In our modern age of technology-driven lifestyles, speed is of the essence. We have speed dating, speed-reading, flash trading, and fast food. The idea "Fast is better than slow" is an inescapable principle of life - at least according to companies like .

But Warren Buffett, as you may know, isn't a man built for speed. So when the time comes for him to make big decisions, he turns to a methodical, tried-and-true approach. It's one that he enjoys and one that works. He laid it out in his annual letter to Berkshire shareholders in 1992:

Of all our activities at Berkshire, the most exhilarating for Charlie and me is the acquisition of a business with excellent economic characteristics and a management that we like, trust and admire. Such acquisitions are not easy to make but we look for them constantly. In the search, we adopt the same attitude one might find appropriate in looking for a spouse: It pays to be active, interested and open-minded, but it does not pay to be in a hurry.

From Buffett's point of view, there are some decisions you just can't rush. Buying a business is one of them. Finding a life partner is another. Ironically, these "exhilarating" activities are often the ones that tempt us to act irrationally. While Buffett learned this lesson the hard way, we can use the Oracle's wisdom to avoid falling into the same trap.

Buffett sticks to what he knows: Being folksy and old-school. Source: Flickr/thetaxhaven

Buffett makes a rookie mistake
Believe it or not, Buffett wasn't born with an uncanny ability to identify great companies. On the path to investing success, he stumbled quite frequently, especially early on in his career.

His first major acquisition, in fact, was also his worst. That was the purchase of none other than the textile firm Berkshire Hathaway , which would ultimately become the namesake of his legendary holding company.

In the 1960s, Berkshire Hathaway was a Massachusetts manufacturer involved in the lowly business of making fabrics. Buffett identified Berkshire as "cheap" initially, but he also quickly recognized that it was operating in a rapidly declining industry. Still, even as mills were being closed left and right, Buffett continued to acquire shares.

Why throw good money after bad? As Buffett would explain years later, he became infuriated when the CEO at the company offered to buy shares from him at a certain price, only to retreat and offer a lower value shortly thereafter. In an interview with CNBC, Buffett recounted the sequence of events as follows:

"[T]his made me mad. So I went out and started buying the stock. And I bought control of the company and fired [the CEO]."

End of story? Not quite.

Buffett went on to say, "I had now committed a major amount of money to a terrible business." In other words, the man whose career would be defined by his ability to keep his cool had just fallen prey to his own emotion-driven instincts.

Unfortunately, the textile operations went belly up and cost Buffett dearly. He estimated in 2010 that Berkshire would be worth 200 billion dollars more had he avoided the textile industry altogether. Talk about an extraordinarily expensive way to learn a lesson!

On the bright side, Buffett learned these crucial lessons early on and they would serve him well for the rest of his career. There were three valuable takeaways from his experience with Berkshire Hathaway:

1. First, investors should buy only those businesses with superior economics. Textiles, at the time, were quite inferior.

2. Secondly, seek out businesses with great leadership, not managers that you want to fire.

3. And finally, investors need to keep their emotions out of the picture. Don't latch onto a flash-in-the-pan stock. Instead, take a moment and get a second opinion. But never, ever, act impulsively when your net worth is at stake.

Less than a decade into investing, Buffett had already begun to realize that he needed a system to use in evaluating businesses, and these three tenets would be at the core of that system. They might not always lead him to brilliantly executed investments, but they would surely limit his losses in an event similar to the textile industry's downturn. He shared these lessons in the early 1990s so others could learn from his hard-earned wisdom.

You can learn (and profit) from Buffett's blunders
In this instance, Buffett's experience provides a tangible example of what not to do, and his quote reveals what long-term investors should be doing. But how can we apply those lessons on economics, leadership, and temperament to a given investment opportunity? Let's take a look at an industry that everyone can relate to: retail.

In today's cutthroat retail environment, household names like The Container Store and Williams & Sonoma are prime examples of businesses Buffett would admire. The former is founder-led, entirely devoted to helping customers get organized, and capable of exerting incredible pricing power relative to big box stores. Williams-Sonoma, meanwhile, has effectively carved out a profitable niche in high-quality cooking accessories, a business that's made the leap to e-commerce quite nicely in recent years.

Source: Flickr/Dave Dugdale and Chris Potter

Both companies possess leaders with a vision of where retail is headed in the future. And, quite frankly, they're in a polar opposite position than the textile industry was in the 1960s. Investors looking for attractive retail operators should give these niche players a second look.

But, before you run out and purchase shares, just remember to do your research. A complex decision with profound implications on your personal wealth need not be rushed. Not now, not ever.

As Leonardo da Vinci once said, "He who wishes to be rich in a day will be hanged in a year."

Not your folksy Buffett-esque quote, but, hey, it gets the point across: Take your time. Develop a system. We're in this for the long haul.

NVIDIA has managed to carve out a market for its GPUs in the enterprise, selling its Tesla line of GPU accelerator cards for use in supercomputers and high-performance computing applications. These GPUs are typically paired with a CPU from Intel , but Intel has also attempted to break into the accelerator card market in recent years with its Xeon Phi line of co-processors. While Intel has seen some success, NVIDIA still has an overwhelming share of the HPC accelerator market, which was as high as 85% last July.

But, the next iteration of Intel's Xeon Phi, known as Knight's Landing, promises to give NVIDIA a real run for its money. Set to launch in 2015, Intel could have a real competitor in the HPC market, which threatens NVIDIA's growing enterprise business.

Why Knight's Landing might take a bite out of NVIDIA
Intel's Knight's Landing and NVIDIA's Tesla are very different products. Knight's Landing will be comprised of up to 72 Silvermont cores, the same cores used in Intel's low-power Atom processors, and it promises to deliver nearly 3 TFLOPS of double-precision computing performance. Tesla is comprised of thousands of GPU cores, and while the highest-end product only produces about 1.4 TFLOPS of double-computing performance, NVIDIA will likely refresh the line before Knight's Landing launches next year.

Certain applications will benefit more from having thousands of specialized GPU cores, while some will perform better with fewer, more powerful CPU cores. But, the big advantage for Intel is that Knight's Landing will be based on the company's 14nm process. NVIDIA still uses a 28nm process, and while it plans to eventually move to a 20nm process, NVIDIA is constrained by the abilities of the foundries to which it outsources manufacturing. NVIDIA only designs its chips, while Intel both designs and manufactures them, and with Intel spending $10 billion on R&D and another $10 billion in capital expenditures annually, it's safe to say that the company will be able to maintain a manufacturing edge over NVIDIA.

This move to 14nm should lead to more power-efficient chips, and with the performance-per-watt very important in supercomputers and HPC applications, this could give Intel a significant advantage over NVIDIA.

One last advantage that the new Knight's Landing will have over NVIDIA's Tesla is that Knight's Landing will be available as a stand-alone processor, as opposed to previous iterations that were solely add-on cards. This means that, instead of needing a CPU as well as an accelerator card, customers will be able to replace both with a single Knight's Landing chip.

