Pathlight Investors’ Top Recommended Reads - May 2014

Pathlight Investors’ Top Recommended Reads - May 2014

  • Posted on: 9 December 2015
  • By: admin

Ready for some more great articles?  Here's our picks for May 2014:  

 
Mortgage demand slumps – mortgage demand fell to the lowest level in 14 years as refinancing demand slumped sharply (originations totaled $235B, down 58% Y/Y and 23% Q/Q).  “Softness in the housing market, if it deepens and undermines the broader economic outlook, could complicate the Fed's efforts to dial back easy-money policies designed to support the recovery” – WSJ   http://goo.gl/BY8A0T  

 

Wages + the Fed – “Don’t Look Now, but Rising Wages Could Spell Trouble for the Fed” – from the WSJ - “After a torturously long wait since the 2008-2009 crisis, this gloomy U.S. labor market is finally improving. There are clear, albeit early, signs of wage growth for most workers. And while that’s a positive development for Americans in general, we must warn one especially pessimistic breed of American – fixed-income investors – that it means market rates could head sharply higher in the months ahead” http://goo.gl/hAcU3x

 

Net Neutrality:  The FCC plans to propose Thurs new open Internet rules that would allow content companies to pay ISPs for special access to consumers.  The proposed rules would prevent ISPs from discriminating against specific websites, but would allow ISPs to give some preferential treatment on "commercially reasonable" terms.  The proposal does not address the separate issue of back-end interconnection or peering between content providers and broadband networks. http://goo.gl/1A7Ppd    

 

Washington grows nervous about student debt forgiveness plans; some within the government are worried about the rising liability attached to student loan forgiveness programs and wonder whether the aid plans are causing colleges to raise tuitions well beyond the rate of inflation – WSJ    http://goo.gl/MrTvyA    

 

US economic recovery has been sluggish but prob. has more room to run; the recovery has been among the longest on record but has been tepid by historical standards.  Many key metrics have a lot more room to go before fully normalizing.  WSJ  http://goo.gl/D9bNQB   

 

And On A Lighter Note…

 

Giant pile of dirt upsetting people: http://goo.gl/di3MvH

 

 

 

 

 

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General Motors Investment Thesis

General Motors Investment Thesis

  • Posted on: 9 December 2015
  • By: admin

The following is an excerpt from our May piece, GM Investment Thesis, which can be found HERE
 

In this presentation we discuss how recent recall related setbacks and other temporary conditions have created an excellent opportunity to invest in an international leader at a reduced price.

Here are some excerpts:

  • Recent recall-related stock price decline of approx. (-15%) provides a compelling opportunity to invest in a fundamentally strong, globally diverse, industry leading company participating in a global auto recovery.
     
  • Valuation gap between GM and its peers is unwarranted and we believe will close, providing strong investor return potential.
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European Vacation: A Case for Investment Opportunity in Europe

European Vacation: A Case for Investment Opportunity in Europe

  • Posted on: 9 December 2015
  • By: admin

The following is an excerpt from our May insight piece, European Vacation: A Case for Investment Opportunity in Europe, which can be found HERE

At Pathlight, we began writing about what we felt was an attractive investment case for European equities roughly a year ago based on what we believed was an under appreciation of a strengthening European economy. Although problems still most definitely exist in Europe, i.e. high unemployment, onerous regulation, not to mention an increasingly aggressive Russia, the data are finally starting to validate our original thesis, and high quality European equities present....

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Pathlight Investors’ Top Recommended Reads - April 2014

Pathlight Investors’ Top Recommended Reads - April 2014

  • Posted on: 9 December 2015
  • By: admin

Ready for some more great articles?  Here's our picks for April 2014:                                                      US budget deficit – the CBO Mon said the US gov’t deficit will fall to $492B this year, a smaller number than the prior $680B forecast (http://goo.gl/LB4T7T).  “But if current laws do not change, the period of shrinking deficits will soon come to an end. Between 2015 and 2024, annual budget shortfalls are projected to rise substantially—from a low of $469 billion in 2015 to about $1 trillion from 2022 through 2024—mainly because of the aging population, rising health care costs, an expansion of federal subsidies for health insurance, and growing interest payments on federal debt” (http://goo.gl/r4hLJT).

