Tag Archives: etf

Finding Value In The Small-Cap Space

Meson Capital is a small-cap activist investor. They share our appreciation for the small-cap industry, where small-caps tend to outperform large-caps over time. But in truth, Meson is more like an micro-cap activist investors, taking a 1-3 year time horizon on their holdings. They operate on the long and short side, with a notable short in FreshPet (NASDAQ: FRPT ). They see the current market as indicative of the market behavior from the 2000 tech bubble. Still, we think there’s value to be had in the traditional value space. With that in mind, Meson’s long portfolio is what’s most interesting right now. One of its top holdings, Heska (NASDAQ: HSKA ) is down 30% this year. The fall comes after a weak earnings report, despite executing a solid turnaround. Still, 2015 fiscal year revenues were up 22% year-over-year and operating profit has doubled. Heska is a maker of veterinary products, namely in the canine and feline markets. The company has been a turnaround story since 2014. It decided to change its business model from primarily selling equipment to generating recurring revenues via rental and other sources. Heska should continue to see the benefits of past investments in 2016 finally paying off. As Meson notes, they focus on a private equity style, where they invest in companies that stick to their long-term strategy despite having to sacrifice short-term profits.. Its core customer is veterinary clinics, which it’s managing to win over with its blood analyzer product, despite the competitive market. Now Heska is expanding beyond the blood analyzer business, buying up the digital radiography and imaging tech company Cuattro Veterinary last year. Then there’s international opportunities, where it’s expanding into Mexico, Europe, Latin America and Canada. Also in Meson’s portfolio is Capital Southwest (NASDAQ: CSWC ), which is a $220 million market cap investment company. Shares are flat for the year. The company is a focuses on acquisitions and investments across industries. It invests in various private companies, namely debt, in companies that generate $5 million to $20 million in earnings before interest, taxes, depreciation and amortization. Its goal is to assist management. Despite the lackluster stock performance the company has brought in new management in hopes of breaking up the investment holding and operating companies following the founder’s passing. Disclosure: None

Yahoo CEO Mayer Gets A Bigger Golden Parachute If The Company Sells

Yahoo ( YHOO ) CEO Marissa Mayer has a bit of extra incentive to sell the ailing Internet company, which is facing a proxy fight. According to CNN Money, Mayer gets $37 million if she’s fired after selling the Sunnyvale-based company, under the terms of her employment contract . But she’ll be paid only $12.5 million if she’s let go without a sale. In that case, Mayer would take home $1 million in salary, a $2 million cash bonus and $9.5 million in stock that would vest in 2016, the report says . But being ousted after a sale significantly ups the ante by triggering “the release of all her stock awards. In virtually any other scenario, Mayer would have needed to stay at Yahoo for a certain period of time in order to cash out those rewards,” said CNN Money. In either scenario, her golden parachute will be worth significantly less now than it was a year ago, since the price of Yahoo stock has fallen 18% over the past 12 months. On Wednesday, Yahoo stock rose a fraction, to 36.56. A year ago, Mayer would have taken home $110 million had she lost her job because of Yahoo’s sale and $26 million if she was let go without a sale, the report said. Mayer, who joined Yahoo in 2012, earned $42 million in cash and stocks in 2014, CNN Money said. Her 2015 compensation is expected to be reported next month. Sale or not, Yahoo is facing rough waters. Last week, in a letter charging the current board of Yahoo with failing to deliver results for its shareholders, activist investor Starboard Value announced that it wants to sweep out all of the ailing Web company’s nine directors and replace them with its own slate during Yahoo’s 2016 shareholder meeting. The letter — from Starboard Value managing member Jeffrey Smith, one of Starboard’s slate of Yahoo board nominees — indicates that Starboard also doesn’t trust Yahoo’s current directors to perform in terms of either the strategic review of Yahoo’s core search and display-ad business or with the eventual fate of Yahoo’s 15% stake in China e-commerce giant Alibaba Group ( BABA ) and its holdings in Yahoo Japan. Yahoo this month appointed two members to its board, Catherine Friedman, a former managing director at Morgan Stanley ( MS ), and Eric Brandt, a former chief financial officer of Broadcom ( AVGO ). Yahoo’s revenue growth has stalled for nearly a decade as ad dollars continue to slip away to rivals including Facebook ( FB ), Netflix ( NFLX ), Alphabet ( GOOGL )-unit Google, and others that include high-profile startups Snapchat and Pinterest. Yahoo has reportedly gotten interest from as many as 40 groups who have until April 11 to submit preliminary bids for its core business and Asian operations.

