ShopHouse is a Southeast Asian restaurant concept developed by Chipotle Mexican Grill, Inc. It adapts the foundation of Chipotle’s (CMG) business to an Asian cuisine. The principles are the same: source responsibly raised ingredients, cook food in front of the customer in an interactive format and offer a unique dining experience.

This concept began with the first restaurant in Washington DC in 2011. Now ShopHouse is taking off, resulting in an expansion to a second store in D.C. and two more stores in Los Angeles.

A few days ago, Chipotle announced four more leases for additional locations. Two of the locations are planned for Maryland, one in DC, and one in Westwood, California. All these stores are expected to be opened by late 2014.

Let’s compare this rate of growth with Chipotle’s original stores. The first Chipotle opened in 1993 with the second and third locations appearing in 1995. By 1996, there were eight stores. It wasn’t until 1999 that Chipotle opened outside of Colorado.

This was also the beginning of Chipotle’s decade-long evolution to offer all natural ingredients including meats, zero trans-fat frying oil, organic beans, and rBGH-free cheese.

It took Chipotle three years to expand to eight locations and another three years to begin opening outside its home state. I believe ShopHouse is on track for follow the same growth trajectory as Chipotle, even as the parent company reiterates that its plans for the concept are not accelerating and will focus its growth on its core business.

If ShopHouse continues to grow at this rate, by 2017 it will begin expanding outside of Maryland, the District of Columbia, and California, followed by a decade of operational and cultural refinement.

Steve Ells, the founder, chairman and co-CEO even hinted at the parallels between the two restaurants himself: “The response we have seen to ShopHouse reminds me very much of what I saw when I opened the first Chipotle.”

The ability for a restaurant chain to maintain its core business while cultivating a child-chain of stores at the same historical rate as the original restaurant gives me confidence that ShopHouse might be just as successful - and a driver for ongoing growth for Chipotle.

Happy 20th anniversary, Chipotle.

Image: ShopHouse

The investments discussed are held in client accounts as of 5/31/2013.  These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable.

The post Chipotle spin-off ShopHouse looks like a winner appeared first on Smarter Investing

Covestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures. For information about Covestor and its services, go to http://covestor.com or contact Covestor Client Services at (866) 825-3005, x703.

Jonathan Wee

I’m a growth investor with a long-term view on macroeconomic trends. As a systems engineer, I use processes and tools…

In May, positive developments in the US housing market have raised questions about whether the U.S. Federal Reserve will start reducing its monetary stimulus. Despite the strong home prices, housing stocks in my portfolio (PHM) and (LEN) recorded some price decreases following the increases in long-term interest rates.

I do not believe that the positive developments in the housing market are strong enough to reduce the monetary stimulus just yet. First of all, the data show that new housing starts are still below of what they used to be in 2005.

One can hardly start talking about a real estate bubble. Furthermore, thanks to the low oil prices, inflation is still very low. The purchasing manager index has been trending down in the last two months.

There is an ongoing recovery in the economy, but I believe this is still too fragile to stop the financial stimulus yet. The debate is now about the extent of tapering, and we are less convinced about an early Fed move. Inflation has been trending lower recently; in April, inflation grew at 0.7% reaching the lowest reading since 2009.

As far as the metal prices are concerned, subdued inflation expectations have led to underperformance of the gold (EGO) and silver stocks (SLW) in my portfolio. However, I continue to expect that their inflation-hedging potential may come into play later in the year, especially if Fed does not taper its quantitative easing.

The recovery in the US seems to be consumer driven, despite the lack of significant increases in real incomes. The consumer confidence index is strong and homeowners seem to enjoy the positive equity effect of increasing house prices.

In addition, oil prices remain low, fuelled by the sluggish global economy and increasing US supply. In my opinion, all these factors may stimulate the consumer demand for new autos.

In May, therefore, I sold AutoZone (AZO) just after it was announced that the company’s earnings beat earnings expectations. I believe that this stock has already reached its fair value and with the improvements in the US economy and there is not much upside left, as better consumer confidence is expected to increase the demand for new cars, reducing the demand for car repairs and reducing future revenue growth for this company.

One encouraging sign in the economy that does not seem to get much coverage is the reduction in bank-loan delinquency rates. In the last quarter these rates were as low as 1%, the lowest in the past 25 years.

