Aval May Sell $1.3 Billion of Shares in Colombia Offering

Grupo Aval Acciones y Valores SA, the Colombian banking group controlled by billionaire Luis Carlos Sarmiento Angulo, said it may sell about 2.4 trillion pesos ($1.3 billion) of shares in Bogota.

Grupo Aval's board considered the share sale in a meeting yesterday and authorized the company to start getting the necessary approvals, according to regulatory filing late yesterday. Aval is seeking to raise capital and bolster its finances after agreeing to make three acquisitions since December for $1.4 billion.

The shares fell 4 percent to 1,315 pesos at the close of trading in Bogota, the biggest drop in two years. It was the worst performance on Colombia's benchmark Colcap index, which declined 0.9 percent.

"The amount was surprising," Juan C. Dominguez, an analyst at Credicorp Capital's Colombia unit, said in a telephone interview. "It seems pretty high if you compare it to the purchases they've made."

Aval has pledged to buy at least $500 million of shares in a separate capital raise planned for November by Banco de Bogota SA, the biggest of its four banks.

The group said today in a filing that it's withdrawing a registration with U.S. regulators to sell shares in New York. Chief Executive Officer Luis Carlos Sarmiento Gutierrez, Sarmiento Angulo's son, told reporters Sept. 27 that while Aval was prepared to go forward with the sale in New York, the markets weren't cooperating.

Should Morgan Stanley Be In Your Portfolio?

With shares of Morgan Stanley (NYSE:MS) trading around $22 after Morgan Stanley's earnings, is MS an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock's Movement

Morgan Stanley is a global financial services company that, through its subsidiaries and affiliates, provides its products and services to a range of clients and customers, including corporations, governments, financial institutions and individuals. The company operates in three segments: Institutional Securities, Global Wealth Management Group, and Asset Management. Morgan Stanley provides financial advisory and capital-raising services; equity, fixed income, and alternative investments; and merchant banking services. The company participates in an industry that powers most other types of businesses around the world. As economies continue to grow, Morgan Stanley is at the stem of that growth, providing the products and services required to form solid operating bases well into the future.

T = Technicals on the Stock Chart are Strong

Morgan Stanley stock has yet to recover from the Financial Crisis meltdown it saw in 2008. The stock has struggled to make any significant progress, which has kept it in a downtrend. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Morgan Stanley is trading around its key averages which signal neutral price action in the near-term.

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Morgan Stanley options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Morgan Stanley Options	30.21%	0%	0%

What does this mean? This means that investors or traders are buying a small amount of call and put options contracts, as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
May Options	Steep	Average
June Options	Steep	Average

As of today, there is an average demand from call buyers or sellers and high demand by put buyers or low demand by put sellers, all neutral to bearish over the next two months. To summarize, investors are buying a small amount of call and put option contracts and are leaning neutral to bearish over the next two months.

E = Earnings Are Increasing Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Morgan Stanley's stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Morgan Stanley look like? More importantly, how did the markets like these numbers after Morgan Stanley's earnings call?

	2013 Q1	2012 Q4	2012 Q3	2012 Q2
Earnings Growth (Y-O-Y)	916.67%	294.20%	-147.83%	176.32%
Revenue Growth (Y-O-Y)	17.64%	22.85%	-46.09%	-24.48%
Earnings Reaction	-5.4%	7.85%	-3.78%	-5.28%

Morgan Stanley has seen increasing earnings and revenue figures for most of the last four quarters. From these figures, the markets have not been very pleased with Morgan Stanley's recent earnings announcements.

P = Average Relative Performance Versus Peers and Sector

How has Morgan Stanley stock done relative to its peers, UBS (NYSE:UBS), Charles Schwab (NYSE:SCHW), TD Ameritrade (NYSE:AMTD), and sector?

	Morgan Stanley	UBS	Charles Schwab	TD Ameritrade	Sector
Year-to-Date Return	16%	13.21%	18.28%	17.37%	16.04%

Morgan Stanley has been an average relative performer, year-to-date.

Conclusion

Morgan Stanley provides essential financial products and services to a wide array of businesses operating in various sectors worldwide. The stock has yet to recover from the heavy selling experienced during the Financial Crisis. Earnings and revenue figures have improved a bit, but investors have clearly been expecting more from the company. Relative to its strong peers and sector, Morgan Stanley has been an average performer. WAIT AND SEE what Morgan Stanley does in coming months.

Phillips 66 Sends a Warning Sign to Refiners

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

At 2 p.m. EDT, the Fed released a policy statement that said the economy was too weak to start tapering. That promptly caused the Dow Jones Industrial Average (DJINDICES: ^DJI  ) to fall from breakeven to a loss of 0.24% near the end of trading. The market's reaction has ranged from exuberance to fearfulness when monetary stimulus is extended, so I don't think the short-term reaction is anything to lose sleep over.

Energy stocks are struggling along with the rest of the market, and one driver is oil, falling 1.3% today thanks to a 4.1 million-barrel rise in U.S. oil inventories. The energy sector is also being hurt by weak earnings from Phillips 66 (NYSE: PSX  ) , which should send a warning signal to some of the major refiners.

Phillips 66 said third-quarter profit fell from $1.6 billion, or $2.51 per share, in the year-ago quarter to just $535 million, or $0.87 per share, last quarter. Management said this owed primarily to a 40% drop in the crack spread, or the difference between the price of gasoline and the price of oil. You can see below that oil is up 15% over the past year, while gas prices are down 5.6%.

WTI Crude Oil Spot Price data by YCharts.

Big oil companies and refiners ExxonMobil (NYSE: XOM  ) and Chevron (NYSE: CVX  ) will both report earnings in the next two days, and they'll likely face the same challenges as Phillips 66. The difference is that they have much more exposure to oil exploration, which is doing quite well on rising oil prices. This is one of the advantages of investing in big oil companies: They have exposure to both the good and the bad in the market.

Long-term challenges facing refiners
The tough challenge facing U.S. refiners in the long term is that gas consumption in the U.S. is falling, while oil prices are rising. The rise in the price of oil is due to marginally higher global demand and, more importantly, more expensive oil-extraction.

I don't see these trends changing, which will continue to put pressure on the refining business.

Refiners are down, but U.S. energy production is booming
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Is LinkedIn a Worthy Candidate for Your Portfolio?

LinkedIn (NASDAQ:LNKD) has quickly become a Wall Street darling since its IPO back in 2011. The stock has surged around 70 percent since the beginning of the year. Investors are bullish on LinkedIn because it has succeeded in an area where Facebook (NASDAQ:FB) has not: monetizing its user base. Bulls justify the company's high stock price with its double-digit growth rate and unique business model; however, as the industry changes and competition increases in the future, can LinkedIn continue to enjoy its dominance? Let's use our CHEAT SHEET investing framework to decide whether LinkedIn is an OUTPERFORM, WAIT AND SEE, or STAY AWAY.

C = Catalysts for the Stock's Movement

Despite exceeding analysts' estimates in its first quarter earnings announcement, LinkedIn was dinged because of its reduced earnings guidance for the second quarter. The star performer was its talent solutions segment—the core of LinkedIn's business operations—which connects recruiters with users. This division generated 57 percent of total revenues and grew 80 percent from the previous year's quarter. LinkedIn's marketing solutions (read: advertising) division grew a solid 23 percent. While this growth is not as impressive as growth in its talent solutions unit, it is still solid, especially amidst fears that the company would have trouble generating ad revenue from its growing mobile user base. Lastly, LinkedIn generated 20 percent of its revenue through its premium subscriber base—while most users spend nothing to use the site, others pay a monthly fee to unlock exclusive features. Revenues from premium subscriptions rose 73 percent from the previous year's quarter.

The stock fell about 10 percent the day of this earnings announcement, not because it underperformed in the first quarter, but because it set relatively low earnings guidance for its second quarter. CEO Jeff Weiner and the rest of LinkedIn's management team have been notably conservative in their past earnings projections, but shareholders were clearly spooked about the slow growth projections. The reason they are buying LinkedIn at such a high multiple, after all, is because of the high and sustainable earnings growth prospects. With no significant catalysts in the near term, barring the second quarter earnings announcement sometime in early August, the share price should actually trend downward on expectations of slower growth.

E = Earnings and Revenues Are Increasing Year-over-Year

In terms of earnings and revenue growth, LinkedIn has performed incredibly well since its IPO in 2011. Excluding negative EPS growth in the second quarter of 2012, LinkedIn has been on a tear, shattering analysts' expectations in most quarters. The strong growth evident in the table below is why investors are willing to buy LinkedIn at a trailing price to earnings multiple of more than 700; however, exuberance for the stock will surely taper off as growth slows. Still, when looking at these numbers, its hard to imagine LinkedIn posting negative quarterly earnings growth in either the short- or medium-term.

