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Warren Buffett’s Holding In Wells Fargo & Co. Is Approaching 10 Percent
March 28, 2016 — 5:00 AM PDT
Warren Buffett’s Holding In Wells Fargo & Co. Is Approaching 10 Percent, A Level At Which He’d Have to Pass A Federal Reserve Review To Keep Building His Stake. The Billionaire Oversaw About 506 Million Shares, Or 9.9 Percent, Of The Bank As Of Dec. 31, According To Regulatory Filings. Most Of The Stock was Held By Subsidiaries Of His Berkshire Hathaway Inc. The Ratio Has Steadily Climbed From 6.7 Percent At The End Of 2009 Because Of Buffett’s Stock Purchases And The Lender’s Buybacks…His Wells Fargo Stake Is Valued At More Than $24 Billion Based On The Bank’s $48.90 Closing Price Thursday. Almost All The Shares Were Accumulated At An Average Price Of $25.46 According To Omaha, Nebraska-Based Berkshire’s Annual Report.
Investors typically have to tell the Fed and the public before acquiring 10 percent ownership in a bank. It’s one of the requirements that regulators use to track and review who can control the nation’s lenders. The U.S. has long limited the ties between non-financial companies and banks.
Still, there are pledges that investors can make to show that they don’t plan to influence a bank or its management. In the 1990s, for instance, Buffett increased his holding in American Express Co. to more than 10 percent. At the time, he agreed to follow the credit-card lender’s recommendations in voting company shares. Berkshire made a similar commitment to the Federal Reserve, according to the lender’s proxy filing. Berkshire’s AmEx stake was about 16 percent as of Dec. 31.
Darren Gersh, a spokesman for the Fed, and Wells Fargo’s Mary Eshet declined to comment. Buffett didn’t respond to a request for comment.
Share Buy Backs
His Wells Fargo stake is valued at more than $24 billion based on the bank’s $48.90 closing price Thursday. Almost all the shares were accumulated at an average price of $25.46 according to Omaha, Nebraska-based Berkshire’s annual report.
Buffett is a long-time investor in the bank, and his holding got close to the 10 percent threshold in 2007. But his ownership share fell in the next two years, even as he added more stock, because San Francisco-based Wells Fargo issued billions of dollars in equity to help fund the Wachovia Corp. acquisition and then to rebuild capital after a U.S. bailout in the financial crisis. The bank accelerated buybacks in 2011 after markets rebounded.
Berkshire also owns retailers, manufacturers, electric utilities and BNSF, one of the largest U.S. railroads.This is How Financial Chaos Begins
This is How Financial Chaos Begins
by Wolf Richter • February 12, 2016
There are over $1.8 trillion of US junk bonds outstanding. It’s the lifeblood of over-indebted corporate America. When yields began to soar over a year ago, and liquidity began to dry up at the bottom of the scale, it was “contained.”
Yet contagion has spread from energy, metals, and mining to other industries and up the scale. According to UBS, about $1 trillion of these junk bonds are now “stressed” or “distressed.” And the entire corporate bond market, which is far larger than the stock market, is getting antsy.
The average yield of CCC or lower-rated junk bonds hit the 20% mark a week ago. The last time yields had jumped to that level was on September 20, 2008, in the panic after the Lehman bankruptcy, as we pointed out. Today, that average yield is nearly 22%!
Today even the average yield spread between those bonds and US Treasuries has breached the 20% mark. Last time this happened was on October 6, 2008, during the post-Lehman panic:
At this cost of capital, companies can no longer borrow. Since they’re cash-flow negative, they’ll run out of liquidity sooner or later. When that happens, defaults jump, which blows out spreads even further, which is what happened during the Financial Crisis. The market seizes. Financial chaos ensues.
It didn’t help that Standard & Poor’s just went on a “down-grade binge,” as S&P Capital IQ LCD called it, hammering 25 energy companies deeper into junk, 11 of them into the “substantial-risk” category of CCC+ or below.
Back in the summer of 2014, during the peak of the wild credit bubble beautifully conjured up by the Fed, companies in this category had no problems issuing new debt in order to service existing debt, fill cash-flow holes, blow it on special dividends to their private-equity owners, and what not. The average yield of CCC or lower rated bonds at the time was around 8%.
Today the scenario is punctuated by defaults, debt restructurings with big haircuts, and bankruptcy filings. These risks had been there all along. But “consensual hallucination,” as we’ve come to call the phenomenon, blinded investors, among them hedge funds, private equity firms, bond mutual funds for retail investors, and other honorable members of the “smart money.”
But now that they’ve opened their eyes, they’re running away. And so the market for new issuance is grinding down.
“Another tough week,” S&P Capital IQ LCD said on Thursday in its HY Weekly. There was one small deal earlier this week: Manitowoc Cranes’ $260 million B+ rated second-lien notes that mature in 2021 sold at a yield of 14%!
The M&A-related bond issue by Endurance International Group couldn’t be syndicated and ended up on the balance sheets of the underwriters. LeasePlan has a $500 million deal on the calendar. If it goes today, it will bring the total this week to a measly $760 million, down 90% from the four-year average for the second week in February. According to S&P Capital IQ LCD, it would be “the lowest amount of early-February issuance since the credit crisis in 2009.”
In the secondary market, where the high-yield bonds are traded, it’s equally gloomy. S&P Capital IQ LCD:
The market was hit hard again this week amid solid volume trading as oil prices plunged anew. There was a meager attempt at stability on Wednesday, but some participants described it as similar to the calm at the eye of a hurricane.
That proved true today, as markets fell further. There was red across the board with losses in dollar terms ranging 1–5 points, depending on the credit and sector. The huge U.S. Treasury market rally gave no technical support, even as the yield on the 10-year note, for one, pierced 1.6%, a 4.5-year low.
And retail investors are catching on.... <<<<<< N.B from Jumbotweet: auto-truncated at 4K characters on index page - Click here or on the "view" link to see entire jumbotweet! http://www.jumbotweet.com/ltweets/view/138738- https://www.youtube.com/watch?v=TYlx3ltSqdM
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FOMC MINUTES (Released February 18, 2015)
FOMC MINUTES
Release Date: January 28, 2015
(Released February 18, 2015)
For immediate release
Information received since the Federal Open Market Committee met in December suggests that economic activity has been expanding at a solid pace. Labor market conditions have improved further, with strong job gains and a lower unemployment rate. On balance, a range of labor market indicators suggests that underutilization of labor resources continues to diminish. Household spending is rising moderately; recent declines in energy prices have boosted household purchasing power. Business fixed investment is advancing, while the recovery in the housing sector remains slow. Inflation has declined further below the Committee’s longer-run objective, largely reflecting declines in energy prices. Market-based measures of inflation compensation have declined substantially in recent months; survey-based measures of longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate. The Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced. Inflation is anticipated to decline further in the near term, but the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of lower energy prices and other factors dissipate. The Committee continues to monitor inflation developments closely.
To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy. However, if incoming information indicates faster progress toward the Committee’s employment and inflation objectives than the Committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated. Conversely, if progress proves slower than expected, then increases in the target range are likely to occur later than currently anticipated.
The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.
When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal... <<<<<< N.B from Jumbotweet: auto-truncated at 4K characters on index page - Click here or on the "view" link to see entire jumbotweet! http://www.jumbotweet.com/ltweets/view/85460Shop for the perfect #Valentines gifts for the ones you love at the Wynn and Encore Esplanades.
Shop for the perfect #Valentines gifts for the ones you love at the Wynn and Encore Esplanades. Specialty boutiques and the most sought after brands and designers like Manolo Blahnik, Chanel and Rolex will help you beautifully express your affection.What These Banks Learned About Wearable Devices, Augmented Reality
What These Banks Learned About Wearable Devices, Augmented Reality
by PENNY CROSMAN, AUG 8, 2014 3:48pm ET
When Westpac New Zealand recently took its Google Glass app on a road show to branches up and down the country, customer reactions took the bankers by surprise.
For example, customers were not as interested in using voice commands with wearable computers as expected. Many in the U.S. feel that voice commands are going to be the feature that makes wearables supremely useful, and Westpac's Google Glass app is set up so the user can ask things like, "What's my balance?" out loud.
"What we've found is that people want to be able to swipe and touch rather than have voice commands, which was a really interesting insight, because people are quite personal and particular about their finances," said Simon Pomeroy, chief digital officer for the Auckland-based bank "If we're talking to someone from our bank, we would do it in a more private space. It started telling us that voice commands were good for certain things but tap commands and swipe commands were better for other things." The bank is backing off from voice recognition for now.
Westpac's experiments in letting people bank using Google Glass, smartwatches and augmented reality are a test case from which others could learn, at a time when many believe wearables are about to become mainstream and banks can't afford to lose customers to faster adopters. U.S. Bank in Minneapolis and an Australia bank have also tried out these emerging technologies and shared some of their early findings.
Test participants in Westpac's pilots have liked the speed and ease of use of Google Glass, Pomeroy said.
"The initial reaction of everybody is 'this looks quite gimmicky,'" he said. "But as soon as those glasses go on, people's perception changes in a strange way. The first thing they say is 'wow.' The second thing people do is try to get themselves into this new routine of tapping and talking. But it's amazing how after just a minute with Glass on, people get very comfortable very quickly."
