Cheniere's $8B Deal May Be The First Installment In A Giant Ramp-Up

LNG pipeline and terminal operator Cheniere Energy Inc. (LNG) stands to gain huge from the landmark 20-year $8 billion deal between its publicly-traded partnership company Cheniere Energy Partners (CQP) and British energy firm BG Group Plc (BRGYY.PK), whereby BG has agreed to purchase 3.5 million tons per annum (mtpa) of liquefied natural gas via its Sabine Pass terminal facility in Louisiana. The deal per Cheniere CEO Souki is expected to reap $410 million a year. Per our calculations, this relates to the $2.15/MMBtu premium that Cheniere will charge BG. However, this is on top of the 115% of U.S. benchmark Henry Hub prices that Cheniere will sell the liquefied natural gas for to BG, with the additional 15% being used for fuel and sourcing the gas. That 15% assuming current natural gas prices of in the $3.60/MMBtu range should yield another $100 million.

Given that the initial phase of the Sabine Pass terminal facility is proposed to have a capacity of 9 mtpa, with approval from the U.S. Department of Energy for up to 16 mtpa of LNG destined to all countries with which trade is permissible, one can extrapolate that at full development, the Sabine Pass terminal facility would generate at least $2.3 billion to Cheniere. We believe that the actual value that they will reap at full development will be higher as it would be reasonable to assume that natural gas prices would rise once the link is established between the surplus shale gas producing regions in the U.S. and the markets in Asia and Europe. Currently, natural gas prices in Europe and Japan, for example, are in the $12-$15 range, while U.S. prices for natural gas stand at $3.60, so it would be reasonable that with the export link established, prices may trend up to at least the $6-8 range. Based on that assumption, Cheniere would reap $2.6 and $2.9 billion at full build-out of the Sabine Pass terminal facility.

We believe that despite the huge 80% plus intra-day surge today, the markets may not have fully c! aptured the value of this landmark deal. The company back in 2005-07 was valued at over $2 billion when it had almost no revenue. Assuming even build-out of the initial phase of 9 mtpa (instead of the approved 16 mtpa), and further assuming 20% net margins, Cheniere has the potential to earn over $3 per share. Applying even a reasonable 4-5 forward P/E would get us to a valuation in the low- to mid-teens. Cheniere has already said that they expect to announce another deal soon. With one deal in the bag, and another coming shortly, we believe that the run-up in LNG may have only started. However, we would advise to scale gradually into it to take advantage of any weakness.

It is import to remember here that Cheniere started out building LNG import terminals, but that with the development of domestic shale natural gas production in the U.S. prices collapsed domestically while prices overseas have stayed higher. This discrepancy in the prices was possibly due to the lack of infrastructure to connect the excess shale supply with the demand overseas. Cheniere's Sabine Pass project is the first and only U.S. approved project with an export license to ship LNG worldwide, although four more are already at work here in the U.S. The only other approved LNG export facility in North America is KM LNG, a joint venture between oil and gas exploration and production companies Apache Corp. (APA), Encana Inc. (ECA) and EOG Resources, Inc. (EOG). That project received a license from Canada's National Energy Board to export from a deepwater port in Kitimat, B.C. Also, Canada has another two LNG export facilities under development in western Canada.

Besides LNG, CQP, APA, ECA, and EOG, other North American publicly traded companies involved in the liquefaction and transportation of LNG companies that could be impacted by this landmark development include:

• Golar LNG Ltd. (GLNG), a provider of international marine transportation service for LNG with a fleet of 12 vessels.
• Devon Energy Corp. (D! VN), eng aged in the exploration and production of oil, gas, and natural gas liquids in the U.S. and Canada.
• Teekay LNG Partners LP (TGP), a provider of international marine transportation services for LNG and crude oil with a 30 vessel fleet.
• Interoil Corp. (IOC), engaged in the refining, liquefaction, marketing and distribution of oil and natural gas in Papua New Guinea.

The deal also should be a boon to domestic shale gas production companies in the U.S. that we will explore in another article that may soon be accessed from our author page.

Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are our 'opinions' and we may be wrong. We may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to our thoughts and opinions. The contents of this article do not take into consideration your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks including loss of principal.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in LNG over the next 72 hours.

MF Global Fights for Survival

NEW YORK (TheStreet -- If MF Global (MF) could use rumors as collateral, the firm would be in good shape. Instead, market insiders are saying the company will struggle for survival over the weekend.

It is a potential death spiral that is being compared to the weekend bloodbath at Bear Stearns, but it's difficult to determine what is true and what is false.

