2 Positive Signs for McDermott International

McDermott International (NYSE: MDR  ) carries $41.2 million of goodwill and other intangibles on its balance sheet. Sometimes goodwill, especially when it's excessive, can foreshadow problems down the road. Could this be the case with McDermott?

Before we answer that, let's look at what could go wrong.

AOL blows up
In early 2002, AOL Time Warner was trading for $66.27 per share.

It had $209 billion of assets on its balance sheet, and $128 billion of that was in the form of goodwill and other intangible assets. Goodwill is simply the difference between the price paid for a company during an acquisition and the net assets of the acquired company. The $128 billion of goodwill in this case was created when AOL and Time Warner merged in 2000.

The problem with inflating your net assets with goodwill is that it can -- being intangible after all -- go away if the acquisition or merger doesn't create the amount of value that was expected. That's what happened in AOL Time Warner's case. It had to write off most of the goodwill over the next few months, and one year later that line item had shrunk to $37 billion. Investors punished the stock along the way, sending it down to $27.04 -- or nearly a 60% loss.

In his fine book It's Earnings That Count, Hewitt Heiserman explains the AOL situation and how two simple metrics can help minimize your risk of owning a company that may blow up like this. Let's see how McDermott International holds up using his two metrics.

Intangible assets ratio
This ratio shows us the percentage of total assets made up by goodwill and other intangibles. Heiserman says he views anything over 20% as worrisome, "because management might be overpaying for the acquisition or acquisitions that gave rise to the goodwill."

McDermott has an intangible assets ratio of 2%.

This is well below Heiserman's threshold, and a sign that any growth you see with the company is probably organic. But we're not through; let's also take a look at tangible book value.

Tangible book value
Tangible book value is simply what remains after subtracting goodwill and other intangibles from shareholders' equity (also known as book value). If this is not a positive value, Heiserman advises you to avoid the company because it may "lack the balance sheet muscle to protect [itself] in a recession or from better-financed competitors."

McDermott's tangible book value is $1.6 billion, so no yellow flags here.

Foolish bottom line
To recap, here are McDermott's numbers, as well as a bonus look at a few other companies in its industry:

Company	Intangible Assets Ratio	Tangible Book Value (millions)
McDermott International	2%	$1,585
Chicago Bridge & Iron (NYSE: CBI  )	35%	$34
Foster Wheeler (Nasdaq: FWLT  )	5%	$748
Halliburton (NYSE: HAL  )	7%	$10,985

Data provided by S&P Capital IQ.

McDermott appears to be in good shape in terms of the intangible assets ratio and tangible book value. You can never base an entire investment thesis on one or two metrics, but there are no yellow flags here. If any companies you're researching do fail one of these checks, make sure you understand the business model and management's objectives. I'll help you keep a close eye on these ratios over the next few quarters by updating them soon after each earnings report.

Big Banks Are A Value Trap

by Michael Bigioni

Many people are hesitant to reinvest in banking stocks because of the deep loses they suffered in the global recession, but are there good deals out there ready to be had? In this article, I analyze the major commercial banks. My actionable analysis concludes that the big, money-center banks are a value trap.

Citigroup Inc. (C) is trading at around $28, much lower than its 2007 highs of a split-unadjusted price of $550. The financial services company suffered severe losses in 2008 and dropped in size and rank from being one of the largest financial institution in the world to being ranked 23 by the Bankers Almanac. By comparison, JPMorgan Chase and Co's (JPM) stock price has had a much wilder ride going from highs of around $52 in 2007 to lows of under $16 in 2009 only to climb back up to more than $45 in 2011. The stock now trades around $33 and the company itself has gone from being in the top 3 for largest financial institutions in the world to being ranked number 10 by the Banker's Almanac. Bank of America (BAC), which was once the largest bank in the world, is now placed in 17th spot by the Bankers Almanac. After lows of near $3 in 2009, the stock climbed steadily to prices over $18 in 2009 and 2010 only to retreat back to around $3, where it currently trades around $28 on a split-adjusted basis. Note that Citigroup issued a 1:10 reverse stock split in May 2011.

Many analysts feel C is a buy, putting a target price of $44-45 on the stock, a difference of $16-17 or approximately 57%. Its 52-week range is $21.40 - $51.50 and the 50 and 200 day moving averages are 28.73 and 34.21 respectively. The company still has difficult statistics to work through. Revenue is estimated at $65.8 billion (ttm), down from $86.6 billion in December 2010. Earnings per share are estimated at $3.75 (ttm), up from $3.50 in december 2010. Analysts are predicting revenue to come in at $80.17 billion for December 2011, down by around 7%. Earnings are expected to increase from $3.50 to $4.08, however, indicating that Citigroup may be in better control of their costs. Analysts predict earnings to continue to grow in 2012 hitting $4.44 while minimal growth is expected for revenue. Return on equity is around 6.5%. Market capitalization is around $80.6 billion while real value of C is estimated at -$33.7 billion. While there are some positive aspects to the company, it is no where near as healthy as it was once perceived.

Analysts are putting a target price of $47 on JPMorgan Chase & Co. (JPM) which is 42% higher than where it is currently trading. Most are giving the stock a buy or strong buy rating. Its 52 week range is $27.85-$48.36 and the 50- and 200-day moving averages are 32.75 and 37.46 respectively. The company still has inconsistent statistics to work through. Revenue is estimated at $93.4 billion (ttm), down from $104.8 billion in 2010 and earnings per share are estimated at $4.69 (ttm), up from $3.96 in 2010. Analysts are predicting 2011 revenue to come in higher at $100.3 billion, but still under 2010 figures. They also expect 2011 earnings to increase $4.58, up from 2010. While revenue is expected to decrease, JPM is still managing to increase its earnings. Analysts predict earnings to continue to grow in 2012 hitting $4.93 while a slight decrease is expected for revenue. Return on equity is around 11%. Market capitalization is around $122 billion while real value of C is estimated at -$34.5 billion. There are some positive aspects to the company, but it is still a risky stock in my opinion.

Analysts have a target price of $9 on Bank of America (BAC), which is about 50% higher than where it is currently trading. Most are giving the stock a hold or buy rating. Its 52-week range is $5.13-$15.31 and the 50 and 200 day moving averages are 6.37 and 8.77 respectively. The company has different strengths than C and JPM. Revenue is estimated at $75.36 billion (ttm), down from $110.2 billion in 2010 and earnings per share are estimated at -$0.31 (ttm), down from $0.86 in 2010. Analysts are predicting 2011 revenue to come in higher at $93.32 billion, but still under 2010 figures. They expect 2011 earnings to be -$0.03, still well down from 2010. Both revenue and earnings are expected to take sharp drops this year while both are predicted to grow in 2012 with earnings expected to come in at $1.00 and revenue is expected to climb to $97.4 billion. Return on equity is around -0.78%. Market capitalization is around $61 billion while real value of C is estimated at $200 billion. There is a positive valuation to the company, but it disappoints this year with negative earnings. On the upside, 2012 should see a turn around.

Points to consider:

• C and JPM overvalued according to market cap and estimated value while BAC is under valued.
• Revenue is expected to be down for all 3 banks, while C and JPM are still expected to post increased earnings per share. BAC is expected to post a loss.
• All 3 banks are expected to improve earnings for 2012 while only BAC is expexted to increase earnings significantly.
• All 3 banks are well under their target price, but analysts are mixed on recommendations giving JPM their strongest backing.

Compared to the Toronto Dominion Bank of Canada (TD) which trades at around $70 and has a target price of near $93, the big 3 American banks look less stable. TD has consistently posted increased revenue and earnings while also increasing their presence in the United States. The company does have a negative estimated value at around -$37.7 billion versus a market capitalization of near $62.9 billion. For those who like dividend paying stocks, TD's trailing dividend was $2.47 and is expected to increase. By contrast, BAC's trailing dividend is $0.04 while JPM's is $0.80 and C's is $0.03. Looking at banking stocks, I am not interested in investing in American banks at these prices. TD looks a lot more appealing to me because of strong financials, good dividends and the fact that they are growing as opposed to recovering from poor management and a financial crisis. As always, these are my opinions so make sure to do your own due diligence before investing.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

3 Pros & Cons: JPMorgan Chase

JPMorgan Chase (NYSE:JPM) CEO Jamie Dimon jolted the markets this week when he announced an increase in the company’s quarterly dividend from 20 cents to 30 cents — good for a nearly 2.8% yield — right before the release of the Fed’s financial “stress tests.”

The company also announced a plan to buy back a staggering $15 billion in stock, which would come to about 8% of the outstanding shares. About $12 billion is approved for 2012 and the remaining $3 billion is slated for the first quarter of 2013.

As a result, JPMorgan�s stock price shot up nearly 10% going into Friday, bringing JPM’s year-to-date gains past 30%.

So is there anymore upside left in JPMorgan right now? Let’s take a look at the pros and cons:

Pros

Massive Scale: JPMorgan is the biggest bank in the United States, with more than $2 trillion in assets and operations in more than 60 countries. Besides traditional banking, the company also generates substantial revenues from asset management, investment banking and treasury services. Last year, JPMorgan generated $19 billion in net income, or $4.48 per share, with revenues close to $100 billion.

Leadership: Dimon is perhaps the world’s top banker. Because of his conservative policies — at least compared to rivals like Citigroup (NYSE:C) and Bank of America (NYSE:BAC) — he was able thrive during the 2008 financial crisis. During this time, he picked up choice assets like Bear Stearns and Washington Mutual — with federal government�assistance. Even during the European crisis, Dimon demonstrated his knack for understanding risk levels. The result was that JPMorgan had relatively low exposure to the instability.

Economic Growth: This is critical for JP Morgan. With the U.S. economy showing signs of a rebound, there should be more opportunities for lending — which will drive strong growth in revenues and profits.

See Also: Financials Pump up Payouts After Stress Test

Cons

Regulations: These definitely are a drag for JPMorgan, as well as the rest of the banking industry. Capital requirements are now more onerous, and the federal government has cracked down on overdraft and interchange fees, cramping banks’ sources of revenue and forcing them to consider additional — and unpopular — fees for things like checking accounts. There also are tough restrictions on proprietary trading.

