Why 401 (k) investors ignore 'keep cool' advice when markets tank
You would think people have learned to stay the course with their retirement accounts when the stock market gets shaky.
Unfortunately, not so.
A new report finds that 401(k) participants keep on selling during market downturns despite being repeatedly told to chill.
For example: In early August, markets went topsy-turvy as investors, including 401(k) participants, got jittery about the economy, according to the Alight Solutions 401(k) Index. Stocks began to slither south on Aug. 2, prompting 401(k) plan participants to make trades in their plan holdings — trading at around 1.7 times their normal activity. Then, when stocks went into a full-blown tumble on Aug. 5, trading activity exploded to 8.3 times an average trading day, per the data that tracks the inflow and outflow from 401(k) plan account holdings.
Read more: Here’s what to do with your retirement savings when the markets are shaky
That hasty freakout by 401(k) plan savers triggered a flight to safety. People pulled 401(k) money from company stock, large US equity funds, and target date funds and shifted to stable value, bond, and money market funds.
The last time trading activity was this high was March 2020, as markets were adjusting to the uncertainty of the COVID-19 pandemic, said Rob Austin, vice president at Alight Solutions.
The freakout wasn’t a good thing. The S&P 500 (^GSPC) fell 3% on Aug. 5 — the worst day in nearly two years — and then gained 1.04% on Aug. 6, dropped another 0.77% on Aug. 7, and jumped 2.3% higher on Aug. 8. People who jettisoned stocks on the 5th would have missed two solid rebound days.
For the entire month of August, 20 of 22 days, people leaned into investing new contributions to fixed-income funds, according to the index, which tracks the trading activity of over 2 million people and details the monthly volume, asset flows, and market activity of accounts.
“It is not unusual,” Austin told me. “We’ve been tracking daily behavior since the 1990s and know there will be higher than normal trading whenever indices like the S&P 500 drop by 2% or more in a day.”
‘Head to the hills’ mentality
A few things can cause people to want to “head to the hills with their money when the market swings,” Steve Parrish, professor of practice and scholar in residence at The American College of Financial Services, told Yahoo Finance. “There’s recency bias. People tend to both favor recent events over historic ones and overemphasize their importance, and when they see a current market drop, they project it forward well into the future,” he said.
Second, loss aversion is a huge driving force, Parrish said. “People enjoy a market surge, but they detest a market drop. They remember how they felt the last time there was a drop, and they don’t want to relive that feeling. So, they take their money and run for safety.”
The truth is that retirement savers can’t afford to be so hasty.
If you’re saving automatically in your employer-sponsored retirement plan, or you’re making automatic contributions to a Roth IRA or a traditional IRA and are years from retirement, you’re always investing in your retirement accounts regardless of whether markets are up or down. That smooths out your returns over the long haul.
Meanwhile, many retirement savers these days have their funds set aside in target-date retirement funds so the account is automatically adjusted when the markets get out of whack. Generally speaking, for example, at Vanguard, “portfolios are rebalanced if the portfolio’s asset allocation has drifted from its target asset allocation by a predetermined tolerance threshold, for example, a threshold of 1% or 2%.”
Other firms might rebalance monthly or quarterly. Currently, there seems to be no standard rebalancing methodology when markets get woozy.
With a target-date retirement fund, you select the year you’d like to retire and buy a mutual fund with that year in its name (like Target 2044). The fund manager then divides your investment between stocks and bonds, fine-tuning that to a more conservative mix as the target date nears, or soon after.
The reality: It’s pretty hard to find the best time to sell and to buy stocks. If you exit when markets dip, you might fail to catch the gain when they start climbing again.
If you’re firmly in the do-it-yourself camp, here are some steps to take.
Revisit your asset allocations. “Investors who haven’t thought through their risk tolerance based on their age and retirement goals are more likely to panic sell,” said Mark Johnson, an investments and portfolio management fellow and professor at Wake Forest University.
Financial advisers typically suggest rebalancing (adjusting the mix of your stocks and bonds) whenever your portfolio gets more than 7% to 10% away from your original asset allocation.
“With the help of diversification, a long-term investing strategy, periodic portfolio rebalancing, dollar-cost averaging, and avoiding market timing, investors have little to worry about,” Johnson added.
