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Talking About ‘Inflation’ May Backfire For Brands, Says Collage Group

Hispanic, Black, and Asian Americans Are Also Adopting Different Purchasing Strategies A whopping 93% of respondents said they have noticed that items they ordinarily purchase are now more expensive, and 78% said they are “a little” to “very worried” about their current financial situation. Inflation Talk May Trigger Backlash From Consumers These findings are according […] Hispanic, Black, and Asian Americans Are Also Adopting Different Purchasing Strategies A whopping 93% of respondents said they have noticed that items they ordinarily purchase are now more expensive, and 78% said they are “a little” to “very worried” about their current financial situation. Inflation Talk May Trigger Backlash From Consumers These findings are according to a new study from cultural intelligence firm Collage Group, which also found that brands should avoid certain language about the economic outlook when addressing consumers. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more   Data from the analysis, “Guard Against Recession with Cultural Insights,” cautions brands to refrain from using terms like ‘the economy,’ ‘recession,’ and ‘inflation’ as these phrases may trigger backlash from consumers. “These words polarize buyers, and once they hear them, there’s a tendency to absorb the message as loaded or too political,” explained David Evans, chief product officer at Collage Group. “I recommend brands avoid playing into the economic anxiety.” Evans instructs brands to connect around personal finance issues and look to address everyday problems such as paying down debt, and managing escalating costs. Another 93% of consumers want brands to do something to help them, with the top actions being to offer discounts, cut prices, and provide lower cost versions or packaging.    It is critical for brands to recognize that consumers are navigating the waters differently, especially across racial and ethnic segments, according to the study. Collage Group found that 35% of Hispanic Americans say they are “very worried” now, much higher than other groups. As a result, they have already begun adjusting their purchasing across virtually every category. Black Americans, however, are far less worried about what’s to come, and in fact are holding steady on purchasing behaviors. Evans attributes this poise to Black Americans’ tenacity over time, citing the segment’s higher levels of optimism and courageousness, two of a variety of cultural traits which Collage Group tracks across all demographics. Asian Americans say they are not yet worried. However, Asians also say they are planning to adjust spending in the future in order to be safe. “Americans across all racial and ethnic backgrounds are feeling the pinch, and brands need to respond with empathy and show they are prepared to take action,” said Jack Mackinnon, senior director at Collage Group and the author of the study. Findings were also notable in terms of generational perspectives. Millennials (ages 26 to 42 years old) and Gen X (ages 43 to 57 years old) consumers were most likely to be very worried about their current financial situation at 34%. “In the case of the young- to mid-age generations, their high level of concern is likely attached to the life-stages they occupy,” said Evans. “These are the segments who often have children, mortgages, and higher-education debt, thus inflation and elevated prices would understandably cause anxiety.” Inflation Fears Fifty two percent of Americans are bracing for the U.S. economy to worsen over the next six months, the study found. This point was largely driven by White Americans, at 58% and Asian Americans at 52%. The reality is, as a result of their inflation fears, Americans are indeed cutting back on spending. This includes an increase in purchasing more generic or store brands. Among cultural lines, Hispanic Americans have taken the greatest steps to save, as 74% of respondents answered that they have started purchasing more generic or store brands due to high prices. Hispanic and White Americans were slightly more likely to report taking such measures at 77% and 75%, respectively. Americans shopping locales are changing, too, with Hispanic and White respondents reporting they recently decided to shop more at discount stores in order to save money. Hispanics were more likely to report this behavior at 77%. In addition to that, the nation has taken other actions to reduce spending. Fifty six percent of respondents said they are dining out less. Driving has also been affected. In the wake of mounting gas prices, 55% said they have been driving less. Even in areas where fuel costs appear to have subsided, the totals are still much higher compared to this time a year ago. A number of shoppers have been delaying some of their bigger buys, as 32% reported postponing larger purchases. Twenty-five percent said they have canceled travel plans, and 24% reported cancelling streaming platforms, audio and video. Black respondents were less likely to report reducing their eating out routines (46%) or driving less (41%) to save money. Hispanic and Asian respondents were more likely to report abandoning travel plans at 31% and 30%, respectively. In general, Americans have a willingness to switch to cheaper options if their financial situation declines, but that motivation varies by race and ethnicity. Respondents said they are most open to switching to cheaper grocery (46%) and home care (37%) options if the economy continues to wane. So, what actions should brands take to authentically address the economic concerns of American consumers? “It is essential for brands to avoid attempting to adopt a ‘one-size-fits-all’ approach to the multicultural segment,” said Jack Mackinnon, senior director at Collage Group and the author of the study. “Brands also need to recognize the variety of responses consumers are having to inflation.” Collage Group recommends 5 action steps brands should consider. About Collage Group Collage Group is the leading source of cultural intelligence about diverse consumers to more than 250 of America’s iconic brands across 15 industries. Updated on Aug 18, 2022, 5:22 pm.....»»

