Strong Dollar,Appreciation Recasts Investing Strategies

Chipmaker Qualcomm will buy back 15 billion in stock,10 billion of that over the next 12 months.It has 31.6 billion in cash on hand,and will increase its dividend by 14%.It is contemplating a debt issue plus use cash for the buyback.Shareholders have been pushing for this bigger return on investment.Along with this accelerated repurchase,the company has just announced some new chips that are going to be important to its business.*
General Motors will be executing a five billion dollar stock buyback in the near term.*
The soaring US dollar makes it the worst of times for big American companies with an overseas presence,said Larry Glazer of Mayflower Advisors.There's actually a shortage of stocks out there.You have to change your investment strategy.Ultimately,the strong dollar is a good thing,but a volatile currency is not a good thing.It is hurting the emerging markets.*
Small cap stocks,as well as domestically-oriented US companies and European stocks,which have not appreciated nearly as much as US issues in recent years,are being recommended in these conditions.Margins of the big multinationals are likely to be hit by the strong dollar.*
iShares Small Cap Core ETF (IJR),iShares S&P Europe 350 Index Fund (IEV),Qualcomm Inc (QCOM)

From Buybacks To Growth;JC Penney Improves

We're forecasting about a 10% upside for the year-closer to an average return than the past few years,said Savita Subramanian,head of US equity and quantitative strategy at Bank of America/Merrill Lynch.Once we get a better sense of the economy as improving,there's no better place to be than the stock market.The market is actually rewarding the companies that spend on growth,whether through acquisition or capex.Investors want growth,not necessarily buybacks to return cash.
We really want to look at company spoecifics.It's less about picking the right asset class,and more about picking the right stocks.
It just doesn't make sense anymore to buy back stock,when prices have returned to more normal levels.Companies have not been spending on economic growth,but I think that's what we're gonna see this year,Ms.Subramanian projected.
She likes the technology,industrial and energy sectors.*
In the retail sector,it's been a big improvement for JC Penney,according to Chad Green of Sterne Agee.It looks a lot better for them than it did 12 months ago.Their store looks a lot better.It looks like the old JC Penney.
The big question for them is getting their traffic back,clearing through former CEO Don Johnson's mistakes,Mr.Green noted.*
JC Penney(JCP)

Hedge Fund Takes GM Stake

Hegde fund Hayman Capital Management has taken a stake in General Motors.You're starting to see them take market share back,said Hayman founder and managing partner Kyle Bass.With their new 2014-15 product line,they're gonna increase dividends and buy back stock.Given how cheap the stock is,we think it should be trading in line with Ford.When you look at the enterprise value,it's about 47 billion dolars.
A 100 basis point move takes eight points away from their pension liability.We think that could actually go down to 17 billion dollars.We just think from a catalyst-driven timing perspective,now is the time to invest in GM.
The new GM products will take North American sales back.You have them really working on all cylinders.Motor Trend gives it the New Product of the Year last year.We think it's incredibly cheap and it's gonna move much higher next year,Mr.Bass noted.*
The federal government has announced it has exited its stake in GM,as Mr.Bass predicted it would by the end of the year.The taxpayer lost 10 billion dollars on the bailout of the automaker.*
GM shares closed at 40.90 in Monday trading,up 1.82%.