An annual check-up can do the trick. If, for instance, having too large of a chunk of your savings invested in stocks makes it hard for you to keep it together when markets swing, then you might consider trimming those holdings.
The key is to ride out the chaos with calm and take action when things quiet down. “Think of those videos where an adult puts candy in front of a child, instructs them to wait to eat the candy,” Parrish said. “If they do so, they’ll be rewarded with even more candy. Some wait, but the majority go for the quick result.”
Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist, and the author of 14 books, including “In Control at 50+: How to Succeed in The New World of Work” and “Never Too Old To Get Rich.” Follow her on X @kerryhannon.
Read the latest financial and business news from Yahoo Finance
Trump's Strategy: Double Down On White Voters In The Rust Belt While Kamala Harris Expands Minority Support
Donald Trump‘s Saturday rally in Wisconsin underscores his campaign’s effort to strengthen his support among working-class and rural white voters in a crucial battleground state.
Since Kamala Harris replaced President Joe Biden at the top of the Democratic ticket over the summer, the former president has seen his support diminish across most demographic groups, reported Reuters.
Trump spoke in Mosinee, a town with around 4,500 residents near Wausau. This area is remote from Wisconsin’s major population centers, Milwaukee and Madison.
Marathon County, where Mosinee is located, was once a competitive region, voting for Barack Obama in 2008. However, it has shifted rightward, supporting Trump by approximately 18 points in both 2016 and 2020.
Nationally, Harris leads Trump by 13 percentage points among Hispanic voters, according to the latest Reuters/Ipsos poll from August, up from Biden’s five-point lead in May. She has also increased her support among Black Americans, outperforming Biden by seven points. However, her impact on white voters has been minimal.
The same polls reveal that white voters without a college degree, a key part of Trump’s base, still prefer him by 25 points, compared to a 29-point margin in his race against Biden.
Trump’s relative strength among white voters is seen as a key advantage, with several of his advisers and allies recently telling Reuters that maintaining these margins will be critical for his potential victory over Harris.
This is particularly important in the northern “Rust Belt” states, including Wisconsin, which have large white and rural populations. Trump’s success in these areas was pivotal to his 2016 triumph over Hillary Clinton.
Biden secured the presidency in 2020 partly by regaining support from some of these voters for the Democratic Party. Although the Trump campaign is targeting Hispanic and Black male voters as crucial for Republican growth, much of Trump’s recent campaigning has focused on less diverse small cities and towns in the Rust Belt.
According to two Trump advisers, Trump’s running mate JD Vance is expected to intensify efforts in relatively rural Rust Belt areas in the final weeks leading up to the election.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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If You'd Invested $1,000 in Berkshire Hathaway Stock 5 Years Ago, Here's How Much You'd Have Today
Led by Warren Buffett, one of the most famous investors to ever live — and one of the most successful — Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) has delivered incredible returns to shareholders over its long history. Buffett knows how to “pick ’em,” as they say.
Berkshire’s success is built on the investing philosophy of Buffett and his late business partner, Charlie Munger, which revolves around finding “wonderful” businesses and sticking to them long term — not unlike our philosophy at the Motley Fool. These wonderful companies include some of the biggest names in the world: Coca-Cola, American Express, and Apple, to name just a few.
Their approach made both men billionaires, and made the company the only non-tech U.S. firm to surpass $1 trillion in market capitalization.
The growth of $1,000 of Berkshire Hathaway stock
If you had invested $1,000 into Berkshire five years ago, today your investment would be worth north of $2,300. That’s a 132% gain or 18% annualized — not a bad return! The S&P 500 is up just 85% over the same period. Berkshire’s return beat even the tech-heavy Nasdaq Composite, which was up 111%.
The best time to invest in Berkshire would have been long ago, but it’s better late than never. Berkshire is a phenomenal company to this day. You may not enjoy quite the growth rate that it has seen in years past — and, yes, Buffett is getting up there in age — but Berkshire is still making sound investment decisions and growing shareholder wealth.
Investors can expect the company to be guided by the same philosophy and values for many years to come. The future continues to look bright for Berkshire.
Should you invest $1,000 in Berkshire Hathaway right now?
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American Express is an advertising partner of The Ascent, a Motley Fool company. Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy.
