Tag Archives: management

The Long-Term Superiority Of Frontier Markets, Emerging Markets, And Gold

Summary Higher value will be found in frontier and emerging markets in the future. I plan to focus solely on frontier and emerging markets in Asia, Latin America, and Africa. The threats these markets are facing have created low valuations, and consequently a flurry of buying opportunities. I was extremely grateful to hear that the Fed decided to delay hiking interest rates, as this would have resulted in an unnecessary relegation of frontier and emerging markets. A strong USD, low commodity prices, and low investor confidence in frontier and emerging markets has resulted in extremely low valuations. Therefore, there are a flurry of investment opportunities available in frontier and emerging markets, for those willing to take a long-term view of these markets’ potential. A rationally constructed portfolio, with low valuation, invested into high-growth frontier and emerging markets, is highly unlikely to fail in the long term. As a Seeking Alpha contributor, my objective is to promote the superior long-term value of frontier and emerging markets in Asia, Latin America, and Africa. The FX risk of frontier and emerging markets is certainly justified by the high growth, low valuation, and high dividend yields. I am skeptical of the recent increased strength of the USD, and personally prefer investing in gold, frontier markets, and emerging markets. Vietnam: Low Valuation + High Growth = Paradise In my opinion, Vietnam is clearly the most superior destination for investment in Asia. I recently posted an article on Market Oracle explaining the growth of the Asian Hedge Fund industry, which mentioned that Vietnam was the superior location for investment, due to high growth and low valuation. I remained shocked as to why a large portion of investors are still deciding to take a wait-and-see attitude with Vietnam, only to potentially arrive too late, when valuation is higher. Increased consumer spending has been a substantial catalyst for Vietnam, which recently experienced annual GDP growth of 6.44% . Vietnam’s stock market has had a P/E of approximately 12, a far cry from the valuations in other Asia. The fusion of low valuation and high growth in Vietnam results in the country being a superior destination for value investors. Moreover, the Vietnamese dong has been a relatively stable currency, and the FX risk is well worth taking, considering the low valuation, high growth, and high dividend yields. Investors can invest in the VinaCapital Vietnam Opportunity Fund( OTCPK:VCVOF ) and Vietnam Holding Ltd.( OTC:VNMHF ) on the US OTC market, although higher liquidity can be found on the London Stock Exchange Listings. Anytime I mention Vietnam, I also highly discourage investors from investing in the Market Vectors Vietnam ETF(NYSEARCA: VNM ), based it on its poor historical performance. India: Small Cap Approach India’s economy has also had substantial growth, with most recent annual GDP Growth of 7% . As ETFs that invest their assets in India generally have high valuation, I have previously promoted the small cap approach to India. Small cap ETFs have lower valuation, and have had substantial earnings growth. This can be accessed through the Market Vectors Small Cap ETF(NYSEARCA: SCIF ) and the EG Shares India Small Cap ETF(NYSEARCA: SCIN ). Other favorable aspects of India include projections for continued high economic growth, high growth driven by consumer spending, relatively low inflation, increasing disposable personal income, and the country having the world’s largest youth population. The Philippines: High Growth at a High Price The Philippines has been experiencing substantial economic growth, with some noteworthy developments including the high growth of the business process outsourcing industry and the growth of townships outside of Manila. While the investment environment and growth is favorable, its appeal is somewhat offset by the high valuation. The Philippines’s stock exchange currently has a P/E of 25.05 , and the iShares MSCI Philippines ETF(NYSEARCA: EPHE ) currently has a P/E of 18. The Philippines can certainly be characterized as a high growth, favorable investment environment, although the valuation is a bit too high. Indonesia: Approach with Caution Indonesia is certainly no economic paradise in Asia, but I have identified a specific buy opporutnity for the Aberdeen Indonesia Fund(NYSEMKT: IF ), due to its low valuation and high discount. Favorable aspects of investing in Indonesia include growth in consumption, recent annual GDP growth of 4.67%, and high loan growth rates. I would not recommend investing in other ETFs with higher valuation, due to the substantial inflation and FX risks that Indonesia presents. Pakistan: A Contrarian Suggestion Pakistan is certainly a contrarian place to suggest , although the country’s decreasing terrorism and stock market’s yearly gain of 16.31% certainly justify this as a viable suggestion. Valuation is substantially low given the consistent rise of the Karachi Stock Exchange, making now a strategic time to enter. The newly launched Global X MSCI Pakistan ETF(NYSEARCA: PAK ) provides exposure to a variety of publicly listed companies in Pakistan, and currently has a P/E of 9.12. Chile: Latin America’s Highest Credit Rating Chile is another excellent site for investment , although its economic growth has been offset by the plunging price of copper. However, the country is continuing to fare well in terms