Author Archives: Scalper1

4 Top-Rated TIAA-CREF Mutual Funds Worth Adding

Teachers Insurance and Annuity Association of America-College Retirement Equities Fund (TIAA-CREF) has nearly $869 billion in assets under management (as of June 30, 2015). TIAA-CREF Asset Management, part of the TIAA-CREF group, seeks to offer financial services pertaining to investment advice and portfolio management to a wide range of investors including individual investors, intermediaries and institutional clients. Through its subsidiaries, TIAA-CREF invests in an array of mutual funds including both equity and fixed-income funds, and U.S. and non-U.S. funds. Below we share with you 4 top-rated TIAA-CREF Mutual Funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. TIAA-CREF Real Estate Securities Retirement (MUTF: TRRSX ) seeks maximum total return over the long run through growth of capital and current income. TRRSX invests a large chunk of its assets in companies primarily involved in operations related to the real estate domain. TRRSX may invest a maximum of 15% of its assets in securities issued by foreign entities. TRRSX may also invest not more than 20% of its assets in securities of companies from different sectors, other than real estate. The TIAA-CREF Real Estate Securities Retirement fund has a three-year annualized return of 11.8%. As of September 2015, TRRSX held 52 issues with 9.38% of its assets invested in Simon Property Group Inc (NYSE: SPG ). TIAA-CREF Small-Cap Equity Premier (MUTF: TSRPX ) invests the lion’s share of its assets in equity securities of domestic small-cap firms. TSRPX focuses on acquiring securities of companies with market capitalization similar to those listed in the Russell 2000 Index. TSRPX invests in securities of companies irrespective of their sectors, growth rates and valuations. The TIAA-CREF Small-Cap Equity Premier fund has a three-year annualized return of 18.5%. TSRPX has an expense ratio of 0.59% as compared with the category average of 1.23%. TIAA-CREF Mid-Cap Growth Retail (MUTF: TCMGX ) seeks a high total return. TCMGX invests the major portion of its assets in equity securities of companies having market capitalization within the range of the Russell Midcap Growth Index. TCMGX primarily invests in securities of domestic companies that are believed to provide above-average growth potential. The TIAA-CREF Mid-Cap Growth Retail fund has a three-year annualized return of 15.3%. George (Ted) E. Scalise is one of the fund managers of TCMGX since 2006. TIAA-CREF Large-Cap Value Retirement (MUTF: TRLCX ) invests the majority of its assets in securities of the U.S. based large-cap companies. TRLCX invests in companies with market capitalization identical to those included in the Russell 1000 Value Index. TRLCX invests in securities of companies that are believed to be undervalued. TRLCX may invest a maximum of 20% of its assets in securities of companies that are located in foreign lands. The TIAA-CREF Large-Cap Value Retirement fund has a three-year annualized return of 14.3%. TRLCX has an expense ratio of 0.69% as compared with the category average of 1.11%. Original Post

(Non)-Correlated November

Depending on your perspective, November proved to be a rather correlated or non-correlated month. U.S. stocks and Managed Futures are the only two asset classes we track with positive results in November (likely from unique return drivers), while Long-Only Commodities continues to plummet, and Managed Futures is positive on the year. Those that know that Managed Futures can find return drives when the markets are moving up, down, and from various different sectors won’t be surprised to see that it was also able to make a +2.84% gain, when the iShares S&P GSCI Commodity-Indexed Trust ETF (NYSEARCA: GSG ) had another big downward move in November, down -9.03%, bringing the YTD performance to -27.34% (Disclaimer: Past performance is not necessarily indicative of future results) . As FT Alphaville points out, this is the 5th-worst November the index has ever had. Believe it or not, November 2014 was worse, as was its full-calendar year performance . As for the actual return drivers from Managed Futures in November, a trending dollar is Managed Futures’ friend . Many are speculating that if the Fed decides to raise interest rates, it could push the dollar higher, and in doing so, could give Managed Futures that extra help before the year draws to a close. Many are waiting to see what happens to the markets in December, pending the Fed decision. It will be a nail-biter to the end. (click to enlarge) (Disclaimer: past performance is not necessarily indicative of future results.) Source: All ETF performance data from Morningstar Source: Managed Futures = Newedge CTA Index, Cash = 13-week T-Bill rate Bonds = Vanguard Total Bond Market ETF (NYSEARCA: BND ) Hedge Funds= IQ Hedge Multi-Strategy Tracker ETF (NYSEARCA: QAI ) Commodities = iShares S&P GSCI Commodity-Indexed Trust ETF ( GSG ) Real Estate = iShares U.S. Real Estate ETF (NYSEARCA: IYR ) World Stocks = iShares MSCI ACWI ex-U.S. Index ETF (NASDAQ: ACWX ) US Stocks = SPDR S&P 500 Trust ETF (NYSEARCA: SPY )

Southwest Gas Corporation Is Dependent On The Construction Business

Summary After years of performance, the stock slumped in 2015. Investors didn’t like Q3 results due to poor outlook for the natural gas division. The construction segment has a secular tailwind at its back, but there is no telling when it will go away. Southwest Gas Corporation (NYSE: SWX ) is a utility company that specializes in natural gas distribution and construction. It’s primarily services customers in Arizona, Nevada, and California. The company is the largest distributor in Arizona and Nevada. With its scale and the relative stability of the utility business, the stock has steadily climbed throughout the years. In 2015 however, the stock has hit a bump. Year to date, shares have fallen by 10% from $61.81 to $55.70. The Business Let’s first talk about the natural gas division. It consists of the company’s distribution and transportation business. The majority of customers is made up of residential and small commercial customers, which accounted for 85% of the company’s operating margin (defined by the company as operating revenue minus the cost of gas, which is more similar to gross margin) in 2014. The other 15% is broken down into two parts: 4% from other customers and 11% from transportation. The transportation segment acts like a midstream company, transporting gas that is sourced by the customer instead of Southwest. Interestingly, although transportation only accounts for a tenth of overall operating margin, it does occupy a significantly larger portion of total system throughput. Transportation accounted for almost half of the total throughput in 2013 and 2014. This discrepancy between transportation margin and the capacity occupied by the transportation segment shows that the company can improve profitability if it can shift more of its business to distribution, which earns much higher profits. The other half of the business is the construction division. This segment’s main focus is on energy distribution related systems, so it acts as a complement to the distribution and transportation business. A typical project could be as small as maintenance or as big as piping the entire community, for that reason, earnings could be quite lumpy. Recent Performance It would appear that the market didn’t like the company’s Q3 results. After releasing earnings on November 4th, the stock has declined by 9% in a matter of weeks. Both segments continued to grow. While natural gas operations’ revenue declined from $226 million to $219 million, this was the result of lower gas prices in general. After subtracting the cost of gas, the natural gas segment’s operating margin increased from $153 million to $155 million. However, it should be noted that the company is not expecting growth in the natural gas division in the near future. The management stated during the Q3 earnings call that they believe future margin increases will be offset by higher expenses. The construction segment experienced higher growth, increase revenue from $206 million to $286 million. Can you count on the construction segment to hold up? Recently the segment benefited from higher demand for pipe replacement projects as the result of regulatory pressure by the U.S. Department of Transportation to enhance safety. While projects may continue to ramp up in the short-term, I don’t think that the construction segment can continue to perform at the current level over the long-term. Conclusion In the near-term, I believe that the stock can only recover if the construction segment continues to perform well. Because the outlook for natural gas operation is not great (i.e. no growth), the only way that the company can create value is by winning more contracts through the construction segment. The aforementioned secular trend of increasing regulatory pressure could help, but there is no telling when the increase in demand will fade away.