When is the GM IPO? After the Election (WSJ)

Official White House Briefing: "Fact Sheet on Obama Administration Restructuring of General Motors"

Treasury Provides Further Guidance on GM IPO

AUTOS SEPTEMBER 21, 2010

China's SAIC Expresses Interest in Buying GM Stake


By SHARON TERLEP
DETROIT—Interest by China's biggest auto maker in possibly buying a stake in General Motors Co. this fall raises the dicey issue for the U.S. government over foreign investment in the Detroit company.

SAIC Motor Corp., which has built cars with GM in China since the 1990s, hasn't decided whether to participate in GM's initial public offering but has expressed an interest in doing so, people familiar with the matter said.

GM declined to comment about SAIC. The Chinese auto maker said only that it is closely watching the GM offering. SAIC's interest was first reported by Reuters news service.

The issue of foreign investors buying GM shares in the company's IPO is a thorny one for the U.S. government, which is eager to unload its 61% stake in the auto maker.

The Treasury is likely to seek out large institutional investors to buy blocks of GM stock at a set price. Such "cornerstone" investors typically commit to holding their stock as a show of confidence, which can help draw other investors. In exchange, cornerstone investors sometimes get a favorable deal on the shares. Several U.S. investors have expressed an interest in buying a stake in GM, including potential cornerstone investors, according to a person familiar with the situation.

The larger the group of cornerstone investors, the easier it would be for the Treasury to sell a big chunk of its GM stake in the IPO. GM and the banks underwriting the deal are pushing for the biggest possible investor pool to increase the size of the offering. The IPO will likely involve shares held by the Treasury, a union-managed retiree trust fund and Canadian governments.

But the Treasury also is worried about the political reaction if non-U.S. investors, such as sovereign-wealth funds or a Chinese company, are allowed to acquire a significant stake in GM after U.S. taxpayers spent $50 billion to assist the company through bankruptcy reorganization.

"Critics will publicly blast the Obama administration for using taxpayer money to fund foreign ownership in an American icon," said Morningstar automotive equities analyst David Whiston. Yet restricting foreigners from buying stock in the IPO would be impractical since the shares would be available on the public market, he said.

Indeed, the Treasury, in an effort to maximize the share price and establish a solid shareholder base, said last week that all investors will have access to GM shares. The statement also said, however, that no single investor or group of investors would receive "a disproportionate share or unusual treatment."

GM plans to begin pitching the IPO to investors immediately after the Nov. 2 midterm elections, which could keep the IPO separate from campaign politics. The goal is to conduct the offering before the end of the month. GM Chief Executive Dan Akerson said last week that it will likely take years for the U.S. government to unload its entire stake.

Mr. Akerson, who took over as CEO Sept. 1, has been more pragmatic about the IPO than was his predecessor Edward E. Whitacre Jr., who pushed the Treasury to unload as many shares as possible as quickly as possible. In contrast, Mr. Akerson last week acknowledged the importance of Treasury getting the best possible share price, even if means the government continues to hold some shares for some time.

China's auto market, the world's biggest, is a key source of strength for GM.

The auto maker's sales in China rose 19% in August from a year earlier while the U.S. and European markets struggled. The auto maker's partnership with SAIC has been central to GM's success in China and is expected to continue to play a major role.

Such joint ventures also are an important platform to reaching other fast-growing, emerging markets. GM and SAIC are teaming to expand in India, for example.

Write to Sharon Terlep at sharon.terlep@wsj.com

Miami Herald: Low Cost Marketing Tips for Small Business

Posted on Mon, Sep. 20, 2010
Marketing help just clicks away
BY TASHA CUNNINGHAM
Tasha@BizBytes101.com


1. Twilert. This is a Twitter app that allows you to receive e-mail updates of tweets that contain keywords related to your business. Other apps like TweetDeck let you do the same thing, but Twilert sends the updates directly to your e-mail in-box so you can view them when it's convenient for you.

2. Slide Rocket. Slide Rocket is a free online tool for creating slick, professional Flash-enabled presentations that can showcase your products and services. It's like turbo-charged version of PowerPoint. You can share your presentations instantly on YouTube and Flickr and track the number of people that view your presentation using Slide Rocket analytics.

