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The Danger Zone Pick: 9/4/12

Tuesday, September 4th, 2012

My Danger Zone pick this week is also my Stock Pick of the Week. Listen to all the details in my weekly interview with MarketWatch’s Chuck Jaffe.

Learn why Boston Properties (BXP) makes our Most Dangerous Stocks list and could spell trouble for investors.

I also recommend selling the following ETFs and mutual funds because they allocate 5% or more of their portfolio to BXP and get my “Very Dangerous” or 1-star rating:

  1. iShares FTSE NAREIT Industrial/Office Capped Index Fund (FNIO) – 20% allocation to BXP
  2. Advisors Series Trust: PHOCAS Real Estate Fund (PHREX) – 6% allocation to BXP
  3. Eaton Vance Special Investment Trust: Eaton Vance Real Estate Fund (EAREX, EIREX) – 6% allocation to BXP
  4. Columbia Funds Series Trust I: Columbia Real Estate Equity Fund (CRECX, CRRVX, CREBX, CREWX,CRSRX, CREEX, CRRFX, CREIX, CREAX) – 6% allocation to BXP
  5. Principal Funds, Inc: Real Estate Securities Fund (PIRPX, PRETX, PREJX, PREPX, PRERX, PRENX, PRAEX, PIREX, PRCEX, PRLEX, PRRAX) – 6% allocation to BXP

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  1. varadha says:

    Terrific, yet simple analysis. I’ve always been a fan of ROIC as a measure of capital efficiency and believe that no size/growth outperformance can replace the quest for efficiency.

    Sort of like a big gas guzzling v8 that needs ever increasing gallons of fuel to keep its engine running

  2. David says:

    But Angie’s $90 per user acquisition cost is going to go away. That’s what their approach probably is. How would their outlook be if that $90 cost dropped down to a total cost of $3 per user?

  3. David:

    That would be great, but cost per user acquisition is not something that’s very easy for a company to fix. ANGI can slash their marketing budget to the bone, but then they would stop acquiring new members. They would probably lose members in fact, as their membership renewal rate is at ~75% and declining. If they cut marketing expense by ~95% as you seem to be suggesting, ANGI might be able to eke out 1 year of slight profits, but they would start shedding members and losing money very quickly. ANGI’s only hope is to keep its marketing budget high and hope it can reach the scale and brand awareness to be able to sustain its business while scaling back marketing costs enough to turn a profit. The fact that ANGI’s revenue growth is slowing down even as its marketing costs keep increasing makes it very unlikely it will achieve that goal.

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