What is known is that according to The Wall Street Journal, MF hired Evercore Partners to explore options, or as some call it -- a bankruptcy adviser. Moody's(MCO) and Fitch Ratings cut the firm's credit rating to near junk status on Thursday, with Moody's giving it a Ba2 and Fitch giving it a BB+. The downgrade will cause borrowing costs to rise, making it even harder for MF Global to operate.

Dodd-Frank helps stem contagion of MF Global

Another rumor came from the blog Zero Hedge, which suggested that maybe MF Global dumped its U.S. Treasuries on the market on Thursday and that it was drawing down credit lines and was in need of cash. This would make sense, as once source said they were told to quit trading with MF Global. That is a perfect recipe for a run on the bank as customers start fleeing, and it is a repeat of the Bear Stearns saga. Nervous traders start pulling out, and no one wants to be the last guy walking out the door empty-handed.

The futures business is the largest part and the crown jewel of MF Global, according to industry watchers.

Also, some employees were let go just a few weeks ago, making it look as if the company was cleaning up its balance sheet and dressing up its windows for a buyer. One current employee said they were told the "retail" side of the futures business would be fine. That comment speaks volumes as it doesn't address the rest of the company.

!

One definite loser is Fine Capital. The hedge fund raised its stake in MF Global by nearly 2 million shares, according to the firm's 13-D filing. MF Global was trading at roughly $7 a share at the end of June; it's now closer to $1.20. That would be a beat down of roughly $60 million. Other big holders include RS Investment Management, Cadian Capital Advisory Research and TIAA-CREF Investment management. Another big loser is John MacDonald, the global head of retail at MF Global, who owns 488,426 shares.

The 10 Best ETF Performers Over The Last 5 Years (Including A Few Surprises)

The last five years have seen a tremendous expansion of the ETF industry, as assets have skyrocketed and the number of products available to U.S.-based investors has multiplied. That same period of time has also been a period of tremendous volatility in global financial markets; the last five years have witnessed an unprecedented financial crisis, one of the most severe recessions in history, and a remarkable recovery in both 2009 and 2010.

A look back at the performance of exchange-traded funds over the last five years (ending October 31) highlights the tremendous growth of the ETF industry as well as the challenging realities of recent history. Though there are now more than 1,350 ETPs, only 330 or so were launched before November 2006. Of those that are still in existence, about half have delivered negative returns over that period–a remarkable testament to the impact that the volatility of recent years has had on portfolios.

But the news isn’t all bad; several exchange-traded products have delivered big gains in recent years, helping to cushion the blow from freefalls in stock markets. While some of the big winners are likely obvious (spoiler alert: precious metals have done pretty well), others are somewhat surprising inclusions on this list.

Past performance, of course, is not indicative of future returns. But even if a look back won’t necessarily deliver the secrets to picking winners going forward, it is an interesting exercise that reveals some unexpected products that have thrived amidst the chaos of the last several years:

10. Latin America 40 Index Fund (ILF): Up 57%

This popular iShares ETF offers exposure to major Latin American economies, including Brazil, Mexico, Chile, Peru, and Colombia. The Brazilian economy has been one of the few bright spots in recent years, as energy independence, a wealth of natural resources, and surprisingly stable government and fiscal policies have boosted the BRIC member.

As the recovery from the financial crisis gained steam, Brazil’s neighbors also made big contributions to the performance of this fund; Colombia, for example, has been home to one of the hottest stock markets for the last several years.

ILF, launched back in 2001, can be traded commission free in TD Ameritrade accounts. One of two inclusions from the Latin American Equities ETFdb Category on this list, ILF has about $1.8 billion in assets.

9. Market Vectors Gold Miners ETF (GDX): Up 59%

This fund probably isn’t much of a surprise given the meteoric rise of gold prices over the last several years (more on that below). GDX consists of many of the largest mining companies in the world, essentially delivering indirect exposure to gold prices. The companies found in this ETF are engaged in the extraction of precious metals, and as such their profitability generally depends on the prevailing market price for the products they sell. As gold and silver prices have climbed, so too have profits for the mining industry–which has propelled GDX into this impressive list.

It is also interesting to note, however, that the gains turned in by GDX–while certainly impressive–have fallen short of the performance of the underlying metal.

8. Barclays 20 Year Treasury Bond Fund (TLT): Up 59%

Long-term bonds have defied multiple predictions of a bubble, the first of which came back in 2009. With interest rates at record lows, investors have found it hard to scrape up meaningful yields at the short end of the maturity spectrum, prompting many to take on some interest rate risk in exchange for a bit of current return.

And for all the concern about the mounting debt burden in Washington, Treasuries have maintained their safe haven appeal. The combination of those factors has pushed TLT, which focuses on long-term government debt, higher over the last five years. While TLT is the only long-term ETF with a track record long enough to be included in this! list, s ome other funds have stolen the spotlight in 2011. ZROZ has gained about 50% this year, as has EDV. For those who gravitated towards this asset class for the stability, those returns have no doubt been a pleasant surprise.