This does, however, pose a threat to Intel's Xeon CPUs, which are typically paired with an accelerator card for HPC applications. It also means that Knight's Landing is unlikely to be cheap, since it would need to make up for lost Xeon CPU sales. But, it's still likely to be less expensive than a Xeon CPU plus an NVIDIA Tesla card, and that's what matters.

NVIDIA has one important advantage
While NVIDIA is a hardware company, software is proving to be a source of competitive advantages for the company. Much like NVIDIA provides code to game developers that is optimized for its GPUs, the company also offers tools and libraries written in CUDA, its proprietary GPU compute language, for common mathematical computations. This cuts down on development time and creates some lock-in for NVIDIA's enterprise hardware.

Of the top 100 supercomputers in the world, 18 use NVIDIA GPUs, while only nine use Intel's Xeon Phi. Coupled with NVIDIA's massive HPC market share, and it's clear that a lot of developers are using CUDA, this creates some significant switching costs. So, even if Knight's Landing provides better efficiency and performance than NVIDIA's Tesla, that may not be enough to end NVIDIA's dominance.

The bottom line
Intel's upcoming Knight's Landing will have some serious advantages over Tesla accelerator cards from NVIDIA, but NVIDIA has built an ecosystem around its hardware that may prove difficult to beat. Knight's Landing probably won't move the needle much for Intel, but its success has the potential to disrupt NVIDIA's enterprise ambitions. It's hard to say how this will all shake out, especially with Knight's Landing at least a year away, but NVIDIA certainly has something to worry about.

Uber made the record books early in June with a $17 billion valuation and $1.2 billion in a funding round led by Fidelity Investments. This valuation, combined with recent moves into more cities like New Orleans and Miami, cements this taxi app company even further as an up-and-comer, and a company to watch for a big IPO.

Of course, Uber has current challenges, including proposed California legislation regarding state insurance, worries about high costs, and worldwide competition from companies like Lyft. But, with services in 130 cities around the world, more than 1,000 employees, and a business model that is running traditional taxicabs out of town, Uber's path toward a successful IPO in the near future seems assured.

That is, of course, except for one little detail -- the rise of self-driving cars. Companies like Google  , Intel, and BMW are hard at work creating driver-less car tech, and manufacturers like Autoliv  and Delphi Automotive  are backing them up. That's where Uber runs into a bit of a problem. The two market segments, taxi apps and self-driving cars, are on a collision course toward the same customers. Both depend on tightly controlled urban environments where driving is a pain and driving services are expected. Neither have a customer base outside cities for the foreseeable future.

If push comes to shove, only one option may survive the rise of self-driving cars. Uber may be faced with some tough decisions, or driver-less cars may not be all they were promised to be. Is there a compromise that allows both sides to work together?

Playing nice, or just playing around?
The obvious compromise, and one already noted by Uber, is for the taxi app service itself to adopt self-driving cars as they grow in popularity. That way, people can still hire a taxi without buying a driver-less car of their own, and both sides could prosper. While no formal partnership has been announced, CEO Travis Kalanick has said that he likes the idea of using Google's driver-less vehicles.

However, there's a bump in this road -- Google technology is designed to work with your life. Google analytics love to learn customer patterns and predict them to better meet needs. One of the draws of a Google self-driving car is the likelihood that it might already know your habits, show up without you needing to summon it, and let you choose pre-programmed routes while bringing up your favorite apps. It could also tie in with shopping lists, phone calls, and social media.

An Uber version of the Google car couldn't do all those things, at least not with the same ease as a personally owned vehicle. With Android Auto, Google also has a vested interest in having people buy driver-less cars: It can encourage developers to sell car-related apps, then bring in revenue from the 30% Google Play cut every app must pay.

Sensors here, sensors there
The burgeoning self-driving car market is also home to suppliers like Delphi Automotive and Autoliv, which create sensors and other equipment these cars depend on. If driver-less cars start to replace traditional taxis, these guys could see a significant jump in demand. If you like future tech stocks with room for growth, both options are worth a look. They've been a little volatile in 2014, but year over year, both show similar patterns of growth, Delphi increased from $50 to nearly $70, and Autoliv rose from $80 to nearly $110 (a lifetime high). Delphi's P/E ratio is 16.82, and Autoliv's is at 20.46.

Of course, the future is growing brighter for these companies, even without considering Uber. But, an Uber switch to driver-less cars, or a preference for those cars instead of taxi services, would be a major win for suppliers like these.

If Uber is planning to embrace the self-driving craze and evolve its strategy, now is the ideal time to create some official partnerships. Sure, self-driving technology is still in the early prototype stages, but what about adopting Android Auto or giving another sign of commitment to the future? If Uber plans to make an IPO within the next year, this type of involvement would be welcome.

In May, Ford Motor Company  reported its strongest sales since 2006, and U.S. auto sales in general have been trending upwards over the last few months. Will Ford get a boost from the industry this month as well? On Tuesday's installment of "Stock of the Day", Motley Fool analyst Michael Finarelli says investors shouldn't put too much weight in one month's figures. Long-term investors should keep their eyes not only on Ford's sales, but -- more importantly -- on how the company converts those sales to underlying profits and cash flow.

Mike notes that Ford's gross and operating margins have been on the decline for the past several years -- in fact, for the 12 months ending March 31, out of every dollar of sales, the company was only able to hold onto roughly $0.03 of operating income thanks to the ongoing expenses inherent in Ford's industry.

So is Mike bullish on Ford? Unfortunately, he's not a fan of the economics of the automobile industry -- profits are traditionally thin due to the huge expenses involved, and cash flow available for shareholders suffers due to the large and persistent capital investments needed. Furthermore, on a price to earnings basis, shares of Ford are trading around the higher end of where they've been over the past 10 years.

In the video below, Mike tells how those industry economics are working against Ford.

On Tuesday, stock markets went through the roof, with most major-market benchmarks hitting new all-time or multi-year highs on optimism that the second half of the year will enjoy stronger economic growth than the first half did. In the wake of the melt-up, which sent the Dow up triple digits on the day, hundreds of stocks hit new yearly highs. Yet among the more impressive of the gains were those of Southwest Airlines , Baidu , and Western Digital , which set new highs with more assertive moves.

Source: Southwest Airlines.

Southwest Airlines jumped more than 3% as the airline started offering international service to Caribbean nations for the first time in its long and storied history. Southwest passengers will be able to fly to Jamaica, the Bahamas, and Aruba, and the airline has taken the opportunity to promote its vacation bundles to customers in order to get passengers used to thinking of Southwest as a Caribbean travel option. The move is just the latest in the benefits that Southwest has gotten as it integrates its AirTran acquisition, and Southwest expects to add Mexico and the Dominican Republic later this year.

