Though, the company is making positive progress at Mt. Milligan, Meyer feels that the recent share price pullback has provi! ded a buy! ing opportunity, albeit a risky one.

Harvard’s deficit soars to $34 million

BOSTON (AP) — Harvard University finance officials are pledging to manage costs better and pursue innovative revenue strategies after its deficit soared to $34 million in the most recent fiscal year, compared to a $7.9 million shortfall the previous year.

A financial report released Friday says the school saw revenues jump 5% to $4.2 billion, due largely to the increased annual distribution from its hefty $32.7 billion endowment.

Revenue also was bolstered by a 17% increase in gifts for current use, from $289 million in the previous fiscal year to $339 million in the most recent year.

Operating expenses for the nation's oldest school rose 6% to $4.2 billion. Benefits, wages and other compensation expenses accounted for about half of expenses.

The financial report, authored by Harvard's Vice President for Finance and Chief Financial Officer Daniel S. Shore and Treasurer James F. Rothenberg, notes that the $34 million deficit is slightly less than 1% of the school's revenue. In that context, they said, it is manageable, while still meaningful.

"However, the ability to stay in financial balance going forward depends in large part on institutional commitment to cost management and an embrace of innovative revenue opportunities," they said.

The Ivy League school can manage costs better by consolidating operations and procurement, which could also help improve efficiency, yield higher quality service and improve ability to manage vendor-related risks, according to the report.

"Culture change of this sort is hard for any large and decentralized organization," Shore and Rothenberg said in the report. "Changing Harvard's culture will require time, transparency, a willingness to make mistakes along the way, and the capacity to learn from them. "

Reducing costs of benefits can be difficult because they are "experienced at a more personal level," they said. "Yet these changes are inevitable and will allow us to protect the integrity of the high-quality teaching and r! esearch that has allowed Harvard to lead throughout the centuries."

The report noted that Harvard is no exception from other colleges and universities facing substantial pressure as net income from tuition, particularly at the undergraduate level, grow slowly. Although the endowment earned an 11.3% gain on investments in the most recent fiscal year, Harvard must use caution in planning for future distribution due to the volatility of global financial markets, the report said.

Political bickering in Washington is not helping matters either.

"The federal government's ongoing commitment to research funding is more uncertain than it was last year, and we have already begun to feel the chilling effects of the budget sequester on research grants," the report said.

Harvard President Drew Faust noted the nation's wealthiest university has not been immune to the fact that a faltering economy has raised questions in the public's mind about the value of a college education as well as the reality that every revenue stream upon which institutions of higher learning depend has come under pressure.

"We will need to meet those challenges by acting thoughtfully and decisively as a community; we will adapt where circumstances demand it; and we will remain steadfast in defending the values that make Harvard an essential contributor to the pursuit of knowledge in the world," Faust said.

Hilton’s IPO soars: Should you buy?

The much-anticipated initial public offering of Hilton Worldwide Holdings (ticker: HLT) went off without a hitch, with the largest hotel IPO ever pricing at $20 per share and the stock quickly posting a 6.5% jump at the open. Yet even if Hilton's honeymoon period goes well for investors, the bigger question facing the hotelier is whether it can outpace competition from rivals Hyatt Hotels (H) , Marriott (MAR) , and Starwood Hotels & Resorts (HOT) and justify what some see as a fairly lofty valuation.

Cashing in on hotels

When private-equity firm Blackstone Group (BX) took Hilton private back in 2007, it paid about $26 billion in stock and debt assumption for the hotelier. At first glance, the $2.35 billion take from Hilton's IPO today might seem like a huge loss for Blackstone. But the IPO only included 117.6 million shares in its offering, representing less than 12% of the 985 million shares that Hilton said in its registration would be outstanding after the offering. At the current trading price, that puts a more than $21 billion valuation on the hotel operator. When you add in the fact that Hilton still has about $15 billion in outstanding debt from Blackstone's buyout, Blackstone has made an almost-unprecedented paper profit on the IPO, with Bloomberg estimating the private-equity firm's take at $8.5 billion.

