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Highlights From New Constructs Investment Research

Short VMware (VMW) As Hedge for Euro Recession

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VMW’s valuation has its head in the clouds.
This stock is a great short in most any scenario and is especially attractive in the event of a global economic slowdown led by a recession in Europe.

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“Predictive” ETF & Mutual Fund Rating Methodology

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QUESTION: Why should fund investors rely on backward-looking NAV trends?
ANSWER: They should not.

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ETFs vs Mutual Funds: The Winner Is…

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The radically higher number of US equity mutual funds (4,700+) versus ETFs (380+) is not indicative of better stock selection from active management. On the contrary, the vast majority of actively-managed funds do not justify the higher fees they charge. They do not, in terms of stock selection and expected returns, add value versus passively managed benchmarks.

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Stock Rating Methodology

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New Constructs assigns a rating to every stock under coverage according to what we believe are the 5 most important criteria for assessing the risk versus reward of stocks. New Con­structs’ stock rat­ings are reg­u­larly fea­tured as among the best by Barron’s.

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Portfolio Management Rating: Methodology for Predictive Fund Ratings

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The Portfolio Management Rating of a fund is based on the aggregated ratings of the securities it holds as well as its overall Asset Allocation. When analyzing equity funds, we use New Con­structs’ stock rat­ings, which are reg­u­larly fea­tured as among the best by Barron’s over the past three years.

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Forensic Accounting Says Avoid Energy & Financial Stocks

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As one financial scandal follows another, it seems the good guys are having a tougher time catching the bad guys. Recent revelations about MF Global’s ponzi scheme are another reminder of how our regulatory and oversight systems seem to let whales pass through their net.

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Cutting Thru the Smoke in the Energy Sector

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Two of the three stocks added to our large/mid cap Most Dangerous stocks list for November are from the energy sector. Those stocks are Energy XXI (Bermuda) Ltd. (EXXI) and Superior Energy Services (SPN) – both get my very dangerous rating as do all of the Most Dangerous stocks.
All of the energy sec­tor ETFs get a dan­ger­ous rat­ing, which means you should sell them.

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Apple Inc. (AAPL): Very Attractive Risk/Reward Rating for Ask Matt Readers

Apple Inc. (AAPL): Very Attractive Risk/Reward Rating for Ask Matt Readers

Here is a free copy of our report on AAPL for Ask Matt readers.

AAPL gets our “Very Attractive” rating because its economic earnings are positive and rising, it has one of the highest returns on invested capital (ROIC) in the world. At the same time, it’s stock price reflects very low expectations for future earnings growth.

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MF Global Was a Dangerous-rated Stock

MF Global Was a Dangerous-rated Stock

New Constructs rated MF Global (MF) a Dangerous stock long before it blew up.

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Utility Sector: Check The Ingredients Before Buying

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High dividend yields are NOT enough to warrant investing in the utilities sector.
Too many investors put their hard-earned money in utility stocks with the assumption that relatively high-yielding dividends from stable business make a good investment.
The real question that investors in any equity security must ask is: does my expected return from a stock justify the risk of investing in it?

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