My older brother is a first lieutenant in the United States Marines Corps who has served two tours of duty in Iraq. I am truly grateful for the commitment and sacrifices that he and his fellow service members have made so that we may enjoy the countless freedoms provided by our great country.

On this Veterans Day, I’d like to in some small way serve them, by taking a look at five great companies for veterans seeking work after their service to our country.

While employment has been tough coming out of the Great Recession, the United States has sought to serve our veterans well, as historically they have had an unemployment rate lower than the national average, as shown in the chart below:

Source: Bureau of Labor Statistics

However, the situation is not as bright for those classified as Gulf War-era II veterans who have served in the armed forces since September 2001. Their unemployment rate is well above that of veterans from other service periods:

Source: Bureau of Labor Statistics

Many companies have recognized this trend and are putting mechanisms in place to narrow the gap. One of those is Starbucks (NASDAQ:SBUX) which just last week announced it would commit to hiring 10,000 veterans and their spouses over the next five years. CEO Howard Schultz said of the plan, “The more than one million transitioning U.S. veterans and almost one and half million military spouses — with their diverse background and experience — share our mission-driven sensibility and work ethic and can build long-term careers at Starbucks as they return home.”

The multiyear plan will focus on career development by establishing the tools necessary to match the skills of veterans and their spouses with the needs of Starbucks to ensure that the new employees can succeed. In addition, the program will provide mentoring resources to the veterans to assist with the transition and “ensure new hires have access to the information and resources they need to be successful,” according to a Starbucks press release.

There are a significant number of companies committed to hiring veterans, and through the Military Times’ Best for Vets survey and the Victory Media Top 100 Military Friendly Employers, the Motley Fool has highlighted five of these organizations.

Union Pacific (NYSE:UNP) Railroad
One out of every five of the 51,000 employees at Union Pacific Railroad has military experience. The company’s board of directors includes retired Gen. Charles C. Krulak, who served as the 31st commandant of the Marine Corps between 1995 and 1999. The company also assists veterans through specific recruiting events, workshops, and even an online tool that helps “translate military skills, experience and training to find [Union Pacific] career opportunities.” Union Pacific ranked second in the Military Friendly Employers survey and fifth in the Best for Vets.

Verizon Communications (NYSE:VZ)
Seven percent of Verizon employees are veterans, and with nearly 175,000 employees the company is one of the largest employers of former service members. Like Union Pacific, Verizon also offers a Military Skills Matcher and a tool that allows those seeking jobs to find them near where they are currently stationed. Verizon also helped create a mobile app that provides veterans and their spouses access to the tools provided by the U.S. Chamber of Commerce Hiring Our Heroes initiative. Verizon was ranked third by the Military Friendly Employers survey and sixth by Best for Vets.

ManTech International (NASDAQ:MANT)
Although ManTech isn’t a household name like the others on this list, almost half of its workforce has experience in the armed services. In addition, the company provides access to confidential resources and counseling for employees who are deployed and their spouses. The Fairvfax, Va., science and technology company ranked third in the Best for Vets survey and fifth in the Military Friendly Employers survey.

USAA
The financial services company dedicated to serving military members and their families is also committed to hiring veterans. The 25,000-person company has hired more than 7,300 veterans and their spouses since 2005. In a recent release, USAA’s executive vice president of human resources, Dana Simmons, himself a retired U.S. Air Force brigadier general, noted that “for us, hiring veterans isn’t an option, it is a critical necessity.” The company has committed to 25% of its new hires being veterans or their spouses, and plans to increase that number to 30% in the coming years. It should come as no surprise that USAA was named as the No. 1 employer for veterans by both surveys.

General Electric (NYSE:GE)
While there were certainly companies ranked ahead of General Electric on each list (it came in at 15th on the Best for Vets survey and 11th among the Military Friendly Employers), the company’s size and scope perhaps offer the most expansive set of options for veterans as they transition into the civilian workforce. This includes potential employment across GE’s health care, energy, finance, and industrial divisions.

Not only does General Electric provide an expansive network of veterans and a transition assistance program, but it also offers different insights to opportunities depending on the veteran’s occupational specialty. It provides specific job opportunities through its Junior Officer Leadership Program for former military officers, and in 2009 “signed a memorandum of agreement with the U.S. Army Reserve to guarantee priority consideration for job interviews for all qualified participating soldiers no later than 30 days after completing military occupational specialty training.”

Continued support of our veterans as they transition from the armed forces into the workforce is essential, and we would all do well to support them today and on all days.

The article 5 Great Employers for Veterans originally appeared on Fool.com.

Fool contributor Patrick Morris owns shares of General Electric Company and Starbucks. The Motley Fool recommends Starbucks. The Motley Fool owns shares of General Electric Company and Starbucks. 

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Have you ever asked yourself why some people make more money than others? Since the late 1970s, the gap between rich and poor in the U.S. has been steadily widening. Today, income inequality is an undisputed reality for the vast majority of Americans.

In his 2012 State of the Union address, President Barack Obama described this burning problem as “the defining issue of our time.” However, he stressed that “if you worked hard, you could do well enough to raise a family, own a home, send your kids to college, and put a little away for retirement.”

But what if you want to achieve more than that? What does it take to become filthy rich?

If you are a rationalist, chances are you are richer than your neighbor

According to the Myers-Briggs Type Indicator (MBTI) – a psychometric questionnaire based on the famous psychologist Carl Jung’s typological theories– there are 16 possible personality types, divided into four categories: artisans, guardians, idealists, and rationalists.

An in-depth infographic I stumbled upon recently from the Career Assessment Site shows that of all of these personality types, a specific type of rationalists — the ENTJ – scores the highest average household income. Idealists, on the other hand, and especially those who fit with the INFP description – in other words,are more affectionate, calm, and shy than others – are less likely to cash in on their traits.

Source: Career Assessment Site 

So, next time you ask yourself why your neighbor drives a Lamborghini while you are stuck with an old Volvo, you’ll know the answer. Apparently, when it comes to your earning potential, your character makes all the difference.

How do ENTJs stay ahead of the game?

In general, rationalists are visionary people, but, at the same time, very practical. If they see a problem, they fix it. ENTJs in particular, are good with money, determinant to the point where they intimidate those around them, and they are always in the driver’s seat. They don’t settle for second best. They aim for the stars. To put it differently, ENTJs are the kind of people most likely to run the show.

Not surprisingly, some of the big names in the business world suit this type, including Bill Gates and investing guru Warren Buffett. The late Steve Jobs was also, according to experts, the epitome of ENTJ personalities.

ENTJs think ahead to the future and approach problems from several different angles.

“Someone’s sitting in the shade today because someone planted a tree a long time ago,”Warren Buffett once observed.

“Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks,” he told shareholders back in 1985 when discussing his worst ever investment, the textile mill that gave its name to his financial powerhouse, Berkshire Hathaway.

Moreover, ENTJ personalities don’t deal well with inefficiency and they loatheincompetence. They can be harsh and unforgiving when they realize that someone or something has failed to live up to their expectations.

In the summer of 2008, Apple launched MobileMe, its first real stab at a cloud storage and delivery service. But itgot off to a terrible start. It failed to impress users and proved to be one of Apple’s major missteps. Jobs was hopping mad at the MobileMe team. “You’ve tarnished Apple’s reputation,” he yelled at them, and he didn’t think twice before naming a new team leader.