If You’d Invested $1,000 in Berkshire Hathaway Stock 5 Years Ago, Here’s How Much You’d Have Today was originally published by The Motley Fool
Ask an Advisor: I Live on Social Security and Food Stamps – Can My Investments Survive a Down Market?
I’m retired and living on Social Security and food stamps. I have all my money in two conservative retirement accounts. I cannot contribute any money to them. I plan on taking distributions in five years. What’s the best course of action to save my money before the market crashes even more?
-Camile
The core question here is how to protect your money during a market downturn. It’s one that I hear perhaps more than any other.
The answer can vary depending on the unique circumstances of the person asking. In particular, it depends on how you understand risk and what you’re willing to do about it.
Here’s what to know about protecting your money when the market falls. A financial advisor can help you manage your savings and plan for retirement. Find a local advisor today.
The Investor’s Trilemma: Safety, Liquidity and Growth
In general, your investments can offer safety, growth and liquidity. But you can’t expect them to deliver all three benefits at once. Since you do not plan on taking distributions for another five years, liquidity probably isn’t a top priority right now. (Of course, it is still important to keep in mind.) That leaves safety and growth as your primary concerns. So, which of those two is more important?
In your case, it’s clear that safety – or avoiding loss from further market downturns – is a major concern. You don’t have extra cash to put toward your investments, and the fact that they’re already so conservative suggests that you don’t think they can take much of a hit.
You may or may not be right to think that. It’s difficult to say without looking at the hard numbers. And there may be steps you can take to make your portfolio more conservative. On the other hand, perhaps your dissatisfaction indicates that a safety-first approach is no longer cutting it.
The Challenge: Beating Inflation
The reason to invest in the first place is to maximize the value of your money as much as possible. Many obstacles get in the way of that goal. But the one hurdle that will always be there, to some degree, is inflation.
So, as an investor, your battle is with inflation first. And the only way to win that battle is to own something that appreciates in value faster than (or at least equal to) the inflation rate.
Can You Earn Returns Without Risk?
With all those principles established, let’s return to the central question: How can you avoid putting your money at risk but still earn returns on it?
Well, sadly, the short answer is that you can’t. No risk typically means no return.
That said, you can get minimal returns, for minimal risk, by investing in debt. In other words, you loan somebody money and get paid a little bit of interest in return. Some examples include:
-
Certificates of deposit. These financial vehicles are currently paying about 3% for 12-month terms. Your money will be held in the CD until the maturity date or else you’ll owe a penalty.
-
Money markets. These savings accounts are paying about 1.5% today.
-
Treasury bonds. These government-backed bonds currently pay about 3.1% for a two-year bond.
-
Treasury Inflation-Protected Securities (TIPS). This type of Treasury bond has a principal value determined by the prevailing inflation rate, which impacts the interest paid.
-
I bonds. This Treasury bond’s interest rate is determined by the current inflation rate. The current interest rate for I bonds is at 9.62%.
-
These investments will not earn you much money. But they will help soften the blow of inflation and won’t vary wildly in their value.
Such modest benefits are enough for some investors. But they may not be enough for you.
Consider consulting a financial advisor to build a plan to protect your retirement nest egg.
How to Approach Your Investments
Sure, you don’t have the income to spare right now, and you won’t start drawing from your portfolio for a few more years, so hunkering down with low-risk assets sounds appealing.
But “starting” to draw from your portfolio is very different from depleting it. How long do those savings need to last? If you plan on drawing from your portfolio over the next 20 years, you must have some exposure to risk if it is to keep up with (or beat) inflation.
The good news is getting that exposure may not be as scary as it seems. If you have a long time horizon and can get away with annual withdrawals of about 4% or less, you may be able to get your portfolio to a good place with just moderate risk exposure.
A well-diversified portfolio, for example, can have “buckets” of money with different risk profiles for various time horizons. You could have a roughly 25% portion in your nest egg invested in cash and bonds for short-term withdrawals.
A second quarter could go toward high-yield bonds and stocks and have a time horizon of six to 10 years. The final half would be in the most aggressive “bucket,” with stock and real estate holdings. You wouldn’t plan to draw from this bucket until 11 or more years have passed.
What to Do Next
As I always tell my clients, you do not flip a switch from aggressive to conservative or vice-versa. It happens incrementally over many years, even decades.
