CMYK ➛
THE TIMES LEADER www.timesleader.com
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SUNDAY, APRIL 15, 2012 PAGE 3D
MarketPulse THE LONG RUN Consider yourself a long-term investor? You may want to focus on pharmaceutical stocks and steer clear of banks. Researchers from Harvard Business School combed through more than 150,000 transcripts of earnings conference calls. They wanted to see whether CEOs used phrases that emphasize long- or short-term planning. They found that the vocabulary of pharmaceutical and apparel CEOs tended to be more long-term oriented, while electronic equipment companies and banks were more short term. The researchers also found that short-term oriented companies had more volatile stocks.
TRASHED The business of trash The economic recovery may be 1Q growth over last year, percent underway, but it’s not yet showing trash hauled price increase itself at the dump. Haulers dumped 0.3 percent less stuff in U.S. landNortheast fills in the first quarter than a year ago, according to Wedbush analyst Al Kaschalk. One of the main South culprits is the still-weak housing market. In February, crews started construction on only about 30 perMidwest cent of the number of homes that they did during 2006. That means less construction and demolition West waste. One bright spot for Republic Services (RSG) and other publicly traded waste companies is National average that prices are rising to haul trash: -2% -1 0 1 2 They were up 1.8 percent last quarter, Wedbush says. Source: Wedbush
IT ALL MATTERS Bond investors took notice when Standard & Poor’s upgraded Macy’s credit rating on Tuesday: It meant S&P believes Macy’s bondholders are more likely to get their money back. But stockholders should also care. The upgrade means Macy’s can borrow more cheaply, and can use the cash which would have gone to interest, on stock buybacks instead. Citi analyst Deborah Weinswig expects Macy’s to buy $1.3 billion of its stock in 2012, up from an estimate of $1 billion. A bigger buyback means shareholders will get a larger proportion of the company’s earnings.
Phrases that imply a short-term view: ew: •Weeks •Short run •Latter half of the year Phrases that imply a long-term view: •Years •Long run •Trend Source: “Short-termism, Investors Clientele, and Firm Risk” by Francois Brochet, Maria Loumioti and George Serafeim
AP
Big Big opportnities opportunities InsiderQ&A
Eric Marshall Who he is: Co-manager of Hodges Small Cap fund (HDPSX) His track record: The small-cap fund has returned an annualized 34 percent over the last three years; better than 98 percent of similar funds What he suggests: Look to smaller stocks for growth
Small stocks have lagged behind the rest of the market in 2012, but Eric Marshall still sees big opportunities for them. Fewer financial analysts follow small-cap companies, which means there are more chances to find overlooked winners. Aren’t small-caps more volatile historically than large stocks? Small-cap stocks tend to be in the areas of the market that are growing the most. They tend to involve companies that are more cyclical and maybe have a little more leverage to what’s going on in the economy. That can be good in good times and bad in bad times. But because they carry a higher risk, they carry a higher reward over the long run. If you’re a long-term investor with a four- or five-year time horizon, it makes sense to have a portion of your portfolio exposed to small-caps, because it’s where you find the opportunity for growth. Can you give an example? During the recession, everyone thought you didn’t want to be in retail stocks. But there were pockets, like at A.T. Cross (ATX). They own the Cross pen business and a sunglass brand called Costa that grew double digits during the recession. They have a unique lens technology and sell for over $200 per pair. We’re in an environment where the economy is improving, but it’s improving at a very slow pace. In this environment, small-caps can represent pockets of growth, either in a niche sector or through a company that’s gaining market share. Like Tempur-Pedic (TPX). Here’s a company that just went through the worst housing crisis, and furniture companies are very tied to the housing market. Also, who’s going to go out and buy a $2,000 mattress when the unemployment rate is 10 percent? But somehow TempurPedic was able to see decent growth, because they had only 2 percent of the global market share. If you can go from 2 percent to 3 or 4 percent, you can offset whatever slow economic growth is out there. Isn’t a drawback of small-cap stocks that they generally don’t pay dividends? There are some out there. Cinemark (CNK) has a 3.7 percent yield. The funny thing about the movie business is if people don’t go for a long time, they quit going. But it only takes one or two movies to get people back in the habit of going to the movies. I see you own Heelys (HLYS), the company that makes a shoe with a wheel in it. Isn’t that fad over? The stock is down to about $2 from $30 in 2006. Heelys is now sitting on about $2.20 per share in cash. We paid right at or below that price for it. We bought the cash on the balance sheet and got the company for free. They don’t have any debt. There’s a new management team in there. We think maybe they could be break even, modestly profitable, by the end of this year. Answers edited for content and clarity. AP
Mortgage rates fall again
No treasure in these funds
Treasury bond mutual funds haven’t offered much safety this year. Even though Treasury prices have rebounded this month, long-term government bond mutual funds remain in the red. They’ve lost 3.4 percent this year. That’s the worst performance among the 14 bond fund categories that Morningstar tracks. At the top of the list? Emerging market bond funds, which are up 6.3 percent. Treasury prices began falling in February after fears about the European debt crisis waned and the U.S. unemployment rate fell to 8.3 percent, its lowest level since 2009. As a result of those improvements, investors sold Treasurys and shifted money into riskier, higheryielding investments. Also, the Federal Reserve said it doesn’t foresee buying more bonds to pump money into the economy. Investors are hungry for bond yields to rise.
