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HECO: Socially Responsible Investing Backed By Strong Earnings

HECO: Socially Responsible Investing Backed By Strong Earnings Socially responsible investing combines the ambition to make money with the motivation to enact positive change in the world.  It is a popular approach to finance that has been around for decades. However, in recent years, the concept has been catching on at an even faster pace.   Since 2017, global investments based on ethical and social principles have increased by 34% and reached $30.7 trillion.  In the U.S. alone, one in every six dollars under professional asset management is invested using socially responsible financial strategies.  New research from Morningstar suggests these trends will continue growing, as nearly three-fourths of all investors are at least “moderately interested” in devoting long-term savings to sustainable investments.

One selection following these investment objectives is the Strategy Shares EcoLogical Strategy Fund (NYSEARCA: HECO).  The underlying strategies guiding the ETF seek long-term capital appreciation, are ecologically focused, and backed by strong earnings results in core stock holdings.  Since inception, investments in the Strategy Shares EcoLogical Strategy Fund have outperformed the MSCI ACWI TR Index by 7.36%. To achieve these goals of sustainability, the Strategy Shares EcoLogical Strategy Fund focuses on companies that are components of recognized environmentally focused indices.  Investment strategies apply strict criteria to identify global businesses with emerging projects positioned to benefit from ecologically conscious legislation and cultural shifts in market consumption.   During periods of normal market volatility, at least 80% of the portfolio allocation is devoted to green bonds, mutual funds, ETFs, equity, and fixed-income securities of ecologically-focused companies.  At least 65% of total allocation is devoted to common stocks and fixed-income securities of ecologically-focused companies based in the U.S. The remaining portion of the allocation is devoted to ADRs and stocks connected to ecologically-focused businesses that are based outside the U.S.

The Strategy Shares EcoLogical Strategy Fund is broadly diversified across industry sectors and its positive outlook is supported by notable earnings results that have been generated during the market’s most recent reporting period. During the first-quarter, casualty and property insurer Travelers Companies (NYSE: TRV) beat the market’s consensus earnings forecasts on underwriting improvements and significant declines in catastrophe losses.  Core earnings posted at $2.83 per share, with nearly $800 million in net income for the period. The EPS figure indicates annualized gains of 17% and the performance surpassed analyst expectations ($2.72 per share) by 4.04%.  The revenue figure indicated annualized gains of 5.2% (at $7.67 billion) and comfortably surpassed Wall Street’s estimates calling for revenues of $7.1 billion.  Catastrophe losses dropped by 45.5% on an annualized basis (to $193 million) and written premiums rose to $7.06 billion (a gain of 3.5%). Shares of Travelers Companies stock currently show YTD gains of 23.54%. Another market sector that continues to generate enhanced returns can be found in traditional payment networks.  Major credit card companies have shown strength in digital payments to overcome disruption efforts of big tech companies like Apple, Inc. (NASDAQ: AAPL) and others.  To capitalize on these trends, the Strategy Shares EcoLogical Strategy Fund includes exposure to these traditional payment networks with two names that have outperformed the S&P 500 by a wide margin in 2019. Mastercard (NYSE: MA) released first-quarter results that beat market forecasts for both earnings and revenue.  Solid transaction volumes and a lift from new products/services propelled net income to $1.9 billion (EPS of $1.80).  This represents a gain of 26.7% relative to the $1.5 billion in net income (EPS of $1.41) posted during the same period last year.   Mastercard’s adjusted earnings were $1.78 per share during its most recent reporting period, which represents an annualized gain of 18.7% and was firmly above the market’s consensus estimates ($1.66 per share).  Revenues increased from $3.58 billion last year to $3.89 billion (a gain of 6.7%) and this also beat analysts forecasts of $3.85 billion. Mastercard stock shares currently show YTD gains of 33.31%. Visa (NYSE: V) shares continue to reach new highs, even in cases where the rest of the market is declining.  The company’s most recent quarterly report showed annualized gains of 8% in net revenues (at $5.5 billion) and a 17% annualized gain the bottom-line figure (EPS of $1.31).  Payment volumes were higher by 8% (to $2.1 trillion) and this was accompanied by an increase of 9% in the number of total transactions (to 47.4 billion). Share repurchases of $2 billion also boosted EPS for the period.   Visa’s revenue growth did show some evidence of slowing but management has noted rising volatility in currency markets as a peripheral factor which may prove to be temporary in nature.  Shares of Visa stock currently show YTD gains of 23.27%. Key names in the technology sector (which represents 42.29% of allocation) include Adobe (NASDAQ: ADBE), which also beat Wall Street's earnings targets for the fiscal first-quarter with adjusted EPS of $1.71 and sales of $2.6 billion.  Consensus estimates were calling for EPS of $1.62 on sales of $2.55 billion. On an annualized basis, this performance indicates sales gains of 25% and EPS gains of 10%.   Current-quarter earnings guidance was reduced to an adjusted $1.77 per share (with sales figures expected to come in at $2.7 billion).  Previously, Wall Street analysts modeled second-quarter earnings of $1.88 per share on sales of $2.72 billion. However, even with these recent reductions, it should be noted that Adobe’s updated guidance implies annualized sales gains of 23.6% and earnings gains of 6.63%.  Adobe shares are currently showing YTD gains of 21.45%.

