Contrite Facebook executives seek to ward off more European rules

MUNICH (Reuters) – Facebook executives are fanning out across Europe this week to address the social media giant’s slow response to abuses on its platform, seeking to avoid further legislation along the lines of a new hate speech law in Germany it says goes too far.

Facebook’s communications and public policy chief used an annual meeting in Munich of some of Europe and Silicon Valley’s tech elite to apologize for failing to do more, earlier, to fight hate speech and foreign influence campaigns on Facebook.

“We have to demonstrate we can bring people together and build stronger communities,” the executive, Elliot Schrage, said of the world’s biggest information-sharing platform, which has more than 2 billion monthly users.

“We have over-invested in building new experiences and under-invested in preventing abuses,” he said in a keynote speech at the DLD Munich conference on Sunday.

In the United States, lawmakers have criticized Facebook for failing to stop Russian operatives using its platform to meddle in the 2016 presidential elections, while Britain’s parliament is looking again at the role such manipulation may have played in Britain’s Brexit vote to leave the European Union.

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A German law that took effect at the start of the year requires social networks such as Facebook, Google and Twitter to remove online hate speech or face heavy fines. (

“It sets forth the right idea for the relation between government and the private sector but it also goes farther than … we think it should go,” Schrage said of the law.

”At the same time the law places the responsibility on us to be judge and jury and enforcer determining what is legally compliant and not. I think that is a bad idea.

“The challenge is how to define where the violation has been or not,” he said.

By contrast, Schrage praised the approach of the European Union in demanding that internet companies adhere to a code of conduct and respond quickly to requests to take down illegal content rather than being required to make those decisions themselves.

“That’s an example of how we can work with governments to be more responsive to their concerns,” Schrage said of the EU.

The EU has put internet companies on notice that it will legislate if they don’t do a better job self-policing their services for extremist propaganda, hate speech and other abuses. (


Far from being a “Wild West of content”, Schrage argued, Facebook’s policies on policing content are far more in line with Europe’s strict boundaries governing hate speech than the anything-goes reputation it has coming from Silicon Valley.

“We are often criticised for being an American company. But our policies with respect to speech and expression are much closer to how the standards have evolved in Europe than they are in the United States,” Schrage said.

“We do not permit hate speech, we do not permit incitement. There is a tremendous amount of content we remove regularly. When we see content related to terrorism, to hate speech, to incitement, we reach out to law enforcement,” he said.

But several tech leaders in the audience said Facebook had long ignored what are effectively editorial responsibilities for policing abusive content on its platform.

Schrage said Facebook now employed thousands of people to monitor content and to work more closely with law enforcement, while automated algorithms detect and delete 99 percent of Islamic State and al Qaeda content before any Facebook users ever see it.

Paul-Bernhard Kallen, chief executive of Hubert Burda Media, one of Germany’s largest publishers, said Facebook has avoided responsibility for moderating content on its platform.

“From my perspective, Facebook is a media company. One way or the other, Facebook should accept it,” Kallen said of taking more control over content or facing regulatory demands to do so.

Facebook Chief Operating Officer Sheryl Sandberg is meeting policymakers in Paris and Brussels, while Schrage is touring Germany. Later this week they will converge on Davos, the annual policy gathering of world politicians, business chiefs, bankers and celebrities taking place in the Swiss Alps.

Facebook founder and chief executive Mark Zuckerberg, who has declared earlier this year that his 2018 goal is to “fix” Facebook, is staying home (

Reporting by Eric Auchard and Douglas Busvine in Munich; Editing by Adrian Croft

Space Photos of the Week: *You* Just Try to Snap a Pic at 100,000 MPH

Say hello to Jupiter’s south pole! The Juno spacecraft snapped this photo during its tenth orbit around the planet, all while speeding at over 100,000 miles per hour. The cyclones and storms in this image are highlighted in false color, and while they might appear lovely and small—they’re not! Some of these storms are bigger than entire continents on Earth.

What is this alien landscape? This is Saturn’s largest moon, Titan. A hotbed (coldbed, really) of alien chemistry, this moon is covered with lakes and rivers—but not like we have here on Earth. Titan is covered in lakes mixed with methane, ethane, and nitrogen, which is what we see here in this image of Titan’s second largest lake, Ligeia Mare.