The 10-year Treasury note yields about 2 percent, down from its average of 6.5 percent over the last 30 years. Worries about the strength of an economic recovery have worked to keep interest rates low. Just last Friday a weaker-than-expected jobs report caused Treasury prices to rise, and the yield on the 10-year note to fall to 2.06 percent from 2.18 percent. What’s more, economic problems in Europe remain unresolved. Such uncertainty is why a diversified bond fund is often the best option. For instance, the T. Rowe Price Short-Term Bond fund (PRWBX), which Morningstar recommends, has 49 percent of its assets in corporate bonds, 4 percent in Treasurys and the rest in mortgage-backed securities and other investments. It has returned 2.2 percent over the last 12 months.
InterestRates
Money market mutual funds
PRIME FED Taxable—national avg RATE FUNDS Selected Daily Govt Fund/Cl D FRIDAY 3.25 .13 Tax-exempt—national avg 6 MO AGO 3.25 .13 BofA CT Muni Reserves/Investor 1 YR AGO 3.25 .13
Longterm
Investment grade Shortterm
Intermediateterm
Shortterm
0.4%
Intermediateterm
Longterm
2.0%
3.4%
1.4%
0.8%
High-yield
-0.14 -0.08 -0.08 -0.04 0.14 -0.13
FRIDAY YIELD
1WK
0.08 0.19 0.12 0.27 0.85
0.01 -0.04 -0.01 -0.07 -0.16
s t t t t
s 0.02 s -0.05 s 0.00 s -0.47 s -1.35
0.12 0.26 0.15 0.80 2.29
0.07 0.01 0.16 0.71
10-year T-Note 1.99 30-year T-Bond 3.13 Money fund data provided by iMoneyNet Inc.
-0.19 -0.20
t t
s -1.49 s -1.41
3.56 4.63
1.72 2.72
3-month T-Bill 1-year T-Bill 6-month T-Bill 2-year T-Note 5-year T-Note
6.3%
4.8%
0.01 0.09 $ 2,500 min (800) 345-6611
2.13 3.99 3.37 4.56 7.39 1.08
Broad market Lehman Triple-A corporate Moody’s Corp. Inv. Grade Lehman Municipal Bond Buyer U.S. high yield Barclays Treasury Barclays
Emerging market
0.01 0.22 $ 10,000 min (800) 243-1575
1WK
TREASURYS
Investors willing to take on more risk can earn significantly greater returns.
MIN INVEST PHONE
YIELD
FRIDAY YIELD
U.S. BOND INDEXES
2012 bond mutual fund returns U.S. Government
The average rate on the 15-year fixed mortgage fell to a record low of 3.11 percent last week, down from 3.21 percent a week earlier. The average rate on a 30-year fixed mortgage fell to 3.88 percent from 3.98 percent. Mortgage rates tend to follow Treasury yields, and the yield on the 10-year Treasury note has been falling since March on worries about a slowing global economy.
