Two of my 35 stocks have short interest ratios over 10 days. [Short interest ratio = amount of shares shorted / average daily volume.] I look at this statistic, and force myself to re-examine companies where the ratio is over 10. Maybe there is something that I don't know.
The two stocks in question are Stancorp Financial (SFG) and National Western Life Insurance (NWLI). The short cases for both are based on a naive view of how insurance companies work.
Stancorp is a disability insurer. Disability insurers often do badly in a recession because disability claims increase - people who are unemployed claim they are disabled.
There are two models for disability insurance: 1) Underwrite carefully, and pay all legitimate claims. 2) Accept all business, but when claims come in litigate with vigor.
Stancorp follows the first model. I would never own an insurer that followed the second model, it is dishonest, and it is bad business. Because Stancorp does its risk management up front, it does not get the same degree of unemployment masquerading as disability claims. But the shorts don't get this. Thus the short interest ratio near 20.
Top 5 Financial Stocks For 2014: Envestnet Inc(ENV)
Envestnet, Inc. provides technology-enabled, Web-based investment solutions and services to financial advisors. The company?s technology platform provides financial advisors with a series of integrated services, including risk assessment and selection of investment strategies, asset allocation models, research and due diligence, portfolio construction, proposal generation and paperwork preparation, model management and account rebalancing, account monitoring, customized fee billing, overlay services covering asset allocation, tax management and socially responsible investing, and aggregated multi-custodian performance reporting and communication tools, as well as access to a wide range of leading third-party asset custodians. It also offers Web-based access to a range of technology-enabled investment solutions, including separately managed accounts (SMAs), which allow advisors to offer their investor clients a managed portfolio of securities with a personalized tax basis; unified managed accounts (UMAs) that allow the advisor to use various types of investment vehicles in one account; advisor-directed portfolios, where advisors create, implement, and maintain their own investment portfolio models to address specific client needs; mutual funds and portfolios of exchange-traded funds (ETFs); and access to a range of investment managers and investment strategists. The company was founded in 1999 and is headquartered in Chicago, Illinois.
Advisors' Opinion:- [By Monica Wolfe]
Envestnet (ENV)
During the second quarter, Columbia Wanger increased their position in Envestnet by 187.59%. The fund purchased a total of 511,394 shares at an average price of $20.28 per share. Since their addition, the price per share has increased approximately 26%.
- [By Evan Niu, CFA]
What: Shares of Envestnet (NYSE: ENV ) have jumped today by as much as 13% after the company said it closed the acquisition of Prudent Wealth Management Solutions, or WMS.
- [By Jake L'Ecuyer]
Envestnet (NYSE: ENV) was also up, gaining 15.06 percent to $34.03 after the company priced 5,045,215 shares of common stock at $29.25 per share by selling shareholders.
Top 5 Financial Stocks For 2014: Camden National Corporation(CAC)
Camden National Corporation operates as the holding company for Camden National Bank, which provides commercial and consumer banking products and services to the individuals, businesses, municipalities, non-profits, and commercial customers. The company offers various deposit products, including NOW accounts, transaction accounts, time deposits, savings accounts, money market accounts, certificates of deposit, brokered deposits, and demand deposits. Its loan products comprise residential mortgage loans, commercial business loans, commercial real estate loans, and various consumer loans. The company offers its products and services through a network of 37 banking offices and ATMs in the Maine counties of Androscoggin, Cumberland, Franklin, Knox, Lincoln, Penobscot, Piscataquis, Somerset, Waldo, and York. In addition, it operates nine Union Trust branches in Hancock and Washington counties, Maine. The company, through Acadia Financial Consultants, provides full-service broke rage and insurance services, including college, retirement, estate planning, mutual funds, strategic asset management accounts, and variable and fixed annuities. Camden National Corporation, through its subsidiary, Acadia Trust, N.A., offers various trust, trust-related, investment, and wealth management services, as well as retirement and pension plan management services to individual and institutional clients. The company was founded in 1875 and is headquartered in Camden, Maine.
Advisors' Opinion:- [By Eric Volkman]
Camden National (NASDAQ: CAC ) has elected not to change its dividend policy for the moment. The company declared a quarterly payout of $0.27 per share, to be handed out on July 31 to shareholders of record as of July 15. That amount matches the company's previous distribution, which was dispensed at the end of April. Before that, Camden National paid a regular distribution of $0.25 per share in every quarter stretching back to April 2008.