The gains are just the latest in a series of profitable hotel transactions for Blackstone. Two of them involve Extended Stay America, which Blackstone bought in 2004 and sold at the top of the market in 2007 before joining a group of other funds to take the hotel chain private again in 2010. The most recent Extended Stay IPO just last month raised $565 million, valuing the company at about $4 billion and helping Blackstone and its partners roughly triple their investment.

Moreover, Blackstone intends to tap the equity markets again with its ownership of La Quinta. Reports last month said that the private-equity company would likely seek an IPO rather than trying to se! ll La Quinta outright. Given its success in moving hotel-company shares, Blackstone's attempt to repeat that success with La Quinta makes plenty of sense.

Paying up for quality?

But even if Blackstone made money on Hilton, will shareholders buying the stock in the IPO share the same results? According to Hilton's registration statement, the hotelier made $462 million over the past 12 months, or about $0.47 per share. That equates to an earnings multiple of about 46. Because of the nature of the hotel business, that actually isn't as excessive as it looks. But it's still well above Hyatt's earnings multiple of 40, let alone Marriott and Starwood at a more reasonable 22. Paying roughly double the earnings multiple for Hilton for those two equally impressive hotel chains definitely requires giving it premium status over its rivals.

Moreover, even when you consider Hilton's leveraged balance sheet and look at earnings before interest, taxes, depreciation, and amortization, you still get a fairly lofty enterprise-value multiple of 13.7 times future projections for EBITDA. That's higher than Starwood's projected EV/EBITDA ratio of just over 12, as well as Hyatt's 10.7 and Marriott's 13.2, according to S&P Capital IQ. Again, the metric suggests that investors are willing to put a premium on Hilton because of its status in the industry.

Obviously, Hilton would argue that it deserves that premium pricing. The hotelier has posted revenue per available room figures that are above the industry average, taking full advantage of greater demand for hotel rooms throughout the industry. Moreover, given the performance of Extended Stay America -- whose shares has added another 3% on top of its first-day gains of almost 20% -- investors clearly have an appetite for hotel stocks.

Is Hilton worth buying?

For long-term investors, it's worth noting that Blackstone itself didn't offer any of its Hilton shares in the IPO, choosing to hold onto them. That suggests at least a short-term vot! e of conf! idence for the stock, as the private-equity firm apparently believes Hilton shares will be worth more in the future. In the long run, though, Hilton will have to demonstrate its competitive advantage over other premium hotel chains in taking advantage of favorable economic conditions. Otherwise, Hilton will have a hard time justifying an above-average valuation for its stock.

The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.

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Howard Marks Podcast Interview - Investors Should Be Cautious in Today's Markets

Top 10 Biotech Stocks To Invest In Right Now

In the linked podcast below of the Goldman Sachs Financial Services Conference we hear from Oaktree Capital (OAK)'s Howard Marks.

[ Enlarge Image ]

At the conference he answers a variety of questions including what the impact of tapering will be on the investment world.

Marks doesn't think that tapering will be that big of a deal, but he does think it needs to happen so that we can return to a truly free market.

Enjoy the 20 minutes of observation and thought from Marks:

http://www.chinamoneypodcast.com/2013/12/11/howard-marks-investors-should-be-cautious-in-todays-markets

Also check out: Howard Marks Undervalued Stocks Howard Marks Top Growth Companies Howard Marks High Yield stocks, and Stocks that Howard Marks keeps buying
About the author:http://valueinvestorcanada.blogspot.com/