3. Click Tale. With pricing plans that start at free, Click Tale is an essential tool that lets you learn more about how your visitors interact with your website. You can record snapshots or ``movies'' of your customers' browsing sessions and get detailed information on how they use all areas of your site. You can use the data you collect to improve their customer experience while on your website.

4. Trackur. Trackur is a tool that allows you to monitor what people are saying about your brand on social blogs, social networks, and online forums.

5. iKarma. Based in Jupiter, Fla., this reputation management tool allows you to compare customer comments, review products and services and get customer referrals that help you manage your brand's online word-of-mouth.

6. BrandDoozie. This do-it-yourself online tool allows you to create professional marketing materials in minutes including business cards, logos, brochures and flyers. It's free to create your materials and just $19.99 when you're ready to download and print them, saving you thousands of dollars in design costs.

7. Shoutlet. With this tool, you can distribute, track and manage your social media marketing campaigns across different social networks at once, saving your business time and money.

8. Later Bro. This service saves you time by allowing you to post-date Facebook and Twitter updates. You can plan, create and schedule updates for delivery to your customers at a later date.

9. PRLog.org . This service is completely free and lets you distribute press releases about your company to blogs, search engines and news sites. It's a great way for a cash-strapped entrepreneur like you to get the word out about your products and services.

10. Pitchrate.com . This free service will help you maximize your public relations and marketing efforts by connecting you with journalists who write about topics related to your business. It also offers free guidance on how to get publicity and a regular free ``PR Happy Hour,'' a series of conference calls that let you interact live with marketing and PR experts to ask questions and get advice.

Check out BizBytes101.com for more must-have marketing tips.



Read more: http://www.miamiherald.com/2010/09/20/v-print/1830154/marketing-help-just-clicks-away.html#ixzz106K1TL48

Obamacare Alert - Insurance Changes This Week ( State of Florida)

Insurance Consumer Advocate Urges Floridians To Learn About Health Insurance Reforms That Take Effect Sept. 23

Terry Butler, Interim Insurance Consumer Advocate

Many consumers have been confused about or unsure as to when many of the reforms in the Patient Protection and Affordable Care Act (PPACA) will take effect. Some of the reforms do not take effect until 2014 or even later. However, on Thursday, September 23, 2010, many very important PPACA provisions will go into effect and the Office of Insurance Consumer Advocate urges Floridians to be aware of and take advantage of the changes.
The most important changes will ensure that consumers are able to retain coverage and remain covered regardless of their circumstances. While the following provisions take effect next week, some policyholders may not be able to take advantage of all of these new provisions until policy renewal, which for many employees in group plans is in January.

The benefits that will be effective on September 23, 2010, are as follows:

Currently, most health insurance policies have provisions stating that the maximum the insurer will pay during the life of the policy is $1 million or maybe $2 million. In addition, they have a maximum the insurer will pay in any calendar year, usually around $250,000. As of this Thursday, insurers will be prohibited from limiting the amount they will pay over the lifetime of the policy. However, until 2014, plans will still be allowed to have an annual limit on coverage payments.

All health plans will be prohibited from dropping consumers from coverage just because they get sick.

Children under the age of 19 with pre-existing medical conditions will no longer be denied coverage by employer plans or new plans in the individual market because of their pre-existing condition.

New private plans will be required to cover preventative services and neither copayments nor deductibles will apply to the cost of these services.

All new plans will have to provide consumers with two levels of appeal when the plan denies payment for medical services. The first level would be a review by the plan itself. The second level would be an independent review process in which an outside group of medical experts review the claim to determine whether the plan followed its own rules in denying the claim.

Employer health plans will be prohibited from establishing any eligibility rules for health care coverage that have the effect of discrimination in favor of higher wage employees.

Health plans will be required to allow young people to remain on the parents’ health plans up to their 26th birthday, provided that they do not have access to coverage on their own plan.

Consumers will have more freedom of choice in the selection of their physicians.
Consumers should contact their insurer or their employers’ benefit administrator to obtain any additional information regarding changes to their specific policy.

As more information is available and additional changes become effective, the Office of the Insurance Consumer Advocate will generate advisories regarding their effect on consumers. More information regarding the PPACA can be found on the website of the Insurance Consumer Advocate at http://www.myfloridacfo.com/ica/federalhealthcare.asp.