Last but not least, people with this kind of personality can come across as arrogant. They have a very high self-esteem and do not hesitate to be honest and straightforward. However, often their self-confidence turns into arrogance.

In the early 2000s, Bill Gates was at loggerheads with Judge Thomas Jackson, who had announced that Microsoft was an illegal monopoly that had to be split into two. The judge told The New Yorker at the time: “I think he [Bill Gates] has a Napoleonic concept of himself and his company, an arrogance that derives from power and unalloyed success, with no leavening hard experience, no reverses.”

Can you train yourself to become a millionaire?

Old habits die hard. People may be forced to develop certain traits or habits temporarily depending on the circumstances. Nevertheless, at the end of the day, we are who we are.

Is it just a coincidence that rationalists in the U.S. claim a 10.3% share of the population and, at the same time, the top 10% of richest households make up for around half of the income earned last year?

Or is it by a stroke of luck that, based on an analysis conducted by economist Emmanuel Saez, over the 20-year period between 1993 and 2012 the top 1% of U.S. earners saw its income’s real growth climb as much as 86%?

Buffett believes that “if you’re in the luckiest 1% of humanity, you owe it to the rest of humanity to think about the other 99% percent.” But, do all rationalists think like that?

The article Why One Personality Type Tends to Make the Most Money originally appeared on Fool.com.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

George Soros‘ Soros Fund Management has recently bought into Arno Therapeutics Inc. (OTCMKTS:ARNID), through a passive stake of 2,039,333 shares. This newly acquired position represents around 9.99% of Arno’s common stock, a large portion of shares for a new entry.

Arno Therapeutics, a biopharmaceutical company which specializes in oncology therapeutics, completed a private placement of new shares of common stock at the end of October. The transaction, which resulted in $30.7 million in gross proceeds for the company, certainly did not escape George Soros' attention, as his investment firm decided to buy a stake in the Arno a little over a week after the announcement.

Soros Fund Management, founded in 1969, has been delivering 20% annual returns over the past four decades. The firm invests in a series of securities, like currency, commodities, as well as stocks from transportation, energy, retail, and financial sectors, among others. However, technology is currently the hedge fund’s favorite segment, with a large portion of equity investments being made in this sector.

Soros currently has an equity portfolio valued at over $9.2 billion, after gaining around 1% last 13F filing period. The fund's most important assets, in terms percentage of its holdings, are stocks like Google Inc. (NASDAQ:GOOG) and J.C. Penney Inc. (NYSE:JCP).

The billionaire is now the first hedge fund of those we track to invest in Arno Therapeutics.

The biopharmaceutical company could prove to be a savvy investment, since it has several interesting projects in its pipeline. Onapristone, for example, is already undergoing pre-clinical trials and is expected to deliver good results for breast and endometrial cancer treatment.

Disclosure: none

Last week, Carlo Cannell and his hedge fund, Cannell Capital, entered into an agreement with Clinton Group, a firm known for its activism, and several other parties, regarding ValueVision Media Inc (NASDAQ:VVTV). According to the arrangement, the investors have agreed to consult with each other before buying or selling the company’s stock.

Cannell Capital has also disclosed recently that it holds about 5.54 million ValueVision Media shares, part of which may be considered to be indirectly (beneficially) owned by Clinton Group and George E. Hall. In addition, the group declared holding 982,300 shares in form of derivative securities.

The activist group formed by Cannell Capital, Clinton Group and other participants also divulged a letter sent to Keith R. Stewart, Chief Executive Officer of ValueVision, in which they demanded a special company shareholders' meeting. They intend “to elect new directors who will install a senior management team that will harness the power of ValueVision’s tremendous assets.” You can check out the letter, here or find a few highlights, here.

In response, Randy S. Ronning, the chairman of ValueVision, asked the funds to wait until after the holidays for the company to make some changes, so that it can now remain focused on the holiday season. However, Mr. Ronning showed himself quite receptive to the group's demands.

Following the ownership report, Cannell Capital stands as the largest known hedge fund bull at ValueVision, closely followed by Par Capital Management, which owns more than 4.7 million shares. The fund's holdings at the company are now worth about $208 million, representing its largest known holding, by a wide margin. Other "hedgies" that are bullish on the stock are Phil Frohlich’s Prescott Group Capital Management, Ken Griffin’s Citadel Investment Group and Israel Englander’s Millennium Management.

However, many of the hedge funds we track have been quite bearish about ValueVision Media lately, and have sold off their entire holdings during the last few months. This was the case of J. Alan Reid, Jr.’s Forward Management, and Ken Gray and Steve Walsh’s Bryn Mawr Capital.

Despite other hedge funds’ decisions, the bet on ValueVision Media fits Cannell Capital's wider strategy of investing in domestic small-cap companies. By focusing on value-oriented, bottom-up or fundamental investments, it has managed to return substantial amounts of money to investors. For instance, in 2004, when funds bulked up to $765 million, it returned 15% of the capital to its investors.

ValueVision is a multichannel electronic retailer that enables customers to shop and interact via TV, phone, Internet, mobile and social media. With roughly $265 million in market capitalization and about 1,000 employees, this specialty retailer fits Cannell Capital’s equity portfolio perfectly.

Apparently, the group is betting on growth, as analyst consensuses point toward above average EPS growth for the next 5 years to come. In fact, they expect ValueVision Media to outperform its industry peers by about 20%, delivering average annual EPS growth rates around 20%.

Disclosure: none

Crispin Odey‘s Odey Asset Management has increased his position in LSE-listed Ocado Group PLC (LON:OCDO), a filing has just revealed. Odey now holds 17.02 million shares of the company, which represent 2.92% of its voting rights, up from previously held 16.71 million. The filing showed that the fund owns 12.12 million voting rights in form of Contract for Difference, which represent 2.08% of Ocado at large.

Disclosure: none

Despite the fact that Apple (NASDAQ:AAPL)’s new iPhone 5s has just been released to the world, the rumor mill (Bloomberg) is already buzzing with claims that Apple is planning to launch two larger iPhones — one with a 4.7″ screen and one with a 5.5″ screen.

While Apple’s move to larger iPhone models is inevitable, the company must be extremely careful about how it manages its suite of smartphone models going forward. Releasing a new, larger iPhone will help address more of the market, but there’s a risk that if Apple simply kills the smaller iPhone, it may alienate a substantial number of its customers.

Notice something interesting?
When the large Android phone craze began to take hold, driven by models like the Samsung  Galaxy series, it seemed that Apple eventually needed to get on board to keep its share in the high-end. Apparently, sales of Samsung’s high-end Galaxy S4 and Galaxy Note III are sputtering, while the iPhone 5s continues to see demand that dominates supply. Sure, there’s a market for larger phones, but high-end buyers have voted loudly with their wallets and have signaled that the current iPhone form factor is still a top choice.

Will Apple mess with its winning formula?
There’s certainly nothing stopping Apple from introducing a whole family of iPhones to cater to a wide variety of tastes. Since Apple puts the bulk of its engineering effort into a few device launches per year, the company needs to be careful not to introduce too many variants to try to appease every little niche.

The smaller 4″ iPhone should certainly be allowed to continue (as many simply prefer that form factor), but a slightly larger phone to capture more of the market would be a great move. As long as it’s tastefully done and the product lineup makes sense (similarly to how the iPad Air and iPad Mini Retina are positioned), then there will be no problem.