	2013 Q1	2012 Q4	2012 Q3	2012 Q2	2012 Q1
Qtrly. EPS	$0.20	$0.1008	$0.02	$0.03	$0.04
EPS Growth YoY	400%	68%	200%	-25%	N/A
Qtrly. Revenue	$324.70M	$303.62M	$252.03M	$228.21M	$188.46M
Rev. Growth YoY	72.3%	80.73%	80.70%	88.54%	100.6%

T = Technicals Are Strong

LinkedIn is currently trading at around $193.11, well above both its 200-day moving average of $160.43 and its 50-day moving average of $175.27. From the chart, it is clear that LinkedIn has experienced a strong uptrend in the past year, let alone since its 2011 IPO. The stock would have to gain around 6.5 percent to get back to its previous 52-week high of $202.91 it reached back in May. With contracted guidance for the second quarter and no significant near-term catalysts, it is unlikely the stock will break through this resistance level until second quarter earnings are announced.

Conclusion

What attracted investors to LinkedIn in the first place is its difficult-to-replicate business model. Because LinkedIn is the first and the biggest professional social network, there is some degree of permanence attached to its user base; i.e. users will find it hard to switch to a competing service because they will lose their connections and professional identity they built through LinkedIn. Stable revenues and high switching costs will ensure LinkedIn's profitability for many quarters to come; however, at a trailing price to earnings multiple of 746, the stock is trading at too high of a price to warrant a purchase at this point in time. The share price will most likely contract to a more reasonable once investor exuberance subsides; thus, there will be a more attractive level at which to buy the stock. For now, LinkedIn is a WAIT AND SEE.

5 Rocket Stocks to Buy This Week

BALTIMORE (Stockpickr) -- Phew, good thing that's over. August was the worst month for stocks in more than a year: the S&P 500 shed a whopping 3.13% for the month. That little statistic says quite a bit about what kind of environment investors have been enjoying since last May.

>>5 Stocks Setting Up to Break Out

Just in case anyone is unclear, 15 straight months without a 5% dip is a bull market.

And it's "new month, new market" again in September. While the S&P has only climbed 1.4% since the calendar flipped over last week, the tenor of the market has changed. Investors appear willing to step in and buy in the face of scary headlines again. And it couldn't have happened at a better time -- broad market indices were testing their intermediate-term trendline last week. Yes, the uptrend remains intact.

That's creating some buying opportunities this week, and it's why we're turning to a new set of Rocket Stocks.

>>4 Red-Flag Stocks to Sell This Fall

For the uninitiated, "Rocket Stocks" are our list of companies with short-term gain catalysts and longer-term growth potential. To find them, I run a weekly quantitative screen that seeks out stocks with a combination of analyst upgrades and positive earnings surprises to identify rising analyst expectations, a bullish signal for stocks in any market. After all, where analysts' expectations are increasing, institutional cash often follows. In the last 213 weeks, our weekly list of five plays has outperformed the S&P 500 by 88.3%.

Without further ado, here's a look at this week's Rocket Stocks.

Westpac Banking

Australian financial services giant Westpac Banking (WBK) has a massive presence Down Under and in New Zealand, a big enough scale to make it the third biggest bank on the continent. Sydney-based Westpac sports more than 1,200 branches that offer products raging from conventional retail and commercial banking to investments. Recent acquisitions have boosted Westpac's exposure to wealth management, hiking its fee-based revenue at a time when investors are getting antsy about the rate-sensitive banking business.

>>5 Big Trades for a September Bounce

In a big way, Westpac is a leveraged play on the commodity-driven Australian economy. While the firm was far from insulated from the Great Recession that sparked off in the U.S., its impact was much less jarring in Australia, where housing prices have remained very resilient. A number of protections in the Australian market help to mitigate the risks of the kinds of capital shortfalls that U.S. banks experienced in 2008, destroying large swaths of shareholder value.

Westpac's big branch network makes it the bank of choice for more than 12 million customers, a fact that gives WBK access to a huge cheap deposit base. As a result, the bank is well capitalized and should stay that way. With rising analyst sentiment in Westpac, we're betting on shares.

Facebook

Facebook (FB) has built up some impressive momentum over the course of the summer. I've made it no secret in the past that the social network isn't exactly my favorite stock -- but it's hard to argue with the market's recent love affair with FB. By far, Facebook ranks as the largest social networking site in the world: More than 600 million people use Facebook every day, and a billion use it each month. As the firm gets better at monetizing that enormous user base, the firm should grow into its lofty valuation.

>>4 Tech Stocks to Trade (or Not)

One of Facebook's biggest detractors is that, unlike other Internet businesses such as Google (GOOG) or LinkedIn (LNKD), the firm has to basically derail what its users are doing to earn advertising revenues from them. But the firm is trying to combat that by brute force; with such a massive user count, it can afford to only make money off of a tiny percentage of its users. The highly targeted nature of FB's data should help the firm charge more for space on the site. It's also gaining revenues more directly through premium online games like those made by Zynga (ZNGA).

Mobile is an exciting growth avenue for Facebook. The firm has been growing its mobile revenue at a breakneck pace, and demographic shifts toward using portable devices should make that mobile monetization all the more important to Facebook's overall value in the years ahead. More than anything else in September, market momentum is the reason to get behind Facebook. This stock has gone from a Wall Street punch line to a Wall Street darling, and there's still money on the table.

Ford Motor

Shareholders in Ford Motor (F) are enjoying a knockout year in 2013. That's because the $68 billion automaker has seen its share price climb by more than 31% since the calendar flipped to January, more than doubling the impressive performance that the S&P 500 has turned out. And the ongoing improvements at this Detroit giant are continuing to provide tailwinds right now.

>>5 Stocks Insiders Love Right Now

Investors shouldn't forget that Ford was the only Detroit automaker that didn't go bust in the wake of 2008 -- and the only one that didn't wipe out shareholders (even if it did destroy value to stay afloat). No amount of cost fixes, union deals or economic improvement saved Ford from certain death. Instead, it saved itself by building better cars. Ford's fully revamped line of models now gets top quality marks from review agencies, and they've managed to get car buyers excited about driving behind a blue oval again. The one-two punch of record low interest rates and the oldest car fleet in U.S. history is adding fuel to the fire now, helping Ford achieve stellar sales growth.

There's no question that Ford's improved financials have helped the firm look attractive to investors again. The firm's ability to regain profitability, achieve an investment-grade debt rating, and start issuing a dividend again are all huge milestones. And now, as the black clouds are starting to part over the Eurozone economy, Ford's huge exposure to the continent should start looking less like a liability and more like a big benefit again. Stay tuned for earnings at the end of next month.

Xerox

While it's still synonymous with copy machines, Xerox (XRX) has moved its core business away from big-ticket printers and progressed to become the world's biggest document management and business services firm. That change may sound subtle, but it's important.

>>4 Stocks Triggering Breakouts on Big Volume

Printing has become commoditized in the last few years. Print quality has essentially become the same across most major black and white laser printer manufacturers, so Xerox has taken its resources from black and white printing tech and moved it over to areas where its R&D can actually build a better mousetrap. At the same time, services are becoming a much more important part of Xerox's business. Servicing printers historically generates more revenues than the printer's original cost, a fact that provides XRX with sticky recurring revenues. Higher-end professional services, such as document outsourcing, are becoming a more important part of XRX's sales as well.

Xerox still earns a material chunk of its sales through office printers and copiers. But as time progresses, building low-moat office equipment should become a smaller and smaller part of XRX's total revenues. As the economy continues to heat up, so is Xerox's top line in 2013.

Home Depot

As the world's largest home improvement retailer, Home Depot (HD) has been one of the biggest beneficiaries of recent upside in the housing market. After all, more real estate transaction volume means more to-do lists for new buyers -- and the more equity homeowners build in their properties, the more they're willing to spend. Home Depot's 2,250 big box locations in North America provide just the place to do that.

>>5 Big Short-Squeeze Stocks Ready to Pop

But that doesn't mean that HD needs high home prices to stay afloat. The Great Recession revealed to Wall Street that homeowners are willing to spend money on home improvements when times are tough too; just not as aggressively. While Home Depot entered 2008 with too large of a store footprint, it remedied its over-leveraged balance sheet with a successful restructuring program that boosted margins and positioned the firm extremely well for the ensuing rebound.

Home Depot is in good financial shape today with reasonable leverage. Its restructuring efforts left the firm with a much better supply chain management apparatus, which means that it's able to get merchandise on shelves more cheaply and quickly than ever before -- and it can do a better job of pinpointing the products that consumers want to buy. So, as analysts pile into this stock this week, so are we.

To see all of this week's Rocket Stocks in action, check out the Rocket Stocks portfolio at Stockpickr.

-- Written by Jonas Elmerraji in Baltimore.

RELATED LINKS:

>>5 Tech Stocsk Spiking on Big Volume

>>3 Big Stocks on Traders' Radars

>>5 Foreign Stocks to Trade for Gains

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to

TheStreet. Before that, he managed a portfolio of stocks for an investment advisory returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily, and on CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation.

Follow Jonas on Twitter @JonasElmerraji

There are plays to be made despite politics

Washington, D.C., is currently in fantasy land. Or maybe that's nightmare land. Either way, the good news for investors is that central banks are here, to the rescue, once again — acting when and where politicians are too incompetent to lead.