Are you gobsmacked? Believe it or not, this is Jupiter, the same planet whose south pole we just flew under. In this mind-blowing photo, Jupiter’s famous bands are on full display. Textures in the cloud tops highlight the depths of the storms—some that go many miles below the upper atmosphere. Juno took this photo on December 16, during its most recent orbit.

This glittering image is of galaxy cluster Abell 1758. This massive cluster was first discovered in 1958 (hence the last two numbers in its name) and was first thought to be a single cluster—just an especially large one. It wasn’t until scientists took another look 40 years later that they realized it was actually two clusters. Each one contains hundreds of galaxies, and while they seem so quaint and illuminating in this image, these two massive clusters are just beginning to merge together.

Welcome to globular star cluster NGC 3201. From this distant vantage point, the cluster almost seems like one single star, speckled with the dust of starlight around it. The European Southern Observatory captured this photo as a part of its Digitized Sky Survey 2, an atlas of the sky that astronomers use to study the stars. We’re still so far away—let’s get a bit closer!

That’s better. Now that we’ve zoomed in on cluster NGC 3201, we can begin to make out the specks of individual stars. Clusters like these, some of the oldest known objects in the universe, contain millions of stars. This particular cluster is 16,000 light years from Earth and is so large its mass is equivalent to 254,000 times that of our sun.

It’s Hubble’s turn to spy on NCG 3201. This close up image, taken by the Hubble Space Telescope, appears almost as though the camera is inside the cluster of stars. We’re now close enough to see the color of stars: blue, white, and orange. Just this week, scientists using the Very Large Telescope in Chile discovered a black hole in NGC 3201—the first stellar mass black hole found in a cluster of this kind.

Android Malware, Free Speech, and More Security News This Week

This week, Hawaii reeled after an emergency text alert about an impending nuclear missile attack triggered panic—and then turned out to be a false alarm. Researchers provided more details about the sophisticated Triton malware that targets industrial control systems and impacted a real-world plant last year.

The anti-fascist far-left movement known as Antifa gets some of its intelligence from a computer scientist named Megan Squire, who disseminates valuable and controversial information. Officials looking to support and further law enforcement initiatives are using the clever catchphrase “responsible encryption” in an attempt to gingerly avoid debate while describing the need for backdoors into protected data. Algorithms meant to analyze crime trends and predict future incidents don’t have a particularly impressive accuracy rate. And researchers are refining an approach to automatically uncover vulnerabilities in Internet of Things Devices—ideally so they can be protected before attackers come along.

And there’s more. As always, we’ve rounded up all the news we didn’t break or cover in depth this week. Click on the headlines to read the full stories. And stay safe out there.

###Hacking Group Linked to Lebanon Used Fake Mobile Messaging Apps to Spy on Thousands of PeopleA newly identified digital espionage initiative has stolen hundreds of gigabytes of data and surveilled thousands of people in 21 countries, including the United States, Canada, France, and Germany. The spy campaign works by tricking users into installing malicious apps that appear to be trusted messaging services like WhatsApp and Signal. The phony apps seem to work normally, but are actually laced with trojans that scoop up messages, call logs, photos, location data, and anything else users send and receive.

The campaign, discovered by the Electronic Frontier Foundation and the mobile security firm Lookout, is known as Dark Caracal and seems to be the work of nation state-funded hackers. The researchers traced the sinister project to a building owned by the Lebanese General Security Directorate in Beirut. The spying has targeted well-connected or controversial figures like activists, military personnel, journalists, and lawyers.

“Dark Caracal is part of a trend we’ve seen mounting over the past year whereby traditional … actors are moving toward using mobile as a primary target platform,” said Mike Murray, vice president of security intelligence at Lookout.

###LeakedSource Creator Charged With Selling Stolen Data He CollectedThis week unmasked LeakedSource creator Jordan Evan Bloom, a 27-year-old from Ontario, appeared in court on charges of trafficking in identity information and unauthorized computer use. Canadian officials say that Bloom sold data from the three billion credential pairs and pieces of personal information LeakdSource had on file. Bloom allegedly made almost $200,000 by selling personal data.

