Deal Yourself an Ace

In This Issue: Deal Yourself an Ace Two New MLPs to Join the Party The Bear in the Room Is The New York Times Right? Market alarmists are warning of a market meltdown worse than 2008. Moneynews.com predicts a 50% crash in 2014. The New York Times says it's time to worry about a stock bubble. If you're at or near retirement, you don't need this stress. In fact, now may be a good time to play it safe with your nest egg. One income strategist is offering a "Stress-Free" Portfolio filled with high-dividend stocks from the U.S. and around the world. They offer stable cash flows and steady, reliable profits from yields of 10.05%, 10.10%, and 10.32%. It's worth a look. Details here. Deal Yourself an Ace 9/09/2014 By Thomas Scarlett Switzerland-based ACE Ltd. (NYSE: ACE) is one of the top global property and casualty insurers. Aided by its fortress-like balance sheet, Ace is highly regarded for its proven underwriting expertise, which in turn provides flexibility and pricing discipline even as low interest rates have moved some competitors to take on more underwriting risk. Over the past decade, Ace has stood out in its cyclical industry by increasing revenues, earnings and book value, as well as raising its dividend at a double-digit annual rate. But oddly enough, Ace shares are cheaper than the industry average. In fact, the current price-earnings ratio hovers around 10. With operations in 54 countries, ACE provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance and life insurance to a diverse group of clients. The company is distinguished by its broad product and service capabilities, exceptional financial strength, underwriting and claims handling expertise and local operations globally. The insurance companies of ACE Group serve multinational corporations and local businesses with property and casualty insurance and services; companies and affinity groups providing or offering accident and health insurance programs and life insurance to their employees or members; insurers managing exposures with reinsurance coverage; and individuals purchasing life, personal accident, supplemental health, homeowners, automobile and other specialty insurance coverage. With more than $94 billion in assets and nearly $23 billion of gross written premiums in 2013, ACE's core operating insurance companies maintain financial strength ratings of AA from Standard & Poor's and A++ from A.M. Best. ACE Group maintains executive offices in Zurich, Bermuda and New York, among other locations. ACE recently reported net income for the quarter ended June 30, 2014, of $2.28 per share, compared with $2.59 per share for the same quarter last year). Operating income was $2.42 per share, compared with $2.29 per share for the same quarter last year. Book value and tangible book value per share increased 3.8% and 3.9%, respectively, from March 31, 2014. Book value and tangible book value per share now stand at $90.19 and $73.77, respectively. Operating return on equity for the quarter was 11.8%. The property and casualty (P&C) combined ratio for the quarter was 87.5%. Evan G. Greenberg, Chairman and Chief Executive Officer of ACE Limited, commented: "ACE's excellent second quarter results were marked by strong earnings, very good premium revenue growth globally and continued expansion of our business in the majority of markets in which we operate -- both developed and developing. After-tax operating income of $825 million was driven by strong growth in underwriting and good investment income results, which together produced an operating ROE of about 12%. Per share book value increased nearly 4% in the quarter and over 6% for the year." The company can boast of 10 percent growth in underwriting, which was driven by current accident year underwriting income before catastrophe losses, which was up nearly 12% as a result of global P&C net earned premium growth of 8.5%, as well as margin improvement in the international business. On the investment side, net investment income was up over 4% -- a very good result in this environment which benefited from strong growth in invested assets. ACE Group recently launched a suite of professional indemnity (PI) wordings aimed exclusively at media companies domiciled outside the USA and Canada as it continues to expand its specialist capabilities for this growing sector of the economy. Technological developments are creating new challenges and risks for the media industry. To respond to this rapidly changing and increasingly complex risk environment, ACE has developed a suite of four new wordings tailored for the digital age aimed at broadcasters, media companies and publishers. The new products offer broad coverage for the specific exposures faced by the media industry. In addition, clients will benefit from ACE's ability to respond to global professional indemnity and errors and omissions requirements with worldwide jurisdiction as well as global issuance of local policies. The coverage includes defamation, confidentiality and privacy coverage. Also included are breach of contract, including breach of license (where the insured exceeds express limitations regarding the territory, duration or medium