One aim of Westpac's digital banking strategy is to make it so that a customer is never more than a click away from a person at the bank. That includes wearables.
"You might start in a digital world, say, 'Call Simon my banker,' and someone pops up in a corner of the screen to have a conversation with you as you go," Pomeroy related.
The bank has also been testing an app that lets people check their bank account balances from a Sony smart watch and is in the final stages of working on a Samsung version. So far, the adoption has been slow - only a few hundred people have downloaded the smart watch app. Pomeroy expects those numbers to tick up as smart watches become more popular.
Dominic Venturo, chief innovation officer at the $367 billion-asset U.S. Bank, which has also conducted smartwatch pilots, takes a rather dim view of wearables. "You have to look at the use cases," he said. "Pushing alerts [to wearables] makes sense. Anything more complicated, probably not."
He saw more potential in augmented reality, a technology Westpac is also working on. AR provides a kind of digital annotation for real-world objects by overlaying data on the screen of a device. A bank customer walking down the street could see a map of nearby ATMs and branches overlaid on the surroundings.
"We've found value in the augmented reality space with our Find US branch and ATM locator, which we launched just over two years ago," Venturo said. AR could similarly help with "Find US Offers," a location-based discount finder program the bank is piloting. It gives the user the option to seek discounts from participating nearby merchants with the click of a button.
The technology can be useful in dense urban... <<<<<< N.B from Jumbotweet: auto-truncated at 4K characters on index page - Click here or on the "view" link to see entire jumbotweet! http://www.jumbotweet.com/ltweets/view/85105Why Banks Should Experiment More with Wearable Computers
Why Banks Should Experiment More with Wearable Computers
by PENNY CROSMAN, AUG 5, 2014 3:02pm ET
With a storm of new wearable computing devices expected to hit this fall, including Apple's iWatch, banks ought to be investing in and experimenting more with the technology, some say.
Wearables lend themselves well to quick banking updates, such as fraud alerts and balance checks, and simple transactions like funds transfers. They're also expected to work well with voice-activated banking, in which customers verbally ask their bank for information or make a simple request, a la Apple's Siri personal assistant. And the devices are gaining popularity — Generator Research projects 8.9 million smart watches will ship worldwide in 2014 and that the number will climb to 214 million in 2018.
"Our conclusion is that you need to start thinking about this now, and if you're an innovative bank you need to decide where you're going to start experimenting," said Mark Schwanhausser, director of omnichannel financial services at Javelin Strategy & Research. "It's still very much a Wright Brothers experiment on a sand hill."
Charaka Kithulegoda, chief information officer of Tangerine Bank in Toronto, is one of the early experimenters. "Smart watches, fitness wristbands, smart glasses — wearable technology is everywhere, so why not banking?" he said. "We see a lot of potential with this technology, especially with the voice control and notification features."
Tangerine, formerly known as ING Direct Canada, is a direct bank with $38 billion in assets. It is piloting wearable apps and hopes to put them in clients' hands — or, rather, on their wrists -in the next few months.
"It fits in perfectly with what we believe in: providing our customers the ability to bank where they want, when they want and how they want," Kithulegoda said.
Few would dispute that wearable computing is poised for greater adoption.
"Wearables are the next wave, or I should say tsunami, in mobile computing and have already become part of the mainstream," Kithulegoda said by email. "Wearables stole the show at this year's Consumer Electronics Show and we're about to see a huge shift in technology. I personally don't go anywhere without my Fitbit. With the imminent release of Apple's iWatch, we're already seeing the capabilities that make wearables must-haves — technology that is relevant, affordable, user-friendly and contextual."
Consumers will be introduced to wearable computing at an "alarming" rate by the summer of 2015, according to Chris Dancy, founder of technology consultancy ServiceSphere, noting that Apple and Google have announced devices in their fall 2014 releases that will include health and environmental apps. Both companies obviously know how to achieve mass adoption for their products.
Schwanhausser sees potential for wearable computers to take off the way the iPhone did when it debuted in 2007.
"Everybody up to a certain point was skeptical: why would I even need one of these things?" Schwanhauser said of the early iPhone days. At some point, there will be enough practical elements to wearables that the question will change to, "How do I live without one?" he said.
Part of the iPhone's usefulness stemmed from the fact that it packed a bunch of devices and into one — phone, text messaging device, camera and music player. "What combination of tools will make wearables as much of a must-have as the iPhone was in 2007?" Schwanhausser wonders.
Of the wearables out there today, smart watches have the advantage, Schwanhausser said. "There are immediate things you can be doing relatively inexpensively even as a financial institution," such as sending customers alerts and letting them give instructions to the app by voice, hands-free.
U.S.... <<<<<< N.B from Jumbotweet: auto-truncated at 4K characters on index page - Click here or on the "view" link to see entire jumbotweet! http://www.jumbotweet.com/ltweets/view/85104Google Glass Is Dead, But No Regrets for Bankers Who Tested It
Google Glass Is Dead, But No Regrets for Bankers Who Tested It
by MARY WISNIEWSKI, FEB 5, 2015 2:04pm ET
Time labeled the device as one of the inventions of the year in 2012. Others likened it to a Segway on a person's face.
But on Jan. 19, Google quietly suspended selling Google Glass to consumers while continuing to support Glass as an enterprise product.
A handful of banks like Tangerine, Wells Fargo, Westpac and U.S. Bank were testing the eyewear that doubles as a computer to better understand a category projected to take off: wearable devices. Though Google Glass has expired, bankers said those efforts were time well spent.
"The announcement by Google has no effect on how we see the wearable computing space evolving," said Dominic Venturo, U.S. Bancorp's chief innovation officer, told American Banker. "The future remains to be seen; and we expect wearables will play important, yet special-purpose, roles in that future."
Many continue to see a future in wearable technology. The tech research firm Gartner expects sales of fitness wearable devices alone will reach 200 million units per year in 2020. And Apple's new Apple Watch could also boost sales of wearable technology.
For banks, there's often no way of knowing which emerging technology will take off, take a pause, or terminate. But there's still value in testing them, observers said, helping institutions to think about the types of features that may be possible in the future.
"It's important for banks to play with technology but not get wedded to a certain device," said Stessa Cohen, research director at Gartner.
Tangerine, formerly ING Direct Canada, viewed Google Glass as part of the new wave of wearable smart technology that includes smart watches and fitness trackers.
The Canadian bank looked at Glass for alerting and allowing users to check balances and transfer funds with voice commands. Tangerine was also experimenting with using the camera to deposit checks or pay bills in addition to using location-based services for finding automated banking machines.
But the company thinks all those uses could be applied to other devices.
"We think that wearables could represent what the future of banking might look like and we will continue to develop these same types of features for other wearable devices such as smart watches or smart fridges or the next version of Google Glass," wrote Charaka Kithulegoda, chief information officer at Tangerine, to American Banker.
Glass' suspension does not change Tangerine's strategic plans.
"The wearables revolution is fueling innovation and the learnings and experiences developing for Google Glass were invaluable and taught us a great deal," wrote Kithulegoda. "For us, it's not about the device, it's about our customer-centric and multi-channel approach to providing our clients with rich and contextual banking experiences through continuous experimentation."
Westpac also learned from its Glass app experience. When Westpac trailed customers across New Zealand to understand their preferences, it discovered they prefer using swipe over voice-activated services for everyday banking, said spokesman Chris Mirams.
Bankers' reactions underscore a message that industry analysts have been touting: banks should test experiences that can translate well to other products.
"It's a complete mistake to wait for a product and live or die by whether the product worked," said Mark Schwanhausser, director of omnichannel financial services at Javelin Strategy & Research. "The idea is to think about the capabilities."
Biometrics and push alerts are two features analysts and bankers believe would translate well into many wearable devices, including the Apple Watch.
Gartner's Cohen is not in favor of the vision of putting... <<<<<< N.B from Jumbotweet: auto-truncated at 4K characters on index page - Click here or on the "view" link to see entire jumbotweet! http://www.jumbotweet.com/ltweets/view/85103Morgan Stanley Shops OIL STORAGE UNIT Again
Morgan Stanley Shops OIL STORAGE UNIT Again
By Justin Baer & Christian Berthelsen, Feb. 02, 2015
The Collapse of the OIL Market has dragged down prices across the Energy Sector. One exception is the price Morgan Stanley is seeking for its OIL TRADING & STORAGE business, which could profit from the recent slide. The New York Bank, who's deal to sell the division to Russian Energy firm OAO Rosneft for several hundred million dollars was scuttled last month, is seeking a simular price for the business this time around, according to people familiar with the matter. Australian Bank Maquarie Group Ltd. and private equity firm KKR & Co. have emerged as early contenders to acquire the unit, the people said. OIL Storage facilities are among the collection of assets Morgan Stanley is looking to sell as it scales back its commodities business. Prices for storage have been surging amid the steep decline in the commodity itself, as traders hoard crude at currently cheap rates and stash it away for sale when the market eventually recovers.