Low Rates: Banks generally make profits on the difference between the rates they pay on deposits and the interest they charge on loans. The problem is the margin between the two has been thin, which has made it tough to generate profits. While this low-rate environment might get better eventually, it won’t in the near-term, presenting a challenge.

Real Estate: There are signs of improvement in the real estate market, but it’s far from clear whether they are sustainable. A large number of homes still have delinquent loans, though, and if there’s a strong real estate rebound, it likely won’t be for years down the road.

See Also: Investors Should Hope Bank Fees Stick

Verdict

While real estate and regulations will likely be a problem, JPMorgan�s prospects still look promising. Dimon is focused on managing risks and finding ways to reward shareholders, such as with dividends and buybacks. And JPM shares still are fairly cheap despite this year’s run-up, coming to 10 times earnings.

So for now, the pros outweigh the cons on JPM shares.

Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of �The Complete M&A Handbook”, �All About Short Selling� and �All About Commodities.� Follow him on Twitter at @ttaulli or reach him via email. As of this writing, he did not own a position in any of the aforementioned securities.

6 Hazardous Stocks to Sell Now

With the internal indicators at very overbought levels and the indices hard against major resistance, it would appear that the rally is about to fail.�But even if it doesn’t, it won’t necessarily float all boats for the remainder of the summer.

At least one thing is clear, and that is that the Dow and its companions are just a hair below a resistance line that connects with the high of 10,736 made on Jan. 13. That high represents the very top of a trading range with a floor at around 9,800. The S&P 500′s range is 1,150 to 1,040, and the Nasdaq’s range is 2,320 to 2,100.

I’ve put together a list of stocks that are headed for a technical breakdown, so sell them if you own them, avoid them if you don’t, or short them if you want to make some money.

Whatever you decide, you need to know that the following stocks could be hazardous to the health of your portfolio.�

Stock to Sell #1: Big 5 Sporting Goods Corp. (BGFV)

U.S. sporting goods retailer Big 5 Sporting Goods Corporation (NASDAQ: BGFV) operates 384 stores in 11 states.

The stock broke down from a rounding top in early June at $13.50, following the dreaded death cross in May. It quickly dropped to under $11, and then bounced to its 50-day moving average, where it should be sold. Note the recent sell signal from the stochastic.

Credit Suisse Equity Research notes that the second half 2010 earnings comparison will probably be lower than last year. If consumer sentiment continues to lag and BGFV falls under support at its 20-day moving average at $13, then look for a quick drop to $8 to $10.

Stock to Sell #2: Corinthian Colleges, Inc. (COCO)

Post-secondary education company, Corinthian Colleges, Inc. (NASDAQ: COCO), which provides various diploma programs, has been hampered by the government’s policy of cutting aid to schools with a high rate of student loan defaults. Analysts have regularly reduced Corinthian’s earnings estimates.�

Technically COCO double-topped in March/April at just under $20 and made a consistent series of lower lows in a three-month high-volume liquidation. There has been no support even following the bounce to $11 in early July. And on Aug. 4, COCO broke a double-bottom at $8.65, signaling a further decline.�

�

Stock to Sell #3: Caremark Corp. (CVS)

CVS Caremark Corporation (NYSE: CVS)? broke down from a compound top when it sliced through a neckline at $30.50. The decline was followed by a death cross in June, and a new low at under $29. In July, the stock rebounded, but reversed just as it penetrated its 50-day moving average and flashed a new sell signal from the stochastic.

Decreased drug reimbursements from federal and state governments and only modest earnings growth, coupled with inconsistent revenue projections, have led to the stock’s fall. A break under the low at $28 could lead to a quick sell-off to $24. For those shorting this stock, stop-loss orders should be entered at $32.50.

Stock to Sell #4: Gilead Sciences (GILD)

Biopharmaceutical stock Gilead Sciences, Inc. (NASDAQ: GILD) broke down from a broad consolidation in April, following a huge downside breakaway gap. Even though the pace of the decline slowed in June and July, the trend is still down. The recent rally to $35 has been halted at the 50-day moving average. And note the number of “big days” of selling volume.

The likelihood is that the downtrend will continue with a target under $30.�Short sellers should consider a stop loss at $37.

S&P recently lowered GILD’s rating, saying that the downgrade “reflects our view of its near-term exposure to U.S. health care reform, which � affects about 45% of its U.S. business.”

Stock to Sell #5: QUALCOMM (QCOM)

QUALCOMM, Inc. (NASDAQ: QCOM), a designer and manufacturer of digital wireless products, has been in a sharp downtrend since topping out at $50 in January. The huge gap down, which opened at $46, is a breakaway gap and a reminder of the negative power in this stock’s decline.�

But QCOM is a volatile performer, and in early July it bounced from $32 to $39, which is the trading range within a channel down price collapse. Note the huge selling volume following rallies and the new sell signal from the stochastic.�

The target for a short sale is under $30, and a stop-loss should be considered at $41. Credit Suisse Equity Research rates this stock “neutral,” and warns that there are few catalysts on the horizon that will drive earnings momentum.

Stock to Sell #6: Research In Motion (RIMM)

Research In Motion Limited (NASDAQ: RIMM) is a designer and manufacturer of wireless equipment, best known for its line of BlackBerry smartphones. But lately each of its new product offerings seems to be upstaged by rival Apple Inc. (NASDAQ: AAPL).�

The stock appeared to be progressing nicely in an ascending triangle early this year until prices broke down in April. That sell-off turned into a broad decline with a death cross in May. RIMM managed a reaction rally in July, but it appears to have run into a wall at the 50-day moving average, and the stochastic recently issued a new sell signal.

It is now trading under its 20-day moving average, plunging again immediately following the introduction of its latest phone. Its low just over $47 will no doubt be tested and, if it fails, look for RIMM to fall to $40.�

The Options Trader’s Guide to Technical Analysis — In his latest report, learn how John Lansing leverages the power of technical analysis to identify the short window when a trade is set to go straight up or down. Get your FREE copy here!

Stalking The Bear: Trouble In Transports

Part 2 of a series.

Before we begin with a detailed look at the Transportation group, I'd like to remind the reader this series is titled, "Stalking the Bear," not skinning it. There will be time enough for skinning but patience is of utmost importance at this juncture. Now is the time to apply war paint, rub your hands in the dirt, put on the foil or whatever else you want to do in preparation for the fight. You want to be prepared so you can take advantage -- not be taken by surprise.

In Part 1 of the series, "Trouble Brewing Behind Facade of Bull Rally," I highlight the "key reversal" of Apple Inc. (AAPL) the supreme leader of this bull market. Does this mean AAPL can't attempt to make a new high? Absolutely not. Sometimes a series of reversals must occur to derail an uptrend such as AAPL's. Sometimes not. Either way, only a fool would ignore the clear sign of weakness that punctured AAPL's pristine ascent last week.

Never forget, the object of "Stalking the Bear" is to make you aware of the warning signs so you are not swept up and eventually away by the senseless cheerleading going on around you. One of the best tools for such stalking is the close monitoring of the Transports.

Conventional wisdom suggests the transportation group leads the overall market, because of said group's hypersensitivity to economic conditions. However, a debate about the reasons for leadership, while interesting, would in fact be missing the point. This "transports lead" school of thought has a large and successful following and hence must be respected.

Below is a price chart of the Transports (IYT) next to the S&P 500 (SPY). I've chosen a 60 minute interval for prices to magnify the significant divergence unfolding. The 4 day yellow rectangle highlights the demarcation point. IYT broke down on Feb. 7 and has only accelerated lower as the SPY has obliviously marched on.

I feel obligated to again stress that this divergence, while worrisome, is not reason alone to sell the market. The charts above instead illustrate the deterioration of a key pillar of support for the general market. This price behavior will eventually come home to roost, and is another piece to the "stalking" puzzle. Place this piece next to the AAPL issues and Copper's under performance, and a picture begins to form. A picture that is not as bullish as the major averages suggest, or as exciting as CNBC, et al, would have you believe. DOW 13,000 is a meaningless event. Stay focused.

Perhaps these warning signs are foreshadowing an impending shock to the economy that will, of course, negatively affect equities. I will leave you with the following charts of oil and gold. The strength of both commodities may suggest some key geopolitical issue (or issues) is close to the boiling point. While I believe the Greece controversy is not going to be the catalyst (Greece is a 2011 shock topic), conceivably, the current sideshow in Iran may become center stage a lot quicker than the average market participant is expecting.

In the 1st figure below, I am using the Oil ETFs as a proxy. On the left you will see the daily price chart of OIL (representing WTI) and on the right BNO (representing Brent). Clearly both are experiencing strong breakouts of sound bases. Significantly higher energy prices are a killer of economic growth.

In the 2nd figure I've chosen to use the ETF Sprott Physical Gold (PHYS) for our Gold proxy. This investment actually guarantees real physical gold is behind the paper certificate. Other ETFs fail to provide adequate assurance and are in some cases unapologetic ponzis, but I digress. As you will see, the daily price of PHYS has broken the downtrend in place since mid August. The two yellow rectangles highlight the rather obvious and well formed double bottom. Flight to safety? Or simply flight out of paper currencies as Central Banks print and the Currency Wars heat up?

Disclosure: I am long PHYS.

Oil Spread Signals Better Times Ahead

By Brad Zigler

Oil's had an exciting week. How so? Well, the petroleum sector is finally sending definitive signals of an economic rebound.

The indication arises from the recent downward volatility in the cost of crude oil, together with simultaneous upside pressure in refined product prices. We're now seeing refining profits normalize to levels not seen since spring 2009.

You may well ask why you should care about refiners' earnings, but trust me, there's a way for you to piggyback on their good fortune to generate profits of your own.

Let's not get ahead of ourselves, though. We need to define a few terms first.

Crack Spreads

Refiners make money by "cracking" input crude oil into an array of distillate products, most notably gasoline and heating oil. Output yields—that is, the ratio of lighter to heavier distillates—will vary according to seasonal factors and available refining capacity.