Putting all political opinions aside, the government shutdown is, at the very least, an embarrassment, will likely cause some damage to our economy, and will likely force the Federal Reserve to maintain or perhaps increase its monetary stimulus, especially if this drags on. Our politicians failures will likely cause the following market reaction:

Interest rates will likely remain rangebound with a downward bias, at least through the end of the year. Expect the 10-year Treasury yield to end below 2.5% at year end.

The U.S. dollar will likely strengthen against major currencies, as "safe haven" buyers seek refuge from the uncertainty

In spite of added short-term volatility, equities will rally, ending the year at record highs

Investors should tune out the noise and focus on the data, and the data tells us that stocks are likely to continue to rise, in spite of the politically designed uncertainties, markets are benefiting from increasingly positive economic data.

In the U.S., manufacturing activity, auto sales, home prices and even the unemployment rate is improving (albeit with some statistical trickery). In Europe, consumer and business confidence is rising, the unemployment rate has dropped to a multi-year low, and manufacturing and export data continues to improve. Asia's economies, particularly the emerging-market economies in the region, also appear to be recovering from the summer duldroms. Japan's Takan (their version of PMI and ISM Manufacturing report) came in much stronger than expected, and with the recent drop in the Yen, exports are improving as well.

Option and bond markets appear to agree with my thesis — based on price movement, volatility and trading volume, neither are pricing in a downturn in our economy or a meaningful change in trend.

Lastly, and this is truly a two-edged sword, according to the latest report by the Federal Reserve, non-financial companies are sitting on approximately $1.5 trillion in cash, and bank-holding institutions are holding over $2.3 trillion in deposits at the Federal Reserve. As old as the story is, eventually a chunk of this money will re-enter the system.

I think the first step will be an increase in share-buybacks and an increase in dividends. As such, I am once again overweighting large-cap multinationals, including some great European names. My favorites include Novartis (NVS) , Legget and Platt (LEG) and Visa (V) .  Of course, the potential risk is that the cash horde remains and even grows, likely creating a deeper negative interest rate environment — something that surely would be damaging to our economy.

Disclosure: NVS, LEG and V are holding in the MPDAX and separate accounts at GGFS.

Will Schwab Earnings Rise With Stocks at Record Highs?

Charles Schwab (NYSE: SCHW  ) will release its quarterly report next Tuesday, and investors aren't expecting a blowout quarter for the discount brokerage company. Yet with the stock trading near five-year highs, there's rising optimism that the company has put its worst days behind it, and that Schwab earnings could easily rise considerably from here.

As a broker, Schwab benefits from interest in the stock market, yet even though stocks have moved dramatically higher in recent years, they've done so without the usual chorus of retail investors getting back into the market. How can the broker engineer a comeback? Let's take an early look at what's been happening with Charles Schwab over the past quarter and what we're likely to see in its quarterly report.

Stats on Charles Schwab

Analyst EPS Estimate	$0.19
Change From Year-Ago EPS	(5%)
Revenue Estimate	$1.32 billion
Change From Year-Ago Revenue	2.7%
Earnings Beats in Past 4 Quarters	2

Source: Yahoo! Finance.

How will Schwab's earnings climb from here?
Analysts haven't made many changes in recent months to their earnings calls for Schwab, boosting their June quarter estimates by a penny per share but keeping their full-year 2013 and 2014 calls unchanged. The stock, though, has risen considerably, jumping 27% since early April.

We've already gotten a hint of how Schwab has been performing from its monthly activity reports. In May, for instance, Schwab saw a net decrease in new assets of $1.9 billion, with a single mutual-fund clearing services client accounting for a $10.3 billion outflow. Schwab anticipates more than $60 billion in additional outflows from this client in the future. Yet overall, total client assets reached a record $2.11 trillion, and daily average trades among clients rose 8% from April and 17% from the year-ago month, showing strength in customer activity.

The problem for Schwab, though, is that its competitors have seen similarly strong performance lately. TD AMERITRADE (NYSE: AMTD  ) weighed in with a 9% increase in daily average revenue trades in May, posting its best level in a year as it has gone head-to-head with Schwab with their similarly sized offerings of commission-free ETFs. Meanwhile, shares of E*TRADE Financial (NASDAQ: ETFC  ) hit a 52-week high earlier this week, as the company rode on its own success with a 15% gain in trades from May. As the industry has gotten more cutthroat, brokers have been fighting to boost business, giving out expensive incentives to draw new customers in an effort to capture long-term relationships.

Just as important for Schwab, though, is the interest rate environment. Schwab has lost money having to subsidize its money market mutual fund offerings for some time, as rock-bottom short-term rates have made extraordinary measures necessary to keep money market rates from going negative. As some begin to foresee a move higher for rates, the corresponding boost to Schwab earnings from not having to provide fund subsidies could help the stock climb higher.

In Schwab's earnings report, look for signs of how its expansion of its commission-free ETF menu earlier this year has done in bringing in new customers. With ETFs continuing to grow, staying strong in that niche could give Schwab earnings power it might not otherwise have.

ETFs are valuable not just for brokers like Schwab but for investors as well. Find out about three ETFs that are set to soar in this free special report from the Motley Fool. Just click here to access it now.

Click here to add Charles Schwab to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Diversification Drives Nasdaq's Q3 Earnings, Future Outlook

NASDAQ OMX (NASDAQ:NDAQ) was already one of the most diversified exchange players in the U.S. prior to its acquisitions over the past year. Following these acquisitions, it is now an entity that is almost unaffected by the weakness in its most recognizable division, U.S. cash equity trading. NASDAQ reported its earnings for the third quarter on October 23, and recorded a 23% jump in its net revenue, primarily driven by the acquisitions. Organically, its revenue grew by 4% year-on-year as the U.S. cash equity trading business continued to lose market share and remained a drag.

Below we provide our take on the most important data released during the conference call. Our price estimate for the company’s stock is around $31, and we will update our model shortly.

Good Progress On Capital Plan

NASDAQ has spent over $1 billion in the last year to acquire fixed income platform eSpeed and Thomson Reuters’ corporate solutions business. The company had to take on a significant amount of debt for these deals, which initially raised concerns about its credit ratings. In Q2, its long-term debt obligations increased by $807 million from the end of 2012.

However, the company is committed to reducing its debt at an accelerated pace, and seems to be doing well on this front. It paid back $98 million of debt during the quarter, and remains on track to return to its long-term gross debt-to-EBITDA target of around 2.5x. As debt reduces, we expect NASDAQ’s financial flexibility to return, and the company is then likely to restart its share buyback program (read: NASDAQ Escapes Moody’s Review Without A Downgrade).

New Acquisitions Provide Diversification…

The hefty sum paid for Thomson Reuters’ business and eSpeed definitely seems to be benefiting NASDAQ in terms of diversification. Whereas the Thomson Reuters’ corporate business acquisition has strengthened its non-transaction based revenue, eSpeed has helped diversify transaction-bas! ed income by contributing fixed income revenues.

At the moment, cash equities trading accounts for just 9% of NASDAQ’s net revenue, while derivatives, fixed income, and access and broker services account for 14%, 4% and 13% respectively. Together, these segments comprise NASDAQ’s Market Services division, which is responsible for 40% of its topline. The other 60% comes from Technology Solutions (26% of revenue) and Information Services (23% of total net revenues), both of which provide recurring revenue from long-term client relationships (Press release, NASDAQ OMX, October 23, 2013). We expect the share of non-transaction based revenues to further increase as NASDAQ continues to roll out new products in the data and technology markets.

…And Are Likely To Drive Growth

In addition to providing diversification, the two new acquisitions also provide NASDAQ interesting growth opportunities.

According to NASDAQ’s management, the majority of its clients are currently using only one or two of its products in the corporate solutions market. With the acquisition of Thomson Reuters’ businesses, it has an opportunity cross sell to its clients and increase its revenue per client. The company has already started integrating Thomson’s platforms with its own, and is reorganizing its sales team to better serve its 10,000 customers globally. We expect NASDAQ’s corporate solutions revenue to grow rapidly as some of these initiatives start to have an impact.

The opportunity in the fixed income space is also large. With the acquisition of eSpeed, NASDAQ is now one of the leaders in the electronic government bond trading markets. During the quarter, over $3 trillion worth of U.S. fixed income products were traded on its platform every month, and the figure is likely to increase as it attracts new clients and launches new products. Since the close of the eSpeed acquisition, NASDAQ has already enrolled four new customers and expects to e! nroll ano! ther four by the end of 2013. The pace of new client enrollments could further increase once it finishes work on improving eSpeed’s responsiveness, a stated short-term goal.

Disclosure: No positions.

Source: Diversification Drives Nasdaq's Q3 Earnings, Future Outlook

Tech Wrap-Up: CREE, BRCM, AMD, MSI

NEW YORK (TheStreet) -- In Wednesday's tech stock recap, TheStreet brings you the latest on Cree  (CREE), Advanced Micro Devices  (AMD), EMC Corporation  (EMC), Broadcom Corporation  (BRCM) and Motorola Solutions  (MSI).

Cree, Inc.

LED manufacturer Cree, Inc. plummeted 16.9% during Wednesday trading after reporting first-quarter profits a day earlier.