of distribution of a third party's copyrighted material), and breach of authority. Because of the company's strength, stability, value and shareholder-friendly policies, we recommend that you buy ACE for your personal growth portfolio up to 112. Pulling in $635,000 Per Day This first-class ultra-deep-water driller pulls in $635,000 per drill shop – PER DAY! – on 5-year contracts. This driller just signed a contract with Canada to provide a deep-water harsh environment rig so they can start drilling off the coast of Greenland. The price tag: $653,000 per day! The cash streams in so fast, this company pays out a hefty 10.6% yield. But business is booming and this yield could easily grow to 27.7% within 5 years! Today, the owner pockets $1 million a day in dividends! How much do you want to pocket? Read more here. Two New MLPs to Join the Party 9/09/2014 By Robert Rapier As of Sept. 1, some 130 master limited partnerships (MLPs) were traded publicly, with the vast majority involved in the production or transportation of fossil fuels. That number is set to grow by two more in coming weeks based on preliminary Securities and Exchange Commission filings. And while these omit key numbers like the expected price range and the minimum distribution, the recent record of other MLP debuts suggests these offerings will be in demand. USD Partners USD Partners (USDP) was formed by US Development Group to acquire, develop and operate energy-related rail terminals and other complementary midstream infrastructure assets and businesses. Its initial assets are: A ~173,000 barrel per day (bpd) crude-by-rail terminal in Hardisty, Alberta, capable of load up to two 120-railcar unit trains per day A 20,000 bpd ethanol rail terminal in San Antonio, Texas A 13,000 bpd ethanol rail terminal in West Colton, California In addition to these assets, USDP manages a fleet of 3,799 railcars. The partnership generates nearly all of its operating cash flow by charging fixed fees for handling energy-related products and providing related services, with no direct exposure to fluctuations in commodity prices. USD Partners projects continued strong growth in crude shipments by rail, and expects to grow via further acquisitions from its sponsor, USD. USD is a developer, builder, operator and manager of energy-related infrastructure and was one of the first companies to develop contemporary rail terminals for energy products. USD has developed, built and operated 14 unit train-capable origination and destination terminals with an aggregate capacity of over 730,000 bpd. Since 2006, USD has loaded and/or handled through its terminal network a total of more than 75 million barrels (MMbbls) of crude oil and more than 72 MMbbls of ethanol. USD's expansion projects of interest to USD Partners include the Hardisty Phase II and Hardisty Phase III, which would expand the capacity for handling and transportation of crude oil at Hardisty by two additional 120-railcar unit trains per day. The IPO is projected to raise $150 million. USD Partners expects the Hardisty terminal to account for 90% of its projected EBITDA of $38.7 million over the next year, with $27.1 million available for distribution to investors. Cone Midstream Partners Consol Energy (NYSE: CNX) and joint venture partner Noble Energy(NYSE: NBL) filed paperwork with the SEC for an initial public offering of a Marcellus midstream MLP that will be called Cone Midstream Partners (CNNX). Both sponsors are rapidly growing production in the Marcellus Shale in Pennsylvania and West Virginia, and they intend to use Cone Midstream Partners as their primary midstream services provider there. Initial assets of the partnership will be contributed by both sponsors and supported by fee-based, 20-year contracts covering 100% of expected revenue. These assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. Initial midstream assets are divided into three separate categories, which are referred to as "Anchor Systems," "Growth Systems" and "Additional Systems" based on their relative current cash flows, growth profiles, capital expenditure requirements and the timing of their development. Anchor Systems include midstream systems that generate the substantial majority of current cash flows and that are expected to drive growth over the near term as average throughput on these systems increases from the sponsors' growing production. Growth Systems include high-growth, developing gathering systems that will require substantial expansion capital expenditures over the next several years, the substantial majority of which will be funded by the sponsors in proportion to their retained ownership interest. Additional Systems are smaller, lower-growth gathering systems that are expected to generate stable cash flows and require less capital spending over the next several years. The IPO is projected to raise up to $350 million. For the 12 months ending Sept 30, 2015 the partnership forecasts EBITDA of $67.4 million, with $58.2 million of distributable cash flow available for investors. This article originally appeared in the MLP Investing Insider column. Never miss an issue. Sign up to receive MLP Investing Insider by email. The