At times, it's more efficient—i.e., more profitable—to weight refining runs toward lighter distillates. A fairly common type of operation, for instance, turns out two barrels of gasoline and one barrel of heating oil for every three barrels of crude oil input. Knowing a refiner's throughput, or "crack spread," allows us to approximate its gross profit margin.

The process is complicated, however, by the industry's pricing conventions. Crude oil is priced in dollars per barrel, while heating oil and gasoline are denominated in gallons.

A barrel of oil contains 42 U.S. gallons, so you can translate the throughput of a "3-2-1" operation as:

3 x 42 gallons (crude oil) = [2 x 42 gallons (gasoline) + 1 x 42 gallons (heating oil)] - profit

Applying current wholesale prices* into this equation, we can determine the refiner's gross yield as:

3 x $87.33/bbl = [84 x $2.5816/gal + 42 x $2.6627/gal] - profit

$261.99 (crude oil) = [$216.85 (gasoline) + $111.83 (heating oil)] - $66.70 (profit)

*We use NYMEX futures prices for real-time fixes on the crack spread, the nearby contract for crude oil and to better simulate the refiners' marketing cycle, the second-nearby contract for products.

Thus, with current prices, a refiner can crank out a $22.23 per barrel ($66.70 per 3 bbl) profit for a "summertime mix." With a crude input cost of $87.33, the refiner's gross margin is 25.5 percent (or $22.23 / $87.33).

Not surprisingly, margins expand and contract as input and output values vacillate. In February 2009, when crude prices reached their nadir at below $34 a barrel, the 3-2-1 gross margin briefly ballooned to more than 64 percent—even after cratering at 4 percent the previous October. Margins were relatively thin in 2009 and 2010, averaging less than 15 percent.

Gross (3-2-1) Refining Margin

Investors should remember two things about gross refining margins. First, there's no guarantee that any refiner will actually realize them. For that to happen, a refiner would have to rely exclusively on the spot market for purchases and sales, even though most use contracts for their input crude and distillate production. Even so, margins are worth watching, as they represent potential earnings available to operators.

Second, there's a seasonality to margins. A 3-2-1 refining mix, being tilted toward gasoline, naturally produces the fattest profits for refiners when motor fuel prices rise. That's typically in the winter-to-spring run-up to driving season. You can see the pattern of May peaks in the chart above.

Gross margins, however, can't be looked upon in isolation. To get a more complete picture of a refiner's earning power, you have to compare its margin to the cost of goods sold, or COGS. The COGS is determined by dividing a refiner's crack spread by its product sales proceeds. Using our example above, we can calculate the COGS in the 3-2-1 operation as:

$66.70 / ($216.85 + $111.83) = 20.3 percent

A refiner is truly flush when margins exceed the COGS by 5 percentage points or more—and that's the signal flashing now.

As of Wednesday, January 26, this spread tipped over the threshold—to 5.2 percent—for the first time since March 3, 2009.

Favorable spreads weren't long-lived in 2009; the last time this occurred lasted only 32 trading days between January and March. There was no such run in 2008. For 2007 and 2006, though, profits ran high for 101 and 94 trading days, respectively.

At times like now—and during those runs in 2006, 2007 and 2009—individual traders can ride refiners' coattails by trading crack spreads through futures.

Futures Spread Vs. Refiners' Shares

Simply put, trading a three-legged futures spread is the most direct way to capture expanding refining margins. One does this by selling crude oil contracts short and simultaneously purchasing gasoline and heating futures in the same ratio as the crack spread illustrated above.

Despite their different denominations—crude oil in barrels and refined products in gallons—the contracts are equivalent. A crude oil contract covers 1,000 barrels, or 42,000 gallons; the exact quantity controlled by gasoline and heating oil contracts.

This spread is afforded a 75 percent reduction in each leg's performance bond requirement and is margined as a single position by the exchange clearinghouse.

To get a sense of the returns that can be obtained from this trade, consider the 2006 crack season. On March 5, refining margins moved to a 5 percent premium to the COGS, when the crack spread was $15.39 a barrel. By early May, that spread widened to $24.21, yielding a $26,460 gain.

Spread trading necessarily requires a futures account, and futures trading isn't suitable for many investors. For those disinclined to trade futures, the purchase of refiners' shares—such as Valero Energy Corp. (NYSE: VLO) or Tesoro Corp. (NYSE: TSO)—may be more appropriate.

Valero Energy Corp. (VLO) Vs. Tesoro Corp. (TSO)

But the question stock investors must address is whether the refiner's improved margins are already priced into its stock value.

No matter what approach an investor takes—if any course is taken at all—the improvement in refiners' prospects is yet another sign that a recovery is finally taking hold.

Disclosure: None

9 BRIC Stocks With Bullish Short Trends

If you're looking to add some growth and diversification to your portfolio, one idea is to consider emerging markets. These developing economies are represented by the BRIC countries (Brazil, Russia, India, and China).

To illustrate this idea, we ran a screen on US-traded stocks based in the BRIC countries for those short sellers believe will outperform. We screened for BRIC stocks seeing the most significant decreases in shares shorted month-over-month.

?Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.?

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We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.

Do you think these stocks will outperform like short sellers expect? Use this list as a starting point for your own analysis.

List sorted alphabetically.

1. Cninsure Inc. (CISG): Provides insurance brokerage and agency services, and insurance claims adjusting services in the People's Republic of China. China. Shares shorted have decreased from 2.82M to 2.44M over the last month, a decrease which represents about 1.44% of the company's float of 26.47M shares.

2. Changyou.com Limited (CYOU): Develops and operates online games in the People's Republic of China. China. Shares shorted have decreased from 372.33K to 220.03K over the last month, a decrease which represents about 1.52% of the company's float of 10.04M shares.

3. GOL Linhas A (GOL): Operates as a low-cost low-fare airline in Latin America. Brazil. Shares shorted have decreased from 7.42M to 6.06M over the last month, a decrease which represents about 1.49% of the company's float of 91.12M shares.

4. Zhongpin, Inc. (HOGS): Engages in the processing and distribution of meat and food products primarily in the People's Republic of China. China. Shares shorted have decreased from 3.74M to 3.20M over the last month, a decrease which represents about 2.07% of the company's float of 26.10M shares.

5. Mindray Medical International Limited (MR): Develops, manufactures, and markets medical devices worldwide. China. Shares shorted have decreased from 14.59M to 13.40M over the last month, a decrease which represents about 1.42% of the company's float of 83.77M shares.

6. Noah Holdings Limited (NOAH): Engages in the distribution of wealth management products to the high net worth population in China. China. Shares shorted have decreased from 2.63M to 2.29M over the last month, a decrease which represents about 1.95% of the company's float of 17.44M shares.

7. SouFun Holdings Ltd. (SFUN): Provides marketing, listing, technology, and information consultancy services to real estate and home furnishing industries in the People's Republic of China. China. Shares shorted have decreased from 2.11M to 1.90M over the last month, a decrease which represents about 1.91% of the company's float of 11.00M shares.

8. Trina Solar Ltd. (TSL): Designs, develops, manufactures, and sells photovoltaic modules worldwide. China. Shares shorted have decreased from 16.27M to 15.58M over the last month, a decrease which represents about 1.16% of the company's float of 59.34M shares.

9. VanceInfo Technologies Inc. (VIT): Engages in the provision of information technology services. China. Shares shorted have decreased from 7.48M to 7.10M over the last month, a decrease which represents about 1.51% of the company's float of 25.18M shares.

*Short data sourced from Yahoo! Finance, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Volatility In U.S. Financial Stocks Remains Too High

As 2011- dubbed as the ‘Year to Forget’- is coming to end soon, some investors are wondering if bank stocks are worth getting into now. Since the credit crisis, most bank stocks have been decimated and some of the banks have completely disappeared due to forced takeovers, mergers or failures. However, despite all the calamity in the industry in the past few years, U.S. banks are now in a better position compared to their European counterparts. This is because unlike European banks, U.S. banks were quick to get rid of bad assets from their balance sheets and they strengthened their financial position by raising fresh capital. However, despite this positive development, many questions still remain about the wisdom of investing in their stocks.

One of the reasons for investors’ worry about bank stocks is that they have become too volatile relative to the overall market and other sectors. The daily drama with the European debt crisis that primarily impacts European banks and large U.S. banks is not helping the situation for the entire U.S. banking sector.

In terms of equity performance of banks, the KBW Bank Index is down 23.5% while the S&P 500 is flat YTD. Individual banks such as Bank of America (BAC), Citibank (C), JPMorgan Chase (JPM) are also down by double digit percentages YTD, with Bank of America off over 58%.

Recently I came across an interesting article on the volatility of bank stock prices. From The Wall Street Journal article published last month:

The volatility of bank stock prices from one day to the next depends on investor perceptions of the riskiness of the assets held by banks. In tranquil times, when investors feel that bank portfolios are reasonably safe and not excessively leveraged, daily volatility is low. When investors are uncertain about the soundness of bank balance sheets and about the adequacy of bank capital, then daily volatility rises in bank stock prices to double or triple their normal levels.

Click to enlarge:

When uncertainty turns to panic, as it did in 1929-33 and again in 2008-09, the volatility in the daily movements of bank stock prices can shoot up to seven or eight times their normal levels. When this occurs, the damage radiates quickly from the banks to the broader economy.

These dynamics are illustrated in the nearby chart, which shows the volatility of daily movements in an index of all publicly traded bank stocks from 1926 to the present. In normal times, volatility hovers below 1%, occasionally rising as high as 2%, and rarely rising above 3% unless a serious crisis is at hand.

Source: The Rising Fear in Bank Stock Prices, The Wall Street Journal

The global financial crisis of 2008 pushed the volatility of bank stocks to levels that were last observed during The Great Depression. However, in spite of improvement in the financial strength of the industry volatility still remains high.

So should investors completely avoid bank stocks now?

The answer is absolutely not. In my opinion, investors must have a small exposure to the banking sector. As banks are the pillars of any economy and the U.S. banking system has been stabilized in recent years, it is highly unlikely the sector will face another big crash similar to the one it went through during the global financial crisis.