The Durham, North Carolina-based company recorded first-quarter earnings of 39 cents on $391 million in revenue, compared to 27 cents on $315.8 million a year earlier. Net income totaled $47.3 million, a 49% year-on-year increase. "The strong performance was primarily due to increased sales of our lighting products, higher gross margins and improved operating leverage across the business," said CEO Chuck Swoboda in a statement. However, investors remained concerned on a lower-than-expected second-quarter guidance of between 36 and 41 cents a share and low gross margins on its moneymaker division, lighting.  Financial services company D.A. Davidson has maintained its "neutral" rating and $65 price target, citing concerns on the "company's ability to grow margins". "We point out that gross margins within the company's Lighting Products segment (27%) are significantly lower than gross margins within both the LED Products (47%) and Power & RF (54%) segments," analyst Avinash Kant said in a research report. "As the Lighting Products division has been the fastest-growing segment for Cree (both sequentially and on a year-over-year basis), we believe margin expansion prospects remain challenging despite expectations of strong revenue growth." TheStreet Ratings team rates Cree Inc as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation: "We rate Cree Inc (CREE) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow." You can view the full analysis from the report here: CREE Ratings Report
Broadcom Corporation Broadcom lost 2.9% to $26.36 by market close, shedding a further 0.6% in after-hours trading. On Tuesday, the semiconductor company reported earnings of 76 cents a share, compared to analysts' expectations of 69 cents a share, according to Thomson Reuters. Third-quarter revenue totaled $2.146 billion, a 3% year-on-year increase, and net profit of $316 million, 43.6% higher than a year earlier. For the fourth quarter, Broadcom said revenue would be around $1.975 billion within a positive or negative 3% range. Investors were disappointed having expected a total $2.135 billion in fourth-quarter revenue. UBS has maintained its "neutral" rating while reducing its price target to $27 from $30. "After a solid Q3, Broad Broadcom's Q4 outlook was softer than expected largely due to mobile OEM year-end inventory adjustment and a lower ASP mix in combo chips," writes UBS. Wedbush downgrades the stock to "neutral" and reduces its price target to $27 from $33 on industry pressures and Q4 guidance. "We expected Q4 guide to be down, it was much worse than we expected primarily due to an even choppier mobile market from intense competition in 3G, inventory corrections, and connectivity share loss. We expect challenges in the mobile business to persist into the 1H and despite our high expectations for LTE share gains; we now see 2014 as a year of rebuilding rather than a year of growth," Wedbush wrote in its research report. Topeka Capital Markets, however, maintained its "buy" rating but lowered its price target to $30 from $35, on reflection of its "near-term revenue headwinds primarily in its mobile/wireless and broadband segments". TheStreet Ratings team rates Broadcom Corp as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation: "We rate Broadcom Corp (BRCM) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity." You can view the full analysis from the report here: BRCM Ratings Report
Advanced Micro Devices Advanced Micro Devices shares fell in sympathy with as weaker-than-expected guidance troubled fellow chipmakers Broadcom, Intel  (INTC) and Texas Instruments  (TXN). AMD reported third-quarter results last week. Net income totaled $48 million, or 6 cents a share, on revenue 15% higher than a year earlier to $1.46 billion. The company forecast that fourth-quarter revenue will increase between 2% and 8% sequentially. AMD tripped 1.3% to $3.14 in Wednesday trading, before recovering 0.64% in after-hours trading. TheStreet Ratings team rates Advanced Micro Devices as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation: "We rate Advanced Micro Devices (AMD) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and generally high debt management risk." You can view the full analysis from the report here: AMD Ratings Report
Motorola Solutions Motorola Solutions reported third-quarter sales of $2.1 billion, 2% lower than a year-earlier. Government sales, its primary income, dropped 4% while Enterprise sales gained 2%. The company recorded earnings of $1.32 a share, a 57% year-on-year increase, and operating earnings of $397 million. Analysts surveyed by Yahoo! Finance estimated earnings of $1.02 a share and revenue of $2.13 billion. Weak government sales contributed to revised flat full-year 2013 guidance with earnings per share between $4.63 and $4.70 a share, considerably higher than Yahoo! Finance estimates of $4.43 a share. "With the ongoing uncertainty around the U.S. federal business, our full year outlook is for sales to be approximately flat to last year," said Gino A. Bonanotte, interim CFO, in a conference call. "We remain on track for operating margins of approximately 18% for the year." Shares gained 1.1% in after-hours trading $63.09, adding to a 3.3% gain already seen throughout the trading day. TheStreet Ratings team rates Motorola Solutions Inc as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation: "We rate Motorola Solutions Inc (MSI) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, notable return on equity and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow." You can view the full analysis from the report here: MSI Ratings Report

Funds that win in bull and bear markets

Ancient people spent an awful lot of time piling up large rocks, in part to discover just how long it took Earth to go around the sun. Modern people have (generally) dispensed with the large rocks and settled on 365.25 days. We use that unit to measure many things, such as our own age and the amount of time it seems to take Congress to reach a budget agreement.

Whether or not you should measure your mutual fund's performance by the time it takes Earth to cycle around the sun is another question. In fact, you might be better measuring how your fund fares in a full market cycle — from bull to bear and back, or vice versa.

Of the 663 large-company stock funds from the top of the last bull market in September 2007 to today, 225 posted above-average performance in both the 2007-2009 bear market and the bull market that continues (possibly) to this day. Let's take a look at a few of them and see what they have in common.

Lipper divides large-company funds into three categories:

• Value funds, which look for beaten-down stocks that have the potential to return to Wall Street's favor. In theory, since these funds buy stocks that have already been clobbered, these stocks will get clobbered less in a bear market. Many value funds also have above-average dividend yields, which help soften the effect of a downturn. But value managers generally won't buy the stocks that really fly in a bull market.

• Growth funds, which look for stocks of companies with high potential earnings growth. These funds buy stocks that soar in good times, and land like Wile E. Coyote at the bottom of Dry Gulch when the bull market ends.

• Core funds, which look for companies with GARP: growth at a reasonable price. In theory, this should be the best of both worlds, although it's much harder in practice than in theory.

No categories are as neat as people would like them to be. Few growth managers will admit that they don't give a fig about a stock's price, relative to earnings. And few value! managers will say they have never given a thought to a stock's earnings prospects. But the classifications do give you some idea of how a manager invests.

In the value camp, the winner is John Hancock Disciplined Value Fund (ticker: JVLAX). The fund fell 47.8% from the end of September 2007 through February 2009. Bad as that seems, it's better than the 54.1% tumble the Standard & Poor's 500 took during the same period, with dividends reinvested. The fund has gained 161% since the bear market bottom, for a round-trip gain of 36.4%. (The S&P's round-trip record was 25.8%.)

Not surprisingly, managers Mark Donovan and David Pyle aren't hard-core value managers: They look at industry earnings trends as well as traditional value metrics, such as price-to-book ratios.

Interestingly, an index fund, PowerShares Dynamic Large Cap Value Portfolio (PWV), also made the cut. While expensive for an index fund — it charges 0.59% in expenses a year — it's cheaper than the John Hancock offering, which charges 1.20% a year, as well as a front-end sales charge.

Laudus Growth Investors U.S. Large Cap Growth Fund (LGILX) was the best round-trip fund in the growth camp, racking up a 56% round-trip gain. Both managers are new — they started at the helm in November 2012 — so it's hard to give the fund in its current incarnation too much credit.

A better bet might be the ancient Putnam Voyager fund (PVOYX), launched in 1969. Current manager Nick Thakorehas been at the helm since November 2008. The fund has scored a 49.6% gain during the full market cycle.

The top growth fund is — again — an index fund. PowerShares QQQ Trust (QQQ), which tracks the Nasdaq 100 index, has gained 59.2% for the cycle, thanks in large part to its biggest holding, Apple.

And the world according to GARP, the winner is the Managers AMG Yacktman fund (YACKX), up 89.6% in the round trip. Don Yacktman, the chief manager, has been at the helm since 1992, and his son has worked on the fund since 2! 002.

No word on the grandchildren's role as yet, but they could do worse than learning at their grandfather's knee. The fund trades rarely — its turnover rate is just 7% — and tends to hold a relatively concentrated portfolio of high-quality, reasonably priced names like Procter & Gamble, Microsoft and Coca-Cola. The fund lost 39.7% during the bear market and gained 214.5% during the bull phase.

As the Securities and Exchange Commission likes to remind us, past performance is no guarantee of future returns. But looking at a fund's record in bull and bear markets gives you an idea of what you can expect in a bad market and a good one.

Of course, we can only hope that few people put their entire fortune into a fund at the start of the bear market in 2007. Those who started investing $100 a month into funds at the end of September of 2007 did pretty well, though. In the case of the Yacktman fund, $100 a month — $7,300 total — would have become $11,740. It's not easy to hang onto a fund in a bear market. But it is easier than piling up large rocks.