Analysts say the amount of OIL stored in such trades has jumped to millions of barrels, and traders who deal in the physical OIL Market say prices for Land Storage have been on the rise roughly doubling since last fall. "Anyone who owns storage potentially has a license to print money," said Stephen Schork, president of OIL research consultancy Schork Group in Villanova. Pa. "if you have those assets in this market structure you're in a very advantageous position, and it gives you a lot of leverage in your negotiations." The sale process remains at an early stage, and a deal isn't imminent. Other would be buyers have also expressed interest in the unit, the people said. Morgan Stanley's agreement with Rosneft-which fell apart amid political tensions between U.S. and Russian authorities had included Morgan Stanley's OIL Storage business, agreements covering the sale, purchase and supply of OIL, an inventory of the commodity and various other investments. Morgan Stanley had also planned to transfer its 49% stake in Heidmar Holdings LLC, an operator of OIL Tankers, as part of the deal.
When Morgan Stanley was forced to unwind the Rosneft deal after failing to win the U.S. government's approval, Macqarie emerged quickly as a potential replacement. By Dec. 22, or two days after Morgan Stanley's contract with Rosneft expired, the bank had conveyed its interest. The Wall Street Journal reported last month.
Since then, Morgan Stanley's named new leadership to run it's commodities division after one co-head, Simon Grreenshields, quit the firm and another moved to take an advisory role. Wall Street Banks, including Morgan Stanley and J.P. Morgan Chase & Co., have moved to shed businesses that store or transport commodities amid pressure from U.S. Regulators and politicians. Concerned the assets may pose dangers to the markets or the banks themselves, the Federal Reserve is weighing whether to restrict these activities. Last year a Senate subcommittee published a report critical of Wall Street's biggest commodity traders, including Morgan Stanley. Macquarie is a commodity-focused bank with offices in the U.S. and 27 other countries. It's Energy-Trading Group operates from cities including Houston, New York and Singapore, and it already has a footprint in physical markets for OIL, Natural Gas, Power and Coal. KKR has shown interest in commodity assets before. in 2013, it was part of a joint bid for the physical commodity trading assets being sold by J.P. Morgan. Last month, one of its subsidiaries announced a plan to launch a joint venture that will pump capital into the commodities industry.
J.P. Morgan ultimately reached a deal to sell the assets to Mercuria Energy Group Ltd. Morgan Stanley executives have stuck with plans... <<<<<< N.B from Jumbotweet: auto-truncated at 4K characters on index page - Click here or on the "view" link to see entire jumbotweet! http://www.jumbotweet.com/ltweets/view/85038- -- Too late, this Jumbotweet has auto-destructed --
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George Soros May Be In A Car Race With Warren Buffett
George Soros May Be In A Car Race With Warren Buffett
by Ben Geier @ben_geier JANUARY 26, 2015, 11:52 AM EST
The investor and philanthropist’s representatives were at last week’s National Automotive Dealers Association conference looking for potential deals, a report says.
Another octogenarian billionaire is reportedly considering getting into the auto dealership business.
Trade magazine Automotive News reported Monday that Soros Fund Management, run by the investor and philanthropist George Soros, sent representatives to last week’s National Automotive Dealers Association conference in San Francisco over the weekend to research the industry and find potential investing opportunities.
If Soros goes through with his reported plan to get into the automotive retailing space, he would have a rival in Warren Buffett, who purchased the Van Tuyl dealership group last year.
Soros is interested in the car business as a way to diversify his fund’s holdings and cash flow opportunities, and buying a large dealership group was one option, sources told Automotive News.
Soros Fund is in talks with an undisclosed number of dealership groups and has proposed “different transactions to different people,” the publication said, citing one of the sources.
If Soros chooses to follow Buffett into the auto dealership business, he’ll be getting into an industry undergoing huge changes.
Smaller dealerships like the ones operated by Tesla look to become more and more popular — evidenced just last week when Cadillac announced it is pushing for some dealerships to create boutique-style showrooms. Technology is also changing the game, with online shopping changing the way people shop for cars.
Outside of the investing world, Soros is known for his politics and philanthropy. He is a supporter of left wing and progressive causes, particularly his activism against President George W. Bush last decade.Why Caterpillar's Dismal Earnings Spell Trouble For The Global Economy
Why Caterpillar's Dismal Earnings Spell Trouble For The Global Economy
by Chris Matthews @crobmatthews JANUARY 27, 2015, 12:20 PM EST
Caterpillar’s performance is often seen as a gauge of the health of the global economy. By that measure, things aren’t looking too good.
The American consumer may be rejoicing over the dual tailwinds of cheap gas prices and falling unemployment, but much of Corporate America isn’t so sanguine.
On the same morning that the Conference Board announced that consumer confidence reached its highest level since August 2007, the stock market took a nose dive, driven by disappointing earnings announcements by big-name companies like Caterpillar CAT -0.01% and Dupont DD 1.39% , and downbeat outlooks from the likes of Pfizer PFE -0.38% and Bristol-Myers Squibb BMY -0.31% .
The missed earnings and revised expectations are due in part to a rapidly appreciating dollar, which is being driven up by the relative strength of the U.S. economy as well as the announcement of central bank bond buying in Europe. A more expensive dollar means that U.S. companies are less competitive abroad.
But Caterpillar in particular has been negatively affected by the sharp drop in the price of oil and other commodities. The drops have led energy and mining companies to reduce their investment in the kind of accounts for the bulk of Caterpillar’s sales.
The disappointing news can also be hung on the fact that the rest of the world’s economic outlook isn’t nearly as rosy as it is in the U.S. Both China and Europe have recently reduced their growth forecasts. Meanwhile, emerging markets like Brazil, Turkey, and Russia are reeling amid falling oil prices and whipsawing foreign investment.
In a press release this morning, Caterpillar Chairman and CEO Doug Oberhelman said that the sharp decline in the price of oil is the single biggest factor contributing to its prediction that sales will fall roughly 9% in 2015.
But the company did not discount the impact of falling prices in other commodities, in addition to slow growth in Europe, and relatively slow growth in China.
“We’re not seeing any decent growth out of Europe,” said Mike DeWalt, a Caterpillar vice president said in a conference call this morning with analysts. “The developing countries like Brazil and China, are, shall we say, challenged.”
It’s important to remember that the decline in the price of oil is partly due to slower growth abroad and in China in particular.
Caterpillar’s performance is often seen as a gauge of the health of the global economy because it sells the sort of equipment—construction and mining—that functions as an engine of global economic growth. Caterpillar’s diminished outlook suggests the potential for trouble ahead.
The U.S. economy, by contrast, is not highly dependent on sales abroad—U.S. GDP is composed of just 10% exports, while consumer spending makes up north of 70%. So, while weakness abroad certainly isn’t good for the American economy and it is a bad sign for export-heavy companies like Caterpillar, it’s not something that should worry most workers or business owners stateside.
In the U.S., strong job and GDP growth, low inflation, and the jolt of cheap energy prices should all conspire to make 2015 the strongest year yet in the economic recovery. As long as Europe is able to muddle along and China’s growth doesn’t drop off the table too sharply, the struggles abroad will likely steer clear of America’s shores.Volcker What? JPMorgan Mints $300 Million Trading Swiss Francs
Volcker What? JPMorgan Mints $300 Million Trading Swiss Francs
by Stephen Gandel @stephengandel JANUARY 29, 2015, 11:46 AM EST
Banks are finding their way around the Volcker Rule in some unexpected ways. JPMorgan’s recent windfall off the Swiss franc—and Citi’s loss—is testament to that fact.
JPMorgan is also finding its way around the Volcker Rule.
Earlier this month, traders at the nation’s biggest bank made $300 million in one day, following news that the Swiss central bank was taking its cap off the franc. That caused the currency to soar, and JPMorgan JPM 1.68% traders took the move, literally, to the bank.
If you have been following financial regulation since the financial crisis—and who hasn’t—or even just read the headlines, this might seem odd. One of the concerns after the financial crisis was that banks were taking too much risk, particularly with government-backed consumer deposits. So, as part of the Dodd-Frank reform law, Congress passed the Volcker Rule, which bans banks from engaging in risky trading. Presumably, this rule would make big paydays like a $300 million gain on a 30% move in the franc not possible.
It was clear from the start that the Volcker Rule had some very large loopholes. But recently, banks are finding their way around Volcker in some unexpected ways. Last week, The New York Times reported that Goldman Sachs was “on a shopping spree with its own money,” buying up mostly commercial real estate but also pieces of some private equity-type investments. But it wasn’t an official private equity fund, so it’s okay.
There’s trading, and then there’s trading. The Volcker Rule was not supposed to stop banks from executing client transactions, which is trading, but supposedly the good, not so risky, kind. But allowing that kind of trading and not the other risky, bad kind was always the big problem with the Volcker Rule. Nearly every bank has announced that they are shutting down their proprietary trading desks, which might give you the impression that the Volcker Rule is working. But JPMorgan made $2.5 billion in fixed income revenue in the last three months of 2014 alone, which seems like an awful lot of money from just doing good, risk-less trading.
JPMorgan could claim that they made the $300 million from collecting commissions on client trades. Matt Levine of Bloomberg ran the math and says it’s possible, but unlikely. But that doesn’t explain what happened to Citigroup C 1.08% , Deutsche Bank, and Barclays. Those banks lost a total of about $400 million on moves related to the Swiss franc. Clearly, that bank was risking some money in the market.