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OAK STOCK PRICE CHART 54.84 (1y: +24%) $(function() { var seriesOptions = [], yAxisOptions = [], name = 'OAK', display = ''; Highcharts.setOptions({ global: { useUTC: true } }); var d = new Date(); $current_day = d.getDay(); if ($current_day == 5 || $current_day == 0 || $current_day == 6){ day = 4; } else{ day = 7; } seriesOptions[0] = { id : name, animation:false, color: '#4572A7', lineWidth: 1, name : name.toUpperCase() + ' stock price', threshold : null, data : [[1355378400000,44.08],[1355464800000,44],[1355724000000,43.95],[1355810400000,44.26],[1355896800000,45.29],[1355983200000,46.15],[1356069600000,46.01],[1356328800000,45.78],[1356501600000,44.99],[1356588000000,44.97],[1356674400000,45.42],[1356933600000,45.49],[1357106400000,45.51],[1357192800000,45.7],[1357279200000,46.22],[1357538400000,46.15],[1357624800000,46.8],[1357711200000,47.02],[1357797600000,47.13],[1357884000000,47.61],[1358143200000,48.01],[1358229600000,47.8],[1358316000000,47.47],[1358402400000,47.52],[1358488800000,47.49],[1358834400000,46.71],[1358920800000,47.01],[1359007200000,47.44],[1359093600000,46.75],[1359352800000,46.99],[1359439200000,47.07],[1359525600000,47.39],[1359612000000,48.04],[1359698400000,48.2],[1359957600000,47.17],[1360044000000,48.59],[1360130400000,48.87],[1360216800000,48.89],[1360303200000,49.15],[1360562400000,48.96],[1360648800000,49.35],[1360735200000,49.9],[1360821600000,50.48],[1360908000000,50.5],[1361253600000,51],[1361340000000,51.55],[1361426400000,49.46],[1361512800000,48.84],[1361772000000,49.12],[1361858400000,49.21],[1361944800000,49.49],[1362031200000,49.93],[1362117600000,50.13],[1362376800000,51.1],[1362463200000,50.48],[1362549600000,50.42],[1362636000000,50.27],[1362722400000,50.65],[1362978000000,51.31],[1363064400000,52.09],[1363150800000,52.01],[1363237200000,52],[1363323600000,51.19],[1363582800000,51.75],[1363669200000,51.47],[1363755600000,52.57],[1363842000000,53],[1363928400000,52.1],[1364187600000,51.45],[1364274000000,51.45],[1364360400000,51.89],[1364446800000,51.02],[1364792400000,51.12],[1364878800000,51.15],[1364965200000,51.19],[1365051600000,51.08],[1365138000000,51.22],[1365397200000,51.05],[1365483600000,51.89],[1365570000000,52.13],[1365656400000,52.15],[1365742800000,51.93],[1366002000000,50.29],[1366088400000,51.45],[1366174800000,51.12],[1366261200000,50.32],[1366347600000,50.88],[1366606800000,50.73],[1366693200000,50.9],[1366779600000,51.25],[1366866000000,51.42],[1366952400000,52.57],[1367211600000,51.6],[136729800! 0000,51.92],[1367384400000,52.26],[1367470800000,52.64],[1367557200000,53.62],[1367816400000,54.26],[1367902800000,57.12],[1367989200000,56.33],[1368075600000,56.85],[1368162000000,56.46],[1368421200000,57.12],[1368507600000,57.69],[1368594000000,55.2],[1368680400000,54.65],[1368766800000,54.72],[1369026000000,55.88],[1369112400000,55.62],[1369198800000,54.41],[1369285200000,53.5],[1369371600000,53.5],[1369717200000,53.66],[1369803600000,52.87],[1369890000000,53.48],[1369976400000,52.15],[1370235600000,51.2],[1370322000000,50.24],[1370408400000,50.01],[1370494800000,50.13],[1370581200000,52.3],[1370840400000,53.28],[1370926800000,52.07],[1371013200000,51.46],[1371099600000,51.89],[1371186000000,53.49],[1371445200000,53.82],[1371531600000,53.7],[1371618000000,52.7],[1371704400000,51.94],[1371790800000,51.96],[1372050000000,51.02],[1372136400000,51.87],[1372222800000,51.98],[13723

Bank Customer Satisfaction Returns to Prerecession Levels

As the stock market has hit new highs, so too has customer satisfaction with banks and insurers.

The American Customer Satisfaction Index reported Tuesday that the index was up 0.3% to 76.7 on a 0–100 scale.

The ACSI Finance and Insurance Report 2013 was based on interviews with 5,296 customers, chosen at random and contacted via telephone and email between July 10 and Sept. 4.

