Category Archives: etf

A Few Reasons Why Investors Need Advisors: Financial Advisors’ Daily Digest

Wealthfront, one of the big three robo-advisors, says low fees aren’t everything – an excellent arrow for human advisors’ quivers as well. Evan Powers exemplifies the benefit of having an advisor (and listening to him), as he recounts the sorry tale of Prince’s recent passing without a will. Michelle Waymire provides the bottom line for FAs’ social media usage, and Lance Roberts recounts the experiences of clients on their first day of retirement. Today’s Seeking Alpha Financial Advisors’ Daily Digest provides an embarrassment of riches for advisors, so I’ll try to keep this brief before getting to the links. First, I was struck by Wealthfront’s latest post. Of course, the robo-advisor par excellence is supposed to be advisors’ chief nemesis, and indeed the article is not shy about extolling its offerings as an investor’s ultimate solution. Yet, in arguing that ” investment fees matter, but taxes matter even more,” I believe the robo-advisor is perhaps unintentionally offering a pretty juicy bone to human advisors by saying, in essence, don’t sweat the small stuff like fees. And as if to prove that point, comes along one of SA’s newer contributors, Evan Powers, with an article about how Prince’s untimely intestate passing will cost his heirs hundreds of millions of dollars in avoidable fees and taxes. Powers is an investment advisor, not an estate attorney, and yet his highly intelligent and informed framing of the issue is a clear reminder of the value of having an advisor’s counsel. And speaking of intelligent and well-informed new contributors, Michelle M. Waymire offers a highly readable and clear description of what advisors need to know about using social media. I admit I’ve seen a fair amount of kitschy stuff on that topic, but Michelle has done the homework of going through the rulebooks and provides a bottom line in a simple and pleasant way. Before moving on to today’s links, it is my strong recommendation that you follow Evan’s and Michelle’s feeds straightaway to avoid the risk of missing their next articles. And as I mentioned, we’ve got some really great advisor content today: Your comments, as always, are welcome below.

AMC Networks Q1 Beats On Content Licensing, International Growth

AMC Networks ( AMCX ) stock jumped Thursday after the pay-TV and video streaming content provider reported Q1 revenue and EPS minus items that topped Wall Street views. AMC Networks sells on-demand TV shows to Netflix ( NFLX ) and Amazon.com ( AMZN ). Pay-TV companies such as Comcast ( CMCSA ), meanwhile, pay AMC programming fees for current season shows. AMC Networks stock was up 6% in morning trading in the stock market today , near 67.50. New York-based AMC Networks said Q1 earnings per share minus items rose 13% to $1.99, while revenue increased 5.7% to $707 million. Analysts had modeled $1.89 and $694 million. “AMC Networks beat revenue and EBITDA expectations, boosted by content licensing (likely Hulu) and improving trends internationally,” Stan Meyers, an analyst at Piper Jaffray, said in a research report. AMC Networks’ cable channels include AMC and IFC. Its shows include some big hits, such as “Mad Men,” “Breaking Bad” and “The Walking Dead.” “International revenue was ahead of expectations at $109 million vs. consensus estimate of $107 million,” said Benjamin Mogil, an analyst at Stifel, in a report. Even with Thursday’s gain, AMC Networks stock is still down 9% in 2016. AMC Networks has an IBD Composite Rating of only 37 out of a possible 99.