Ascena Retail Group Deserves a Closer Look

Investing in specialty retail companies hasn't been rewarding for investors as of late. Industry players are finding it difficult to increase sales. As investors are losing interest in specialty retailers, industry players such as Abercrombie & Fitch (NYSE: ANF  ) , Aeropostale (NYSE: ARO  ) and Ascena Retail Group (NASDAQ: ASNA  ) have been witnessing stock price declines since the beginning of the year.

Ascena Retaildata by YCharts

All the three retailers have been witnessing lower demand for their products, which is resulting in lower sales and disappointing performance. Both Abercrombie and Aeropostale reported a weak back-to-school season, leading to lower quarterly numbers. Ascena Retail Group, however, seems to be doing better than its peers with an over 15% increase in its share price in the past month. Ascena Retail Group has a more diversified product portfolio compared to Aeropostale and Abercrombie & Fitch, which I will come to later. Its stock price bounced back in September after it posted great quarterly numbers. This company has been performing well and its recently reported quarter beat the Street's expectations.

Driven by an increase in transaction size and contribution from new stores, revenue surged 27% to $1.2 billion over last year's quarter. Earnings for the quarter were $0.34 per share compared to $0.29 per share in the previous year. Same-store sales grew 2%, helped by higher promotions and marketing efforts.

Attractions
The retailer's e-commerce segment posted growth of 30% during the period, boosting the top line. Its online sales increased for all brands with Maurices and Dressbarn registering more than 50% growth, driven by higher demand for cooler-weather products. In fact, the overall e-commerce business has been growing well in the U.S. and is estimated to grow by another 15% in the fall season . This growth in U.S e-commerce sales should lead to higher sales for the specialty retailer, too. The company also increased its product prices, which was one of the primary reasons behind higher sales of Justice Brand products.

Same-store sales for Lane Bryant increased 9% due to new product launches and increased promotions for the same. One of the ways of promoting its business is Ascena's Take Ten loyalty program which was launched in September last year. The program is growing continuously by providing discount coupons to its loyal customers through mailers and the company's email database has increased to 3.4 million.

The retailer added a large number of new stores, which led to an increase in revenue from each brand. For example, Ascena added 14 new Justice stores during the quarter and plans to open another 23 in the current one.

Looking forward
Ascena has been making the right moves. It has been adding new stores, increasing its marketing efforts, and acquiring new businesses. Its acquisition of Justice and Charming Shoppes has been bearing fruit as reflected by increasing sales for these businesses.

Moreover, the company is well placed strategically since its different brands cater to different age groups of women. From casual apparels to trendy wear for tweens and "plus-size" apparels for older and obese people, the retailer covers a plethora of consumer demands. On the other hand, companies such as Abercrombie & Fitch, which focuses in younger people, do not offer plus-size apparels. Even Aeropostale mainly targets women between the ages of 14 to 17 years old although it has a wider variety of offerings online. Hence, Ascena enjoys a competitive advantage. Also, the specialty retailer plans to open 55 to 75 new stores in the current year and expects to reach annual sales of $5 billion.

Key numbers
Considering Ascena Retail Group's P/E ratio (on a trailing-12 month basis), the company might look expensive. Its P/E multiple is 22.7 whereas Abercrombie & Fitch has a P/E ratio of 12.5. However, Ascena is expected to perform much better than its peer as reflected by the forward P/E ratio of those two companies. Ascena's forward P/E multiple stands at 10.3, far below its trailing P/E multiple as well as Abercrombie's forward P/E multiple of 12.1. The PEG ratio for Ascena Retail Group and Abercrombie is 0.9 and 1.3, respectively. Hence, Ascena is cheaper than its peers and is estimated to grow much faster than Abercrombie.

Bottom line
Although specialty retailers are not doing very well, Ascena Retail Group stands out. It has been making efforts to attract customers with promotions such as its Take Ten loyalty program and other marketing strategies, which will help the retailer boost its top line.

Moreover, it is expanding its footprint and is trying to maintain lower inventory levels in order to offer fresh products in the fall season. These strategies, along with decent valuation numbers, make this company attractive. Investors should take advantage of this opportunity and strengthen their portfolio with this retailer.

The retail sector is tough these days, and picking a winning retail stocks is even tougher
The retail space is in the midst of the biggest paradigm shift since mail order took off at the turn of last century. Only those most forward-looking and capable companies will survive, and they'll handsomely reward those investors who understand the landscape. You can read about the 3 Companies Ready to Rule Retail in The Motley Fool's special report. Uncovering these top picks is free today; just click here to read more.

Amazon.com Inc. (AMZN): Forget $380 – What About $700?

Amazon.com Inc. (AMZN) is on the loose today, outperforming a strong NASDAQ. The online retail giant's shares are ahead by almost $20 (more than 6%) as we type. The A-to-Z retailers can thank an upgrade from UBS for today's charge.

Analyst Eric J. Sheridan sees the stock as a "Buy" now, up from yesterday's "Neutral" rating. Sheridan says the NASDAQ 100 member is on its way to $385; potential upside of 14.9% as we hit this keystroke.

According to the analysts, "We are upgrading shares of Amazon from Neutral to Buy & taking our PT to $385 (from $305) on the back of a bullish secular backdrop for Amazon's position in multichannel commerce & specific items that we think could propel both higher operating results and stock outperformance over the coming 12-18 months. Specific drivers for our upgrade: a) our expectations for a reacceleration of revenue growth and paid unit growth in Q4 and beyond (indicators being strong seasonal hiring trends, video game/console sales, easing paid unit comparisons, AWS); b) the globalization of its Kindle ecosystem; & c) its under-appreciated Advertising business."

Amazon.com is a difficult company to assign a valuation to as the company tends to lose money. As a matter of fact, Wall Street believes AMZN will lose nine cents for the current quarter.

For all of 2013, Amazon is forecasted to make a profit of $0.86. Sine Sheridan is concerned with the next "12-18 months," we'll focus our look at the possibility of $380 on 2014's numbers.

Next year, the consensus estimate is $2.88 per share, which is a projected increase of 241% from this year's guesstimate. In order to price out at $380, Amamzon.com requires a P/E of 131.94 on 2014's EPS. It's not all that crazy when you consider the bottom line is slated for 241%. In fact, we rather like that sort of EPS growth to P/E discount.

Revenue for 2014 is projected to grow 21.50% to $90.39 billion. In the past five-years, investors have paid an average price-to-sales (P/S) ratio of 2.! 03 for the retailer's shares. They would have 1.9 times sales for the company with the stock at $380.

Overall: $380 seems reasonable for Amazon.com Inc. (AMZN) on a P/S basis; however, there could be additional upside to UBS's price target on a P/E basis. Many B-schools with that a P/E equal to EPS growth is acceptable, which would put Amazon closer to $700 than $400.

Fink, Gross: Zero chance of debt default

Bloomberg

BlackRock Inc.'s Laurence D. Fink and Pacific Investment Management Co.'s Bill Gross said the U.S. budget standoff will be resolved without a debt default.

The congressional dispute will end “very rapidly,” Mr. Fink said at an event hosted by the UCLA Anderson School of Management at the Beverly Hilton hotel in Beverly Hills, Calif., and streamed on CNBC.com.

“It's theatrics posed by politicians to get ratings or to get their way via legislation,” Mr. Gross said. “It's not a realistic proposition.”

A partial U.S. government shutdown entered a fourth day amid wrangling by lawmakers over the budget and debt limit. The U.S. will run out of borrowing authority Oct. 17 and will have $30 billion in cash after that. The country would be unable to pay all of its bills sometime between Oct. 22 and Oct. 31, according to the Congressional Budget Office.

The shutdown has furloughed about 800,000 federal employees and is becoming a prolonged deadlock that is merging with the debt-ceiling debate.

Financial markets suggest that most investors anticipate U.S. lawmakers will raise the limit on the nation's debt and avoid a default on government securities, Pimco's Mohamed El- Erian said.‘Too Awful’

“The alternative would be too awful to contemplate,” Mr. El- Erian, chief executive officer at the world’s biggest manager of bond mutual funds, said on Bloomberg Television’s “In the Loop” with Betty Liu. “Most people in the market think we will avoid a debt-ceiling debacle.”

Billionaire investor Warren Buffett said politicians should stop using the nation’s borrowing authority as a bargaining chip in policy debates, comparing the practice to the threat of dropping a nuclear bomb.

“It ought to be banned as a weapon,” Mr. Buffett, 83, said in an interview with Fortune magazine posted online today. “It should be like nuclear bombs, basically too horrible to use.”

House Speaker John Boehner said the way to end the government shutdown would be for Democrats to negotiate with him and accept changes that would produce “fairness” under the Affordable Care Act.

Mr. Boehner, speaking to reporters after a private meeting with House Republicans, criticized an unidentified White House official quoted in The Wall

News Reports: JPMorgan Chase Agrees to $13 Billion Settlement

NEW YORK (TheStreet) -- JP Morgan Chase has agreed to pay a $13 billion fine to settle federal and state lawsuits over the bank's residential mortgage-backed securities business, according to news reports.

General terms of the tentative agreement between the bank and the Justice Department were reached Friday night in a phone conversation involving Attorney General Eric Holder, his deputy Tony West, J.P. Morgan CEO James Dimon and the bank's general counsel, Stephen Cutler, The Wall Street Journal reported, citing an unidentified person familiar with the deal.