Participants were asked to evaluate their recent experiences with financial services — including banks, credit unions, health insurance, property and casualty insurance and life insurance — provided by the largest companies in terms of market share, plus an aggregate category consisting of “all other” — and thus smaller — providers.

Banks and Credit Unions

Overall customer satisfaction with retail banking returned to its prerecession level, growing by 1.3% over the past year to an ACSI benchmark of 78.

“Even though banks have raised fees again, the 15th straight year of such increases, no negative repercussions have been detected regarding customer satisfaction,” Claes Fornell, ACSI’s founder and chairman, said in a statement.

“In part, this is because a fair number of consumers are changing their behavior to avoid the fees by exclusively using their own bank’s ATMs and maintaining sufficiently large account balances.”

All of the big banks improved, but smaller ones far outdistanced their larger competitors, up 5% to 83, as did credit unions, up 4% to 85.

Among the four largest banks, JPMorgan Chase held on to its lead with a 3% gain to 76, while Citigroup jumped 6% to 74, and Wells Fargo inched up 1% to 72.

Bank of America registered its largest improvement in a decade, up 5% to 69, but remained in last place. It was the only bank that had yet to restore its prerecession level of customer satisfaction.

Banks and credit unions received good marks for their customer service at branches and for online banking. But customers gave a failing grade to the competitiveness of bank interest rates, while credit union customers complained about the lack of convenient ATMs and branches.

Insurance

Customer satisfaction with health insurance was up 1.4% to an ACSI benchmark of 73. High premiums, out-of-pocket expenses and complicated policies contributed to relatively low satisfaction compared with other financial services.

“The health insurance industry is in a state of flux as many parts of the Affordable Care Act come into effect, including insurance exchanges, which allow consumers to comparison shop for health care coverage,” ACSI director David VanAmburg said in the statement.

“The customer satisfaction gains this year may be driven in part by expected price competition as health insurance companies anticipate the effects of the new online marketplace.”

In addition to possible increased price competition, health insurers have an opportunity to distinguish themselves by competing on customer satisfaction, the report said. At present, there is little differentiation, with most companies clustered around the industry average.

The Blue Cross and Blue Shield Association led with an ACSI score of 74, while WellPoint matched the industry average of 73. The aggregate of smaller insurers such as Cigna and Humana remained just below average at 72. UnitedHealth was stable at 70, while Aetna held the bottom spot at 69.

Customers showed disdain for most aspects of the health insurance experience. Although most policies provide reasonably good access to hospitals and primary and specialty care doctors, customers thought coverage of services, particularly prescription drugs, could be better. They found billings fairly difficult to understand. And they gave low marks to both insurance websites and call centers.

In the latest index, customer satisfaction improved for both life and property and casualty insurance. Life insurance was up for the second consecutive year, to 83. Despite annual rate increases, customer satisfaction with property and casualty insurance also rose, to 81.

Customers were more satisfied with auto insurance than homeowners insurance, although customers with multiple policies from the same insurer expressed the highest level of satisfaction.

Increased customer satisfaction with property and casualty was the result of large gains for smaller insurance carriers, a group that includes AAA and Nationwide, up 8% to 83.

Among the largest property and casualty insurers, only Geico improved, up 3% to 81, taking the top spot from State Farm, down 2% to 79, and Progressive, down 4% to 78. Allstate fell by 3% to 77, and Farmers dropped by 4% to 76.

Smaller life insurance companies, such as John Hancock and Lincoln Financial, also tended to have higher customer satisfaction than big providers, leading with an 83 aggregate score.

Top Financial Stocks To Watch For 2014

Among the large companies, New York Life remained on top, unchanged at 80 for a third year in a row. Northwestern Mutual and Prudential tied at 78, and MetLife was at 77.

Policy holders of property and life insurance gave firms high marks for their customer service and the variety of coverage options, but were frustrated by the unavailability of meaningful policy discounts and rewards.