Short Gold With These ETFs

The rally in gold ETFs that was spurred by the safe haven demand in the wake of the Chinese market rout, overall global growth worries and nagging oil price declines at the start of 2016, has started to lose steam. Possibilities of another Fed rate hike as early as in April, given stronger U.S. economic numbers and an upward shift in Q4 GDP data have added strength in the greenback lately. Notably, PowerShares DB US Dollar Bullish ETF (NYSEARCA: UUP ) added over 1.3% in the last five trading sessions (as of March 24, 2016). As a result, a surging greenback weighed on the yellow metal as these are mostly priced in the U.S. dollar. Also, rate hike talks pushed up the U.S. Treasury bond yields in recent times, which in turn wrecked havoc on non-interest bearing assets like gold. In any case, the outlook for gold investing was appalling (read: Pain or Gain Ahead for Gold ETFs in 2016? ). The metal saw its third consecutive annual decline in 2015, being crushed heavily by the strength of the greenback in the wake of the Fed policy tightening, demand-supply imbalances and tepid global inflation (especially in the developed markets). As a result, the largest gold bullion ETF SPDR Gold Shares (NYSEARCA: GLD ) lost over 11% in 2015, followed by a 3.8% decline in 2014 and 28.8% in 2013 (see all precious metal ETFs here ). Now the renewed talks of Fed tightening have cast a shadow over this space. The price of gold fell to the lowest level in more than a month of late. Following the Fed meeting in mid-March, which indicated two more hikes this year, the largest gold bullion ETF SPDR Gold Shares saw asset outflow of $844.9 million from March 20 to March 27, 2016. As a result, investors who are bearish on gold right now may want to consider a near-term short on the precious metal. Below, we highlight a few such options (read: Believe in Goldman? Short Gold with These ETFs ). DB Gold Short ETN (NYSEARCA: DGZ ) This ETN has an inverse (opposite) relation to the movement of gold prices and thus creates a short position in the underlying index. It has managed assets of $23.9 million so far in the year and trades in average daily volume of more than 200,000 shares. This suggest a relatively wide bid/ask spread increasing the total cost for the product beyond the annual fees of 75 bps. DGZ added about 2.7% in the last five trading sessions (as of March 24, 2016). DB Gold Double Short ETN (NYSEARCA: DZZ ) This ETN seeks to deliver twice (2X or 200%) the inverse return of the daily performance of the Deutsche Bank Liquid Commodity Index-Optimum Yield Gold, as per etfdb. The note charges 75 bps in fees per year from investors. The product has amassed about $52.8 million in AUM. The ETN generated impressive returns of about 4.4% in the last five trading sessions (as of March 24, 2016). ProShares Ultra Short Gold ETF (NYSEARCA: GLL ) This fund seeks to deliver twice the inverse return of the daily performance of gold bullion in U.S. dollars; the gold price is fixed for delivery in London. The product is expensive when compared to the other geared options in the space, charging 95 bps in fees a year. The $60-million fund trades in average daily volumes roughly 30,000 shares. The ETF gained 5.6% in the last five trading days (as of March 24, 2016). VelocityShares 3x Inverse Gold ETN (NASDAQ: DGLD ) This product provides three times (300%) short exposure to the daily performance of the S&P GSCI Gold Index Excess Return plus a daily accrual equal to the return that could be earned on a notional capital reinvestment at the 3-month US Treasury rate less the daily investor fee. The ETN has been able to amass an asset base of $18 million. The product is a high cost choice in the gold bullion space, charging 135 bps in fees per year from investors. Additionally, it has a wide bid/ask spread given its small average daily volume of 60,000 shares that increases the total cost of the product. Not surprisingly, the note returned an excellent 8.8% in the last five days (as of March 24, 2016) buoyed by negative sentiments for gold across the globe. Original Post