The fall in these rates is an indication that the monetary stimulus program has been so far successful despite some mixed economic data in the first week of June. I believe that these developments  should benefit banking stocks. Therefore, I continue to believe that I will see further upside with stocks such as Bank of America (BAC).

In May I added First Solar (FSLR) to the portfolio. I believe this stock may perform well in the mid-to long-term time period. Furthermore, the latest tariff imposition by the EU on Chinese solar imports, albeit lower than expected, should benefit FSLR.

The investments discussed are held in client accounts as of May 31, 2013. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable.

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Covestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures. For information about Covestor and its services, go to http://covestor.com or contact Covestor Client Services at (866) 825-3005, x703.

Banu Simmons

I have a decade of financial sector experience as an econometrician/quantitative analyst. Furthermore, I conduct academic research on equity analysis…

The times are a-changin’ in the stock market, says Charles Sizemore, founder of Sizemore Capital and a portfolio manager on the Covestor platform - and so is his personal approach to making dividend-paying stock picks.

“The market as we know it is sort of upside down,” Sizemore said in his latest Google Hangout interview. “The defensive stocks that are normally quite conservative led most of the year and behaved like growth stocks, whereas growth stocks languished. But now we are seeing a bit of rotation, and dividend-focused things are underperforming.”

One reason, Sizemore says, is that interest rates are starting to rise. As The New York Times Dealbook reports, investors and banks have been demanding higher payments for their loans in recent months, pushing up both interest rates and bond yields.

According to Sizemore, a 30-year bull market for bonds may soon be ending. He joins JP Morgan Chase CEO Jamie Dimon among the voices warning that interest rates are heading up, and so, too, are the yields on bonds - another way of saying that bond prices are now falling.

Falling bond prices have the potential to make many dividend-paying stocks less attractive to investors, Sizemore says. One reason is that companies that were able to borrow at very low rates in order to increase their dividends may no longer be able to do so.

“When (bond) yields were going lower and lower every year, it made sense to buy yield-focused investments that behaved similar to bonds,” he said. “But in a rising rate environment, that does not work as well.”

Sizemore notes that there are technical warning signals for the markets including a weak transportation sector relative to industrials.

That alone does not spell doom, although he says it’s among the reasons that the stock market may see additional churn in coming months.

And in a rising interest rate environment, he thinks that traditionally defensive stock sectors including utilities may not be the best hiding place. Rising rates could translate to higher borrowing costs -- and ultimately a higher cost of doing business for industry groups, such as utilities, that routinely use debt to finance infrastructure purchases

Sizemore says that his strategy now involves adding dividend-paying companies to his portfolio that have little debt, and have an earnings stream that he believes will allow those companies to raise dividends going forward. It helps, he says, if he can buy those stocks at historically low price-to-earnings ratios.

One of the industry sectors to find those stocks, he says, is technology. A few of the many dividend-paying stocks he is now holding in his Dividend Growth portfolio are Microsoft (MSFT), Cisco (CSCO), and Intel (INTC).

“The old tech stocks are the sweet spot right now,” Sizemore says. “The dividend payouts are surprisingly good. And the growth in dividend rates is hopefully there.”

This replay represents statements made live on June 12, 2013. All opinions included in this material are as of June 12, 2013 and are subject to change. The opinions and views expressed herein are of the portfolio managers and may differ from other managers, or the firm as a whole. All investments involve risk (the amount of which may vary significantly) and investment recommendations will not always be profitable. Past performance does not guarantee future results.

The post Sizemore: How I'm playing the end of a 30-year bull for bonds appeared first on Smarter Investing

Covestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures. For information about Covestor and its services, go to http://covestor.com or contact Covestor Client Services at (866) 825-3005, x703.

Charles Sizemore

Sizemore Capital Management LLC is a registered investment advisory firm located in Dallas, Texas. Charles Lewis Sizemore, CFA is the…

As the first half of 2013 comes to a close, I decided to take a step back and review my Dividend Paying Large Cap portfolio and key activities year-to-date. I have made a few major new investments this year, but for the most part am pleased with the results I’ve seen in the first half of 2013 from my ‘slow and steady’ approach to investing.

