SeaWorld A Likely Takeover Target: Cheaper Than The Price Of Admission

By Andrew Vazquez:

After 4 years of private equity (NYSE:PE) ownership, shares of SeaWorld (NYSE:SEAS) opened for public purchase in April 2013. Despite outperforming both its industry and individual competitors on a variety of financial metrics, mismanagement, negative publicity, and a lack of regional diversity have all contributed to driving SEAS stock down over 50% over the last year. With shares currently trading at $ 20.79, well below their initial public offering (NYSEARCA:IPO) price of $ 27, a competitor is likely to find value in purchasing the company as a whole. A buyout would reward current SEAS investors handsomely. However, even without a takeover the combination of solid fundamentals and shares selling at a large discount makes SEAS stock a great purchase.

SEAS operates 11 theme parks in 5 states in the United States ((U.S.)), including 5 of the top 20 parks by attendance in North America. It is not regional, but rather is represented


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Notable Mergers and Acquisitions of the Day 9/2: (CPWR) (DG)/(FDO) (NCLH) (ADM) (FLWS)

* Compuware (Nasdaq: CPWR) and Thoma Bravo jointly announced that Compuware has entered into a definitive agreement to be acquired by leading private equity investment firm Thoma Bravo, LLC, in a transaction valued at approximately $ 2.5 billion.

“Compuware is the clear established leader in the categories of application performance and mainframe productivity tools, and this transaction is the capstone to a series of transformative company initiatives to relentlessly drive value,” said Bob Paul, Chief Executive Officer of Compuware. “We began with the IPO of Covisint, initiated a robust dividend, divested non-core operations, and aggressively reduced corporate expenses. Compuware is now
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What We’re Really Paying for at the Pump

Gasoline Prices: What We're Really Paying For at the Pump

By Shelley Goldberg, Commodities Strategist

The price of crude oil has the largest impact on the price of retail gasoline.

But that raises an important question, one that many motorists were likely thinking as they filled up their tanks over Labor Day weekend.

Why can gas prices appreciate when crude oil prices are steady, or even dropping?

The reason is simpler than you might think.

Good Ol’ Uncle Sam

In short, while gas and crude oil are positively correlated, the price of crude oil today represents, on average, only 66% of the retail gasoline price.

So what makes up the balance, exactly?

For one, taxes make up the second-largest component of gasoline prices.

Today, on average, 12% of the price of gasoline at the pump reflects taxes imposed by both the federal government and state governments.

As of January 2014, according to the U.S. Energy Information Agency (EIA), federal taxes equated to $ 0.1840 per gallon, while the average state tax was $ 0.2717 per gallon.

The second and third components are refining and distribution and marketing. Each reflects 11% of the retail gasoline price.

Breakdown of Gasoline Prices

What to Expect

While tax rates and distribution and marketing costs are typically steady, the price of crude oil and refining costs are more volatile.

Crude oil is truly a global market. Even though the United States is drilling at record levels due to hydraulic fracking and horizontal drilling, global crude oil prices are still affected by growing demand in emerging markets, the influence of the Organization of Petroleum Exporting Countries (OPEC) on prices, and geopolitical risk. This translates to a limited downside for the price of crude oil in the short to medium term.

Refining costs can have a major impact on gasoline prices, and can change rapidly. Beyond scheduled maintenance periods, other unknowns – such as temporary outages, delivery pipeline disruptions due to severe weather, bottlenecks, and other technical issues – can affect prices.

Now, gasoline inventories are the cushion between major short-term supply and demand imbalances.

Gasoline prices tend to increase as the available supply of gasoline grows smaller relative to demand or consumption. A drop in inventories may cause wholesalers to bid higher for available supply over concern that future supplies may be inadequate.

Imbalances have also occurred when a region changes from one fuel type to another (for example, to cleaner-burning gasoline) as refiners, distributors, and marketers adjust to the new product.

Based on the chart below, U.S. supplies are at the midpoint of the five-year average.

U.S. Gasoline Stocks

Still, while there’s no notable shortage of U.S. gasoline supplies, we shouldn’t be complacent. There are too many variables that could disrupt inventory levels, particularly in light of the approaching hurricane season.

So how do you profit from any potential uptick in prices?

How to Trade or Invest

Trading gasoline is not for the faint of heart. It requires persistent attention to the markets and access to a myriad of data.

The easiest way for the average investor to play the gasoline market is through refinery stocks, like Valero Energy Corp. (VLO) and Tesoro (TSO). Remember, higher crude prices are a negative for refiners, whereas high distillate prices, including gasoline, are a positive.