None of this likely breaks the Volcker Rule, at least not directly. The rule has a loophole that allows banks to trade currencies, but only in the spot market, which is day-to-day trading. Banks are not allowed to buy futures contracts, which involve more leverage, and typically more risk.
But banks still have to make money, and they typically want to make as much as they can. So they are taking much large positions in seemingly safer markets, and trades. Given that JPMorgan made $300 million, it likely had about $1 billion riding on a rising Swiss franc. Citigroup had more betting the opposite way. According to Citi’s last quarterly statement, it believed the most it was likely to lose based on its position on any one day in the currency market was $32 million. JPMorgan put its currency trading risk at just $8 million a day.
But as a few weeks ago showed, these currency markets weren’t as safe as they seemed. The result was a bigger than expected loss for Citi, Barclays, and Deutsche—and the opposite for JPMorgan. The Volcker Rule has limited the amount of risk banks can take, but it hasn’t eliminated it. It’s not clear the banks know... <<<<<< N.B from Jumbotweet: auto-truncated at 4K characters on index page - Click here or on the "view" link to see entire jumbotweet! http://www.jumbotweet.com/ltweets/view/84831FOMC Fed's Monetary Policy Statement January 28, 2015
FOMC
Fed's Monetary Policy Statement
Release Date: January 28, 2015
For immediate release
Information received since the Federal Open Market Committee met in December suggests that economic activity has been expanding at a solid pace. Labor market conditions have improved further, with strong job gains and a lower unemployment rate. On balance, a range of labor market indicators suggests that underutilization of labor resources continues to diminish. Household spending is rising moderately; recent declines in energy prices have boosted household purchasing power. Business fixed investment is advancing, while the recovery in the housing sector remains slow. Inflation has declined further below the Committee’s longer-run objective, largely reflecting declines in energy prices. Market-based measures of inflation compensation have declined substantially in recent months; survey-based measures of longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate. The Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced. Inflation is anticipated to decline further in the near term, but the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of lower energy prices and other factors dissipate. The Committee continues to monitor inflation developments closely.
To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy. However, if incoming information indicates faster progress toward the Committee’s employment and inflation objectives than the Committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated. Conversely, if progress proves slower than expected, then increases in the target range are likely to occur later than currently anticipated.
The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.
When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal... <<<<<< N.B from Jumbotweet: auto-truncated at 4K characters on index page - Click here or on the "view" link to see entire jumbotweet! http://www.jumbotweet.com/ltweets/view/84799NOMINATIONS OPEN FOR EUROPEAN FAMILIES IN BUSINESS AWARDS 2015
NOMINATIONS OPEN FOR EUROPEAN FAMILIES IN BUSINESS AWARDS 2015
7 JANUARY, 2015 05:19 PM
Campden Wealth is pleased to announce that nominations have opened for its European Families in Business Awards 2015.
The fourth annual award ceremony, held in association with Societe Generale Private Banking, is due to take place in Rome on 23 June. The gala event will celebrate family businesses and their leaders that display the best virtues for successful enterprises: stability, longevity and sustainability.
The six categories this year, including a new award Top Next Generation Entrepreneur, are:
Top family business
Top family business leader
Top family business rising star
Top next generation entrepreneur
Top non-family director
Top sustainable business
The selection process will begin by offering the readership of CampdenFB the opportunity to propose top companies/leaders in each category. Click here to vote.
A team of senior business school professors and CampdenFB’s editor will then decide a shortlist, which the eventual winners will be selected from. The judges will look at the performance of the companies/individuals in each category and commitment to the family business model.
Nicholas Moody, editor of CampdenFB and member of the judging panel, said: “We’re excited to be celebrating the fourth year of our European Families in Businesses – which champions those truly innovative and enterprising businesses that are powering the European economy.
“We know there are many fascinating businesses out there that deserve their time in the limelight so we’re calling on all readers to get involved by sending in your nominations by the end of February”.
The event is being held in conjunction with Campden Wealth’s European Families in Business Conference, which features a range of high-profile family speakers including Marco Emilio Lavazza, vice president of Italian coffee manufacturer Lavazza SpA, Anna Fendi and Philippe Lacoste.
Public nominations will remain open on the awards site for the next seven weeks, closing on 27 February.
For more information on the categories and nomination criteria click here, email: fb@campdenwealth.com or phone +44 (0)20 3763 2805.- POHLAD FAMILY OFFICE SNAPS UP MAJORITY STAKE IN POLAROID
9 JANUARY, 2015 09:06 AM | BY MICHAEL FINNIGAN
A majority stake in Polaroid, a brand synomymous with the instant photography market, has been bought by US single family office Pohlad Family Capital Fund for $70 million (€59.3 million).
A federal bankruptcy judge approved the deal last week, according to The Star Tribune, which sees the Pohlad family and an undisclosed partner take a 65% stake.
The announcement just one week after the Pohlad family, which has been associated with financial services for the last 60 years, sold the financial arm of its business portfolio for $182.5 million.
Chief investment officer at Pohlad-owned Marquette Companies Jann Ozzello Wilcox said: “This transaction presents us with the opportunity to capitalise on what we see as a strong, strategic growth opportunity and to contribute to the compelling resurgence of Polaroid.”
“The management team of Polaroid is exceptional and we are pleased to partner with other investors – some new, and some existing – that bring additional expertise beyond our own.”
Pohlad Companies was founded in the 1950s by family patriarch Carl Pohlad, who died in 2009 with an estimated net worth of $3.6 billion, according to the Forbes rich list. The self-made billionaire grew his small financial services firm to an enormous conglomerate with more than 30 businesses in the fields of real estate, entertainment and sport.
Polaroid, on the other hand, filed for bankruptcy in 2001, having failed to adapt to the emerging digital camera market, racking up more than $1 billion in debt in the process. The firm was subsequently restructured by its new owners but once again filed for bankruptcy in 2008.
President and CEO of Polaroid Scott W Hardy said about the transaction: ”We are very excited about this deal and what it means for Polaroid in 2015 and beyond. The addition of these new investors to the ownership group will bring stable family capital to the Polaroid brand over the long-term”.
The camera maker said the transaction marks the next phase in the company’s evolution after a successful five-year effort to re-establish Polaroid as the preeminent brand for instant photography and related consumer electronics. STAR POWER: APL.DE.AP ON EDUCATION-BASED PHILANTHROPY
STAR POWER: APL.DE.AP ON EDUCATION-BASED PHILANTHROPY
13 JANUARY, 2015 10:31 AM | BY DANIEL BARDSLEY
Apl.de.ap wants to improve educational outcomes for Filipino children through his philanthropic foundation
Credit: Press Association
By any standards, it is a remarkable achievement to co-found a multi-million dollar selling international pop act that wins half a dozen Grammy awards. To do this when you have a severe sight problem, nystagmus, and after you were brought up as one of seven children by a single mother in the Philippines, is little short of extraordinary.
Inspired by his own life story, which saw him adopted to a US home and go on to achieve fame and fortune with the Black Eyed Peas, rapper and record producer Allan Pineda, better known as Apl.de.ap, now runs a philanthropic foundation in the hope of helping others in the country of his birth escape poverty.
The Apl.de.ap Foundation builds classrooms in the belief that education is a means for young Filipinos to better themselves.
“Education is a ticket, a way out of poverty … [but] that’s one of the things in the Philippines: the shortage of classrooms. Kids are still studying under trees,” says Apl.
“It’s really important to give other people a chance in life and an opportunity … It will make you feel better than all the success you have had.”
The organisation has built 14 classroom’s in Apl’s home province of Pampanga, is constructing more in Zamboanga in the southern island of Mindanao and has been training teachers to help children traumatised by Typhoon Haiyan, which devastated parts of the Philippines late last year.
The foundation is also training Philippine medical staff to diagnose and treat retinopathy of prematurity, a sight condition that affects many babies in the country.
Funds are raised through concerts, and the foundation has collaborations with a number of other charities. “To me it’s simple. Let’s get together, play some music and help some people,” says Apl.HYUNDAI LOOKS TO PLAN B FOR SUCCESSION PLANNING AFTER FAILED SHARE SALE
HYUNDAI LOOKS TO PLAN B FOR SUCCESSION PLANNING AFTER FAILED SHARE SALE
13 JANUARY, 2015 12:39 PM | BY JESSICA TASMAN-JONES Credit: Press Association
A $1.25 billion (€1.06 billion) share sale at a subsidiary of South Korean family-owned conglomerate Hyundai has flopped, potentially stalling succession between the second and third generations. Despite a discount on the share price of up to 12%, the Chung family failed to reduce its 43% in Hyundai Glovis, the group’s logistics subsidiary. Analysts believe there were two motivating factors behind the block deal: to overcome new tax laws; and to provide heir apparent Chung Eui-sun, 44, the funds to foot a 50% tax bill when he inherits control of the business. It has been widely reported that the younger Chung wishes to increase his stake in Hyundai Mobis that acts as the unofficial holding company for the group. The younger Chung is currently vice-chairman of Hyundai Motors, while his father, second-gen Chung Mong-koo, 77, is chairman. Antitrust laws introduced in February last year require South Korean families to pay extra tax when companies in which they own more than 30% of stock benefit from intra-group deals. The Chung family wanted to reduce its stake to 29.99%. Hyundai says it has no current plans to revive the share sale. Chaebol, the country’s family-owned conglomerates, suffer a bad reputation, largely because of their anti-competitive nature, which flourishes in their complex ownership structures. South Korean president Park Geun-hye, who assumed office in early 2013, made an election pledge to crack down on corruption among the family-owned corporations. Chaebol have come under the spotlight in the last month due to an outburst from Hanjin Group third-gen Heather Cho, who urged a Korean Air flight to return to the dock when she was served macadamia nuts in a bag rather than on a plate. Her behaviour was seen as emblematic of the sense of entitlement felt by many chaebol next gens.MESSY DIVORCE FOR WALMART HEIRESS
MESSY DIVORCE FOR WALMART HEIRESS
24 APRIL, 2014 12:37 PM | BY TESS DE LA MARE
Paige Laurie is facing a tough divorce battle
A third gen of the Walmart dynasty is facing a difficult divorce from her husband of six years, after filing a civil lawsuit claiming he stole money from her during their marriage.