Companies like Lenovo and Samsung have seen robust market share in the Asia-Pacific region, precisely because larger phones are simply the preferred form factor there. Apple can, and should, aggressively move to take share in this region. While Apple’s brand isn’t quite as strong there as it is in the U.S., there’s very little to stop Apple from making an even more aggressive push with the right products.

How about the low end?
While it would be in Apple’s best interest to cover as much of the high end as possible (since this is where much of the profitability in this space lies), there is the ever-present question of whether Apple should try to attack the low end of the market. In this Fool’s humble opinion, this would be a mistake. While this would help raw market share numbers and drive incremental revenue, it’s not clear how profitable such a venture would be for a company like Apple, which is well known for refusing to cut corners for the sake of cost savings.

In fact, in this space, the majority of the profits go to Samsung. While Samsung isn’t an innovator in the same vein as Apple, it has a great cost structure since it can source almost any component that it wants in-house. This allows Samsung to build “good enough” phones at a great cost structure and flood the market with them. This just isn’t Apple’s style, nor should investors expect it to be.

Foolish bottom line
Apple expanding the iPhone family to include a larger phone to satisfy that portion of the market currently satisfied by Android would be a good move. However, replacing the current, smaller iPhone may be a mistake. A low-end iPhone, while great for market share and ecosystem lock-in, is also not a great idea since it’s unclear if Apple could participate in this market and still generate meaningful profit.

Apple’s past, present, and future are based on ownership of the highest end, most lucrative segments of the computing market. Management’s job now is to find a way to grow sales domestically, and a good place to start would be by taking share away from the high-end Android players. After that, the company can worry about its next revenue expansion opportunity.

The article Apple’s Big iPhone Is a Big Deal originally appeared on Fool.com.

Ashraf Eassa has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

If you’ve ever sat down and done your own investment research or watched CNBC, there’s a good chance you’ve run across an advertisement by an investment firm offering asset management services. And as we’ve witnessed with third-quarter earnings results from investment advisory services, these firms are doing exceptionally well, so people are clearly biting on those calls for assistance.

I would guess that if you interviewed investors at random, a majority would tell you that institutional money-managers have knowledge about investing that exceeds what the average investor can learn. Indeed, given their six- or seven-figure salaries, most money managers should have a keen understanding of the market, and the result should be market-topping returns on a somewhat regular basis.

Source: Raiffeisenverband Salzburg, Wikimedia Commons.

Institutional money-managers are getting this wrong
Unfortunately for investors in select money-management firms, this isn’t always the case. Finance professors Bidisha Chakrabarty, Pamela Moulton, and Charles Trzcinka — respectively from Saint Louis University, Cornell University, and Indiana University — reported in a recent study (link opens PDF) that between 1999 and 2009, more than 96% of funds completed round-trip trades that lasted less than one month.

Why is this important? Because the majority of funds that completed short round-trip trades of less than one month (within an analysis of 1,186 separate funds and more than 105 million round-trip trades) wound up losing money on those trades, according to the academic trio’s findings. Furthermore, their research report notes that “cutting one’s losses” was often not the primary reason for short-term holding, but rather a fund managers’ overconfidence or desire to appear active in managing investors’ money.

You might not think this is a big deal, but allowing your gains to compound over the long term, including dividend gains, is where your biggest gains are to be made. This doesn’t discount the fact that some of these institutional investors did nab big gains over the short term in some instances, but they were much more likely to leave bigger gains on the table. In addition, in cases where these funds did make money they set themselves up to pay short-term capital-gains taxes on the profit, rather than long-term capital-gains taxes, which are significantly lower.

You can do it — we can help
So what’s an investor to do in light of these statistics?

Here at The Motley Fool, we’d like to think you have the opportunity to help yourself, regardless of your investing knowledge. If you’re a beginner, implementing the “13 Steps to Investing Foolishly” could be what puts you on the path to financial independence and allows you to make smart financial decisions for yourself.

For more seasoned stock-market investors, some long-term stock ideas might be in order. I have a couple that just might do the trick. Of course, I strongly suggest you do your own digging, as not every stock listed here may meet your investing objectives.

Coca-Cola (NYSE:KO) could be the right company for more conservative investors who are looking for something they can essentially set and forget within their portfolio or individual retirement account. Coca-Cola has a diverse range of carbonated and still beverage products sold across the globe (in all but two countries) and has 94% brand recognition throughout the world. Coca-Cola’s yield of 2.8% isn’t too shabby, either, and will nearly equal or even outpace inflation rates in more years than not. Having a basic product that tends not to be affected by global recessions is certainly one strategy for success.

If you’re an investor looking for something that offers a higher growth rate, I would recommend digging more deeply into payment processing facilitator MasterCard (NYSE:MA) . Because MasterCard strictly handles payment facilitation and not loans, only a severe global recession will affect the number of transactions and the gross dollar value that it processes. With much of the world still conducting transactions in cash, MasterCard has what could be a multidecade double-digit growth opportunity. MasterCard’s dividend yield of 0.3% leaves a lot to be desired for income investors, but it’s certainly a company you may never have to sell.

Finally, every once in a while we get lucky and are offered the chance to invest in a company with both a reasonably high yield and exceptional growth potential. For you, that might be oil and gas pipeline and storage giant Kinder Morgan (NYSE:KMI) , which sports a 4.7% yield but should be able to grow its bottom-line profits by double digits over the next five years. While a lot of the glory in the energy sector goes to drillers that pump oil, natural gas, and natural-gas liquids out of the ground, the transportation and storage of these assets is where the steady production and cash flow comes from. Kinder Morgan is at the heart of a gigantic domestic energy boom and could make for a fantastic long-term investment.

Long-term investing is likely your best bet to a happy retirement and is the most effective way for you to potentially outsmart some of the highest-paid institutional money-managers out there — who are getting it all wrong.

The article 96% of Institutional Money-Managers Are Getting This Wrong originally appeared on Fool.com.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of, and recommends Coca-Cola, Kinder Morgan, and MasterCard. 

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Who would you invest in? Anyone seeking angel or venture capital should ask themselves this question, because chances are, the investor they’re pitching is probably an entrepreneur, too. It goes with the territory. The people willing to invest in early-stage ideas are those who have the same entrepreneurial spirit, the ability to envision what might be possible, and the guts to make a highly speculative investment in it.

I can’t speak for every entrepreneur who is a private equity investor, but I believe my criteria are comparable to what others are seeking. So I’ll explain the attributes I look for in other entrepreneurs. As an example, I will discuss Keith Murphy and his venture, Organovo (NYSEMKT:ONVO) , which I made an early-stage investment of over $1 million in.

There are three rules to abide by:

Rule #1 – Early-stage investments are in the people, not the ideas

One of the biggest fallacies is that all you need is a great idea. In reality, a great idea is useless by itself. Great execution determines success. If an investor hears a brilliant idea but isn’t confident the entrepreneur can make it happen, he’ll pass.

When I invested in Organovo, the company’s technology of bioprinting took a distant second place to Keith Murphy, chairman, CEO and co-founder. If Keith wasn’t the right person, I knew the technology – no matter how impressive – wouldn’t matter. More often than not, good technology can’t save bad management from messing the whole thing up.

In staying on top of the regenerative medicine industry, I had stumbled across a blurb in a trade publication about Keith and his new venture. After some preliminary due diligence, I reached out to him to find out more about his work. This led to phone calls and in-person meetings, where I drilled him with tough questions, not all of them purely focused on business.