The Insurance Consumer Advocate is appointed by Florida CFO Alex Sink and is committed to finding solutions to insurance issues facing Floridians, calling attention to questionable insurance practices, promoting a viable insurance market responsive to the needs of Florida’s diverse population and assuring that rates are fair and justified.

Floating Rate Loan Funds (Morningstar)

Five Senior Loan CEFs for Your Radar

Five Senior Loan CEFs for Your Radar
By Cara Scatizzi | 08-13-10

Senior bank loans are typically extended to below-investment-grade companies, which can translate to higher interest-rate payments for banks and investors. After a bank lends the money, it sells the loan as a security to investors and passes the interest payments to investors. Such bank loans are structured to produce yields higher than comparable bonds and also to mitigate certain risks that accompany fixed-income investing.


Senior loans are often short term and have floating interest rates. This reduces interest-rate risk for investors because, as interest rates rise, the short-term floating rates on the loans can be reset quickly to reflect higher rates. Conversely, if interest rates are falling, the floating rates will reset to echo lower rates, which means investors cannot lock in high interest rates with this type of security.


In addition, these loans are secured by cash or assets and are considered "senior." This means that, in the event of bankruptcy, these obligations are the first to be repaid. There is no guarantee of any payment after a default, but because the loans are senior and secured by assets, historically, investors have received $0.75 to $0.80 per dollar in such situations.


Investing in closed-end funds, in general, has many benefits. First, CEFs can use leverage in an effort to enhance performance and distributions. CEFs are also required to distribute income to investors. In addition, CEFs often sell at discounts to net asset value, which means investors can achieve "yield enhancement." Finally, there is an added benefit of diversification. Specific to senior bank loans, CEFs hold hundreds of individual bank loans of varying credit quality and maturity. If one or a few of the companies default on their bank loans, it will most likely have a small effect on the overall portfolio. However, bankruptcy is not the only way for a senior loan to lose value. Deterioration of the individual company's credit can cause a loan to fall in value.


There are 19 senior bank CEFs and only one does not use leverage (the newly created Blackstone/GSO Senior Floating Term Rate (BSL). The remaining CEFs use leverage in the form of debt and preferred shares, which is regulated by the Investment Act of 1940. In addition to senior loans, these types of CEFs also invest in corporate bonds and cash. Ten of the 19 senior loan CEFs trade at a discount to net asset value, which offers investors a yield enhancement via their discount.


Investors seeking the higher income that senior bank loans can offer should be aware of the risks to their underlying capital. The group produced volatile returns in 2008 and 2009, as would be expected given the changes in interest rates, the inherent volatility of leverage, and the turmoil in the credit markets. The average senior loan CEF has gained 0.19% annually over a five-year period, is down 2.97% annually for the latest three-year period, and is up 6.5% in the year to date.

A Closer Look: Five Senior Loan CEFs

Discount /Premium (%)Distribution Rate at Current Price (%)1-Yr Distribution Change (%)Leverage Ratio (%)

Highland Credit Strategies (HCF) -2.1 8.68 0 23.6
Nuveen Senior Income (NSL) +2.4 6.92 19 36.5
Nuveen Fl Rate Inc Opps (JRO) -0.6 6.63 24 36.5
Nuveen Floating Rate Inc (JFR ) -3.9 5.56 24 35.6
LMP Corporate Loan Fund (TLI) -5.8 5.17 20 52.0

The table above lists five senior loan CEFs that, in our opinion, look attractive. Exclusion from the above list does not reflect our dissatisfaction with a fund. Instead, these are the five that have caught our attention at the moment. None of the listed CEFs have decreased distributions in the last year and four of the five have increased the distribution at least once over the last year. In addition, none of them uses return of capital to synthetically boost stated yields.


Highland Credit Strategies (HCF ) has a distribution rate of 8.7%. The fund has not increased the distribution in the last year, but while 13 of the 19 funds in this category decreased distributions, HCF did not. The fund came out of the gates in 2007 and performed poorly, as might have been expected given the credit-market environment at the time. The fund has lost 10.8% per year since inception. However, in early 2009, the fund replaced the portfolio-management team with two new managers, who have outperformed their peer group over the one-year (HCF gained 21.9% versus the peer group's gain of 20.2%) and year-to-date (HCF is up 7.95% versus 6.55% for the peer group) periods. HCF holds 63% in bank loans, with the remainder in low and non-investment-grade corporate bonds and equities. Its largest holding (7.3% of the portfolio) is a holding company for venture healthcare companies. Finally, HCF has a leverage ratio of 23.6%.