---

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Warrants Warrant More Respect in the Resource Sector: Dudley Baker

The Gold Report: Before we get into how to invest in warrants, please tell our readers what a warrant is.

Dudley Baker: Very simply, a warrant is a security that gives the holder the right, but not the obligation, to purchase the underlying common shares at a specific price and includes a specific expiration date.

TGR: How does that differ from a futures contract?

DB: A futures contract refers to the purchase of an actual commodity: gold, silver, soybeans, pork bellies, etc. Warrants also differ from call options. Those are derivative contracts written on a stock, stock index or futures contract.

"Virtually every company in the resource sector has a warrant in its capital structure."

The official definition of warrants states that they are securities, the distinction being here that a warrant is actually issued by the company.

TGR: Why do most investors overlook warrants?

DB: That has been a mystery for decades. Since the early 1980s, when the Chicago Board Options Exchange (CBOE) came into play, investors' interest turned toward stock options—calls and puts. These days, it's all about trading, and for brokers, it's all about commission. Warrants were left out of the investment arena. They're still great opportunities. My mission is to educate and explain the value of stock warrants.

TGR: What are the differences between trading warrants and private placement warrants

DB: Virtually every company in the resource sector has a warrant in its capital structure. Very few of those warrants actually trade; most are private placement warrants.

Private placement warrants serve as an equity kicker. I'll use Rick Rule as an example. He would never do a transaction unless a long-term warrant was part of the equity package because he wants more bang for his buck. Unfortunately, many individual investors don't have the opportunity to participate in private placements.

However, investors should know that there are roughly 200 trading warrants out there right now in the U.S. and Canada, not just in the resource sector, but across the board.

TGR: We're in a depressed market for mining equities. Does market performance have an effect on the warrant market?

DB: Yes, if stocks are down, warrants will be down. That said, it's all about the underlying company. For the warrant to do well, the company has to perform. We're always looking for the upside leverage.

"Now is when investors want to start looking for long-term warrants on companies they like."

We're looking for a 2:1 leverage. If an investor wants the common shares in a company to rise 100%, we want the warrant to perform 200%. That gives us a reason to buy the warrant in lieu of the common shares. It's all about gaining more leverage with long-term warrants.

For the last couple of years, the market has not been kind to resource investors, whether it's common shares or warrants. We see this whole sector coming back big time. Now is when investors want to start looking for long-term warrants on companies they like.

TGR: Why do mining companies, especially gold and silver equities, deal in warrants more than other sectors?

DB: The resource sector is highly capital intensive and high risk. Let's face it, the companies need more incentive to get someone like Rick Rule and Sprott Global involved in a potential financing. They have to offer a long-term warrant as an equity kicker.

TGR: The warrant offsets risk.

DB: Exactly. In the resource sector, money goes into the ground and everybody hopes for the best. The people providing the financing, however, need more opportunity for the upside potential to outweigh the downside. The financiers know that many companies will not perform, so they require these equity kickers.

TGR: What's the typical path to making money by investing in a warrant?

DB: The most straightforward, logical way is to pick the right company and buy its warrants. If the company doesn't perform, the warrant can't perform either.

On top of that, we need a good market environment or the expectation of a good market environment, which I think we have right now. I think most would agree that the next few years probably will be in favor of resource investors.

TGR: Are there other ways to make money with warrants?

DB: Yes, one is a dollar allocation. Take an investor who comes to us with a question as to how to invest $10,000 in a gold stock. The company also offers a long-term warrant. He could split the investment between the stock and the warrant. Depending on the leverage situation, that split could be 50/50, 80/20, or another combination, according to the investor's risk/reward ratio.

"The liquidity of warrants varies on a daily basis."

There also are hedging opportunities in warrants. Instead of just buying the warrant, investors can buy the warrants and short the common shares. They could buy the warrants and sell puts against that position. They could actually short the warrants and buy call options. So they're just trying to establish hedge positions here.

This works better in the U.S. markets. That is because American investors can't exercise a warrant issued in Canada; U.S. investors can only trade Canadian warrants. A Canadian investor could probably short the shares.