- [By Sarah Jones]
National benchmark indexes climbed in all 18 western European markets, except Greece. The U.K.�� FTSE 100 increased 2 percent and Germany�� DAX rallied 2.4 percent. France�� CAC 40 (CAC) jumped 3.6 percent for the biggest gain since August.
Top Energy Companies To Watch For 2014: Cathay General Bancorp(CATY)
Cathay General Bancorp operates as the holding company for Cathay Bank, which offers various commercial banking products and services for individuals, professionals, and small to medium-sized businesses primarily in California. Its deposit products include passbook accounts, checking accounts, money market deposit accounts, certificates of deposit, individual retirement accounts, college certificates of deposit, and public funds deposits. The company?s loan portfolio comprises commercial mortgage loans, commercial loans, small business administration loans, residential mortgage loans, real estate construction loans, and home equity lines of credit. It also offers installment loans to individuals for automobile, household, and other consumer expenditures. In addition, the company provides trade financing, letters of credit, wire transfers, forward currency spot and forward contracts, traveler?s checks, safe deposit, night deposit, social security payment deposit, collecti on, bank-by-mail, drive-up and walk-up windows, automatic teller machines, Internet banking, and other customary bank services. As of April 20, 2011, Cathay General Bancorp operated 31 branches in California, 8 branches in New York State, 1 branch in Massachusetts, 2 branches in Texas, 3 branches in Washington State, 3 branches in the Chicago, Illinois area, 1 branch in New Jersey, and 1 branch in Hong Kong, as well as a representative office in Shanghai and in Taipei. The company was founded in 1961 and is headquartered in Los Angeles, California.
Top 5 Financial Stocks For 2014: Federal Home Loan Mortgage Corp (FMCC)
Federal Home Loan Mortgage Corporation (Freddie Mac) conducts business in the United States residential mortgage market and the global securities market. The Company operates in three segments: Single-family Guarantee, Investments, and Multifamily. The Single-family Guarantee segment reflects results from the Company's single-family credit guarantee activities. The Investments segment reflects results from the Company's investment, funding and hedging activities. The Multifamily segment reflects results from the Company's investment (both purchases and sales), securitization, and guarantee activities in multifamily mortgage loans and securities. The Company conducts its operations in the United States and its territories.
Single-Family Guarantee Segment
In the Company�� Single-family Guarantee segment, it purchases single-family mortgage loans originated by the Company�� seller/servicers in the primary mortgage market. The Company uses the mortgage securitization process to package the purchased mortgage loans into guaranteed mortgage-related securities. The Company guarantees the payment of principal and interest on the mortgage-related security in exchange for management and guarantee fees. The Company�� customers are lenders in the primary mortgage market that originate mortgages for homeowners. These lenders include mortgage banking companies, commercial banks, savings banks, community banks, credit unions, Housing Finance Agency (HFAs), and savings and loan associations. The Company�� customers also service loans in its single-family credit guarantee portfolio.
Mortgage securitization is a process, by which the Company purchase mortgage loans that lenders originate, and pool these loans into mortgage securities that are sold in global capital markets. The United States residential mortgage market consists of a primary mortgage market that links homebuyers and lenders and a secondary mortgage market that links lenders and investors. The Company part! icipates in the secondary mortgage market by purchasing mortgage loans and mortgage-related securities for investment and by issuing guaranteed mortgage-related securities. In the Single-family Guarantee segment, it purchase and securitize single-family mortgages, which are mortgages that are secured by one- to four-family properties. The types of mortgage-related securities it issue and guarantee include PCs, REMICs and Other Structured Securities and Other Guarantee Transactions. The Company also issue mortgage-related securities to third parties in exchange for non-Freddie Mac mortgage-related securities. The non-Freddie Mac mortgage-related securities are transferred to trusts that were specifically created for the purpose of issuing securities, or certificates, in the Other Guarantee Transactions.
Investments Segment
In the Company�� Investments segment, it invests principally in mortgage-related securities and single-family performing mortgage loans, which are funded by other debt issuances and hedged using derivatives. In the Company�� Investments segment, it also provides funding and hedging management services to the Single-family Guarantee and Multifamily segments. The Company�� customers for its debt securities predominantly include insurance companies, money managers, central banks, depository institutions, and pension funds. The Company funds its investment activities by issuing short-term and long-term debt. The Company�� PCs are an integral part of its mortgage purchase program. The Company�� Single-family Guarantee segment purchases many of its mortgages by issuing PCs in exchange for those mortgage loans in guarantor swap transactions. The Company also issue PCs backed by mortgage loans that it purchased for cash.