Best And Worst Q2’16: Consumer Staples ETFs, Mutual Funds And Key Holdings

The Consumer Staples sector ranks third out of the ten sectors as detailed in our Q2’16 Sector Ratings for ETFs and Mutual Funds report. Last quarter , the Consumer Staples sector ranked first. It gets our Neutral rating, which is based on aggregation of ratings of nine ETFs and 15 mutual funds in the Consumer Staples sector. See a recap of our Q1’16 Sector Ratings here . Figure 1 ranks from best to worst all nine Consumer Staples ETFs and Figure 2 shows the five best and worst rated Consumer Staples mutual funds. Not all Consumer Staples sector ETFs and mutual funds are created the same. The number of holdings varies widely (from 16 to 115). This variation creates drastically different investment implications and, therefore, ratings. Investors seeking exposure to the Consumer Staples sector should buy one of the Attractive-or-better rated ETFs or mutual funds from Figures 1 and 2. Figure 1: ETFs with the Best & Worst Ratings – Top 5 Click to enlarge * Best ETFs exclude ETFs with TNAs less than $100 million for inadequate liquidity. Sources: New Constructs, LLC and company filings Figure 2: Mutual Funds with the Best & Worst Ratings – Top 5 Click to enlarge * Best mutual funds exclude funds with TNAs less than $100 million for inadequate liquidity. Sources: New Constructs, LLC and company filings Fidelity Select Automotive Portfolio (MUTF: FSAVX ) is excluded from Figure 2 because its total net assets are below $100 million and do not meet our liquidity minimums. Fidelity MSCI Consumer Staples Index ETF (NYSEARCA: FSTA ) is the top-rated Consumer Staples ETF and fidelity Select Consumer Staples Portfolio (MUTF: FDFAX ) is the top-rated Consumer Staples mutual fund. FSTA earns a Very Attractive rating and FDFAX earns an Attractive rating. PowerShares Dynamic Food & Beverage Portfolio (NYSEARCA: PBJ ) is the worst rated Consumer Staples ETF and ICON Consumer Staples Fund (MUTF: ICRAX ) is the worst-rated Consumer Staples mutual fund. PBJ earns a Neutral rating and ICRAX earns a Very Dangerous rating. 117 stocks of the 3000+ we cover are classified as Consumer Staples stocks. Procter & Gamble (NYSE: PG ) is one of our favorite stocks held by FSTA and earns an Attractive rating. Over the past decade, Procter & Gamble has grown its after-tax profit ( NOPAT ) by 6% compounded annually. Since 2008, PG has earned a double digit return on invested capital ( ROIC ) and over the last twelve months earns an 11% ROIC. In spite of revenue declines, Procter & Gamble has generated a cumulative $64 billion in free cash flow over the past five years. However, at current prices, PG remains undervalued. At its current price of $82/share, PG has a price-to-economic book value ( PEBV ) ratio of 1.1. This ratio means that the market expects PG’s NOPAT to only grow 10% over the life of the corporation. If Procter & Gamble can grow NOPAT by 3% compounded annually for the next decade, (half the rate of the previous decade), the stock is worth $94/share today – a 15% upside. The company’s 3% dividend yield also adds to the attractiveness of PG. Mondelez International (NASDAQ: MDLZ ) is one of our least favorite stocks held by ICRAX and earns a Very Dangerous rating. MDLZ was placed in the Danger Zone in late March 2016 . Despite impressive revenue growth, Mondelez has never generated positive economic earnings . In fact, since 2008, the company’s economic earnings have declined from -$763 million to -$1.3 billion. The company’s ROIC has declined from 7% in 2009 to 5% in 2015. As we pointed out in our Danger Zone report, MDLZ likes to push focus away from the deterioration of business operations by using misleading non-GAAP metrics that remove many standard operating costs. Worst of all, MDLZ is significantly overvalued. To justify its current price of $42/share, MDLZ must grow NOPAT by 10% compounded annually for the next 17 years . The expectations embedded in the stock price are simply too high considering the decline in profits and the corporate governance risk related to the company’s reliance on non-GAAP measures of performance. Figures 3 and 4 show the rating landscape of all Consumer Staples ETFs and mutual funds. Figure 3: Separating the Best ETFs From the Worst ETFs Click to enlarge Sources: New Constructs, LLC and company filings Figure 4: Separating the Best Mutual Funds From the Worst Mutual Funds Click to enlarge Sources: New Constructs, LLC and company filings D isclosure: David Trainer and Kyle Guske II receive no compensation to write about any specific stock, sector or theme. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.