Since hundreds of bank stocks trade on the market, investors looking to add some bank stocks can consider “The Top 150 Banks” list published by the Bank Director magazine last quarter. The top five banks in the list, which was compiled based on many factors, were State Bank Financial Corp. (STBZ.PK), First Financial Bankshares Inc (FFIN), City Holding Company (CHCO), First Republic Bank (FRC) and Republic Bancorp, Inc (RBCAA). The full list of 150 companies can be found here.

Disclosure: No positions

Downtown Los Angeles Sees Luxury Revival

Downtown Los Angeles peaked as a commerce center in the 1920s with banking and business headquarters stretching across the skyline, grand hotels such as the Biltmore and Alexandria and nascent luxury brands such as Harry Winston. Much of the city's influence and focus moved west down Wilshire Boulevard over the decades, though, leaving the city's inner core to languish in a mostly 9-to-5 world of white-collar workers, infamous Skid Row and an infrastructure of decaying landmarks that, despite a skyscraper skyline and gilded landmarks, became a virtual no-man's-land after dark.

But a reinvention of downtown Los Angeles began with the arrival of the city's Staples Center in 1999, owned in part and operated by the Anschutz Entertainment Group, and developments that included an ambitious design hotel by Andre Balazs in 2002 and burgeoning art scene flocking to loft developments at various historic bank and industrial buildings. Then came L.A. Live, a mixed-use entertainment venue with a reported price tag of $2.5 billion that gave a home to the Nokia Theater, Grammy Museum and a glassy condo-hotel tower. There are even plans for a football stadium that could lure an NFL franchise back to Los Angeles. Today, L.A. Live stands at the center of a new downtown, flanking the southwest strip of the skyline next to the Los Angeles Convention Center and Staples Center. The only five-star luxury hotel in downtown L.A., the Ritz-Carlton Los Angeles opened last year in the 22nd to 26th floors of a multi-use high-rise above a J.W. Marriott sister-hotel and below Ritz-Carlton Residences. It feels more like New York City than L.A. with its efficient doorman and counter-style reception. With no showy lobby lounge or glitzy restaurant on the ground floor, the reception is all about getting you to your room as efficiently as possible, and there's no less than four staff members guiding you before you even get to the elevator. The Ritz-Carlton Los Angeles' interiors are credited to Barry Design Associates, a Santa Monica firm that's worked on properties including Milan's Hotel Principe di Savoia and Four Seasons Hotel Atlanta. Elevators are lined in mixed shades and shapes of cut marble opening to long corridors with plush carpeting -- and additional elevators that connect only the five upper guest-room floors, meaning you're never forced to mix with those going to and from the lobby. While the front desk insists that all views are essentially equal, the west-facing view is the one to ask for -- it faces the Santa Monica Mountains and panoramic ocean silhouette on clearer days.

Deluxe rooms open to small foyers through integrated glossy-white wardrobes -- likely the prettiest closet you've ever seen. King-size beds are tucked with fluffy Italian linens facing built-in workspaces under a vista of the downtown skyline that instantly vanishes with manual blackout shades. Bathrooms are trimmed in marble vanities with shiny tile walls, and the wet room has a rain shower and soaking tub. (The TVs integrated in the vanity mirror are too far too see easily, though.) A rooftop pool maximizes skyline views and there could be a great cabana scene, but during our visit it was lacking music and people, save for a lone businessman overdressed on a hot autumn afternoon.

The in-house WP24, an Asian-concept eatery by star-chef Wolfgang Puck, is one of the hottest reservations in town. On our visit it was closed for a posh private event. Luckily there's no shortage of top eateries that have opened in the past few years in downtown Los Angeles. L.A. Live includes chains such as ESPN Zone, Yard House, Fleming's Prime Steakhouse & Wine Bar, Rock'N Fish and Rosa Mexicano. For a more local taste of downtown, a walk to nearby Rivera Restaurant offers much reward where Esquire's Chef of the Year, John Rivera Sedlar, leads a Latin menu of food and drink in a sexy space of exotic wood floors, chunky tables and a lively bar that's open for lunch and dinner. Menus are divided between three dining room themes of Sangre (Spanish and Portuguese), Samba (South American) and Playa Bar (Mexican and Southwestern) offering global Latin cuisine in a single restaurant. Further into the downtown's historic core, a number of super-stylish eateries attract a mix of loft-living locals, office workers and commuters to a trendy dining scene led by a few standouts. Bottega Louie would be one of the more famous and popular, offering a sparse loft-meets-Louis XIV dining room divided between a cafe bar with patisserie and no-reservations restaurant. Food is cooked in an open kitchen by a staff of edgy, well-tattooed epicureans that turn out consistent salads, burgers, frites and traditional chicken dishes. Not far away, Urbano Pizza Bar mixes rustic industrialism in a dining room of reclaimed wood paneling and pounded-tin ceiling with wood-fired pizzas topped with manila clams and mozzarella or hen eggs with mushroom ricotta.Directly next-door to Urbano Pizza Bar is Library Bar, a retro-inspired speakeasy filled with downtown's more eccentric design students and white-collar happy hour revelers within a boutique bar scene inspired by the private studies and libraries of yesteryear. A short appetizer menu complements whiskey cocktails such as the Tennessee Williams and Wilde's Sazerac. During warmer weather, the nearby Standard Hotel Downtown Los Angeles has one of the city's hottest rooftop pool bars -- ignited with an outdoor fireplace where snugly seated professionals sip away chilly sunsets among a revived downtown L.A. skyline.RELATED STORIES: >>Dorchester Collection Races to Luxury Leader>>Home Exchanges Mean Free Stays in Luxury>>Cipriani by Another Name Proves Just as ChicFollow TheStreet on Twitter and become a fan on Facebook. >To order reprints of this article, click here: Reprints

STR Holdings Off; Hapoalim Downgrades To Hold, Cuts Target

STR Holdings (STRI) shares are down sharply this morning after Hapoalim Securities analyst Gordon Johnson cut his rating on the shares to Hold from Buy, with a new target of $19, down from $21.

The move follows the company’s announcement yesterday that it continues to expect 2010 sales of $310 million to $330 million, with non-GAAP EPS of $1.05 to $1.10 a share. STR noted that it is seeing strength in its solar business, but that it has seen reduced orders from clients of its quality assurance business; it expects revenue from the solar segment of $195 million to $205 million and QA sales of $115 million to $125 million.

For Q1, the company continues to expect sales of $77 million to $81 million and non-GAAP EPS of 23-25 cents.

Johnson said the only real incremental information in the update was the weakness in the QA biz; he writes that he had already expected update from its solar segment. He also notes that the lock-up period for a group of private equity investors who hold the stock expires on May 4, creating dilution risk for the shares; he notes that the lock up affects 28 million of the roughly 41.3 million outstanding shares.

STRI is down $1.43, or 6.7%, to $19.95.

Update: A spokesman for STR Holdings points out that the terms of the company’s lock-up basically prevent the sales of any shares covered by the arrangement for another six months after the lock-up expiration – and even at that point, only 50% of the covered shares would be eligible for sale, with the remaining shares subject to sale another 91 days later.

Taiwan: The Other Election To Watch

Mitt Romney’s win in the New Hampshire Republican primary may be dominating the headlines, but as CNN recently noted, the US presidential election isn’t the only race for top office this year worth closely watching. Right now, my attention is focused on an upcoming presidential election on the other side of the globe.

On January 14, Taiwanese voters will vote for their country’s next president. This election is particularly important for investors. Though many factors drive stock prices, a win for incumbent President Ma Ying-jeou would be supportive of Taiwanese equities. A loss, on the other hand, could be a tailwind for the market.

Ma, who has been in power since 2008, is viewed by the local business community as being much more focused on maintaining a friendly relationship with China than his opponent, Tsai Ing-wen, chairwoman of the Democratic Progressive Party (DPP). Tsai has publically criticized Ma’s efforts to create closer economic links with China.

Maintaining a good relationship with China is important to the Taiwanese business community because many Taiwanese businesses operate parts of their supply chain in China. Friendly ties with the mainland are also perceived by investors as good for Taiwanese economic growth.

Let’s look at what happened to equity valuations the last time a DPP leader was in office.

From 2000 to 2008, then President Chen Shui-bian pushed for Taiwan’s independence publicly and had what can best be characterized as a bad relationship with the mainland. Taiwanese businesses found it hard to invest in China, and Taiwan missed out on much of the global economic boom of the period. In addition, Chen was ultimately convicted of corruption.

During Chen’s presidency, equities in Taiwan, as measured by the MSCI Taiwan index, fell by 7%. In comparison, the broader MSCI Emerging Market Asia index rose by 117%.

Since 2008, when Ma replaced Chen as president, Ma has focused on fostering a better relationship with China. Under his leadership, stocks in Taiwan have performed generally in line with the broader developing Asian market. Since 2008, Taiwanese equities have dropped 24%, while the broader Asia emerging market index has dropped 18%.

Some market watchers are worried that if the DPP gains power, we could see a repeat of Chen’s term or at least a deteriorating relationship between China and Taiwan. In other words, a DPP win could have a negative impact on Taiwan’s business and economic growth in general. A Ma win, in contrast, could potentially mean a continuation of China’s current economic cooperation policy with Taiwan and could have a positive impact on Taiwan’s growth.

As Taiwan doesn’t allow local public opinion polls in the 10 days prior to presidential elections, the country’s equity market seems to have become especially sensitive to potential outcomes in the days leading up to the vote.

As of close Wednesday, the Taiwanese market appears to be reflecting a somewhat narrow win for Ma, which the most recent polls also showed. Since January 3rd, when the last local opinion polls were released, equities in Taiwan are up about 3% while the broader developing Asia index was up 1%.

Still, who will ultimately be elected and what his or her actual policy toward China will be is uncertain. In addition, election outcomes are just one of the many factors influencing Taiwanese stock prices. Another major factor is the state of the global economy, which has a huge impact on Taiwan’s export-driven economy.

For now, some analysts are expecting that investors will remain cautious on Taiwanese equities early this year. While I still hold a near-term overweight view on Taiwan, there is a chance that my view could change if the global economic environment changes along with the country’s political landscape.