Multifamily Segment
The Company�� multifamily segment issues Other Structured Securities, but does not issue REMIC securities. The Company multifamily segment also enters into other guarantee commitments for mult! ifamily H! FA bonds and housing revenue bonds held by third parties. The Company acquires a portion of its multifamily mortgage loans from several large seller/servicers.
The Company competes with Federal National Mortgage Association (Fannie Mae), Government National Mortgage Association (Ginnie Mae), Mae Federal Housing Administration/the United States Department of Veteran Affairs (FHA/VA) and Federal Home Loan Bank (FHLB).
Advisors' Opinion:- [By Lauren Pollock]
J.P. Morgan Chase & Co. agreed to pay $5.1 billion to settle a lawsuit brought by the regulator of mortgage-finance companies Fannie Mae(FNMA) and Freddie Mac(FMCC). The pact with the Federal Housing Finance Agency includes $4 billion to settle a lawsuit alleging the bank misled Fannie and Freddie about�the quality of securities J.P. Morgan and two other banks it later acquired had sold to the housing-finance giants during the housing boom.
- [By Dan Caplinger]
To its credit, FHFA specifically addresses the moral hazard involved in the Streamlined Modification Initiative. The agency notes that "because many borrowers who miss one or two payments have a temporary hardship and often reinstate their mortgage to current status, it is most effective to target borrowers who are at least 90 days delinquent." Moreover, in its efforts to curb abuse of the program, the FHFA notes that Fannie Mae (NASDAQOTCBB: FNMA ) and Freddie Mac (NASDAQOTCBB: FMCC ) , which the FHFA oversees, have "existing proprietary screening measures to prevent strategic defaulters from taking advantage of a Streamlined Modification."
- [By Dan Caplinger]
Interestingly, though, this analysis doesn't mention an important factor: Increasingly over the past decade, major mortgage lenders haven't held onto their loans but rather have sold them on to government-sponsored enterprises Fannie Mae (NASDAQOTCBB: FNMA ) and Freddie Mac (NASDAQOTCBB: FMCC ) . During the housing boom, mortgage lenders Bank of America (NYSE: BAC ) and Citigroup (NYSE: C ) didn't perform as well as they did because they were securing particularly high margins on their mortgage loans. Rather, they collected transaction-based income by immediately reselling conforming loans to Fannie and Freddie, often retaining streams of income from risk-free mortgage-servicing rights without keeping any liability for potential loan default. Even now, Wells Fargo (NYSE: WFC ) relies on strength in mortgage-related income, and decreases in refinancing activity pose a threat to income growth in future quarters -- although unlike many of its peers, Wells has actually retained a good portion of its loans on its own books.
- [By Alex Planes]
While the rest of the market was freaking out about solar stocks and electric cars, the common stocks of America's two most notable housing government-sponsored enterprises (GSEs) languished. Of course, this was almost certainly because both Fannie Mae (NASDAQOTCBB: FNMA ) and Freddie Mac (NASDAQOTCBB: FMCC ) were placed in conservatorship as the economy melted down in 2008, which has left common shareholders without a means of redress or indeed without any expectation of sharing in the fruits of recovery. But come March, the stocks began shooting up, and they've shot up again this month. What's going on?
Top 5 Financial Stocks For 2014: Central Bancorp Inc(CEBK)
Central Bancorp, Inc. operates as the holding company for Central Co-operative Bank, which provides a range of banking products and services in the northwestern suburbs of Boston, Massachusetts. The company offers various deposit products, including demand deposit accounts, NOW accounts, money market deposit accounts, regular savings accounts, term deposit accounts, and retirement savings plans. Its loan portfolio comprises residential mortgage loans, commercial real estate and construction loans, home equity lines of credit, commercial and industrial loans, and consumer and other loans. The company also provides automated teller machines, Internet banking, preauthorized payment and withdrawal systems, tax-deferred retirement programs, and other miscellaneous services, such as money orders, travelers? checks, and safe deposit boxes. Central Bancorp operates nine full-service office facilities in Somerville, Arlington, Burlington, Chestnut Hill, Medford, Melrose, and Wobur n, Massachusetts; and a limited service high school branch in Woburn, Massachusetts. It also operated an automated teller machine in Somerville, Massachusetts. The company was founded in 1915 and is headquartered in Somerville, Massachusetts.
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