For investors seeking well-diversified, long-term capital appreciation through ecologically focused investment strategies, the Strategy Shares EcoLogical Strategy Fund is one name that should be on the radar.  Even with its recent moves higher, shares of HECO are still trading below their long-term premium/discount averages. This suggests that the Strategy Shares EcoLogical Strategy Fund is attractively valued at current levels.  As core holdings continue to show evidence of consistent earnings strength, HECO finds itself in a strong position to continue producing gains in 2019. Read the full article

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OIPIX: Powerful Returns Driven by High Caliber IPOs

OIPIX: Powerful Returns Driven by High Caliber IPOs In 2018, investors saw a surge in activities connected to initial public offerings (IPOs), as 190 companies entered the market and collectively raised a total of $47 billion.  But the current IPO pipeline may be even more intriguing, as several multibillion-dollar companies are slated to enter the public market this year. These highly anticipated new issues have the potential to ignite the market’s interest in the months ahead and many investors are looking for ways of gaining sustainable exposure to new growth opportunities as they develop. One option is the Catalyst IPOx Allocation Fund (MUTF: OIPIX), which applies quantitative models to select and rank high-caliber IPOs using two distinct and complementary strategies.  The Fund includes roughly 150 long equity holdings, with an average market capitalization of $13.3 billion and a median market capitalization of $5.1 billion.  Stock weightings are broadly distributed across industry sectors, with information technology stocks making up 32.0% of the total holdings, health care stocks making up 24.2% of the holdings, and communication services making up 12.7% of the holdings.    The Fund’s Core Long Component includes exclusive mutual fund access to the IPOX U.S. 100 Index, which tracks a group of 100 top-ranked companies in the IPOX U.S. Composite Index and has exhibited a strong level of long-term outperformance relative to the S&P 500.  Common stock in these high-quality companies is purchased either at the time of the initial offering or later during the post-IPO trading phase. Stocks exhibiting bullish momentum and sustainable growth in market value during the periods following the initial floatation are analyzed as viable opportunities for inclusion in the Fund.

Since 2014, the IPOX U.S. 100 Index has produced returns of 695.64% (as of March 31, 2019).  Over the same period, the S&P 500 Total Return Index has produced returns of only 261.24%. The divergences here are exceptionally striking, given the fact that the S&P 500 broke above its prior all-time highs during this timeframe. The underlying strength of these trends supports the outlook for continued moves higher in shares of OIPIX. In conjunction with the Core Long Component strategy, the Dynamic Component of the Catalyst IPOx Allocation Fund’s identifies 30 to 70 attractively valued IPOs (based on price/sales multiples) not included in the Core Long Component.  Timing is critical for this portion of the strategy, as stocks become eligible for inclusion on the IPO date and remain viable as potential investment opportunities for a period of one month.  The sum result of these dual approaches is a unique market instrument designed to capture the enhanced long-term returns often associated with promising IPO investments.