I wanted to find out his character and way of thinking. What were his beliefs about certain practices? Was his outlook for the future pie-in-the-sky, or was he grounded in reality? Could he — and would he — afford to forfeit a salary if times got tough? How fiscally conservative was he? I didn’t pull his credit report, but if I had concerns, I absolutely would have. He passed my interrogations with flying colors.

Rule #2 – The business idea needs to have a proprietary advantage

The business idea may be second on the list, but it still needs to be rock solid.

So what falls under the “rock solid” category? Many early-stage investors will insist that the business model have some sort of proprietary advantage: something that is a barrier to entry for competitors, something to minimize the risk of being ripped off.

In the case of Organovo, this was intellectual property. They have a lock on the bioprinting technology developed by Professor Gabor Forgacs (company co-founder) and his team at the University of Missouri, Columbia. Later, they also secured an exclusive license for a competing version of the technology (using a modified inkjet printer for bioprinting) developed by Dr. Thomas Boland at Clemson University. As described in Organovo’s Form 10-K filing:

“Competition in the bioprinter arena has been limited to date. We believe that we have a first to market advantage in being the first and only company to leverage a purely cellular bioprinting system commercially, which does not rely on the presence of foreign, non-native polymer in the final tissue constructs. Some academic groups have internally created inkjet bioprinting systems, but these systems have not been developed commercially to date and are unlikely to be as effective in the generation of larger-scale 3D tissues. Futhermore, commercialization of certain inkjet based technologies will require certain intellectual property rights.”

That’s the type of competitive edge I like to see. But patents certainly aren’t the only form of a proprietary advantage.

An ode to what I said in Rule #1, the talent and skills an entrepreneur possesses can make an idea rock solid, even if the idea itself is not patentable. If the entrepreneur’s knowledge and knowhow are irreplaceable, it’ll be difficult for a competitor to replicate. I’ve found this to especially be true in highly specialized technology niches, where there may only be a handful of people who actually know the field.

Alternately, if the entrepreneur is already an accomplished veteran of a given industry, that alone can serve as a proprietary advantage. For example, if Joe Schmoe – with no food industry experience – was pitching a fast casual restaurant concept, few investors would listen. But if he was a seasoned high-level exec from Chipotle or Starbucks who was looking to quit and start his own concept, investors would take notice. Having a proven track record and valuable business relationships can go a long way.

And there are other ways a business can have a proprietary advantage. If a competitor can’t copy your concept overnight, then being the first mover might give you that edge. Even if others do the exact same thing you are, being established can demonstrate to the investor that you have the potential to be a viable competitor.

Rule #3 – The entrepreneur needs to prove his worth with a little, before getting a lot

Not only does the business concept need to be solid, the chemistry of the people involved needs to be considered before investing a large sum. My very first investment in Organovo was only $30,000. Sure, Keith passed my scrutiny, but I needed to monitor the progress before putting more chips on the table.

Keith consistently proved that he could deliver results: a partnership with Pfizer and a year later, with United Therapeutics. Despite a shoestring budget, Organovo demonstrated the ability to get the word out about its work – both within industry circles and the general public. With the latter, bragging rights included coverage in The Economist and being named one of Time magazine’s Best Inventions of 2010.

While those accolades may be impressive, an entrepreneur simply needs meaningful progress to impress the investor. It doesn’t have to be that grandiose — just growing and moving the business in the right direction is a significant accomplishment that won’t be ignored. Many entrepreneurs don’t deliver even that after they get the check.

But what has impressed me the most about Organovo is the caliber of team the company put together.

Entrepreneurs can give themselves a leg up in the eyes of investors if they have a veteran on board. Organovo hired Barry Michaels as CFO, a position he’s held at three private and three publicly traded companies during his career. For an investor, this was an important missing piece of the puzzle – someone who had been around the block, with the wisdom of experience.

Entrepreneurs can increase their appeal by bringing on impressive talent (as long as that won’t lead to internal conflict). Long before Sharon Presnell came on as Organovo’s CTO in 2011, I was a fan of her work and actually invested a small amount in her prior employer, Tengion.

While the aforementioned investments in Organovo were made before it became a publicly traded company, I didn’t exercise any of my warrants (which represented over half the dollar value) until afterward. Why? Primarily because I wanted to see the chemistry of the team over a longer period of time before doubling down.

Ultimately, entrepreneurs will need to prove themselves in every way before they get the “big bucks.” This includes work ethic, values, delivering progress, and demonstrating that their team works well together. When all of those pieces are in place, it’s an investment worth considering.

The article What Angel Investors Look for When Investing in Entrepreneurs originally appeared on Fool.com.

Fool contributor Michael Dolen is the founder of CreditCardForum, and he is long Organovo. The Motley Fool has no position in any of the stocks mentioned. 

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

There’s never a shortage of losers in the stock market. Let’s take a closer look at five of this past week’s biggest sinkers.

Source: Barron’s.

Let’s start with Tremor Video. It was the biggest loser on the New York Stock Exchange, shedding nearly half of its value on Friday alone after posting disappointing quarterly results. Revenue growth fell short of analyst targets, and then it warned of a sharp sequential decline on the top line. Wall Street was braced for improvement. The video advertising specialist went public in June, and the market hates when rookies mess up. It makes it seem as if retail investors were duped into buying into a debutante that was actually peaking. In short, Tremor Video’s lost the market’s confidence.

BlackBerry got squeezed after the smartphone pioneer ousted its CEO and called off the strategic review to entertain buyout offers. Investors hoping for an exit strategy or at least an asset sale were disappointed to see BlackBerry move to raise money and try to make it on its own. This just doesn’t seem like a feasible strategy when sales are plunging.

Tesla hit the brakes after posting a quarterly report that was a bit light on Model S deliveries. Reports that a third Tesla caught fire also hurt the company that uses its car’s high safety rating as part of its marketing message.

Calumet Specialty Products slipped after missing Wall Street estimates for the third quarter in a row. The company stunned the market by posting a loss when a healthy profit was expected. Calumet’s soft report was the handiwork of higher input costs that tightened up the margins for fuel and specialty products.

Finally, we have Annaly Capital Management going the wrong way. The mortgage REIT posted a smaller profit than Wall Street was expecting, and just as troubling, we’re seeing Annaly’s book value continue to contract sharply. Book value per share has fallen from $16.70 to $12.70 over the past year.

The article 5 of Last Week’s Biggest Losers originally appeared on Fool.com.

Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Tesla Motors.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

What’s better than momentum? Mo’ momentum. Let’s take a closer look at five of this past week’s biggest scorchers.

Source: Barron’s.

Let’s start with AK Steel. The producer of flat-rolled carbon, stainless, and electrical steels moved higher after jacking up its prices. AK Steel announced that the current spot market base prices for all of its carbon flat-rolled steel products will increase by $30 per ton. That will improve the company’s margins.

Geron moved sharply higher after an abstract posted online showed promising results for its potentially promising myelofibrosis treatment. In a Mayo Clinic study, five of 18 patients in the abstract analysis achieved at least partial remission. The stock had more than doubled at one point, but it gave back most of those gains as the initial euphoric response settled.

Universal Display lit up the room after posting better-than-expected financial results. It also boosted its outlook. The company has come under fire in the past on concerns that it may lose Samsung as its flagship customer, but the OLED technologist still managed to earn three times as much as Wall Street was forecasting.