LeakedSource always billed itself as a good-faith service. The tool collected usernames, passwords and other personal information compromised in corporate breaches and organized it into a searchable database so web users could check whether their data had been compromised. Some security professionals had doubts about the service, created in 2015, largely because its creator remained anonymous. Other similar services, like Troy Hunt’s Have I been pwned?, are more transparent.

LeakedSource and its social media accounts have been taken offline, but at least one mirror site hosted in Russia still exists.

###Fewer Than 10 Percent of Gmail Accounts Use Two-factor AuthenticationGoogle engineer Grzegorz Milka said at the Usenix Enigma security conference on Wednesday that fewer than 10 percent of Gmail’s active users currently enable two factor authentication on their accounts. On a similarly bleak note, he cited a 2016 Pew study that only about 12 percent of people in the US use a password manager.

For two-factor authentication users need something beside their password to log into their account—like a random numeric code from an authentication app or a physical token like a UbiKey. The protection shields accounts by making it much more difficult for an attacker to have all the required information to access a victim’s account at a given time. Milka told The Register that Google hasn’t made two-factor mandatory because it’s harder for customers to use than regular username and password login. “It’s about how many people would we drive out if we force them to use additional security,” he said.

###An Up Close Look at the NSA’s Voice-Recognition Prowess

For all the hype and angst inspired by Alexa and Google Assistant, a report this week by The Intercept shows why it’s the NSA that should really have your attention. Voice recognition has been a priority for the agency for years. That doesn’t mean that they’re listening in on your conversations; instead, they use so-called voiceprints to map what certain high-value targets sound like, using them to help identify and locate persons of interest. It’s certainly not the only area in which the NSA has been a technological front-runner, but with the heightened interest in voice technology generally, it’s worth a look at how it’s been used in the past.

Amazon boosts monthly fee for Prime by $2, maintains yearly rate

(Reuters) – Inc (AMZN.O) raised the monthly fee for the U.S. version of its fast-shipping and video-streaming service Amazon Prime by $2 on Friday, making the case for subscribers to upgrade to an annual plan.

It was the first increase of Prime fees in almost four years and comes at the end of another bullish year and holiday season for Amazon’s dominant online shopping platform.

The move also follows a rise in fees by video streaming rival Netflix Inc (NFLX.O) in October.

Amazon increased the fee for its monthly plan to $12.99 from $10.99, while maintaining the annual fee at $99. It also hiked the monthly subscription fee for college students to $6.49 from $5.49.

“That’s good value, over time they’ve raised the price. I don’t think they will lose many members,” Tigress Financial Partners analyst Ivan Feinseth said.

“Those who use it the most get the most value and won’t mind the higher price and those who don’t use it are not the best customers, so even if they drop off it is not a big loss to Amazon,” he said.

As of September, Amazon had about 90 million Prime members in the United States, according to research firm Statista. The company itself does not disclose the number.

Netflix has 52.77 million subscribers in the U.S. and its global tally is 109 million.

Existing monthly Prime and Prime Student members will pay the new price for renewals after Feb. 18, Amazon said on its website.

Amazon, which along with Netflix faces competition from Hulu and Alphabet Inc’s (GOOGL.O) YouTube, has been spending heavily to make original shows.

Only Prime has the added dimension of offering subscribers discounts and other benefits from its shopping platform, which help the company lure more buyers.

The company shipped over 5 billion items worldwide via the subscription service in 2017 and revenue from subscription fees that include Prime jumped 59 percent to $2.4 billion in the quarter ended Sept.30. The company reports its fourth quarter on Feb. 1.

“We only expect to see 2 percent churn from this price increase with many customers moving to the yearly subscription which is the ‘golden goose’ for Bezos & Co as once on the annual plan customers rarely churn,” GBH Insights analyst Daniel Ives said.

Amazon’s shares rose 0.5 percent to $1,300 on Friday.

Reporting by Aishwarya Venugopal and Arjun Panchadar in Bengaluru; Editing by Sriraj Kalluvila

Eni launches world's biggest industrial supercomputer

MILAN (Reuters) – Italian oil and gas group Eni said on Thursday it had installed new capacity at its supercomputing centre near Milan to create the world’s most powerful industrial computer.

