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Time To Buy Casino ETF On Value?

The dark clouds of slowdown that were long settled over Macau are finally clearing. Casino operators, who have been suffering from a sluggish business scene in Macau, are again seeing glimmers of hope. Notably, Macau – a Chinese territory – is one of the largest casino gaming destinations in the world. Credit crunch in Mainland China, check on illegal money transfers especially in VIP gaming, constraints on visa and last but not the least, a broad-based slowdown in China wrecked havoc on the casino business in Macau. However, these burning issues have started to cool off. Gaming revenues declined 21.4% year over year in January, but the fall was lesser than what analysts had projected. Year-over-year declines in Macau gaming revenues may decrease further in February to 5%, as per Credit Suisse Group AG. In the last one month, the casino gaming ETF Market Vectors Gaming ETF (NYSEARCA: BJK ) was up 3.3% (as of February 12, 2016). All in all, there was a boost in sentiments in gambling companies. This makes it more important to look at casino earnings this season. Below, we highlight two key casino earnings releases: Q4 at Wynn Resorts On February 11, Wynn Resorts Ltd. (NASDAQ: WYNN ) posted mixed fourth-quarter 2015 results. Adjusted earnings of $1.03 per share decreased 14.2% but beat the Zacks Consensus Estimate of $0.74 by 39.2%. Revenues of $946.9 million missed the consensus mark of $1960 million by 1.4% and slipped 17% year over year, owing to a choppy performance in Macau. Despite the mixed performance, investors were keen on building positions in the stock as founder Steve Wynn pointed out that this January as ‘the best month in a long time’. Investors took this statement as a sign of turnaround in Macau operations, which have long been a pain for Wynn. The company surged more than 15.8% on February 12, 2016 following the earnings report. Notably, Wynn Macau revenues plummeted 27% year over year to $555.7 million in the quarter, owing to lower revenues at the VIP and the mass market segments, while Wynn Resorts’ revenues from Las Vegas operations increased 3.8% year over year to $391.2 million supported by higher non-casino revenues. WYNN has a Zacks Rank #3 with a value style score of ‘B’. The underlying industry of the company is in top 25% segment of the Zacks Universe. Q4 at Las Vegas Sands Las Vegas Sands’ (NYSE: LVS ) fourth-quarter 2015 earnings of $0.62 – announced on Jan. 27 – missed the Zacks Consensus Estimate of $0.64 by 3.1%. Earnings fell approximately 32.6% year over year. The downside reflects a decline in revenues, partially offset by lower expenses. Quarterly net revenue of $2.86 billion missed the Zacks Consensus Estimate of $2.92 billion by 2.1% and declined 16.2% year over year due to soft business in Macau. Since reporting earnings, the stock gained about 6% (as of February 12, 2016). LVS has a Zacks Rank #3 with a value style score of ‘B’. Casino ETF: Time to Buy? The performance at Wynn Resorts has acted as a cornerstone for the entire space as LVS also added over 9% and MGM Resorts International (NYSE: MGM ) advanced about 7% at the close on February 12, 2016. WYNN’s outsized gains gave a big push to the casino gaming ETF which was up 3.4% on February 12, but is down 0.7% since Las Vegas Sands reported its earnings. Moreover, investors should note that casino stocks have been extremely cheap in valuation after undergoing a steep sell-off. Plus, analysts are betting on a turnaround in Macau. Per analysts , the region is changing itself from being mass-centric to being VIP-oriented. Another group of analysts believes that “if the yuan and Chinese economy stabilize there’s money making opportunity in Macau.” In any case, all three companies mentioned above have found a place in the fund with a considerable share. Las Vegas Sands and Sands China – together have about 16% exposure in BJK. Wynn Resorts takes about 3.21% in the fund while MGM has about 6.2% share. The fund holds about 43 stocks in total. The product charges 66 bps in fees and has a Zacks ETF Rank #3. Original Post

Are Fund Awards Only Showtime For Mutual Funds?