And that’s true of investing generally: Whether things look exhilarating or terrifying at any given moment, remember that it’s about the long game. Success has more to do with sticking to your principles over time, and less with picking the “right” horse at the “right” time. A financial advisor can help guide you through your investment and retirement journey, and you can get matched for free.
Retirement Planning Tips
-
Work with a professional. From Social Security and alternative income streams to medical expenses and long-term care, there’s a lot to consider when creating a plan for retirement. A financial advisor can help guide you through this complicated process. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
-
Why you shouldn’t panic during a bear market. Pausing investments during a bear market can slash retirement income down the road. This chart shows why you shouldn’t stop investing during a bear market.
-
Keep an emergency fund on hand in case you run into unexpected expenses. An emergency fund should be liquid — in an account that isn’t at risk of significant fluctuation like the stock market. The tradeoff is that the value of liquid cash can be eroded by inflation. But a high-interest account allows you to earn compound interest. Compare savings accounts from these banks.
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Are you a financial advisor looking to grow your business? SmartAsset AMP helps advisors connect with leads and offers marketing automation solutions so you can spend more time making conversions. Learn more about SmartAsset AMP.
Photo credit: ©iStock.com/Goodboy Picture Company, ©iStock.com/Nattakorn Maneerat
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Sell Alert: John Bell Cashes Out $67K In Permian Resources Stock
John Bell, EVP at Permian Resources PR, reported an insider sell on September 5, according to a new SEC filing.
What Happened: According to a Form 4 filing with the U.S. Securities and Exchange Commission on Thursday, Bell sold 4,821 shares of Permian Resources. The total transaction value is $67,173.
The latest market snapshot at Friday morning reveals Permian Resources shares down by 0.0%, trading at $13.48.
Delving into Permian Resources’s Background
Permian Resources Corp is an independent oil and natural gas company focused on generating outsized returns to stakeholders through the responsible acquisition, optimization and development of oil and liquids-rich natural gas assets. The Company’s assets and operations are primarily concentrated in the core of the Permian Basin, and its properties consist of large, contiguous acreage blocks located in West Texas and New Mexico.
Financial Milestones: Permian Resources’s Journey
Revenue Growth: Over the 3 months period, Permian Resources showcased positive performance, achieving a revenue growth rate of 99.89% as of 30 June, 2024. This reflects a substantial increase in the company’s top-line earnings. As compared to competitors, the company surpassed expectations with a growth rate higher than the average among peers in the Energy sector.
Evaluating Earnings Performance:
-
Gross Margin: Achieving a high gross margin of 49.45%, the company performs well in terms of cost management and profitability within its sector.
-
Earnings per Share (EPS): Permian Resources’s EPS is below the industry average, signaling challenges in bottom-line performance with a current EPS of 0.38.
Debt Management: Permian Resources’s debt-to-equity ratio is below industry norms, indicating a sound financial structure with a ratio of 0.48.
In-Depth Valuation Examination:
-
Price to Earnings (P/E) Ratio: The P/E ratio of 10.14 is lower than the industry average, implying a discounted valuation for Permian Resources’s stock.
-
Price to Sales (P/S) Ratio: The P/S ratio of 1.64 is lower than the industry average, implying a discounted valuation for Permian Resources’s stock in relation to sales performance.
-
EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): Permian Resources’s EV/EBITDA ratio at 4.54 suggests potential undervaluation, falling below industry averages.
Market Capitalization Analysis: Positioned below industry benchmarks, the company’s market capitalization faces constraints in size. This could be influenced by factors such as growth expectations or operational capacity.
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Exploring the Significance of Insider Trading
Insider transactions, although significant, should be considered within the larger context of market analysis and trends.
In the context of legal matters, the term “insider” refers to any officer, director, or beneficial owner holding more than ten percent of a company’s equity securities, as outlined by Section 12 of the Securities Exchange Act of 1934. This includes executives in the c-suite and significant hedge funds. Such insiders are obligated to report their transactions through a Form 4 filing, which must be completed within two business days of the transaction.
Pointing towards optimism, a company insider’s new purchase signals their positive anticipation for the stock to rise.
Despite insider sells not always signaling a bearish sentiment, they can be driven by various factors.
The Insider’s Guide to Important Transaction Codes
For investors, a primary focus lies on transactions occurring in the open market, as indicated in Table I of the Form 4 filing. A P in Box 3 denotes a purchase, while S signifies a sale. Transaction code C signals the conversion of an option, and transaction code A denotes a grant, award, or other acquisition of securities from the company.