Broad sector diversification is another feature of the Catalyst IPOx Allocation Fund.  Key stock holdings include Paypal (NASDAQ: PYPL), Takeda Pharmaceutical Ltd (OTCMKTS: TKPHF), Verizon Communications (NYSE: VZ), Thermo Fisher Scientific (NYSE: TMO), Stryker Corp. (NYSE: SYK) and Worldplay, Inc. (NYSE: WP).  Impressively, all of these companies beat consensus estimates for earnings during the most recent reporting period, and these bullish performances have helped drive OIPIX gains relative to the S&P 500. As the Catalyst IPOx Allocation Fund’s largest stock holding, recent earnings performances from Paypal have been particularly notable.  For the first quarter, Paypal reported adjusted EPS of $0.78 (beating analyst expectations by 14.71%) on revenues of $4.13 billion. Total payment volumes rose by 25% on an annualized basis (to $161 billion), and the company revealed its peer-to-peer payment app Venmo is on pace to generate revenues of $300 million in 2019. Strong earnings growth amongst these companies has been widespread, and this suggests share gains in OIPIX may continue.  Another notable example can be found in Thermo Fisher Scientific, which posted earnings of $2.81 per share during the most recent reporting period.  This figure beat analyst estimates by $0.07, and the company’s revenues of $6.13 billion also beat expectations by $89.47 million. The market is currently anticipating annualized earnings growth of 13.78% for Thermo Fisher for the second quarter and earnings growth of 12.27% for the third quarter.

Consistencies in projected growth and earnings have been reflected in market valuations.  For the period 06/30/2017 – 06/30/2018, the Catalyst IPOX Allocation Fund returned +21.20% and significantly outperformed its S&P 500 Total Return Index benchmark by +683 basis points.  Over the last three years, those performances have been recognized with Morningstar’s 5-star rating for risk-adjusted returns positioned at the top of the mid-cap growth category (555 total funds).  These three-year performances were also recognized with a Lipper Fund award from Refinitiv as the best alternative event-driven fund (with the highest consistent return value out of 49 total funds). While U.S. equity markets continue to exhibit evidence of underlying stability, the continued trend implication is that 2019 may be a massive year for IPOs. While the total number of public offerings could decline this year, there are several events on the horizon with the potential to generate an explosive impact on the market.  As a result, sustainable consistency in deal flow should create a favorable environment for the Catalyst IPOx Allocation Fund. YTD returns in OIPIX continue to outpace the S&P 500 Total Return Index benchmark and this bullish activity is likely to catch the market’s attention in the quarters ahead. Read the full article

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Metals Correlations: Might Silver Emerge as the Market Winner?

Metals Correlations: Might Silver Emerge as the Market Winner? By Richard Cox After many turbulent market periods in 2018, the precious metals seemed to find itself on a stable footing toward the end of the year.  Rising volatility levels after August put gold on track to post a 5% gain in December, which was its best-performing monthly period since early 2017.  But the ultimate result of this activity was that it took the market’s focus away from gold’s undervalued counterparts in the precious metals asset class.  Specifically, the longer-term historical trends suggest that relative downside in silver has reached extreme (and potentially unsustainable) levels. Furthermore, metals investors should pay strict attention to inflow activity in metals-backed ETFs as a way of gauging when a potentially forceful reversal in silver is likely to begin.

The relationship between gold and silver is a topic that is often discussed amongst precious metals investors.  But what many miss in this simple ratio analysis is the propensity for silver to develop trends which broaden to extreme boundaries in relatively short periods of time.  In comparative terms, the price history of gold shows us that this type of activity does not occur to the same degree in its own market valuation.

In the chart above, we can see a comparative analysis of the gold/silver ratio and the market price of silver in U.S. dollar terms. With this information, what I like to focus on are not the price moves themselves but the extremity of the moves.  As we can see, the market price of silver skyrocketed in the late 1970s and then made similar moves to the topside again in 2010-2011.  When these trend changes occurred, the market also experienced significant declines in the gold/silver ratio. Additionally, it should be noted that silver valuations were roughly similar to current price levels just prior to the giant leaps which eventually benefited bullish investors. Ultimately, this indicates that silver is much more likely to act like a “coiled spring” when market extremes become apparent.  With the S&P 500 and NASDAQ both trading within close proximity to their respective record highs, the potential for downside retracement in equities continues to increase.  If this does occur, long-term trend histories suggest that silver could benefit (much more than gold) in the trend-change periods that follow.