Nuveen Senior Income (NSL) is one of three highlighted funds from Nuveen. All three funds are managed by Gunther Stein. NSL is selling at a 2.4% premium to NAV but still offers a 6.9% distribution rate. The fund increased the distribution twice in the last year for a total increase of 19%. In 2009, the fund gained 111% in net asset value (versus the peer group, which gained 76%), during which the fund's share price jumped from a 12% discount to NAV to a 17% premium to NAV in the final four months of 2009. Since inception in 1999, the fund has gained 5.3% annually. 86% of assets are held in bank loans with the remainder in high-yield corporate bonds, convertibles, and cash. The largest sector concentration is media, at 11% of assets. The fund has a 36.5% leverage ratio.


Nuveen Floating Rate Income Opportunities (JRO) has a 6.6% distribution rate and has boosted its distribution twice in the last year for a total increase of 24%. The fund invests 87% of its assets in senior loans and the remainder in junk bonds, cash, and a very small portion in common stock. The current leverage ratio is 36.5%. The fund has performed about as well as the peer group, with the exception of 2009, when the fund outperformed with an impressive NAV gain of 113%. Since inception in 2004, the fund has gained 4.1% annually. Historically, the fund has traded at a discount to NAV (its three-year average discount is 8.04%), but 2010 has proved a volatile year for JRO's premium and discount. In April 2010, the fund shot to at a historically high 9.46% premium, only to drop to a discount of 6.75% in late May. Currently, the fund sells at a slight 0.60% discount to NAV.


Nuveen Floating Rate Income (JFR) has a current distribution rate of 5.6% and is selling at a 3.9% discount to NAV. The fund has increased its distribution twice over the last year for a total increase of 24%. JFR has a current leverage ratio of 36.5%. In 2009, JFR gained 101% and in 2008 the fund lost 50.1%, still slightly beating the peer group. Since inception in 2004 the fund has gained 3.71% annually. JFR holds 86% in bank loans of mostly low credit quality, though 7% of its holdings are bonds rated AAA.


LMP Corporate Loan Fund (TLI) has the lowest distribution rate of the highlighted CEFs, but it is still attractive on an absolute basis. In addition, the fund is selling at the largest discount (5.8%) of the funds listed, making it even more attractive. TLI has increased its distribution twice in the last year for a total increase of 20%. The fund holds 93% in bank loans, with the remainder in corporate bonds and short-term debt. TLI has a relatively high leverage ratio of 52%. Since inception, TLI has gained 4.5% annually. In 2008, when the average senior bond CEF lost 51%, TLI lost 44%.





Cara Scatizzi is a closed-end fund analyst at Morningstar.

How to Recognize the Next Bull Market ( Futures Magazine)

Four stages of a bull market and how to profit - Financials - Futures Magazine


More money is likely made from bull markets than any other market condition. Understanding how to invest during these periods is key to long-term success. First, a simple definition: A bull market is a congestive market composed of an extended period of time in which the stock indexes continue to register higher highs. It is composed of four periods. Two of those four periods are relatively easy to identify, while the first and fourth periods are a blending of the bull and bear cycles and are more difficult to spot.

These periods are often difficult to define clearly because they are normally rife with conflict. The cycles never change from black to white or white to black, but rather evolve in stages of gray. One of the skills of reading the market is to be able to interpret this gray as it develops and to identify the actual reversal points before they become clear to the general public.

Although they often look orderly in retrospect, bull markets are less clear as they unfold. They take two steps forward and one step back. Bull markets normally stagger around with little discernible direction. During the bull cycle, 90% of all stocks will slowly follow the 100-day moving average north. The problem is that they tend to check out every side road and rest area in the process. Although bull cycles occasionally develop strong trends, they are normally identified by continuation patterns.

Scaling outward helps. Just like a bear market, these markets can be confirmed by observing an 18-month simple moving average (see "Riding the bear," Futures, June 2009). This occurred in the present cycle in October.



Period one

The first period of a bull market is marked by little, if any, public confidence and quiet accumulation by professionals. It is nearly impossible to identify this stage as it is happening. However, good fundamentals, improving earnings and bargain prices mark this as a period of accumulation by value buyers and institutions.

