GAP – don’t drop your pants BUY

GPS : NYSE : US$40.14

BUY 
Target: US$47.00

Consumer & Retail — Specialty Retail
LONG-TERM MARGIN DRIVERS REMAIN IN PLACE;

OUR NEAR-TERM VIEW IS MORE CONSERVATIVE

 

Investment recommendation
We are lowering our Q4 EPS estimate for GPS by $0.09 to $0.68,
below prior consensus of $0.77. There is more work to do in the
Gap brand (38% of TTM sales) than we had previously
anticipated, particularly in the women’s business. As a result, we
are lowering our consolidated SSS estimate from flat to a decline
of 2.4% on top of +1%. Our gross margin forecast moves 50bps
lower, and we now expect 59bps of expense deleverage on the
lower sales. Our BUY rating remains intact despite the near-term
headwinds. We continue to expect supply-chain initiatives will
drive gross margin expansion over the long term. This does not
appear priced in with shares trading at 13x our C2015 EPS
estimate and 7x C2015E EV/EBITDA.
Investment highlights
 Art Peck will begin his CEO stint with two new brand
presidents. Jeff Kirwan (10 years with GPS, recently as
president of Gap China) will take the reins from Stephen
Sunnucks at the Gap brand in December, and Andi Owen (19
years at GPS, recently leading the Gap outlet business) will
head up Banana Republic beginning in January, replacing
Jack Calhoun.
 Our price target moves from $51 to $47 as we incorporate
our updated estimates into our DCF model.

TESLA – Attracts Mutual Funds

These 3 Funds Are Loading Up On Tesla
Benzinga By Kate Stalter
1 hour ago


Tesla Motors Inc (NASDAQ: TSLA) has been one of the more popular IPOs of the past few years.

The number of U.S. mutual funds and hedge funds owning the stock has steadily risen in recent quarters. With a market capitalization of about $30 billion, the stock fits into the large-cap category. It’s part of the consumer cyclical sector, so that’s another fund category where the stock may appear.

Despite Tesla’s market cap, it’s a volatile stock, with a beta of 1.87. That means it’s more volatile than the broader market. For funds with significant holdings in Tesla, that volatility may show up in changes to Net Asset Value.

Who Holds Tesla?

Harbor Capital Appreciation Fund (MUTF: HACAX) has a large-cap focus. It seeks to invest in companies with superior earnings and sales growth, improving sales momentum, growing profitability and strong balance sheets, among other factors.

The fund, sub-advised by Jennison Associates, invests primarily in U.S. companies with a market caps of at least $1 billion at the time of purchase. The fund holds 0.97 percent of Tesla shares, totaling 1.21 percent of fund assets.

DoubleLine Capital Owns Tesla Motors Shares As It Could ‘Change Society’ TheStreet q 54 mins ago

The Fidelity Advisor New Insights Fund (MUTF: FNIAX) holds 0.71 percent of Tesla shares, accounting for 0.79 percent of the fund’s assets. This fund, which was established in 2003, is managed by Will Danoff, who also manages the Fidelity Contrafund.

The Fidelity Advisor New Insights Fund invests in growth and value stocks of mid- and large-cap companies in the U.S. and overseas. Financial services, technology and healthcare are the largest sectors in the fund.

Its one-year return is 12.7 percent.

The JPMorgan Large Cap Growth Select (MUTF: SEEGX) holds 0.85 percent of Tesla shares, totaling 1.72 percent of fund assets. This is not a fund that a casual investor can just drop into; the minimum investment is $1 million.

The fund seeks to invests at least 80 percent of its assets in stocks of large, well-established companies with above-average growth, or that are forecast to have superior growth in the near future.

Top sectors are healthcare, technology and consumer cyclical. The fund’s one-year total return is 16.4 percent.