 

 Draghi ratchets up his EUR warnings; suggests any further upside would prompt additional EcB easing; "In a sense, if you want our monetary policy to remain as accommodative as it is today, a further strengthening of the exchange rate - I don't want to give you a level where we will act or not, I am giving you an orientation - would require further monetary policy stimulus” – Reuters    http://goo.gl/k4fjqd   

 

GM sales may suffer – customers increasingly anxious re the recall and sales could take a hit; dealers are fielding calls from prospective customers concerned about the safety of GM autos – Reuters   http://goo.gl/yA28Er   

 

Health care – insurers are concerned they will need to raise prices in ’15, a decision that could invite political scrutiny; the White House hit its enrollee goal, but the mix of sign-ups were older and more expensive than the industry hoped – Reuters   http://goo.gl/wNrsRC   

 

And On A Lighter Note…

 

Father moves daughter’s messy room to driveway as a lesson in responsibility: http://goo.gl/iZGnGb

 

 

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Easy Come, Easy Go: The Challenge of Investing in Momentum Stocks

Easy Come, Easy Go: The Challenge of Investing in Momentum Stocks

  • Posted on: 9 December 2015
  • By: admin

The following is an excerpt from our April insight piece, Easy Come, Easy Go: The Challenge of Investing in Momentum Stocks, which can be found HERE

The stock market’s high-flying momentum stocks have fallen back to Earth as investors locked in profits this past month. Despite the adoration of 3-D printing, biotech, internet, and social media stocks, Pathlight has long warned about the risks of investing in companies whose valuations just don’t make sense. Investors can certainly make a lot of money in these types of businesses if they get the timing right, but just as fast, profits can vanish. In looking at the table below, one can see that recent investors into the above-mentioned categories have experienced a painful ride.

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Pathlight Investors’ Top Recommended Reads - March 2014

Pathlight Investors’ Top Recommended Reads - March 2014

  • Posted on: 9 December 2015
  • By: admin

Ready for some more great articles?  Here's our picks for March 2014:  
 

China – the country defended its population controls and said it won’t announce a time frame for completely ending the one-child policy – WSJ http://goo.gl/XoqOQe  

 

Companies rush to list shares – IPOs are occurring at the fastest pace in years.  In the first two months of this year, 42 companies went public in the U.S., raising $8.3 billion (at this time in ’13 only 20 companies had listed).  “investors are bidding more aggressively for newly minted shares this year than they have in more than a decade” – WSJ   http://goo.gl/bUoFNZ   

 

Crude by rail: The WSJ reports that pipeline companies are abandoning proposed projects in the Bakken Shale and that it is becoming clear that crude by rail isn’t a temporary phenomenon. WSJ http://goo.gl/ZqE2EQ   

 

Keystone pipeline - New Post-ABC News poll: Keystone XL project overwhelmingly favored by Americans (Washington Posthttp://goo.gl/bPrbnn). 

 

China suffers its first corporate bond default – three retailer holders of a bond from Shanghai Chaori Solar told the FT they received only a small fraction of the interest owed Thurs night and didn’t expect any more money.  FT   http://goo.gl/UALQuE  

 

China property markets – China Vanke, the country’s biggest property developer, said net profit rose 21% in ’13.  Vanke said housing demand was stronger than expected in many Chinese cities.  WSJ   http://goo.gl/yWsyHz   

 

China – a finance official suggested China could miss this year’s 7.5% GDP growth target – WSJ   http://goo.gl/SHgRF2   

 

And On A Lighter Note…

Rooster driving Michigan neighborhood bonkers: http://goo.gl/g3vLSh

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Happy 5th Year Anniversary Bull Market!

Happy 5th Year Anniversary Bull Market!

  • Posted on: 9 December 2015
  • By: admin

The following is an excerpt from our recent research piece "Happy 5th Year Anniversary Bull Market!"  The full report can be found HERE

For the last five years, stocks have been in one of the strongest bull markets we have ever seen, with the S&P 500 rising roughly 183% from the March 2009 lows through March 6, 2014.  While this bull market has been powerful, most investors, and even more non-investors, still don’t believe in it.  They feel as if it is all a mirage manufactured by central banks around the world and that we are destined to pop this most recent stock bubble, just as we did in the dot.com era of 2000. 

On the fifth anniversary of the most recent bull market, we wanted to provide a defense of stock market performance.  And since pictures are worth 1,000 words, we are going to let the following pictures, along with just a few of our words, do the talking for us.  Hopefully, these visual representations can sway a few of the most skeptical out there to our camp and give stock market supporters a degree of comfort.  

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