Category: blogSource: valuewalkAug 19th, 2022

7 Ways Entrepreneurs Can Inject New Capital Into Their Business During A Recession

Recessions are an inevitable part of the market cycle — and there’s no denying that they can be scary for consultants and the businesses they work with. Regardless of the size of the business, a recession can pose a serious financial risk. As consumer spending declines, so too will companies’ revenue and profit. This can […] Recessions are an inevitable part of the market cycle — and there’s no denying that they can be scary for consultants and the businesses they work with. Regardless of the size of the business, a recession can pose a serious financial risk. As consumer spending declines, so too will companies’ revenue and profit. This can create a precarious situation. Businesses may be more inclined to view B2B services as an unnecessary expense. This is especially true during times when they need to tighten their budget. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more   Aside from ensuring that their services can become truly essential to their clients, to survive these periods of economic uncertainty, entrepreneurs must find ways to inject new capital into their business. By expanding revenue options, you can greatly increase your odds for long-term success. You’ll do this by ensuring that a decline in one area doesn’t completely wipe out your business. Injecting new sources of capital doesn’t just help you survive a recession. It also enables you to deliver greater value to your clients so you can thrive in the long run, regardless of what the economy looks like. Why Injecting New Capital Should Be a Priority Entrepreneurs who rely on a single source of revenue can put themselves at significant financial risk, even during relatively stable times. In their article “Diversification Reconsidered” from the Journal of Social Entrepreneurship, Peter Frumkin and Elizabeth K. Keating explain, “Business and non-profit researchers have long argued that by establishing and maintaining multiple streams of funding […] organizations are able to avoid excessive dependence on any single revenue source, stabilize their financial positions, and thereby reduce the risk of financial crises.” Few things are more likely to disrupt the relationships you have with clients than a recession. Changes to their financial circumstances (or your own) can result in requests to renegotiate contracts. It might cause them to obtain similar services from a less expensive provider. Entrepreneurs who are focused on a single type of service or a small group of clients are at the greatest risk. Suddenly losing the bulk of your clients due to a recession can spell disaster. It could cause you to run out of cash before you have time to respond to the situation. Diversifying revenue and finding new ways to inject capital can help mitigate such losses so that even if you have to tighten your budget, you will at least maintain sufficient cash flow to keep from going under. Options for Finding New Capital (to Resist a Recession) Now that you understand the value of making your business more resistant to the impact of a recession, you’re doubtless wondering where and how to get started. The following ideas are some of the best ways to inject new capital (or better retain the cash you already have) so you can grow your revenue, even when the economic picture looks bleak. Adjust your rates. Perhaps the simplest thing an entrepreneur can do in the midst of a recession is adjust their rates. After all, during times of rising inflation, your own costs for doing business can increase dramatically. If you continue to charge the same rates to your clients, your cash flow will suffer as your profit margins decline. Of course, during a recession, a significant rate hike could be enough to cause some clients to stop doing business with you. As such, this option should always be approached with extreme caution. Rate increases or decreases may need to be approached on a client-by-client basis to balance risk and reward. If you decide to increase rates, inform your clients in advance of pending changes with a rate increase letter. This letter should be clear and direct, explaining what the increase will be and when it will go into effect. It should also provide justification for the rate increase (such as an increase in your own operating costs). The letter should also express gratitude for your clients’ support. There is no guarantee that you won’t lose clients if you increase your rates. However, if you are able to replace them with new clients at the higher rate, you will be better able to stay ahead of inflation. Use a referral program. Referral programs reward existing customers who refer family, friends, or business colleagues to use your products or services. Reward options could include offering a current client a discount off of their next invoice after a person they refer signs up for your services. You could even offer larger discounts if they get more people to sign up for your services. Obtaining referrals from existing clients is a cost-effective way to grow your client base when you need to cut back on marketing costs. Potential customers are more likely to pursue a referral that comes from a person they trust. At the same time, because they are in the same “circle” as current clients, they are more likely to also stand to benefit from your services. In fact, 78 percent of marketers report referral marketing as delivering “excellent” leads, with conversion rates four times higher than other marketing methods. With a referral program, you can create a true “win-win” scenario that helps you find new clients while simultaneously fueling loyalty in your current client base. Offer your services to new types of clients. Focusing on a specific niche can help entrepreneurs develop a unique selling proposition for potential clients. However, targeting too narrow of a niche can prove limiting. To counteract this, entrepreneurs can strategically evaluate how they can begin offering their services to new groups of clients who fit outside their current target market. For example, if you