By Detlef Glow Not only the film industry has glamorous events such as the Academy Awards (better known as the “Oscars”) and the “Golden Globe Awards,” where juries select and reward the best movies from their point of view. The mutual fund industry also celebrates its best performing funds with fund awards ceremonies at the beginning of the year. As with movies, these fund awards are determined by a jury (a qualitative screening) or with a quantitative screening on a global basis by the likes of Morningstar and Thomson Reuters Lipper, who use a similar quantitative methodology for their awards all around the world. Or the funds are selected by local players, who award funds only in a single country or region according to their definition of the best funds. Are awards useful tools for fund selection? Fund awards reward the past performance achieved by a portfolio manager. Since past performance is the only way to evaluate the achievement potential of a fund manager, fund awards-like fund ratings-can be used as a tool to support a quantitative fund selection process. Opposite to fund ratings, where normally a group of funds gets the highest score, there is only one winner in each peer group for a fund award. In this regard, one can assume that an award can be used as guidance for fund selectors. But this is only true if the methodology on which the award is calculated suits the expectations and requirements of the investor, especially with regard to risk-adjusted returns. It is key for investors who want to use awards as tools in their fund selection process to know the methodology and/or selection process employed in the determination of the award winners. Unfortunately, the majority of funds are not able to maintain their top position for the succeeding year. Even though some observers see this as a big disadvantage of fund awards, it is the nature of the beast; not all investment approaches such as value or growth work well in any given market environment. But, unlike for movies, there are funds/fund managers that are able to win the categories year after year, and these might be the funds an investor should examine more closely. Fund flows as an indicator of future performance Another issue that can’t be neglected is the impact of high inflows and outflows on a mutual fund. As shown in the study “The Kiss of Death” by Matthew R. Morey , a good rating can have a massive impact on the flows into a fund, which can at some point have negative impacts on its performance. Even though the author analyzed only the impacts from one rating and the negative effects do not apply to every fund, investors need to monitor the flows of all funds in their portfolio regularly, so they can act appropriately if a fund becomes too small or too large. Summary Fund awards, like fund ratings, are an additional tool that can be used by investors to support their fund selection process, as long as the criteria used to nominate the award winners suit the needs of the investors. It can be concluded that fund awards ceremonies, which are typically held over the first quarter of any year, are not only a show event where the employees of the mutual funds industry enjoy a glamorous evening and the organizers do their marketing bit; the funds also get a lot media attention at these ceremonies. But a fund award can’t replace a full fund analysis process; investors still need to invest a lot of work in their fund selection process even if they may use awards as guidance. At the end of the day, as it is for the movies, not everybody likes all the winners; everyone is looking for different funds that may be the winners the next year. The views expressed are the views of the author, not necessarily those of Thomson Reuters

