SEC’s Structured Products Chief to Exit

The Securities and Exchange Commission announced Tuesday that Kenneth Lench, chief of the Enforcement Division’s Structured and New Products Unit, will leave the agency for the private sector at the end of July.

Lench, who’s been at the SEC for more than 23 years, has led the unit since its inception in January 2010. The unit conducts investigations into complex financial instruments including asset-backed and derivative securities, and has 45 staffers in eight SEC offices across the country.

“Ken’s determination to always seek the right answers and his devotion to protecting investors by working tirelessly with his staff and colleagues made everyone around him better,” said George Canellos, co-director of the SEC’s Division of Enforcement, in a statement. “The Enforcement Division is stronger today because of Ken’s unwavering leadership.”

During Lench’s tenure, the SEC says that the unit filed “significant enforcement actions” against financial services firms that violated federal securities laws during the financial crisis relating to the structuring, marketing, and sale of collateralized debt obligations (CDO) and residential mortgage-backed securities (RMBS).

The CDO and RMBS cases filed under Lench’s leadership include Goldman Sachs, JPMorgan (CDO case and RMBS case), Citigroup, Credit Suisse, Mizuho, Wells Fargo/Wachovia, Option One, Stifel, Nicolaus & Co., and RBC Capital Markets.  These cases provide for approximately $1.7 billion in financial recovery for harmed investors.

Lench joined the SEC’s Enforcement Division as a staff attorney in 1990. He was promoted to branch chief in 1995, assistant chief counsel in 2000, and assistant director in 2004. As an assistant director, Lench spearheaded the SEC’s major auction-rate securities settlements with a number of major broker-dealer firms that provided more than $60 billion in liquidity to tens of thousands of investors.

He also led significant investigations into matters involving financial and accounting fraud, Foreign Corrupt Practices Act violations, and hedge fund fraud cases.

Besides serving in the Enforcement Division, Lench was in the SEC’s Division of Corporation Finance from 1999 to 2000.

Lench, who was in private practice prior to his arrival at the SEC, received his B.A. from Brandeis University and his J.D. from Boston University School of Law.

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Check out How the SEC Stacks the Deck on ThinkAdvisor.

Bull of the Day: Pilgrim's Pride (PPC) - Bull of the Day

Pilgrim's Pride (PPC) has seen some big action on recent Friday's, carries a great valuation and will be reporting earnings soon. It is a Zacks Rank #1 (Strong Buy). It is the Bull of the Day.I Feel Like Chicken TonightIf the title line of this section is lost on you then I am showing my age a bit. That was a popular tag line from a commercial in the 80's but it's clear that the sentiment still rings true.With a 19% share of the domestic market, Pilgrim's Pride has a firm grip on second place behind Tyson's 22%. The 36 million bird weekly capacity also tells you that plenty of people are eating chicken.Company DescriptionPilgrim's Pride produces, processes and markets fresh, frozen, and value-added chicken products in the United States, Mexico, and Puerto Rico. The company was founded in 1945 and is headquartered in Greeley, Colorado. As of December 28, 2009, Pilgrim's Pride Corporation operates as a subsidiary of JBS USA Holdings, Inc. Earnings HistoryLooking to the earnings history, I see a stock that has beaten the number in two of the three most recent reports. The most recent quarter was a miss of $0.02, which translated into a negative earnings surprise of 8.7%. The two previous quarters had the analyst guessing where the number was going to come in and they were pretty light. The September 2012 quarter was s beat of $0.11 or 183%, and that was followed up by an even more impressive $0.17 beat for the December 2012 quarter. That translated to a beat of 212%, which isn't exactly chicken feed.Not a Small ChickenPPC has approximately 37,500 employees and 30 hatcheries. They also have 3,900 growers and 26 feed mills with production facilities throughout the Southeast of the United States, Mexico and Puerto Rico. The company sells to a wide range of food service companies like US Foodservice, Yum Brands, Wendy's, Burger King and ConAgra Foods. on the retail side, PCC sells to grocers like Walmart, Publix, Kroger and SuperValu among others.Earnings Estimates Tic! k HigherEstimates for FY2013 have been moving higher and higher. The 2013 calendar year started out with the Zacks Consensus sitting at $0.86, but that number jumped to $1.31 in April, and then again to $1.49 in May and now sits at $1.65. That is some excellent growth of nearly 100% in just six months.The picture for 2014 is a little less clear, but still shows some growth. The Zacks Consensus for next year started the year at $1.18 and ticked higher to $1.22 in April. A big move up to $1.41 the following month and a subsequent move to $1.47 at the current level. ValuationThe valuation picture for PPC is a good one. With a trailing PE of 20.8x the stock trades at a very small premium to the industry average of 19.5x. Not that great, but not that bad either. The impressive valuation metric is the forward PE of 9.3x compared to the 18x industry average. That is a significant discount for such a large player in the industry. The price to book of 4.1x carries a small premium to the 3.6x metric for the industry. Price to sales of 0.5x is only a fraction of the 2.4x industry average, so lots of room to expand there.The Chart The year to date price chart of PPC stock shows a few recent big up days. Both were more than 10% moves and both came on Friday's in June. Last Friday, 7/5 saw a surge of buying at the close, but nothing like the recent big moves. Is it at all a coincidence that PPC is the Bull of the Day on this second Friday in July? Well, I am not a believer in Easter Bunny or coincidences, just merely the appearance of said bunny and coincidences. How else to do explain all those egg hunts, chocolates and foam bunny treats? As for the stock, I like it here and beyond the August 1, 2013 earnings release. Brian Bolan is a Stock Strategist for Zacks.com. He is the Editor in charge of the Zacks Home Run Investor service, a Buy and Hold service where he recomm! ends the ! stocks in the portfolio.Brian is also the editor of Breakout Growth Trader a trading service that focuses on small cap stocks and also carries a risk limiting strategy. Subscribers get daily emails along with buy, and sell alerts.Follow Brian Bolan on twitter at @BBolan1Like Brian Bolan on Facebook