The new capacity quadruples the group’s computing power, allowing it to process up to 22.4 quadrillion operations per second, the company said.

“In our industry it is increasingly important to be able to process ever-increasing amounts of data, ensuring more accurate and faster results,” Eni CEO Claudio Descalzi said.

The state-controlled firm has invested heavily in high-powered computing to give it an edge over rivals in exploration and get its resources to market faster.

After giant gas discoveries in Mozambique and Egypt, it has one of the industry’s best discovery track records in recent years.

In December, it said it had produced first gas from its Egyptian supergiant Zohr field in just two and a half years, a record time for this type of field.

Reporting by Stephen Jewkes; Editing by Elaine Hardcastle

Amazon: The Most Undervalued Company

Investment Thesis

Evaluating Amazon’s (NASDAQ:AMZN) in the context of its anticipated growth rate we see that the company is currently undervalued.

I’d like to change the usual format of my articles and reveal my findings in advance: there is a substantial reason to believe that Amazon is an underestimated company, and not an overestimated one. And it’s not my emotions, but the result of the mathematical calculations.

To begin, let’s simply compare the key multipliers of Amazon with those of its closest competitors:

This comparison results in almost complete nonsense. The fair price of Amazon’s share is $200 based on the P/E (forward) multiple, negative (!) based on the EV/EBITDA and significantly undervalued, judging by the P/S (forward).

I admit that the comparative analysis of the three companies may contain significant error. So as the next step, I compared Amazon with all the companies from my database, without sticking to a particular industry. However, the result almost has not changed. Furthermore, three months ago it was approximately the same.

So, the standard approach to evaluating a company through its multiples is clearly not suited to Amazon. We need another technique.

Why do investors buy Amazon’s shares?

Of course, they do it not because they count on the potential dividends or buy back. In my opinion, the main reason is the growth rate of the company. No, it’s not about it. The main reason is the growth rate that investors expect from Amazon in the future.

It is the future growth that is Amazon’s main driver and the only prism this company can be compared and evaluated through.

Based on Yahoo! Finance data I collected and systematized the average analysts’ projections of the earnings per share and the revenues of the companies I closely monitor for the current and the next year. Here is what I’ve got.

As you can see, Amazon is the indisputable leader in terms of the expected growth of earnings per share:

The company is ranked fourth and is significantly higher than the median in terms of the expected revenue growth. Please also note that the expected absolute growth of Amazon’s revenue exceeds the expected aggregate revenue growth of the companies that are ahead of Amazon on this list.

OK, the forecasted growth of Amazon exceeds that of the other companies even in spite of its enormous rate. But what if the current price of its shares already reflects this optimism?

In this situation, it would be reasonable to compare Amazon through the multiples previously adjusted for the expected growth rate. That is, I suggest to compare and evaluate Amazon through the P/E (forward) and P/S (forward) multiples divided by the expected growth rates. The higher is the growth, the lower are the value of each multiple and the relative value of the company. In this case, we compare the dollar evaluation of each percent of the future company’s revenue and profit growth. Here I provided the detailed description of the formulas.

This is what we get analyzing the revenue growth rate, i.e. the P/S to growth (forward) multiple:

In this case, Amazon is almost the cheapest company on the list.

This is what we get analyzing the growth of earnings per share i.e. the P/E to growth (forward) multiple:

In this case, Amazon is the median value of the list.

Now let’s get back to where we started from and compare the new multiples of Amazon with those of its key competitors:

Now Amazon is almost fairly valued in terms of P/E to growth (forward) and undervalued in terms of P/S to growth (forward).

And, in conclusion, let’s use the new technique and compare Amazon with all the companies from my list:

The result: Amazon is fairly valued but is below the upper range border in terms of P/E to growth (forward) and is enormously undervalued in terms of P/S to growth (forward).

Putting It All Together

Amazon is one of the companies whose growth has not yet reached its limit and not even entered the plateau phase. While this situation remains, the market will assess Amazon only through the prism of the expected growth without much regard to the absolute indicators. As I’ve demonstrated, this approach to the assessment indicates that Amazon is now rather underestimated than overestimated.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I Know A REIT That Screens 'Dirt Cheap' And Kimco Is Its Name-O

In our constant quest for value, we regularly screen dozens of REITs weekly in order to find a diamond in the rough. While it’s impossible to eliminate all investment risk, we look to minimize it by selecting securities with a significant margin of safety.