of economic growth, and has the prestige of its banking industry to offer to investors. Chile’s banking industry has the highest credit rating in Latin America, and three of its banks are available to US investors at extremely low valuation. These banks include Banco de Chile (NYSE: BCH ), Banco Santander Chile (NYSE: BSAC ), and CorpBanca (NYSE: BCA ). General exposure to Chile’s economy can be accessed through the iShares MSCI Chile Capped ETF (NYSEARCA: ECH ) Colombia: Rebound I have also been following Colombia, based on my conclusion that low oil prices have unjustly lowered the valuation of many companies in Colombia, particularly in the banking industry. The most convenient way for investors to gain exposure to Colombia is through the Global X MSCI Colombia ETF (NYSEARCA: GXG ) which currently trades at 9.02, a far cry from its 52 week high of 19.72. Despite the current low oil price, Colombia has still been able to economically thrive and lead Latin America in terms of economic growth, with most recent annual GDP growth of 3% . A rebound in oil prices is essential for full recovery, but now is certainly an excellent time to investigate investment opportunities in Colombia. Investors can gain exposure to Colombia’s high growth banking industry through BanColombia S.A. (NYSE: CIB ) and Grupo Aval Acciones Y Valores S.A. (NYSE: AVAL ). Nigeria: Strength in its Newly Diversified GDP I have previously mentioned that Nigeria’s newly diversified GDP offsets the risk of the current low oil price environment. Moreover, while the threat of Boko Haram is substantial, it can not offset the high growth of consumer products, construction, and banking industries in Nigeria. The Global X MSCI Nigeria ETF (NYSEARCA: NGE ) offers very convenient exposure to Nigeria, with my biggest concern being the high valuation of the consumer products industry. The construction and banking industry are the most favorable sites for investment, with low valuation and high growth. The fund’s P/E is currently 8.22, which further justifies the logic of investing in Nigeria, although a further plunge in oil prices would prove to be damaging to the fund in the short term. Gold: On the Rise after The Fed’s Delay The Direxion Daily Junior Gold Miners Bull 3X ETF (NYSEARCA: JNUG ) rose by 10.63% after the Fed announced its decision to delay hiking interest rates. Historically, this fund has traded substantially higher, before QE in 2014. The historically higher price of gold, and this fund in particular, presents opportunities for investors willing to take a long term bullish view on gold. Volatility of this fund has been substantial, but its recent bottoming out presents opportunity. Investors should be willing to hold long term, as some financial experts have mentioned the likelihood of gold falling near $800/ounce. JNUG data by YCharts Conclusion To quote Jim Rogers , ” The US Dollar is not a safe haven, but people think it is; that’s why they put money there.” The rise of the USD, and its prestige as the world’s reserve currency, should be questioned by those investing in companies in the United States. Gold is certainly a conservative alternative, for those who do not want to risk investing in frontier and emerging markets. Furthermore, I consider the high growth environment of frontier and emerging markets to be superior to options in the United States. Plunging commodity prices and the strong USD are relevant threats to be acknowledged, but will be unsuccessful in presenting a long term threat to frontier and emerging markets. I do not focus on general emerging market funds, due to the discrepancies in opportunities in emerging markets. Thailand Malaysia are two examples of countries that I am concerned with, and would not invest in. Proper due diligence can result in a successful value based investing in frontier and emerging markets. The undertakings of the Fed will not be able to offset this in the long term. Editor’s Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks. Disclosure: I am/we are long JNUG, GXG, NGE, IF, BCA, BCH, BSAC. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The Future Of Seeking Alpha, From One Contributor’s Perspective (Part II)

Summary SA has new leadership and a bright future. Here is what that future may hold for you. Many questions have been answered since Part I. Much has changed at Seeking Alpha since Part I . Here is an update from Seeking Alpha’s opinion leaders on big changes that impact you. New Leadership As announced by Seeking Alpha’s founder, the company is newly led by my friend Eli Hoffmann . Eli is the perfect person to lead Seeking Alpha. In April, he announced the launch of the SA contributor marketplace. While Eli was always the best successor to founder David Jackson , his success at leading the launch of this new business really catapulted him to the top. We have stayed in close touch during the launch including discussions of its progress here and here . New Marketplace The contributor marketplace is comprised of value-added investment services from top SA contributors, according to Seeking Alpha. Under Eli’s leadership, the contributor marketplace exploded to over fifty writers on over twenty five specialized topics. New Ideas from Seeking Alpha Opinion Leaders I reached out to each of the top ranked opinion leaders from every category for their thoughts on Seeking Alpha’s future and their role in it. What is the future of SA? My hope is that the future of SA is to provide both professional and retail investors with a