Bond Basics: Tips for Today's Market

Jim Stack, market historian and editor of InvesTech Market Analyst, offers common-sense tips for bond buyers in the current economic and interest rate environment.

Over the past couple months, there's been a dramatic shift in the bond market that has many investors worried about their fixed income safety nets.

The recent distress in the bond market is due to a sudden rise in long-term interest rates, driven by fear that the Federal Reserve will start backing off its quantitative easing.

These programs were started by the Fed in 2009 to buy long-term bonds. These purchases have helped support higher bond prices, and have kept long-term yields and mortgage rates low.

However, the Federal Reserve is now confirming its intent to start tapering its bond buying activities by year-end, depending on the economy. Meanwhile, the yield on the ten-year bond climbed from 1.6% to as high as 2.7% in just a couple months.

While the sharpness of the bond sell-off may partly be a knee-jerk reaction to the anticipated Fed move, it illustrates the potential losses that can occur in fixed income investments...particularly in bond funds.

As seasoned investors know, bond prices fluctuate with interest rates. If rates go up, the value of bonds declines. This isn't a problem with individual bonds if you hold them to maturity. As long as the company doesn't default, you'll always get your money back, plus the coupon interest.

With bond funds, however, there is no maturity date or par value. The fund's price, or (NAV), depends on the current value of the bonds in the underlying portfolio, and in a negative bond environment, that could be much lower than your initial investment.

The critical question for bond holders is, "Where are interest rates headed in the future?" Bond funds tend to thrive when inflation pressures and interest rates are low or declining, which has been the case over the past 30 years.

Interest rates today are at the lowest level in decades, with the yield on the ten-year bond well below the 50-year average of 6.6%.

Given this historical context, coupled with an end to QE stimulus, we believe inflation and interest rates will head higher. The recent 1% uptick in rates is barely perceptible on a long-term graph, but it may be just the tip of the iceberg going forward.

Over the next decade, the primary risk for bond fund investors is from rising inflation, leading to higher interest rates and declining bond prices.

To find a previous period that might be comparable, we have to go back 40 years, to a time when the tame inflation of the 1960s gave way to rising inflation during the 1970s. Only a handful of bond funds have survived from that era. The rest have been merged out of existence due to poor performance.

Clearly, investing in bonds requires careful planning and monitoring, as the current monetary environment continues to evolve.

Despite the fact that bond funds are not as invincible as they seem, and the road ahead is uncertain, many investors want to hold part of their assets in fixed income investments for diversification. Thus, we'll offer some tips for today's bond investors...

Buy individual bonds, not bond funds.

Unless an individual bond defaults, you'll get your initial investment back, as well as the interest payments. With bond funds, there is no maturity date or par value—they continually have to accept new investments and meet redemptions, regardless of current market conditions. Bond fund prices constantly fluctuate depending on cash flows, current inflation, and interest rates.

Always buy quality...stay with investment grade bonds or Treasuries.

Bond issuers are rated by Standard & Poor's on a scale ranging from AAA for the most credit worthy firms, to C on the speculative or low end. Moody's and Fitch offer similar ratings. Bonds that are rated BBB or better are investment grade. Bonds rated BB or lower have significantly higher risk of default and should be avoided.

Ladder maturities, but keep them on the short end of the scale.

Select individual bonds so that part of the portfolio matures each year. For now, we recommend staying with shorter maturities of less than five years. As interest rates rise, you'll be able to take advantage of higher yields when bonds are replaced.