Baidu rose almost 2.5% as investors anxiously await the initial public offering of Chinese Internet giant Alibaba. Recently, Baidu has seen its market share in the Chinese Internet search arena continue to fall, with latest figures from the first quarter showing that its page-view share dropped below the 60% mark while rival Qihoo 360 jumped above 25%. Yet if Baidu can use its broader array of services, including its greater focus on mobile applications, to its advantage, then Qihoo's challenge could eventually become moot as users gravitate away from PC-based search and toward using mobile devices more prevalently.

Source: Western Digital.

Western Digital gained more than 2% as the maker of hard-disk drives and other storage solutions earned positive comments from stock analysts. In particular, investors see the potential for big gains from both Western Digital and its main hard-disk rival, pointing to the possibility of much higher margins than most investors expect to see. Already, we've seen positive comments throughout the tech space pointing to unexpected gains in PC sales from the need to upgrade unsupported operating-system software. Many of those PCs will have hard-disk drives, helping push sales high and extending the lifespan of Western Digital's hard-disk products. At the same time, Western Digital has seen the need to update its offerings, with efforts to come out with solid-state drives and hybrid drives to provide speed and efficiency to those who can afford to pay for the more expensive storage options.

The first day of the third quarter got off to an exemplary start on Wall Street, as nine out of 10 sectors added ground in the stock market today. Stronger-than-expected auto sales and impressive manufacturing activity in June combined to send stocks higher on the first day of July. The same can't be said for shares of Chesapeake Energy , Exelon Corporation , and FirstEnergy Corp. , which ended as the three worst performers in the S&P 500 Index on Tuesday. The S&P, for its part, finished at record closing highs, adding 13 points, or 0.7%, to end at 1,973.

Chesapeake Energy was the index's biggest laggard, losing 5.9% by the ring of the closing bell. This, however, was a more of a technicality than an indictment against the company. Chesapeake, which produces natural gas, oil, and natural gas liquids, completed the spinoff of its oilfield services business today; that move gave Chesapeake shareholders one share of the newly independent Seventy Seven Energy for each 14 Chesapeake Energy shares held by investors. That is to say, anyone who isn't a brand-spankin' new Chesapeake investor now also owns a piece of a newly independent shale fracking company. Seventy Seven Energy stock advanced more than 6% on Wall Street today.

Shares of the diversified utilities company Exelon didn't have a spinoff to blame for its 2.1% losses today. Market mechanics had more to do with Exelon's unpopularity today; the utilities sector often lags when the stock market is in rally mode, for several reasons. Firstly, utilities are one of the most heavily regulated areas of the investible market, making them great sources of stability and income for more conservative-minded investors or portfolios seeking safer diversification strategies.

A FirstEnergy crew repairs a power line. Image source: FirstEnergy.

Another reason utility stocks get beat up on go-go days like today also relates to the "risk-on/risk-off" tendencies of investors. On more bullish days ("risk on") like Tuesday, big-money, market-chasing fund managers tend to pull money out of fixed income investment like bonds and treasuries and gain exposure in the more exciting world of stocks. Stocks like Exelon and FirstEnergy -- which also lost 2.1% today - don't merely fall into the income-producing, and therefore "boring" category with their high dividend yields. They also typically borrow large amounts of money to finance their impressive dividends, and just as funds are selling utilities stocks to seek higher returns elsewhere, borrowing costs essentially rise as the bond market loses its appeal simultaneously, making those high dividends even more costly to finance. FirstEnergy, for instance, pays an annual dividend equal to nearly 140% of its yearly earnings, using borrowed funds to pay shareholders the excess cash.

Tuesday was a good day for stock market investors, as several major-market benchmarks reached new all-time highs. With investors deciding to commit to the five-year-old bull market to start off the second half of 2014, advancing stocks greatly outnumbers decliners, and the number of stocks setting new yearly highs numbered in the hundreds. Yet even amid the strength in the market today, SodaStream , Portugal Telecom and VelocityShares Daily 2x VIX ST ETN declined to their lowest levels in a year or more today.

Source: SodaStream.

SodaStream fell another 1.5% today, bringing its total loss for 2014 to around 30%. Throughout the past year, SodaStream has had plenty of promise with its at-home carbonation systems, but missteps in its marketing efforts during a tough promotional environment in the most recent holiday season took their toll. In addition, competitive efforts from elsewhere in the space have investors wondering if SodaStream can emerge victorious, especially as well-established beverage giants take sides with SodaStream's rivals. If the company can manage to correct those mistakes and take advantage of still-strong demand for its machines, then the stock could bounce back, but SodaStream will have to move quickly to hang onto its leadership role in the cold-drink space.

Portugal Telecom dropped by almost 6% as the telecommunications company had two of its directors leave the board. Portugal Telecom is still working with Brazilian phone-company Oi to merge, with the intent of creating a company that will span across the Atlantic and allow Portugal Telecom to compete against rivals in Spain and Mexico for the lucrative Latin American market. With the European economy still struggling, emerging markets represent an important growth opportunity for Portugal Telecom, and investors hope that the shared language with Brazilian customers could help boost the merged company's prospects. But some now fear that the directors' departure could indicate problems with the merger, and that could prove problematic for investors.

For the VelocityShares ETN, today's 5% drop merely marks the latest sign of investor complacency in the market. As stocks have risen, the S&P Volatility Index, also known as the Fear Index, has sunk to multiyear lows as investors get used to the lack of substantial downward moves. In this case, the VelocityShares ETN is leveraged, making its losses even more dramatic. Until the next market correction starts making investors fearful about their gains again, the VelocityShares ETN will have a tough time making much progress from its current low levels.

In a recent interview, Mobile Iron's CEO Bob Tinker had this to say, when asked how he felt that BlackBerry  is repositioning itself as a broad mobile device management company:

We don't actually see them [BlackBerry] inside competitive customer deals. We just don't see them. There's probably two reasons for that. One, choice. CIOs want to bet on mobile IT that's neutral. BlackBerry is a conflict of interest. And, two, enterprise mobility is a strategic decision, so they [IT] will buy the best product. BB is now just joining the party for platform independence three years late. One of the biggest arbiters of who is big is Gartner. We were in the leaders' quadrant. 

Bob Tinker is absolutely right. However as he also points out, "BlackBerry is now just joining the party for platform independence three years late."

BlackBerry has been behind the curve for a long time 
While BlackBerry pioneered the MDM space, its MDM software was exclusive to BlackBerry devices. And when the iPhone and Android devices came out, BlackBerry was so convinced its devices were better, it did nothing to update its devices and OS. Being in denial as to the state of the smartphone market to come, when it finally decided to update its OS and devices, Apple and Google had already taken over the world.

BlackBerry devices are still widely in use 
But even if BlackBerry's devices and OS were outdated, if you were an enterprise customer who placed a high value on security, BlackBerry was still the only choice. As a result, even as iOS and Android devices became ever more popular, enterprise customers still used BlackBerry's MDM software and devices. Until two or three years ago, that is. 

