The second quarter saw a sharp spike in interest rates, which caused havoc in the mortgage REIT sector. As inevitable book value losses became the norm, it became a question of which mREIT could get away with the least damage.�
Hatteras Financial (NYSE: HTS ) �was one of the worst performers during the period despite following a relatively conservative strategy of investing mostly in adjustable-rate mortgage (ARM) mortgage-backed securities, as opposed to fixed-rate 30-year MBSes that can often carry a larger interest rate risk.�
How bad was it?
Hatteras reported EPS of $0.66 for the quarter, a rise of $0.04 per share over the previous quarter. The company's net interest spread dropped by 18 basis points from Q1 to 0.93% as its Constant Prepayment Rate (CPR) jumped to 20.8% -- the highest in almost two years. However, the real shock came in the form of a steep drop in book value, which fell to $22.18 from $28.18 in Q1 -- a drop of 21%.
This is bad by any standard, but what makes it even worse is that Hatteras is known to have a relatively defensive portfolio when compared to its fixed-rate focused peers; at the end of the second quarter, ARMs comprised almost 89% of Hatteras' MBS portfolio. Capstead Mortgage (NYSE: CMO ) , a mortgage REIT that follows a similar strategy of investing in ARMs, reported that its book value per share declined by just 3.8% because of market price movements.
Top 5 Shipping Companies To Watch In Right Now: AptarGroup Inc. (ATR)
AptarGroup, Inc. engages in the design, development, manufacture, and sale of consumer product dispensing systems in North America, Europe, Asia, and South America. The company operates in three segments: Beauty + Home, Pharma, and Food + Beverage. The Beauty + Home segment primarily sells pumps, closures, aerosol valves, and accessories to the personal care and household markets, as well as pumps and decorative components to the fragrance/cosmetic market; and fragrance/cosmetic and personal care fine mist spray pumps, personal care lotion pumps, and continuous spray aerosol valves. The Pharma segment provides pumps for nasal allergy treatments; and metered dose inhaler valves for respiratory ailments in pharmaceutical market. The Food + Beverage segment offers dispensing and non-dispensing closures, spray pumps, and aerosol valves to the food and beverage markets. AptarGroup, Inc. sells its products through sales force, independent representatives, and distributors. The c ompany was founded in 1992 and is headquartered in Crystal Lake, Illinois.
Advisors' Opinion:- [By Seth Jayson]
When judging a company's prospects, how quickly it turns cash outflows into cash inflows can be just as important as how much profit it's booking in the accounting fantasy world we call "earnings." This is one of the first metrics I check when I'm hunting for the market's best stocks. Today, we'll see how it applies to AptarGroup (NYSE: ATR ) .
Top 5 Defensive Companies To Invest In 2014: Vision Industries Corp (VIIC)
Vision Industries Corp. (Vision), incorporated on May 11, 2004, is a manufacturer of zero-emission hydrogen fuel cell electric hybrid powered Class 8 trucks and terminal tractors. Vision operates in the short-haul, drayage trucking category (the movement of containerized cargo over a short distance, typically less than 50 miles, from a port to an intermodal facility, such as a rail yard). The Company�� products include the Tyrano, a short-haul Class 8 tractor, and the Zero-TT, a single axle terminal tractor co-developed with Cargotec USA, the maker of terminal tractors.
The Company markets its vehicles to drayage operators at the twin Ports of Los Angeles and Long Beach and plans to expand its target market nationally to all fleet operators, owner-operators and Original Equipment Manufacturers (OEMs). Vision aims to target drayage trucking fleet operators who operate in the eight deep-water ports (Los Angeles, Long Beach, Oakland, Seattle, Houston, Savanah, New York and New Jersey). Fleets which operate at these locations usually have predetermine routes, travel less than 50-mile (from Port to rail yard or distribution center) and have a return to base duty-cycle.
Tyrano
The Vision Tyrano is a lass 8 Zero-Emission Hydrogen Fuel Cell / Electric Hybrid heavy-duty truck designed to move containerized cargo from port to rail yard. With a GCVWR the Tyrano uses Lithium-ion batteries to power an electric motor and Hydrogen fuel cells to extend its range. The Vision Tyrano was designed for short-distance containerized cargo movement with trade corridor communities in mind.
Vision (Zero-TT) Terminal Tractors
The Zero-Emission Terminal Tractor (Zero-TT) is a Class 8 facility-only Hydrogen Fuel Cell Electric Hybrid vehicle. GCVWR and is designed to move the heavy containerized cargo inside a Port facility or central distribution center. The Zero-TT is designed to operate for two full eight-hour shifts with refillable hydrogen tanks.
The Cheetah Supercar is a zero-emission passenger sports car prototype. This sports car is using Vision�� hybrid hydrogen drive system which can deliver 425 horsepower and 1,350 feet /lbs of torque.
The Company competes with Bosch, Delphi, Siemens, Visteon, Quantum, Dynetek Industries Ltd., Lincoln Composites, Structural Composites Inc, Linde AG, Air Products and Energy Conversion Devices.