If you can only invest in mutual funds, stay with high-credit, quality, short duration bond funds, or even cash, or a money market fund, for money you can't afford to lose.

When evaluating bond funds, duration is a more useful gauge than average maturity, as it also takes into account the present value of future coupon and principal payments, and provides a good indication of the fund's sensitivity to interest rates.

The greater the fund's duration, the more sensitive the fund's share price will be to changes in interest rates. Although it's not a precise measurement, a bond fund with a duration of five years would be expected to lose 5% in value for every 1%-point increase in long-term interest rates.

A duration of ten years would imply a 10% reduction in NAV for every 1%-point increase in rates. Bond fund durations can be found at Morningstar.com or on the fund's Web site.

Never stretch for yield.

The only way to get higher yield in today's market is through longer maturity or lower credit quality. Remember, there's no free lunch...higher yield invariably means higher risk.

As Mark Twain once said, "I am more concerned with the return of my money than the return on my money." And most bond investors today probably share that sentiment if their primary concern is protection and preservation of fixed income assets.

Subscribe to InvesTech Market Analyst here…

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How Apple May Differentiate the iPhone 5S

Apple (NASDAQ: AAPL  ) is struggling to keep its lead in smartphones as competition -- particularly Samsung and its Google-powered (NASDAQ: GOOG  )  Android operating system -- continues to bring the heat. In the video below, Fool contributor Daniel Sparks explains how competition has weighed on Apple shares, and why the company needs a successful iPhone 5S for the stock to have any hope of reviving itself.

What does Apple have in store to make the 5S a hit? Daniel outlines two potential differentiators.

Five enter, one leaves
It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.

Is a Revenue Miss Coming for Regal Beloit?

There's no foolproof way to know the future for Regal Beloit (NYSE: RBC  ) or any other company. However, certain clues may help you see potential stumbles before they happen -- and before your stock craters as a result.

A cloudy crystal ball
In this series, we use accounts receivable and days sales outstanding to judge a company's current health and future prospects. It's an important step in separating the pretenders from the market's best stocks. Alone, AR -- the amount of money owed the company -- and DSO -- the number of days' worth of sales owed to the company -- don't tell you much. However, by considering the trends in AR and DSO, you can sometimes get a window onto the future.

Sometimes, problems with AR or DSO simply indicate a change in the business (like an acquisition), or lax collections. However, AR that grows more quickly than revenue, or ballooning DSO, can, at times, suggest a desperate company that's trying to boost sales by giving its customers overly generous payment terms. Alternately, it can indicate that the company sprinted to book a load of sales at the end of the quarter, like used-car dealers on the 29th of the month. (Sometimes, companies do both.)

Why might an upstanding firm like Regal Beloit do this? For the same reason any other company might: to make the numbers. Investors don't like revenue shortfalls, and employees don't like reporting them to their superiors.

Is Regal Beloit sending any potential warning signs? Take a look at the chart below, which plots revenue growth against AR growth, and DSO:

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. FQ = fiscal quarter.

The standard way to calculate DSO uses average accounts receivable. I prefer to look at end-of-quarter receivables, but I've plotted both above.

Watching the trends
When that red line (AR growth) crosses above the green line (revenue growth), I know I need to consult the filings. Similarly, a spike in the blue bars indicates a trend worth worrying about. Regal Beloit's latest average DSO stands at 55.9 days, and the end-of-quarter figure is 59.6 days. Differences in business models can generate variations in DSO, and business needs can require occasional fluctuations, but all things being equal, I like to see this figure stay steady. So, let's get back to our original question: Based on DSO and sales, does Regal Beloit look like it might miss its numbers in the next quarter or two?

The numbers don't paint a clear picture. For the last fully reported fiscal quarter, Regal Beloit's year-over-year revenue shrank 3.7%, and its AR grew 0.1%. That looks OK. End-of-quarter DSO increased 3.9% over the prior-year quarter. It was up 5.0% versus the prior quarter. Still, I'm no fortuneteller, and these are just numbers. Investors putting their money on the line always need to dig into the filings for the root causes and draw their own conclusions.

If you're interested in companies like Regal Beloit, you might want to check out the jaw-dropping technology that's about to put 100 million Chinese factory workers out on the street – and the 3 companies that control it. We'll tell you all about them in "The Future is Made in America." Click here for instant access to this free report.

Add Regal Beloit to My Watchlist.

