Press Esc to close

Welcome to Money Morning - Only the News You Can Profit From.

Close

While Washington Stews, You Can Cash In on the Biggest "Tax-Inversion" Deal in History

Back in June 2012, we recommended that you pick up shares of Big Pharma player Abbott Laboratories Inc. (NYSE: ABT). The reason: Abbott was planning to split in two at the end of the year, meaning folks who took our advice would end up with stakes in two companies for the price of one.

There was more than bargain-basement thinking at work here.

You see, these corporate breakups – known as spin-offs – have a habit of turning into market-beating profit plays. And the newly minted spin-off firms often end up as takeover fodder – also at big profits.

Abbott followed part of that blueprint.

  • Why Stock Buybacks are More Harmful Than You Think Gold grab small

    Companies flush with cash are increasingly engaging in stock buybacks - taking money and buying back some of their own shares.

    During the 18-month period from April 2011-October 2012, companies in the S&P 500 bought back a net 8 billion shares. At the end of 2012's third quarter, there were about 300 billion shares outstanding for S&P 500 companies, the lowest quarter-end total since the middle of 2009.

    Some investors see stock buybacks as a good thing: The company has extra money and thinks its stock is at a bargain price. Companies often describe stock buybacks as good investments in sound businesses.

    But in reality, stock buybacks can actually hurt shareholders in the long run.

    "Behind the wondrous faade, stock buybacks are just a means for management to enrich themselves," said Money Morning Global Investing Strategist Martin Hutchinson. "The truth is buybacks are positively damaging to the interests of ordinary shareholders."

    To continue reading, please click here…

    Read More...
  • It Looks Like the Market Is Saying "OMG" Today I want to talk about a few things I've been scratching my head over lately.

    First, about those polls leading up to the presidential contest.

    How come they were so wrong? How come the candidates were inches apart right up to the finish line, and then it's like a "tortoise and the hare" kind of ending?

    Did Romney even finish? Is he finished? Is the Republican Party finished?

    Maybe the problem is the questions they ask, the pollsters, that is, or the way they ask them. Maybe they ask questions like a lawyer leading a witness would.

    You have to wonder who pays for those polls, too. Survey says: the Super PACs - or is that the stupid hacks? Don't you wish they'd post the questions they asked along with the "Survey Says" results?

    And, how stupid are the markets, make that investors, you know who you are. The day of the election, the market was anticipating a Romney victory, after all the polls said it was more than possible, so we got a smart little rally.

    Then reality set in. Four more years. And you think it's going to get better?

    Here's something else to chew on. If you think the Republicans are going to roll over and play dead, now that they are dead, think again.

    The only way to fight back when you're dead is to kill the other guy, so you're both dead. Then, of course, you say, I was dead first, I couldn't have killed the economy, I couldn't have driven us over the fiscal cliff, they did it!

    It looks like the market is saying, OMG (that's Oh My God, for you non-texters), we're going over the cliff and there's no stopping us.

    Trust me on this one, that cliff everyone's been talking about - it ain't the only cliff.

    To continue reading, please click here... Read More...
  • What Wall Street Will Never Tell You About Stock Buybacks Every time I hear a Wall Street analyst extolling the virtues of stock buybacks I just want to scream.

    "Don't fall for the flim-flam," I think to myself, "demand the cash instead!"

    That's why my Permanent Wealth Investor service focuses on the kinds of dividends you can actually hold in your hand. For me, cash is king.

    Anything else is simply a magician's trick. It's a sleight of hand designed to make you think you're getting something when you really aren't.

    Share repurchases or buybacks are the perfect example.

    Behind the wondrous faade, stock buybacks are just a means for management to enrich themselves. The truth is buybacks are positively damaging to the interests of ordinary shareholders.

    The Ruinous Truth Behind Apple's Stock Buyback

    Take Apple Inc. (Nasdaq: AAPL), for instance. It's the stock everybody loves these days.

    This $653 billion company recently announced a $10 billion stock buyback over three years, beginning October 1. Naturally, shareholders cheered, believing the buyback would boost the share price.

    But consider this: Apple is buying back shares at several times book value, so the buyback will actually dilute Apple's book value per share.

    To continue reading, please click here... Read More...