The agreement does not require the Justice Department to drop a criminal investigation focusing on the same issues, Reuters reported, also citing an unidentified person with knowledge of the deal.

Under the tentative agreement, the bank is likely to be required to cooperate in criminal investigations of individuals tied to wrongdoing associated with the bank's mortgage practices, a person who requested anonymity said, according to Bloomberg News.

Google shares soar past $1,000

Click the chart for more on Google's stock

NEW YORK (CNNMoney) Google shares soared above $1,000 a share early Friday as investors cheered the company's latest quarterly report.

The stock surged 13% and rose as high as $1,007 a share, well above the stock's previous all-time high of $928 set in July. Shares pulled back later in the morning to trade near $998.

Late Thursday, Google (GOOG, Fortune 500) reported earnings and revenue that blew past investors' expectations, driven by strength in the company's core search business.

The stock could head even higher, according to a raft of analyst reports published Friday.

Deutsche Bank was one of the most bullish, raising its price target for Google to $1,220 from $970.

Credit Suisse hiked its price target to $1,200 and Jefferies now thinks Google can hit $1,150 at some point over the next year.

Shares of Google are now up more than 40% this year. Amazingly enough, the stock has lagged the performance of two key rivals in 2013: Yahoo (YHOO, Fortune 500) is up nearly 70% while Facebook (FB, Fortune 500) has more than doubled.

Google is the second blue chip tech company to recently top $1,000 a share. Online travel site Priceline (PCLN, Fortune 500) became the first S&P 500 company to hit a four-digit stock price last month. Its stock is currently hovering around $1,050.

At $1,000 a share, Google is trading at about 19 times 2014 earnings estimates. But those estimates are likely to be raised in light of the company's recent results. Deutsche Bank, for example, hiked their full-year earnings outlook to $54.30 a share. The current consensus is for Google to earn about $51 a share.

By comparison, Yahoo currently trades at nearly 20 times next year's earnings estimates, even though it's still a turnaround story. Facebook, which is growing more rapidly than Google, is trading at nearly 55 times earnings forecasts for 2014.

Analysts pointed to a number of factors behind their rosy outlook, including revenue from Google's "enhanced campaigns," which help marketers more easily run targeted ads on both desktop and mobile. YouTube in particular is expected to benefit from a shift in ad dollars away from traditional television.

Google is not alone in its quest to make more money off of mobile advertising. It's a main focus for Y! ahoo and Facebook as well. And Twitter, which will soon go public, is expected to be a force to be reckoned with in mobile ad sales too.

Still, even though mobile Internet usage continues to grow, advertisers won't pay as much for mobile ads as they do for desktop ones. So even as the number of ads clicked on Google properties increases, the company is commanding less money on average for each of those clicks.

But analysts seem to believe that Google's dominance of search and its established advertising business give it an advantage over rivals. Google should also benefit next year from expanding profit margins.

However, Google still faces challenges in its Motorola business.

Meanwhile, the Motorola business shows few signs of a turnaround yet. It lost $248 million in the third quarter.

-- CNNMoney's Julianne Pepitone contributed to this report.

IBM - Don't Expect Anything Spectacular In The Coming Months

Shares of International Business Machines (IBM) sold off aggressively in after-hours trading. Investors and analysts are not happy that "Big Blue" reported a big miss on its quarterly revenues.

I do not expect anything spectacular in the short to medium term, yet long term prospects should continue to look good as long as the company is taking the rapidly changing developments within the industry seriously, and continues to act upon this.

Third Quarter Results

IBM generated third quarter revenues of $23.72 billion, down 4.1% on the year before. Roughly half of those revenue declines are attributable to adverse foreign currency movements. Consensus estimates for revenues stood at $24.74 billion, implying that IBM missed consensus estimates by a full billion.

The company reported net earnings of $4.04 billion, up 5.7% on the year before. Diluted earnings per share advanced from $3.33 per share last year to $3.68 per share.

Non-GAAP earnings came in at $3.99 per share, beating consensus estimates by three cents as IBM benefited from lower taxes. CEO and Chairman Ginni Rometty commented on the third quarter performance:

In the third-quarter we continued to expand operating margins and increased earnings per share, but fell short on revenue. Where we had identified high growth opportunities and pursued them aggressively --- cloud, mobile, business analytics, and security --- we continued to show strong growth.

Looking Ahead

For the full year of 2013, IBM sees GAAP earnings of at least $15.01 per share. Non-GAAP earnings are seen between $16.25 and $16.90 per share, excluding a workforce rebalancing charge of $1.0 billion.

IBM is taking actions to improve execution in the emerging growth market units and underperforming hardware business. That being said, IBM is confident that it will reach its full year targets and its 2015 goal of achieving operating earnings of at least $20 per share.

Looking Into The Results

IBM saw its revenues! fall by some 4.1%. IBM's main global technology service unit reported a 4.3% fall in revenues, coming in at $9.49 billion. Systems and technology sales fell by 16.6% to $3.25 billion. Only the global business service business and software business reported earnings growth of 0.4% and 0.6%, respectively.

Despite the fall in revenues, IBM managed to boost its gross margins by 60 basis points to 48.0% of total revenues. The company saw very strong reductions in selling, general and administrative expenses which fell by 170 basis points to 22.2% of revenues.

While IBM didn't see a big one-time gain as it did last year, the bottom line was aided by lower provisions for income taxes, which boosted the bottom line.

IBM notes that a portion of these lower tax rates are structural, driven by a decrease in ongoing tax rates. Yet effective tax rates will bounce back a bit, as IBM had discrete benefits from deals with foreign tax audits.

Valuation

IBM ended its third quarter with $10.2 billion in cash, equivalents and marketable securities. Total debt stand at $36.2 billion, for a net debt position of around $26 billion.

Revenues for the first nine months of the year came in at $72.05 billion, down 4.2% on the year before. Net earnings fell by 4.4% to $10.30 billion in the meantime.

At this pace annual revenues could come in around $100 billion, as GAAP earnings could come in around $15-$16 billion.

Factoring in losses of 6% in after-hours trading, with shares trading around $175 per share, the market values IBM at around $192 billion. This values operating assets of the firm around 1.9 times annual revenues and 12-13 times earnings.

IBM pays a quarterly dividend of $0.95 per share, for an annual dividend yield of 2.2%.

Some Historical Perspective

Over the past decade shares of IBM have roughly doubled. As a matter of fact, shares traded as low as $75 in 2006 before they saw steady gains to levels as high as $215 last year. In the meantime, shares h! ave nearl! y sold off some 20%, currently trading around $175 per share.

Between 2009 and 2012, IBM increased its annual revenues by a cumulative 10% to nearly $105 billion last year, although revenues are set to show a decline this year. Net earning rose by nearly 25% from $13.4 billion to $16.6 billion last year. As IBM repurchased nearly one out of five shares outstanding over the time period, earnings per share saw a big extra boost.

Investment Thesis

Investors are not too happy with the drop in revenues. While IBM can partially blame adverse currency movements for the disappointing numbers, hardware weakness and soft emerging market performance hint towards execution issues.

Earnings in the hardware business fell by $1 billion so far this year, driven by dismal performance in China as adverse currency movement cost another $500 million.

Just like all companies operating in the wider industry, IBM is making the transition from focusing on hardware to software, replacing traditional IT infrastructures. Yet IBM still has a long way to go, as the third quarter was the very first quarter in which it generated cloud revenues north of $1 billion. Service sector could not offset falling hardware revenues as well, even as the service backlog continued to grow as IBM saw poor conversion into current revenues.

While IBM continues to hold on to its full year targets, analysts and the wider investment community are not happy, especially with the poor revenue developments. Yet IBM has done a great job at cutting costs to boost margins, while continued share repurchases continued to fuel earnings per share growth.

Over the past decade IBM has done well. It saw modest revenue growth, but coupled this with margin expansion and share repurchases, resulting in solid but spectacular earnings growth.

Today, the environment for IBM looks more challenging as more and more investors and analysts are questioning Big Blue's ability to reach its $20 earnings per share by 2015. This is as ! revenues ! are actually falling, or stabilizing at best. The ability to squeeze out higher margins going forward will be difficult, while IBM has already picked up quite some debt to finance share repurchases.

While IBM was quick to exit consumer electronics, the solid and profitable business market is coming under pressure by cloud developments. With a potential painful shift to the cloud coming up in the coming years, IBM is not that well positioned at the moment, while shares are trading at historical high levels.

Back in June of this year, I last took a look at IBM's prospects after it paid $2 billion to acquire SoftLayer to boost its cloud computing offerings. The deal is just a drop in the bucket for a firm the size of IBM which targets $7 billion in cloud revenues by 2015, currently generating revenues at an annual rate just north of $4 billion. Note that even when IBM meets its 2015 target, cloud revenues make up just 7% of total revenues.

Back in June when shares were trading around $205 per share, I concluded that investors should not expect spectacular returns in the short to medium term, when in fact shares have lost some 10% ever since.

I applauded IBM's ability to constantly change in an evolving environment to stay competitive in the future. This will undoubtedly occur again given that IBM takes the Cloud seriously.