offer consulting services to local grocery store chains, you could consider expanding your services to assist other companies in related niches, such as food and beverage producers. Alternatively, you could continue to focus on your core target market, but expand your reach to new areas by marketing to clients in a different part of the country. When targeting a new audience, some adjustments to your current messaging may be needed. Look at how others who already target that market engage with their audience. Identifying successful tactics, such as key marketing channels and the tone of their marketing, can help you identify how best to appeal to a new market. You must also be aware of the opportunities and challenges facing potential clients in the new market. You will only achieve long-term success if you can offer dependable results. Don’t jump into a new market until you’ve done your research. Join a reseller program. Even more powerful than earning a few dollars from your referrals is joining software companies’ “reseller” programs. These are often partnerships that enable consultants and entrepreneurs to sell third-party apps as a central part of the value they deliver to their clients. For example, as vcita’s Amy Wilder explains, the company’s reseller program offers significant commissions. The program makes it easy for entrepreneurs to co-manage clients’ use of the small business management platform. It essentially allows you to offer “digital transformation as a service.” The program is also adaptable to the needs of individual entrepreneurs. “For example, let’s say you run a marketing agency. You’ll likely be laser-focused on selling training packages that focus on features such as lead-capturing and nurturing. If you’re a business consultant, you might be more focused on our CRM features,” Wilder suggests. “Either way, you can choose accordingly. You have the freedom to pick and choose features à la carte, based on your business.” By partnering with third-party reseller programs that are relevant to their clients, consultants can further increase their revenue as they deliver greater value to their target audience. Choose programs that are related to your current service areas. Or choose programs that can help you expand on the types of services you can provide. Success as a reseller is ultimately dependent on partnering with brands that are a solid match for your clients’ needs. Introduce a new product or service. When introducing new products or services to your clients, choose something complementary to your primary offering. It should serve the same target audience, and allow you to potentially increase the lifetime value of your existing customers by providing something else that appeals to them. A successful product or service addition will further improve outcomes for your clients. This typically happens by helping them save time or money, or helping them make better use of the current resources. New services should match an entrepreneur’s current skill set and strengths. The alternative is hiring additional staff with expertise in that area. During a recession, focusing on services that you can provide yourself without needing to hire additional staff could be key to keeping expenses manageable during a launch. Promotion should start with your existing customers. This could entail offering them a special preview or sample of the service. Alternatively, you might provide an offer for a discount on the new service as a pre-existing customer. Existing customers are 50 percent more likely to buy from you in the first place, so this is an ideal place to begin your marketing efforts to ensure that the new service starts generating revenue immediately. Niche down. After talking about introducing new services or targeting new audiences, the idea of niching down may seem counterintuitive. However, targeting a more specific, narrow niche could prove key to generating revenue growth. It will bolster the client loyalty needed to sustain your business. The idea behind niching down is that you become less of a generalist and more of a specialist. There are several inherent advantages to niching down. For one, there tend to be fewer competitors with such an intense focus on your target audience. Niching down can also help you grow your capital as you become the go-to expert for your niche. Of course, before you niche down, make sure you are truly an expert. Customers will quickly become dissatisfied if you market yourself as a specialist but continue to provide generalist-level services. Know what to cut. The phrase “addition by subtraction” is generally used to describe when you gain something of value by getting rid of something negative. Essentially, you can make your business more lean and agile. You do this by getting rid of the excess that keeps you from being as efficient as possible. For example, let’s say you offer ten service packages, but only four generate significant revenue. As a result, you are likely losing money by continuing to market the low-earning services. Cutting the underperforming services allows you to focus your marketing budget on the services that generate the most revenue. Auditing your business operating expenses can also help you identify whether current expenses are necessary, or if you could get the same service elsewhere for a lower cost. Recessions Are Inevitable - Failure Isn’t Yes, recessions are scary. But with proactive planning to inject new capital into your own business efforts, you can weather the storms ahead. By appropriately managing your cash supply and using relevant methods to cut costs and diversify your revenue (even if it’s only temporary), you can garner new capital investments and forge ahead with confidence. Article by Deanna Ritchie, Due About the Author Deanna Ritchie is a financial editor at Due. She has a degree in English Literature. She has written 1000+ articles on getting out of debt and mastering your finances. She has edited over 40,000 articles in her life. She has a passion for helping writers inspire others through their words. Deanna has also been an editor at Entrepreneur Magazine and ReadWrite......»»

