CyberSecurity Sector ETF (HACK)

Transcription

1 CyberSecurity Sector ETF (HACK) The investment seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the ISE Cyber Security Index. The fund will invest at least 80% of its total assets in the component securities of the index. The index tracks the performance of companies across the globe that are a direct service provider for cyber security and for which cyber security business activities are a key driver of the business, whose business model is defined by its role in providing cyber security services and for which cyber security business activities are a key driver of the business. The fund is non-diversified. The FBI Internet Crimes Complaint Center received its three millionth internet crime complaint in 2014, having received 269,422 complaints in 2014 alone--with losses estimated at over $800 million. Cyber crime and cyber attacks affect people around the globe each day. The cyber security industry comprises the growing field of companies helping to combat the issue. The PureFunds ISE Cyber Security ETF provides investors with a way to invest in a basket of cyber security companies. The fund has 32 holdings (as of June 26, 2015). Top holdings in the fund include Palo Alto Networks, FireEye, Proofpoint, Splunk, and Fortinet. July 2015 Price $31

2 Merck (MRK) Merck, a global health care company, discovers, develops, manufactures, and markets medicines, vaccines, biologic therapies, and consumer and animal products. The company serves drug wholesalers and retailers, hospitals, government agencies, physicians, physician distributors, veterinarians, and animal producers. The company is organized into five divisions, including its manufacturing operations and Merck Research Laboratories. The others are the prescription drug business, animal health and a consumer health business. Merck has a geographically diverse mix of business, generating more than 50% of its revenue outside the United States. Merck reported that second-quarter net profits fell to $687 million, or 24 cents a share, from $2 billion, or 68 cents a share, in the same period a year ago. Excluding non-recurring items, such as costs related to acquisitions and divestitures, comparable adjusted earnings per share came in at 86 cents. Revenues fell 11 percent to $9.79 billion, with currency movements reducing revenue by 7 percentage points. For the full-year 2015, Merck raised its adjusted EPS outlook to a range of $3.45 to $3.55 from $3.35 to $3.48, Merck is near the front of a hotly contested race to bring to market new cancer therapies that use the body s immune system to fight tumors. Its drug, Keytruda, which is approved for the treatment of skin cancer and is awaiting approval for use in lung cancer, sold $110 million during the second quarter. Analysts had forecasted $100 million. The drugmaker is also working on a hepatitis C treatment that could compete with therapies for sale from Gilead Sciences and AbbVie. Merck plans to focus on hardto-treat cases of the liver infection, rather than competing on price. The Company recently announced that the Food and Drug Administration had accepted its application for the drug, which is a combination of the medications grazoprevir and elbasvir. Merck pays an annual dividend of $1.80 per share, which is equivalent to a current yield of 3.1 percent. July 2015 Price $59

3 Metlife (MET) MetLife through its subsidiaries and affiliates ( MetLife ), is one of the largest life insurance companies in the world. Founded in 1868, MetLife is a global provider of life insurance, annuities, employee benefits and asset management. Serving approximately 100 million customers, MetLife has operations in nearly 50 countries and holds leading market positions in the United States, Japan, Latin America, Asia, Europe and the Middle East (source: Company). MetLife reported operating earnings of $1.8 billion, up 11 percent from the second quarter of 2014, and up 16 percent on a constant currency basis. On a per share basis, operating earnings were $1.56, up 12 percent over the prior year quarter. Premiums, fees & other revenues were $12.2 billion, down 4 percent (essentially unchanged on a constant currency basis) over the second quarter of Financial institutions, including insurers, should benefit from a rising interest rate environment. The Fed is committed to begin raising interest rates prior to year-end The Company pays an annual dividend of $1.50 per share, which equates to a 2.7 percent current yield. July 2015 Price $56

4 Rayonier (RYN) Rayonier, a real estate investment trust (REIT), is a leading international forest product company engaged primarily in activities associated with timberland management, including the sale of timber and timberlands. Rayonier is a geographically diverse global land resources company. The company owns, leases, or manages 2.6 million acres of high-quality timberlands in North America and New Zealand. Its holdings include 2.7 million acres across ten states and approximately 200,000 high-value acres with residential, commercial and industrial development potential along the Interstate 95 corridor between Savannah, Ga., and Daytona Beach, Fla. The core operations are organized into two principal segments: Timber and Real Estate. Rayonier reported first quarter net income attributable to Rayonier of $17.7 million, or $0.14 per share, compared to $41.4 million, or $0.32 per share, in the prior year quarter. The prior year first quarter results included $31.0 million of net income from its Performance Fibers business, which was spun off to shareholders in June Excluding this item, net income was $10.4 million, or $0.08 per share, in the prior year period. Interest rate sensitive securities, including REITs, have declined in price this year as the Fed has signaled that it will begin raising interest rates later this year. REITs are especially sensitive to higher interest rates since they must pay out 90 percent of earnings to receive favorable tax preference. The high pay-out rate means that companies cannot accumulate cash to fund new projects or acquisitions, rather they must rely on debt and equity issuances to raise the funds. The Company declared its quarterly dividend of 25 cents per common share. The annualized dividend of $1.00 per share equates to a current yield of approximately 4.1 percent. A portion of its dividends are treated as return of capital. The shares trade on the New York Stock Exchange. July 2015 Price $25