As Warren Buffett told an audience at Columbia Business School in 1984 (for the 50th anniversary commemoration of the original Security Analysis):

You do not cut it close. That is what Ben Graham meant by having a margin of safety. You don’t try to buy businesses worth $83 million for $80 million. You leave yourself an enormous margin. When you build a bridge, you insist it can carry 30,000 pounds, but you only drive 10,000-pund tricks across it. And that same principle works in investing.”

The margin of safety is the essence of value investing because it’s the metric by which hazardous speculations are segregated from bona fide investment opportunities. As Benjamin Graham wrote in The Intelligent Investor, the value investor’s purpose is to capitalize upon “a favorable difference between price on the one hand and indicated or appraised value on the other.”

Surveying our list of filtered investment opportunities, we have identified a REIT that is worthy of ownership. As I explained in a recent article,

Once a moat is created, it must grow. The weaker firms are usually losing market share, and unable to raise prices to offset their costs, or being undercut by competitors…companies that are able to withstand the relentless onslaught of competition for long stretches are the wealth-compounding machines that we want to find and own.”

Identifying a moat-worthy company involves careful consideration of the company’s industry, its current competitive position within that industry, and the “economic moat” around the company; that is, a sustainable competitive advantage that helps preserve long-term pricing power and profitability. Warren Buffett (Fortune 1999) summed it up as follows,

The key to investing is …determining the competitive advantage of any given company and, above all, the durability of that advantage. The products or services that have wide, sustainable moats around them are the ones that deliver rewards to investors.”

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The Case For Kimco

Kimco Realty (KIM) is the owner and operator of the largest publicly traded portfolio of neighborhood and community shopping centers in North America. The company was founded in 1958 and listed shares in 1991. In 2006, Kimco was added to the S&P 500 Index.

As of Q3-17, KIM’s well-balanced portfolio consists of 507 U.S. shopping centers comprising 84 million square feet of leasable space across 35 states and Puerto Rico. KIM focuses on major U.S. metropolitan markets:

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KIM has a very diverse revenue model with over 8,800 leases with 4,100 tenants. The company has well-staggered lease maturities with limited rollover in any given year; averages ~8% of GLA over next 10 years. 4 of KIM’s top 5 tenants are Moody’s investment grade and only 14 tenants have ABR exposure greater than 1.09%.

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Reviewing KIM’s top 10 tenant list, I consider Kohl’s (NYSE:KSS) and Bed Bath & Beyond (NASDAQ:BBBY) the highest risk. However, Kohl’s has low leverage and I like the recent announcement for “accepting returns at certain U.S. locations.” As Richard Schepp, Kohl’s chief administrative officer, explains,

This is a great example of how Kohl’s and Amazon are leveraging each other’s strengths – the power of Kohl’s store portfolio and omnichannel capabilities combined with the power of Amazon’s reach and loyal customer base.”

Also, Bed Bath & Beyond is still trying to find its groove as “revenue and profit growth have been on a downward trajectory for some time.” Bed Bath & Beyond represents just 1.9% of Kimco’s ABR (average base rent) and Kimco’s diversified business model provides powerful risk management: with over 8,700 individual leases, a significant margin of safety advantage.

Also, community centers are the most recession-resistant shopping centers and KIM’s “open-air” focus makes the case that the company will continue to benefit from growth. As illustrated below, only 5% of KIM’s portfolio is internet vulnerable:

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Quality locations are where the retailers will always want to be, and the quality of Kimco’s portfolio continues to improve. Since 2010, the company has sold over $6 billion of real estate, recycling the proceeds into higher quality assets and reducing the size of the portfolio from over 900 to 508 assets.

The result is a higher quality portfolio concentrated in the best markets in the US. By focusing on high barrier to entry markets and executing on the company’s unique customer strategy, Kimco has become more efficient and able to drive greater value-creation.

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Kimco remains on track to sell five non-core assets for $62 million, at a mid-7% cap rate. This brings the company’s sales total for the first nine months of 2017 to 21 shopping centers and three land parcels for a gross price of $331 million. Kimco has another 19 assets, either under contract or with price agreements, for a total of approximately $185 million that should have closes by year-end.