Advisors' Opinion:- [By Peter Graham]
Small cap green stocks Vision Industries Corp (OTCMKTS: VIIC), Bravo Enterprises Ltd (OTCMKTS: OGNG) and Kleangas Energy Technologies Inc (OTCMKTS: KGET) have reported recent news and/or they are being promoted. Of course, it goes without saying that small cap green stocks tend to be more volatile that other types of investments. So will investors and traders alike see some greenbacks from these green stocks? Here is a quick reality check:
Top 5 Defensive Companies To Invest In 2014: Gafisa SA (GFA)
Gafisa S.A. (Gafisa), incorporated on November 12, 1996, is a diversified national homebuilder serving all demographic segments of the Brazilian market. The Company�� brands include Tenda, which serves the affordable entry-level housing segments, Gafisa, which offers a variety of residential options to the mid to higher income segments and Alphaville, which focuses on the identification, development and sale of residential communities. In addition, it provides construction services to third parties. Gafisa�� core business is the development of residential units in attractive locations. During the year ended December 31, 2009, approximately 55% of the value of its launches was derived from high and mid high-level residential developments under the Gafisa brand. It is also engaged in the development of land subdivisions, also known as residential communities, representing approximately 18% of the value of its launches under the Alphaville brand, and affordable entry-level housing, which represents approximately 27% of the value of its launches under the Tenda brand. In addition, it provides construction services to third parties. Gafisa operates in more than 120 cities, including Sao Paulo, Rio de Janeiro, Salvador, Fortaleza, Natal, Curitiba, Belo Horizonte, Manaus, Porto Alegre and Belem, across 21 states and the Federal District.
Real Estate Activities
The Company�� real estate business includes developments for sale of residential units; land subdivisions (also known as residential communities); commercial buildings; construction services to third parties, and sale of units through its brokerage subsidiaries, Gafisa Vendas and Gafisa Vendas Rio, jointly referred to as Gafisa Vendas. In the residential buildings product category, Gafisa develops three main types of products: luxury buildings targeted at upper-income customers, buildings targeted at middle-income customers; and affordable entry-level housing targeted at lower-income customers. Quality residential buildi! ngs for middle- and upper-income customers are its core products. Luxury buildings units usually have over 180 square meters of private area, at least four bedrooms and three parking spaces. The development includes swimming pools, gyms, visitor parking, and other amenities.
Buildings targeted at middle-income customers have accounted for the majority of its sales. Units usually have between 90 and 180 square meters of private area, three or four bedrooms and two to three underground parking spaces. Buildings are usually developed in large tracts of land as part of multi-building developments and, to a lesser extent, in smaller lots in attractive neighborhoods. Affordable entry-level housing consists of building and house units. Units usually have between 42 to 60 square meters of indoor private area and two to three bedrooms.
Commercial Buildings
During 2009, the Company launched four commercial buildings. These buildings include Centro Empresarial Madureira, Paulista Corporate, Reserva Eco Office Life and Global Offices.
Construction Service
Gafisa provide construction services to third parties, building residential and commercial projects for developers in Brazil. The Company�� principal construction services clients are large companies, many of them developers that do not build their own projects. As of December 31, 2009, its principal construction services clients were Fibra Empreendimentos Imobiliarios S.A., Sisan-Grupo Silvio Santos, Camargo Correa Desenvolvimento Imobiliario S.A., Helbor Empreendimentos Imobiliarios Ltda., InCons S.A., SDI Desenvolvimento Imobiliario Ltda. and Abyara. It also provides construction services on certain developments where it retains an equity interest.
Advisors' Opinion:- [By Jon C. Ogg]
Gafisa S.A. (NYSE: GFA) is a homebuilder in Brazil, supposedly with more than $1 billion in projects for 2014 alone. This ADR trades at $3.05 against a 52-week range of $2.22 to $5.24, and this is down only about 2% so far in 2014.
- [By Eric Volkman]
Brazilian construction firm Gafisa (NYSE: GFA ) is not only selling houses these days. The company has signed an agreement to sell a 70% stake in residential community developer Alphaville Urbanismo to funds managed by Blackstone (NYSE: BX ) and the American company's Brazilian partner firm Patria Investimentos.
Top 5 Defensive Companies To Invest In 2014: ASB Bancorp Inc (ASBB)
ASB Bancorp, Inc. (ASB Bancorp), incorporated in May 2011, focuses to become the holding company for Asheville Savings Bank, S.S.B. (Asheville Savings Bank). ASB Bancorp, Inc.�� business activity will be the ownership of the Asheville Savings Bank. Asheville Savings Bank is a chartered savings bank. It operates as a community-oriented financial institution offering traditional financial services to consumers and businesses in its market area. It attracts deposits from the general public and use those funds to originate one-to four-family residential mortgage loans and commercial real estate loans, and home equity loans and lines of credit, consumer loans, construction and land development loans, and commercial and industrial loans. It conducts its lending and deposit activities with individuals and small businesses in its primary market area. Its market area is Asheville, North Carolina and the rest of Buncombe County where it has eight branch offices, as well as Henderson, Madison, McDowell and Transylvania Counties where it has five branch offices.