7. Rydex S&P MidCap 400 Pure Growth (RFG): 61%

This fund might be the biggest surprise on the list, especially since other members of the Mid Cap Growth ETFdb Category trail behind this Rydex product by a wide margin. The popular iShares S&P 400 Growth Index Fund (IJK), for example, was up only about 29% over the same period. That’s still a pretty impressive return–SPY was down about 2% during that period–but comes up far short of RFG.

The big gap is evidence of the potentially significant impact that seemingly minor nuances in methodology can have on bottom line returns. RFG is part of the “pure style” suite of ETFs from Rydex that include only stocks exhibiting the strongest value or growth characteristics. Funds just as IJK, on the other hand, tend to cast a wider net; a number of the components of that ETF are also found in the iShares S&P 400 MidCap Value Index Fund (IJJ).

The pure value focus of RFG, which has fewer than half the holdings of IJK, has translated into a huge payoff for investors [see RFG vs. IJK head-to-head].

6. iShares MSCI Brazil Index Fund (EWZ): Up 68%

As mentioned above, Brazil’s economy has been one of the brightest spots on the map over the last few years. The South American market has raced ahead thanks in part to skyrocketing commodity prices; as a major exporter of a number of natural resources, the boom over the last few years has lined government coffers and allowed for increased flexibility during wild times.

EWZ is also one of the most popular equity ETFs, with more than $10 billion in assets. This fund is linked to the MSCI Brazil Index, which has about 90 individual components. EWZ is a bit top heavy; the top ten account for about 60% of total asset! s. The l argest sector allocations in this ETF, which can be traded commission free on TD Ameritrade, are materials, financials, and energy.

5. iShares MSCI Malaysia Index Fund (EWM): Up 86%

Though the meteoric rises of funds focusing on BRIC economies such as China and India have been well chronicled, it is the relative unknown Malaysia that has been the best performing market over the last five years (at least as measured by pure play ETFs).

Malaysia has one of the lowest unemployment rates in the world, and has strengthened relations with several other Asian powerhouses in recent years. The strong performance out of Malaysia is nothing new; between 1957 and 2005, real GDP grew by 6.5% annually, a mind-boggling figure over such a prolonged period of time.

EWM has about 45 holdings in total, with financials and industrials combining to account for about half of assets.

4. Biotech HOLDRS (BBH): Up 163%

This product is part of the lineup of HOLDRS funds that Merrill Lynch launched in the late 1990s; while not technically a 1940 Act ETF, BBH trades in generally the same way as true exchange-traded funds. Many of this product’s components have been acquired over the last few years as a wave of M&A activity has swept across the biotech space, pushing this fund sharply higher over the last few years.

The purchase of BBH components has also resulted in some significant concentration; BBH currently holds a portfolio of only about ten stocks, with well more than half of total assets in Amgen and Biogen. BBH is scheduled to be converted to a traditional ETF in the fourth quarter, when it will come under the Van Eck lineup.

3. iShares Silver Trust (SLV): Up 164%

Welcome to the precious metals portion of this list; silver may be less popular as an investment vehicle than gold, but its returns have been nearly as impressive over the last few years. SLV is a physically-backed fund, meaning that the underlying assets are simply silver bullion, and t! hat the price of this fund will move in unison with spot silver prices.

There are a couple of other exchange-traded funds that offer exposure to silver prices; ETF Securities offers the ETFS Physical Swiss Shares (SIVR) and Global X has a fund in its lineup that offers access to companies engaged in the extraction and production of silver (SIL).

2. iShares Comex Gold Trust (IAU) and Gold SPDR (GLD): Up About 178%

The inclusion of these ETFs shouldn’t come as much of a surprise; gold thrived during the crisis as investors flocked to safe havens, and was able to continue to rally afterwards amidst lingering uncertainty, desire for dollar diversification, and hefty bets on the metal by some big hedge funds.

It is interesting to note that IAU has outperformed the much more popular GLD during the last five years. Part of that performance gap is attributable to the differential in expenses; at just 0.25%, IAU is essentially guaranteed to outperform GLD (which charges 0.40%) over the long haul.

Both of these two ETFs are tremendously popular; aggregate assets in these funds total more than $75 billion.

1. B2B Internet HOLDRS (BHH): Up 192%

BHH isn’t technically an ETF, but rather a member of the quirky HOLDRS family of products. And this is one of the most bizarre securities on the market; the underlying portfolio currently consists of just two stocks, Ariba, Inc. (which makes up about 93% of assets) and ICG Group. That wasn’t always the case; once upon a time, BHH consisted of a number of firms that provided B2B services over the Internet. But over the years, almost all of the components were either acquired or went bankrupt [see Curious Case of The B2B Internet HOLDRS].