If you want to take a more advanced route, one can speculate on gasoline prices by trading the CME-Nymex RBOB gasoline contract, which represents 42,000 gallons of physical gasoline. There’s also the E-mini RBOB (QU) representing 21,000 barrels (futures only). Finally, there’s the exchange-traded fund United States Gasoline Fund LP (UGA), which tracks RBOB futures.

And “the chase” continues,

Shelley Goldberg

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By Shelley Goldberg


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3 Russell Dividend Dogs Roust 10% To 23% August Upsides

By Fredrik Arnold:

Russell Investments reconstituted its Russell 2000 Small-Cap & Russell 1000 Large-Cap constituents in June and in so doing purged business development company stocks among other changes. A combined list of the two indices as of market closing prices August 29 was compared to analyst mean target price projections one year later. A chart of that data shown below highlighted four of the top ten posting double digit upside percentages but one Russell 2000 dog was alleged to go negative by over 22%.

This report presumed yield (dividend / price) dividend dog methodology applied to any index and compared that index side by side with the Dow. Below, Arnold active dog selections for August were disclosed step by step. Five actionable conclusions were drawn.

Actionable Conclusion (1): 10 Russell Dogs Sought 3.9% to 22.8% Upsides While 1 Dropped 22.7% Per analyst 1 year August targets

The chart above used one


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David Winters’ Wintergreen Fund’s Top Five Stocks

By Monica Wolfe. Read more » »
Related Stocks: FRA:UHR, TSX:CNQ, XSWX:CFR, LSE:BATS, BEN,
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Sarah Ketterer’s Causeway International Value Fund Reports Top Five

By Monica Wolfe. Read more » »
Related Stocks: XAMS:AKZA, XAMS:REN, XSWX:NOVN, TSE:9433, XPAR:SAN,
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Russia Has Invaded Ukraine

Russia Sending Troops and Tanks Across Ukraine Border

By Christopher Eutaw, Managing Editor

A week ago, I told readers that I’d keep them updated on the peace talks between Russian President Vladimir Putin and Ukrainian President Petro Poroshenko.

Well, I’m here to report that the talks were an abject failure.

Even as Putin was consoling Western leaders in Minsk, Russian forces continued pouring across the border into Ukraine. At this point, it’s undeniably an invasion.

Heck, Vox even published an article on August 27 titled, “Let’s be clear about this: Russia is invading Ukraine right now.”

Yet Putin has executed this incursion so subtly that he hasn’t faced any serious backlash or sparked a wider conflict, despite violating UN regulations and essentially giving the Western World the middle finger.

It might be the most impressive invasion since the Greeks used a wooden horse to sneak into Troy.

Vladimir Putin – Brilliant Strategist?

Today, any sense that the conflict is winding down has been completely dismissed. The reality is, Putin is on a warpath.

Vox author, Max Fisher, didn’t sugarcoat the situation at all: “Russian military forces are crossing the border into Ukraine in what is clearly a hostile invasion and act of war. That includes Russian artillery, Russian tanks, Russian-trained irregular forces, and even uniformed Russian soldiers.”

The Sydney Morning Herald corroborated that story. According to The Herald, the Ukrainian military spotted a convoy of as many as 100 tanks, armored vehicles, and rocket launchers moving towards a town just south of the pro-Russian stronghold in Donetsk.

Yet, incredibly, Russia continues to deny that it’s arming the pro-Russian rebels and insists that the convoy it sent into Ukraine is for “aid” purposes. And why not? So far, Putin’s stealthy invasion has worked perfectly.

Moscow has continually denied helping the rebels while, in fact, gradually increasing Russia’s involvement in the conflict, and this tactic has proven to be a quandary for Western leaders.

As Bloomberg Businessweek wrote, “The pattern has become a familiar one: Putin annexed the Black Sea peninsula of Crimea after saying he had no intention of doing so; a promise in Switzerland to help bring the separatists to heel preceded more intense fighting.”

This tactic of “muddying the waters” has helped stall the United States and Europe, and has prevented harsher penalties from being levied against Moscow.

On top of that, by ever-so-slowly crossing Obama’s supposed red lines, Putin has given America “red-line fatigue,” as Vox called it. You see, the United States has in fact lost interest in what’s happening in Ukraine, and that gives Putin a de facto pass to do what he likes.

Even the recent peace talks with Ukrainian President Petro Poroshenko were nothing more than a ruse. And now, Ukraine is warning the rest of Europe that Russia plans to cut off gas supplies as summer turns to fall, and cold weather settles in across the land.