BlackBerry is still playing catch-up
BlackBerry finally entered the era of modern smartphone operating systems with the introduction of BB10 and BES10 (BlackBerry's MDM solution), and with devices like the Z10 and Q10. However BlackBerry miscalculated one thing: the extent to which companies would upgrade to the the new BlackBerry platform. 

See, BlackBerry's BES10 software did not cater to older BlackBerry devices. And with millions of older BlackBerry devices still in use, if companies wanted to upgrade to BlackBerry's new devices, they had to undertake the time and effort to manage two platforms. So, many companies decided not to bother. As a result they did not upgrade to BlackBerry's newer devices nor BES10. They needed a solution that could manage older BlackBerry devices, new BlackBerry devices, and iOS and Android devices as well. BlackBerry did not have such a solution.

As a result, many enterprise customers decided to keep using older BB5 devices, until BlackBerry could come up with a solution to manage both (in addition to manage iOS and Android devices). In many cases, however, they simply dropped BlackBerry altogether, since most of their staff used Apple's iPhone or some other Android alternative. But for companies that wanted maximum security, BlackBerry was still their only choice. 

BlackBerry's BES12 is the answer
BES12 will provide device management for both BB5 and BB10 devices, as well as iOS, Android, and Windows 8 devices. In addition, clients will be able to migrate to the cloud effortlessly, and there will be support for deployment models, including on-premise, public cloud, private cloud, and hybrid environments. 

In order to help facilitate the transition to BES12, BlackBerry introduced its EZ Pass Program on March 31, 2014, which ends on January 31, 2015. Every BES10 license that is activated through the program comes with free BlackBerry Advantage Level Technical Support until January 31, 2015 and a free upgrade to BES12.

So, did the market respond? Yes. As per BlackBerry's recent quarterly report:

EZ Pass Program resulted in a total of 1.2 million licenses issued for BES10, including more than 10% of total licenses traded in from competitors' Mobile Device Management

What's important to note -- in addition to the fact that older customers are upgrading to BES10 as well as the fact that new customers are coming to BlackBerry -- is that for the first time ever, BlackBerry says customers using other MDM solutions are coming back to BlackBerry.

Bottom line
BlackBerry has been behind the curve for a long time, but with BES12 coming online by the end of the year, it will finally be in a position to compete against other MDM solutions.

BES12 will allow enterprise customers to mix older and newer BlackBerry devices, as well as all other smart devices. If BES12 is well-received, not only will it mean BlackBerry will finally be back on its feet, but for the first time in years, BlackBerry will be ahead of the curve, and not behind it.

While we don't know if BES12 will be a success or not, the fact that BlackBerry is already taking business from the competition is encouraging, to say the least. 

The Dow Jones Industrials finished Tuesday with a gain of 129 points, hitting a new all-time high and falling just short of hitting the 17,000 level at one point during the trading day. Most market participants attributed the gains to favorable data from the manufacturing sector, and the monthly phenomenon that often sends stocks rising on the first trading day of the month might have played a role in the advance as well. The S&P 500 also set a new record in a fairly broad-based rally, but several stocks nevertheless missed out on the positive day, with Goldman Sachs and DuPont among the more notable declining stocks today.

Source: DuPont.

Goldman Sachs fell by about 0.4% on Tuesday, with the Wall Street giant dealing with news on a number of fronts. The Dow component got fined $800,000 by the Financial Industry Regulatory Authority over alleged violations related to dark pools, and although the money award is inconsequential, the episode further worsens Goldman's reputation on an increasingly controversial area for the brokerage industry. Reports of workforce reductions in the fixed-income arena appear imminent, with the bond market having become too quiet for Goldman Sachs to earn as much as it did in the past in more turbulent credit-market environments. Meanwhile, some believe that Goldman Sachs might buy an online discount brokerage firm to try to broaden its appeal, reaching out to an audience that has historically seemed like far from a perfect match for the upper-crust financier firm. Whatever it does, Goldman has to find a way to foster growth even in a hostile regulatory environment.

DuPont dropped just a few pennies today, but the chemical company has had to deal with a lot of turmoil recently. A profit warning late last month showed that even DuPont's much-heralded agricultural segment is vulnerable to downturns, with the company having bet wrong on the size of the spring's corn planting and therefore finding itself with high levels of corn-seed inventory. More broadly, investors have waited patiently for more details on how DuPont plans to split off its performance-chemicals business from the rest of its operations, with some noting that the reduction in DuPont's size could lead the managers of the Dow Jones Industrials to take the company out of the average if it shrinks too far.

It's reasonable for companies not to participate in overall gains for the Dow Jones Industrials on any given day. In the longer run, though, investors should keep an eye on DuPont, Goldman, and other laggard stocks to make sure that structural flaws aren't what's holding back their shares from advancing with the Dow.

CalAmp's recent pullback could be a buying opportunity for long-term investors, Credit: CalAmp

CalAmp Corp.   released its fiscal first quarter 2015 earnings today and shares fell by as much as 16% in after-hours trading. However, unlike last quarter's across-the-board miss, this time CalAmp's results actually came in ahead of Wall Street's expectations.

Specifically, quarterly revenue rose 10% year over year to $59 million, just edging past the $58 million analysts had expected. That performance was led by a 17% increase in wireless datacom sales to $47.8 million, which easily offset a 14% drop in Satellite revenue to $11.1 million. Meanwhile, CalAmp's adjusted net income grew 23% over the same period to $6.9 million, or $0.19 per share, also beating estimates for earnings just $0.18 per share. 

Also of note is that CalAmp's results were well within its previously guided ranges, which called for fiscal Q1 revenue of $56 million to $60 million, and adjusted net income per share of $0.17 to $0.21. That's all well and good, but at least one analyst chimed in ahead of today's report, effectively inflating expectations with the assertion that guidance was likely conservative.  

Here's why CalAmp stock is down now
But that wasn't the biggest reason for today's after-hours drop. For that, investors must look to CalAmp's fiscal second quarter guidance for revenue of $57 million to $61 million, and adjusted net income per share in the range of $0.17 to $0.21. Analysts were more optimistic, with average estimates for fiscal Q2 sales and earnings of $62.5 million and $0.22 per share, respectively.

CalAmp CEO Michael Burdiek elaborated that fiscal second quarter Wireless Datacom revenue should be higher both sequentially and on a year-over-year basis, thanks both the resumption of shipments to a key OEM customer in the solar power industry and continued healthy consumer demand in most of CalAmp's other verticals. However, that strength will be offset by a "sharp decline" in Positive Train Control revenue, and only a small contribution from Mobile Resource Management products in Latin America.

Heavy equipment markets will help drive CalAmp's fiscal year results, Credit: CalAmp

CalAmp's Satellite revenue could also fall sequentially to the lower end of its normal quarterly operating range, and for the full-year is now "anticipated to be below earlier projections." For perspective, last quarter CalAmp expected Satellite to ultimately return to a normalized revenue run rate of around $10 million per quarter. 

