Small Cap Analysis

How Dangerous are Five of the Most Heavily Shorted Small Cap Stocks?

Luke Jacobi — Fri, 17 May 2013 20:15:00 +0000

Blyth (NYSE: BTH)

Blyth sells household and weight management products utilizing direct marketing tactics. This marketing strategy accounts for over 75 percent of sales, a technique it began using in 1990. Aside from direct marketing, catalog and Internet sales represented 12 percent of total sales for the year that ended December 2012.

Currently, an astounding 81.75 percent of Blyth’s float is sold short. Much of investor’s concern stems from Bill Ackman’s attack on Herbalife (NYSE: HLF). Blyth’s practice of direct marketing is very similar to the marketing strategy utilized by Herbalife, which many investors consider a pyramid scheme. Shares are trading at $14.55 after Blyth earnings missed analyst estimates last week.

Spectrum Pharmaceuticals (NASDAQ: SPPI)

Spectrum Pharmaceuticals acquires, develops and commercializes hematology and oncology drugs. The company currently markets three drugs in the United States, with two more in late stage development. Spectrum plans to expand its business by increasing sales of its marketed pharmaceuticals and optimizing its development portfolio.

Recent investor concern for Spectrum includes a loss of market share to generic forms ...

Institutions are Buying RF Industries, Should You Too?

Luke Jacobi — Fri, 17 May 2013 18:48:48 +0000

RF Industries (NASDAQ: RFIL) designs, manufactures and markets interconnect products (fiber optic and other specialty cables) and radio frequency wireless modems.

These products are sold to individual customers, processed further and sold to governmental entities. While products are designed in California, most are manufactured by third parties in Asia.

Analysts estimate the size of the interconnect products industry to be approximately 46 billion with no entity controlling no more than 15 percent of the market. With limited financial resources as compared to competitors, RF Industries competes on the basis of quality, price and value added support to customers.

Major risks for the company face include control over manufacturers, limited customer diversity and quickly changing technology. As products are largely produced by third parties, RF has limited control over quality, and cannot be certain that ...

Is Core Molding Technologies Right For Your Portfolio?

Luke Jacobi — Thu, 16 May 2013 17:45:19 +0000

Investors looking to add a small cap company in a unique industry to their portfolios should consider Core Molding Technologies (NYSE: CMT)

Core Molding Technologies works extensively with reinforced plastics, producing sheet molding compound and molding fiberglass reinforced plastics. The firm has four production facilities with three in the United States.

Core Molding Technologies is working to use reinforced plastics in place of metals, citing advantages of heat and corrosion resistance, lower cost and lighter weight as reasons for its superiority. In the annual report, the company claims to be one of the four largest producers of reinforced plastics, and plans to beat competition with superior quality, engineering capability and cost. Making concessions, competitors with larger financial resources, research and development and manufacturing capabilities are acknowledged.

Investors ...

China ETFs Are on Fire

ETF Professor — Wed, 15 May 2013 17:38:48 +0000

Despite constant refrains regarding compelling valuations, Chinese stocks and the corresponding ETFs got off to disappointing start this year. For most China ETFs, the year-to-date numbers are still in the red.

However, the valuations are still attractive and many China ETFs, popular and obscure, have been surging over the past month. The iShares FTSE China 25 Index Fund (NYSE: FXI), the largest China ETF by assets with over $6.8 billion, currently has a P/E ratio of 13.57 and a price-to-book ratio of just over two, according to iShares data.

The $1.04 billion SPDR S&P China ETF (NYSE: GXC) is even cheaper with a P/E of 9.71 and a price-to-book ratio of 1.53. Both FXI and GXC traded at noticeable discounts to the iShares MSCI Emerging Markets Index Fund (NYSE: EEM), which currently sports a P/E over 18 and a price-to-book north of three, according to iShares data.

If the returns accrued by FXI, GXC and other China ETFs over the past month are any indication, investors are again starting to warm to Chinese stocks. In the past month, FXI has surged 8.1 percent, making the second-best performer among the four major major ETFs tracking the BRIC nations. Only the WisdomTree India Earings ETF (NYSE: EPI) has been better. Since April 11, FXI has trounced the comparable Brazil, ...

Two Global Small-Cap ETFs Merit Consideration

ETF Professor — Fri, 10 May 2013 17:40:53 +0000

It has been a good year for small-caps and the major ETFs that house them. The iShares Russell 2000 Index Fund (NYSE: IWM) is up 14.3 percent year-to-date while the Vanguard Small-Cap ETF (NYSE: VB) is higher by 15.6 percent.

Decent performances to be sure, but not spectacular when considering the SPDR S&P 500 (NYSE: SPY) is up 14.9 percent with noticeably less volatility.

Increased volatility is usually part of the equation when dealing with small-caps, even more so when evaluating global small-cap equities and ETFs. However, those investors that are willing to take a look at international stocks with smaller market caps can find some rewarding options.