3D Systems moved higher as Bloomberg reported on takeover speculation. The company stands out as a leader — and profitable player — in 3-D printing. A 3D Systems spokeswoman is quoted in the Bloomberg report, saying that the 3-D printing speedster is “not currently in discussions regarding an acquisition of the company’s shares.” However, the denial did little to suppress investor demand in the stock.

Finally we have Organovo on the move. This is the third consecutive week that Organovo has cranked out a 10% return. You’re not going to see that happen too often. Organovo’s goal is ambitious. It wants to give 3-D printing a medical turn, creating a proxy for human tissue that could be used to speed up treatment testing. Organovo’s solution may be years away, but it’s easy to fathom how popular Organovo will be if it does become the first to market this technology.

The article 5 of Last Week’s Biggest Winners originally appeared on Fool.com.

Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of 3D Systems and Universal Display and also has options on 3D Systems.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Vivian Schiller’s resume is impressive. It boasts former positions as CEO of National Public Radio, senior vice president of NYTimes.com, and senior vice president and chief digital officer for NBC News — not to mention stints at CNN and Discovery.

Where does someone with a resume like this want to work next? Twitter (NYSE:TWTR) .

We’re thrilled to announce @VivianSchiller is joining the team as Twitter’s new Head of News Partnerships. She starts in January!

— Twitter for News (@TwitterForNews) October 24, 2013

Making the hire just weeks before Twitter went public, her role as head of news and journalism partnerships gives investors a tweet-sized clue into Twitter’s big plan to play a major role in news.

Getting publishers on board
Twitter has become a viable news outlet. Some tweets, like billionaire investor Carl Icahn’s tweets about Apple (NASDAQ:AAPL), have even been known to move the market. Publishers often rely on Twitter to provide news more rapidly. President Obama used Twitter to declare his victory in the 2012 U.S. presidential election. Astronauts have tweeted photos from space. It’s the future. Twitter will play a major role in news.

But just how important is news to Twitter? It’s crucial.

According to Twitter’s S-1 filing, the social platform creates value for users through a virtuous cycle — a virtuous cycle in which news plays a central role:

Although we do not generate revenue directly from users or platform partners, we benefit from network effects where more activity on Twitter results in the creation and distribution of more content, which attracts more users, platform partners and advertisers, resulting in a virtuous cycle of value creation.

Platform partners, as defined by Twitter, include publishers, media outlets, and developers, who have integrated with Twitter and distribute content on the platform. Twitter specifically lists BBC, CNN, and Times of India as examples. In other words, publishers pay a major role in helping Twitter’s business grow. As head of news and journalism partnerships, therefore, Schiller will certainly be busy.

Not without Facebook (NASDAQ:FB) watching
Facebook , too, seems to believe there’s value in getting publishers on board in using its platform as a means for important news distribution. In a position that seems to mirror Schiller’s, Facebook has a VP of media partnerships — a role that belongs to Justin Osofsky.

Even more intriguing, Osofsky’s aspirations for Facebook sound a bit Twitter-like: “We are committed to building features that improve the experience of discovering and participating in conversations about things happening in the world right now, including entertainment, sports, politics and news,” he explained in a September press release announcing the company’s plans to give tools to news organizations to allow them to tap into Facebook’s public feed.

As the much larger player, with 1.19 billion monthly active users and 728 million daily active users compared to Twitter’s just over 230 millionmonthly active users, could Facebook make Schiller’s job more difficult? Sure. But Twitter’s move to hire an industry veteran to reach out to publishers shows the smaller social network is taking the challenge seriously. Twitter wants to change the way we receive breaking news.

The article Will Twitter Disrupt News As We Know It? originally appeared on Fool.com.

Fool contributor Daniel Sparks owns shares of Apple.The Motley Fool recommends Facebook and Apple. The Motley Fool owns shares of Facebook and Apple.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

BlackBerry  stunned investors this week by taking a different stance on its previously announced deal to go private. The company’s plan to be bought out by Fairfax fell through due to a lack of financing, and now the company’s shares have taken a massive hit. However, BlackBerry is raising cash to bolster its balance sheet and turn the company’s fortunes around. Investors have been extremely unimpressed, sending the company’s shares down roughly 15%. 

The drama continues
BlackBerry’s management and board have done a great job destroying shareholder value in the last few years. Now, the Canadian government is reportedly playing a big part in short-changing BlackBerry shareholders. According to reports from Bloomberg, Chinese smartphone manufacturer, Lenovo, was interested in making a bid for BlackBerry. However, the Canadian government made it very clear that it will not approve such a transaction by a Chinese company, citing security-related issues.

The deal by Fairfax was pegged at $9 per share, and a Lenovo bid would have been a massive boon for already-hurt BlackBerry shareholders. But, the impact of government intervention has scared away Lenovo from even making a bid, leaving shareholders to lick their wounds.

More skin in the game for Fairfax
Fairfax couldn’t manage to get more partners or secure additional financing for taking the company private. Now, Fairfax will be investing up to $250 million in convertible unsecured debt in BlackBerry. Other investors will come up with $750 million to invest a total of $1 billion in BlackBerry. The company is offering 6% interest for these convertible debentures, which can be converted into common stock at $10 apiece for a period of seven years.

Even though the deal to go private hasn’t gone through, BlackBerry will have a much stronger balance sheet, and Fairfax CEO, Prem Watsa, will rejoin the BlackBerry board. Investors should note that Fairfax has conducted extensive due diligence on BlackBerry’s books and internal records, and only then decided to make this additional investment in the company.

The cash injection by Fairfax in BlackBerry’s convertible debt points to a vote of confidence in the company by taking a longer-term view. But, Fairfax’s investment might be simply a method to save its own original investment in BlackBerry common stock of roughly 10%.

While the smartphone market is becoming exceedingly competitive, BlackBerry is shedding more market share, mostly to phones running Google (NASDAQ:GOOG)’s  Android OS. According to Strategy Analytics, BlackBerry’s market share fell to 1% in the third quarter of 2013, down from the previous year when the company held 4.3% market share.  Android’s market share surged to 81.3% in 3Q2013, up from 75% a year ago.   In spite of an additional investment by Fairfax and other investors, if BlackBerry continues to lose market share, the company’s turnaround efforts will be very challenging.

Can the new CEO turn things around?
BlackBerry remains a popular brand with enterprise customers focused on security, and the company’s recent decisions are geared toward reviving that decline in brand perception. The company got rid of CEO Thorsten Heins and appointed John Chen as the new interim CEO. While the company has not been entirely forthcoming about its strategy going forward, the appointment of John Chen is a positive. He has been credited with turning around Sybase and selling to SAP in 2010. Plus, John Chen also sits on the board of iconic American companies like Walt Disney and Wells Fargo. In addition, John Chen is an advisor to leading private equity firm, Silver Lake.

BlackBerry’s technology is maturing, and the appointment of an experienced tech-focused CEO and highly accomplished person, like John Chen, is a strong plus. The company has stated that it has stopped looking for additional buyers and will instead focus on strategy and growth. BlackBerry’s executives and board are taking a long-term view on the company.

The issuance of convertible debt will allow the company more time to ramp up restructuring efforts and focus on R&D. If BlackBerry’s share price rises above $10, the convertible debt holders will be able to exercise their options and own roughly 16% of the firm’s outstanding stock. Based on the company’s current trading price of below $7, shareholders would rejoice if the stock price reached anywhere near $10.

Final thoughts
The smartphone market is becoming extremely competitive due to OEMs using Android and aggressively cutting prices. Plus, the company’s restructuring efforts might eat away the cash balance further down the road. Based on competition in the market, the ability to grow its business sizably might be a long shot.