Many analysts had already predicted such a circumstance, but this is the first time Ukrainian officials have said they know of Russian plans to close the pipelines. Countries that rely on Russia for natural gas are busy stocking their reserves – but most, including Ukraine, will fall well short of the supplies needed to make it through the winter months.

If Russia cuts off gas supplies, it could turn into a brutal, deadly winter for thousands – if not millions – of citizens in Eastern Europe.

The only question that remains, then, is: Will President Obama or European Union leaders, particularly Angela Merkel, finally take decisive action?

In Pursuit of the Truth,

Christopher Eutaw

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By Christopher Eutaw


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Weekend Edition – The Power of Iteration

It’s crazy to think, but fall is in the air. We’re smack dab in the middle of the informal “end of summer” weekend, given it’s Sunday of the Labor Day break.

At Dividend.com, and at our parent, Mitre Media, summer is a little slower than the rest of the year in terms of website traffic. Traffic dips slightly as compared to other months in July and August, with a subsequent pick-up in the fall as people shake the sand from their hair and head back to the office.

Personally, I love this time of year. I take a week off in early August and use the rest of the month to get set up for the big push from September to the Christmas holiday season. To me, the business world seems to bring a collective sense of motivation to work in September, as they strive to achieve the goals yet to be checked off after two-thirds of the year is complete.

At Dividend.com this summer, our team hasn’t been resting on its laurels. As you know, we attempt to get better every day, and we’ve used the summer to position our leading property in dividend investing to make important strides and improvements in how we deliver content and tools to our highly engaged, dividend hungry audience. Specifically, we’ve been very active in leveraging the core technology of Mitre Media, which we call the “MitreOS,” across the Dividend.com website to bolster the quality of experience we deliver to our highly valuable users, like you.

The Importance of Mobile

It’s no secret that mobile usage is surging. Case in point: global online page views from mobile accounted for 13% of total pageviews in the calendar year 2013. In 2014 that number is trending to be up nearly 80% year-over-year, as mobile pageviews as a percent of total pageviews is expected to be around 25% this year. One in four Internet page views will be from a mobile device in 2014. When I say “mobile,” think devices like smartphones (iPhones, Androids, Blackberrys, etc.) and tablets (iPads, Galaxys, etc.), or conversely, “not desktop.” These are stats highlighted in Mary Meeker’s seminal, must-read annual report on key Internet trends – dive in here if you’re so inclined.

We’ve experienced a similar trend in mobile traffic growth at Dividend.com. As you may recall, we started with our Category pages and detailed improvements back in a July edition of the Weekend Edition–Introducing a Better Way to Slice, Dice and Research–which included making the pages much more user-friendly when accessed using non-desktop devices.

The site-wide roll-out continues. As we’ve iterated, we’re not only providing a mobile-friendly user experience, but we continue to iterate on the best way to present complex topics to our readers – like which dividend stocks have the best qualities and why.

Five Pages You Must Visit

At Mitre Media, we attempt to foster a culture of iterating towards excellence every day, understanding we can always get better. But we do so in the confines of a scientific, data-driven approach to improvement.

As such, we’ll always remain humble about our iterations and listen intently to the feedback our users provide us. Ultimately, we simply need to give our users what you want. We attempt these iterations in an effort to provide the best experience to said users.

If you could, please spend a few minutes on these new pages:

Let us know what you think about the updated layout. Click the links above while on your Smartphone and let us know how you feel about the mobile experience. We’re always up for your feedback at support@dividend.com. You’ll get an answer to your email too, from a human.

Send the pages above to your friends or broker and solicit their feedback too. We are set up to continually iterate and improve the experience for our users, so there’s no time like the present to chime in.

Let us know how we can make our products better for you!

September Dividend Advisor Coming Tuesday

With the impending release of the detailed Dividend Advisor newsletter this Tuesday, I took the liberty in this note to update our Premium members on a site-specific, rather than dividend investing-specific topic. That said, Tom Reese has a jam packed edition of the newsletter teed up for you, which will be released Tuesday. Tom will:

  • Analyze trends that have proved consistent in the current 5-year bull market and what they might mean for us now
  • Discuss the current interest rate environment and what it means for dividend investors
  • Highlight key takeaways from what was a busy August earnings season for dividend payers
  • Feature a stock of the month that is featured on our Best Dividend Stocks list
  • And much more…

Enjoy the rest of your Labor Day weekend! We’ll see you on Tuesday morning.