Paige Laurie is divorcing her husband Patrick "Bo" Dubbert citing irreconcilable differences, but also lodged a civil suit on the grounds he siphoned cash from a business they operated together.
Laurie, the granddaughter of Bud Walton, the brother of Walmart founder Sam Walton, and Dubbert owned a shopping centre in Malibu that Dubbert managed.
According to website TMZ, Laurie alleges Dubbert convinced her to let him hire a friend as a co-manger, the pair then declared themselves general contractors and upped their salaries from $15,000 (€11,000) a month to $70,000.
She also claims Dubbert paid himself an additional $250,000 a year to manage the shopping centre on top of his other fees.
To add insult to injury, Laurie signed a prenuptial agreement prior to her wedding in 2008, which gave her husband, whom she met in high school, the right to spousal support if they ever divorced.
Laurie is the only child of Nancy Walton Laurie. Her mother and her aunt, Ann Walton Kroenke, together own a Walmart stake worth more than $6 billion.
The family caused controversy in 2004 by paying $25 million to have the naming rights for the new basketball arena at the University of Missouri, naming it the Paige Sports Arena, despite the fact she had never attended the university and had graduated from the University of Southern California.
In 2005, Laurie returned her communications degree to her alma mater, after her former roommate told US news show 20/20 that she had been paid over $20,000 over four years to do Laurie's homework for her.
Her parents agreed to allow the University of Missouri to rename its basketball arena the Mizzou Arena after the university's nickname.
The Walmart retail empire has created some of the world's biggest fortunes – Laurie's cousin by marriage Christy Walton is the world's wealthiest woman, with a net worth of $38.5 billion, while Jim, Alice and S Robson Walton all weigh in at the top end of the Forbes Rich List with multi-billion dollar fortunes.WOMEN POORLY REPRESENTED ON FAMILY BUSINESS BOARDS IN EUROPE
WOMEN POORLY REPRESENTED ON FAMILY BUSINESS BOARDS IN EUROPE
16 DECEMBER, 2014 04:49 PM | BY HARRIET MALLINSON
Women make up only 16% of family business boards in Continental Europe’s four largest economies, and only 10% of boards in Germany, new research has revealed.
The 2014 Survey of Corporate Governance Practices in European Family Businesses examined board composition, board efficiency, succession planning and chief executive/chairman demographics.
Supervised by IESE’s family-owned business chair Josep Tapies, the report surveyed some of the largest family businesses in France, Germany, Italy and Spain.
According to the survey, gender diversity was low within family-controlled boards: 25% in France, 17% in Spain, 15% in Italy and just 10% in Germany. The same is true for foreign diversity: in France no family businesses surveyed had foreigners on their board, while the average was 8% across the four countries.
This year, Women Corporate Directors, the world’s largest organisation for female board members, established a family business council to explore how family firms could improve corporate governance.
According to Egon Zehnder’s 2014 diversity report, the average European board has female representation of 20%.
The IESE report found the presence of family members noticeably varies, with Spain having the highest representation of family members at 62%, while in Germany this figure was 25%.
The boards surveyed were fairly consistent in their agenda content, with virtually all boards reviewing the existing economic and financial climate, as well as their capital expenditures and sales performances, and, to a lesser degree, competition, industry and client trends.
Most boards in Spain, Germany and Italy described “decision making” as their main role, but French boards were more like to perceive their role as “consultative”.
When it came to preparing for board meetings, half of European boards surveyed receive the agenda a week ahead of time, while 22% have fewer than three days to prepare.
Succession is of course a delicate subject in family-controlled businesses, and only 49% of the boards questioned had identified possible future chief executives from internal candidates, while only a third have a plan to fill the position in the event of an emergency. Italian boards were the least prepared for a sudden departure, with only 18% having a plan in place.
Board member experience dealing with succession planning varied greatly between the countries surveyed. At least one director had such experience on 95% of the German boards surveyed, but this was only 28% on Italian boards.
On average, 49% had identified internal candidates for the succession plans, and ultimately, more than two-thirds of family business chief executives in Europe are promoted internally. Spain had the strongest trend of internal promotion with 85% coming from the same company.
The study was led by Russell Reynolds Associates, an executive leadership and search firm, and was based on responses from 106 participants.Caesars Places Largest Operating Division Into Bankruptcy
Caesars Places Largest Operating Division Into Bankruptcy
By HOWARD STUTZ
LAS VEGAS REVIEW-JOURNAL
Caesars Entertainment Corp. placed its largest operating division into bankruptcy Thursday, taking the initial steps to eliminate almost $10 billion of debt and restructure the casino operator’s troubled balance sheet.
The pre-packaged filing covering Caesars Entertainment Operating Co., has been agreed upon by 80 percent of the company’s senior bondholders.It was filed in the U.S. Federal Bankruptcy Court in Chicago. The company hopes to emerge from bankruptcy later this year.
The action comes after several months of negotiations between Caesars officials and the company’s primary bondholders and lenders over restructuring a large portion of the Las Vegas-based gaming operation’s $22.8 billion long-term debt.
“We believe this restructuring is in the best interests of all of CEOC’s stakeholders and will result in a sustainable capital structure for CEOC and value creation for all stakeholders,” Caesars Entertainment Chairman and CEO Gary Loveman said in a statement.
“The restructuring of CEOC is the culmination of a years-long effort to improve the health of CEOC’s balance sheet, which has included substantial investment in new and upgraded assets, especially in Las Vegas,” Loveman said. “I am very confident in the future prospects of our enterprise, which will combine an improved capital structure with a network of profitable properties.”
Caesars operates 40 casinos in 14 states and Canada, including 10 on or near the Strip. The iconic 4,250-room Caesars Palace is the only Las Vegas property covered by the CEOC bankruptcy filing.
Company officials have said the bankruptcy filing and financial restructuring will not impact day-to-day operations of its hotels and casinos, its interactive gaming operations or the company-owned World Series of Poker. The reorganization will not disrupt Caesars’ Total Rewards customer loyalty program, which has more than 45 million members.
“The properties across the entire Caesars Entertainment network are open and will operate without interruption throughout CEOC’s reorganization process,” Loveman said.
The plan is to seek the court’s approval to convert CEOC into a publicly-traded real estate investment trust. CEOC is the largest of Caesars’ operating units and controls the flagship Caesars Palace, Caesars Atlantic City, Harrah’s Reno and more than a dozen regional properties.
CEOC carries $18.4 billion of the company’s total debt. The bankruptcy restructuring, which could take up to a year to complete, would reduce the division’s debt to $8.6 billion. Annual interest expense would be reduced by approximately 75 percent, from approximately $1.7 billion to approximately $450 million.
The property company would lease the yet-to-be determined hotel-casinos to the management company for annual payments of $635 million. The lease payments will be guaranteed by Caesars Entertainment.
Senior-level creditors would receive a combination of equity in the company, cash and new debt in return for their support of the reorganization plan.
The filing created two bankruptcy actions. On Monday, junior-level creditors who are owed $41 million and believe they will be cut out of the restructuring efforts, filed an involuntary bankruptcy petition in Delaware’s federal court on Monday.
Caesars accumulated the bulk of its debt in 2008 when it was acquired by private equity companies TPG Capital and Apollo Global Management in a $29 billion leveraged buyout.