Lending Activities
Asheville Savings Bank loan portfolio include real estate mortgage loans, including one- to four-family residential mortgage loans and commercial mortgage loans, and revolving mortgage loans, which consist of home equity loans and lines of credit, consumer loans, construction and land development loans, and commercial and industrial loans. As of March 31, 2011, it had $177.8 million in one- to four-family residential loans, which represented 36.7% of its total loan portfolio. Its origination of residential mortgage loans enables borrowers to purchase or refinance existing homes located in its primary market area. It offers a mix of adjustable rate mortgage loans and fixed-rate mortgage loans with terms of up to 30 years.
Asheville Savings Bank offers fixed- and adjustable-rate mortgage loans secured by non-residential real estate and multi-family properties. As of March 31, 2011, commercial mort! gage loans totaled $162.7 million, or 33.5% of its total loan portfolio. Its commercial mortgage loans are secured by commercial, industrial and manufacturing, small to moderately-sized office and retail properties, hotels, multi-family properties and hospitals and churches located in its primary market area. As of March 31, 2011, $35.6 million or 21.9% of its commercial real estate loans were secured by owner-occupied properties. It originates fixed-rate and adjustable-rate commercial mortgage loans, generally with terms of three to five years and payments based on an amortization schedule of up to 25 years. It has originated construction and land development loans for commercial properties, such as retail shops and office units, and multi-family properties, and construction and land development loans for one-to four-family homes. As of March 31, 2011, commercial construction and land development loans totaled $27.8 million, which represented 5.7% of its total loan portfolio, and residential construction and land development loans totaled $7.9 million, which represented 1.6% of its total loan portfolio. As of March 31, 2011, it had speculative residential construction loans of $3.1 million and speculative commercial construction loans of $9.6 million.
Asheville Savings Bank offers revolving mortgage loans, which consist of home equity loans and lines of credit, and various consumer loans, including automobile loans and loans secured by deposits. As of March 31, 2011, revolving mortgage loans totaled $52 million, or 10.7% of its total loan portfolio, and consumer loans totaled $41.1 million, or 8.5% of its total loan portfolio. Its revolving mortgage loans consist of both home equity loans with fixed-rate amortizing term loans with terms of up to 15 years and adjustable rate lines of credit with interest rates indexed to the prime rate.
Asheville Savings Bank offers commercial and industrial loans to small businesses located in its primary market area. As of March 31, 2011, co! mmercial ! and industrial loans totaled $15.8 million, which represented 3.2% of its total loan portfolio. Its commercial and industrial loan portfolio consists of loans, which are secured by equipment, accounts receivable and inventory, but also includes a smaller amount of unsecured loans for purposes of financing expansion or providing working capital for general business purposes.
Investment Activities
As of March 31, 2011, Asheville Savings Bank�� investment portfolio consisted of the United States government and agency securities, mortgage-backed securities and securities issued by government sponsored enterprises, and municipal securities. As of March 31, 2011, its securities portfolio represented 27.2% of total assets. As of March 31, 2011, $198.6 million of its securities portfolio was classified as available for sale and $5.7 million of its securities portfolio was classified as held to maturity. Securities classified as held to maturity are United States government sponsored securities, mortgage-backed securities and state and local government securities. As of March 31, 2011, it had four million dollars of other investments, at cost, which consisted of Federal Home Loan Bank of Atlanta.
Sources of Funds
Deposits, borrowings and loan repayments are the sources of Asheville Savings Bank funds for lending and other investment purposes. It uses advances from the Federal Home Loan Bank of Atlanta to supplement its investable funds. The Federal Home Loan Bank functions as a central reserve bank providing credit for member financial institutions. Advances are made under several different programs, each having its own interest rate and range of maturities. It also utilizes securities sold under agreements to repurchase and overnight repurchase agreements to supplement its supply of investable funds and to meet deposit withdrawal requirements.
Subsidiaries
Asheville Savings Bank has two subsidiaries, Appalachian Financial Services,! Inc., wh! ich was formed to engage in investment activities, and Wenoca, Inc., which serves as Asheville Savings Bank�� trustee regarding deeds of trust. Both subsidiaries are organized as North Carolina corporations.
Advisors' Opinion:- [By Tim Melvin]
ASB Bancorp (ASBB) is the holding company for Ashville in western North Carolina. The bank has 13 branches and total assets of around $733 million. Nonperforming assets are just 2.1% of total assets and the bank is massively over-reserved for future losses, with loan reserves at 6 times nonperforming loans. The bank bought back 544,494 shares of common stock at an average price of $16.79 per share in 2013. The board just authorized a new 5% buyback in January 2014. The stock is trading around 80% of book value, so management is buying the shares on the cheap — and that should bode well for shareholders in the future.
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