In April, I consolidated my portfolio and liquidated some of my holdings, not because of any deterioration in the underlying securities, but because I believed (and still do) that there are better opportunities available in the current market.

In May, my only addition to my portfolio was Oracle (ORCL).

In my personal opinion, ORCL will probably continue to outperform the rest of the market for the remainder of the year for three main reasons:

1. The exponential propagation potential of cloud computing systems and processes.

2. Expanded loyalty base as it becomes increasingly difficult for companies to easily move their data storage from one provider to another.

3. More frequent hardware and software updates due to mandatory upgrades typical of subscription models.

You can read a more detailed explanation of why I think Oracle is a good stock here.  Two of the things I like most about Oracle are the company’s commitment to buying back stock, and the competitive return on equity. Both of these factors are green lights for me when I buy any stock on the market.

In terms of my sellouts, I have a few thoughts. I believe Coca Cola (KO) and Pepsi (PEP) are great companies, but after a positive first quarter in 2013, they started to look a little bit too expensive as compared with other equities on the market today.

So far I believe this rebalance in my portfolio is working quite well.  As of May 31st, 2013 my portfolio is up 3.9% (net of fees) while the S&P 500 Index is up 3%. This will be the second consecutive month where my portfolio has outperformed the S&P 500 Index.

In 2013, my largest holding continues to be Apple (AAPL), which accounts for about 11% of my portfolio. However, as we move into the second half of 2013, this is a stock that I have under close observation and will plan to downsize if the company doesn’t release any new products by 2014 (which I doubt they will).

Apple has an incredible market advantage when releasing new products and services, but in my opinion, it is taking the company too long to capitalize on this advantage. I think an Apple-powered streaming music service that can compete with Pandora (P) and Spotify is long overdue, as is a new iPhone with NFC (near field communication) capabilities at a lower price point.

I believe the release of the Apple TV is taking too long as well, and in delaying the release, Apple is allowing their competitors to catch up. Samsung now offers smart TVs with Internet access and apps.

If Apple doesn’t launch their version soon, people may get too comfortable using Samsung’s version and not care about what Apple has to offer.  If Apple releases any product this year, I believe that alone would be enough to take the stock to new heights (as any new product release almost inevitably does).

I look forward to seeing how everything plays out this year. If things stay the same at Apple by December though, I may reduce my exposure in 2014.

As we move into the second half of 2013, a position that I will be closing is Occidental Petroleum (OXY). This month the company reached its historic average valuation. The PE 10 (current stock price divided by the average of the last 10 years of earnings per share) is 17.06, while its PE ratio is 17.37.

OXY's price is 0.77% under its historical valuation, and based on my calculations, the fair price of OXY should be $95.  This is fairly close to the current price. The way I calculate the fair price is as follows:

First, I calculate the fair value of a company by combining two valuation methods. The first method is the PE valuation method. This valuation method corrects for any recent price appreciations or discounts by assuming that the value of the company will be in line with its historical valuations based on PE ratios. In the case of OXY, the fair price would be $76.56. (PE Ratio 5 year average 14.11 x earnings per share $5.42)

The second valuation method I use is the PS valuation method that applies a historical average of median Price to Sales Ratios to current trailing 12 months sales numbers. According to this method, the fair price of OXY would be $113.44 (PS ratio 3 years average 3.839 x Sales per Share $29.55)

I then average the fair value of both valuations - in this case, the PE valuation method ($76.56), and the PS valuation method ($113.44). The average of these two valuations is $95.

As I look ahead to the second half of 2013, I think now is the time to rebalance my stock portfolio further. I believe there are other stocks with better opportunities right now.  I look forward to scouting them out and sharing my findings in future posts.

The investments discussed are held in client accounts as of May 31, 2013. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable.

The post Apple: Time to trim back my biggest holding? appeared first on Smarter Investing

Covestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures. For information about Covestor and its services, go to http://covestor.com or contact Covestor Client Services at (866) 825-3005, x703.

Libardo Lambrano

I am a value investor, an investment philosophy that boils down to investing in undervalued, under-researched and unpopular companies. Reasons…

Fed Chairman Ben Bernanke, in a speech to the Joint Economic Committee of the U.S. Congress on May 22, 2013, hinted that the Fed would someday taper its monthly buying program of $85 billion in longer-term Treasury bonds and Mortgage Backed Securities.