Then again, BlackBerry has a strong patent portfolio, social presence through BBM, and millions of subscribers. The company definitely needs to innovate and focus on its core customers if it wants to have even a small chance of being the former stock market darling that it was a few years ago.

The article What Now for BlackBerry? originally appeared on Fool.com.

Ishfaque Faruk has no position in any stocks mentioned. The Motley Fool recommends Google. The Motley Fool owns shares of Google.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Source: Aaron Friedman

Before he was the most prominent investor in the world and chairman of Berkshire Hathaway (NYSE:BRK.A) , Warren Buffett was just another Midwest transplant surviving in New York City.

As an investor he had plenty of early success, but how he managed his personal life may have had just as much impact on his wealth than his investing savvy. Two things really define who he is:

1. He was downright cheap
In a biography, The Snowball: Warren Buffett and the Business of Life, Alice Schroeder tells the story of the early Buffett we never knew. The early Buffett wasn’t the generous philanthropist we know today. He was a hardworking investor, but he worked doubly hard at saving money.

Schroeder tells the story of the many ways Buffett made his money, but also how he kept his money. In his early days as a 20-something analyst, he would save a few dollars per week by buying week-old magazines from the newsstand. His thinking was that these magazines would soon go to the trash can, giving him an opportunity to grab a bargain.

At the same time, Buffett didn’t own a car. He’d save money by borrowing his neighbor’s car and never filling the tank. He traveled on borrowed gasoline.

And even when Buffett was undeniably successful, he still wanted to save a buck. At a meeting with investors who would fund his first investment partnership before Berkshire Hathaway, Buffett insisted that prospective investors “go dutch” at a dinner meeting at one of the finest restaurants in Omaha. Yes, even though Buffett wanted their investment capital, he was unwilling to pay for their dinners to make a pitch.

2. He hid much of his success
We hear all the time of wealthy Americans who look closer to broke than rich. Buffett certainly fit in this category.

After working for years in New York City and stockpiling a formidable investment account, he moved back to Omaha, Neb. Here he rented his first home. To rent at the time was unheard of, particularly when Buffett had a net worth of $174,000 at the age of just 26 years old.

Warren Buffett didn’t only hide his wealth on the outside. He hid it inside the family, too.

At the same time Buffett borrowed cars from neighbors to save on gas, he was making thousands of dollars from his stock picks. But no one knew — not even his wife, Susie.

One day, Susie accidentally threw out uncashed dividend checks from Warren’s desk. She hurriedly called the neighbor, telling her something terrible had happened. After opening the apartment incinerator and tearing through piles of garbage, they found the checks, which were worth “thousands,” not the “$25 or $10 as she had assumed.”

Needless to say, the couple quickly had a discussion about their shared finances, and Warren made a few compromises on how much the two could truly afford to spend.

The Buffett you know now
Warren Buffett may be a billionaire investor and the chairman of Berkshire Hathaway, the world’s most successful investment company, but the ways in which he became wealthy are hardly unique to him. Buffett may invest better than anyone, but his towering billion-dollar would be nothing without his ability to cut corners.

Warren Buffett became obscenely wealthy the old fashioned way, living on less than he made and investing in high-quality businesses at attractive prices. For us — those of us who aren’t billionaires — his story should serve as inspiration that common sense still goes a long way.

The article The Warren Buffett You Never Knew Existed originally appeared on Fool.com.

Fool contributor Jordan Wathen has no position in any stocks mentioned. The Motley Fool recommends Berkshire Hathaway. The Motley Fool owns shares of Berkshire Hathaway. 

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Three strikes and you’re out.

Three major mortgage REITs — American Capital Agency (NASDAQ:AGNC) , Annaly Capital Management (NYSE:NLY) , and American Capital Mortgage (NASDAQ:MTGE) — have all reported earnings. All missed Wall Street’s expectations.

But that doesn’t mean consistent, high-yield stocks are out altogether. High-yield equity REITs may be a much better substitute for mREITs in a volatile interest-rate environment.

Buildings, not mortgages
Equity REITs such as Realty Income (NYSE:O) and Health Care REIT (NYSE:HCN) hold physical real estate. Realty Income invests primarily in commercial real estate, whereas Health Care REIT holds senior living and medical properties. Think hard assets, not paper.

American Capital Agency holds mostly agency-backed mortgages. Annaly Capital Management and American Capital Mortgage hold non-agency and commercial mortgage securities. Think paper, not hard assets.

Equity REITs also have the benefits of lower leverage. So although Realty Income’s 5.2% yield or Health Care REIT’s 4.7% yield might not rival the mREITs’ double-digit yields, equity REITs also have much better dividend stability. Not to mention, they move much more slowly in reaction to interest-rate fluctuations, preserving your investment in rising or falling interest-rate environments.

Realty Income’s business model
Realty Income is in the business of buying standalone commercial properties — gas stations, single-tenant retail buildings, and theaters — and leasing them on long-term contracts. The business model is as simple as it comes: The company raises money at one rate and invests in real estate with the goal to earn a higher rate.

And it does so with long-term capital, so it doesn’t have the exposure to short-term interest-rate jumps like the mREITs do.

What makes Realty Income great is that it’s structured with dividend growth in mind. When it signs a long-term lease, it includes annual price increases indexed to the inflation rate or the tenant’s annual sales. In just the past year, the company increased rents 1.3%, allowing for several dividend increases to shareholders as more income flows to the bottom line.

Its history of good acquisitions also supports the dividend and dividend growth. Adjusted funds from operations (a measure of its ability to pay dividends) grew 15.4% per share in the past 12 months. Its monthly dividends are 20% larger now than one year ago. If history is any guide, investors who buy today at a 5.2% yield will see much bigger dividends as Realty Income completes new acquisitions.

Make a mint on health care
Health Care REIT is on a tear, acquiring new hospitals and medical buildings which it leases back to medical-care companies, doctors, and patients. In the last quarter, Health Care REIT acquired new senior housing facilities in the U.K., completed another purchase for 38 housing communities, and closed on a new purchase of hospitals.

Like Realty Income, Health Care REIT is in the business of raising cash cheaply to deploy funds in higher-yield real estate.

All this acquisition activity has been great for the company’s dividend. Health Care REIT increased its guidance for normalized cash flow from operations to $3.74-3.80 per share next year, easily supporting its dividend, which tallies to $3.06 per year, per share. The company now yields 4.6% at the current price.

Health-care REITs have a natural advantage in that medical buildings are not as commoditized as other real estate assets. A hospital tenant can’t simply move to a new location at the drop of a hat, giving landlords pricing power to raise rents over time. A combination of rising rents and good acquisitions has propelled 30% growth in the quarterly dividend in the past 10 years.

The Foolish bottom line
Equity REITs offer greater share price stability at the cost of a lower dividend. However, over time, both Realty Income and Health Care REIT have consistently grown payouts to shareholders, all while mREITs have slashed their distributions. Investors who want yield with less volatility should give a second look to lower-yielding equity REITs for income for the long haul.

The article Where Dividend-Hungry Investors Should Go Now originally appeared on Fool.com.

Fool contributor Jordan Wathen has no position in any stocks mentioned. The Motley Fool recommends Health Care REIT. 

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Natural Resource Partners , the coal-related master limited partnership, has traded with a distribution yield of 10%+ for most of the past two years. This is unusual. Typically, when a MLP’s yield languishes at 10%+, that company is experiencing difficulties and is forced to cut its distribution.