Balance Sheet Improvements

Kimco has been very active on the balance sheet front: The company issued $850 million in unsecured bonds, $500 million at 3.3% and $350 million at 4.45% with a weighted average life of 16.7 years. Also, Kimco completed the $206 million refinancing of the mortgage at the Tustin property with a new 13-year mortgage at a reduced rate of 4.15% versus 6.9% previously and issued $225 million of perpetual preferred stock.

Proceeds from the bond and preferred offerings were used to redeem $225 million of 6% preferred, $211 million of 4.3% bonds due in 2018 and to repay the outstanding balance on the revolving credit facility.

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As a result of these transactions, Kimco’s weighted average debt maturity now stands at 10.8 years, one of the longest in the REIT industry. The company has over $2 billion of immediate liquidity with less than $100 million of debt maturing in 2018.

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As I explained in a recent article, “it appears that Kimco could become an ‘A’ rated REIT during the next year or two. KIM has similar ratings with Moody’s and Fitch.”

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I only mention the likely credit upgrade because I want to compare KIM with the peers when I examine the valuation metrics at the end of this article. It’s important to recognize the quality of KIM’s dividend power, and the potential for multiple expansion.

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Note: I will compare Regency Centers (REG) and Federal Realty (FRT) to Kimco at the end of the article. It’s important to understand the comparison as Kimco is striving to move into the upper echelon (A-rated) by focusing on its balance sheet.

The Latest Earnings Results

The strength of Kimco’s real estate portfolio continues to shine as the company had another strong quarter led by our leasing activity that produced positive double-digit leasing spreads and an increased occupancy level. As illustrated below, occupancy is pushing toward all-time high and continues to validate the quality of the portfolio.

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Leasing is the most direct and important creator of value, whether it comes from filling vacancies, renewing existing tenants, preleasing redevelopment and development projects or realizing mark-to-market opportunities.

One example of this is Kimco’s ability to transform and reposition specific assets. Specifically, Kimco signed new leases at strong leasing spreads that included the recapture of three former Kmart boxes in Q3-17.

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Redevelopment and development continue to be a part of Kimco’s long-term growth strategy. In Q3-17 Kimco achieved several critical milestones that will pave the way for future success.

It’s important to keep in mind that Kimco has over $360 million invested in development projects which are not earning today, thus impacting FFO growth in the short-term. These development projects will begin slowing in stages in the latter half of 2018 and into 2019.

Kimco’s operating portfolio continues to deliver positive results. Same-site NOI growth was 3.1% for Q3-17 and includes negative 20 basis points impact from redevelopments.

For the nine months, same-site NOI growth was 1.7% with no incremental contribution from redevelopments, as the company started a number of new redevelopment projects that have been completed. The Boulevard redevelopment project is an example of this:

For Q3-17, Kimco reported NAREIT-defined FFO per diluted share of $0.39 per share, which includes $0.03 per share of foreign currency gain on the substantial liquidation of the Canadian investments. Also included is a $0.02 per share charge attributable to the preferred stock redemption, prepayment of bonds, and some land impairments.

NAREIT-defined FFO per share for the third quarter in 2016 was $0.18 per diluted share and included transactional expenses totaling $0.20 per share from the early repayment of debt and the deferred tax valuation resulting from the merger of the taxable REIT subsidiary into the REIT.

FFO as adjusted (which excludes transactional increment expense and non-operating impairments) was $161.3 million with $0.38 per share, the same per share level as Q3-16.

Based on Kimco’s nine-month results (of NAREIT-defined FFO per diluted share) of $1.17 and FFO as adjusted per diluted share of $1.13, Kimco has narrowed the guidance range for FFO to $1.55 to $1.56 per diluted share from the previous range of $1.53 to $1.57 per share. Similarly, Kimco narrowed the FFO as adjusted per diluted share guidance range to $1.51 to $1.52 from the previous range of $1.50 to $1.54.

Also, Kimco’s Board approved an increase in the common stock quarterly cash dividend to $0.28 per share from $0.27, an increase of 3.7%. The increased dividend level represents a conservative and safe dividend payout ratio in the low 70s.

