Category: Investing

New Congress: Investing Pluses and Minuses

WASHINGTON, D.C. – A former Hill staffer armed with a business degree from the University of Chicago, Stuart Sweet makes his living telling Wall Street what’s going on in Washington. With the 110th Congress kicking off this week, we checked in with Sweet, president of D.C.’s Capitol Analysts Network, to get his take on sectors bets for the Beltway-minded investor.

“The volatility of Washington has increased considerably,” says Sweet. “My job has gotten more interesting.”
Broadly speaking, Sweet’s take is that this Congress could prove productive. Reasoning: The Democrats’ need to protect conservative-leaning seats will prevent them from drifting too far left. Republicans, with a nervous eye on 2008, risk being tarred obstructionists if they block too much. Add to the mix President Bush’s likely desire to burnish his legacy, and the stage is set for cutting deals and passing laws.
Full story at Forbes.com

A Year Of Beltway Investing

WASHINGTON, D.C. – On Forbes.com this year, we’ve consistently offered readers ideas for Beltway-themed stock investing. The idea, of course, is that you can profit from businesses that are enjoying legislative, regulatory or procurement-related tailwinds.
So, how are we doing? At least in the short-term, not badly. In 2006, this author wrote 23 Beltway investing columns, which mentioned 107 stocks favorably. They’ve posted an average total return of 15%, using prices from the date of publication through Monday night’s market close, against a return of 10% for the S&P 500 index during equivalent time periods.
Full Story at Forbes.com

Hail Mary Stock Picks

On this page we repeat a venerable FORBES ritual known as Love Only One. The gist: Each year we invite 12 experts to give us the stock they deem best poised to outrun the market over a 12-month period. We also ask 5 bears to name a likely laggard. When the time’s up, those successful get return invitations; the rest make way for new contestants.

Full story at Forbes.com (reg. required)

Spinning Red Tape Into Gold

WASHINGTON, D.C. – For a D.C.-area private equity shop, Valhalla Partners goes light on the public sector experience. Among these VCs, you won’t find any former cabinet officials or intelligence big wigs looking to trade on a fat Washington rolodex. Nor do they sound all that enthusiastic about investing in companies catering to the federal government or its big contractors.

“Government is capricious,” says Arthur Marks, a Valhalla co-founder and general partner.
Yet there’s no aversion at the Vienna, Va.-based outfit, which has $440 million under management, to making money off opportunities that the government creates, namely through red tape.

Full story at Forbes.com

Play the Asian Boom

WASHINGTON, D.C. – Bad news for investors, at least for certain ones: The dollar will collapse against Asian currencies over the next two decades. Good news: China and India will evolve from devourers of basic materials into full-blown consumer economies, creating demand for U.S. exporters.

These are two of the premises behind stock picks from Stephen Fan, a money manager in Mountain View, Calif. with a fondness for midcap technology stocks. One in his portfolio is MEMC Electronic Materials, a St. Peters, Mo. firm (once part of Monsanto) that makes silicon wafers for the semiconductor industry. Last year sales outside the U.S. accounted for two-thirds of MEMC’s $1.1 billion in revenues, with the bulk going to customers in Japan, Taiwan and South Korea. If Asia rockets as Fan expects, MEMC will likely go along for the ride. With shares at $35, MEMC goes for 5 times expected 2006 sales and 18 times expected earnings.

Full story at Forbes.com (reg. required)

Thanks To The Democrats: Sallie Looks Cheap

WASHINGTON, D.C. – Five years ago, we presented Forbes magazine readers with a bullish call on student lender SLM, otherwise known as Sallie Mae. Backing up our bet was analyst Matthew Snowling of Friedman Billings Ramsey, an Arlington, Va., investment bank.

That tip worked out well, as Sallie has had an 84% cumulative total return since October 2001, versus 34% for the S&P 500. After last week’s election, we checked in again with Snowling on Sallie Mae , a stock that gets bounced around on political news.

“We recently dusted off the Sallie Mae story,” he says. “It’s getting interesting.”

Full story at Forbes.com

Security Stocks: Bank On The Bankers

WASHINGTON, D.C. – The presence of bullish investment bankers in a particular business sector is no guarantee of its good health. It sometimes indicates just the opposite. In 2000, for example, bankers at San Francisco’s Robertson Stephens were prospering on dot-com and technology business. The bank folded two years later, victim of a tech market gone abruptly south.

These days, you’ll find plenty of bullishness at a boutique banking outfit with a unit catering to the homeland security industry. John Shaw, president of New York’s Legend Merchant Group, says he expects homeland security to experience “explosive” growth in the coming years. “Our pipeline is rather robust,” adds colleague Scott Greiper, a Legend Merchant principal and head of its homeland security practice, the Convergent Security Group (CSG).

In the investment context, we’ve been troubled on occasion by the possibility of terror bubbles. Here, however, we don’t interpret the happy talk from the i-bankers as a sign of impending bust. In fact, those interested in homeland security stocks and takeover plays should heed arguments from Greiper and his CSG colleagues.

Full story at Forbes.com

Beltway Money Man: Jonathan Silver

Venture capitalist Jonathan Silver doesn’t claim to be a political savant. Will Democrats gain the upper hand this November? “Whatever I tell you,” he says with a laugh, “go the other way.”

But Silver, managing director of Washington’s Core Capital Partners, isn’t so modest when it comes to making calls on the outlook for technology spending and Uncle Sam’s IT budgets.

Silver acknowledges the possibility of a slowdown for some government contracting but says spending levels won’t fall below where they were five years ago. “The federal government is going to spend considerable dollars on technology for a long, long time to come,” he says.

Full story at Forbes.com

Check Point Software: Battle Hardened

WASHINGTON, D.C. – He may be an American, but Jerry Ungerman displays Israeli-style stoicism when it comes to the effects of war on his company, Check Point Software Technologies. The developer of computer security software has 600 employees in its hometown of Tel Aviv.

“It’s an unfortunate part of life,” says Ungerman, Check Point’s vice chairman, of Israel’s war with Hezbollah. “There’s been no impact on our operations.”

Indeed, he describes the effect of the call-up of Israeli army reservists from Check Point’s employee ranks as nearly indistinguishable from people taking their summer vacation. And the rocket attacks? For folks in Tel Aviv, he suggests, it’s like being in downtown San Francisco and hearing that a rocket has fallen on Lake Tahoe.

Tough talk? Maybe. But an ability to shrug off adversity is valuable in Check Point’s line of work. In recent months, the company has faced its share of proverbial rockets from Wall Street and Washington alike.

Full story at Forbes.com