BHH is the smallest and least popular product on this list, with just $16 million in assets. It’s also interesting to note that the end of the road is approaching for BHH; along with several other HOLDRS, this product is scheduled to be shut down before the end of the ! year. Se veral HOLDRS products are slated to be converted to traditional ETFs and merged into the Van Eck lineup.

Disclosure: No positions at time of writing.

Disclaimer: ETF Database is not an investment advisor, and any content published by ETF Database does not constitute individual investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. From time to time, issuers of exchange-traded products mentioned herein may place paid advertisements with ETF Database. All content on ETF Database is produced independently of any advertising relationships.

Original post

5 Cities Where Halloween Means Scary Money

Halloween does what it can to spread the trick-or-treating and parties across the country as fairly as possible, but some cities just get more of the treats.

Halloween is a pretty sweet time of year for Hershey(HSY), Tootsie Roll(TR) and whoever makes slutty Spongebob Squarepants costumes, but towns that know how to throw a party tend to get the most goodies. About 44% of Americans 18 and older plan to put on a costume this year, and more than 34% of all Americans plan to hit a Halloween party, according to the National Retail Federation.

That party percentage has been climbing steadily since 2005, when only 25% of Americans could commit to bobbing for apples, drinking pumpkin beer or dancing to the Thriller album. This year's party invitees include 59% of Americans 18 to 24, 50% ages 25 to 34 and 46% of Americans who make $50,000 a year or more.

That's a lot of cash to throw around during the holiday, and a handful of cities are banking on those costumed carousers and their crews to come to their towns and spend some cash. Some will let you march down their avenues with 60,000 new friends, some offer three nights of shows featuring Snoop Dogg, Soundgarden and Social Distortion and some will remind you that it's clothing optional.

We put on our best mild-mannered reporter costumes and went around the country searching for Halloween party cities. We came back with candy-corn-stained teeth, a skull-crushing hangover and this collection of five holiday celebrations that bring in tons of costumed customers and pillowcases full of cash:

Haunted Happenings
Oct. 1-31, Salem, Mass.
Does it really matter that Salem's witches weren't the fun flying-broomstick types who play Quidditch and occasionally get crushed by wind! blown Ka nsas houses? If not, does it matter that Salem's witches were 14 women and five men hanged and, in the case of Giles "More Weight" Corey, crushed to death by stones because children called them witches and consenting adults didn't approve of them being homeless, church-averse or slaves, among other things?

No? Then let's party!

Salem has plenty of candlelight Samhain circles, seances, Crucible readings, hanging judge re-enactments at the House of Seven Gables and other witchy activities, but the town takes its horror business very seriously. Late-night ghost tours, haunted houses and haunted harbor tours are supplemented by monster movies at the local Czech cafe and appearances by Kane Hodder (who played Jason in the Friday the 13th series, Doug Bradley (Pinhead from Hellraiser), Tony Moran (Michael Myers from Halloween) and Bill Johnson (Leather Face from Texas Chainsaw Massacre 2) at Salem's Nightmare Gallery monster museum.

There's a 6.66-mile run, lots of choreography from groups dancing the Time Warp from The Rocky Horror Picture Show and the zombie dance from Thriller, costume contests and balls, carnivals, concerts, Budweiser(BUD)-sponsored beer gardens and fireworks filling the monthlong slate. Even in a town where the streets are stocked with performers year-round and the Witch Museum is always welcoming new visitors, someone has to keep the constantly arriving and oft-costumed masses entertained.

"We estimate about 200,000 people come to Salem during October for the Salem Haunted Happenings festival," says Kate Fox, executive director of Destination Salem, part of the Salem Office of Tourism and Cultural Affairs. "Halloween night, depending on weather, we could have between 50,000 to 100,000 revelers in the street in addition to those who are in the various costume balls and parties."

All of those people are spending, too. Fox says tourism generates approximately $99.5 million in spending i! n Salem each year. Of that, 25% is spent during October alone and very little of it comes from corporate sponsors. Salem has a nasty history when it comes to false judgements, but it's tough to accuse Salem of selling out its past and make it stick.

"Salem Haunted Happenings is a collaboration of many different businesses and organizations, but we do not have any primary or dominant corporate sponsors," Fox says. "We partner with Radio 92.9 out of Boston for the finale concert, and they bring in Budweiser for a beer garden, but otherwise it is a collaborative and primarily local effort."

Village Halloween Parade
New York City
There are few things small about the Village Halloween Parade.