Splunk : Update Raising Target Price

SPLK : NASDAQ : US$64.94

BUY 
Target: US$80.00 

COMPANY DESCRIPTION:
Splunk software collects and indexes machine-generated big data
coming from the websites, applications, servers, and mobile
devices that power business. The firm’s software enables
organizations to monitor, search, analyze, visualize and act on
massive streams of real-time and historical machine data. Splunk
is headquartered in San Francisco, was founded in 2003 and has
been public since April, 2012.
All amounts in US$ unless otherwise noted.

Technology — Enterprise Software — Infrastructure

AS SOLID AS EXPECTED. MOMENTUM WARRANTS PREMIUM VALUATION.
It is quite clear to us that investors are shifting money back into business software and
that the investments are tightly targeted toward perceived quality names. We strongly
believe Splunk is one of the best-in-class systems software firms, and arguably one of the
most promising companies in the broader software space. Obviously, SPLK is expensive,
but in software stock investing, execution trumps valuation for long periods of time. We
expect to see SPLK shares higher in three months, six months and a year. BUY.
 Bullish items. A larger revenue upside than last quarter. Product and use case
momentum. Major wins in Public Sector, Sporting Goods, Healthcare, Education and
Telco. Broader use cases for stream wire data. Sales restructuring by functionality
generated strong wins in security. Real-time data and analytics now deployed in
sports stadiums.
 Bearish items. Frankly, not much. We would like to see continued progress toward
the high end of 25-35% ratable revenues as a percentage of total revenues.
Operating margins were guided to be roughly flat next year, although we believe
there is upside to margin assumptions if revenues upside a bit. Finally, the obvious –
SPLK is highly valued at 13x and 10x our C2015 and C2016E EV/revenues.
 Sales excellence. The call had a large focus on continued strong sales performance
with 500+ new customers added, 290 orders above $100k, positive data points from
the segment-focused model, more than 70% of bookings from existing customers,
2/3rds of upsells from horizontal expansion and the largest ever transaction for
cloud (7 figures). The list goes on, but ultimately shows how SPLK’s sales organization is firing on all cylinders and a major reason for the company’s growth.

 Guidance update to bring positive revisions. Management increased revenue
guidance for the full year by $13.5M at the midpoint, mostly reflecting the $10M
beat in Q3. Operating margin guidance at 1-2% for the full year was increased from
1%. The company also released initial F2016 guidance for revenue of $575M. While
possibly still conservative, implying 31% growth over F2015 guidance, it was above
both our estimate and consensus, which should bring about positive revisions to
forecasts.

We raised our F2016 revenue estimate by $21.5M to $580M

Sell signals from Eric Sprott

Sell signals from Eric Sprott according to information published by the Canadian Insider, Mr. Sprott has made four separate sales since the end of September. In all, Mr. Sprott sold 375,000 units at prices ranging from US$10-to-US$9.44.

 

Bloomberg Despite those four sales – which resulted in gross proceeds of US$3.6-million — Eric Sprott still has almost US$35-million of skin in the game.

Over the past six weeks, Eric Sprott — one of the country’s best known gold bugs — has been selling units in the Sprott Physical Gold Trust, a fund formed to hold physical gold.

A

Here are the details: Sept. 30 (15,000 at US$9.96 per unit); Oct. 2 (40,000 at US$10); Oct. 31 (210,000 at US$9.62) and Nov. 6 (110,000 at US$9.44.) Despite those four sales – which resulted in gross proceeds of US$3.6-million — Mr. Sprott still has almost US$35-million of skin in the game. According to the most recent filing on SEDI, he owns 3.49 million units in the fund.

Related
Barrick Gold co-president joins insider buying spree
The gold mining meltdown is so bad even activist investors won’t touch it
Sprott adds to investment management team in Toronto, New York
In its IPO, the fund raised US$442.5-million. Since then it has been back to the market on six separate occasions and has raised almost US$2-billion. Its most recent offering was in September 2012.

Glen Williams, a spokesperson for Sprott, said in an email message. “We don’t comment on Eric’s personal trading activity but Sprott’s view on gold is unchanged.” Another Sprott source said that Eric has been using the proceeds to invest in gold and silver equities which offer greater leverage.