Tech-Energy Boom Figuring out where the next energy boom will take place should be as simple as following the technology. After all, it's the technology behind oil and natural gas production that's driving America's new energy boom. The problem is, exploration companies operate in a shroud of secrecy to maintain an advantage over their competitors. So instead of placing a bet on a driller and hoping their white-coat whiz kids will hit it big, I have a better idea. Put your money into six companies I've found that profit no matter which exploration company hits it big. I'll give you the profitable story here. The Bear in the Room 9/05/2014 By Richard Stavros During the Internet Bubble, one warning sign it would pop was the book "Dow 36,000." Today it's Morgan Stanley predicting the Standard & Poor's 500-stock index will hit 3,000 in the next five years -- that would be a 50% gain from the S&P's current level. Both are predictions of radical new highs when the market is already pushing its limits. Morgan Stanley economists based their forecast on earnings growth of 6% a year and a S&P 500 price/earnings ratio of about 17, according to new report titled "2020 Vision: Long Live the Expansion." Given some big companies are growing earnings greater than 5% that might seem possible at first glance. But the growth is based on Federal Reserve stimulus (which is being cut back) and stock buybacks (which are being cut back). What is generally driving the earnings growth, according to investment bank Societe Generale, isn't improvements in cash flow. The bank found one-time gains such as write downs, assets sales and restructuring charges were often responsible. In a report, the bankers echo a concern shared by many that income gains come from cutting expenses rather than investing in new business. Another concern comes from University of Massachusetts professor William Lazonick in a recently published paper in the Harvard Business Review titled, "Prosperity without Profits."Lazonick found profits were spent on stock buybacks and dividends instead of investing in new business. His study showed that from 2003 through 2012 companies in the S&P 500 used 54% of their earnings---$2.4 trillion---to buy back their own stock, Dividends accounted for another 37% of their earnings. That left "very little" for improving productivity or paying employees more, he wrote. Meanwhile, some asset managers are betting against the market. According to Bloomberg, Oaktree Capital Group, the world's biggest distressed-debt investor, is seeking $10 billion for a new fund with plans to sit on most of the money until rising markets reverse course. An Oak Capital manager told Bloomberg that the combination of a drop in credit standards and the record in new junk bonds means more of the distressed debt they feed on is coming. Demographics are Destiny I'd love to see five more years of expansion, but I'm not betting on it -- except when it comes to certain global companies, such as the ones we've selected for the Global Income Edge portfolios. Global companies tap emerging markets, and emerging markets are where the growth will be. The new book by economist Thomas Piketty, entitled "Capital in the 21st Century," says that from 1900 to 1980, 70% to 80% of the global production of goods and services were concentrated in Europe and America. By 2010, the European-American share had declined to 50%, or about the same level of 1860. He writes this share will probably "continue to fall and may go as low as 20% to 30% at some point in the twenty first century." Piketty isn't the only one that has been focusing on these issues. In its recent World View paper, J.P Morgan Asset Management finds that the, "The U.S. economy is likely to grow at a rate closer to 2% instead of its long-term average of 3% in part because fewer workers are entering the workforce. Most developing countries don't have that problem. So while the growth of developed economies in general, and the U.S.'s in particular, is debatable, the growth of developing markets isn't. And that means a smart global investment strategy that safely taps developing markets is in order. The Seven Hottest Oil Plays in Canada Canada is a hotbed for oil activity right now… and it should be. The Maple Leaf nation is sitting on 174 billion barrels of oil. For most countries, that would be enough. But not for our neighbors to the north. Because just a few months ago, Canada seized a frozen tract of land in the Arctic Circle that is estimated to have another 90 billion barrels of oil. And I've identified the seven companies that stand to benefit the most. I'll give you all their details here. You are receiving this email at benjamart.ss.stock@blogger.com as part of your subscription to Investing Daily's Stocks To Watch, published by Investing Daily. To ensure delivery directly to your inbox, please add postoffice@investingdaily.com to your address book today. Email Preferences | About Us | Premium Services | Contact Us | Privacy Policy Copyright 2014 Investing Daily. All rights reserved. Investing Daily, a division of Capitol Information Group, Inc. 7600A Leesburg Pike West Building, Suite 300 Falls Church, VA 22043-2004 U.S.A.