“Someday” is probably when unemployment drops below 6.5% and inflation rises above 2%. Big banks panicked by selling bonds based on Bernanke’s comments, and drove up bond yields worldwide. Their panic was manifested by the Dow Utility index being driven down 14% at the open on May 23, for about 15 minutes.

I personally believe that the so called “big bank panic” also drove down utility prices, Japanese stock prices, and more. Chinese manufacturing weakness was revealed on May 23 and this news also drove down Chinese stock prices.

I believe bank short selling has only enough powder to drive a sharp drop in prices for a few days. Hedge funds and banks all share the same information instantaneously and act together. In my opinion, the market declines were premature and prices will recover within several days.

I like banks, small-cap value stocks, Dow and S&P 500 Index stocks at this time. I don’t see a sharp move higher or lower here, first a recovery then a muddling through increase over time.

My personal analysis indicates that all style-box indexes have good momentum with value ahead of growth.

I believe utilities and gold have negative momentum, and semiconductor, oil, and finance momentum are positive. The world indexes have positive price momentum with Germany highest, followed by U.S. and the U.K.

Because the markets can turn quickly, be ready. May the market be with you.

The post The fed won't tighten until jobless rate dips below 6.5% appeared first on Smarter Investing

Covestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures. For information about Covestor and its services, go to http://covestor.com or contact Covestor Client Services at (866) 825-3005, x703.

Gary Harloff

Harloff Capital, an SEC registered investment advisor was founded by Gary Harloff. Gary has a Ph.D. in Aerospace Engineering and…

Nobody knows the exact day the U.S. Federal Reserve will reverse course and begin withdrawing liquidity from money markets. But everyone knows that day will indeed arrive - and some market participants believe it is already time to adjust  portfolios for a new period of rising interest rates.

That realization is behind the recent slump in Treasuries and global sovereign bonds (rising rates tend to depress bond prices, all things being equal). Global government bonds have just absorbed their seventh-worst month in 28 years, while bond funds suffered their biggest weekly redemption since the financial crisis, as Kopin Tan noted in an outlook piece in the latest edition of Barron’s.

10 Year Treasury Rate data by YCharts

It looks like the much-expected Great Rotation out of bonds and into stocks that analysts like Bank of America analyst Michael Hartnet began talking about late last year has finally arrived. As the housing market recovers, the economic recovery should strengthen, which should make stocks even more attractive according to Hartnett. “If bond yields begin to rise alongside homebuilder and bank stocks, a major asset allocation shift would be warranted, in our view,” he argued.

Warren Buffett recently caused a stir in the markets when he called bonds a "terrible investment," what with the economy on the mend and stocks still offering attractive valuations.

David Kelly, chief global strategist of JPMorgan Funds, sees an orderly rise interest rates that won’t cause U.S. stocks much trouble until they surpass the 5% mark. Yet even a gradual rise will have big market implications, according to Kelly:

Every one percentage-point increase in rates -- say, if the 10-year yield were to climb from 2.16% to 3.16% -- could mete out losses of 7.9% for 10-year Treasuries, 4.1% for treasury inflation-protected securities, and 3.3% for corporate bonds. Kelly advocates underweighting fixed-income in general, but within bonds, leaning more on convertibles and high-yield, which hold up better as rates rise. Among stocks, a one-point rise in long rates could translate into gains averaging 2.1% for materials, 1.5% for technology, 1.3% for energy, and 1% for consumer discretionary, but losses of 1.5% for staples, 2% for healthcare, and 2.3% for utilities.

Meanwhile, Bloomberg’s Whitney Kisling has an interesting piece out noting that stocks tend to rise during periods of Fed tightening.

The Standard & Poor’s 500 Index, which has fallen 2.5 percent from its May 21 record, rallied an average 16 percent over two years the last four times the central bank started raising interest rates, according to data compiled by Bloomberg. While the 87 percent gain since December 2008 is the biggest following Fed reductions, the advance hasn’t pushed valuations above historical averages.

In the current market environment, commodities don't appear an attractive option, unless you like speculating in orange juice. World commodity prices have taken a beating in recent weeks, as middling economic growth in the U.S. and China and Europe’s debt problems are weighing on demand for all manner of raw materials.