********

Using An Offshore Corporation and Bank Account : The Basics

Originally posted on Tax Haven Guru:

London Tax Haven - where the world's wealth co...

London Tax Haven – where the world’s wealth comes to hide (Photo credit: London Permaculture)

A Brief Summary of Our Services:

We combine strategies to secure you an incorporation ( International Business Corporation or IBC) in a selected low or no tax jurisdiction.Not all jurisdictions meet the needs of all clients.Our clients are from nations around the world but generally seeking tax relief and avoidance of government cupidity.

We recommend a bank(s) – in another jurisdiction- this can be corporate, personal or both.

We can provide wealth management services – 31 % return in 2013 – and this at a 1% fee plus a bonus only payable if we achieve a minimum of 8 % ( as at November 2014).

We can provide asset protection via trusts ( more important to some clients than others).

Royalty and Intellectual Property Licences – we can provide the contracts and jurisdictions to duplicate…

View original 1,392 more words

Canadian Solar BUY

CSIQ : NASDAQ : US$28.08
BUY 
Target: US$46.00

COMPANY DESCRIPTION:
Canadian Solar is a vertically-integrated solar module
manufacturer and project developer. Headquartered in
Canada with principal operations in China, Canadian
Solar has grown to be one of the world’s largest and most
competitive solar firms
All amounts in US$ unless otherwise noted.

Sustainability — Energy & Power Technologies
REITERATE BUY ON CSIQ FUNDAMENTALS; PT TO $46
Investment recommendation
We reiterate our BUY on CSIQ following a solid print/guide and a
valuation backstop following a large sell-off on the Q3 results. We
believe that the sentiment in the solar group has largely detached from
fundamentals based on fears of cheap energy, and we remain buyers of
the top names in the group, including Canadian Solar.
Investment highlights
Canadian Solar handily beat Q3 expectations and issued guidance
sequentially up from the strong quarter. Headlines may look like the
guide missed consensus expectations, but we believe there was an
outlier who was unreasonably high in the average.
 While gross margin headlines read pretty negatively as well, none of
the items causing the pressure should have come as a surprise. We
do not view Canadian Solar as a margin-expansion story, but rather
as more of a solid top-line grower with strong operating leverage
and cash earnings. This has not changed.
 The company is close to announcing a yieldco, in our opinion, even
though it looks like the market interpreted the company’s lack of
firm details as a punt on the topic.
 Canadian Solar’s overall project pipeline continues to grow despite
monetizing and retaining significant volumes in the quarter. While
the new pipeline carries increased policy risk and in some cases
lower margins compared to the Canadian projects that have been
the company’s mainstay thus far, we still have confidence that the
company is among the best-positioned solar companies approaching
these new markets and can complete this strategy given its solid
track record of execution.

Gold-Mining Industry Mostly ‘Under Water,’ Gold Fields

Gold miners’ costs are mostly higher than current spot prices, increasing the likelihood of writedowns next year, according to Nick Holland, chief executive officer of Gold Fields Ltd. (GFI)

Across the industry, costs are about $1,300 an ounce including debt repayments, Holland said by phone from Johannesburg today, citing analysts’ research. Gold dropped 0.1 percent to $1,182 an ounce, bringing the decline since the beginning of 2013 to 29 percent.

“The industry by and large is under water,” Holland said. “I would expect further writedowns. Production I think will be curtailed but it will take some time to filter through the system.”

Gold producers are struggling to adapt to a lower bullion price after a decade of debt-fueled expansion, acquisitions and cost inflation during the boom years that saw bullion peak at $1,921.17 an ounce in September 2011. The spot price has tumbled in the past 18 months as investors speculate the Federal Reserve will raise interest rates due to an improving U.S. economy, lowering demand for the safe-haven metal.

Gold Fields is able to “ride this through” as it has a break-even price of about $1,050 an ounce, or $1,090 an ounce including debt repayments, Holland said. While the company calculates its reserves at $1,300 an ounce, that number includes a 15 percent profit margin, he said.