CHANGE 1MO 3MO 1YR t t t t s t
t s t t t s
52-WK HIGH LOW
-0.94 -1.17 -0.63 -1.11 0.51 -1.23
3.17 5.23 4.10 5.71 10.15 2.39
CHANGE 1MO 3MO 1YR
2.05 3.72 3.27 4.54 6.61 0.93
52-WK HIGH LOW
-3.4% Source: Morningstar Data through April 11
MutualFunds
Stan Choe; J. Paschke • AP
LocalStocks COMPANY
TICKER
52-WK RANGE FRIDAY $CHG %CHG %CHG %RTN RANK %RTN LOW HIGH CLOSE 1WK 1WK 1MO 1QTR YTD 1YR 1YR 5YRS* PE YLD +.62
Air Products
APD
72.26 7
98.01
88.26
-2.55
-2.8
t
t
3.6
Amer Water Works
AWK
25.39 9
34.67
33.05
-0.76
-2.2
t
s
3.7 +20.55
Amerigas Part LP
APU
36.76 2
48.34
38.10
-2.07
-5.2
t
t -17.0—10.79 3
9.3
21
8.0
Aqua America Inc
WTR
19.28 6
23.28
21.52
-0.71
-3.2
t
s
2
1.2
21
3.1
Arch Dan Mid
ADM
23.69 6
37.28
30.75
-0.57
-1.8
t
s
7.5—10.59 3
-2.4
14
2.3
AutoZone Inc
AZO
266.25 0 386.00 380.97
-2.83
-0.7
s
s 17.2 +36.18
1 23.9
19
...
Bank of America
BAC
Bk of NY Mellon
BK
Bon Ton Store
BONT
CVS Caremark Corp
CVS
-2.4 +1.42
2
5.8
15
2.9
1 26.3a
18
2.8
4.92 5
13.64
8.68
-0.55
-6.0
t
s 56.1—34.29 4 -23.9
...
0.5
17.10 5
30.77
23.11
-0.71
-3.0
t
s 16.1—20.25 4
-8.4
11
2.3
2.23 5
14.58
7.19
-0.77
-9.7
t
s 113.4—44.23 5 -31.4
...
2.8
31.30 9
45.88
43.43
-1.19
-2.7
t
s
17
1.5
6.5 +23.43
1
5.2
Cigna Corp
CI
38.79 7
52.95
48.31
-0.68
-1.4
s
s 15.0 +9.27
2
-0.5
10
0.1
CocaCola
KO
63.34 8
74.39
71.94
-1.53
-2.1
s
s
2 10.0
19
2.8
Comcast Corp A
CMCSA 19.19 0
30.41
29.50
-0.06
-0.2
r
s 24.4 +23.97
1
2.0
19
2.2
Community Bk Sys
CBU
21.67 8
29.47
27.69
-0.85
-3.0
t
t
1
9.7
14
3.8
Community Hlth Sys
CYH
14.61 4
37.79
21.82
-0.68
-3.0
t
s 25.0—33.54 4
-9.5
9
...
Entercom Comm
ETM
4.61 2
11.01
5.80
-0.56
-8.8
t
t
-5.7—44.18 5 -23.3
6
...
Fairchild Semicond
FCS
10.25 4
21.02
14.02
0.03
0.2
t
s 16.4—26.90 4
12
...
