Williamstown, MA, August 10, 2008 --(PR.com
)-- Don Dion, publisher of Fidelity Independent Adviser, and president of Dion Money Management, announced today that despite recent housing woes, PowerShares Dynamic Building & Construction (PKB) has maintained its momentum ranking in PowerShares Momentum Tracker (http://www.fidelityadviser.com/readMe_PS.asp).
“While real estate has been dismal as a whole,” Dion said, “PKB has been buoyed by several of its components.” While PKB faltered slightly on Dion’s Sector Momentum Table— from the 34th spot July 30 to the 36th spot August 6, PKB has improved dramatically in the last 6 months—having held the 51st spot on February 6.
News early this week did little to cheer housing investors.
On Monday, Aug. 4, WCI Communities Inc., chaired by Carl Icahan, filed for bankruptcy. “With Moody’s Investors Service predicting that June’s 2.4% default rate could rise to 5.4% by December,” Dion noted, “WCI may not be the last construction company to see its shares plummet.”
“While WCI is not among PKB’s 30 components,” Dion added, “PKB has certainly felt pressure from negative industry news over the past year.” On Dec. 24, 2007, PKB’s share price held at 18.77, before falling as low as 16.48 one month later. PKB has picked up the pace over the last month, however, with share prices rising more than 4% from July 8 to Aug. 4. http://www.fidelityadviser.com/readMe_PS.asp
“The key to PKB’s heartiness in difficult markets,” Dion said, “lies in its methodology and components.” PKB is designed to track the Building & Construction Intellidex Index. Components have to meet a variety of criteria: fundamental growth, stock valuation, investment timeliness, and risk factors.
“PKB is not solely concentrated in the housing sector,” Dion explained, “PKB’s top 10 holdings include home improvement giant Lowe’s, construction equipment manufacturer Caterpillar (CAT) and capital equipment manufacturer Terex (TEX).”
Dion believes that Terex could continue to boost PKB in the future. “With a $4.7 billion market cap and three year earnings per share growth of 37%, TEX’s bargain price might spur investors to scoop up shares,” Dion said. Terex’s recent earnings call revealed net income of $400 million from January through June in 2008, and that TEX’s strength in its crane manufacturing, materials processing, and mining will offset losses in construction.
Dion credits PKB’s momentum growth to several other top ten components, including Caterpillar (CAT) and Quanta Services (PWR). “PWR continues to be involved in wind energy development,” Dion noted, “if wind energy plans— like the Pickens Plan—move into construction stages, PWR—and subsequently PKB—stand to benefit.”
Will PKB’s performance continue to gain the fund momentum on Dion’s charts (http://store.fidelityadviser.com/pws1yr.html)? PowerShares’ website shows PKB’s index outperforming the S&P Super Composite Construction & Engineering Index by 12% and the S&P Super Composite Homebuilders Index by 59% as of Aug. 4, 2008.*
“While the housing market may struggle during the recovery process,” Dion noted, “some investors believe that now could be the time to invest in housing construction. An ETF, such as PKB, whose components are diversified, may boost returns for patient investors.”
* Source: PowerShares.com
Top 10 Holdings*
Quanta Services Inc. 5.40%
Fluor Corp. 4.78%
Lowe’s Cos. 4.69%
Caterpillar Inc. 4.57%
Jacobs Engineering 4.49%
Mohawk Industries 4.36%
Manitowoc Co. 3.66%
NCI Building Systems 3.60%
Terex Corp. 3.51%
*As of 8/1/08
PowerShares Momentum Tracker is a member of Fidelity Independent Adviser’s family of financial publications. With more than 70,000 subscribers in the United States and 29 other countries, Fidelity Independent Adviser publishes four monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers. http://store.fidelityindependentadviser.com/fidinadnew.html
Publisher Don Dion is also president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Massachusetts, Dion Money Management manages more than $700 million in assets for clients in 49 states and 11 countries. A licensed attorney in Massachusetts and Maine, Mr. Dion has more than 25 years’ experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management. http://www.dionmm.com/