I Know A REIT That Screens Dirt Cheap And Kimco Is Its Name-O

Whenever the financial markets fail to fully incorporate fundamental values into securities prices, an investor’s margin of safety is high, hence the title to my article today:

I Know A REIT That Screens Dirt Cheap And Kimco Is Its Name-O

Let’s define “dirt cheap” by viewing the chart below:

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We have not seen $16.55 in over five years. In fact, we have not seen $16.55 since 2010…

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So why has Kimco underperformed the peers? (Note: REG and FRT are shaded in light purple):

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Let’s compare Kimco’s dividend yield with the peer group (FRT and REG shaded in purple):

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Now let’s compare the P/FFO multiple (FRT and REG are shaded in purple):

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Wow, or shall I say…

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Kimco is not just cheap, this puppy is “dirt cheap.” Let’s take a look at consensus FFO/share growth (data: F.A.S.T. Graphs)…

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We can now see that Kimco doesn’t rank high in terms of FFO/share growth (REG averaging 6.9% and FRT averaging 5.3%, compared to Kimco’s 1.8%). However, as illustrated below, Kimco is moving out of its flat-line growth and the substantial development pipeline should kick in this year and next. Also, according to the National Retail Federation, “Americans spent more than expected this holiday season, fueling the strongest growth in holiday retail sales since the end of the Great Recession.”

Holiday sales rose to $691.9 billion in November and December, marking a 5.5% increase from the year before, according to the National Retail Federation. The lobbying group had forecast holiday spending growth of 3.6% to 4%.

Many retailers say they saw a bump in sales during the important holiday season. Kohl’s reported a 6.9% increase in holiday sales at stores open at least one year, while sales rose 3.4% at both Target (TGT) and J.C. Penney (JCP). Tax Reform should certainly serve as a catalyst too as many retailers are in the highest tax brackets and savings will be significant.

Kimco is well-positioned to benefit and the strong locations serve as the primary moat giving the company an edge. Also, economies of scale provide another moat characteristic that allows Kimco added diversification. Most importantly, and not recognized by the market, is Kimco’s disciplined balance sheet. Since the end of the last recession (Kimco did cut its dividend in 2008), Kimco has done an excellent job at managing its balance sheet and this provides the company with excellent financial flexibility to maneuver the choppy retail storms.

Arguably, Kimco does not deserve the same multiple as REG or FRT, but there is certainly room to grow the multiple from 11x to 15x. I am maintaining a Strong Buy, and I Know A REIT That Screens Dirt Cheap And Kimco Is Its Name-O.

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More: Getting Under The Hood Of The Newest Kimco Preferred


Note: Brad Thomas is a Wall Street writer, and that means he is not always right with his predictions or recommendations. That also applies to his grammar. Please excuse any typos, and be assured that he will do his best to correct any errors if they are overlooked.

Finally, this article is free, and the sole purpose for writing it is to assist with research, while also providing a forum for second-level thinking. If you have not followed him, please take five seconds and click his name above (top of the page).

Source: F.A.S.T. Graphs and KIM Investor Presentation.


I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Contraceptive App Natural Cycles Blamed for Playing Role in 37 Unwanted Pregnancies

An app that promises to offer “an effective method of natural contraception” has been accused of causing nearly 40 unwanted pregnancies.

Natural Cycles, which analyzes a woman’s individual menstrual cycle to inform her when she’s “fertile” and not, caused 37 women to become pregnant, ultimately forcing them to visit hospitals for abortions, Swedish publication SVT is reporting. The claims, which were earlier reported on by The Verge, were made to the Swedish regulator Medical Product Agency (MPA).

The Natural Cycles company was founded by a couple who wanted a safer way form of contraception that doesn’t rely on hormones. The app requires women to take their temperature each day and input the reading into the app. On the assumption that women can only become pregnant on “up to six days in one cycle,” among others, the app gives a reading to tell them whether they’re fertile that day or not. Natural Cycles says on its site that women may “have sex without protection” on the days they’re described as “not fertile.”

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“Natural Cycles is backed by a unique algorithm that takes your temperature and many other factors like sperm survival, temperature fluctuations and cycle irregularities into account,” the company says on its site. “It not only detects ovulation, fertility and the different stages of your cycle, it also calculates accurate predictions for upcoming cycles.”