Trading around 12 times current earnings and 9-10 earnings for 2015, IBM still looks safe as the company should be able to overcome these hurdles. I do think prospects for short to medium returns look bleak given the current sentiment, yet the long term still looks good based on the valuation.

On top of that shareholders receive large cash flows consisting out of a 2.2% dividend yield, and repurchases of up to 5% per annum, for a combined yield of around 7%.

I remain on the sidelines for now, but still seeing long-term potential on the back of an attractive valuation, as long as the company keeps evolving.

Source: IBM - Don't Expect Anything Spectacular In The Coming Months

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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. (More...)

8 Biotechnology Stocks to Sell Now

Popular Posts: 7 “Triple A” Stocks to Buy7 Biotechnology Stocks to Buy Now16 Oil and Gas Stocks to Sell Now Recent Posts: 8 Biotechnology Stocks to Sell Now 7 Semiconductor Stocks to Sell Now 21 Commercial Banking Stocks to Buy Now View All Posts

This week, the overall grades of eight Biotechnology stocks are lower, according to the Portfolio Grader database. Each of these rates a “D” (“sell”) or “F” overall (“strong sell”).

Genomic Health, Inc. (NASDAQ:) is on the decline this week, earning a D (“sell”) after receiving a C (“hold”) last week. Genomic Health is a life science company, which is focused on the development and commercialization of genomic-based clinical diagnostic tests for cancer that allow physicians and patients to make individualized treatment decisions. In Portfolio Grader’s specific subcategory of Earnings Revisions, GHDX also gets an F. The stock price has fallen 10.6% over the past month, worse than the 1.3% decrease the Nasdaq has seen over the same period of time. .

The rating of Acorda Therapeutics, Inc. (NASDAQ:) slips from a C to a D. Acorda Therapeutics is a commercial stage biopharmaceutical company dedicated to the identification, development and commercialization of novel therapies that improve neurological function in people with multiple sclerosis (MS), spinal cord injury and other disorders of the central nervous system. The stock gets F’s in Earnings Revisions and Sales Growth. .

This week, Amarin Corporation Plc Sponsored ADR’s (NASDAQ:) rating worsens to a D from the company’s C rating a week ago. Amarin focuses on developing the treatment for cardiovascular disease in the field of lipid science. In Earnings Growth, Earnings Revisions, Equity, and Cash Flow the stock gets F’s. As of Oct. 16, 2013, 15.3% of outstanding Amarin Corporation Plc Sponsored ADR shares were held short. .

Exelixis, Inc. (NASDAQ:) earns an F (“strong sell”) this week, moving down from last week’s grade of D (“sell”). Exelixisis a development-stage biotechnology company dedicated to the discovery and development of small-molecule therapeutics for the treatment of cancer and other serious diseases. The stock receives F’s in Earnings Growth, Earnings Momentum, and Equity. Margin Growth and Sales Growth also get F’s. As of Oct. 16, 2013, 22.7% of outstanding Exelixis, Inc. shares were held short. .

This is a rough week for Trius Therapeutics, Inc. (NASDAQ:). The company’s rating falls to D from the previous week’s C. Trius Therapeutics is a biopharmaceutical company. The stock gets F’s in Earnings Growth, Earnings Momentum, and Equity. Cash Flow and Sales Growth also get F’s. .

Progenics Pharmaceuticals, Inc. (NASDAQ:) earns a D this week, falling from last week’s grade of C. Progenics Pharmaceuticals develops and distributes therapeutic products to treat the unmet medical needs of patients with debilitating conditions and life-threatening diseases. The stock gets F’s in Equity and Cash Flow. .

Discovery Laboratories, Inc.’s (NASDAQ:) rating weakens this week, dropping to a D versus last week’s C. Discovery Laboratories is a biotechnology company focused on developing products for the treatment of respiratory disease. The stock gets F’s in Equity and Cash Flow. .

The rating of Achillion Pharmaceuticals, Inc. (NASDAQ:) slips from a C to a D. Achillion focuses on the discovery, development and commercialization of innovative treatments for infectious diseases. The stock also rates an F in Equity. As of Oct. 16, 2013, 16.7% of outstanding Achillion Pharmaceuticals, Inc. shares were held short. .

Louis Navellier’s proprietary Portfolio Grader stock ranking system assesses roughly 5,000 companies every week based on a number of fundamental and quantitative measures. Stocks are given a letter grade based on their results — with A being “strong buy,” and F being “strong sell.” Explore the tool here.

Should I Buy Expedia Stock? 3 Pros, 3 Cons

Expedia (EXPE) stock was hit with a downgrade from Deutsche Bank analyst Ross Sandler yesterday. Sandler bumped EXPE stock from "buy" to "hold" and dropped his Expedia stock price target from $66 to $51.

On the news, EXPE plunged by 6% and has lost another 1% so far today. That brings year-to-date losses to almost 22% for Expedia stock.

Sandler noted some major headwinds for EXPE, including an increased competitive environment. He also warned that abrupt management changes at the company’s Hotels.com division may signal more problems ahead.

But have investors have already factored bad news into Expedia stock? To see, let's take a look at the pros and cons:

EXPE Pros

Strong Portfolio: Expedia has massive scale, with supply from about 200,000 hotels, 300 airlines and various car rentals and cruise lines. And EXPE sites — which include Hotwire.com, Hotels.com, CarRentals.com and more, on top of the Expedia namesake — get about 50 million unique visitors every month. Plus, EXPE also owns a majority stake in eLong (LONG), which is the second largest online travel company in China.

Technology: Expedia is also a pioneer of the online travel space and has continued to innovate and invest large sums in its infrastructure. In fact, Expedia recently announced a long-term alliance to operate the technology platform for Travelocity (for U.S. and Canadian markets). The result is likely to be a boost to EXPE revenue, since Expedia will have new channels to distribute its supply.

Global Expansion: For the most part, rival Priceline (PCLN) has been much more aggressive in foreign markets, especially in Europe. PCLN has performed much better than Expedia as a result. But over the past couple years, Expedia has been busy playing catch up. In Europe, Expedia is seeing lots of traction with Germany-based Trivago, a search engine it recently bought a majority stake in. And Asia is another big priority for EXPE. Besides its eLong asset, Expedia also has a 50/50 joint venture with AirAsia, a low-cost carrier, which should be a nice source of demand.

EXPE Cons

Earnings: Expedia posted terrible second-quarter earnings back in July, as both EPS and revenue missed analyst expectations. EXPE stock lost over a quarter of its value as a result. On the conference call, Expedia noted continued problems with Hotwire.com and more pressures from competitors. The result: EXPE has seen a drop in traffic. On top of that, third-quarter Expedia earnings, which are slated to be released Oct. 30, are only expected to improve by around 3%.

Valuation: Even with after the Expedia stock sell-off, shares of EXPE remain far from cheap. EXPE stock is trading for a trailing P/E of 46 vs. 33 for Priceline and 23 for Travelzoo (TZOO). And considering the recent volatility, investors are certainly jittery about EXPE stock. As a result, another earnings disappointment could have a severe impact.

Competition: As we’ve mentioned, the U.S. market has been getting tough for EXPE as rivals like Bookings.com continue their marketing blitzes. On top of that, there are countless online startups in the space. A few names include Hipmonk, HotelTonight and Triporati … and all leverage social media and mobile.

Verdict

While the U.S. market for online travel is nearing maturity, there are still big opportunities in Europe and Asia — and EXPE is definitely pushing hard in these markets.

But as competition grows, it will likely get more expensive to snag customers, which will mean lower margins for EXPE. At the same time, Expedia stock is hardly cheap. And even on a technical basis, things look concerning. Expedia stock appears to be in retracement mode on the downside.

For investors, it is probably best to wait until after the next Expedia earnings report, which once again is scheduled for the end of the month.

And in the meantime, the cons outweigh the pros for EXPE stock.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

Southwest details executive ‘promotions and rea…

DALLAS (AP) - Southwest Airlines announced several changes in its executive ranks, which it called "promotions and realignments."

Executive Vice President Jeff Lamb said Monday that the changes would "help support the transformation of our brand in this tough industry."

ALSO ONLINE: Southwest Airlines begins enforcing 'no-show' policy
VIDEO: Travel Q&A: Is Southwest Airlines right for you?

The airline named Andrew Watterson as vice president of network planning and performance. He had been vice president of planning and revenue management at Hawaiian Airlines.

Sherry Staber, a vice president at department store chain J.C. Penney, was named vice president of business transformation in the airline's technology organization.

A Southwest spokeswoman said that Staber took over the duties of one or two vacant positions and that Watterson did not replace anyone.

Also, Southwest promoted Bill Tiffany to vice president from senior director in supply-chain management. It also moved Senior Vice President Brian Hirshman to operations from technical operations, replacing Greg Wells, who was named senior vice president of operational performance.

Shares of Dallas-based Southwest rose 8 cents to close Monday at $15.31.