The scale of the commodities slump is summed up nicely in this chart courtesy of Bespoke Investment Group, which recently described the situation with precious metals as an “absolute bloodbath.” Here's how major commodities have fared this year as of June 17.

If you're interested in income investing, check out some the Covestor portfolios that focus on generating yield income.

Photo Credit: martinak15

The post Investing in the time of rising interest rates appeared first on Smarter Investing

Covestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures. For information about Covestor and its services, go to http://covestor.com or contact Covestor Client Services at (866) 825-3005, x703.

Thanks to the Boston Business Journal for picking up the news of our recent financing round:

The company, which relocated from New York City to Boston's financial district in November, reports that it will use the new funding to support further growth of its marketplace.

Covestor allows users to comparison shop for money managers and financial advisers, and offers more than 100 portfolios on its site which customers can mirror in their own investing. The company reports that the 10 most popular managers on Covestor have beaten the S&P 500 index by 28.5 percent over the last year.

The post Boston Business Journal covers our recent financing round appeared first on Smarter Investing

Covestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures. For information about Covestor and its services, go to http://covestor.com or contact Covestor Client Services at (866) 825-3005, x703.

Justin Uyehara has a 10 year track record with Marketocracy, showing an annualized return of 30% a year, net of fees. By comparison, the S&P 500 returned less than 9% a year during the same period. Justin is up a cumulative 240% over the past 5 years, and up 22% so far this year, net of fees. He is profiled in the book “The Warren Buffetts Next Door” by Forbes Investment Editor Matt Schifrin. Could Justin Uyehara be the next Warren Buffett?

Investment Style

With a portfolio turnover rate that has at times exceeded 3000%/year, Justin Uyehara’s investment style is very different than Buffett’s. Where Buffett has come to define value investing, Justin is the quintessential swing trader.

Buffett likes stocks that have solid, steady growth. Justin likes volatile markets because that’s when the swings between the highs and the lows are at their biggest. Buffett likes to find stocks that he can hold forever. It is rare for Justin to hold onto a stock for more than a few months.

However, to me, its more important that he deliver Buffett-like returns than that he make the same decisions Buffett would have.

A Great Stock Picker

Over the past 10 years, Justin has invested in a total of 1204 stocks at one time or another, and made money on 797 (66%) of those stocks. Careful stock selection is a key to Justin’s success.

A Decent Trader With An Excellent Sell Discipline

Justin’s average gain to loss ratio is 1.08. This ratio tells me that on average he makes 8% more when he is right about a stock than he loses when he is wrong. To keep this ratio above 1.0, you have to be good at cutting your losers off while the losses are small. In 2008, when the market was crashing, Justin’s discipline led him to sell relatively early while the losses were small. As a result, in 2008 when the S&P 500 fell 37%, Justin was down just 1.2%, net of fees.

Profitable In Many Sectors

This table shows which sectors and market caps accounted for Justin’s gains and losses over the past 10 years. What is unusual about Justin is that he has made money in all market caps, and nearly all sectors.

My Assessment

Put together, these statistics tell me that Justin’s return comes from making lots of trades in every sector and market cap which are small wins but where the winners outnumber the losers roughly 2 to 1.

He accomplishes this by looking at stocks that are making a big move up or down on high volume because that’s when something has changed which affects the opinions of people holding lots of shares. He then looks at what changed and makes a judgement call about whether, or not, the stock price move has more room to run. Of all the stocks he has chosen to buy over the past 10 years, Justin’s judgement call was right 66% of the time.

Recent Trades

Buy Proshares Ultrashort Yen (NYSE:YCS)

Japan’s central bank is conducting a massive quantitative easing program which will double the country’s money supply by injecting $1.4 trillion at about $70 billion/month into their economy. To put this in perspective, the U.S. Federal Reserve is injecting $85 billion a month into the U.S. economy which is 3x the size of Japan’s. Two days ago, the yen strengthened after the Bank of Japan neither increased or decreased the program. However, as long as the program is in place, the longer term trend for the yen has got to be down so yesterday’s move is a short-term, tradeable counter-trend rally against the long-term trend being engineered by Japan’s government.