Check Out The Full List Of Permian Resources’s Insider Trades.
This article was generated by Benzinga’s automated content engine and reviewed by an editor.
Market News and Data brought to you by Benzinga APIs
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Keir Starmer To Meet Biden at White House Amid Talks on Global Issues And UK-EU Relations
UK Prime Minister Keir Starmer will meet Joe Biden for the first time since the U.S. president announced he would not seek re-election.
Starmer’s visit to the White House is scheduled for next Friday and will be his second since taking office, reported The Guardian.
His initial visit occurred at the NATO summit shortly after Labour’s election victory, amid discussions about President Biden’s age and health, during which Starmer noted that Biden was in “good form.”
Since then, Kamala Harris has officially been selected as the Democratic nominee. According to a statement from White House Press Secretary Karine Jean-Pierre, the leaders will engage in “an in-depth discussion on a range of global issues of mutual interest.”
Also on the agenda will be efforts to secure a hostage release and a ceasefire agreement to end the war in Gaza.
The discussion will also cover safeguarding international shipping in the Red Sea from Iranian-backed Houthi threats, promoting a free and open Indo-Pacific, and exploring ways to enhance U.S.-UK collaboration on securing supply chains and boosting climate resilience.
No meetings between Starmer and Harris have been announced, though it’s expected she will join the bilateral talks with Biden.
There are also no public plans for Starmer to meet Republican nominee Donald Trump, although such meetings have occurred in the past, like David Cameron‘s with Mitt Romney in 2012.
In July, Starmer extended his best wishes to Trump and condemned the assassination attempt on the former president.
Recently, Starmer has traveled to Berlin and Paris in an effort to recalibrate the UK’s ties with European leaders.
On Saturday, he will head to Dublin to meet with Irish Taoiseach Simon Harris, marking the first official visit to Ireland by a UK prime minister in five years.
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Bristow Group Recent Insider Activity
A substantial insider sell was reported on September 5, by Solus Alternative Asset Management LP, 10% Owner at Bristow Group VTOL, based on the recent SEC filing.
What Happened: According to a Form 4 filing with the U.S. Securities and Exchange Commission on Thursday, LP sold 75,000 shares of Bristow Group. The total transaction value is $2,962,162.
Monitoring the market, Bristow Group‘s shares down by 0.0% at $38.93 during Thursday’s morning.
About Bristow Group
Bristow Group Inc is the provider of vertical flight solutions. It provides aviation services to a broad base of integrated, national, and independent energy companies. The company provides commercial search and rescue (SAR) services in multiple countries and public sector SAR services in the United Kingdom on behalf of the Maritime & Coastguard Agency (MCA). Additionally, it offers fixed-wing transportation and other aviation-related solutions. Its energy customers charter its helicopters to transport personnel to, from, and between onshore bases and offshore production platforms, drilling rigs, and other installations. It has customers in Australia, Brazil, Canada, Chile, Colombia, Guyana, India, Mexico, Nigeria, Norway, Spain, Suriname, Trinidad, the U.K. and the United States.
Financial Milestones: Bristow Group’s Journey
Revenue Growth: Over the 3 months period, Bristow Group showcased positive performance, achieving a revenue growth rate of 12.64% as of 30 June, 2024. This reflects a substantial increase in the company’s top-line earnings. In comparison to its industry peers, the company stands out with a growth rate higher than the average among peers in the Energy sector.
Holistic Profitability Examination:
-
Gross Margin: The company sets a benchmark with a high gross margin of 60.66%, reflecting superior cost management and profitability compared to its peers.
-
Earnings per Share (EPS): The company excels with an EPS that surpasses the industry average. With a current EPS of 0.99, Bristow Group showcases strong earnings per share.
Debt Management: Bristow Group’s debt-to-equity ratio is below the industry average at 1.01, reflecting a lower dependency on debt financing and a more conservative financial approach.
Market Valuation:
-
Price to Earnings (P/E) Ratio: The current Price to Earnings ratio of 36.73 is higher than the industry average, indicating the stock is priced at a premium level according to the market sentiment.