For good reason, many metals investors tend to place their focus on the underlying spot prices.  But there is also crucial information which can be gleaned from exchange-traded funds, like the iShares Silver Trust ETF (NYSE: SLV).  What is particularly interesting about SLV is its inflow/outflow activity as it can be used to define volume changes in aspects of the market that not regularly covered by traders dealing directly with physical metals. From a trend perspective, the market behaviors characterized by these alternative volume segments can help us to identify situations in which price reversals may begin to occur.  In this light, we can see that silver could be basing for a rally of nearly 43.76% when viewed in relation to the August 2016 highs (19.71). Evidence of this growing potential for upside can be found in ETF inflow activity changes.  Over the last four weeks, SLV inflows have propelled the fund to the top of its asset category (at $42.2 million).  This represents a massive alteration from the $234.5 million in SLV outflows which became visible over the last 26 weeks.  Ultimately, the diverging activity suggests new sections of the market may be developing an interest in silver while these assets are still trading near their lows.   Since these portions of the market (ETF investors) tend to focus on stocks, the surge in inflows indicates a rising interest in safe haven assets while stock benchmarks (i.e. the S&P 500 and NASDAQ Composite) continue to trade at record levels.  Without a significant macro catalyst in place, this seems to indicate a more natural ebb and flow of the market in which overvalued assets (equities) are starting to fall out of favor. Of course, this is not yet visible in the stock charts themselves.  But the trend has clearly becoming visible in the market’s flow data.  This confluence of events suggests undervalued metals may have the best potential for upside in the current environment.  As a result, silver is starting to look as though it may emerge as a final winner for investors before the end of 2019, given its strong potential for relative upside during periods of rising market extremes. Read the full article

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BAC: Bank of America Trades Near Inflection Point

BAC: Bank of America Trades Near Inflection Point

Throughout nine months which has been brought to an end on 30 September, Bank of America (BAC) has generated net income by 162.16% to $7.17B. The net income has increased by 6.43% to $7.18B. On top of all of that, the company has $184.86B worth of cash and due from banks, 8 times higher than from the cash & due from banks of its no.1 competitor which is J.P. Morgan Chase & Co (JPM). Bank of America is with Wells Fargo having the better current ratio and quick ratio among the top four money center banks as compared to J.P. Morgan Chase and Citigroup. The current ratio and quick ratio of the company evidently manifested the firm capability of the company to shoulder all their debts. As having total assets of $2,338.83B and the current ratio of 11.82, the company will surely be secured from its debts to the upcoming quarters. In addition to that, Bank of America has achieved a gearing ratio of 1.59. Therefore, the firm’s management will be funded by the equity capital against the creditor financing and highly leveraged because it is higher than 50%. Key financials The target price/current last sale’s percent of the target price is $ 52 / 208%, which means the firm had achieved as twice as its aim price as well as it also endured its competitors to this point. The company’s earnings per share have an amount of $8.07. This is a clear manifestation of the company’s strong profitability which will continue in the future due to their effective operation. Furthermore, we can say that investors can expect to earn more because the price-earnings ratio is $13.43.  Bank of AmericaJPMorgan Chase Wells FargoCitigroup Total Cash & Due from Banks184.86B23.23B18.79B25.727BTotal Debt417.35B516.37B326.77B444.93BOther Earning Asset972.52B105.45B 779.231B1057.52BDebt to Equity 159.20%199.40%164.42%225.85%Total Short-Term Debt 200.64B 246.24B105.45B209.68BCurrent Port. of LT Debt/Capital Leases 4.88B ---Total Long-Term Debt211.84B270.12B221.32B235.26BCurrent Ratio(Industry)11.820.6911.821.69Quick Ratio(Industry)11.771.6911.770.69Return on Equity 9.73%12.84%10.39%8.46%Debt Ratio 0.890.900.890.90Working Capital262.16B258.96B198.741197BReturn of Asset1.10%1.22%1.29%0.92% The 28 forecasters proposing 12-month price forecasts for Bank of America Corp have a median target of 34.75, with a high approximation of 40.00 and a low estimate of $28.00. The median estimate shows a +24.60% growth from the previous price of $27.89. The recent consent from 30 polled investment forecasters is to buy stock in Bank of America Corp. This assessment has held steady since October when it was unaltered from a buy rating. Biggest Quarterly Profit in Bank of America's History Bank of America has made everyone in awe once more as it pulled out a profit worth $6.9 Billion after 3 quarters of 2018, as it had overcome its personal best attained during 2011. After compensating $1.5 Billion to President Trump as income tax which is 26% earlier, the company has still envisioned its upcoming success. The company has been advantageous with the law reforms regarding taxes from the rate of 30% plummeted down to 26%. As a result, it has become exultant with the pretax income risen up to 15% whereas revenues up to 4%. Technological Investment of $500 Million for Innovation and Sales As Bank of America shut down its branches to different locations and closed its doors to its employees, it has still found and developed ways to reach out for its beloved customers as it enhances the services through technological advancement. Bank of America proposed to open over 500 new US bank branches in the next four years which will cover 88% GDP. Modifications in terms of technology and interior aesthetics will happen with over 1,500 branches and 5,400 certified financial planners will aid the support in the long run. Final verdict As the Bank of America has exceeded the expectations by boosting 9% rise in its consumer loan business, reported fourth-quarter earnings of 2017, the corporation could not be contented with the positive response. Even though the year has been good to Bank of America, we could still give them an affirmative assessment and rate “buy” as well. Read the full article