U.S. Factory, Jobs Data Suggest Economy is Slowing

AJ Mast/AP WASHINGTON -- The number of Americans filing new claims for unemployment benefits rose last week and factory activity in the nation's Mid-Atlantic region cooled in April, further signs of a moderation in economic growth. The softening growth outlook was also underscored by another report on Thursday showing a gauge of future economic activity fell in March for the first time in seven months. They were the latest data to indicate a step-back in the economy after a brisk start to the year as tighter fiscal policy began to weigh. "The evidence is mounting that the economy lost momentum in March and that has carried to April," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pa. "Growth is slowing down as the tax increases and sequester take effect." Initial claims for state unemployment benefits rose 4,000 to a seasonally adjusted 352,000 the Labor Department said. The four-week moving average for new claims, a better measure of labor market trends, rose 2,750 to 361,250. Despite the rise, which was broadly in line with economists' expectations, claims held near a level economists normally associate with average monthly job gains of more than 150,000. That helped ease concerns of a deterioration in labor market conditions after nonfarm payrolls posted their smallest increase in nine months in March. "Labor market conditions still appear to be grinding forward, but pushing against the weight of a slowing economy and subdued confidence," said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Mich. Downbeat Outlook In separate report, the Philadelphia Federal Reserve Bank said its business activity index fell to 1.3 in April from a reading of 2.0 in March. A reading above zero indicates expansion in the region's manufacturing. Details of the survey which covers factories in eastern Pennsylvania, southern New Jersey and Delaware, were weak. Measures of factory employment and new orders contracted. A third report supported views the economy was again headed for a soft patch this spring, in a replay of the last two years. The Conference Board said its Leading Economic Index dropped 0.1 percent to 94.7 last month, the first drop since August. U.S. stocks fell on the data, while Treasury debt prices were little changed. The dollar fell against a basket of currencies. Last week's claims data covered the survey period for April nonfarm payrolls. Claims increased 11,000 between the March and April survey periods. Given recent volatility because of the early Easter and spring breaks this year, claims probably aren't useful in trying to gauge April payrolls. Employers added 88,000 workers to their payrolls last month after a solid 268,000 increase in February. While there is no doubt job growth has slowed in line with the overall economy, economists said March's meager gains overstated the labor market's weakness. "We see nothing in the jobless claims data to either suggest that job growth has deteriorated further since March or even to support the view that March's payroll gain represents a new trend," said John Ryding, chief economist at RDQ Economics in New York.

Mood Map: How the results are calculated

NEW YORK (CNNMoney) CNNMoney's Mood Map gives you the chance to share your feelings about the state of the economy.

You can compare your results with those from other countries, and see how the economic climate in your country compares to the

rest of the world.

The four questions you answer have multiple choice answers, representing sentiments from positive to negative. Once submitted, we consolidate the answers and color the world map, based on an average of the responses for each country.

So if 50% of respondents were very positive and 50% very negative, the country in question would be colored from the center of the scale. We also show how many people have responded in each country.

This is not a scientific poll. The results only indicate the sentiments felt by CNNMoney and CNN.com users and may not reflect public opinion.

Cardica and Acorn Energy... Two Good, But Unrecognized, Bets (CRDC, ACFN)

Neither Acorn Energy Inc. (NASDAQ:ACFN) nor Cardica, Inc. (NASDAQ:CRDC) may look all that compelling with just a passing glance. The longer one examines CRDC and ACFN, however - and really gets a grasp of their underlying stories - the more compelling each one becomes. In fact, newcomers may want to go ahead and put both budding stocks on their watchlists, if not in their portfolios.

CRCD is a medical device maker. Specifically, Cardica, Inc. makes anastomotic systems for cardiac surgeries. And, last quarter's results rolled in far better than anticipated, kick-starting a rally from the stock that may have changed things on a permanent basis. In fact, it's this new paradigm for the stock that makes a trade so juicy right now.

As the nearby chart illustrates, the inevitable pushback from the rally in June was stopped rather abruptly, with CRDC only needing to brush the 200-day moving average line (green) to inspire another round of buying. It's the first time in years we've seen Cardica actually find support rather than resistance at a key ling in the sand. It's also the first time in years we've seen any real hints that the bulls are ready to hold their ground.

As for Acorn Energy, it's anything but a household name. ACFN is a $60 million maker of high-end sensors used in a variety of ways.... energy infrastructure, cell phone towers, and even defense technology. Business has been pretty good too, with four straight years of sales growth, even if losses have widened along the way.

That's not the reason a newcomer would want to own a stake in Acorn Energy Inc. right now, however. The most attractive part of ACFN here is the way shares have fought their way above a near-term ceiling at $2.66 after we saw a key reversal effort - on high volume - take shape in early June. The 100-day moving average line (gray) seems to be a point of contention, but the bulls are thus far winning the war.

While both Acorn Energy and Cardica may not necessarily be back in long-term uptrends because of recently-developed clues, the short-term upside here is potentially juicy, and worth a shot.

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