5 SOUTHWEST AIRLINES (LUV) Southwest Airlines Co. operates passenger airlines that provide scheduled air transportation services in the United States. The company operates 689 planes, comprised of Boeing 737 and Boeing 717 aircrafts. It served 93 destinations in 40 states, the District of Columbia, and the Commonwealth of Puerto Rico, as well as 5 near-international countries, including Mexico, Jamaica, The Bahamas, Aruba, and Dominican Republic. Southwest Airlines reported second-quarter 2015 adjusted EPS of $1.03 on revenues of $5.1 billion. In the second quarter of 2014, the airline posted EPS of $0.67 on revenues of $5.01 billion. The Wright amendment expired in mid-october, 2014 and Southwest continues to expand the number of non-stop offerings departing from Dallas Love Field. In April, the company launched nine additional daily nonstop flights, bringing its total daily flights out of Love Field to 166. By August 2015, it is scheduled to operate 180 weekday departures to 50 nonstop destinations. In May, Southwest expanded its international service and changed an order for 31 Boeing s to larger s. The company began service to Puerto Vallarta (PVR) in June and announced daily service between PVR and Denver beginning in November 2015, pending foreign government approval. Southwest plans to begin service by the end of this year between eight international cities and Houston (Hobby), including inaugural service to Belize City, Belize in October 2015, and Liberia, Costa Rica in November 2015, both pending foreign government approvals. Southwest is one of the premier players in the airline industry. Southwest has two competitive advantages which include its low-cost structure and industry-best labor relations. We believe that Southwest Airlines is a low risk holding in the transportation sector. The Company returned $430 million to shareholders through dividends and share repurchases during second quarter 2015, and $811 million during the first half The Company pays an annual dividend of $0.30, which equates to a yield less than one percent. July 2015 Price $36

6 Senior Housing Properties Trust (SNH) Senior Housing Properties Trust (SNH) is a real estate investment trust (REIT) that invests in senior housing real estate, including apartment buildings for aged residents, independent living properties, assisted living facilities and nursing homes. The Company owns approximately 392 properties located in 39 states and Washington D.C. Net income was $39.8 million, or $0.18 per share, for the quarter ended March 31, 2015, compared to net income of $38.6 million, or $0.21 per share, for the quarter ended March 31, The per share earnings declined due to an increase in the outstanding shares. Rental revenues increased 19 percent to $228.6 million during the quarter. During the first quarter, the Company completed the acquisition of 23 high quality medical office buildings leased to strong credit quality tenants for approximately $539 million. Since the end of the first quarter, Senior Housing closed the acquisition of 37 private pay senior living communities for approximately $763 million. Interest rate sensitive securities, including REITs, have declined in price this year as the Fed has signaled that it will begin raising interest rates later this year. REITs are especially sensitive to higher interest rates since they must pay out 90 percent of earnings to receive favorable tax preference. The high pay-out rate means that companies cannot accumulate cash to fund new projects or acquisitions, rather they must rely on debt and equity issuances to raise the funds. Advancements in medical science are helping prolong our lives and this, we believe, will increase the demand for independent and assisted living centers. The portfolio of properties is geographically diversified throughout the United States with the largest concentrations of properties located in Texas and Florida. The REIT pays a current dividend of $1.56 annually or 9.0 percent current yield. July 2015 Price $17

7 TK LNG Partners (TGP) Teekay LNG Partners is one of the world's largest independent owners and operators of LNG carriers, providing LNG, LPG and crude oil marine transportation services primarily under long-term, fixed-rate charter contracts. The Partnership has interests in 44 LNG carriers (including one LNG regasification unit and 15 newbuildings), 30 LPG/Multigas carriers (including four chartered-in LPG carriers and 10 newbuildings) and nine conventional tankers. The Partnership's interests in these vessels range from 20 to 100 percent. During the second quarter of 2014, the Partnership generated distributable cash flow of $66.2 million, up 10 percent compared to $60.1 million in the same quarter of the previous year. The increase in distributable cash flow was primarily due to lower interest expense resulting from the December 2014 termination of capital leases and the subsequent refinancing of three 70 percent-owned liquefied natural gas (LNG) carriers, fewer scheduled dry-dockings and unscheduled off-hire days compared to the first quarter of 2014, the acquisition of the Norgas Napa liquefied petroleum gas (LPG) carrier in November 2014, and an increase in charter rates for two of the Partnership's Suezmax tankers. The Partnership recently declared a cash distribution of $0.70 per unit. The annualized distribution is $2.80, which equates to a current yield of 10.2 percent. July 2015 Price $28

8 Waste Management (WM) Waste Management, based in Houston, Texas, is the leading provider of comprehensive waste management services in North America. Through its subsidiaries, the company provides collection, transfer, recycling and resource recovery, and disposal services. It is also a leading developer, operator and owner of landfill gas-to-energy facilities in the United States. The company s customers include residential, commercial, industrial, and municipal customers throughout North America. Waste Management recently announced financial results for its quarter ended June 30, Revenues for the second quarter of 2015 were $3.32 billion compared with $3.56 billion for the same 2014 period. Net income for the quarter was $274 million, or $0.60 per diluted share, compared with net income of $210 million, or $0.45 per diluted share, for the second quarter of Based on the positive first half results combined with its outlook for continued price and cost control discipline and improving volumes, Waste Management reiterated that it is confident that the momentum it saw in the first half of the year will continue in the second half of the year. The company now expects that its 2015 adjusted earnings per diluted share should be at the high end of its previously announced guidance of between $2.48 and $2.55. The company also expects to achieve the upper end of its full year free cash flow guidance of between $1.4 and $1.5 billion. The Company returned $475 million to shareholders during the second quarter, including $300 million in share repurchases and $175 million in the form of dividends. The Company pays an annual dividend of $1.54 per share, which equates to a 3.0 percent current yield. July 2015 Price $51