This is a developing story. Check back for updates.JP Morgan Chase's Global Wealth Management Biz Turns In Strong 4Q
JP Morgan Chase's Global Wealth Management Biz Turns In Strong 4Q
Updated Wednesday, January 14, 2015 as of 7:36 PM ET
JP Morgan Chase's global wealth management business delivered a strong fourth quarter, according to the bank's financial results released Wednesday. Global wealth management, which includes both JP Morgan Private Bank and JP Morgan Securities, generated $1.5 billion in fourth-quarter revenue, up 4% year-over-year. For the full year, it hauled in $5.7 billion, a 5% increase from 2013. The banking giant managed the uptick in revenue with fewer client advisors. The number of advisors employed by JP Morgan Private Bank and JP Morgan Securities at the end of the fourth quarter fell 4% to 2,836 from 2,962 a year ago. Total client assets jumped to $1.1 trillion, an 8% year-over-year increase from $977 billion, while assets under management surged 19% to $428 billion, according to the earnings release. Global wealth management is part of JP Morgan Chase's asset management business, which generated $3.2 billion in revenue and $540 million in profit. In addition to global wealth management, the asset management business includes the bank's mutual fund and institutional business segments, which are referred to as "global investment management" in the company's earnings release. Overall, JP Morgan Chase & Co. earned $4.9 billion, or $1.19 per share, in the fourth quarter, down from $5.3 billion, or $1.30 per share, a year ago. For the full year, it earned a record $21.8 billion, or $5.29 per share, compared with $17.9 billion, or $4.35 per share, in 2013. "Our businesses continue to demonstrate strong momentum and expense discipline," Jamie Dimon, JP Morgan Chase's chairman and CEO, said in a statement in the earnings release. "Each of our businesses and the company are very well positioned going into 2015 for long-term growth and success."Family Ties: Getting Parent-Child Advisor Teams Right
Family Ties: Getting Parent-Child Advisor Teams Right
Updated Wednesday, January 14, 2015 as of 6:49 PM ET
Across the industry, it's increasingly common to see family members form advisor teams. The benefits are clear, perhaps most so for parents and their adult children who take pride in keeping the practice within the family. But experts and advisors already in those types of partnerships warn that making them a success takes just as much work as any other advisor partnership. CLEAR BEGINNINGS Advisors can stave off problems down the road by clearly defining roles, responsibilities and rewards at the outset. D.A. Davidson advisors Bob Hutchins and his son Rick have been a team for 15 years. When the younger Hutchins joined the practice, his father laid out how the revenue would be shared. They would start out at an 85/15 split, and Rick's share would increase thereafter by 5% a year. "The agreement was very simple," says the elder Hutchins. "There were no expectations that Rick had to do certain things for that partnership change. At the end of 7 years we were going to be a 50/50 partnership no matter what." For his part, Rick credits that arrangement for easing the transition. "Because that was spelt out in black and white, that was never an issue." The Hutchins, who are based in Medford, Ore., made sure that responsibilities were clearly understood between themselves, and that they also communicated to clients that they were equals. "We sat in almost all [client] meetings together. Consequently, I think it made it easy for them to see him as a full partner," explains the senior Hutchins, who has been in the industry for about 46 years. BE FLEXIBLE Experts and insiders suggest that both parties enter the partnership with a clear willingness to be open to each other's suggestions, particularly as the junior partner is likely to broach ideas about changing practices that the senior partner may have had in place for years, if not decades. "I think it's important the senior partner is flexible about that, and that the junior partner can take a step back because the senior partner has a lot of experience, been around a while and not every new idea is a good one," says Alex Tucker, a producing branch manager at D.A. Davidson who is in a partnership with his father, Tim, a five-decade industry veteran. Tucker, who is based in Bellevue, Wash., adds that junior partners need to demonstrate a clear willingness to roll up their sleeves; they should not appear to be caretakers waiting to inherit the practice. At some point parents also need to let their children come into their own. After three years, the Hutchins rearranged their partnership, making Rick the team leader. The elder Hutchins jokes that he told his son, "I'm putting you in charge of me." He says, "I think it's important for the parent to be willing to turn loose of things. You got to let the young person develop. It can matter a lot in the long run." BE OPEN Once a partnership is established, open communication is a critical element in keeping a team's synergy and chemistry positive. It can be particularly challenging to be honest about each other's faults, says Kevin Wallace, a professional development manager at Janney Montgomery Scott. "The challenge is that people often won't or can't acknowledge the deficiencies in family members," he says. "Sometimes as a parent, you say 'Oh my kid's great at everything.' Well your kid might not be great at everything. They might be really good at some things and less so than others." Family members enter partnerships with an intimate understanding of each other; while that can help a partnership function smoothly, it can also mean that annoyances or pet peeves can easily add up, says Wallace. "I was once working with a consultant on family... <<<<<< N.B from Jumbotweet: auto-truncated at 4K characters on index page - Click here or on the "view" link to see entire jumbotweet! http://www.jumbotweet.com/ltweets/view/84393It Begins: IRS launches International Data Exchange Service
It Begins:
IRS launches International Data Exchange Service
By Simon Black on January 13, 2015
Yesterday, the IRS announced the International Data Exchange Service.
If you’ve not heard of it, it’s is an outgrowth of the Foreign Account Tax Compliance Act (FATCA), which requires every single bank in the world to get in bed with IRS to share information about customers.
We’ve said this over and over, FATCA is probably the dumbest law in the history of the United States. And I don’t say that lightly, because there’s definitely stiff competition.
Like any other bankrupt government, the US government has taken to intimidating its own citizens and the entire world in an attempt to make ends meet.
Their hope was that the minority of people committing tax evasion would come clean and that it would result in some huge boost in tax revenue.
But the fact is that tax revenues actually haven’t improved at all.
Looking at tax revenue as a percentage of GDP, the numbers haven’t budged at all from their long-term average. Not a single bit.
So in actuality, FATCA has done nothing positive for America.
That said, FATCA has managed to destroy what little remaining credibility the United States government still had.
Bear in mind these people have spied on their allies, dropped bombs by remote control, and force fed people negative real interest rates and $18 trillion in debt.
But if that weren’t enough, FATCA goes after foreigners with absurd logistical challenges, commanding every single bank on the planet to comply.
Here’s the ultimate irony: there are nations in this world that are not recognized by the United States. The Turkish Republic of Northern Cyprus. Abkhazia. Etc. Yet banks in these regions still have to sign up with the IRS.
It’s like– you don’t exist. But you must still comply.
The IRS tells us that so far more than 145,000 financial institutions have already signed information-sharing agreements.
Now with yesterday’s launch of IDES they have an online platform to invade customer privacy at every one of those banks. This is a terrible trend.
I was talking to Jim Rickards the other day, author of both Currency Wars and The Death of Money (both excellent books).
He was telling me how decades ago he could ring up a bank and open an account over the phone in just a matter of minutes.
Now, because all these governments are bankrupt, banks have become unpaid financial spies required to treat customers as if we’re criminal terrorists.
The lifeblood of capitalism is capital, and banks are supposed to be the responsible stewards of our capital.
So by obstructing the ability of banks to engage in commerce, the US government is grinding down the pitiful remains of global capitalism down to the mere punch line.
This has consequences.
Perhaps more importantly, and the reason we think FATCA is the dumbest or at least the most destructive law in US history, is that it provides an enormous incentive for the rest of the world to simply avoid dealing with the United States.
There’s no bank on the planet that likes FATCA.
The only reason they comply is because the US has a nuclear option: sign up for FATCA or else we’ll withhold 30% of all transfers that go through the United States.
This is a big deal for banks.
Since the US dollar is the world’s dominant reserve currency, the majority of global transactions are denominated in US dollars and cleared through the US banking system.
This makes the US banking system critical to global finance. And it has long been a major advantage to the United States.
You would think that a government entrusted with such an awesome responsibility, from which it has benefitted for decades, would treat this advantage with dignity and care.
But no.... <<<<<< N.B from Jumbotweet: auto-truncated at 4K characters on index page - Click here or on the "view" link to see entire jumbotweet! http://www.jumbotweet.com/ltweets/view/84391Oil Kings - The House Of Saud's Uncertain Future
Guest Post:
Oil Kings - The House Of Saud's Uncertain Future
by Tyler Durden on 01/13/2015 20:20 -0500
Originally posted at Reuters,
When 90-year-old Saudi King Abdullah was hospitalized two weeks ago, the local stock markets crashed and oil volatility expectations surged as we noted at the time, a new king could do almost anything he wants (including changing oil policy). As Reuters' Mohammad Bazzi explains, Abdullah's 79-year-old half-brother has his own health issues and leaves larger questions over the line of succession in one of the world’s most important oil producers remain unanswered.
In his annual “state-of-the-kingdom” address on Jan. 6, Saudi Arabia’s King Abdullah hoped to reassure the world that his country is prepared to absorb the economic shock of plummeting oil prices and to deal with the worsening conflict in its two neighbors, Iraq and Yemen. The message might have been more effective had the 90 year-old king delivered it personally, but Abdullah has been hospitalized since Dec. 31 for pneumonia.
Instead, Crown Prince Salman delivered the speech on the king’s behalf. That image — of an aging heir with his own health troubles standing in for a nonagenarian king — did little to address concerns about whether Abdullah is still fit to lead. Larger questions over the line of succession in one of the world’s most important oil producers remain unanswered.
The 79-year-old Salman, a half brother of the king and his designated successor, has taken on a larger public role in recent months, standing in for Abdullah at a summit meeting of Persian Gulf leaders in Qatar last month. But Salman himself is in poor health, and reportedly suffers from dementia. If Abdullah dies or is incapacitated, and Salman ascends to the throne, he might not be king for long. It’s also unclear who Salman would designate as his crown prince — and that crucial decision could destabilize the royal family.
Prince Muqrin, 69, who has served as head of Saudi intelligence and in other senior positions, was installed last year by Abdullah into the newly created post of deputy crown prince, making him second-in-line to the throne. But any new king has the right to choose his own crown prince. If Muqrin is passed over by Salman, that could set off a succession battle within the House of Saud at a time of regional crisis and instability in the global oil markets.