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Retirement: Key Traits of Successful Financial Advisors

Retirement Planning: Key Traits of Successful Financial Advisors For many people, the active management of investment finances often becomes an overwhelming challenge.  Significant pitfalls can be encountered when mistakes are made, and this is the primary reason a financial advisor strives to provide the guidance that is needed to achieve long-term financial goals.   The term financial advisor is generally used to describe someone that helps with investment management, taxes, retirement strategy, and general financial planning.  Of course, not all investment strategies are created equal, and there are many different types of financial professionals. Depending on the type of specialty that is needed, some financial professionals may not be sufficiently qualified to meet the requirements of every investment situation. This is why it’s always a good idea conduct research beforehand so that it is possible to learn about what’s available and decide on the type of financial advisor that will be best-suited to deliver favorable results. Under ideal scenarios, investment advisors can help navigate the treacherous waters of economics and money management to offer support on the journey toward achieving financial freedom during the later stages of life. What exactly is a financial advisor? First and foremost, a financial advisor works as a coaching mentor to help explain when it’s best to make certain financial decisions.  Most are experienced in analyzing what’s happening in the financial markets and translating that information into actionable strategies which positively impact individual financial circumstances.  Some financial advisors will have more expertise in one area rather than another, so it’s critical to assess individual needs first and then pair those requirements with an advisor’s strengths and abilities.   For example, one advisor may specialize in stock recommendations while others might create an entire financial plan that includes estate recommendations, tax strategies, and insurance planning.  This is why financial advisors are often separated into two different categories: investment advisors and financial planners. We sat down with financial advisor coach Stan Mann to ask questions and learn about which strategies tend to work best for high net worth clients.   What are three important traits seen in successful financial advisors? Stan Mann: From a marketing standpoint, three characteristics of successful financial advisors are: 1. They understand that effective marketing is crucial for their success. A financial advisor who is a competent marketer will be much more successful than an excellent financial advisor who is not a good marketer. 2. Successful financial advisors implement their knowledge. They go out in the field and put it into action. Knowledge is not power. Knowledge is potential power. 3. They have a marketing plan that they follow step-by-step. It is based upon the fundamentals of marketing: strategies and tactics. They adopt specific strategies and implement tactics to achieve their goals. For instance, a webinar strategy would include tactics like: Writing a direct mail letter or email inviting prospects to a presentationMaking a website to maximize conversionsCreating a powerful presentation that employs powerful video marketing techniquesMay decide to place an ad in their local paper What challenges do financial advisors face in this year’s market environment? Stan Mann: One big challenge financial advisors face in this year’s market environment is the flood of marketing messages. This makes it very difficult for an individual financial advisor to be heard. Therefore, a financial advisor needs to be unique and different from its competitors, so he stands out from the crowd. Another challenge is that people want to work with specialists, so advisors need to specialize in solving a particular problem for a specific group of people. They need to choose a niche. What is one easy step financial advisors can take to attract more clients? Stan Mann: Create a headline for your business that concisely tells who you help and how they benefit from your services. Some examples are: Helping families and business owners develop a sound financial strategy; Agent with New York Life offering personal and retirement protection; I help Ford Motor Company executives make the best use of the retirement options. Is there anything else struggling financial advisors should know to achieve better success rates? Stan Mann: Marketing alone will not sell big-ticket items that are provided by financial advisors. The goal of marketing is to get a sales interview. At that point, the advisor takes over and needs to convert the prospect and eventually enroll them in all their financial planning services, from investment management to estate planning. Role of Financial planners Financial planners tend to offer broader specialties, which can vary widely in scope.  