Frontier Comm
FTR
Genpact Ltd
G
Harte Hanks Inc
HHS
7.00 3
11.94
8.26
-0.48
-5.5
t
Heinz
HNZ
48.17 7
55.00
52.65
-0.61
-1.1
t
Hershey Company
HSY
53.77 0
62.38
61.69
1.03
1.7
s
Kraft Foods
KFT
31.69 8
39.06
37.35
-0.69
-1.8
Lowes Cos
LOW
18.07 0
31.63
31.69
0.34
1.1
2.8 +9.78 -0.4 +19.77
-3.9
3.81 1
8.97
4.12
-0.19
-4.4
t
t -20.0—40.81 5 -10.9
24
9.7
13.37 6
18.16
15.92
-0.21
-1.3
t
s
2 20.0a
21
1.1
t
-9.1—26.81 4 -18.5
12
4.1
t
-2.6 +10.15
2
5.3
17
3.6
s
-0.1 +11.65
2
4.2
23
2.5
t
t
0.0 +18.86
1
5.6
19
3.1
s
s 24.9 +19.73
1
1.5
22
1.8
6.5 +1.47
M&T Bank
MTB
66.40 8
90.76
84.43
-2.45
-2.8
t
s 10.6 +1.50
2
-1.5
13
3.3
McDonalds Corp
MCD
75.83 9 102.22
96.97
-1.65
-1.7
t
t
1 17.7
18
2.9
NBT Bncp
NBTB
17.05 6
24.10
20.81
-0.83
-3.8
t
t
-6.0 —1.91
3
1.9
12
3.8
Nexstar Bdcstg Grp
NXST
5.53 5
10.28
7.45
-0.18
-2.4
t
t
-5.0 +5.67
2
-7.0
...
...
PNC Financial
PNC
42.70 9
64.85
61.28
-1.85
-2.9
t
t
+.86
2
-1.3
11
2.6
PPL Corp
PPL
25.00 4
30.27
26.77
-0.86
-3.1
t
t
-9.0 +5.19
2
-4.6
10
5.4
Penna REIT
PEI
6.50 8
17.34
14.61
-0.25
-1.7
t
s 39.9 +10.30
2 -15.1
...
4.1
PepsiCo
PEP
58.50 5
71.89
65.06
-1.09
-1.6
s
s
-1.9 +1.01
2
2.8
16
3.2
Philip Morris Intl
PM
60.45 0
90.10
87.84
-0.80
-0.9
s
s
11.9 +37.33
1 37.1a
18
3.5
Procter & Gamble
PG
57.56 8
67.95
65.81
-1.50
-2.2
t
r
-1.3 +7.81
2
3.3
17
3.4
Prudential Fncl
PRU
42.45 8
65.30
59.91
-2.61
-4.2
t
s 19.5
2
-6.7
8
2.4
SLM Corp
SLM
10.91 7
17.11
14.85
-0.41
-2.7
t
s 10.8 +3.77
2 -20.1
12
3.4
SLM Corp flt pfB
SLMBP 39.00 5
60.00
47.75
-0.50
-1.0
t
s 22.4
...
0.0
...
9.7
TJX Cos
TJX
24.60 0
40.62
39.82
-0.47
-1.2
s
s 23.4 +57.22
1 24.2
21
1.2
UGI Corp
UGI
24.07 3
33.53
26.60
-1.01
-3.7
t
t
-9.5—12.25 3
2.9
15
3.9
Verizon Comm
VZ
32.28 7
40.48
37.26
-0.40
-1.1
t
t
-7.1 +4.13
2
5.8
44
5.4
WalMart Strs
WMT
48.31 9
62.63
59.77
-0.90
-1.5
t
s
0.0 +14.23
1
6.7
13
2.7
Weis Mkts
WMK
36.52 8
44.85
43.00
0.03
0.1
t
s
7.7 +14.32
1
2.7
15
2.8
-3.3 +29.52
6.3
+.92
Notes on data: Total returns, shown for periods 1-year or greater, include dividend income and change in market price. Three-year and five-year returns annualized. Ellipses indicate data not available. Price-earnings ratio unavailable for closed-end funds and companies with net losses over prior four quarters. Rank classifies a stock’s performance relative to all U.S.-listed shares, from top 20 percent (far-left box) to bottom 20 percent (far-right box).
Hunting for takeover targets
Companies are rolling in cash: Those in the S&P 500 have more than $1 trillion collectively, a record. One way for them to use that cash is to buy other companies. The economy is slowly growing again, and one quick way for CEOs to boost growth is to buy another company. For investors of the acquired company, it can be a quick and lucrative payday. This screen shows companies that Goldman Sachs analysts say have a high probability of being involved in a merger or acquisition. One example is Ariba, whose software helps businesses manage their * 1 = buy; 2 = hold; 3 = sell
cash. It’s part of the cloud-computing industry, which delivers software to customers over the Internet. The industry has also been a locus of takeover activity in recent months. German giant SAP said in December that it would buy SuccessFactors, which makes cloud-based human resources applications, for about $3.4 billion. SAP paid $40 in cash for each SuccessFactors share, 52 percent more than its closing price a day before the deal was announced. That followed Oracle’s October announcement in that it would buy RightNow Technologies, another cloud company, for about $1.5 billion.
