Hedge funds get some heavy trimming
Investors are yanking millions out of the hedge fund industry, fourth quarter data shows. The trend will continue unless hedge funds start performing more effectively.
By
Joshua M. Brown,Guest blogger /
January 20, 2012
TALLAHASSEE – Coming on the heels of Gov. Rick Scott saying he’d like to see so-called “Internet cafes” outlawed, a Senate committee passed a bill 8-1 Thursday that would regulate, but not ban, the gaming centers.
State Sen. John Thrasher, R-St. Augustine, was the only vote against the regulation bill. He called it a “major expansion of
gambling.”
The committee considered a bill that would ban the centers but its sponsor, Sen. Steve Oelrich, R-Gainesville, pulled it from consideration when it became clear he did not have support.
The regulation bill would require all sweepstakes centers to register with the state, give proof that they are legal to operate and require they pay a $100-per-machine fee to the state each year.
The vote signals a clear separation between the Senate and the House, which already has passed a bill outlawing the cafes.
The sponsor, Miami Republican Miguel Diaz de la Portilla, says the fee could raise $4 million annually. He also argued the sweepstakes industry employs up to 13,000 people in Florida.
There are about 50 sweepstakes centers in Northeast Florida, most of them in Duval and Clay counties. Jacksonville was the first city in the state to regulate them, passing a bill in late 2010 that imposed fees and allowed no new centers to open.
One exchange during Thursday’s debate came between Thrasher and a Jacksonville attorney who represents a company that provides software to centers.
Laurie Lee, a lobbyist with International Internet Technologies, refuted an earlier speaker who said that all of law enforcement supports a ban. She pointed to letters from Jacksonville Sheriff John Rutherford and St. Johns County Sheriff David Shoar in support of regulation.
“Our community reached a successful compromise through aggressive regulation of this business, in lieu of prohibition,” reads his letter.
Thrasher, who represents parts of both counties, said just because they support regulation does not mean they also don’t support doing away with the centers.
“As far as I am concerned, I have not heard from either of those sheriffs that they oppose prohibition,” he said.
Before the Duval regulation bill passed, Rutherford said he would ban them if he had his way but felt there was enough gray area to keep them open.
Charities that receive donations from the centers and Veterans of Foreign Wars spoke in favor of regulation. Religious groups, the Florida Sheriff’s Association, and Attorney General Pam Bondi’s office lined up in favor of a ban.
Although Scott told reporters Wednesday that he thought sweepstakes centers were “illegal,” Diaz de la Portilla said things can change.
“The governor has changed his mind on a couple of things,” he said, “like pill mills, for example.”
matt.dixon@jacksonville.com, (904) 716-8789
United States (KaiserHealth) It may be a new budget year for Kansas, but its the same level of funding for anti-smoking efforts in the state.
And thats just the problem, anti-tobacco activists say. Kansas falls far short of the federally recommended level of spending for anti-tobacco programs. In fact, the state earns an F for prevention spending in the American Lung Associations 2012 State of Tobacco Control report.
Of the $745 million in tobacco lawsuit-settlement funds and $1.4 billion in tobacco taxes in the past 12 years, less than $11 million has gone specifically for anti-smoking programs. The federal Centers for Disease Control say Kansas should have spent about $32 million per year for a wide range of prevention efforts.
And Gov. Sam Brownbacks budget makes no change: those funds and taxes will continue to pay for other needs in the state.
One effective tool to help smokers quit is telephone counseling, like the toll-free hotline, available in all 50 states, 1-800-QuitNow. Kansas spends approximately $1.10 per smoker on its quit line; the CDC recommends it spend almost 10 times more $10.53 per smoker, according to the American Lung Association.
Thats a problem for Mary Jayne Hellebust, who heads a non-profit advocacy group called the Tobacco Free Kansas Coalition.
How many people know about the quit line? asks Hellebust. Where are the billboards? Where are the radio announcements? Where are the television PSAs amp;hellip; that say Hey, weve got a quit line. This can help you.
According to the CDC, Kansas should be spending $3.7 million per year just on media. The states actual budget for anti-tobacco advertising is $90,000.
The Kansas Department of Health and Environment does produce anti-smoking messages. A video, found on its website, focuses on the cost of smoking. The average smoker spends about $150 a month on cigarettes. Thats almost two thousand dollars a year! If youre tired of paying the price, call the Kansas Tobacco Quit Line. But Hellebust questions how many people are seeing that message.
The multi-state lawsuit settlement with the major tobacco companies provides almost double the amount of funding the CDC recommends for the states anti-tobacco programs.
But Kansas lawmakers decided in99 to devote most of that money to a special fund for early-childhood programsamp;things like early education, childrens mental health, and services for infants and toddlers with disabilities. That decision has the enthusiastic support of Shannon Cotsoradis, who heads the research and advocacy group, Kansas Action for Children.
I think there are a lot of reasons that it influences the childs life in a positive way. Were putting them in a positive, nurturing, supportive environment, Cotsoradis says. Theyre more likely to get access to things like health care and good nutrition, have positive adult role models. All of those things influence whether or not a child engages in risky behaviors in their adolescent years.