Source: Bloomberg

Original post

How to Make a Fast 30%-60% Buying These Beaten-Up Stocks

It's time to take on more risk. At least, that's what private equity firms are doing right now. Private equity firms are investment companies that raise large amounts of capital from wealthy investors and large institutions. They use this capital to take huge, sometimes controlling stakes in companies.  And after six months of fleeing risk, which included buying U.S. Treasurys at record-low yields, these guys are beginning to go shopping. A shopping spree makes sense, given the huge decline in small caps over the past few months. Some companies in the biotech and energy sectors are still down 40%-plus from their highs. One sector that looks particularly attractive is specialty retailers. It includes companies like Chico's and Abercrombie & Fitch – which focus on selling one type of merchandise (clothes, pocket books, jewelry) and cater to a specific clientele. I'm sure these two stocks won't show up on any momentum trading screens following their massive pullbacks. Even value investors may have a tough time buying these struggling retailers. But the "smart money" private equity investors are showing interest in this sector. The chart below includes specialty retailers Talbots (TLB) and Pacific Sun (PSUN). These stocks have exploded higher in the past few days.  Talbots recently announced it received a letter from private equity firm Sycamore Partners, proposing to acquire all outstanding shares for $3. Shares jumped more than 60% on the news. Pacific Sun announced it received a $60 million loan from Golden Gate Capital. That will give the private equity firm a 20% stake in the company. Part of the loan will be used to fund lease buyout payments on the 175-plus stores Pac Sun announced it would close. Shares jumped 35% on the news. These aren't the only two... Charming Shoppes, another specialty retailer, is up about 60% in two months. The firm announced it would sell its Fashion Bug label, which has more than 600 stores. Sitting on its board of directors over the past year is Michael Blitzer. He served as a principal of Portsmouth Partners, an advisory firm that provides operational and strategic services to private equity groups that focus on retail companies. Selling its struggling Fashion Bug division will make Charming Shoppes more appealing to private equity firms. And the stock is up huge in anticipation of a possible private equity deal. Retail stocks make for the perfect private equity investment. They can easily sell underperforming stores. Also, once these companies are private, experienced management teams can focus on growth. After restructuring, these companies can easily be taken public again, usually making huge profits for the original acquirer. Just take a look at Dollar General, which was acquired by private equity giant KKR for $7 billion in 2007. After a huge restructuring, the company was then brought public again in 2009. Dollar General has a market cap of $13.5 billion today. KKR still owns a 30% stake. That said, buying a stock solely on the chance it'll get taken over is not one of my favorite strategies. But one thing the two specialty retailers in the chart have in common is they were all trading at a significant discount to book value before their huge moves to the upside. My advice is to screen for specialty retailers down at least 30% from their highs. Also, make sure they trade at a discount to book value. The book value is the theoretic amount a company would receive if it liquidated. You can find it on Yahoo Finance under "Key Statistics." I found several companies that fit this profile, including Coldwater Creek, Christopher & Banks, Office Max, and Brown Shoe. Buying specialty retailers under book value should provide investors with downside protection.

Why Did My Stock Just Die?

The markets were ecstatic that the world's central banks collaborated to bail out the profligate spending habits of European governments. So even though your stock took a nosedive, don't panic. First, let's see whether it had good reason to fall. Sometimes, panic-fueled drops can make excellent buying opportunities. Here's the latest crop of cratered stocks that could provide a possibility for profit:

Stock	CAPS Rating (out of 5)	Wednesday's Change
Flagstar Bancorp (NYSE: FBC  )	**	(12.6%)
StoneMor Partners (Nasdaq: STON  )	****	(12.5%)
Shutterfly (Nasdaq: SFLY  )	*	(11.9%)

Sources: Yahoo! Finance, Motley Fool CAPS.

With the markets roaring ahead 490 points on Wednesday, or 4.2% -- their best day in more than two years -- stocks that went down by even larger percentages are pretty big deals.

That's going to leave a mark
Once again, Flagstar Bancorp made a big move in price on no specific company news, surprising since financial stocks were buoyed by the developments in Europe. Other regional banks like Synovus Financial (NYSE: SNV  ) and Regions Financial were up 8% and 14%, respectively.

Its recent earnings report showed narrower losses as 30-day and 60-day delinquencies from its residential mortgage loan portfolio remained flat. However, the 90-day delinquency rate continued to rise, though at a slower pace than before. While it remains well-capitalized with Tier 1 capital ratios at 9.31%, Flagstar remains a troubled institution.

While Wall Street analysts are bullish, CAPS All-Stars are more circumspect in their outlook, with just 58% of those registering an opinion thinking the regional banker can beat the broad market averages. Deposit your opinion in the comments section below or on the�Flagstar Bancorp CAPS page and add the stock to�your watchlist�to see if it successfully negotiates the U-turn.

Digging in
Standard & Poor's started playing a dirge for the country's second-largest cemetery operator, StoneMor Partners. Its credit rating, which is already a B, was placed on negative watch.

The death-care services leader is highly leveraged, just as Service Corp. (NYSE: SCI  ) and Carriage Services are, but because it is pursuing a growth-by-acquisition strategy, Standard & Poor's expects it to remain heavily indebted. Its master limited partnership structure favors earnings distributions to unitholders instead of repaying debt, so in the event of default the ability to recover principal is considered unlikely.

While the ratings agency notes that StoneMor operates in an industry with fairly predictable growth, cash flow creation is difficult, and with heavy competition weighing against it, the immediate future looks dim. CAPS member ccjeep looks at the distributions StoneMor pays out and is ready to reap the rewards: "Misunderstood by most, well run and will continue to pay hefty dividend plus capital appreciation."

You can tell us on the�StoneMor Partners CAPS page�or in the comments section below if you think the stock will be buried, and then follow along by adding it to the Fool's�portfolio tracker.�

Picture this
Online photo shop Shutterfly is facing a blurry future as intense price competition limits its profitability. Rival Snapfish, a Hewlett-Packard (NYSE: HPQ  ) subsidiary, is offering steep discounts going into the holiday season, but at least one analyst isn't worried. He says Eastman Kodak (NYSE: EK  ) previously attacked the niche on price and Shutterfly lost no market share, so Snapfish's attempt at emulating the maneuver will be unlikely to cause the segment leader to lose focus.

Interestingly, Shutterfly might just buy either of its peers. Having just recently been approved for a $125 million revolving credit facility, the photo company said that for the right price it could be tempted to capture one or the other. Kodak is known for needing to raise cash to offset its declining IP portfolio and might be the right one.

While Wall Street is wildly bullish about Shutterfly -- all 14 Wall Street analysts tracking the online service see it outperforming the market -- the CAPS community is actually fairly evenly divided. Just 54% see it beating the indexes, while less than half of the All-Stars agree. Add the online photo site to your watchlist and see if it will shake it like a Polaroid.

Ready for a resurrection
Just because your stock has taken a beating, that doesn't mean it's going to roll over and die. Markets are�known for overreacting. A closer look on�Motley Fool CAPS�at what's happened to your stock can give you an edge over other investors who just react to the market's lead. With CAPS, you can decide for yourself whether your stock is ready to come back from the dead.

Editor's note: A previous version of this story incorrectly stated that Shutterfly, not Snapfish, is a Hewlett-Packard subsidiary.

Top Stocks For 2011-12-14-4

DrStockPick.com Stock Report!

Monday July 27, 2009

Imperial Sugar Company (NASDAQ:IPSU) announced that it shipped the first load of bulk granulated refined sugar from its rebuilt Port Wentworth, Georgia refinery. The refinery, which was extensively damaged in an industrial accident in February 2008, commenced limited truck shipment of liquid bulk sugar in late June and completed production through the reconstructed granulator and dry bulk loading stations on Saturday, July 25. John Sheptor, Imperial’s President and CEO said, “The commissioning of the bulk loading station is a major milestone in our quest to fully restore production at Port Wentworth. We can once again begin serving a substantial portion of our industrial customer base from our Georgia refinery. This is a very proud day for all our employees who have worked so diligently to make this possible.”

Enzon Pharmaceuticals, Inc. (Nasdaq: ENZN) announced today that Jeffrey H. Buchalter, Enzon’s president and chief executive officer, will present at the 2009 BMO Capital Markets 9th Annual Focus on Healthcare Conference, which is being held August 4th in New York City. Enzon’s presentation will take place at 9:30 a.m. EST on Tuesday, August 4, 2009. The presentation will be webcast. Interested parties can access the webcast information by going to the events page that is under shareholder information on Enzon’s website at www.enzon.com.

The Bank of New York Mellon (NYSE: BK) announced today that it appears on the U.S. Environmental Protection Agency’s (EPA’s) National Top 50 List of the largest green power purchasers and is a member of the EPA’s Green Power Leadership Club.

Ingles Markets, Incorporated (Nasdaq:IMKTA) will provide an online, real-time webcast and rebroadcast of its third quarter earnings conference call on August 3, 2009. Ingles plans to release earnings for its third quarter ended June 27, 2009, on August 3, 2009.

The U.S. Army has awarded Lockheed Martin (NYSE: LMT) a $142 million follow-on production contract for the Apache Arrowhead(R) system, the combat-proven, Modernized Target Acquisition Designation Sight/Pilot Night Vision Sensor (M-TADS/PNVS) for the AH-64D Apache attack helicopter.

STMicroelectronics (NYSE: STM), the leading producer of semiconductors for Car Infotainment and a top-three supplier to the automotive industry, today introduced Cartesio+, a new application processor with embedded GPS for next-generation in-car and portable navigation systems. Combining superior processing power and positioning accuracy with a rich set of integrated peripherals, ST’s Cartesio+ enables cost- and space-efficient navigation and infotainment applications with enhanced user experience.

Source: E-Gate System from Alphatrade.com

Pardon Our Appearance…

Folks, as some of you noticed this morning, a change to the Tech Trader home page went live, and was not to everyone’s liking, including yours truly.

We’ve returned more or less to the original format. Some stories past a certain length will have a jump to the full story. That’s probably not going to satisfy some people, but I hope that over time an appropriate balance will be struck between the ease with which one can skim the day’s posts, and the ease with which people can quickly browse from headline to headline without having to endure a wall of text.