Data through April 12;
Source: FactSet
TICKER
FRIDAY NAV
WK CHG
4WK
American Funds BalA m ABALX American Funds BondA m ABNDX American Funds CapIncBuA m CAIBX American Funds CpWldGrIA m CWGIX American Funds EurPacGrA m AEPGX American Funds FnInvA m ANCFX American Funds GrthAmA m AGTHX American Funds IncAmerA m AMECX American Funds InvCoAmA m AIVSX American Funds NewPerspA m ANWPX American Funds WAMutInvA m AWSHX BlackRock GlobAlcA m MDLOX BlackRock GlobAlcI MALOX Dodge & Cox Income DODIX Dodge & Cox IntlStk DODFX Dodge & Cox Stock DODGX Fidelity Contra FCNTX Fidelity GrowCo FDGRX Fidelity LowPriStk d FLPSX Fidelity Spartan 500IdxAdvtg FUSVX FrankTemp-Franklin Income A m FKINX FrankTemp-Franklin Income C m FCISX FrankTemp-Mutual Euro Z MEURX FrankTemp-Templeton GlBond A mTPINX FrankTemp-Templeton GlBondAdv TGBAX Harbor IntlInstl d HAINX Oakmark EqIncI OAKBX PIMCO AllAssetI PAAIX PIMCO LowDrIs PTLDX PIMCO TotRetA m PTTAX PIMCO TotRetAdm b PTRAX PIMCO TotRetIs PTTRX PIMCO TotRetrnD b PTTDX Permanent Portfolio PRPFX T Rowe Price EqtyInc PRFDX T Rowe Price GrowStk PRGFX T Rowe Price HiYield d PRHYX T Rowe Price MidCpGr RPMGX T Rowe Price NewIncome PRCIX Vanguard 500Adml VFIAX Vanguard 500Inv VFINX Vanguard GNMAAdml VFIJX Vanguard InstIdxI VINIX Vanguard InstPlus VIIIX Vanguard InstTStPl VITPX Vanguard MuIntAdml VWIUX Vanguard STGradeAd VFSUX Vanguard Tgtet2025 VTTVX Vanguard TotBdAdml VBTLX Vanguard TotBdInst VBTIX Vanguard TotIntl d VGTSX Vanguard TotStIAdm VTSAX Vanguard TotStIIns VITSX Vanguard TotStIdx VTSMX Vanguard WellsIAdm VWIAX Vanguard Welltn VWELX Vanguard WelltnAdm VWENX Vanguard WndsIIAdm VWNAX Vanguard WndsrII VWNFX Wells Fargo AstAlllcA f EAAFX
19.32 12.71 50.56 34.43 38.31 38.32 32.09 17.18 29.14 29.02 29.70 19.21 19.31 13.61 31.13 110.24 76.51 95.89 39.64 48.60 2.13 2.15 19.66 13.06 13.03 57.74 28.52 12.10 10.45 11.19 11.19 11.19 11.19 48.10 24.69 37.55 6.70 58.18 9.75 126.37 126.36 11.06 125.55 125.56 30.99 14.16 10.75 13.12 11.02 11.02 14.06 34.24 34.24 34.23 56.92 32.84 56.72 49.72 28.01 12.42
-.24 +.07 -.36 -.57 -.56 -.65 -.57 -.18 -.56 -.44 -.54 -.19 -.18 +.05 -.88 -2.26 -1.26 -2.05 -.55 -.97 -.02 -.02 -.42 -.07 -.06 -.70 -.40 +.01 +.04 +.09 +.09 +.09 +.09 -.02 -.52 -.55 -.03 -1.18 +.05 -2.54 -2.55 +.04 -2.52 -2.52 -.63 +.06 +.01 -.15 +.07 +.07 -.19 -.69 -.70 -.70 -.05 -.34 -.59 -1.06 -.60 -.11