Distribution safe, but not growing in the near term
Natural Resource Partners is stuck in the middle, by no means in a bad place operationally or financially, but not yet ready to increase distributions either. The company has maintained the same quarterly distribution for the past nine quarters. At $20 per unit and a $2.20 annual distribution, the yield is a hefty 11%. With a cash balance over $100 million, nearly enough to cover two full quarterly distributions, I believe Natural Resource Partners is a relatively safe investment.

Compelling risk/reward vs. coal producers
By relatively safe I mean Natural Resource Partner’s units are far less volatile and have far less downside than coal producing peers like Walter Energy (NYSE:WLT) , Peabody Energy (NYSE:BTU) , Arch Coal (NYSE:ACI) and Alpha Natural Resources (NYSE:ANR) . Each of these four producers have seen meaningful rallies in their stock prices. However, they remain loaded with debt from poorly timed acquisitions in 2011. Margins have been squeezed as per unit costs have declined less than coal prices. Coal prices would have to rise 15%-20% to support another substantial spike in these stocks. Natural Resource Partners did not rally and does not require a spike in coal prices to be a star performer.

Last month I spoke with a senior executive at Natural Resource Partners about the company’s active diversification strategy, the state of the coal markets, and America’s growing energy production. I also spoke with Steve Doyle, Founder and fearless leader of Doyle Trading Consultants,  or DTC. Steve has over 30 years of coal market experience and has followed Natural Resource Partners closely since the mid-2000′s. [Disclosure: Steve Doyle is a longtime owner of units in NRP].

The following Q&A session is between myself (Peter Epstein) and Steve Doyle.

Peter Epstein: Steve, thank you for your time and expert opinion. Broadly speaking, why does Natural Resource Partners get no respect?

Steve Doyle: Very few investors understand coal, let alone coal MLP Natural Resource Partners. Too few take a long look under the, ‘coal hood’. I can understand why investors would value publicly traded coal companies where they are currently trading. They pay little or no dividends, have large workforces, their debt ratios are high and credit ratings low, they have significant operational and margin risk and they have loads of poorly understood reclamation and legacy liabilities.

On the other hand, Natural Resource Partners derives the bulk of its revenues from the coal sector, but has a tiny workforce, yields 10%+, has no legacy liabilities and takes no margin or operational risk. The company owns coal and non-coal reserves as well as operational infrastructure, but its revenues come from royalty and usage payments. In addition, the company has made giant steps in diversifying its revenues into industrial materials and Oil & Gas.

Peter Epstein: Are you implying NRP is risk-free?

Steve Doyle: Of course not. In the case of coal, if the price is so low that the company’s lessees cannot operate, the coal-related royalties dry up. That risk is mitigated in five ways: 1) Diversify by coal basin; 2) Diversify by coal type-coking coal vs. thermal; 3) Diversify by making sure you’re the bulk of the lessees will be among those that can survive in a downturn; 4) Diversify by dividing your coal sector revenues into royalties on coal sales and payments for usage of logistics infrastructure; 5) Diversify into non-coal revenues, so that the cyclical nature of the coal sector is evened out.

Peter Epstein: What’s the significance of NRP’s investment in OCI, and of OCI’s intentions to become a MLP?

Steve Doyle: Natural Resource Partners has diversified over the years into oil & gas, aggregates and industrial minerals. In Q1, the company acquired Anadarko’s 49% interest in Wyoming-based OCI, which mines and refines trona (soda ash), which has solid economic fundamentals. This was a very material investment, a cash outlay of $292.5 million. plus up to $50 million in earn-outs. OCI recently announced it would create a MLP from its holdings. This is great news because as a MLP, OCI’s interests will be completely in line with that of Natural Resource Partner’s.

Peter Epstein: In what key ways does NRP’s coal reserve revenues hold up better than that of coal producers? How about its coal infrastructure revenues?

Steve Doyle: The coal royalties are based on the price of coal, not the coal miner’s operating margin. Cost creep actually works in NRP’s favor as long as the market can absorb the full costs. The bulk of NRP’s infrastructure is located in one of the most attractive coal basins in the world – the Illinois Basin.

Foresight Energy’s longwalls produce enormous volumes of low-cost coal that flow through washing plants and rail/barge load-out facilities owned by NRP. Those revenues are not as sensitive to the coal price as coal royalties.

Peter Epstein: Do you have a sense as to whether NRP’s coal reserve and coal infrastructure revenues have bottomed?

Steve Doyle: I would reckon its infrastructure revenues will continue to increase in tandem with Foresight Energy’s production. The coal royalty revenues might tick down a bit as thermal shipments decline in Central Appalachia, as higher-priced legacy contracts with utilities expire and as the final bottom to the coking coal revenues flows through its lessees’ books. On the other hand, DTC is forecasting utility demand to increase by 50 million tons in 2014, which means NRP might lose some business in Central Appalachia and gain some in the other coal basins.

Peter Epstein: How big a contribution might the company’s industrial minerals business make to the overall story?

Steve Doyle: I believe the coal royalties and coal infrastructure will continue to serve as the primary revenue generator, but I would not be surprised to see the non-coal revenues grow to more than a third of the total.

Peter Epstein: Non-coal related MLPs trade at distribution yields of about 5%-8%. Do you have a view on what distribution yield bucket NRP should be in?

Steve Doyle: Let me put it this way, I bought most of my units in Natural Resource Partners when they were in the $25 range, yielding about 8.5% at the time. Back then I could hardly believe that I could own such a solid company and earn 8.5%! Before I sign-off, I want to touch on one important factor– the management team.

I can tell you from personal experience that outstanding assets don’t necessarily perform in an outstanding manner unless stewarded by talented people. CEO Corbin Robertson and President & COO Nick Carter have sterling reputations and have an uncanny ability to identify value and successfully execute transactions. That provides me with a high level of comfort.

Final thoughts
An 11% yield is hard to find. Junk bond yields are below 7%, the 10-year Treasury is under 2%, blue-chip telecom and utility stocks 3%-5%, and energy-related MLP’s 5%-8%. If one is comfortable like I am that this 11% yield is safe, then Natural Resource Partners offers a compelling risk/reward opportunity. I believe the company’s quarterly distribution will begin to grow again within 12-18 months.

Once the market sees a modestly growing distribution, the hurdle rate to own NRP units should fall dramatically. From 11% a decline to 9% implies a unit price of $24.5, 22% above the current price. Therefore, over the next two years investors could pocket 11% x 2 = 22%, plus an additional 22% in capital appreciation = 44%.

The article Smart Money Loves Natural Resource Partners originally appeared on Fool.com.

Peter Epstein owns shares of Alpha Natural Resources, Walter Industries, and Natural Resource Partners LP (NYSE:NRP). The Motley Fool has no position in any of the stocks mentioned. 

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

The Dow Jones Industrials are in line to finish their fifth straight winning year in a row, with gains of almost 23% in 2013 adding to a bull-market run that has sent the Dow up 140% since its 2009 lows. A big economic recovery helped stocks bounce back from their meltdown during the financial crisis, but the biggest factor supporting the bull market is the rock-bottom level of interest rates over the past several years. Following are four ways in which low rates have proven to be the biggest driver of share prices in the Dow and the broader market.