Cotsoradis says that means these programs make kids less likely to use tobacco, even if thats not the main focus of those dollars.
Kansas Secretary of Health and Environment Dr. Robert Moser supports using settlement funds for childrens programs. And he thinks its unlikely that Kansas will devote anywhere near $32 million dollars recommended by the CDC for tobacco prevention.
There are always things we can do with more dollars, but we live in a time where more dollars are not likely [to] be forthcoming, and so now we have to look at, you know, what interventions, what programs have been most effective, so that we focus on those, perhaps, as more higher priority than some others that maybe arent as effective, Moser says.
Danny McGoldrick, research director for the Campaign for Tobacco-Free Kids, argues that Kansas should raise its tax on tobacco a move that would garner more revenue for the state and would discourage smoking.
Its been ten years since Kansas raised its cigarette tax to 79 cents per pack. McGoldrick says the average nationally is $1.46.
The health care costs associated with smoking in Kansas are over $900 million, so when we invest in tobacco prevention, we not only pay for the program, but in the longer term we save health care dollars, he says.
Provided by Kaiser Health News.
Although the economic outlook remains uncertain, the gambling industry has come roaring back in months past. This is largely due to more hope over the health of the US economy and continued growth in disposable income in many key emerging markets around the globe. Beyond these factors, some of the key gambling cities in the world have seen continued growth as well, suggesting that the worst may be over for the industry.
In fact, despite the broad concerns over the health of the Chinese market, Macao, the only city in the country where gambling is legal, has seen gambling revenues continue to surge to end 2011. Revenues rose 42% to a record of $33.48 billion ensuring that the city continues to be a Mecca for the global gaming industry. Additionally, the upstart of Singapore is expected to see double digit revenue growth as well, further cementing its spot as the second biggest gaming market on Earth despite only having two casinos which have been in operation for less than two years. Yet even for those looking closer to home, in the traditional hotspot of Nevada, news has been pretty good as well. Gambling revenue increased by 7% in November, suggesting that the growth isnt limited to Asia alone (read Three Outperforming Active ETFs).
Even if the economy doesnt pick up, however, casinos could see growth from the opening up of a variety of new markets which could provide casinos with fresh consumers for their resorts. State and national governments are becoming increasingly desperate for new revenues to plug budget holes and allowing the construction of casinos is a pretty easy way to boost collections. Often times, governments dont have to spend anything they merely have to sanction the casinos, and given the broad aversion to spending cuts or tax increases this could be the way to go in the future (read Does Your Portfolio Need A Hedge Fund ETF?).
Already plans are in the works for multibillion dollar casino complexes in states such as Florida and New York, while smaller projects could be given the green light in states such as Ohio, Massachusetts, and a variety of others as well. The plans stretch beyond the US too, as there are reports of new casinos in a number of Asian markets including South Korea, Japan, and a few smaller, less developed nations as well, suggesting that the coming years could see high rates of expansion for the gaming industry, even if just a fraction of these proposals go through the legislative process.
GamingETF In Focus
Given these trends, some investors may want to consider making a bet on the continued resurgence of the sector in 2012 and beyond. For these investors, there is one ETF available that is a good proxy for the global industry; the Market Vectors Gaming ETF (BJK). This fund looks to track the S-Network Global Gaming Index, which is a ruled-based, modified cap-weighted, float-adjusted benchmark designed to give broad access to the global gambling industry. Currently, the fund charges investors 65 basis points a year in fees and holds 53 securities in total (read Top Three Consumer Staples ETFs).
In terms of country exposure, American firms dominate making up nearly 36.4% of total assets, by far the most for a single nation. Beyond the US, however, two Asian markets take the next spots with China (18.3%) and Malaysia (9.8%) rounding out the top three. Overall the exposure is pretty well spread out among countries and regions as Australia, the UK, Japan, and South Korea round out the top seven destinations. For individual securities, the most assets go towards Las Vegas Sands (LVS) with 15.3% of the total while Wynn Resorts (WYNN) and Genting comprise the rest of the top three, making up 7% and 6.4% of total assets, respectively.
While the winds may be ad the industrys back, investors should note that the sector is by no means without risks. Many casinos continue to struggle under heavy debt loads thanks to a pre-recession building boom and some have not yet recovered. Additionally, BJK has a beta of 1.3 suggesting that the fund can be far more volatile than the overall market. In fact, the funds best three month period saw a 50% gain while the worst three month period experienced losses of nearly 45%, showing just how quickly stocks in this sector can move (see ETFs vs. ETNs: Whats The Difference?).
Nevertheless, for investors who are encouraged by the plethora of casinos that could be opening up soon as well as strong revenue numbers from some of the top gaming destinations of the world, this could be an intriguing time to buy. The P/E of the fund is just 12.5 while the Price to Sales is 1.8, suggesting there could be some decent values in many of the securities in the fund. Add in a solid yield of over 2% and some risk-tolerant investors could hit the jackpot with this Van Eck ETF (read A Primer On ETF Investing).
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Author is long LVS.