-1.4 +.6 -1.5 -3.3 -3.7 -2.2 -1.7 -1.7 -2.4 -1.8 -2.2 -2.3 -2.3 +.5 -5.5 -3.3 +.2 -.2 -2.2 -1.7 -1.8 -1.8 -5.3 -1.4 -1.3 -4.9 -2.1 -.9 +.6 +1.0 +1.0 +1.0 +1.0 -1.9 -2.7 +1.0 -.3 -2.5 +.6 -1.7 -1.7 +.8 -1.7 -1.7 -2.0 +.2 +.3 -1.8 +.8 +.8 -4.7 -2.0 -2.0 -2.0 -.2 -1.6 -1.6 -2.3 -2.3 -1.9
GROUP, FUND
RETURN/RANK 1YR 5YR +6.5/A +7.6/B +2.5/A -5.0/C -10.2/B +.7/D +1.8/D +3.9/B +2.3/D -1.8/B +6.8/A -1.7/C -1.4/C +6.4/D -13.6/D -.9/D +8.7/B +10.8/A +3.9/A +6.5/A +1.1/E +.6/E -9.0/A +.5/E +.7/E -7.6/A +1.7/D +4.2/A +2.6/B +5.9/D +6.1/D +6.4/D +6.1/D +2.5/D +1.7/C +12.0/A +4.0/C +1.3/C +7.2/C +6.5/A +6.4/A +8.0/B +6.5/A +6.5/A +5.5/B +11.0/B +2.8/B +2.6/A +8.3/A +8.4/A -11.7/C +5.4/B +5.4/B +5.3/B +10.2/A +5.3/A +5.4/A +5.4/A +5.3/A +2.2/B
+3.3/A +3.7/E +.7/D -.6/B -.9/A +1.1/B +.8/D +1.7/D +.1/C +1.7/A +.5/B +3.9/B +4.2/B +6.8/B -3.8/A -3.4/E +4.4/B +6.8/A +3.1/A +1.0/B +2.5/D +2.0/E -1.8/A +9.7/A +10.0/A -.3/A +4.4/A +6.3/A +5.4/A +8.2/A +8.4/A +8.7/A +8.4/A +8.3/A -.2/B +3.8/B +6.9/B +6.1/A +6.7/B +1.0/B +.9/B +6.9/A +1.0/B +1.1/B +1.5/A +5.3/B +4.4/B +1.9/A +6.5/B +6.5/B -3.5/B +1.5/A +1.5/A +1.4/B +6.3/A +4.0/A +4.1/A -.4/B -.5/B +2.6/C
Rank: Fund’s letter grade compared with others in the same performance group; an A indicates fund performed in the top 20 percent; an E, in the bottom 20 percent.
StockScreener 52-WEEK LOW HIGH
COMPANY
TICKER
CLOSE
MAKO Surgical
MAKO
$41.56
$21.40
$45.15
Wellcare Health Plans
WCG
67.85
33.29
Cepheid
CPHD
38.82
Onyx Pharmaceuticals
ONXX
Ariba
1-YR AVG. STOCK BROKER CHANGE RATING*
62.7%
1.5
74.41
62.4
1.7
28.33
45.00
34.1
1.4
40.73
27.17
46.07
21.5
1.6
ARBA
34.56
21.90
37.14
12.9
1.4
Medicis Pharmaceutical
MRX
38.14
29.76
40.51
10.7
1.6
Volcano
VOLC
26.97
21.38
33.90
7.1
1.3
Computer Prog. & Sys.
CPSI
55.99
41.80
79.06
-6.8
1.2
AeroVironment
AVAV
26.13
24.01
36.49
-8.4
1.6
Aeroflex Holding
ARX
11.05
7.19
19.64
-38.0
1.9
q q q q
Dow industrials
-1.6% WEEKLY
Nasdaq
-2.3% WEEKLY
LARGE-CAP
S&P 500
-2.0% WEEKLY
SMALL-CAP
Russell 2000
-2.7% WEEKLY
q p q p q p q p
-2.9%
MO +5.2%
YTD -1.4%
MO +15.6%
YTD -2.4%
MO +9.0%
YTD
-4.1%
MO +7.5%
YTD