The silver lining
This in mind, Burdiek once again insisted "the second half of fiscal 2015 will be significantly stronger than the first [...], with Wireless Datacom revenue growth expected to accelerate as we move through the last two quarters of the year driven by the emerging auto insurance telematics and heavy equipment markets."

And isn't this what has CalAmp investors so excited in the first place?

Keeping in mind last quarter's OEM solar customer hiccup, remember we're still talking about a small-cap stock whose revenue streams are subject to hefty near-term fluctuations if any one sub-segment moves the wrong direction. Call me crazy, but I'm not particularly concerned with lower-than-expected revenue from CalAmp's increasingly less-important Satellite business.

Foolish takeaway
As long as CalAmp's Internet of Things aspirations remain intact with its steadily growing Wireless Datacom segment, so, too, will its enticing long-term growth story.

As it stands, you might recall I opted to watch from the sidelines in the face of CalAmp's near-term weakness last quarter. That said, I'm much more encouraged by CalAmp's most recent results, and the stock is growing increasingly intriguing with shares now trading at a reasonable 15.5 times next fiscal year's expected earnings.

As we head toward Friday's June employment report, strong manufacturing and auto sales data seemingly helped lift U.S. stocks to a new record high on Tuesday, with the benchmark S&P 500 gaining 0.7%, while the narrower Dow Jones Industrial Average rose 0.8%. The technology-heavy Nasdaq Composite Index was up 1.1%.

Shares of Twitter outperformed the Nasdaq today, rising 2.6%, on news of a high-profile hire, as the company announced that it's bringing on Anthony Noto as chief financial officer. Noto is a former Goldman Sachs banker who is said to have been responsible for winning Goldman the lead manager mandate to take Twitter public last year.

Source: Twitter.

Noto is the latest in a series of management changes at the top of Twitter, as CEO Dick Costolo struggles to clearly define Twitter's position in the social-media landscape and to counter slowing user growth. Ali Rowghani stepped down from his role as chief operating officer last month following a disagreement with Costolo regarding the company's direction. In April, Twitter named Google Maps honcho Daniel Graf as vice president of consumer product, following the departure of Michael Sippey. In May, the company replaced its head of engineering. Note that each of these positions has an important input in defining what Twitter becomes.

In all this commotion, you may be wondering what's happening to the former CFO, Mike Gupta? He will take on the role of senior vice president, strategic investments -- expect him to direct Twitter's investments in technology start-ups, similar to the role that Google Ventures plays at Google. This would seem to be an ideal role for a technology investment banker like Noto, who was co-head of Goldman's powerful technology, media, and telecoms group. However, the new man has a more pressing mission: Selling Twitter's story to Wall Street.

Noto is credited with pulling off a successful initial public offering, avoiding the missteps that plagued Facebook's offering; however, following a massive early run-up, Twitter's shares have suffered a brutal correction as investors have begun to question the microblogging platform's ability to achieve a similar scale to Facebook. Twitter's stock has fallen by a third year-to-date.

Noto will be well compensated for his trouble. According to a filing submitted to the SEC on Tuesday, his annual salary is a relatively modest (by the standards of a Goldman partner) $250,000, but he is also receiving a one-time stock award of 1.5 million shares and a one-time option grant to purchase 500,000 shares, both of which vest over a four-year period. Given that Twitter's market value increased by some $630 million today, one might be tempted to say that the hire has already paid for itself several times over.

So, will Noto be able to save Twitter? That assumes the company needs to be saved in the first place, but it isn't broken. The problem, as I see it, is simply that Wall Street has cottoned on to the fact that Twitter will never achieve Facebook-type user numbers; meanwhile, Twitter's executive management remains adamant about chasing the rainbow of mainstream acceptance and a billion-user global franchise. Unfortunately, Noto's first tweet trumpeting his appointment suggests he has already drunk the Twitter punch:

I could not be more excited about joining the @Twitter team & helping them reach every person in the world. #indispensable

— Anthony Noto (@anthonynoto) July 1, 2014

Although one could pass this off as simply as positive affirmation to mark an exciting new career opportunity, it appears emblematic of Twitter's fundamental misunderstanding regarding what it is ... and what it is not. Twitter is not #indispensable, and its structure and grammar do not lend itself to reaching "every person in the world" -- far from it.

Twitter is an unusual and, in many ways, fascinating tool that is having a profound impact in some sectors (media, for example). It looks like it could become a very decent business. However, it will be more effective in its relationship with Wall Street once it gives up on the pipe dream of global domination and works to maximize its true potential as a niche service. It seems that achieving that will require more organizational self-awareness than Twitter is able to muster at this time.

Boosted by strong economic data, stocks kicked off the second half the year by surging to record highs as the Dow Jones Industrial Average  nearly eclipsed the 17,000 milestone, reaching 16,998 at one point during the session. On the day, the blue chips moved up 129 points or 0.8%, and the S&P 500 also touched a new record, gaining 0.7%. The Nasdaq, meanwhile, jumped 1.1%. 

Economic reports out of both the U.S. and China had investors in a buying mood as Markit's Purchasing Managers Index for June reached 57.3, its highest level since May 2010. The monthly manufacturing report from the Institute of Supply Management was not as strong, as the index edged down slightly from 55.4 to 55.3 in June, below estimates at 55.8. Nonetheless, the index showed the 13th straight month of expansion and new orders and production were particularly high, a leading indicator for future activity. In China, meanwhile, another purchasing managers index showed activity flipping from contraction in May to expansion in June, increasing from 49.4 to 50.7, assuaging concerns about diminishing growth in China. 

Auto sales continued at a strong pace last month as sales industrywide rose 1.2% to 1.4 million in June or an annualized selling rate of 16.98 million. General Motors  shares jumped 3.6% on the news as sales ticked up 1%. The carmaker has been struggling recently with a seemingly endless stream of recalls, which caused sales of a number of affected models, including the Chevy Cruze, Malibu, and Impala to fall significantly last month. Still, overall the automaker didn't seem to be greatly affected by the negative publicity surrounding the recalls. Separately today, a chemical explosion at a GM metal-stamping plant in Indiana killed one worker and injured five. The incident didn't seem to affect the company's stock, but for a manufacturer already struggling with its safety record, news of the explosion will do it no favors.

After hours, Google  was shaking up the online music industry with its purchase of Songza, an Internet radio service similar to Pandora . Shares of Pandora edged down 0.3% after hours on the news. The move gives Google, which did not disclose terms of the deal but was believed to spend just about $15 million, a stake in the burgeoning online radion industry, and follows Apple's $3 billion purchase of Beats Electronics just weeks ago. Songza recommends new songs to listeners, much in the way Pandora, and seems to fit with Google's knowledge-seeking business model. Amazon.com also recently entered the space with its Prime Music service, but Pandora has survived similar threats before, most notably from Apple's iTunes Radio. Despite the activity in the online radio space, the industry may approaching maturity with Pandora and Spotify the leading providers in the U.S. As the tech behemoths hunger for a foothold in the space, Pandora or Spotify could become a juicy acquisition for the big players like Apple, Google, and Amazon. 