“Everything is fine for now, obviously the margin won’t be 15 percent at the current price, it will be less than that,” Holland said. “That said, the business continues to be run the same as before.”

Profit Drop

Gold Fields dropped 4.8 percent at 9:16 a.m. today in Johannesburg after the precious metal fell 1.2 percent yesterday, largely after South African trading hours. The FTSE/JSE Africa Gold Mining Index decreased 5.1 percent to 1,091.8.

Headline earnings for the South African producer with mines from Peru to Australia were $14 million in the three months to Sept. 30, compared with $18 million the previous quarter, it said in a statement today.

The Johannesburg-based company, which spun off three of its cash-generative but old South African mines to create Sibanye Gold Ltd. last year, is seeking to “aggressively” pay down debt over the next three years as it adjusts to the lower gold price, Holland said. The company is also on the lookout for cheap, in-production acquisitions that more troubled miners are offloading.

Gold Fields reduced net debt in the quarter by $137 million to $1.5 billion. All-in sustaining costs for the year are expected to be 3 percent lower than previous forecast at $1,090 an ounce, it said.

Gold production rose 2 percent to 559,000 ounces in the quarter compared with the previous three months, the company said.

Morgan Stanley Slashes Tesla Estimates

Just getting this note from Adam Jonas at Morgan Stanley.

Tesla Motors Inc.
Cutting 2015 Model X Deliveries
to 5k from 15k

Following 3Q results, updated outlook and Model X
launch delay, we are making significant adjustments
to our 2014 and 2015 earnings forecasts, leaving our
target unchanged at $320. Tesla has some execution
hurdles to surmount, but we’d still be buyers.

Cutting our 2015 Model X delivery forecast to 5,000 units from 15,000
previously. We have adopted our Model X forecasts not only for a 3Q launch (which weexpect to belate 3Q), butalso for a slow ramp once deliveries begin. Our forecasts apply what we believe to be reasonable execution risk on this important model to ensure uncompromising quality of initial units.We recently raised a question about whether a seemingly mundane attribute of thecar, thefalcon doors,could prove to be a technical challenge at scale. See our November 17th report: Tesla Motors: Will Tesla Ditch the Falcon Doors on the Model X?

2015 EPS forecast reduced by 44% to $2.45 vs.consensus at $2.99.

The shortfall vs.consensus for 2015 is driven by our non-GAAP revenue
assumption of $5.6bn (consensus at $6.2bn). We have partially offset the
Model X shortfall with an increasein our Model S delivery forecast to 48,000 from 45,000 previously (management target of around 50,000 units).

We believe the Model X is critical to the Tesla story and execution on
this product is critical. There is a lot about the Model X which may be easier to execute upon vs. the Model S given high levels of commonality and experience with thefactory. However, there are still some unique attributes to the vehicle that could present a near-term challenge. We would look for any hiccups/delays as an opportunity to increase exposure to what we believe is the most important manufacturer in global autos.

Valuation Methodology:
We argue Tesla cannot bevalued on near-term multiple metrics like traditional auto companies given that we expect Tesla to multiply revenues by morethan 10x from 2013 to 2016 by nearly 30x by 2020 and around 60x by 2028.We havethus chosen a 15-year time horizon for our DCF which captures thefull maturation of the Model S, Model X (and top-hat derivatives) and also theramp up of its mass market electric vehicle (the Gen 3). We have applied a 11% WACC with a range of 9% to 13%.Theterminal value,calculated on a midpoint of 10x EV/EBITDA accounts for roughly 50% of thetotal DCF value across the range of methodologies we have applied to arrive at our PT.

DOW to 20,000 ?

Longtime stock bull Jeremy Siegel told CNBC on Tuesday that he sees favorable market trends-including the prospect for solid economic growth with low inflation-that could send the Dow Jones Industrial Average (Dow Jones Global Indexes: .DJI) past the 20,000 level by the end 2015.

“There are a number of goods things, I think, that need to happen, but certainly that would be even conservative for fair market value if we get some of these favorable trends coming together over this next year,” the Wharton School finance professor said on “Squawk Box .”