The event heads up Sixth Avenue through Greenwich Village for the 39th time this year, and it's only been growing with age. The parade itself is always elbow-to-elbow across Sixth Avenue, partially because of the giant puppets, more than 50 bands and troupes of dancers, but mostly because anyone who shows up in a costume can march in it.

"The idea behind the parade was always a freewheeling expression of creativity, a celebration of the individual imagination and what we call the new American family," says Jeanne Fleming, the parade's artistic and production director, who has been involved with the parade for 31 years. "Halloween isn't a home holiday, and you don't have to go home and celebrate it with your family. You can celebrate it with your family of friends, and it's very embracing and takes in everybody."

As does this parade. There were 60,000 marchers alone during last year's installment and the groups walking around as the Ghostbusters, performing the parade scene from Ferris Bueller's Day Off and ... sigh, again ... dancing the zombie dance from Thriller (seriously, Jen Garner's version of this in 13 Going on 30 didn't drive the dagger in one of this dance's major a! rteries? ) were among the less creative options the parade had to offer.

Lest you worry about whether anyone bothers to dress up as, you know, a parade watcher, the New York Police Department estimated that 2 million people lined the parade route last year. So many lined the route with camera phones, in fact, that Fleming noted the lack of applause from the smartphone-holding hordes and decided that this year's parade theme would be disembodied eyes -- all staring back into those camera lenses.

The giant marching staring contest faces a few minor potholes along Sixth Avenue this year. The cash-strapped city has reduced the length of all its parade routes this year to save on policing costs. An NYPD that already had its hands full with the United Nations General Assembly and the Occupy Wall Street protests may get a bit of a reprieve at the parade this year with the parade falling on a Monday. Though that may also shrink the estimated $90 million take the Halloween parade hauled in for local businesses last year, Fleming says the parade began as artistic expression and has never been solely about the money.

The parade's sponsor sheet backs that up. Intercontinental Hotels(IHG), Zipcar(ZIP) and Coca-Cola's(KO) Monster Energy are the parade's best known donors, but the list slowly trickles down to locals such as TriBeCa brunch hotspot Bubby's Pie Co. and off-Broadway shows including The Fartiste, based on the life of flatulent 19th-century French musician Le Petomane. The wind-breaking performer would agree: Whether Halloween lands on a weekend or not, the show must go on.

"The Halloween parade is always on Halloween," Fleming says. "It will not be co-opted by the workweek or commercial interest."

Fantasy Fest
Oct. 21-30, Key West, Fla.
Key West is a delightfu! lly weir d, underdressed corner of America to begin with. Once that tanned, leathery, exposed flesh starts getting airbrushed or at least modestly costumed, it's time for fantasy fest.

What little inhibitions remain in America's southernmost (geographic) point are cast into the Gulf for much of October as Fantasy Fest brings 60,000 to 70,000 unrestrained revelers into town for parades, burlesque shows, wet T-shirt contests, fetish parties and costume balls hosted by porn stars. At least three of the event's parties are clothing-optional and at least one features a Charlie Sheen "goddess" hosting a $700 pole dancing contest.

Sex doesn't just sell here -- it turns the place into an 10-day spending spree. According to Fantasy Fest producer The Market Share Co., Monroe County's revenue jumps to $5 million during Fantasy Fest as more than 60 events at Key West's bars, hotels and restaurants keep the registers ringing.

A little corporate cash never hurts, either, and Diageo's(DEO) Captain Morgan does a whole lot of spending to make sure its big Saturday parade and other events go off smoothly. Anheuser-Busch Inbev, Coca-Cola and Comcast(CMCSA) also make contributions to this carnal carnival that doesn't end until "The Fat Lady Sings" tea dance on Sunday.

While the booze, costumes and general carefree attitude draw a lot of newcomers and return business, the surplus of skin isn't always what it's cracked up to be. Yes there are porn stars, but there are also a lot of folks who look like Jimmy Buffet. Picture Jimmy Buffet naked, multiply that by 100 or so and then decide if you're ready to take your Don Draper costume to the clothing-optional clubs.

Voodoo and Halloween New Orleans
New Orleans
When you're already a party town on par with New Orleans, one Halloween event just won't do.

The Big Easy has a couple of bi! g events going on Halloween weekend, but only Halloween in New Orleans is entering its 28th year of booze, beats and barely there costumes. The festival's four days of decadent dance parties and its huge costume parade on Saturday not only draw such big sponsors as Harrah's, House of Blues(LYV), Absolut Vodka and Anheuser-Busch InBev, but bring in more than 3,000 partiers for Saturday's main event alone.

"We probably work on Halloween about eight months out of the year," says Jerry Fredieu, a member of Halloween New Orleans' board of directors. "It probably sounds crazy, but it's a four-day event on Halloween weekend and we try to be as detailed as possible, put on as good a show as we can and try to spend as little money as possible so the donation can be big."