The market turned bullish about Joy Global in recent weeks, but Longbow isn't impressed. The research firm downgraded the stock to "underperform" last week, planting a price target of $50 a share. That represents nearly a 20% downside from the stock's current price.

While I usually take analyst estimates with a grain of salt, investors may have a reason to worry here, especially after Caterpillar recently reported dismal mining-equipment sales numbers. Is it time to short Joy Global?

Is the optimism justified?
Longbow believes the current demand for mining equipment doesn't justify the high consensus estimates for Joy Global. In other words, the optimism that Joy's Street-beating second-quarter numbers fueled may have already been baked into its share price.

Can Joy Global dig itself out of the hole? Source: Joy Global.

At first blush, Joy Global's Q2 numbers were nothing to write home about. Its bookings fell 7%, net sales dropped 32%, and net income slumped a staggering 59% year over year. Nevertheless, the company gave the market sufficient reasons to turn hopeful, one of them being the confirmation of its full-year revenue guidance. In contrast, during its last quarterly earnings, Caterpillar lowered its forecast for mining-equipment sales, expecting them to drop twice as much as earlier projected at 20% for the full year.

But then, Joy's outlook suggests that it had perhaps already factored in the worst, leaving little room for revision - Joy expects to end this financial year with revenue between $3.6 billion and $3.8 billion, which represents at least 24% downside versus 2013.

Pay attention to the indicators
Joy Global really caught the market unawares when it raised the lower end of its projected adjusted earnings range for the full year by $0.10 to $3.10 and $3.50 per share. But if the small improvement in guidance has encouraged investors to believe that the worst is over for Joy Global, they may be jumping the gun.

The weakness in end markets has compelled Joy Global to resort to aggressive cost cutting. But that can help maintain margins only to a certain extent. Moreover, even at the higher end, the EPS outlook represents a substantial 30% downside versus last year. Here's a graph that gives you the full picture.

Red Lobster's days are numbered. While it was struggling to stay relevant under former owner Darden Restaurants , it now faces a dismal future at the hands of private equity firm Golden Gate Capital.

The reason for this is simple. Despite efforts to characterize things differently, the private equity industry isn't interested in investing in a failing restaurant franchise in a last-ditch attempt to revitalize the brand -- click here to learn more about the history of private equity companies. Golden Gate will instead extract as much cash out of the business as possible in an effort to maximize its own return on investment.

In fact, Golden Gate has already begun doing so. "On the same morning that Darden announced the sale of Red Lobster, Golden Gate Capital announced that it had sold the real estate assets of 500 Red Lobster properties in a sale-leaseback deal with American Realty Capital for $1.5 billion," a recent Fortune article explained.

As a result, "Golden Gate, which stripped Red Lobster's real estate assets and sold them off, arranged to recoup 71% of the total investment before it even took control of the restaurants."

As Motley Fool contributor John Maxfield explains in the video below, the result is that Red Lobster, which has already been struggling with declining same-store sales and profitability, now faces a higher expense base. Needless to say, this probably won't end well for the chain.

Roche rarely does expensive early stage deals, relying instead upon its deep proprietary pipeline of oncology drug candidates. So when the company commits itself to $725 million upfront and $1 billion more in milestones (to say nothing of the hundreds of millions that will be required for clinical trials) for a new cancer drug approach, investors would do well to pay attention. When that new approach concerns breast cancer, an area where Roche is particularly strong, it's all the more interesting.

Enter Seragon
Roche announced Wednesday that it is acquiring Seragon, a privately held biotech recently spun off when Johnson & Johnson acquired Aragon Pharmaceuticals. Like Aragon, Seragon's focus is in hormone-related cancers, but focused on breast cancer instead of prostate cancer.

Roche is agreeing to pay $725 million in upfront cash, with contingent milestone payments potentially totaling another $1 billion. By way of comparison, Medivation , which has Xtandi approved, on the market, and expected to generate over $500 million in revenue this year, carries an enterprise value of just under $6 billion while Pharmacyclics, Johnson & Johnson's partner on Imbruvica, has a nearly identical just-under-$6 billion enterprise value.

What Roche is getting
In acquiring Seragon, Roche is getting Seragon's portfolio and R&D expertise in selective estrogen receptor degraders (or SERDs) - a potentially new class of oral medications that can address the 60% to 70% of breast cancers that are hormone receptor-positive.

Targeting estrogen receptors is not a new approach, as selective estrogen receptor modulators (or SERMs) like tamoxifen have been around for a while, as have drugs that directly target estrogen (like aromatase inhibitors). Seragon's platform appears to take it up a notch. Not only do these molecules act like "glue in the lock" for breast cancer cells, they can actually modify the receptor in such a way that the cell eliminates it entirely.

That latter point could be key, as research has indicated that hormone receptor-positive cancers are so "addicted" to estrogen signaling that the receptor will mutate in such a way that it can be active even without estrogen to bind to it. SERDs, then offer the potential of a highly potent, highly selective (and therefore possibly safer) treatment for these breast cancer types, either as monotherapy or part of a combination.

Sergaon's lead compound ARN-810 is now in Phase I testing.

There *will* be others
No good idea goes uncopied in Big Pharma and I cannot imagine that the industry will look at Roche shelling out so much money for an early stage company and not take a look at the SERD space themselves. Look no further than immuno-oncology and drugs like PD-1/PDL-1 antibodies - at least a half-dozen companies are under way with competing versions (including Roche), so there's no way Roche will have this all to itself.

I'm aware of one other company actively look at SERDs (Radius), but this is definitely a case where absence of proof should not be read as proof of absence. Large pharmaceutical companies in particular are known to be cagey about talking about the mechanism of action for drugs in Phase I or preclinical testing.

I'd also note that Medivation is looking to try Xtandi in breast cancer - both in androgen receptor-positive types and estrogen receptor-positive or progesterone receptor-positive types as well. My understanding of Xtandi is that it does not destroy the receptor as Seragon's compounds seem to, and that could be an important differentiating factor in long-term efficacy. Either way, it's far too soon to say.

The bottom line
It strikes me as interesting that Johnson & Johnson did not choose to buy all of Aragon's assets when it could; perhaps J&J was uncomfortable paying what management wanted for those assets at the time, or perhaps J&J doesn't have ambitions to take on the breast cancer space. Either way, if Seragon's compounds/technology go on to do great things, I expect Johnson & Johnson investors might want an explanation.