Better yet, let ETFs remove the stock-picking burden and consider these international small-cap funds that offer more upside for the rest of this year.

WisdomTree Europe SmallCap Dividend Fund (NYSE: DFE)
There are a couple of things about this ETF that need to be addressed right off the bat. Yes, DFE is a dividend ETF, but it is not a great yield play as its 30-day SEC yield is just 1.93 percent. Second, it is fair to ...

Three Top Performing Healthcare Stocks to Watch

Scott Rubin — Mon, 06 May 2013 19:53:30 +0000

The healthcare sector has been a very strong performer in 2013, driven in part by a near 12 percent rise in the S&P 500.

The iShares Dow Jones US Healthcare ETF (NYSE: IYH) had climbed better than 19 percent and the SPDR S&P Biotech ETF (NYSE: XBI) has also been outperforming the major averages with a gain of over 20 percent already in 2013.

A total of 22 mid-cap healthcare stocks with market capitalizations greater than $2 billion are already up over 30 percent so far this year. Below, Benzinga takes a closer look at two of these stocks along with a micro-cap natural products company.

Seattle Genetics (NASDAQ: SGEN)

This company sports a market cap just south of $4.5 billion and the stock has been a Wall Street winner in recent years in the wake of FDA approval for its product called ADCETRIS. The drug was approved in August 2011 and led to a sharp spike in revenue for fiscal 2012. This corresponded with a steep uptick in the stock in 2012 which has actually accelerated in 2013.

Over the last 5 years, SGEN has climbed around 260 percent, including a gain of around 60 percent in 2013 alone.

ADCETRIS has been approved for the treatment of Hodgkin lymphoma and a rare lymphoma known as systemic anaplastic large cell lymphoma. The treatment is an antibody-drug conjugate that combines an antibody and drug which allows the antibody to direct the drug to a target on lymphoma cells known as CD30.

In addition to its approved product, Seattle Genetics boasts a diversified pipeline of antibody-drug conjugates, putting the company at the cutting edge of cancer treatment research and development.

The success of ADCETRIS and excitement about the company's pipeline has driven Seattle Genetics' valuation higher and higher despite the company only being projected to record fiscal 2013 revenue of roughly $221 million. As with most biotech stocks, uncertain future revenues make the stock ...

The Best of The "Other" Japan ETFs

ETF Professor — Wed, 01 May 2013 17:22:02 +0000

Being bullish on Japan over the past six months has certainly been profitable. That much is highlighted by the WisdomTree Japan Hedged Equity Fund (NYSE: DXJ), the most impressive ETF in 2013 on asset-gathering basis.

It was not that long ago that DXJ had less than $1 billion in assets under management. Today that number is close to $7.7 billion and investors have been rewarded for their faith in this is ETF. Over the past six months, DXJ has surged over 50 percent compared to 30 percent for its primary rival, the iShares MSCI Japan Index Fund (NYSE: EWJ). In the process, the experts and pundits that preferred EWJ because it was the more established name now look downright silly.

Abenomics, as Japan's yen weakening gambit has become known, has benefited plenty of other ETFs tracking the world's third-largest economy. Some of those ETFs are not even Japan-specific plays. For a look into the world of ETFs with significant Japan exposure outside of DXJ and EWJ, consider the following funds.

WisdomTree Japan SmallCap Dividend Fund (NYSE: DFJ)
Japanese small-caps have arguably flown under the radar during this renaissance for the country's equity markets. That is perhaps the result of U.S. investors limiting the universe of Japan-specific ETFs to DXJ and EWJ, but the WisdomTree Japan SmallCap Dividend Fund merits a place at the adult table.

DFJ is up 17 percent in the past three months and while not on par ...

Emerging Markets Small-Caps ETF Soars Above Large-Cap Rivals

ETF Professor — Tue, 30 Apr 2013 17:33:16 +0000

The proverbial they say it has been a bad year for emerging markets equities and ETFs. They are correct, but only to a limited extent as it has been the largest developing markets and the corresponding ETFs that have been real laggards.

By focusing on large-cap emerging markets stocks and some of the ETFs that hold those shares, plenty of investors would be lead to believe 2013 has been a dreadful year in which to be long developing markets. They may not know that the opposite is true of emerging markets small-caps. The WisdomTree Emerging Markets SmallCap Dividend Fund (NYSE: DGS) proves as much.

The WisdomTree Emerging Markets SmallCap Dividend Fund's underlying index, the WisdomTree Emerging Markets SmallCap Dividend Index (WMS), offers exposure to all 10 major sectors (financial services, industrials, discretionary, etc.), and in all 10 cases the index has outpaced large-cap an equivalent large-cap index.

For example, telecommunications shares in the WisdomTree Emerging Markets SmallCap Dividend Index were up 16 percent through April 10 compared to 4.3 percent loss for the same sector in the MSCI Emerging Markets Index, according to WisdomTree data.

Consumer staples and health care names in the small-cap index sported double-digit returns while ...