Sell Proshares Ultrashort Gold (NYSE:GLL)

The post Finding the next Warren Buffett: Justin Uyehara appeared first on Smarter Investing

Covestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures. For information about Covestor and its services, go to http://covestor.com or contact Covestor Client Services at (866) 825-3005, x703.

Marketocracy

Marketocracy chooses investment managers from a pool of more than 100,000 individuals. The top managers, based on the firm’s risk…

Thanks to peHUB for picking up our financing news and press release:

Covestor said on Thursday that it has raised $12.75 million in Series B financing. Investors participating in the round included Union Square Ventures, Spark Capital, Amadeus Capital Partners and Bay Partners. Based in Boston, Covestor is an online marketplace for investing.

* * * 

PRESS RELEASE (BOSTON) June 13, 2013 — Covestor, an online marketplace for investing, announced today it has raised $12.75 million in a Series B financing round. Investors in the round included Union Square Ventures, Spark Capital, Amadeus Capital Partners, and Bay Partners. The Series B financing brings the total capital Covestor has raised to $28 million.

Covestor will use the proceeds to accelerate its growth and continue its mission of providing investors with access to alpha-focused portfolio managers in an online marketplace. With over 100 portfolios available on covestor.com, the company provides exceptional levels of transparency and liquidity to investors who believe that actively managed portfolios can perform better than index averages.

The 10 most popular managers with the most client assets invested in their Covestor portfolios have beaten the S&P 500 index by 28.5%, gross of fees, over the last year (as of June 10).

“Research has shown that smaller, more nimble managers can outperform large hedge funds,” said Sanjoy Ghosh, Covestor’s recently appointed Chief Investment Officer. “This is why we are excited to help investors connect with portfolio managers we specifically select from thousands of people who propose to offer their products on Covestor’s marketplace.”

Ghosh joined Covestor in May from PanAgora Asset Management where he was Director of Investments. Prior to that, he worked at Putnam Investments.

The company’s previous rounds of financing were used to build Portfolio Sync, a proprietary trading capability that replicates trades of hedge fund managers, individual investors, and other active portfolio managers. Covestor’s Portfolio Sync software platform has successfully replicated over 500,000 trades.

Covestor’s CEO, Asheesh Advani, said, “The industry appears to have abandoned active money management. Covestor has not. We have observed how portfolio managers, emerging hedge fund managers, and investors have been able to outperform the market. Our marketplace connects investors who seek higher than market index returns with a curated set of managers who share that goal.”

Covestor relocated from New York City to Boston’s financial district in November, 2012. In recent months, the company announced the appointments of two new board members:

- Independent Board Member Jamie Cornell, former President of Private Wealth Management at Fidelity and currently Managing Director of Bollard Group, a multi-family office.
- Independent Board Member John Sinclair, former Director of Research at Fidelity and currently Managing Director at Infusion Global Partners, an alternative asset management firm.

In May, Covestor also hired a New Business Manager, Compliance Analyst, Controller and Developer.

About Covestor

Founded in 2006, Covestor is widely regarded as a pioneer in bringing separately managed accounts (SMAs) online in a transparent marketplace. Investors can compare and select from a transparent marketplace of money management talent that includes renowned portfolio managers and seasoned investors. Covestor’s Portfolio Sync technology automatically replicates trades, providing clients the convenience of “set and forget” functionality and the protection of Covestor’s proprietary trade filtering. The company has offices in Boston and London.

Covestor is an investment adviser registered with the US Securities and Exchange Commission under the Investment Advisers Act of 1940. Additional information can be accessed directly from our Form ADV document, available at http://www.covestor.com.

It should not be assumed that any information discussed herein will prove to be profitable or that decisions in the future will be profitable or provide similar results. While Covestor does provide limited investment advice to its clients, the content herein is provided as general and impersonalized investment information and is not a recommendation or solicitation to buy or sell any security or subscribe to any particular investment model. Please take appropriate professional advice in any investment decisions.

For additional information contact: Kalen Holliday, Covestor Communications Director
866-825-3005 x707 or kalen@covestor.com

The post Covestor receives $12.75m in Series B financing appeared first on Smarter Investing

Covestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures. For information about Covestor and its services, go to http://covestor.com or contact Covestor Client Services at (866) 825-3005, x703.