As for Roche, any time a company goes against its long-demonstrated operating philosophy it is a reason for pause. I think Roche is making a risky bet here, but I also believe that Roche deserves the benefit of the doubt when it comes to understanding the breast cancer space and recognizing a game-changing therapy approach when they see it. While I don't want to dismiss the risk with a glib "it's only money, and Roche can afford it", the reality is just that - this is a risky move, but it is one that Roche can easily afford and one that could extend Roche's leadership in breast cancer for more than a decade to come.

Target.com

A lot has been made of the Target data breach, and for good reason. It led to a lack of customer trust, a still unknown number of total future expenses related to the breach, and it cost the CEO his job.

The data breach was bad news, but it could only be a temporary hit, which could present an investment opportunity. The difference here is that the data breach isn't the only problem for Target. Canadian operations haven't been performing as well as anticipated, and Target is well behind its peers in e-commerce. Does this mean you should cross Target off your watchlist? If so, is another retailer likely to present a better long-term option?

Canadian performance
Target has 1,916 retail locations, with 1,789 of those units in the United States and 127 of those units in Canada. In the first quarter, U.S. sales increased 0.2% year over year to $16.7 billion, whereas Canadian sales came in at $393 million versus just $86 million in the year-ago quarter. As you can see, U.S. operations are still much more important.

The above slight sales increase in the U.S. might lead you to believe Target is performing well domestically, but comps (sales at stores open at least one year) declined 0.3% year over year. Additionally, gross margin slipped to 29.5% from 30.7% because of promotional markdowns. Earnings before interest expenses and income taxes also plummeted 13.5%.

Unfortunately, despite the surface numbers, Canadian operations didn't fare much better. Sales at Canadian stores were only $86 million in the year-ago quarter because there were only 24 stores at the time. This left a lot of room for improvement. Currently, there are 124 Target stores in Canada. Sales increased thanks to new store openings. It's the margins you really need to watch.

Gross margin came in at paltry 18.7% for the first quarter because of excess inventory. This number might improve going forward, but it's not a good sign. The Canadian consumer hasn't taken well to Target's pricing and merchandise mix, and in addition to competing against local retail brands, Target must fight against Wal-Mart Stores , which has had a presence in Canada for two decades. This isn't the only area where Target is lagging Wal-Mart.

E-commerce positioning
According to comScore, overall e-commerce sales increased 12% in the first quarter on a year-over-year basis to $56.1 billion. This represented 18 consecutive quarters of year-over-year growth and 14 consecutive quarters of double-digit growth. The strongest areas were apparel, accessories, consumer packaged goods, sport and fitness, digital content and subscriptions, and home and garden. Look at that list and notice that Target merchandise would fit well, for the most part. However, Target was late to the party.

Target's online sales aren't reported, but they're estimated to make up approximately 2% of total sales. For Wal-Mart, it's just shy of 4% of total sales, and Wal-Mart just delivered a 27% e-commerce sales increase in the first quarter.

The key to success is omni-channel, which allows customers to shop when, where, and how they want. For example, a good omni-channel retailer will make shopping more convenient for its customers by filling online orders quickly for faster delivery, allowing in-store pickup, and making online and mobile ordering simple.

Target does have a plan for improved omni-channel performance going forward. It has set up a council that will meet once a month to strategize. This council includes:

• Ajay Agarwal (Managing Director at Bain Capital Ventures)
• Amy Chang (CEO of Accompany, previously ran Google Analytics)
• Roger Liew (Technology Chief at Orbitz Worlwide)
• Sam Yagan (CEO of Match Group, Founder of OKCupid)

If previous and current positions are any indicator, then this is a Jedi-like omni-channel strategy group.  This panel combined with other e-commerce initiatives (i.e. more sorting options on mobile devices, Save for Later in mobile basket, streamlined mobile checkout, dynamic customized landing pages), Target should see e-commerce improvements going forward.  However, savvy investing is about going with companies that deliver continuous and sustainable profits.  Wal-Mart falls into this category much better than Target does at the moment. It's performing better domestically, in Canada, and in e-commerce. It also has a new growth avenue with its small-box stores, and its earnings-per-share is expected to remain ahead of Target's for the current and next three fiscal years:

WMT EPS Estimates for Current and Next 3 Fiscal Years data by YCharts

Therefore, if you're going to invest in one of these retailers over the other, then you might want to consider Wal-Mart first. 

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Extending a two-day winning streak following two positive analyst notes, shares of King Digital Entertainment PLC jumped another 10% early Wednesday before closing the day up around 6%.

So what: Shares of King Digital have risen around 27% since Monday, when at least two analysts chimed in with bullish comments for the mobile game specialist. First, JPMorgan's Doug Anmuth stated King Digital's strong free cash flow of around $800 million this fiscal year should enable it to return cash to shareholders. Anmuth also noted he believes King Digital's upcoming game launches should provide much-needed diversification. In addition, Wedbush analyst Michael Pachter expressed confidence in King Digital's "large market share" in the free-to-play games space, and insisted it's "built to last" given the impending contributions from other games in its pipeline.

Now what: Today's gains bring the stock almost exactly back to its March IPO price of $22.50 per share. Since then, the overwhelming worry for King Digital shareholders has been its over-reliance on the currently all-important Candy Crush Saga game, which single-handedly accounted for 67% of King Digital's bookings in the first quarter. Personally, I remain skeptical of the economics driving sustained profitability for businesses in the free-to-play game space. But if King Digital can merely prove it's not a one-hit wonder, I'll admit there could be little preventing the stock from rewarding patient shareholders from here.

Dividend aristocrat Abbott Labs  has has a long history of rewarding income investors, but after its transformation, is it still one of the sector's top dividend stocks? 

In this video, Motley Fool health-care analyst David Williamson will be grading well-known dividend stocks using a World Cup-inspired grading system: a yellow card is a warning for investors, a red card is an ejection, and a "goal" happens if the stock looks like a winner. 

After impressive gains yesterday, the stock market largely took Wednesday off, with major market benchmarks making only modest advances into all-time record high territory. Despite impressive figures on the jobs front from the ADP private-sector employment report, investors appeared reluctant to rely on the reading as a signal of better economic prospects ahead without confirmation from tomorrow's release from the Bureau of Labor Statistics.

Nevertheless, many stocks posted more impressive gains, with Greenbrier , Walter Energy , and Cliffs Natural Resources among the better performers on the day.

Source: Greenbrier.

Greenbrier soared 12% as the maker of railcars reported a strong fiscal third quarter and gave solid guidance for the near future. The company managed to reverse a year-ago loss with a profit of $1.03 per share, well in excess of what investors had expected to see, with a 37% jump in revenue coming on the heels of deliveries of 4,300 new railcars during the quarter. Greenbrier also boosted its range for full-year adjusted earnings per share by 14% to 21%. With high demand for tank cars coming from the energy industry's need to ship crude oil by rail in areas underserved by pipeline networks, Greenbrier could easily see continued demand skyrocket, especially as new regulations to increase rail safety encourage railroad companies to update and replace older railcars.