Beyond Salman’s expected ascension to the throne, the Saud dynasty faces a larger challenge over succession within its system of hereditary rule. The kingdom was founded in 1932 by Abdulaziz al-Saud, and he left behind a system where the throne is passed from older son to younger son (the king had 35 surviving sons when he died in 1953). With the old generation of Abdulaziz’s sons dying off or passing into senescence, the kingdom has no clear plan to hand power to the “new” generation of royals — Abdulaziz’s grandsons, of which there are at least 30 who could be in line for the throne.
Muqrin is the youngest surviving son of Abdulaziz who is still in the running for the throne (he has several older siblings who have been passed over). If Muqrin becomes king, he would have to appoint a crown prince from the third generation of royals. Muqrin does not have strong enough support within the royal family to appoint one of his sons to the post. One theory is that Abdullah positioned Muqrin as second-in-line so that he would be beholden to Abdullah’s sons, one of whom could become king once the generational shift takes place.
Aside from the king’s illness and questions over succession, Saudi Arabia is faced with a series of regional and economic threats.
Most prominently, the kingdom must cope with plunging oil prices. On Jan. 7, Brent crude, the international benchmark, fell... <<<<<< N.B from Jumbotweet: auto-truncated at 4K characters on index page - Click here or on the "view" link to see entire jumbotweet! http://www.jumbotweet.com/ltweets/view/84389My Tweets & Retweets For 01-06-2015 In One Place
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Rod Harrell @RodMT5Harrell · 37m 37 minutes ago
New LG smartwatch breaks cover at CES: the rumored G Watch R2? @ http://pocketnow.com/2015/01/06/lg-ces-smartwatch …
Rod Harrell @RodMT5Harrell · 6h 6 hours ago
Hot Off The Press! The Rod Harrell Daily is IN! See Archives
@ http://paper.li/RodMT5Harrell/1403945923 …
Rod Harrell @RodMT5Harrell · 10h 10 hours ago
Bill Gross Says the Good Times Are Over - Bloomberg http://www.bloomberg.com/news/2015-01-06/gross-says-good-times-are-over-with-markets-set-to-fall.html …
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AtlanticCouncil @AtlanticCouncil · 19h 19 hours ago
WATCH: @ACLatAm celebrates successful year tackling trends & transformations in Latin America http://buff.ly/1xB5Mtu
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TTIP Action @TTIPAction · 19h 19 hours ago
What a Stronger Dollar Means for the Economy -- "It might be time to book that vacation in Paris." http://nyti.ms/1vVVKho via @UpshotNYT
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DealBook @dealbook · 11h 11 hours ago
Pimco Cuts Access to Some Quarterly Investment Reports http://nyti.ms/1IncUvh
Rod Harrell @RodMT5Harrell · 12h 12 hours ago
Daimler Chief unveils autonomous smartphone on wheels | http://video.foxbusiness.com/v/3974197939001
FOX Business
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Vanguard Newspapers @vanguardngrnews · 12h 12 hours ago
Oil spill: Shell to pay Ogoni community N16.6bn http://dlvr.it/827yfV
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Rebecca Liggero @RebeccaLiggero · 12h 12 hours ago
China busts online gambling ring; over 87k arrested for gambling and porn in 2014: Authorities in China’s Shan... http://bit.ly/1Fjflmq
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Conrad Hackett @conradhackett · 18h 18 hours ago
73% of the world's people live in a country in which they are part of a religious majority http://www.pewforum.org/2012/12/18/global-religious-landscape-exec/ …
Rod Harrell @RodMT5Harrell · 12h 12 hours ago
Super-Rich Teach the 1% How to Really Make Money http://bloom.bg/1zO0h87 via @BloombergTV
Rod Harrell @RodMT5Harrell · 13h 13 hours ago
The Top 5 Risks of 2015 @ https://www.linkedin.com/pulse/top-5-risks-2015-ian-bremmer?trk=tod-home-art-list-large_0 …
Rod Harrell @RodMT5Harrell · 13h 13 hours ago
When The Herd Turns
@ https://www.youtube.com/watch?v=qrz76_j9MRs …
YouTube
Rod Harrell @RodMT5Harrell · 14h 14 hours ago
Love Him or Hate Him, Bill Ackman Now Runs the World’s Top Hedge Fund @ http://www.businessweek.com/news/2015-01-06/love-him-or-hate-him-ackman-now-runs-the-world-s-top-hedge-fund …
Rod Harrell @RodMT5Harrell · 14h 14 hours ago
Janus’ Gross Sees No Rate Increase Until Late 2015 ‘If at All’ @ http://www.bloomberg.com/news/2015-01-05/janus-gross-sees-no-rate-increase-until-late-2015-if-at-all-.html …
Rod Harrell retweeted
ProFootballTalk @ProFootballTalk · 15h 15 hours ago
Raiders bring John Madden in for Mike Shanahan interview http://wp.me/p14QSB-9G6j
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Institutional Invest @iimag · 15h 15 hours ago
10 of The Fastest Growing Emerging Markets to Watch in 2015 http://bit.ly/1zJdZsO
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CNBC Prime @CNBCPrimeTV · 21h 21 hours ago
The Sharks are ready, are you? Don’t miss #SharkTank TONIGHT on CNBC at 8P-12A ET/PT! #SharkTankNation
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Steve Forbes @SteveForbesCEO · 14h 14 hours ago
France illustrates why “tax the rich” doesn’t work. http://www.wsj.com/articles/adieu-french-supertax-1420503805 …
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The Economist @EconBizFin · 14h 14 hours ago
Our #econespresso #quoteoftheday is from political theorist Edmund Burke. Get the app http://econ.st/13Wvtce
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500 Startups @500Startups · 14h 14 hours... <<<<<< N.B from Jumbotweet: auto-truncated at 4K characters on index page - Click here or on the "view" link to see entire jumbotweet! http://www.jumbotweet.com/ltweets/view/84118Attached Media
Today's Tweets & Retweets In One Place
Today's Tweets & Retweets In One Place
Rod Harrell @RodMT5Harrell · 10m 10 minutes ago
2 Big Mergers, Acquisitions and Spinoffs to Be on the Lookout for in 2015
6. Caesars Entertainment
While much of forward-looking deal projections center on heady multiples and big price tags, there is one big transaction that can't be overlooked in 2015 -- Caesars Entertainment (CZR) . This transaction, however, is not about lofty multiples, but rather about using a buyout of its subsidiary Caesars Acquisition (CACQ) as part of an expected bankruptcy filing and restructuring in 2015. Caesars Entertainment is heading toward a restructuring that will reorder its capital structure, costing private equity firms, including TPG Capital, billions of dollars as it tries to reduce $18 billion in liabilities. Already, Caesars has cleaved off premium assets, but it will take until January 9 to see if its restructuring plan has sufficient support among creditors -- otherwise, the casino will have rolled a seven at a crucial time.
8. Halliburton-Baker Hughes Buyout
Not every deal is spurred by an activist investor. Sometimes, it takes bigger market forces -- such as free-falling oil commodity prices -- to spark a big deal. Such was the case with Halliburton's (HAL) plans to acquire Baker Hughes (BHI) in a $35 billion deal. But the discounted price of oil isn't saving Halliburton much on the more than 50% premium it will pay to make the buy. Like Comcast's Time Warner Cable play, Halliburton's deal is a big gamble. Regulators could ultimately shoot it down, leaving the company to pay $3.5 billion in breakup fees. But if the deal goes through, it will be a big win for Goldman, which successfully took the exclusive advisory role for Baker Hughes and is set to net a big payday.
Rod Harrell @RodMT5Harrell · 2h 2 hours ago
Think Samsung's first smartwatch arrived in 2013? Think again: http://cnet.co/1vlsz86
Rod Harrell @RodMT5Harrell · 2h 2 hours ago
Hedge Fund Crowding History: Internet Software Stocks
@ https://www.youtube.com/watch?v=PG5eN4qzXEE …
Rod Harrell @RodMT5Harrell · 3h 3 hours ago
Crowded internet software bets -100% vs passive in 10yrs. Hence why #Crowding analyses matter http://bit.ly/ABWSWCrowd
Rod Harrell retweeted
ValueWalk @valuewalk · 4h 4 hours ago
Ackman up 40.9% through Dec 30th - more info to follow + Loeb dec tear sheet out http://www.valuewalk.com/2014/12/apple-micron-sune-greenlight/ … $$
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ValueWalk @valuewalk · Jan 1
Value Investing: How I Achieved 303% Return Investing in Stocks http://bit.ly/14fam5Y
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ValueWalk @valuewalk · Jan 1
BridgeWater: oil investment & production will lead to a drag on real growth of 0.5% of GDP http://www.valuewalk.com/2015/01/bridgewater-associates-state-oil-c... … $$
Rod Harrell retweeted
ValueWalk @valuewalk · Jan 2
Value Investing: How I Achieved 303% Return Investing in Stocks http://bit.ly/13MCT1y
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ValueWalk @valuewalk · Jan 2
Linn Energy LLC (LINE) Cuts Capex and Reduces Dividend http://stks.co/c1RLY $LINE
Rod Harrell retweeted
ValueWalk @valuewalk · Jan 2
RBS Could Be On The Hook For $7.7B To Fannie Mae http://stks.co/q1DxO $RBS $FNMA $FMCC
Rod Harrell retweeted
Investors.com @IBDinvestors · 6h 6 hours ago
Can you top in 2015 the top mutual funds of '14? Here they are. http://ow.ly/GJZwr
Rod Harrell @RodMT5Harrell · 6h 6 hours ago
The Collapse Of OIL Is Uncovering Opportunities For Corporate Bond Investors...