We’re also starting to institute tags, as you can see along the left-side margin of this page, near the top of each post. I’m on the fence about the utility of tags, so I welcome your feedback. As this initiative is just getting started, most of the tags will initially link to nothing at all. Believe it or not, this is a by-hand, Web 1.0 kind of affair. Your patience is appreciated.

Radio Shack Mulls Sale Of The Company, N.Y. Post Reports

Radio Shack (RSH) is “exploring strategic alternative including a possible sale of the company,” the New York Post reports this morning. Citing “people close to the situation,” the Post says the electronics chain could be sold for over $3 billion. (Which isn’t all that stunning a figure, given the company’s $2.7 billion market cap.)

The report says investment bankers for the company have already begun pitching private equity firms about a potential LBO of the retailer. Also possible: a merger with Best Buy (BBY), the story says. Another option: a massive stock repurchase program.

RSH this morning is up $1.21, or 5.6%, to $23.01.

Best Stocks To Invest In 2012-2-19-1

China Direct Industries, Inc. (NASDAQ: CDII ), a U.S. based company that sources, produces and distributes industrial products in China and the Americas in two core business segments, announced its financial results for the fiscal year ended September 30, 2011.

Fiscal 2011 revenue reaches $187.8 million up 66.6% from fiscal 2010

Fiscal 2011 net income attributable to China Direct Industries rises to $9.3 million up from a loss of ($3.2 million) in fiscal 2010

Fiscal 2011 Diluted EPS climbs to $0.25 compared to a loss of ($0.11) in fiscal 2010

Financial Highlights

For the full year of fiscal 2011 total revenues increased to $187.8 million, an increase of 66.6% compared to total revenues of $112.7 million recorded in fiscal 2010. Our gross profit reached $19.5 million, up 171.1% compared to gross profit of $7.2 million recorded in the prior fiscal year. Gross profit margins improved to 10.4% in fiscal 2011, an increase of 63% compared to gross margins of 6.4% in fiscal 2010. For fiscal 2011, our operations resulted in net income attributable to China Direct Industries of $9.3 million compared to a net loss of ($3.2 million) recorded in fiscal 2010. Earnings per basic share reached $0.26 in fiscal 2011 on 36.1 million weighted average shares outstanding. Earnings per diluted share were $0.25 in fiscal 2011 on 36.8 million weighted average shares. This compares to a net loss of ($0.11) per basic and diluted share in fiscal 2010 on 29.6 million weighted average shares outstanding.

China Direct Industries, Inc. is a U.S. based company that sources, produces, and distributes industrial commodities in China and the Americas and provides business and financial consulting services. Headquartered in Deerfield Beach, Florida with corporate offices in Shanghai, China Direct Industries’ unique infrastructure provides a platform to expand business opportunities globally while effectively and efficiently accessing the U.S. capital markets.

More about CDII at www.cdii.net

IMAX Corporation (NYSE:IMAX) and Paramount Pictures announced that Mission: Impossible - Ghost Protocol The IMAX Experience, earned approximately $14 million at the box office in IMAX® theatres worldwide during its opening weekend. Domestically, the film generated $10.5 million on 300 IMAX screens, for an IMAX per-screen average of $35,000. Internationally, it generated $3.4 million on 89 IMAX screens, for an IMAX per-screen average of $38,200. The film surpassed the previous December opening box office records set by Tron: Legacy. Mission: Impossible - Ghost Protocol The IMAX Experience is set to open on 112 additional IMAX® theatres in various territories, including China and the UK.

IMAX Corporation is one of the world’s leading entertainment and technology companies, specializing in the creation and delivery of premium, awe-inspiring entertainment experiences.

NRG Energy, Inc. (NYSE:NRG) and The Kraft Group announced a comprehensive sustainable energy supply agreement for Gillette Stadium, home of the New England Patriots and the New England Revolution, and Patriot Place, The Kraft Group’s shopping, dining, and entertainment destination in Foxborough, Massachusetts. Under the agreement, NRG will triple the amount of clean, renewable solar power generated at Patriot Place. The Kraft Group and NRG will also pursue the addition of a full-sized wind turbine that would elevate Patriot Place to be one of the largest renewable power installations at a major sports venue in the United States. In addition, NRG will provide all the additional power for the nearly 70,000-seat stadium and the more than one-million-square-foot retail and entertainment complex.

NRG is at the forefront of changing how people think about and use energy. A Fortune 500 company, NRG is a pioneer in developing cleaner and smarter energy choices for our customers.

Cleantech Transit, Inc. (CLNO)

Cleantech Transit, Inc. is in the business of producing and conserving power. Cleantech Transit produces and sells clean electricity globally, with a focus on sustainable energies using renewable resources such as Geothermal, Solar and Wind. Cleantech Transit’s goal is to use innovative technologies to reduce electricity consumption and dependence on carbon based energy. Cleantech Transit, Inc. was founded in 2006 and is based in Scottsdale, Arizona.

Biomass has generated energy from the time it created the first fire, and wood is still the largest bioenergy resource available today. Other sources include food crops, grasses, agricultural residues, manure and methane from landfills. Fossil fuels are simply ancient forms of biomass, but their finiteness and negative environmental impact makes it imperative to develop our renewable biomass resources for our energy needs. Because biomass can be converted to other usable forms of energy it is an attractive petroleum alternative.

Today, biomass resources generally fall into three types:

Agriculture
Forests
Urban wast

Cleantech Transit, Inc. (CLNO) is pleased to announce it has met its funding requirement to secure the Company’s ability to earn in 25% of the 500KW Merced Project.
The Company is in the final stages of closing its initial interest in the Merced Project and is currently working on completing the necessary documentation and expects closing the transaction soon. As previously announced Cleantech has the option to earn up to 40% of the Merced Project and the Company plans to continue to work towards increasing its interest in the Merced Project as they move ahead.

Express Inc. (NYSE:EXPR) the specialty retail apparel chain operating more than 600 stores in the U.S., Canada and Puerto Rico announced that Express will become an official sponsor of the 2012 Miss America Program. The year-long sponsorship kicks-off with an exciting week of pageant events and culminates on January 14 at 9:00 PM /EST with the live ABC broadcast of the 2012 Miss America Pageant from the Planet Hollywood Casino Resort in Las Vegas, Nevada.

Express is a specialty apparel and accessories retailer of women’s and men’s merchandise, targeting the 20 to 30 year old customer.

Top Stocks For 2011-12-16-20

Columbus McKinnon Corporation (Nasdaq:CMCO) announced financial results for its fiscal 2012 second quarter that ended on September 30, 2011.Net sales for the second quarter of fiscal 2012 were $149.9 million, up $17.6 million, or 13.3%, from the prior-year period based on strength across all geographic markets. Sales outside of the U.S. expanded 22.7% to $70.1 million and comprised 47% of total net sales, compared with $57.1 million, or 43% of total sales, in the second quarter of fiscal 2011. Compared with the year-ago quarter, changes in foreign currency translation favorably impacted fiscal 2012 second quarter sales by $5.4 million, or 4.1%.

Columbus McKinnon Corporation designs, manufactures, and markets material handling products for commercial and industrial end-user markets in the United States, Europe, Canada, and internationally.

Crown Equity Holdings, Inc. (CRWE)

Internet advertising enables you to reach your target audience effectively. Interested consumers can find your website by searching for the specific product or service that you offer. You can also place your adverts on niche websites which will be visited by your target consumers. By using email marketing to advertise new products or services, either by buying email addresses of potential customers or by following up on visitors to your own website, you are able to target thousands of people at once, whether they live across the street or across the world. Internet marketing is a cost effective way to market your business to a targeted audience without geographic or time limitations and has the added benefit of allowing you to assess on a daily basis the effectiveness of your marketing campaign.

Crown Equity Holdings, Inc. together with its digital network currently provides electronic media services specializing in online publishing, which brings together targeted audiences and advertisers. Crown Equity Holdings Inc. offers internet media-driven advertising services, which covers and connects a range of marketing specialties, as well as search engine optimization for clients interested in online media awareness.

Crown Equity Holdings Inc. (CRWE) recently announced that it has entered into a joint venture to deploy VoIP (Voice over Internet Protocol) technology delivering voice, video and data services to residential and commercial customers. The joint venture company is Crown Tele Services Inc. which was a wholly-owned subsidiary of Crown Equity Holdings Inc. Crown Equity Holdings Inc. will own fifty percent (50%) interest in the joint venture.

Commenting on the joint venture, Kenneth Bosket, President of Crown Equity Holdings Inc., said: “We are excited to deliver VoIP communications solutions specifically designed to meet the business and residential market needs in this fast-growing global market.”

For more information, visit http://www.crownequityholdings.com

Clearwire Corporation (Nasdaq:CLWR) plans to announce its third quarter 2011 financial results on Wednesday, November 2, 2011. The financial release will be posted at http://investors.clearwire.com at approximately 4:00 p.m. Eastern Time. Clearwire executives will host a conference call and webcast following the release at 4:30 p.m. Eastern Time.

Clearwire Corporation provides wireless broadband services. The company builds and operates mobile broadband networks that provide high-speed mobile Internet and residential access services, as well as residential voice services in communities in the United States.

Acme Packet, Inc. (Nasdaq:APKT) announced the Company has been named to the Deloitte 2011 Technology Fast 500�, a ranking of the 500 fastest growing technology, media, telecommunications, life sciences and clean technology companies in North America. This represents the third year in a row that Acme Packet has made the list.

Acme Packet, Inc. provides session delivery network solutions that enable the delivery of interactive communications, such as voice, video, and multimedia sessions; and data services across internet protocol (IP) network borders.

Cisco: Oppenheimer Impressed with ‘Stability’ in Switching

Oppenheimer & Co.’s Ittai Kidron today takes a “deep dive” into the switching equipment market, and observes that Cisco Systems (CSCO) appears to be gaining share in every corner of the ethernet�switching market, albeit in a market that saw sales drop in Q1.