I'd almost say, especially in the U.S., any time you are doing a hedge and you're buying the common shares as your core position, basically you just substitute the company's long-term warrant for the common shares, and you can accomplish that same hedge position with a lot less cash on the line, which means your net return will be substantially higher.

TGR: What are four things should investors be aware of before entering the world of warrants?

DB: First, warrants can expire. Once they've expired, they are worthless. I would recommend choosing only long-term warrants, which to me means a minimum of two or three years. This gives you more time for the markets to turn around and to capture the maximum gains.

Second, stick with companies that you like. Before buying common shares, ask whether the company has any long-term trading warrants, You may have to look into those yourself; not all newsletter writers are up on the opportunities warrants offer.

Third, before you buy a warrant, find out what the current leverage is. Is the warrant overpriced, fairly priced or undervalued? You don't want to pay more than you have to.

Fourth is liquidity. The liquidity of warrants varies on a daily basis.

TGR: When you talked with The Gold Report in 2008, there was no exchange where warrants were traded. Are there some new resources that make warrants trading more transparent and, perhaps, simpler? Your website, CommonStockWarrants.com, is one resource. Are there others?

DB: The lack of information about warrants was one reason I started my service, and there has been progress. Today, warrants are traded like stocks on the Toronto Stock Exchange (TSX) and the TSX Venture Exchange (TSX.V) in Canada. Warrants for U.S. companies can trade on the New York Stock Exchange (NSYE) or on NASDAQ. Exchanges issue warrants a symbol, just like common shares.

TGR: They just have a longer ticker.

DB: It's usually five letters or it will have a .WT, or in the U.S., it might have a -WS.

TGR: When an outstanding warrant is worth less than the current stock trading price, it can create an overhang on a stock. How do you play that situation?

DB: There is a perception, and probably rightly so, that outstanding warrants have a dilution effect on the common shares. Some people see that as a negative. We look at the upside leverage opportunity that warrants offer an investor. We know there will be slight dilution to the company's shares if and when those warrants are exercised. We also know that means new cash coming into the company's kitty. It's a tradeoff.

TGR: But if a company is trading for $2/share and its warrant is trading at $1, why not buy the warrant instead of the shares?

DB: The warrants will always be selling for less than the common shares but an investor must still ask several questions: do you like the company, what is the time remaining until expiration, and what are the current leverage calculations as to whether the warrant is fairly priced. Additionally, a warrant will almost always trade at a minimum of its intrinsic value. If the common shares are selling at $12/share and the exercise price on the warrant is $10, we know that warrant has to be selling in the marketplace for a minimum of $2.

TGR: What's the best way to play a long warrant?

DB: Time permitting, you want to hold a warrant as long as you would hold the common shares. Remember, you're basically playing the common stock even though you own the warrants.

If you own a warrant and, after 6 to 12 months, decide that the common shares have peaked and are overbought, you sell the warrant at the same time that you would sell the shares. You make the same decision, as though you owned the common shares.

People often ask if you have to hold the warrant until the expiration date. The answer is no. Warrants are totally liquid. You can buy today, sell tomorrow. You're not locked in.

TGR: What are some warrants in the gold and silver space that you'd like to share with us today?

DB: There are several. We have Sandstorm Gold Ltd. (SSL:TSX; SAND:NYSE.MKT), which has a similar streaming model to Silver Wheaton Corp. (SLW:TSX; SLW:NYSE) and the same management team. Sandstorm Gold has three warrants trading right now. I always look for the warrant with the longest life. The Sandstorm Gold Warrant B goes out to September 2017, giving investors almost four years of remaining life.

New Gold Inc. (NGD:TSX; NGD:NYSE.MKT) is another great company. Its Warrant A expires in June 2017, more than three-and-a-half years of remaining life. We expect to see a rip-roaring bull market within that time period, so that's really cool.

The third name I'd share with you is Alamos Gold Inc. (AGI:TSX). It issued a five-year warrant just a few months ago that will expire in August 2018.

For any of those three, of course, you want to determine the leverage calculation. Is it overvalued, undervalued?