1. Low rates have forced many investors into stocks.
Before the financial crisis, many conservative investors relied on safe investments such as Treasury bonds and FDIC-insured CDs to generate the income they needed for their living expenses. With typical rates on CDs in the 4% to 5% range, many retirees and others who lived off the income from their investment portfolios could generate enough cash to survive at those rates.

eral Reserve building in Washington D.C. Source: Flickr Creative Commons (image creator: DonkeyHotey).

The persistent low interest rates from the Federal Reserve over the past five years or so have crushed savers, however, with rates on CDs falling to 1% or less. And although investors bear ultimate responsibility for choosing to raise their risk level to get more income, many have nevertheless felt forced to do so, shifting toward dividend-paying stocks. That phenomenon has pushed high-dividend stocks to high valuations, with Johnson & Johnson (NYSE:JNJ) and PepsiCo (NYSE:PEP) representing just a couple of the many above-average yielding dividend stocks with earnings multiples above 20 in light of huge demand for their shares.

2. Low rates boosted corporate profits because of refinancing.
Corporate earnings have driven the stock market higher, but in large part, companies boost their earnings because of low rates. Countless companies have successfully refinanced outstanding debt over the past several years at rates much lower than what they were paying on their old debt, cutting their interest costs and thereby raising their net income. Although those cost-saving opportunities haven’t disappeared entirely, most companies have already gotten most of the mileage they can from refinancing, and so investors can expect one growth driver for corporate profits to fade away if rates start easing upward.

3. Low rates make stocks look more valuable.
Most stock valuation models use discount factors to put values on future streams of income. The lower the interest rate you use, the greater the value of expected profits well into the future. So with record low interest rates in recent years, it’s been easy to argue for stock prices that represent much higher earnings multiples than normal.

Unless you expect those interest rates to be permanent, though, relying on them for long-term valuation purposes is dangerous at best. If interest rates start to rise, then the same factor that led analysts to overvalue stocks could make them overreact on the downside, punishing stocks in a much more severe correction than might be warranted under the circumstances.

Ben Bernanke. Source: Federal Reserve.

4. Low rates have made leveraged strategies more profitable.
Largely because of Ben Bernanke’s policies at the Fed, rock-bottom short-term rates have made it easy for companies to use leverage to boost their returns. Some companies use leverage at the root of their business models, such as mortgage REITs Annaly Capital (NYSE:NLY) and American Capital Agency (NASDAQ:AGNC) , and for them, even the hint of rising rates has sent their share prices plunging recently in anticipation that the best rate conditions for those companies might be coming to an end.

More generally, though, companies have taken advantage of low rates to borrow for unusual purposes, such as doing share buybacks or paying dividends to shareholders. When rates rise, those strategies won’t work nearly as well, leaving companies with the unappetizing decision of whether to reverse their earlier generosity or accept much higher costs in the future.

All in all, low rates play a huge role in the record run that stocks have made recently. If those rates rise further, it could put the Dow in serious danger of a reversal of some of its big past gains.

The article The Biggest Reason Stocks Are at Record Highs originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends and owns shares of Johnson & Johnson and PepsiCo. 

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

A few weeks ago, Al Gore advised Americans to avoid oil stocks because the “carbon assets,” that is oil and natural gas, owned by publicly traded companies are overvalued. Gore believes “this carbon bubble is going to burst.” When my wife heard this, she suspected Gore of ulterior motives. I’m inclined to agree. Foolish contributor, Matt DiLallo recently responded to Gore’s remarks by showing how much longer our “carbon bubble” might last and recommended three oil-related stocks to buy instead. I’d like to offer three companies that I think will do well in the carbon asset, ahem, oil and gas business.

Finding energy across the globe
Be it natural gas or crude oil, be it in the U.S., Gulf of Mexico, or a foreign country, Noble Energy (NYSE:NBL) seeks and generally finds hydrocarbon resources. For example, its Niobora oil play is believed to contain over 2 billion barrels of oil. Even better, production costs are less than or equal to those of the Bakken or Eagle Ford plays. Overseas, Noble discovered crude oil off the coast of both Cameroon and Equatorial New Guinea, and these assets are contributing to the company’s bottom line.

Natural gas discoveries contribute to Noble’s revenue as well. The biggest finds are the Tamar, Karish, and Leviathan gas fields off the Israeli coast. Gas from the Tamar has already come ashore within four years of its discovery. In the U.S., Noble produces natural gas from the low-cost Marcellus shale and the DJ Basin on Colorado. This past quarter alone saw a 16% increase in natural gas production.

As an investment, Noble represents a growth stock as its dividend yields less than 1%. And grown it has; the stock climbed almost 50% in the past year. Not only is Noble finding more oil and gas, the company is focusing on production costs and divestiture of non-core assets. These efforts to grow production and reduce costs should reward investors well.

Low-cost natural gas for years to come
Currently boasting over 3 trillion cubic feet of proven natural gas and liquids reserves, Cabot Oil & Gas (NYSE:COG) provides proof that a “carbon bubble” isn’t bursting for a while. Production in July 2013 reached 1.2 billion cubic feet a day while production costs declined from the year before. All told, at current production levels, Cabot has enough gas to last more than 25 years. These reserves have been steadily growing and are projected to continue growing.

Cabot anticipates not only reserve growth, but production growth by over 40% in the future. Even better for investors, the improved production costs achieved over the past year should continue in the years to come. The current breakeven point for Cabot is less than $1.20/Mcf; this means Cabot can make money despite low natural gas prices. The trend toward lower production costs suggests an even lower breakeven point down the road.

This past quarter saw Cabot’s earnings and cash flow increased over the third quarter of 2012. No surprise, production was 61% higher than last year’s results. Nine month results for 2013 also convincingly topped 2012′s results. Sale of non-core assets in Texas signaled a continuing trend for Cabot to focus on its Marcellus operations.

Moving energy from the field to the market
Producing oil or gas in the U.S. is wonderful, but somehow that energy needs to get to a refinery. Enterprise Products (NYSE:EPD) Partners does that and does it well. In addition to connecting various Texas and Southern U.S. oil fields to Gulf Coast refineries, Enterprise also connects natural gas liquids from the Midwest and Pennsylvania to the Gulf Coast. The growing oil production in Colorado has Enterprise expanding into that play.

Enterprise also operates pipelines and other assets for the export market. Specifically, the company operates a natural gas liquids import/export facility at the Houston Ship Channel. Enterprise currently is expanding this facility to increase its capacity by three cargoes a month by early 2015. This is in addition to a previous expansion completed this past March. This looks to be a lucrative business as Enterprise is contracted out through 2015.

More exports are on the horizon. Enterprise has interests in three different pipeline assets connected to two Texas coast terminals. These assets will export refined products with an eye toward the Central and South American markets. The first of these terminals should come online in the first quarter of 2014, the other three to six months later.

Final Foolish thoughts
It’s a free country, and Al Gore can express his opinions on the matter of future U.S. energy production and use. And you are free to agree or not. If you doubt the U.S. “carbon bubble” will soon burst, these three companies are worth considering.

For capital gains, Noble wins hands down in my book. Its growing production, diversified assets, and focus on cost reductions should pay off for years. Enterprise is the one for long-term, safe income with room for capital gains. Oil and gas production won’t slow anytime soon, and Enterprise is well positioned to capitalize. Cabot is a bit expensive for me, especially considering the price of natural gas. The company continues growing production and reducing costs, but the market, in my opinion, has priced that in.

The article 3 Ways to Ignore Al Gore originally appeared on Fool.com.

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