As this period develops, traditional reversal patterns in individual equities begin to appear. The average price is low and even the good stocks are cheap. Also, the price/earnings (P/E) ratios of the indexes are low. A few strong stocks now begin to break out of their sideways patterns. At the same time, isolated weekly and monthly highs occur as prices begin crossing their 100-day moving averages.
On balance, price action is dull and volume is low. While the violation of the 18-period moving average may have indicated a turning point in the overall market, it is not a guarantee that a particular stock will rebound soon. Many former market darlings will lie dormant for years.

Leading money managers now begin their accumulations based on the fundamentals. Because disillusionment with the market is the general temper of the public, good buying opportunities are abundant. Many companies with solid business strategies and strong competitive positions within their individual sectors offer real potential for price appreciation. Because most of those who found themselves in desperate need to sell have already done so, the supply is somewhat diminished. Therefore, to get strong stocks, traders now have to start giving higher prices to acquire them. Caution is still driving the bus.

Nevertheless, although values are good and the institutions are pursuing quiet accumulation, the public will not be back into stocks until they reach much higher prices. Most of the bottom pickers were slaughtered on the way down, and the reality is that there are only a limited number of players left.

Most people consider price as the determining factor that indicates the end of a bear market, but it really is time and fundamentals. For this reason, bottoms take much longer to form than it does for tops to collapse. Nowhere is this more apparent than in the opening stage of a bull market, and this is why it is hard to tell when you are in the first stage of a bull cycle and not in a bear market rally.

If you are looking for individual stock picks during this period, it is a good idea to watch for ones with good P/E ratios and return on equity values as they cross their 200-day moving averages.




Period two

In the second stage of a bull market, stock prices have been rising for several months and the mark-up is ready to commence in earnest. Market-leading equities are beginning to violate their 200-day moving averages. This is the time to buy the dips and ride the rallies higher.

Market newsletter writers and television pundits to the contrary, there is no magic in picking stocks in this period. In fact, you can pretty much select any stock and it will appreciate — the only question is by how much. If you are looking for individual stock picks during this period, it is a good idea to prospect the new highs found within the most-active lists.

Because money follows rallies, greed has been rekindled and more people are starting to think of the stock market as a wealth generator. Now there is competition by the public for a reduced supply, and accumulation is forcing prices higher. Some market participants are starting to show some impressive profits due to having bought early and simply holding. However, the larger public does not join the party just yet. Keep in mind that bull cycles take time to develop.

Market leaders are now rising to the top and the media loves them. Mutual fund inflows are increasing once it is apparent that the market is recovering. The Dow Jones Transportation Index now clearly reverses. It all comes down to markets being driven by liquidity and nothing else. Rallies are not caused by inflows, but rather inflows are the result of rallies — and rallies are the result of a series of higher highs. All of this is another way of spelling "greed."

Remember that it is not public demand that causes rising prices but the rising prices that cause public demand. The conclusion of this period is often marked by a significant retracement as the market pauses to catch its breath. However, too much greed is present for prices not to continue rising. As this retracement occurs, it is time to remember that bases must be built for the bull cycle to continue. Things are now getting in line for the third stage. Greed is driving the bus.


Period three

During this period, stock prices advance at a phenomenal rate. Cocktail parties are full of people with "hot tips." Most of the market participants are looking for easy money and little attention is paid to the underlying fundamentals of the larger market.

P/E ratios begin to achieve ever-higher levels, but that is immaterial. New stock market experts look upon all traditional fundamentals with disdain. Historical experiences are scorned, and the mantra of the day is that "it is different this time." New books about how to make millions in the stock market are common and fundamentals really do not seem to matter to anyone anymore.

About now, an initial public offering (IPO) craze hits the market. During period three, a plethora of new companies are formed to satisfy a public’s insatiable appetite for stocks of all kinds. The reason behind this is simple: There is more money to invest than there are shares available to sell.

In addition, a merger-mania also develops and buy-outs run rampant through corporate finance. The availability of leverage funds makes this possible. In other words, many companies are enjoying bloated stock prices to aid in the facilitation of any acquisition that might arouse corporate interest. As long as companies can convince others that their stock prices are valid, acquisitions are easy. Public relations and spin are now driving the bus.
Many leading issues actually will reach their highs during this period. They will then reverse long before the overall market shows any inclination to do so. This always leads to the last stage of a bull market and distribution begins. The professionals start to distribute some of the shares that were acquired in period one.