Since its inception, Halloween New Orleans' door charges and sponsor dollars have raised $4.2 million for Project Lazarus New Orleans, an assisted-living facility for people with AIDS in the Gulf region. Fredieu credits the gay, lesbian, bisexual and transgender community that supports the event not only with making those donations possible, but for keeping the event and Project Lazarus alive after Hurricane Katrina hit New Orleans in 2005.

Halloween New Orleans held together that year for one event in the street outside the W Hotel that required a special permit to work around the curfews imposed at the time. Since then, the event's been bringing the LGBT community, its expendable income and a whole lot of allies back to celebrate for the cause.

"There are still people who think New Orleans is still in shambles and ask is it back," Fredieu says. "As an organization we're still coming back, but the city's in better shape than it's ever been."

New Orleans' Voodoo Experience concert festival, meanwhile, had a much different road back from Katrina. After the storm hit, its organizers held a free show featuring Nine Inch Nails, Queens of the Stone Age and the New York Dolls that October for emergency wor! kers, vo lunteers and returning residents. The full festival briefly moved to Memphis, but returned to an audience of more than 100,000. The now four-day festival is expected to draw just as many people this year behind headliners Soundgarden, Blink 182, Snoop Dogg, The Raconteurs and My Chemical Romance and featuring dozens of of other acts including New Orleans' own Dr. John, the Meters, Mannie Fresh and the Treme Brass Band.

That combination keeps Big Easy hotel rooms booked and bumped occupancy rates last holiday weekend to 85.1% on Friday, 93% on Saturday and 84.6% on Sunday, according to Smith Travel Research. That's only helped by events such as the Krewe of Boo's Halloween parade down music club-lined Frenchmen Street in the Marginy. Frenchmen's considered the local's Bourbon Street, but the out-of-towners keep the French Quarter alive with costumed visitors bouncing from bar to bar.

Even the family-friendly places get in on the act. The Audubon Zoo, for example, hosts Boo at the Zoo with trick-or-treat houses, haunted houses and a ghost train for the kids.

"Although we cannot put a dollar figure on Halloween weekend," says Jennifer Lotz, spokeswoman for the New Orleans Convention and Visitors Bureau, "it is a mega-event for New Orleans."

Lahina Halloween
Lahina, Maui
You could steal every child's candy, kick every fall beer off the tap and limit women's costumes to Sexy Full-Body Haz-Mat Suit and still not ruin Halloween. Stop blocking off the street where your city holds its annual Halloween bash, however, and you're going to force even your own tourism site to call your Halloween parties "crap."

This is what went down in Lahina when the Maui County Cultural Resources Committee decided to cut back on the city's raucous Halloween party in paradise. The Front Street route for the Halloween parade was left open to traffic, the local costume contests weren't held and the throngs! that on ce numbered 20,000 to 30,000 were reduced to a fraction of that.

This year the roads are blocked off again and the scantily clad, costumed crowds are free to roam Front Street as bar patrons on balconies above throw down beads. Even better, Lahina visitors no longer have to dodge traffic or risk a DWI on the way back as a Halloween cruise complete with open bar and grilled beef takes them from Southern Maui up the coast to the festivities.

There's still a children's parade before sundown and costume contests throughout the city should someone still wish to wail "What about the children?" The simple act of shutting down a street and bringing back the main parade not only saved this year's big party, but perhaps preserved one of the best reasons to book a ticket off the mainland this Halloween.

>To follow the writer on Twitter, go to http://twitter.com/notteham.

CEO's speech detailing advertising slumps sent shares reeling

What could go wrong for The New York Times Co. (NYSE:NYT)? Apparently plenty.

Shares of the venerable newspaper publisher yesterday slumped more than 4% after CEO Janet Robinson said advertising sales would be worse than expected. In fact, third-quarter advertising revenue will drop 8% — double a previous forecast — as spending dries up. Print advertising is expected to fall by a whopping 10%. Even digital ad revenue, which had been rising, will fall 2% to 3%, Robinson told analysts at a Goldman Sachs conference.

��Economic conditions have been getting more difficult since the second quarter,�� The Wall Street Journal quotes Robinson as saying in perhaps the understatement of the year.

Consumer confidence remains as fragile as ever. More worrisome for The New York Times is the fact that wealthy consumers, which its advertisers want to target, are not feeling that confident either. One study found that confidence among the well-to-do had plunged 18% in July to a level not seen since the middle of the recession in 2008.