Category: blogSource: valuewalkSep 18th, 2022

The J M Smucker Company Proves Why Staples Are Outperforming

The J M Smucker Company’s (NYSE:SJM) FQ2 results prove once again why the Consumer Staples Sector (NYSEARCA:XLP) is outperforming the S&P 500 (NYSEARCA:SPY) in 2022: Pricing Power. The J M Smucker Company, like others in the group such as Kraft-Heinz (NASDAQ:KHC), reported better than expected results and raised the guidance for the full year on […] The J M Smucker Company’s (NYSE:SJM) FQ2 results prove once again why the Consumer Staples Sector (NYSEARCA:XLP) is outperforming the S&P 500 (NYSEARCA:SPY) in 2022: Pricing Power. The J M Smucker Company, like others in the group such as Kraft-Heinz (NASDAQ:KHC), reported better than expected results and raised the guidance for the full year on the back of demand and pricing. The company is in a great position as the owner of beloved consumer staples brands and is not only seeing sustained demand but an increase in prices that is driving margin health. Considering the staples group and The J M Smucker Company within it are a high-quality dividend-growing group and inflation is cutting into retail sales across the sphere, this is some of the best news the market isn’t talking about right now. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more   "We delivered another quarter that exceeded our expectations, as consumers' demand for our iconic brands continued in a rising cost environment, driving robust organic top-line growth for our key focus platforms of pet, coffee, and snacking,” said Mark Smucker, Chairman of the Board, President, and Chief Executive Officer of The J M Smucker Company. The J M Smucker Company Rises On Margin Strength The J M Smucker Company had a good quarter but there are two issues with the revenue that might otherwise have held the price action in check. The $1.87 billion in net revenue is up 0.5% versus last year but it’s down in the 2,3, and 4-year comparisons due to the tough pandemic comps and divestitures made over the past two years. On an adjusted ex-divestiture and FX neutral basis, revenue is up 4% including the 900 basis point impact from the Jif Peanut recall which are some good numbers and supportive of price action. The margins were a bit soft but this is due primarily to the Jif recall and deleveraging and costs related to it. At the gross level, margins contracted in the mid-teens while at the operating level, income contracted by more than 30% but the adjusted results are better. The adjusted operating income fell only 17% and far less than expected. So, the revenue was flat and only as expected while the GAAP and adjusted earnings both came in ahead of expectations. The adjusted $1.67 beat by $0.40 which is no small margin and led the company to increase the full-year guidance as well. The revenue guidance was increased by 50 basis points at both ends of the range putting the target at 4% to 5% YOY growth compared to the 3.62% consensus as indicated by Marketbeat.com analyst tracking tools. This should lead to some upward revisions as well as the earnings which are now expected in a