The Dividend Daily

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Apple’s Payments Platform May Be Ready To Roll

By Kyle Spencer:

On February 28th, I wrote an article entitled Apple Is Building A Payments Platform To Rival Paypal. This piece, along with a followup penned on March 2nd, relied on a combination of patent trends and leaky insider gossip. Since then, evidence in favor of the “iPay” thesis has continued to mount.

Again, patents are at the forefront. “Apparatus and methods for secure element transactions and management of assets” (US Patent Pub# US20140222688 A1) describes the backend management system for a mobile wallet containing coupons, debit card information, and virtual currencies that is NFC, QR and Cloud compatible. There’s also the ability to handle large spikes information, the kind of capability a large scale retailer might want in place for the holiday season.

Fig. 1: Graphical Representation Of The Proposed Payments Network

(click to enlarge)

From the patent summary:

Customers and merchants generally desire convenient and secure means for


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The Party is Not Quite Over for Oil Sands

http://www.wallstreetdaily.com/2014/08/29/kohlberg-kravis-roberts-kkr/

By Karim Rahemtulla, Chief Resource Analyst

Canadian oil sands operations are facing some significant hurdles right now.

Heck, even actor Leonardo DiCaprio is rallying against the industry for its impact on the environment.

He recently visited Alberta to learn “more about the Canadian tar sands [and] its impact on our climate.” He even nominated Canada’s Prime Minister (and tar sands proponent), Stephen Harper, for the ALS Ice Bucket Challenge.

Opposition to the industry has reached investors, as well. They’re beginning to shift their focus away from oil sands, as new sources of oil from U.S. shale plays have dominated the production scene.

Are Canadian oil sands really on the verge of obsolescence?

No offense to Leo, but the tar sands industry isn’t going anywhere. In fact, this corner of the market can still provide us with killer profit opportunities.

The Issues Plaguing Oil Sands Operations

Before we focus on the growth drivers in the oil sands industry, it’s important to realize what has investors skeptical about the industry’s future…

First of all, getting oil out of mud – which is what oil sands plays involve – is extremely expensive, takes a lot of resources, and is very time consuming.

The sands are also subject to a lot of scrutiny because harvesting oil from them requires three times more water for extraction and separation. Not to mention that it results in 20% more carbon dioxide emissions than typical oil production. This is because of the complex extraction process used to get the oil out of the sand.

On top of that, all that heavy oil coming from the Canadian oil sands must be shipped via pipelines to refineries – hundreds or even thousands of miles away. Competing sources of lighter and more easily refined oil from U.S. shale fields contend for space in the same pipelines. Plus, U.S. shale oil doesn’t have as far to go to be refined, and doesn’t have to cross international borders.

There’s no question that the industry faces several hurdles. Yet all of these issues are balanced by the economic incentive to produce.

Reviewing the Upside

The tar sands are estimated to contain more than 315 billion barrels of oil, more than any other known reserves in the world.

The Canadian oil sands supply over 40% of the oil produced by Canada. And the United States is a major buyer. We import more oil from Canada than any other county by far. Almost four times as much oil comes from Canada than from Mexico or Venezuela, and almost three times as much as what comes from Saudi Arabia.

Oil sands operations are improving, too…

Extraction technology is continuing to advance, which will make tar sands less dirty.

The oil extraction industry also contributes massively to the Canadian economy – especially in Alberta, where the majority of the tar sands are located.

The single biggest reason oil sands extraction will survive and thrive is one that actually surprises most investors.

You see, despite the fact that oil sands operations are complex and resource intensive, production actually costs less than most shale plays.

Oil from the tar sands is produced for between $ 60 and $ 65 per barrel at the source. With oil prices hovering around $ 95, that’s a lot of margin and a lot of built-in resilience.

Bakken oil, on the other hand, costs in excess of $ 69 per barrel to produce, and Permian costs even more.

As the chart below indicates, the existing tar sands oil projects fall into the middle or lower end of the scale when it comes to production costs.

2013 Production Costs: Canada vs. United States

To top it off, the weakness in the Canadian dollar makes oil sands even more attractive, as the oil produced is sold on the market in U.S. dollars.

Bottom line: The oil sands are still producing profitably, and will probably continue to do so, even in the face of new shale oil discoveries.

Sure, shale oil producers will keep dominating mainstream headlines as the amount of oil they produce continues to increase. But from a profitability standpoint, companies like Suncor (SU) – the big tar sands player – will continue to generate bigger profits. Maybe that’s why shares of Suncor are trading closer to their 52-week highs despite the pullback in the price of oil.

Don’t follow the hype. Keep investing in oil sands until this party is officially over.

And “the chase” continues,

Karim Rahemtulla

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By Karim Rahemtulla


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