-
Price to Sales (P/S) Ratio: The current P/S ratio of 0.82 is below industry norms, suggesting potential undervaluation and presenting an investment opportunity for those considering sales performance.
-
EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): At 8.51, the company’s EV/EBITDA ratio outperforms industry norms, reflecting positive market perception. This positioning indicates optimistic expectations for the company’s future performance.
Market Capitalization: With restricted market capitalization, the company is positioned below industry averages. This reflects a smaller scale relative to peers.
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Why Pay Attention to Insider Transactions
Investors should view insider transactions as part of a multifaceted analysis and not rely solely on them for decision-making.
When discussing legal matters, the term “insider” refers to any officer, director, or beneficial owner holding more than ten percent of a company’s equity securities, as stipulated in Section 12 of the Securities Exchange Act of 1934. This includes executives in the c-suite and significant hedge funds. Such insiders are required to report their transactions through a Form 4 filing, which must be completed within two business days of the transaction.
A new purchase by a company insider is a indication that they anticipate the stock will rise.
On the other hand, insider sells may not necessarily indicate a bearish view and can be motivated by various factors.
Transaction Codes To Focus On
Digging into the details of stock transactions, investors frequently turn their attention to those taking place in the open market, as outlined in Table I of the Form 4 filing. A P in Box 3 indicates a purchase, while S signifies a sale. Transaction code C signals the conversion of an option, and transaction code A denotes a grant, award, or other acquisition of securities from the company.
Check Out The Full List Of Bristow Group’s Insider Trades.
This article was generated by Benzinga’s automated content engine and reviewed by an editor.
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3 Top High-Yield Oil Stocks to Buy in September
There’s a major fault line running through the U.S. oil and gas sector, and I’m not talking about geology here. Simply put, Devon Energy (NYSE: DVN), Vitesse Energy (NYSE: VTS), and Chord Energy (NASDAQ: CHRD) are trading on lowly valuations and colossal dividend yields because investors are pricing in Bakken oil field assets at a discount to other assets such as in the Permian Basin. However, all three stocks now trade on attractive valuations and are worth picking up.
The top five oil-producing regions in the U.S.
Here’s a look at the top five oil-producing regions in the U.S. to get a sense of why investors favor the Permian over other assets.
|
Region |
Location |
Oil Production in June 2024 (thousands of barrels per day) |
|---|---|---|
|
Permian |
Texas and New Mexico |
6,187 |
|
Bakken |
North Dakota and Montana |
1,313 |
|
Eagle Ford |
Texas |
1,106 |
|
Niobrara |
Northeast Colorado and Southeast Wyoming |
697 |
|
Anadarko |
Texas and Oklahoma |
383 |
Data: U.S. Energy Information Administration.
Not only is the Permian region the most important in terms of production, but it has also increased production the most in recent years. This stands in contrast to the mediocre growth in production in the Bakken.
The maturing nature of the Bakken oil field is recognized in the North Dakota Energy Report 2023: “The Bakken formation is now considered “mature” by the industry — meaning that many of the operators in the state are dedicated to producing their acreage on a consistent and steady pace but that radical growth in production is less likely.
Devon Energy, Vitesse Energy, and Chord Energy
It’s not hard to see that investors may take a glass-half-empty viewpoint of these stocks. While Vitesse Energy is up 18% this year, it still trades on an 8.1% dividend yield, and stocks don’t trade on such yields unless the market is concerned about something.
Similarly, Devon Energy and Chord Energy also trade on attractive yields, and part of that reason probably comes down to significant deals both companies have done to add assets in the Bakken oil field. All three have announced deals in the Bakken this year. It’s part of a current trend in the industry whereby oil and gas companies are using cash flows gushing from a relatively high price of oil to acquire assets at a time when the market continues to accord energy companies lowly valuations.
It’s not hard to see what all three have in common this year.
|
Company |
Market Cap |
Deal Announced in 2024 |
|
|---|---|---|---|
|
Vitesse Energy |
$763 million |
Agreed to acquire $40 million worth of assets in the Williston Basin (Bakken). |
|
|
Chord Energy |
$9.2 billion |
Combined with Williston Basin-focused Enerplus in an $11 billion enterprise deal, Chord shareholders own 67% of the new company, and Enerplus shareholders hold 33%. |
|
|
Devon Energy |
$28 billion |
Acquiring Grayson Mills’ Williston Basin assets for $5 billion, consisting of $3.25 billion in cash and $1.75 billion in shares. |
|
Data source: Company presentations.