Advertisers interested in reaching wealthy readers like those that read the Times and News Corp.��s (NASDAQ:NWS) The Wall Street Journal might be shifting their marketing spending overseas because that��s where their companies are growing the fastest. For example, Tiffany & Co. (NYSE:TIF) saw second-quarter sales in the Asia-Pacific region rise 55%, more than double the 25% increase seen in the U.S. European sales also surpassed America��s, gaining 32%. For the fiscal year ended Jan. 31, 2012, Tiffany expects Asia Pacific sales to gain 30% and European sales to jump by at least 20% while rising ��a high-teens percentage increase in the Americas.��

Wall Street also might do less advertising as well, as big financial services firms including Bank of America (NYSE:BAC) lay off workers to ! reduce e xpenses. New York real estate, another prime source of Times advertising, continues to be soft. The real estate web site Trulia estimates the median sales price for homes in New York, N.Y., for June 2011 to August 2011 at $1,075,000, up just 1.4% from a year earlier. However, prices in several trendy neighborhoods — including the Upper East Side, the Upper West Side and Chelsea — showed week-over-week declines.

Circulation revenue is a bright spot, with an expected increase of around 4%. Robinson said digital subscriptions are outpacing internal expectations, which is noteworthy considering the company recently instituted a paywall. The company had 224,000 digital subscribers as of the second quarter.

One problem there, of course, is discounting. The company��s flagship paper is selling digital subscriptions that range between $15 and $35 per month for 99 cents for the first four weeks. It will be interesting to see if New York Times readers remain loyal to the paper once these teaser rates expire.

Robinson��s speech threw cold water on what little enthusiasm Wall Street mustered for the stock following the investment by Mexican billionaire Carlos Slim. After he added 450,000 shares to his position in August, his spokesman was quoted in the Times — of course — as saying that the price was so low that it was a ��good point to buy.��

Slim has stayed on the sidelines at The New York Times for now, but his patience with the Sulzberger family, who has controlled the company since 1896, will not last forever.

Jonathan Berr does not own shares of any of the companies listed.

Prudent picks: Four favorites for yield

It is nice to see the renewed interest in income, as we can��t forget that dividends and their reinvestment have long been a substantial contributor to the total return on equities.

Here, we highlight four dividend-paying stocks that we believe are undervalued relative to their long-term appreciation potential: Hudson City Bancorp (HCBK), Merck & Co. (MRK), Ship Finance International (SFL) and Whirlpool (WHR).

Hudson City is the sixth-largest thrift in the U.S. Its subsidiary, Hudson City Savings Bank, offers jumbo mortgages to affluent customers while maintaining operations in nine of the country��s wealthiest markets.

Hudson has relatively conservative underwriting standards, a history of profitability and industry-leading efficiency ratios. Many of its clients have strong credit scores and make large down payments.

The combination of high income, good credit and substantial homeowner equity helps ensure that borrowers are less likely to default, and that losses are limited when defaults occur. Shares currently offer a 5.7% dividend yield.
Merck makes pharmaceutical products to treat conditions in a number of therapeutic areas, including cardiovascular disease, asthma and osteoporosis.

The company also has a substantial vaccine business and is further diversified with animal health and consumer products divisions.

We like that Merck generates strong free cash flow, is proactively seeking opportunities to cut costs and has a drug pipeline with solid potential. Shares are attractively valued and carry a dividend yield of 4.6%.

Spun off from tanker operator Frontline in 2003, Ship Finance owns an international fleet of crude oil tankers, dry bulk carriers and drilling rigs.

Instead of tak! ing on t he challenge of operating the assets in its fleet, the company secures medium and long-term charters with customers that include base-rate and profit-sharing components.

SFL has a fixed-rate charter backlog totaling close to $7 billion and no major needs for refinancing.

The charters provide a secure source of cash flow which in turn provides support for a whopping 12% dividend payout.

Whirlpool (WHR) is the world��s leading producer of major home appliances.

While its North American operations continue to struggle, Whirlpool��s growing international presence is the key driver behind our positive take.

International sales have grown from 38% of the business in 2005 to 50% today. Much of this growth is being captured in emerging markets such as China, Brazil and India.

The firm generates strong free cash flows and has an ability to repeatedly introduce innovative, premium-priced products. Inexpensively priced, WHR sports a yield of 4.0%.

Prudent Speculator eyes oil & gas

We discriminate among potential investments primarily by their relative valuation metrics and our assessments of stock-specific risk.

We buy only those stocks we find undervalued along several lines relative to their own trading history, those of their peers or that of the market in general.

The prices at which we��ll buy and sell stocks incorporate a range of fundamental risks (e.g. credit, customer and competitive dynamic) that we believe the companies may face over our normal 3-to-5-year investing time horizon.

Among our latest featured stock ideas are two companies involved in oil and gas.
Canadian-based Nexen (NXY) engages in global exploration and production of conventional oil and unconventional natural gas, as well as in mining oil sands in the Alberta province of Canada.