Rod Harrell @RodMT5Harrell · 9h
Detroit's Bankruptcy Has Resulted In $178 Million For Lawyers...
Rod Harrell @RodMT5Harrell · 2h 2 hours ago
Think Samsung's first smartwatch arrived in 2013? Think again: http://cnet.co/1vlsz86
Rod Harrell @RodMT5Harrell · 2h 2 hours ago
Hedge... <<<<<< N.B from Jumbotweet: auto-truncated at 4K characters on index page - Click here or on the "view" link to see entire jumbotweet! http://www.jumbotweet.com/ltweets/view/83938Attached Media
"LIVE LINK" Multi Tweet Pinning To Profile
Deutsche Bank GTB @TalkGTB 5m5 minutes ago
US securitisation has been far more robust than Europe in 2014. http://ow.ly/G2sHl #IssuerInsights
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Jared Bernstein @econjared 5m5 minutes ago
Why the conventional wisdom about Jeb Bush’s electability is wrong & how the Democrats may have the same problem: http://wapo.st/1AXH0CJ
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Keith McCullough @KeithMcCullough 5m5 minutes ago
You really have to chase Russia $RSX +4.4% with $OIL -3% lol
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Bloomberg TV India @BloombergTVInd 5m5 minutes ago
Will the revival plan actually take off SpiceJet to skies? @veenaMani2 gets all the details l http://www.btvin.com/videos/watch/10233/spicejet-to-submit-revival-plan-to-government …
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Seeking Alpha @SeekingAlpha 5m5 minutes ago
Rite Aid After Earnings: Alive To Fight Another Day http://seekingalpha.com/article/2772365-rite-aid-after-earnings-alive-to-fight-another-day?source=feed_f … $CVS $WAG $RAD
View summaryMacau Casinos Drop $75 Billion as China's Crackdown Continues
Macau Casinos Drop $75 Billion as China's Crackdown Continues
By Bloomberg News Dec 19, 2014 2:38 AM PT
As Xi Jinping makes his first visit to Macau as China’s president this week, the city’s casinos would like to hear a reassuring word that might revive their tumbling stock prices. They’re not likely to get it.
Xi, who arrived today to mark the 15th anniversary of the former Portuguese enclave’s return to Chinese rule, is the man responsible for the two-year campaign against corruption in China, scaring away high rollers who have helped make Macau the world’s largest casino gambling hub and wiping out $75 billion of casino operators’ market value -- bigger than the entire economy of Luxembourg.
Macau, half of the size of Manhattan and the only place in China where casinos are legal, is viewed as a conduit for officials and businessmen to bypass currency controls and send money out of the mainland to safer havens. While anti-graft campaigns have been short-lived in the past, Xi is stepping up the effort in a bid to bolster the legitimacy of the ruling Communist Party.
“It’s more important for China’s government to see Macau in a healthy economic development, and the reliance on corrupted official gamblers is not healthy,” said Chen Guanghan, deputy director of the Chinese Association of Hong Kong and Macau Studies, a policy research institute backed by China’s government.
Unswerving Determination
It’s important for Macau to maintain long-term prosperity and stability even it faces difficulties and challenges which should be handled appropriately, Xi said in a speech at a welcoming dinner, without elaborating.
An editorial posted on the official Xinhua News Agency website late on Thursday said the central government’s strategy is for the diversified development of Macau’s economy, to overcome the city’s constraints and challenges to its growth.
A separate editorial published in China’s military newspaper this week said Xi’s determination to rid corruption is “unswerving” and that it’s a “mistake” to believe the campaign is coming to an end. In Macau, the authorities will start cracking down on illicit funds funneled through the territory, which sent casino shares plunging on Dec. 17.
Macau’s six major casino operators have lost about $75 billion in market value so far this year, based on the Bloomberg Intelligence Macau Gaming Market Index.
Macau Contraction
Among the companies, gambling mogul Stanley Ho’s SJM Holdings Ltd. (880) is the biggest casualty with shares dropping 52 percent. The companies of billionaires Sheldon Adelson and Steve Wynn (1128) recorded an almost 40 percent decline.
High-rollers, or VIP gamblers, make up about two-thirds of Macau’s billion-dollar gaming market that contributed more than 80 percent of the city’s total revenue last year. Xi’s clampdown caused Macau’s first year-on-year economic contraction since 2009. Now, the city is bracing for its first ever annual decline in casino revenue after posting losses for six straight months.
Xi is scheduled to attend ceremonies to mark the handover and inauguration of the city’s newly re-elected Chief Executive Fernando Chui tomorrow. Beijing-backed Chui won a second five-year term as the only candidate in an election in August.
The Chinese president arrives at a politically sensitive period, days after neighboring Hong Kong declared the end of 11 weeks of the pro-democracy protests.
No Goodies
“I expect Xi Jinping to talk in fairly stern terms that he wants this economy to diversify and to move away from a casino-driven and, in particular, a high-roller economy,” said Philip Tulk, a Hong Kong-based analyst at Standard Chartered Plc. “I’m not expecting anything to be distributed from his ’goodies bag’ which we heard some in the... <<<<<< N.B from Jumbotweet: auto-truncated at 4K characters on index page - Click here or on the "view" link to see entire jumbotweet! http://www.jumbotweet.com/ltweets/view/82872- -- Too late, this Jumbotweet has auto-destructed --
Carl Icahn on a Junk Bond Bubble, Opportunities in Oil and Why Shareholder Democracy is a Myth
Carl Icahn on a Junk Bond Bubble, Opportunities in Oil and Why Shareholder Democracy is a Myth
By Ben Steverman Dec 15, 2014 3:03 AM PT
Being stubborn turned Carl Icahn into a man worth $23 billion.
First, he finds something he’s certain of. Right now, he says that’s the near-doubling of Apple Inc.’s (AAPL) stock price.
Then, he waits. And waits. When a stock eventually rises, a currency drops, or a company fires its CEO and is acquired, Icahn’s empire gets a little bigger. As chairman of Icahn Enterprises LP (IEP), the 78-year-old activist investor has stakes in casinos, an auto parts maker, a meat casings company, a home-fashions business and enough railroad cars to stretch from Ohio to Manhattan.
Icahn spoke with Bloomberg.com about the looming risks in junk bonds, the opportunities in falling oil prices and why it’s a particularly dangerous time to be an investor.
Is there a mistake a lot of investors make?
Yeah, they invest.
I’m being facetious, but not completely. Investing can be very dangerous and that especially holds true when the market has increased for a number of years, as is the case today.
What’s the biggest source of risk for investors now?
There’s still risk in the financial markets, even though the economy looks pretty good. The one area I think is getting to be a bubble is the high-yield market. These bonds are still at way too low an interest rate. In other words, you can borrow money too cheaply if you’re a risky company.
There are arguments that there’s a lot of cash flow to cover the interest payments on the bonds. But some of that cash flow is ephemeral -- it’s not likely to last. It’s a bubble that’s going to burst in the next couple of years.
With the price of oil falling, people have been raising concerns about the high-yield bonds of energy companies.
That might be construed as proof of what I’m saying. Six months ago, you would have said those are fine. Now there are a lot of questions about them.
Oil will be a great opportunity, but not now. The energy sector is probably in for more problems. Oil prices will probably go down more, and these energy companies, especially oil service companies, are going to be hurt. But then I think there will be a tremendous opportunity.
Oil prices will eventually recover, because worldwide demand will continue to grow and supply will diminish, due to depletion. Additionally, the cost of finding oil is growing. We are not coming up with enough alternative energy that quickly.
But these things -- the opportunity in oil and the bursting of a high-yield bubble -- don’t always happen that quickly. Hell, I’ve been short the Eurobond now for three years. I suffered through the upside on it. I shorted [Eurobonds], and then gritted my teeth and just waited. And now I’m making a good deal of profit.
Patience is one of the most important attributes of a successful investor. There is no one who is able to tell you “I know what is going to happen” -- next week, next month and even maybe next year. There are too many variables. Sometimes you get very lucky, and sometimes there are a lot of bumps in the road.
One criticism of shareholder activism is that it might encourage more short-term thinking by CEOs or investors.
Some activists look for immediate gratification. That is a problem. But I can speak for myself, and we’ve kept stocks an average of 8, 10 years.
With true [shareholder] activism, like in all investing, you have to have patience. On Forest Laboratories, I waited three years. [In July, Actavis Plc acquired Forest Laboratories Inc. in a $25 billion deal, less than a year after Icahn successfully pushed Forest’s board to replace its CEO of 36 years.]
If you bought IEP [Icahn Enterprises] in 2000, your annualized return... <<<<<< N.B from Jumbotweet: auto-truncated at 4K characters on index page - Click here or on the "view" link to see entire jumbotweet! http://www.jumbotweet.com/ltweets/view/82680
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