Kidron, who has an Outperform rating on Cisco shares, and a $22 price target, writes that revenue and units both declined in Q1 in all parts of the business:

After growing sequentially for three quarters in a row, the ??????Ethernet switching market experienced a seasonal decline in 1Q12 of 9.6% to $4.8B. Every -25% segment declined QoQ with 10GbE once again outperforming and declining only 8.1% QoQ yet up 23.1% YoY to $1.6B. 10GbE now accounts for 33.3% of the overall market, up from 32.7% last quarter. 100Mbps revenue dropped 14.4% QoQ to $366M, and we expect 100Mbps to continue to decline going forward. 1GbE declined by 10.5% QoQ to $2.8B and still represents the majority of the switching market at 58.4%. For the first time we are introducing 40GbE results which we expect will grow for the foreseeable future.

Kidron is impressed with Cisco’s ability to drop less in the quarter and increase its market share:

Cisco�s switching revenues contracted at a slightly slower than market rate pace QoQ in 1Q12, and grew faster than market on a YoY basis in what is typically a challenging seasonal quarter for the company. In 1Q12, Cisco�s switching revenues decreased 9.1% sequentially to $3.38B and its revenue share slightly improved to 70.4% from 69.9% in 4Q11 and 69.7% in 1Q11. Overall ports shipped declined 7.0% sequentially to 31.7M, suggesting ASPs fell 2.2% while overall market ASP declined just 0.2% sequentially. The drop in ASP was largely due to a decline in fixed 1GbE and 10GbE switching ASPs [�] We believe Cisco�s market share stability is impressive considering an unfavorable geographical mix with emerging markets performing well while the US market, where Cisco�s market share is strongest, seasonally weaker. We attribute Cisco’s success to solid demand for the refreshed Catalyst 2960. Looking at pricing, fixed 1GbE port shipments declined 8.7% sequentially to 16.1M suggesting ASPs dropped 3.1% QoQ to $85. We believe the change in geographical mix is behind the ASP erosion.

In Kidron’s view, competitor�Juniper Networks�(JNPR) is struggling with a product line that’s not quite the right fit:

fter a strong 4Q11 where the company gained share in every market category, Juniper lost share in almost every category and its switching revenues dropped 15.2% sequentially to $116M pushing its market share down to 2.4% from 2.7% in 4Q11. Juniper saw most of its challenges in modular switching (1.4% share, down from 1.9% in 4Q11) where we believe the EX6200 has been slow to ramp and the EX8200 has had challenges gaining incremental traction. We believe the transition to fixed switching in wiring closet and campus environments could limit the opportunity for the EX6200 and that the EX8200 is now somewhat underpowered compared to its peers and needs a refresh.�

Analyzing Abounding Asymmetries

By Chris McKhann

The Internet and online trading companies have put a tremendous amount of knowledge in the hands of retail traders, in some respects equalizing the playing field. But the fact that you may have as much information as the pros doesn't mean you should try to beat them at their own game.

Professional traders, market makers, broker-dealers, and institutional money managers theoretically don't have any more information than you or I do. Hedge funds aren't supposed to, but I suppose it depends on whom they have been talking to. Online brokerages like tradeMONSTER provide analytics that rival anything that the pros have. Information websites provide all the data you need, and then some. (Jon and Pete have long been at the forefront of bringing institutional data to the retail trader.)

It used to be that the "investment experts" had a real hand up, an informational asymmetry that essentially allowed them to pull money from the pockets of retail traders and investors. That informational asymmetry is largely gone, but recent developments show that there are other forces at work.

First of all, there is the very real possibility that many pros are using inside information, or at least data that isn't publicly available. Then there is the issue of speed, as many funds spend huge amounts of money making sure they can trade a lot faster than the rest of us. They put their servers right next to the exchanges and program supercomputers to trade for them. The high-frequency traders may provide liquidity, but there is definitely a speed differential.

Finally, there is the asymmetry of trades. Most funds (and traders, for that matter) like positive carry trades, the type that pay us on a daily basis. In the option world this involves net selling strategies--covered calls, short puts, iron condors, and the like. Hedge funds have a lot of other ways of playing this using currencies and even selling CMOs (collateralized mortgage obligations).

The flip side of this is the negative carry trade. Buying insurance is a negative carry trade, and buying puts--or VIX calls--costs money on a daily basis through time decay. The asymmetry comes from the payoff: Negative carry trades can lose only a small amount, while they can pay multiples of that loss.

Positive carry trades are the exact opposite. You can make only a small amount and can lose a lot if things go awry.

Institutions use positive carry trades because they have to keep up with the Joneses. Funds that don't keep up with competitors are left in the dust; they don't get the inflows, and investors want their money back. So they can't "afford" to lose money on insurance and other negative carry trades. The only time they are willing to bet on asymmetrical plays is when they are a sure thing (like maybe when they have more information then the rest of us).

Where does this leave us? You are unlikely to beat the pros at their own game. They have more money, resources, and brain power at their disposal, not to mention those "expert networks."

However, you don't have the pressure of keeping up with other funds and reporting your returns, so you can take advantage of asymmetrical payoffs more easily than institutions. If you're willing to pay the insurance premiums, you can have asymmetrical payouts in your favor when the markets make a big move, which they do far more often than most people think.

When funds do make asymmetrical bets, they usually turn to options. And because they generally do that when they have an advantage of one sort or another, we can ride their coattails by following the option market and identifying unusual activity--allowing us to make asymmetrical bets without the insider trading.

Disclosure: None

CFTC Reform and the Death of Retail Forex

Slithering along in the proposed rule bin is a nasty little ditty from the CFTC that will fundamentally change how retail FX (forex) business is conducted - and, likely, end its appeal.

The proposal does a number of things, not all of them bad. Retail FX shops have been subject to massive abuse and near-absent enforcement, including front-running. While "bucket shops" ("dealers" that don't actually trade but rather have you betting against the house) have been broadly illegal whether it goes on these days or not is difficult to discern.

In addition you've all seen the ads - both online and on ToutTV - pumping OTC Forex trading as a means to "make money" in a trading market that is open nearly 24x7.

Chief among the risks is the fact that these products are in fact an over-the-counter market - that is, there is no central party exchange and counterparty. As a consequence counterparty risk exists in these accounts along with the risk of business failure of your broker. These accounts are often marketed and sold to people who have little appreciation for the risk that the extreme leverage (in many cases 100:1 or higher!) offered to clients can pose. The brokerages all claim to be "commission-free" but this is not really true - the fees charged, instead of being in the form of a traditional commission, are in the form of "pips" or a spread, and on a position held open the spread is charged again and again as a "rollover fee." As such, unlike a stock, option or futures trade where one pays to enter and again to exit (but not to hold), a FX position is inherently a short-term trade, as you will be charged simply for the privilege of holding your position open over a period of time.

Indeed, while nearly all OTC Forex brokers use language in their advertising that suggests very low (or absent) commissions in point of fact commissions can be quite high and in order to control those costs you MUST trade on very short time frames. If you short the Euro/USD cross, for example, and expect a 100 pip (one cent) move on your trade, you might pay three pips of spread to enter and another three to exit, for a total "vig" of six pips. That's a 6% commission! Worse, if you hold over a rollover you will get hit with another spread and your commission goes up even more. To put this in perspective I can buy or sell 1,000 shares of a $100 stock (total "notional" value of $100,000) for $10 at many discount brokerages. If I'm playing for a $1 move on that $100 stock I pay $20 (round trip) in an attempt to make $1,000 - a commission of 2% on the expected move. In the futures market I can put on a single /6E contract (Euro/Dollar futures) for under $3 in commissions (each way) with an initial margin of $4,050 and a move per-pip of $12.50. This means I can trade for the same 100 pip move for a cost of $6 on a potential profit of $1,250, or ONE TENTH the percentage cost of commission of a retail FX shop! Most brokerages of course try to quote commissions on the "notional value" of the position you buy or sell - that's an intentional misdirection as the correct way to compute the "vig" (or cost of your action) is the percentage cost on the anticipated profit on the trade. The bottom line: Retail FX commissions are quite high compared to other forms of trading and those commissions make it difficult to consistently profit as a trader in this market.

As such, OTC Forex trading is NOT suitable for virtually ALL persons. Indeed, it is the ultimate "day trading" vehicle, both due to the severe cost disadvantages that apply to positions that are held open along with the fact that most "FX brokerages" offer leverage of 100:1 or more. That is, a 1% move in the currency pair you're trading can and will, if it goes the wrong way, wipe you out.

In addition to all of the above there is margin risk that is often unappreciated. While all brokers (in all markets) will typically try to protect themselves by reserving the right to close a position that reduces your account equity to zero (rather than generate a margin call and wait for you to meet it) there is no guarantee that a rapid and/or disorderly move will not gap over the "zero line" and leave you with negative equity. This can lead to a situation where you can easily lose more money than you have deposited with the brokerage. Large, unexpected and violent moves in FX markets are relatively common, especially around news events, and even though such moves often reverse quickly they frequently result in accounts being destroyed and liquidated unexpectedly. This risk goes up dramatically as offered leverage increases.

Now you might think from the above that I "hate" Forex.

You'd be wrong.

Forex is a very difficult market to consistently make money in, mostly due to the "pip spread" form of commissions. The spread looks small but in fact when combined with the high degree of leverage offered it is quite large and it is also charged on a recurring, not only on a trade entry and exit, basis.

Nonetheless, for those who wish to speculate on an intraday basis, using very high degrees of leverage and accepting the sizable risk associated with this sort of trading, OTC Forex is a reasonable way to speculate on currency moves and, if one has a full and fair understanding and acceptance of the risks I have no quarrel with it.

The CFTC's proposal will tighten up regulatory supervision substantially and to the degree that it stems the abuses, including irresponsible marketing practices, improving capital adequacy supervision and providing a means of addressing the "shark" problem (misleading, abusive and unreasonable acts by some retail FX brokerages) it is a good thing.