Increases in long-term global oil demand and tight supply constraints should bode well for NXY.

We also like that Nexen has had recent exploration success and is maintaining its status as a low-cost producer. Furthermore, management continues to aggressively pay down debt to strengthen the balance sheet.

Shares are currently trading at less than 10 times forward earnings estimates and right near tangible book value.

Total (TOT) is the fifth-largest, publicly-traded integrated oil and gas company in the world. Its global businesses include: upstream exploration and production; downstream refining and marketing; and chemicals.

We like Total for its low cost structure, high profitability and strong balance sheet.

Despite continued sluggishness in Europe, the French oil giant remains committed to projects already underway as well as to potential upstream acquisitions.

Though shares have rebounded nicely since t! he lows hit in September, the valuation is still compelling as the stock currently trades for 7 times estimated earnings. TOT also sports a 5% dividend yield.

What the FFO? Ways to Gauge REITs

REITs assess financial performance differently, because land doesn’t depreciate like machinery and equipment, writes John Heinzl, reporter and columnist for Globe Investor.

Each time I see a column on real estate investment trusts, I hope a mystery that has bedeviled me might be resolved, namely: How can a real estate investment trust pay out more in distributions than it makes in profit?—R.B.

Prior to the adoption of new accounting rules on January 1, it was common for REITs to pay out more than they reported in profit. That’s because they were required, under generally accepted accounting principles (GAAP), to gradually depreciate their property much as a manufacturer depreciates machinery and equipment.

The purpose of depreciating an asset under GAAP was to spread the cost over the item’s useful life instead of taking the full hit all at once, but in the case of REITs, it ended up distorting their bottom lines—making it appear as if they earned less money than they actually did.

"If you think about real estate, it doesn’t depreciate that way," said Michael Smith, real estate analyst at Macquarie Securities. "First of all, the land doesn’t depreciate at all. If it’s well located, it usually goes up. And the building doesn’t really depreciate, in the manner that GAAP came up with, predictably over a certain period of time."

To get around the problem, REITs use alternative measures—namely, funds from operations (FFO) and adjusted funds from operations (AFFO)—to assess their financial performance. You can usually find these numbers in a REIT’s financial statements.

The actual definitions are complex, but FFO is essentially operating profit excluding GAAP-style depreciation and any gains or losses on disposals of properties. AFFO is generally equivalent to FFO, less an allowance for maintenance capital expenditures and leasing costs, to reflect the ca! sh a REI T spends to maintain its buildings.

"AFFO is the real estate equivalent of profit, and it’s a good metric to use in assessing a REIT’s payout ratio," Smith said.

(Just to complicate matters further, the adoption of International Financial Reporting Standards on January 1 introduced yet another definition of net income, but FFO and AFFO are still the preferred measures in the REIT industry.)

The upshot for investors? As long as a REIT isn’t continually paying out more than its AFFO, there’s usually no cause for concern. Let’s look at a couple of examples.

Canadian Real Estate Investment Trust (Toronto: REF.UN) reported AFFO of $1.05 per unit in the six months ended June 30, and paid distributions of 71 cents per unit. This represents a conservative payout ratio of 67.6% of AFFO.

RioCan REIT (Toronto: REI.UN), on the other hand, reported AFFO of 63 cents per unit and paid distributions of 69 cents in the six months to June 30, for a payout ratio of about 110%. This isn’t an immediate problem for the company, because many investors elect to reinvest their distributions in additional shares, which means they don’t have to be paid in cash.

Mr. Smith expects RioCan’s payout ratio will fall below 100% on an annualized basis by the end of this year or early next year, thanks to the company’s growing AFFO, which has been bolstered by acquisitions, developments, and improving rents.

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2 ETFs That Could Perform Strongly in Upside Trend

Health care was hot last week with Health Care Select Sector SPDR ETF (NYSE:XLV) registering a 2.65% gain for the week and iShares Dow Jones Health Care Select Sector Index (NYSE:IHF) jumping 3.5% from last week��s close.

That trend is likely to continue because in spite of a stagnant economy and busted housing industry, the US healthcare industry will have strong fundamentals behind it over the next twenty years.

With the baby-boomers retiring in droves, the healthcare industry is likely to experience America��s next large wave of capital growth, and so ETF investors have many opportunities to potentially reap these gains by deploying health care ETFs in their portfolios.

Investors can choose from more than twenty healthcare related ETFs which include regular ETFS, leveraged ETFs and even inverse ETFs which can make money even in down markets.

A widely held healthcare ETF is the Health Care Select Sector SPDR ETF (NYSE:XLV) which tracks the Health Care Sector Select Index and includes holdings in Pfizer, Merck, Johnson & Johnson, and Abbot Laboratories.