TGR: You would buy those warrants and sell them when you believe they are appropriately valued.

DB: Exactly. I would be utilizing all the tools that an investor would: looking at long-term charts, following analysts or newsletter writers.

If, as I expect, we get a nice bull market in the resource sector, it would not be uncommon to see common share prices double, triple or quadruple. The warrants should do twice as well. It's just a matter of staying on board as long as possible to capture these gains, but knowing that you can pull the plug and can exit at any moment.

It's like any investment, if you double your money, you may want to take some money off the table and minimize your risk. But we'd like to capture as much of this upcoming bull market as possible.

TGR: If investors want to find the current value of one the Sandstorm Gold warrants that are trading, where would they go?

DB: That's the dilemma for most investors. There are 200 warrants trading on the markets now in total, not just in the resource sector. It's tooting my own horn, but CommonStockWarrants.com is virtually the only place to find all the detail needed to make informed investment decisions.

Barring that, investors willing to invest the time can follow company news. Fortunately, resource companies tend to be more transparent with information about their warrants.

You can read in the news about U.S. companies outside the resource sector—biotech and financial service firms—making offerings with common shares and warrants. However, 9 times out of 10, those warrants will not trade. You have to dig that information out of the original prospectuses, where there's a phrase that reads, "There is currently no market for the warrant and we do not anticipate a market to be established."

TGR: What other warrant ideas are out there?

DB: There are a couple of interesting companies in the energy space. Kinder Morgan Inc. (KMI:NYSE) has a long-term warrant that goes out to May 2017. A Fieldpoint Petroleum (FPP:NYSE.MKT) warrant goes out to March 2018.

In the biotech space, I would name MannKind Corp. (MNKD:NASDAQ). Its warrant expires in February 2016. Not long ago, another newsletter crowed about gains on its recommendation of Mannkind's common shares. If he had bought the warrant at the same time as the common shares, he would have more than doubled the money for his investors. Instead of making 200%, it would have made a 400–500% return.

Another is Bioamber Inc. (BIOA:NYSE), which has a warrant that expires in May 2017. This is a sustainable chemicals company. Its proprietary technology platform combines industrial biotechnology and chemical catalysts to convert renewable feedstock into chemicals for use in a wide variety of everyday products.

Northwest Biotherapeutics Inc. (NWBO:OTC) is another biotech name with trading warrants.

TGR: Dudley, we've just scratched the surface of warrants. What would be one final thought for our readers?

DB: Brian, I would say warrants are a simple investment vehicle that has been overlooked for decades, whether for trading or for hedging. For good or ill, warrants are a niche market. My passion is getting more people to understand the opportunities of long-term warrants.

TGR: Thanks for your time and your insights.

Dudley Baker worked for the IRS for 29 years, which gave him an extensive 'numbers' background. He has 35 years of accumulated knowledge and experience in trading stocks, options, leaps, futures, options on futures and warrants. In March 2005 he founded and launched a new market data service, Precious Metals Warrants, which provided detail on mining and energy warrants trading on the U.S. and Canadian exchanges. The service was expanded in May 2013 to include all stock warrants trading in the U.S. and Canada and for all industries and sectors and the name changed to Common Stock Warrants. Baker can be reached at Dudley@CommonStockWarrants.com or through the website www.CommonStockWarrants.com.

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DISCLOSURE:
1) Brian Sylvester conducted this interview for The Gold Report and provides services to The Gold Report as an independent contractor. He or his family own shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of The Gold Report: None. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.
3) Dudley Baker: I or my family own shares of the following companies mentioned in this interview: Sandstorm Gold Warrant B (SSL.wt.B) and New Gold Warrant A (NGD.wt.A). I personally am or my family is paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts' statements without their consent.
5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer.
6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise.

( Companies Mentioned: AGI:TSX, BIOA:NYSE, FPP:NYSE.MKT, KMI:NYSE, MNKD:NASDAQ, NGD:TSX; NGD:NYSE.MKT, NWBO:OTC, SSL:TSX; SAND:NYSE.MKT, )

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

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