forum to provide interactive discussion over the analysis of a large number of securities, as well as the general macroeconomic picture. Seeking Alpha has already established a large moat as the leader in ‘crowd-sourced’ investing information, and I also hope that they can grow the entire market for crowd-sourced financial information. – Michael Munro , SA’s real estate opinion leader What is your edgiest prospective idea from today’s market prices? I like the Chinese solar companies such as JinkoSolar (NYSE: JKS ), Trina Solar (NYSE: TSL ), and JA Solar (NASDAQ: JASO ) because of their valuation, the prospects for solar power as it becomes more competitive in electricity generation, the near-term sold out capacity for solar, the companies’ technological/cost competitiveness, the trend towards higher earnings estimates in spite of their very low valuation and the existence of further catalysts for further increases in earnings estimates. – Paulo Santos , SA’s opinion leader in short ideas What is the single most unappreciated article on the site by someone other than you? That’s a pretty good question, I’d say Spear Point Calls for CEO of TheStreet to Resign Requests Board Seats to be the most underappreciated article on Seeking Alpha. In the comment section, there were only two comments, and the content inside of the article was simply phenomenal. I wrote an extensive article on TheStreet in the beginning of 2015 highlighting why it was such a poorly run business. Soon enough, the biggest shareholders, i.e. Spear Point wrote a public letter on Seeking Alpha to TST’s management team stating that the CEO is both incompetent and that the board should be more fairly represented by the shareholders. This is a classic example of how Seeking Alpha’s platform could transition to become more accommodative towards activist funds, while also exemplifying the strengths of the buy-side community as a whole. People mistake Seeking Alpha for a group of wannabe analysts, or amateurs. But it’s simply not the case. Some of the most brilliant people in the world share their ideas here, and as such, I think this specific article is not only one of the most underappreciated article on this website, it also speaks to the direction in which Seeking Alpha could go. – Alex Cho , SA’s opinion leader in long ideas What article have you written on SA that best exemplifies the depth of your research and your ability to uncover information that is not already in the press/in the price? I’m not sure how “deep” my research was, but I thought this idea was unique compared to most things I had read about how DGIs weight their portfolios. The vast majority seems to weight them equally or close to it and that simply didn’t make sense to me. Why would I want to rely upon some speculative 10%-yielder for more income than a proven blue-chipper? That’s exactly what happens for somebody who invests equal amounts of money in both equities. So I went to the numbers and “proved” myself correct – at least in my own mind. And this thesis of mine did go on to form the basis on how I invest today. I weight my positions not only based upon my conviction towards each company. And I do the weighting by annual dividends more than dollar value. – Mike Nadel , SA’s dividend investing strategy leader How does your view of a given securities’ value tend to differ from the market’s view? My view on value is evidence-based and totally dispassionate. A surprising number of investors seem to lose their analytical focus if they are long a stock of a company whose products they love (say, Apple (NASDAQ: AAPL )) – no matter how expensive the stock gets, they reject any information source that presents evidence of over valuation. – Donald van Deventer , opinion leader on bonds To quote Peter Thiel’s favorite question, could you please tell me something that’s true that nobody agrees with? In an investing environment where there are unlimited numbers of brilliant mathematicians, statisticians and physicists all seeking to dissect the tiniest component of what creates opportunity and coming up with diametrically opposing answers, it is not possible to have any degree of confidence in any investing decision without information that is otherwise unavailable to others. – George Acs , income investing strategy leader Sifting the World In March, I wrote that, I am 100% committed to this new endeavor even if it results in only one reader (me) and writer (me). Since then, hundreds of members joined Sifting the World . Many have discussed their experience in their own words . It is both a collegial environment and a forum for vigorous debate. My ideas are supplemented by investment ideas presented by fellow hedge fund managers and by fellow StW members. Online discussion is supplemented by in person meet ups in New York City and Connecticut. You can join us, too, or shoot me any questions that you might have about becoming a member. What do you think? Please use the comment section below or the Seeking Alpha Readers Forum to weigh in. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Additional disclosure: Chris DeMuth Jr is a portfolio manager at Rangeley Capital. Rangeley invests with a margin of safety by buying securities at deep discounts to their intrinsic value and unlocking that value through corporate events. In order to maximize total returns for our investors, we reserve the right to make investment decisions regarding any security without further notification except where such notification is required by law.