Period four

The main factors that have been leading the market to period four — and the coming market collapse — have been uneducated speculating and unrestrained leverage, both of which were aided by easy credit. This is finally becoming apparent to even the most unsophisticated market participants. Period four is rife with conflict and confusion. Slogans such as "if you would have put $10,000 in the market 50 years ago and never sold, you’d be a multi-millionaire today" are now common.

The market develops a theme. These themes culminate into an obvious bubble as the market seizes upon the theme and then goes slightly mad with it. These bubbles float on a sea of easy credit and greed and are rabidly pursued by the public as they dump ever more money into it.

We can go back over market history for hundreds of years and we will find bubble after bubble. There is one about every 20 years or so. These bubbles always are connected by corrective recessions or depressions but like the phoenix, a new bubble always springs forth from the ashes of the old as a new theme develops.

There has been the technology boom, where any company that had "tech" in its name was viewed as an instant path to riches. Then came the "nifty 50" where buying any of 50 blue chips stocks was considered a guaranteed path to wealth. The "conglomerate boom" was so volatile that it became the main concern of the academia that America was going to end up with only five to 10 public companies. Then came the "Internet boom" where all of the stores in America were going to close and people were going to buy everything, including their cat’s food, off of the Web. This incomplete list is to say nothing of the several real estate and commodity bubbles that connected them.

Normally, a bull market’s resolution is not the result of some cataclysmic occurrence or the result of a mature market, as the uninitiated tend to believe. It is the simple result of the inability to keep more and more money coming into the market. In other words, the market suffers from a shortage of players.

This is a period of high volume, high volatility and extreme vacillation. Profits achieved during period two and three have confirmed the belief of most investors that the bull market will continue forever. For these, the start of the upcoming decline is viewed as a gigantic buying opportunity. The truth is, those who see the lower prices as bargains are now the only ones sustaining the bull market. As prices continue to creep lower, the professional traders continue to sell into every rally. Clowns are driving the bus.

The market now begins to eat its own tail, effectively destroying any chance of the bull cycle continuing. We see many market-leading stocks react several points from their previous tops and then not retrace. Their race is obviously run. The best advice: When the press becomes euphorically bullish, but the cumulative advance/decline lines on the weekly chart of the indexes do not concur, tighten your stops, reduce your exposure and tread carefully.



The Tacoma Narrows

Anytime prices begin to print irrationally and your oscillators won’t behave, it is a head’s up to be careful. Extreme vacillation of price usually indicates that something is badly out of balance. Therefore, be wary of any market that seems unwilling to print decent charts. If a market won’t settle down and behave, the likelihood is that it is coming apart. Vacillation of the larger market indicates that something is seriously wrong. It is just that it is not widely apparent, at least not yet.

Whenever you see extreme vacillation in the larger market, it is a good time to remember the story of the Tacoma Narrows Bridge. In 1939, a bridge was built across the Columbia River at a place known as the Tacoma Narrows. Its purpose was to connect Portland, Ore., and Tacoma, Wash.

Unfortunately, the engineers never took the wind sheer of the river into consideration when they designed the bridge. After it was completed and in use, the wind forces created by the Columbia Gorge would whip the bridge up and down and side to side violently, eight to 20 feet at a time. In other words, the bridge was unstable. Although the bridge did not immediately fail, it should have been obvious to anybody who saw it that something was not right.

Nevertheless, it did not make much difference to the public. Despite the obvious weakness of the bridge, people continued to drive on it, walk across it and get their pictures taken while standing in the middle of it as it gyrated wildly above the river. They did this for over four months knowing full well that something was amiss. Fortunately, no one was killed in 1940, when the wind finally twisted the bridge badly enough that it broke up and fell 100 feet into the Columbia River.

As an interesting aside, starting with the year 1900, the length of the average bull cycle has been 40 months and three weeks, which is probably close enough for land mines and hand grenades. It should be noted that during a bull market, approximately 90% of all stocks follow the 100-day moving average higher.


Aubrae DeBuse has been engaged with the markets off and on since 1959 and is presently a proprietary trader for a family foundation.