The retail FX industry is rather aghast at the regulatory requirements including assigning liability for improper actions or business practices. To this I say "Awwwwwwwww!" The retail FX marketplace has for years been rife with complaints about various FX brokerages with allegations including soliciting people who have no business trading in this market, front-running, spread manipulation and even blatant bucket shop operations. How much of this is true I have no means to determine (I don't trade FX with the "retail folks", preferring instead to use an established real broker that deals in other products and therefore has some generalized skin - and a reputation - to protect) but that some of these abuses have happened is a matter of record. (With that said, many who put on a bad trade and lose due to their own overuse of leverage or simply making a bad decision look for someone to blame other than themselves for their losses, so I am typically skeptical of such claims absent evidence.)

But buried in the proposal is one item that has the potential to kill retail FX as we know it today:

Proposed Regulation 5.9(a) would require each RFED and each FCM that engages in retail forex transactions, in advance of any such transaction, to collect from the retail forex customer a security deposit (in cash or in financial instruments that meet the requirements of Regulation 1.25) equal to ten percent of the notional value of the retail forex transaction, ten percent of the notional value of short retail forex options in addition to the premium received, or the full premium received for long options, as the case may be. Pursuant to proposed Regulation 5.9(b), the RFED or FCM would be required to collect additional security deposit or to liquidate the retail forex customer’s position if the amount of security deposit collected fails to meet the requirements of paragraph (a).

That paragraph effectively limits leverage to 10:1 by imposing a hard margin cap of 10% on cash positions (long or short) - or a net leverage reduction of 90%.

Now I'll go out on a limb here and say that most Forex traders, if limited to 10:1 leverage, will leave. They will either trade something else or go somewhere else. Of course the bleating has begun already, with people claiming that traders will move to Europe where they can obtain leverage as high as 400:1.

Well folks, frankly, if you're playing with 400:1 leverage you're juggling nuclear balance sheet destroyers and sooner or later one will explode and blow your fool head off. I simply cannot countenance such a thing.

Is 10:1 a reasonable limit? We seem to think it is in other parts of the market - in commodities and futures generally, most of which offer somewhere between 6:1 and 10:1. As such the CFTC's proposal appears to be in line with other regulated markets, and on its face appears reasonable.

But there's no doubt that this has (and will) anger a huge number of retail FX traders and dealers and will, without a doubt, engender more calls of "you're going to destroy us if you limit things like this!"

Indeed, some of that has already come, including this article from Turnkey Trading Partners (who alerted me to the proposal - it had flown under my radar originally.)

My view on the regulatory proposal is that there is both good and bad contained herein. I believe:

• Regulation of business practices and demanding capital adequacy tests and strict liability for business practices (especially when it comes to solicitations and/or things like front-running and other abusive practices) is a good thing. The Retail FX market has been a shark tank since its inception and muzzling some of the sharks will make the market more fair for everyone.

TriMas Outruns Estimates Again

TriMas (Nasdaq: TRS  ) reported earnings on Feb. 27. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), TriMas beat expectations on revenues and beat expectations on earnings per share.

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

Gross margins expanded, operating margins contracted, and net margins expanded.

Revenue details
TriMas logged revenue of $259.7 million. The four analysts polled by S&P Capital IQ expected to see net sales of $234.2 million on the same basis. GAAP reported sales were 17% higher than the prior-year quarter's $222.7 million.

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

EPS details
Non-GAAP EPS came in at $0.25. The five earnings estimates compiled by S&P Capital IQ predicted $0.21 per share on the same basis. GAAP EPS of $0.38 for Q4 were 138% higher than the prior-year quarter's $0.16 per share.

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

Margin details
For the quarter, gross margin was 29.1%, 10 basis points better than the prior-year quarter. Operating margin was 10.1%, 20 basis points worse than the prior-year quarter. Net margin was 5.1%, 250 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $285.5 million. On the bottom line, the average EPS estimate is $0.40.

Next year's average estimate for revenue is $1.14 billion. The average EPS estimate is $1.81.

Investor sentiment
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on TriMas is outperform, with an average price target of $25.40.

Over the decades, small-cap stocks like TriMas have provided market-beating returns, provided they're value priced and have solid businesses. Read about a pair of companies with a lock on their markets in "Too Small to Fail: Two Small Caps the Government Won't Let Go Broke." Click here for instant access to this free report.

• Add TriMas to My Watchlist.

Jefferies shares close up 23%

NEW YORK (CNNMoney) -- The investment bank Jefferies has taken steps to shrink its assets, and fourth quarter results were "mediocre," according to CEO Richard Handler.

Yet, for Handler, these results were a vindication, after rumors swirled in the wake of MF Global's collapse that Jefferies could swiftly suffer a similar fate.

Shares of Jefferies (JEF) closed up nearly 23% Tuesday after the company released fourth quarter profits that beat analysts expectations. Revenues were lighter than expected though.

"We encountered a real world stress test," said Handler on the company's earnings conference call. "In what would be a rather mediocre quarter most years, we were pleased with this year."

Beginning in November, Jefferies rapidly shrunk the assets on its balance sheet by roughly $10 billion, or 25%, to $35 billion. It did that largely by selling the bank's positions in European sovereign debt.

The triumph of Blackstone on Wall Street

Handler said the firm's balance sheet would likely remain smaller for the foreseeable future until the economy improves.

"We'll have a reduced balance sheet until we see some light in the world," said Handler.

Those tempered aspirations come after Jefferies has spent more than a decade attempting to find solid footing among top-tier investment banks.

"A couple of years ago they were viewed as one of the fastest growing investment banks and that commanded them a higher valuation versus their peers," said Jeffery Harte, a banking analyst at Sandler O'Neill & Partners. "A lot of that premium has now eroded."

Sean Egan, a founding principal of the ratings agency Egan-Jones, said he was getting more comfortable with Jefferies since it shed assets. Egan's firm was the sole ratings agency to downgrade Jefferies in early November to BBB- from BBB and had recommended that the bank cut assets and raise equity.

Still, Egan said he's concerned that Jefferies could build up its assets as quickly as it cut them.

But massive growth does not appear to be a priority for now. Jefferies announced it had reduced headcount by "70 plus" individuals in its equities division during the month of December. Handler said he wouldn't comment on further headcount reductions.

For the quarter that ended in November, Jefferies generated $39 million in profits, or 17 cents a share, beating analysts' expectations of 14 cents per share. That compares to $63 million, or 31 cents a share, in the fourth quarter of 2010.

Revenues dropped to $554 million in the fourth quarter of 2011 compared to $680 million the same quarter a year ago. Analysts had expected $562 million in revenues for this quarter.

Handler said that neither he nor any members of senior management would collect a bonus in 2011 because of the firm's results.

Jefferies also addressed reports that hedge fund clients who house funds at the firm were moving funds away from the bank. Rumors swirled about that when investors were worried about potential liquidity issues at Jefferies in November.

On its conference call, Jefferies reported that the firm lost only eight out of 350 accounts. The bank also said that 34 accounts moved their "cash balances" to JPMorgan through a preexisting partnership, but added that Jefferies continues to work with them.

Over the past two months, Handler gave the market an unprecedented level of detail on its exposure to European sovereign debt ahead of the release of fourth quarter earnings.

During the first two weeks of November, Jefferies issued five separate press releases explaining how much debt it held of Portugal, Italy, Spain, Greece and Ireland and outlining the amount it sold. During the conference call, Handler said Jefferies is now net short $123 million in European debt.

The financial sector overall rallied Tuesday, after bank stocks started off the week under fire as investors grew wary of problems in Europe and over more regulations on financial institutions.

On Monday, Bank of America (BAC, Fortune 500) dropped below $5, a precarious level for any stock, but closed Tuesday at $5.17 per share up more than 3%. Rivals Morgan Stanley (MS, Fortune 500), Goldman Sachs (GS, Fortune 500) and Citigroup, (C, Fortune 500) all bounced back between 3% and 5% Tuesday.  

Credit Repair Services – Find Out More About It

Internet includes a huge system of inadequate information about credit repair services and you will read a lot of them when you do research about the subject. a typical item for the search result looks at the following.

* Don’t pay for credit repair services, that you can do everything on your own for free.

* Companies that offer credit repair services are usually scams, don’t permit them to take your money.

* Do not reply to the promises of credit restoration businesses, most of them tend to be illegitimate.

The complaint that credit repair services get from a lot of consumer watchdogs, federal government, and other teams has become an ordinary scenario inside credit business. The leading buyer protection agency of the govt such a Federal Trade Commission (FTC) capabilities primarily in aiding the consumer against fraudulent firms. A single reason could have been the bad credit history records the majority of credit repair companies have got that usually includes inability to accomplish promises, large bulks of damaging testimonials and also reviews from previous consumers, and a whole lot associated with other problems.

Aren’t there scams within about each industry? Thousands of homeowners have been obtained by building contractors who collect a hefty up-front payment and either walk away from an unfinished task or never ever show up to begin it? But, why aren’t the FTC marketing all business/organizations of the accusations? Because that could be considered to be a great unfair generalization.

Why the credit repair services usually receive a lot of biased criticisms? The answer is either plain lack of edcuation or private agenda. For the case of lack of edcuation it is a lot more common for people to spout off about issues on which they have limited data. Plenty of information which isn’t true in any way may be found on the web and impressing millions to billions of readers and readers.

As for personal agenda, there are numerous powerful agencies, like credit bureaus and creditors, who detest those that promote credit repair services. Investigating quarrels and solving errors needs time to work and money from the bureaus and also creditors, in addition, it makes them look fallible (despite just what the bureaus want you to believe, they create millions of mistakes – at your expense). Time and again lenders and loan companies have to alter the status of the listing because they cannot confirm its credibility making them drop credibility. Obviously the agencies and credit card companies are going to discredit and attack those that endorse credit repair services.

There are credit score companies which in turn tend to have a robust grasp over some people in politics and media personalities. They are able to employ lobbyists whom push his or her agenda. This doesn’t take a master to see precisely why the government is also on the bandwagon versus credit repair services, money talks. And exactly what stories receive the media focus? Most time, the ones that those with money along with influence want to get the attention. It is good to take both positive and negative part before thinking everything you read. Make educated decisions and realize you will always find two attributes to the account.

Finding a hard time locating for strategies to improve credit score? Learn from my website on Repair Credit, and gain free tips as well from reliablecredit repair services.