All three stocks look like a great value, and it appears that the market is being overly pessimistic here.
Vitesse Energy
Vitesse Energy is an unusual oil and gas company that doesn’t fully own or operate assets. Instead, it uses a proprietary technology system and management’s experience to invest in interest in wells operated by larger companies, primarily in the Bakken. These include Chord Energy and Grayson Mill.
In addition, it uses hedging to protect against a fall in the price of oil. The strategy provides diversification across 7,000 producing wells, and Vitesse is almost an ETF on Bakken.
Chord Energy
Chord Energy now expects $1.2 billion in adjusted free cash flow (FCF) in 2024, and management believes it has a “footprint of 10 years of low breakeven locations delivering peer-leading oil-weighted production” in the Williston Basin. Given that the $1.2 billion in FCF represents more than 13% of its market cap, the stock looks capable of delivering its entire market cap and more in FCF within a decade.
Devon Energy
It’s a similar story at Devon Energy, where Wall Street expects the company will generate $10.9 billion in FCF over the next three years. Management expects the Grayson Mill deal will add 15% to FCF generation. With the current market cap at just $28 billion, it won’t take long for Devon to generate a significant part of its market cap in FCF, either.
All told, while the Bakken is maturing, and there’s no guarantee the price of oil will stay high, these three high-yield stocks look like an excellent value.
Should you invest $1,000 in Devon Energy right now?
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Florida Homeowners Association Board Resigns En Masse Over $60,000 Special Assessment Dispute – Find Out What Sparked the Crisis
Homeowners in the Villas of Carillon, a quiet townhome community nestled in Feather Sound, Florida, are reeling after their Homeowners Association (HOA) board dropped a bombshell: a $60,000 special assessment.
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The shock wave hit the residents hard when they received notices in early June explaining the grim reality that their HOA’s reserves, which had never been fully funded in the neighborhood’s 20-year history, were on the verge of depletion. The looming financial challenge threatened to snowball, leaving every household facing a hefty bill.
The notice sent shivers through the community, with each household expected to pay around $60,000. A vote was scheduled for late June to determine the payment plan, but the news didn’t sit well with many residents.
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“I was in shock. I immediately started texting other neighbors,” said Tammy Rodeffer, a concerned homeowner, in a conversation with local station WTSP. “We’re talking about people having to sell, facing liens, even foreclosures. It’s terrifying.”
As the special meeting date loomed, homeowners rallied. The mood was tense as the residents packed the meeting, eager to persuade the board to halt the decision.
“You’ve got to pull together on this,” urged Robert Regan, another resident, at the meeting. “This problem isn’t going to just disappear. And for condos, 100% reserves are a must.”
But just when the community thought the dust might settle, the unexpected happened. In an email sent out right after the vote on June 21, the entire HOA board announced their immediate resignation. The vote was tabled indefinitely, leaving the residents in limbo as they scrambled to figure out their next move.
The big question lingering in everyone’s mind: What exactly is driving these sky-high special assessment fees?
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The story takes a twist when you dig into recent history. Ever since the tragic Surfside condo collapse in 2021, which claimed 98 lives due to shoddy construction, Florida has tightened building inspection regulations. Condo associations across the state are hiking fees to bulk up reserves for essential repairs. New state laws now require regular reserve studies and annual contributions, but they only apply to buildings three stories or taller. The Villas at Carillon? Just two stories.
The now-defunct HOA board had argued that insurance companies would eventually refuse to cover the complex without the necessary reserves, particularly with aging roofs that would soon need replacing. Yet, not everyone is convinced that the steep assessment is the only way forward.
Patricia Staebler, a seasoned reserve specialist from Sarasota, pointed out that special assessments should be avoidable if a project’s cost is planned over time. “Reserves should be built gradually,” she explained. “With annual increases spread out over 30 years, you don’t need 100% funding right away, but you do need to meet your yearly targets.”
Staebler’s 15 years in the field taught her that perfect funding is a myth. “I’ve never seen an association with 100% funding,” she admitted, “but meeting your annual reserve requirements is critical.”
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As the dust settles, town house owners are left searching for answers. They hope the delay will buy them time to investigate the numbers and determine why the assessment ballooned to such an eye-watering figure.