The European Union in August made Natural Cycles the first app certified as a form of contraception. On its website, Natural Cycles said a study found a “perfect use failure rate” 1%. When women don’t use it exactly as prescribed, the failure rate jumps to 7%.

It’s unclear from the Swedish report whether Natural Cycles is indeed to blame for the unwanted pregnancies. However, in a statement to Fortune, a company spokesman said that it’s launching an internal investigation into the matter and acknowledged that at 93% effectiveness, it’s possible Natural Cycles could cause some unwanted pregnancies.

“As our user base increases, so will the amount of unintended pregnancies coming from Natural Cycles app users, which is an inevitable reality,” the spokesman said. He added, however, that Natural Cycles is “clinically proven” and should ultimately “decrease the unwanted pregnancy rates” around the world.

Feast Your Eyes on TAG Heuer’s $197,000 Smartwatch

When the gold Apple Watch Edition launched in 2015 at a high-end price of $17,000, it raised eyebrows. But that’s nothing compared to a diamond-plated TAG Heuer handset that was recently announced.

TAG Heuer on Monday announced the new Connected Modular smartwatch, featuring a white gold band and nearly two dozen carats of diamonds. It costs 190,000 Swiss Francs, or about $197,000. TAG Heuer said in a statement that the device is the most expensive smartwatch ever released.

In a listing on its website, TAG Heuer said that the smartwatch comes with a round 1.4-inch screen that doubles as a touch display for tapping around the device’s Android Wear operating system. It also works with Apple’s iPhones, allowing users to see notifications, access app information, and more. It comes with 4GB of storage and has a near-field communication (NFC) chip so users can place it near a point-of-sale terminal and make mobile purchases.

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TAG Heuer is one of many traditional watchmakers trying its luck in a smartwatch market dominated by Apple and Google. Many of those traditional watchmakers are designing products that come with traditional watch designs but support apps, notifications, and other features users might want in a smartwatch. Still, Apple Watch has proven most popular in the fledgling market.

Whether anyone will actually want a nearly $200,000 smartwatch remains to be seen. While Apple hasn’t ever released Apple Watch sales data, the company’s decision in 2016 to discontinue its gold Apple Watch Edition suggested there was little demand for such an expensive smartwatch. And with a price tag that’s more than 10 times greater than that Apple Watch Edition, TAG Heuer’s smartwatch might have some trouble finding buyers.

Computer AI Can Now Read Better Than You Do

Alibaba has developed an artificial intelligence model that scored better than humans in a Stanford University reading and comprehension test.

Alibaba Group Holding (baba) put its deep neural network model through its paces last week, asking the AI to provide exact answers to more than 100,000 questions comprising a quiz that’s considered one of the world’s most authoritative machine-reading gauges. The model developed by Alibaba’s Institute of Data Science of Technologies scored 82.44, edging past the 82.304 that rival humans achieved.

Alibaba said it’s the first time a machine has out-done a real person in such a contest. Microsoft achieved a similar feat, scoring 82.650 on the same test, but those results were finalized a day after Alibaba’s, the company said.

Read: Alphabet’s DeepMind Is Using Games to Discover If Artificial Intelligence Can Break Free and Kill Us All

The Chinese e-commerce titan has joined the likes of Tencent Holdings (tctzf) and Baidu (bidu) in a race to develop AI that can enrich social media feeds, target ads and services or even aid in autonomous driving. Beijing has endorsed the technology in a national-level plan that calls for the country to become the industry leader 2030.

So-called natural language processing mimics human comprehension of words and sentences. Based on more than 500 Wikipedia articles, Stanford’s set of questions are designed to tease out whether machine-learning models can process large amounts of information before supplying precise answers to queries.

Read: Elon Musk Says Tesla Is Developing Artificial Intelligence: ‘Will Be the Best in the World’

“That means objective questions such as ‘what causes rain’ can now be answered with high accuracy by machines,” Luo Si, chief scientist for natural language processing at the Alibaba institute, said in a statement. “The technology underneath can be gradually applied to numerous applications such as customer service, museum tutorials and online responses to medical inquiries from patients, decreasing the need for human input in an unprecedented way.”