He cited economic growth of 3 percent to 4 percent, low inflation, cheap gas prices and an improving job market as some of the factors that could help push stocks higher. But he said, “The 3 percent [GDP], that’s the wild card.” He cautioned that many forecasters are calling for growth of 2 percent to 2.5 percent in the fourth quarter.

During the October selloff, Siegel had started to waver a bit on whether his prediction of Dow 18,000 by year-end would come to pass. But with the market back on track, he told CNBC earlier this month that he’s again confident that blue chips would reach that level after all.

In a lackluster session Monday, the S&P 500 (^GSPC) eked out its 42nd new high of 2014. The index has moved less than one-tenth of a percent in each of the last five sessions, and the Dow has only had one triple-digit point move this month after having 16 in October. The S&P was up almost 10.5 percent for the year as of Monday’s close. The Dow was up about 6.5 percent in 2014.

“Two to three years ago, I thought we were really undervalued given interest rates and earnings,” Siegel told “Squawk Box” on Tuesday. “I thought the bullish calls were really easy to make. I still think we are 10 percent undervalued given the interest rate structure.” Siegel said he’d view the Dow between 19,000 and 19,500 as fair value.

While Siegel kept preaching his bullish message, other market watchers including Carl Icahn are less optimistic. At a Reuters investment summit Monday, the billionaire warned of a “major correction” in the next few years.

IAMGOLD Corporation

CAVEAT: long time readers are aware that I am the author of The Gold Investors Handbook and have been a seller of all gold and gold stocks from $ 1800 until today.
This shift out of gold and out of shipping has allowed Jack A. Bass Managed Accounts to prosper – our position remains very cautious to both sectors preferring to maintain watch lists rather than positions.

IMG : TSX : C$2.17
IAG : NYSE
HOLD 
Target: C$3.00

COMPANY DESCRIPTION:
IAMGOLD is an intermediate gold company which
produced 764,000 oz in 2013 at a total cash cost of
$796/oz. Its key producing mines include Rosebel (95%)
in Suriname and the Essakane mine in Burkina Faso. Key
development projects include the Westwood (100%)
project in Quebec. Its key non-gold asset is the 100%-
owned Niobec mine in Quebec, which produces niobium.
All amounts in C$ unless otherwise noted.

Metals and Mining — Precious Metals and Minerals

TAKE A KNEE OR HAIL MARY?

Investment recommendation
At lower gold prices the operating outlook for IAMGOLD is not
favourable and based on the third quarter results the situation is even
more concerning. Grade control issues at Rosebel are expected to persist
into YE and management’s ability to fully fix the problem is unknown.
Near $1,100/oz we believe Rosebel may generate negative FCF. At
Westwood, IMG continues to evaluate different production profiles to
conserve development capital that could result in a slower ramp-up. At
Essakane, the Q3 results provided an insight into longer-term operating
costs for the hard rock expansion and the cost structure looks to be 5%
higher than anticipated. At all three core operations, there appears to be
limited opportunity to materially improve costs structures to defend
against a declining gold price environment.
IAMGOLD faces a fork in the road – utilize the Niobec windfall to pay
down debt and survive in a low gold price environment, or take a long
shot by purchasing a transformative asset (or possibly a combination of
both). In a low gold price environment, neither option will likely be
applauded by the market.
Investment highlights
 Q3/14 adj. EPS of $0.00 vs. CG at $0.01 and consensus of $0.03.
IMG generated positive ($55m) operating FCF for the first time in
two years. We forecast $16m in Q4/14 or negative $26.4m in FCF
(incl. G&A, expl., int. and ex Niobec). In this note we deconstruct
quarterly cash flows by assets.
Valuation
We have revised our target price to C$3.00 from C$4.25. Our target is
predicated on a 0.5x (from 0.6x) multiple to our forward curve derived
operating NAV of C$5.21/sh plus net cash and other assets of C$0.44/sh.
Our low target multiple reflects higher operating, financial, political
(Burkina Faso instability) and acquisition risk.

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