Some financial planners are able to create personalized financial plans for clients that cover everything from investments to household budgeting and estate planning.   As a result, these services are typically more comprehensive in nature. But they can also vary widely from one financial planner to another. Other financial planners may only be able to offer a limited number of services, so it is important to be clear availability before entering into contractual agreements. One formal distinction many find preferable is the Certified Financial Planner (CFP) designation, which requires a bachelor’s degree (or higher) from an accredited college, extensive coursework confirmed through a board-registered educational program and successful completion of the CFP certification exam.  CFP certification status can also be verified through the Certified Financial Planner Board of Standards. Role of Investment advisers In contrast, an investment advisor tends to be more specialized in terms of the advice and services that are made available.  Investment advisors help clients to understand the true value of securities and construct strategies for developing an asset portfolio.  Investment advisors can be a firm or an individual person, and they typically analyze the value of stocks, bonds, mutual funds, and other market instruments.   A good investment advisor can assess a client’s financial goals and give recommendations to buy, sell or hold certain assets depending on current market conditions.  Some individual investment advisors hold certification as a Chartered Financial Analyst (CFA), which is a highly regarded classification in the field of economics. When is financial advice needed? Over the course of a person’s lifetime, financial goals will often evolve and change in ways that can be unpredictable.  Events like a death in the family or major career change can negatively influence personal finances. When big changes occur, it can be helpful to get an expert’s perspective and to get a second opinion before making any important financial decisions. Here are some examples of life situations which could benefit from expert advice from a finance professional: 1. Starting financial planning in early career In the early years, it might feel as though the future is infinite and that there is no rush to begin financial planning.  But the reality is that it is never to early to start building a financial strategy for the road ahead, and a financial advisor might be able to help avoid many of the pitfalls and mistakes commonly encountered by newbies.   Creating a personal budget, securing a mortgage, or preparing an investment portfolio can all be made easier with the help of a seasoned professional. 2. Getting married Properly dealing with touchy money issues could turn out to make all the difference when developing the financial future with a new spouse.  New household unions can create a completely different set of financial challenges, and it is always a good idea to gain advice from people that have encountered those challenges themselves. 3. Entering middle age Entering the period of middle-age can present its own set of challenges, and these are the years many people must pay college tuition for their children.  In addition to this, the period of middle-age is also when many people begin to look at new savings strategies for the retirement years. 4. Preparing for retirement Reaching the pre-retirement years can be a transformational period in a person’s life.  Most people don’t know how much money will be needed in order to achieve security after a career is finished.  These are critical questions which can have dramatic ramifications if things are not planned correctly, and a financial adviser can help make preparations to achieve security in the years that follow. 5. Planning for later years Once a person finishes a working career, it is time to start asking some critical questions.  Will it be possible to continue living comfortably on savings? Are potential health expenses adequately covered?  Will children, family, and loved ones be secure in the event of an untimely passing? Checking in with a financial can help with the answers to these questions and keep things on track for a secure future.  Retirement comes with its own unique set of “what-ifs” but proper financial planning can help to reduce the number of potential uncertainties. The Bottom Line No matter what stage of life a person has reached, a little support and guidance can always be valuable and there are many options available when it comes to selecting a financial advisor.   Financial experts are able to assess complex economic situations and devise strategies to benefit from the natural ebb and flow of the market. Partnering with an investment expert can provide the guidance needed to avoid the stress and uncertainties that are often encountered in various stages in life, and the best financial advisors are able to offer hands-on support and individually tailored strategies to help achieve a strong financial future.   For this article, we interviewed Stan Mann, Financial Advisor Coach and Founder of StanMann.com. Read the full article