Apple Has Many Aces Up Its Sleeve

According to a post by ex. WSJ reporter Jessica Lessin, Apple (AAPL) recently purchased for an undisclosed amount Passif Semiconductor, a small Silicon Valley company specializing in low energy chip design. Passif develops communication chips that use very little power. Its technology, which includes a radio that works with a low-energy version of Bluetooth called Bluetooth LE, is promising for health-monitoring and fitness devices that need extra-long battery life.

The interesting thing about this company is that it was purchased some months ago under everyone's noses. That's correct, exactly when Apple made this purchase is unclear. Passif is not the only semiconductor company that has been bought by Apple. In 2008 it acquired P.A. Semi Inc., a designer of low-power processors that deliver more computing power per watt of electricity.

Naturally, what comes to mind is that Apple is interested in this technology for the iWatch. When making any type of wrist device, the most important issue is battery life. No one will buy any type of wrist device (smart or otherwise), if the user has to recharge it every now and then. So assuming that Apple has a technology that uses very little energy to emit radio Bluetooth waves, then that opens up a world of possibilities.

Obviously the iWatch is one thought, but why stop there? Imagine for example if you can implant a small device to monitor you heart or blood and send the data via Bluetooth to you iPhone and the data is automatically monitored by you doctor from his iPhone or from a desktop computer in his office.

While the idea is not new (for example here and here), all these devices require some sort of external power source. Imagine however if these devices could work for months at a time, or can even be recharged via some sort of wireless recharging technology in the future

While it is unclear what Apple is aiming to produce with such technology, we cannot rule out the medical and health devices industry. This is an extremely b! ig industry and I am surprised that Apple has not used its cash hoard to get into this sector as of yet.

Nike (NKE) for example has already devolved FuelBand. I mean Apple is a devices and gadgets company, I see no reason why it has restricted its focus to smartphones alone.

Very recently Credit Suisse issued a report on the rise of the wearable devices and personal accessories industry, that use embedded sensors, displays and other digital technology. Credit Suisse said today this is a $3-$5 billion market, but it will balloon between $30 and $50 billion in the next 3-5 years from now.

If indeed this forecast proves to be correct (and I think it will), we are talking about a lot of money to be made. And guess what, the company that has the technology to power and make these devices communicate for very long periods of time, will probably end up taking a big piece of this market.

And while we know that Apple is pushing ahead and hiring people for the iWatch, I do not think that the iWatch is the only product it is working on, or the only product we will see from Apple in the wearable devices category.

With companies like Google (GOOG), Microsoft (MSFT), Samsung (SSNLF.PK) and even Dell (DELL) all working on making small wrist like devices and bracelets, at the end of the day, success will be determined by the power source and semiconductor components that use extremely low power.

Will Apple be one of these companies that will profit in this fast growing sector? The verdict is still out, however judging from Apple's latest round of acquisitions, I think it is at least preparing the ground work for making a wide variety of devices and gadgets, and medical devices cannot be ruled out.

And while I think Google will also surprise us in the gadget business in the future, I think only Apple has the potential to come out with a gadget that will rival the success of the iPhone.

And I am not talking about the iWatch, but something else that will be really revolution! ary and m! ake our lives better.

Source: Apple Has Many Aces Up Its Sleeve

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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. (More...)

Top 5 Financial Companies To Buy For 2014

LPL Financial (LPLA) said early Wednesday that its RIA platform now has $50 billion in assets under custody, nearly doubling its asset base of a year ago.

"The $50 billion milestone caps five years of remarkable growth for our RIA custody business," said Derek Bruton (left), managing director for LPL Financial, in a press release.

LPL’s RIA platform was used by 152 firms with $27.1 billion in assets as of March 2012. In late May 2013, 208 firms with $50 billion in assets were doing business on the platform.

"We made a calculated decision to focus on this area back in 2008, based on the anticipated success of the then-new hybrid RIA model, which enables both fee- and commission-based revenue opportunities for advisors who operate under their own RIA firm,” Bruton said.

“Our recruitment efforts have been wildly successful, as the number of RIA firms on our platform, and their ability to attract assets, has exploded. We have become the destination of choice for the most successful and sophisticated RIA firms in the industry."

Top 5 Financial Companies To Buy For 2014: National Financial Partners Corporation (NFP)

National Financial Partners Corp., together with its subsidiaries, provides advisory and brokerage services to corporate and high net worth individual clients in the United States and Canada. It operates in three segments: Corporate Client Group, Individual Client Group, and Advisor Services Group. The Corporate Client Group segment operates as corporate benefits advisor in the middle market, offering independent solutions for health and welfare, retirement planning, executive benefits, and property and casualty insurance; and offers property and casualty insurance brokerage and consulting services. It serves corporate clients by providing advisory and brokerage services related to the planning and administration of benefit plans that take into account the overall business profile and needs of the corporate client. The Individual Client Group segment delivers independent life insurance, annuities, long term care, and wealth transfer solutions; and wholesale life brokerage, retail life, and investment advisory services. It serves wealth accumulation, preservation, and transfer needs, including estate planning, business succession, charitable giving, and financial advisory services. The Advisor Services Group segment provides broker-dealer and asset management products and services to independent financial advisors. In addition, the company provides IndeSuite, a wealth management platform for the independent registered investment advisor market. National Financial Partners Corp. was founded in 1998 and is headquartered in New York City, New York.

Top 5 Financial Companies To Buy For 2014: Metro Bancorp Inc(METR)

Metro Bancorp, Inc. operates as the bank holding company for Metro Bank, which provides a range of retail and commercial banking services to consumers and small and mid-sized companies in Pennsylvania. Its deposit products include personal and business checking accounts, regular savings accounts, money market accounts, interest checking accounts, fixed rate certificates of deposit, individual retirement accounts, and club accounts. The company?s loan products portfolio comprises commercial and industrial, owner occupied real estate, commercial construction and land development, and commercial real estate loans; consumer loans, including home equity, overdraft checking protection, and consumer credit cards, as well as installment loans for home improvement, and the purchase of consumer goods and automobiles; and construction loans and permanent mortgages for homes. It also offers debit card services, online banking services, safe deposit facilities, and automated teller fa cilities. As of July 14, 2011, Metro Bancorp operated 33 stores in the counties of Berks, Cumberland, Dauphin, Lancaster, Lebanon, and York. The company was formerly known as Pennsylvania Commerce Bancorp, Inc. and changed its name to Metro Bancorp, Inc. in June 2009. Metro Bancorp, Inc. was founded in 1984 and is headquartered in Harrisburg, Pennsylvania.

Hot Insurance Stocks To Own For 2014: TICC Capital Corp.(TICC)

TICC Capital Corp., a business development company, operates as a closed-end, non-diversified management investment company. The firm invests in both public and private companies. It invests in secured and unsecured senior debt, subordinated debt, junior subordinated debt, preferred stock, and common stock. The firm primarily invests in debt and/or equity securities of technology-related companies that operate in the computer software, Internet, information technology infrastructure and services, media, telecommunications and telecommunications equipment, semiconductors, hardware, technology-enabled services, semiconductor capital equipment, medical device technology, diversified technology, and networking systems sectors. It concentrates its investments in companies having annual revenues of less than $200 million and a market capitalization or enterprise value of less than $300 million. The firm invests between $5 million and $30 million per transaction. It seeks to exit its investments within 7 years. It serves as the investment adviser to TICC. The company was formerly known as Technology Investment Capital Corp. and changed its name to TICC Capital Corp. in December 2007. TICC Capital Corp. was founded in 2003 and is headquartered in Greenwich, Connecticut.

Advisors' Opinion:

• [By Brian Pacampara]

  Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, closed-end asset manager TICC Capital Corp. (NASDAQ: TICC  ) has earned a respected four-star ranking.

Top 5 Financial Companies To Buy For 2014: Blackrock MuniEnhanced Fund Inc. (MEN)

BlackRock MuniEnhanced Fund, Inc. is a closed ended fixed income mutual fund launched by BlackRock, Inc. It is co-managed by BlackRock Advisors, LLC and BlackRock Investment Management LLC. The fund invests in fixed income markets. It invests primarily in long-term, investment grade municipal obligations. BlackRock MuniEnhanced Fund, Inc. was formed in 1988 and is domiciled in United States.

Top 5 Financial Companies To Buy For 2014: White Mountains Insurance Group Ltd.(WTM)

White Mountains Insurance Group, Ltd., through its subsidiaries, engages in the property and casualty insurance, and reinsurance businesses. The company?s OneBeacon segment offers professional liability products, marine insurance, collector cars and boats insurance, property and inland marine insurance, tuition reimbursement, and excess property and accident and health products, as well as property and casualty insurance coverages tailored to industry groups, such as technology, financial services, entertainment, sports and leisure industries, and government entities. Its White Mountains Re segment provides reinsurance coverage for property, accident and health, aviation and space, trade credit, marine, casualty, agriculture, and other exposures. White Mountains? Esurance segment writes personal auto insurance to customers online and through select online agents, as well as sells insurance online. The company offers its products and services primarily in the United State s, Europe, Canada, the Caribbean, Bermuda, Latin America, and Asia. White Mountains Insurance Group, Ltd. was founded in 1980 and is headquartered in Hamilton, Bermuda.