“We need to see the paperwork, go through all the financials, and understand how they arrived at these numbers,” Rodeffer said, echoing the community’s sentiment.
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This article Florida Homeowners Association Board Resigns En Masse Over $60,000 Special Assessment Dispute – Find Out What Sparked the Crisis originally appeared on Benzinga.com
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MDB DEADLINE ALERT: ROSEN, TRUSTED INVESTOR COUNSEL, Encourages MongoDB, Inc. Investors with Losses in Excess of $100K to Secure Counsel Before Important September 9 Deadline in Securities Class Action – MDB
NEW YORK, Sept. 07, 2024 (GLOBE NEWSWIRE) —
WHY: Rosen Law Firm, a global investor rights law firm, reminds purchasers of securities of MongoDB, Inc. MDB between August 31, 2023 and May 30, 2024, both dates inclusive (the “Class Period”), of the important September 9, 2024 lead plaintiff deadline.
SO WHAT: If you purchased MongoDB securities during the Class Period you may be entitled to compensation without payment of any out of pocket fees or costs through a contingency fee arrangement.
WHAT TO DO NEXT: To join the MongoDB class action, go to https://rosenlegal.com/submit-form/?case_id=27182 or call Phillip Kim, Esq. toll-free at 866-767-3653 or email case@rosenlegal.com for information on the class action. A class action lawsuit has already been filed. If you wish to serve as lead plaintiff, you must move the Court no later than September 9, 2024. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation.
WHY ROSEN LAW: We encourage investors to select qualified counsel with a track record of success in leadership roles. Often, firms issuing notices do not have comparable experience, resources or any meaningful peer recognition. Many of these firms do not actually litigate securities class actions, but are merely middlemen that refer clients or partner with law firms that actually litigate the cases. Be wise in selecting counsel. The Rosen Law Firm represents investors throughout the globe, concentrating its practice in securities class actions and shareholder derivative litigation. Rosen Law Firm has achieved the largest ever securities class action settlement against a Chinese Company. Rosen Law Firm was Ranked No. 1 by ISS Securities Class Action Services for number of securities class action settlements in 2017. The firm has been ranked in the top 4 each year since 2013 and has recovered hundreds of millions of dollars for investors. In 2019 alone the firm secured over $438 million for investors. In 2020, founding partner Laurence Rosen was named by law360 as a Titan of Plaintiffs’ Bar. Many of the firm’s attorneys have been recognized by Lawdragon and Super Lawyers.
DETAILS OF THE CASE: According to the lawsuit, throughout the Class Period, defendants created the false impression that they possessed reliable information pertaining to MongoDB’s projected revenue outlook and anticipated growth while also minimizing risk from seasonality and macroeconomic fluctuations. In truth, MongoDB’s sales force restructure, which prioritized reducing friction in the enrollment process, had resulted in complete loss of upfront commitments; a significant reduction in the information gathered by their sales force as to the trajectory for the new MongoDB Atlas enrollments; and reduced pressure on new enrollments to grow. Defendants misled investors by providing the public with materially flawed statements of confidence and growth projections which did not account for these variables. When the true details entered the market, the lawsuit claims that investors suffered damages.
To join the MongoDB class action, go to https://rosenlegal.com/submit-form/?case_id=27182 or call Phillip Kim, Esq. toll-free at 866-767-3653 or email case@rosenlegal.com for information on the class action.
No Class Has Been Certified. Until a class is certified, you are not represented by counsel unless you retain one. You may select counsel of your choice. You may also remain an absent class member and do nothing at this point. An investor’s ability to share in any potential future recovery is not dependent upon serving as lead plaintiff.
Follow us for updates on LinkedIn: https://www.linkedin.com/company/the-rosen-law-firm, on Twitter: https://twitter.com/rosen_firm or on Facebook: https://www.facebook.com/rosenlawfirm/.
Attorney Advertising. Prior results do not guarantee a similar outcome.
Contact Information:
Laurence Rosen, Esq.
Phillip Kim, Esq.
The Rosen Law Firm, P.A.
275 Madison Avenue, 40th Floor
New York, NY 10016
Tel: (212) 686-1060
Toll Free: (866) 767-3653
Fax: (212) 202-3827
case@rosenlegal.com
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