Walter Energy gained 7%. Despite ongoing concerns about the state of the metallurgical coal industry, Walter Energy has quietly climbed by more than 35% over the past month as bargain-hunters speculate that the coal producer could overcome the immense challenges it has in front of it right now. Prices for met-coal are so low, in fact, that many believe that they're below the marginal cost of production for U.S. miners like Walter Energy, and the company has a substantial debt load that makes it important for coal prices to rise in order to help it maintain its debt more effectively. With a tough decision to idle its higher-cost facilities, Walter Energy needs improving industry conditions quickly in order to return to a sustainable course.

Source: Cliffs Natural Resources.

Cliffs Natural Resources rose 5% as the company negotiated with activist investor Casablanca Capital for representation on the iron-ore producer's board of directors. Cliffs offered Casablanca three seats on a newly reconstituted nine-member board, and it said that regardless of Casablanca's response, it would name a new board chairman at the next annual shareholders' meeting. Casablanca rejected the proposal, with the 5% shareholder arguing that more extensive moves are necessary to remedy what it sees as Cliffs "wasting $9 billion on a disastrous diversification strategy and overseeing the destruction of 85% of shareholder value." From today's rise, investors clearly believe that whoever's in control of the company, Cliffs will take more dramatic action to improve its lot in the near future.

Another month is in the books for the volatile and highly tech-centric Nasdaq Composite , and surprise, surprise -- it was a positive month! Out of the 21 trading sessions in June, the Nasdaq advanced on two-thirds of all days and gained 3.9% for the month.

Overall, the basis for the rally continues to be intact. The latest unemployment report signaled that the jobs market is continuing to improve, while manufacturing and factory order readings have regularly been exceeding Wall Street's consensus. Further, consumer confidence figures have been rising to multiyear highs. Although consumer confidence figures aren't a concrete gauge of economic activity, they do measure consumers' short-term and long-term economic-outlook expectations. If this figure is rising it could lead to a rise in spending which would fuel U.S. GDP growth.

Source: Bfishadow, Flickr.

But just as investors have been given ample reasons to love this rally, there are also an equally large number of reasons for skeptics to worry. For starters, a steady drop in the labor force participation rate, coupled with the relatively long amount of time required for the unemployed to find work, has masked the realities of the reported 6.3% unemployment rate.

Perhaps more worrisome is the fact that a good number of companies have turned to strict cost controls and share repurchase programs in order to mask the fact that top-line growth is anemic. While cost-cutting does work for a short period of time, it's not a long-term solution, and skeptical investors know this.

With this in mind, let's do what we do every month: take a deeper dive into the three most hated Nasdaq stocks to see what characteristics, if any, they might share in order to avoid buying into similar companies that have drawn the ire of short-sellers.

Here are the Nasdaq's three most hated stocks:

Source: S&P Capital IQ

Myriad Genetics
Why are investors shorting Myriad Genetics?

• All things considered, it was a relatively quiet June for Myriad Genetics, so the basis for pessimism against the company remains largely unchanged from the previous month. The primary reason skeptics have continued to place Myriad atop the list of the Nasdaq's most hated stocks is the Supreme Court's decision last year that invalidated some of the key patents which Myriad has been using to protect its BRACAnalysis test from competition. This ruling allowed competition to enter the playing field, which is significant since BRACAnalysis comprises around 70% of Myriad's total revenue. Furthermore, the Affordable Care Act has pushed the Center for Medicare and Medicaid Services to drastically cut reimbursement rates for Myriad's BRACAnalysis test, pressuring its top and bottom lines.

Source: John Goode, Flickr.

Is this short interest warranted?

• There are certainly reasons for skepticism given the introduction of new competition and the CMS reimbursement rate reduction. But investors should understand that the CMS rate reductions only affect those being covered by Medicare and Medicaid, which represents a minority of Myriad's customers. Also, Myriad's pipeline is beginning to expand well beyond just BRACAnalysis. The company purchased Crescendo Bioscience in February in order to expand its diagnostics product line and presented encouraging data on its myPath melanoma test as the American Society of Clinical Oncology's annual meeting in early June. With a beefed up sales and profit forecast I wouldn't suggest betting against Myriad.

World Acceptance
Why are investors shorting World Acceptance?

• In similar fashion to Myriad Genetics, not much has changed for payday advance servicing company World Acceptance ... other than the fact that more class action lawsuits have been filed on behalf of investors against it since last month. World Acceptance has been a bull's-eye for short-sellers since the Consumer Financial Protection Bureau opened in an investigation into possible violations of consumer protection laws in mid-March. Although World Acceptance has denied the allegations, skeptics are obviously anticipating that the company will be found guilty of some form of wrongdoing.

Source: Taber Andrew Bain, Flickr.

Is this short interest warranted?

• On one hand, if World Acceptance winds up being vindicated, then its forward P/E of roughly six could propel its shares considerably higher. Even if World Acceptance is found guilty of wrongdoing by the CFPB but isn't fined, its shares could still soar. But if the CFPB finds World Acceptance guilty and slaps the company with a fine then shares could be hit even more than they already have been and the numerous class action lawsuits filed against the company could prove successful in collecting further damages for shareholders. The sad reality of the CFPB's investigation is that it could carry on for months, leaving existing shareholders to question what could happen next. This is a situation that bears avoidance for both optimists and pessimists.

VIVUS
Why are investors shorting VIVUS?

• To make it something of a trifecta, VIVUS's short interest has increased month over month for many of the same reasons as last month. The primary point of pessimism is the disappointment surrounding weight control management drug Qsymia. In the first quarter VIVUS, despite handily topping Wall Street's EPS estimates with a smaller loss, delivered a nearly 3% drop in sequential quarterly prescriptions written for Qsymia to 121,000. You have to remember that at one time Qsymia was expected to be a potential blockbuster. In its latest quarter -- after six quarters on pharmacy shelves -- it tallied just $9.1 million in sales. Simply put, skeptics anticipate that losses for VIVUS will continue for years to come, with the company burning through its remaining cash and diluting investors with additional share offerings.

Source: VIVUS.

Is this short interest warranted?

• Skeptics should keep in mind that Aspen Investments, which owns a 9.7% stake in VIVUS, may eventually try to take it private for about a 20% premium to its current price. Clearly the potential of that happening isn't being priced in at the moment, but for a large shareholder like Aspen, it's not out of the question. But for all intents and purposes, VIVUS continues to resemble one of the strongest short-sale opportunities among Nasdaq-listed stocks. VIVUS is losing money, it's lead drug has fallen flat on its face, it has no marketing partner, and worst of all, if rival Orexigen Therapeutics' Contrave is eventually approved, the simple fact that it will have completed an extensive cardiovascular outcomes study (known as the Light Study) and delivered comparable weight-loss totals could push it to the forefront well ahead of Qsymia. In my opinion, VIVUS remains an "all-out avoid" stock.