Telecom ETFs To Watch After Lukewarm Earnings

This year has been rather mediocre for the telecom industry, with lukewarm results coming up amid turbulent economic conditions. The industry has emerged as an intensely contested space, where success depends largely on technical superiority, quality of services and scalability. Cut-throat pricing competition has put pressure on margins this earnings season. However, mixed results and global market concerns notwithstanding, the overall sentiment for the U.S. telecommunications industry in 2016 is positive. Telecommunications is one of the few industries to have managed to undergo rapid technological improvement even during depression. In this era of digitization and technology, the ever-growing demand for technologically superior products should see the sector through. Quite expectedly, investors will keep an eye on telecom earnings for the rest of this season to assess industry dynamics and future growth prospects, with several big names like T-Mobile US, Inc. (NASDAQ: TMUS ), Dish Network Corp. (NASDAQ: DISH ) and Cincinnati Bell Inc. (NYSE: CBB ) yet to report. Telecom Earnings in Details U.S. telecom behemoth Verizon Communications Inc. (NYSE: VZ ) reported impressive results, beating on both the top and the bottom line. Adjusted earnings per share of 89 cents beat the Zacks Consensus Estimate by a penny and year-ago earnings of 71 cents. Quarterly total revenue increased 3.2% year over year to $34,254 million, outpacing the Zacks Consensus Estimate of $34,132 million. Apart from earnings, the company was also in the news because of other developments. According to a recent Bloomberg report , Verizon has assigned its chief executive officer of its AOL unit, Tim Armstrong, a key role, exploring options to bid for the core assets of tech giant Yahoo Inc. (NASDAQ: YHOO ). However, neither company has confirmed the news as yet. Verizon has gained 11.2% since reporting earnings (as of February 11, 2016). In contrast U.S. telecom giant AT&T Inc. (NYSE: T ) reported weak financial results, wherein both the top and bottom line lagged the Zacks Consensus Estimate. AT&T’s adjusted earnings per share moved up 14.5% year over year to 63 cents, missing the Zacks Consensus Estimate by a penny. Quarterly revenue increased 22.3% year over year to $42,119 million, but missed the Zacks Consensus Estimate of $42,781 million. AT&T’s weaker-than-expected earnings were primarily attributable to disappointing postpaid wireless subscriber addition of 526,000, down a significant 38.4% year over year. The stock has gained 2.3% since reporting earnings (as of February 11, 2016). CenturyLink Inc. ‘s (NYSE: CTL ) solid quarterly performance was buoyed by increased revenues from the acceptance and recognition of Connect America Fund (CAF) phase II funds, along with strength in high-bandwidth data services and consumer strategic revenues. The telecom company’s fourth-quarter 2015 adjusted earnings per share of 80 cents surpassed the Zacks Consensus Estimate of 65 cents and were up 33.3% year over year. Quarterly total revenue of $4,476 million rose 0.9% from the prior-year quarter and surpassed the Zacks Consensus Estimate of $4,427 million. The stock climbed 11% since reporting earnings (as of February 11, 2016). ETFs in Focus Thanks to mixed results, telecom ETFs with considerable exposure to the three stocks above were all in the red in the last 10 trading sessions (as of February 11, 2016). Below, we discuss four of these that are in focus in the coming days (see all Telecommunication ETFs here ). iShares U.S. Telecommunications ETF (NYSEARCA: IYZ ) IYZ tracks investment results before fees and expenses corresponding to the price and yield performance of the Dow Jones US Select Telecommunications Index. The fund manages assets worth nearly $416.6 million and has an average trading volume of roughly 438,000 shares a day. It charges an expense ratio of 43 basis points a year. IYZ holds 25 stocks and has a concentrated approach in the top 10 holdings, with almost 63% of the asset base invested in them. Among individual holdings, top stocks in the ETF include AT&T, Verizon and CenturyLink, with asset allocation of 13.3%, 13.1% and 6.03%, respectively. The four major sectors of this ETF include Integrated Telecom, Wireless Telecom, Alternative Carriers and Communications Equipment, with asset holdings of 56.1%, 23.3%, 18.1% and 2.5%, respectively. The product lost 2.1% in the past 10 days and currently has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. Fidelity MSCI Telecommunications Services Index ETF (NYSEARCA: FCOM ) This ETF tracks investment results before fees and expenses corresponding to the performance of the MSCI USA IMI Telecommunication Services 25/50 Index. The fund manages assets worth nearly $89 million and has an average trading volume of roughly 56,000 shares a day. It charges an expense ratio of 12 basis points a year. FCOM holds 33 stocks and has a concentrated approach in the top 10 holdings, with 73.5% of the asset base invested in them. Among individual holdings, AT&T, Verizon and CenturyLink number among the top five, with asset allocation of 25.8%, 25.4% and 4.1%, respectively. Diversified Telecommunication Services and Wireless Telecommunication Services are the two major sectors of this ETF, with asset holdings of 88.2% and 11.8%, respectively. The product lost 0.5% in the past 10 days and currently has a Zacks ETF Rank #3 with a Medium risk outlook. iShares Global Telecom ETF (NYSEARCA: IXP ) This ETF tracks investment results before fees and expenses corresponding to the price and yield performance of the S&P Global 1200 Telecommunications Sector Index. The fund has nearly $356.7 million of assets under management and an average trading volume of roughly 41,000 shares a day. The fund charges an expense ratio of 47 basis points a year. IXP holds 31 stocks in its portfolio and has a concentrated approach in the top 10 holdings, with approximately 74% of the asset base invested in them. Among individual holdings, top stocks in the ETF include AT&T and Verizon, with asset allocation of 18.9% and 17.3%, respectively. Integrated Telecommunication Services, Wireless Telecommunication Services and Alternative Carriers are the three major sectors, with asset holdings of 77.5%, 21.2% and 1.2% respectively. It fell almost 0.6% in the last 10 days and currently has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. Vanguard Telecom Services ETF (NYSEARCA: VOX ) This ETF seeks to track the performance corresponding to the benchmark MSCI US Investable Market Telecommunication Services 25/50 Index. It has assets under management of nearly $1 billion and an average trading volume of roughly 96,000 shares a day. The fund charges an expense ratio of 10 basis points a year. VOX holds 31 stocks in its portfolio and has a concentrated approach in the top 10 holdings, with 71.1% of the asset base invested in them. Among individual holdings, top stocks in the ETF are AT&T and Verizon, with a combined share of almost 50%. Integrated Telecommunication Services, Alternative Carriers and Wireless Telecommunication Services are the three major sectors, with asset holdings of 63.1%, 20.8% and 16.1%, respectively. The fund lost 0.7% in the last 10 days and currently has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. Original Post