TAN Vs. YLCO: Which Is The Better Solar ETF?

With the recent update from the Obama administration regarding the allocation of more than $120 million for clean energy programs developing solar power and other renewable technology, ETFs focusing on top solar firms are definitely on our radar. The fund will be deployed across 24 states to help Americans gain access to cleaner and low-cost energy sources. Although solar stocks have got a beating due to plunging oil prices and the meltdown in the Chinese stock market, they hold greater promise. Surging demand for solar power, massive panel installations, advanced technologies, global warming issues and Obama’s ‘Climate Action Plan’ will ensure that the solar boom is not fizzling out anytime soon. The good news is that solar energy systems have increasingly become affordable, indicating its potential for wide acceptance among the masses. According to the White House report, solar energy is now cost-competitive with conventional energy, such as coal or natural gas, in 14 states. According to a report by GTM Research and Solar Energy Industries Association, solar photovoltaic installations are expected to go up to 7.7 gigawatts (“GW”) this year from 6.2 GW in 2014, where a GW represents 1 billion watts, enough to power roughly 164,000 homes. Here we will discuss two ETFs, Guggenheim Solar ETF (NYSEARCA: TAN ) and only a few months old Global X YieldCo ETF (NASDAQ: YLCO ). Both focus on the renewable energy sector expecting to ride on the bullish trend in solar space. Though TAN and YLCO have similar exposures, there are certain key differences between the products. Below, we have highlighted the products in greater details. TAN Launched in April 2008, this ETF follows the MAC Global Solar Energy Index, holding 27 stocks in the basket. First Solar Inc. (NASDAQ: FSLR ) and SolarCity Corp. (NASDAQ: SCTY ) take the first and second positions with a combined 15.3% share. The U.S. firms dominate the fund’s portfolio with 34%, followed by China (28%). The product has amassed over $264 million in its asset base and trades in solid volume of around 260,000 shares a day. It charges investors 70 bps in fees per year. The fund shed around 10.3% in the year-to-date time frame (as of Sep. 16, 2015) and has a Zacks ETF Rank of 3 or ‘Hold’ rating with a High risk outlook. YLCO Launched this May, the fund targets a unique segment of the market, namely the YieldCo. A Yieldco is a dividend growth-oriented public company that bundles renewable and/or conventional long-term contracted operating assets. It is often compared to MLPs as they are both energy-related assets, created by their parent company, in order to deliver stable cash flows to investors. To attain its objective, the fund tracks the Indxx Global YieldCo index. The ETF holds only 20 securities with Brookfield Renewable Energy Partners (NYSE: BEP ) and TerraForm Power Inc. (NASDAQ: TERP ) (formerly a SunEdison (NYSE: SUNE ) Yieldco) taking up the first and second spots. Both account for an 18.3% share in the basket. The fund has a global footprint as well with the U.S. occupying the top spot at 39%, followed by Canada with 28%. YLCO has gathered a meager $3.4 million in assets and charges 65 bps in fees. It trades at an average volume of more than 4,600 shares. The product was down 26% since its inception. The Verdict Both funds charge comparable fees and are a tad expensive. However, TAN is widely diversified as it holds more securities and is less concentrated in its top 10 holdings compared to YLCO. Further, TAN is higher in AUM and relatively more liquid as it trades in a higher volume compared to YLCO. The higher volume of TAN also suggests that bid ask spreads should be relatively tight for this fund and total trading costs shouldn’t be much higher than the explicit 0.70% expense ratio. Notably, TAN has higher yield compared to YLCO. Both the funds have higher exposures to U.S. stocks with TAN lagging behind YLCO. However, the good thing about YLCO is that it has no exposure to Chinese firms, which could be affected by the economic turmoil in the world’s second largest economy. Further, YLCO is expected to be less volatile in nature than TAN as it tracks companies that have spun off their more steady power producing operations as Yieldco. Though YLCO doesn’t look bad, we pick TAN as the winner due its higher exposure to top solar firms, diversified nature, higher liquidity and better yield. Data Point TAN YLCO Expense Ratio 0.70% 0.65% Total Holdings 27 20 Top 10 Holdings 54.9% 66.7% Assets in the U.S. 34% 39% Dividend Yield 2.2% 1.2% AUM $264 Million $3 Million Average Volume 260,000 4,600 Original Post