My Long Term GARP Portfolio on Covestor’s platform had a positive month in May as it rose 4.0% (net of fees), better than the S&P 500’s gain of 3.0%.

Iconix Brands (ICON)  is the owner of a broad range of well known brands like OP, Mossimo, Joe Boxer, Peanuts, and Sharper Image.  Iconix bought out the rest of its ECKO brand and presented at the Citigroup Investor Conference.

I sold 40% of the ICON stock position as it nearly doubled in a year and became a long term capital gain. Summer has arrived and there were a few investor conferences for the portfolio holdings, and one company reported earnings. All in all it was pretty light month for news from the holdings.

The summer has already started to see volatility pick up in the market, and the last two weeks of May were generally negative for equities. Much has been made of the recent slight rise of the 10- year bond rate, as it now is above 2%.

Many believe if interest rates go higher, the outcome will be negative for equities. I personally disagree as bond positions are at far greater risk than equities, especially at the long end of the yield curve.

Another area bearing close scrutiny is the Japanese market as many investors are short the yen, and long the Nikkei. If that trade does not go according to plan, I believe leverage can work against those who employ it.

Liberty Interactive (LINTA) is the owner of QVC, Bodybuilding.com, Provide Commerce, Buyseasons.com, Backcountry.com, and large passive minority positions in other large, well known internet based business like the Home Shopping Network. Liberty Interactive gained a majority stake in TripAdvisor when it bought out Barry Diller’s voting shares.    Liberty Interactive presented at Barclay’s Investor conference on May 22.

Liberty Ventures (LVNTA) tracks the economic performance of Expedia, Inc., TripAdvisor, Inc., Tree.com, Inc., Interval Leisure Group, Inc., Time Warner Inc., Time Warner Cable Inc., and AOL, Inc. Liberty Ventures operates as a subsidiary of Liberty Interactive Corporation.

Quest Diagnostics (DGX) is the largest health care diagnostic testing company in the United States. The company reported disappointing earnings and guidance in January, but did raise their repurchase plans for 2013.

Intuit (INTU) reported earnings on February 21, 2013 which was not as good as expected because of weakness in the TurboTax segment.

Starbucks (SBUX) is the largest coffeehouse company in the world.  Starbucks recently opened their first stores in India at the end of October, and in Vietnam on the first day of February.  The company presented at the Bernstein Investor Conference.

Liberty Media (LMCA) is another stock of Liberty Media, the assets inside the holding company structure include Starz Media, the Atlanta Braves, 50% ownership of Sirius Satellite (SIRI), almost 20% ownership of Live Nation (LYV), 16% ownership of Barnes & Noble, and a few other non controlling positions of small public and private.

Liberty announced it increased its stake in Sirius (SIRI) Satellite Radio to 50%, and increased its position in Live Nation (LYV).  The company also completed its spinoff of Starz Media on January 11, 2013.

Liberty Media announced earnings on February 27, 2013 which were in line with expectations. In addition, the company acquired nearly 30% of Charter Communications, one of the largest cable television providers in the United States.

Liberty Media presented at the Barclay’s Investor Conference- VCA Antech- Second largest owner of animal hospitals in the United States also owns the laboratories for diagnostic testing of animals.

IAC Interactive (IACI) is the owner of Ask.com, Match.com, Meetic, Service Magic, Vimeo, CollegeHumor.com, and the Daily Beast, among other web sites.

Another stock that I follow is Moneygram International (MGI).  MGI is the second largest money transfer and bill payment company behind Western Union. The company reported earnings on May 2, 2013 which were better than the last quarter.

British Petroleum (BP) is working on becoming more efficient by upgrading its Whiting Refinery in Indiana, as well as increasing the number of wells it uses in the various operational areas in the upstream segment.

Unilever (UL) is a massive food company based in the UK that gets over half of it’s nearly 50 billion dollars of sales in the emerging markets of Asia and Africa. The company pays a dividend of 3.3% and has the goal of doubling its sales by 2020.

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The investments discussed are held in client accounts as of May 31, 2013. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable.

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Founded by Yale Bock, Y H & C Investments is a registered investment advisor with the State of Nevada. Yale…