range of $8.20 to $8.60 compared to the prior top-end of $8.25 and the consensus of $8.04. Assuming consumer trends remain healthy, these figures could be cautious. The J M Smucker Is Relatively High-Yielding And A Value The J M Smucker Company is no value compared to the broad market S&P 500 but it is a bargain relative to its peers. Trading at 17X its earnings it’s far cheaper than names like Hormel (NYSE:HRL), Clorox (NYSE:CLX), and McCormick & Company (NYSE:MKC) which trade in a range of 27X to 35X their earnings while paying far smaller dividends. The J M Smucker Company is also a dividend grower with 19 years of consecutive annual increases to its credit and paying out only 35% of its earnings. Shares of The J M Smucker Company advanced 3.5% in the wake of the report and guidance increase and are on track to retest recent highs near $146.75. A break above this level would be bullish and could lead the market up another $20 to $25. Article by Thomas Hughes, MarketBeat.....»»

Category: blogSource: valuewalkAug 24th, 2022

Wynn Resorts, Sands And MGM Resorts CEOs On The Industry’s Future

The following is the unofficial transcript of a CNBC interview with Craig Billings, Wynn Resorts (NASDAQ:WYNN) CEO, Robert Goldstein, Sands Chairman and CEO, and Bill Hornbuckle, MGM Resorts International (NYSE:MGM) CEO, from the CNBC Evolve Global Summit, which took place today, Wednesday, July 13th. Video from the interview will be available at cnbc.com/evolve. Interview With […] The following is the unofficial transcript of a CNBC interview with Craig Billings, Wynn Resorts (NASDAQ:WYNN) CEO, Robert Goldstein, Sands Chairman and CEO, and Bill Hornbuckle, MGM Resorts International (NYSE:MGM) CEO, from the CNBC Evolve Global Summit, which took place today, Wednesday, July 13th. Video from the interview will be available at cnbc.com/evolve. Interview With Wynn Resorts, Sands And MGM Resorts CEOs CONTESSA BREWER: So I want to thank you for joining me today. Part of the reason I wanted to invite you, Craig billings, Bill Hornbuckle, Rob Goldstein, to this conversation is because you’re all leading companies that are iconic global casino brands whose imprint of the founders are clearly visible, not just in your properties or just in Las Vegas but around the world. I guess I’ll just begin with can you set the scene for me about where we are when we know that people are here and they’re enjoying what Las Vegas has to offer and the demand is persistent in spite of rising inflationary pressures. Bill, what are you seeing – what do you see for the next half of the year and where’s the industry going? if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more Find A Qualified Financial Advisor Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now. BILL HORNBUCKLE: I do believe there's been a change. I do believe that how people are going to experiences how they think about travel, how they think about whether there was initially Covid money or not, how they think about what they want to do with their free time is a creed to Las Vegas and to us in a large way. And we're seeing it. Is there a recession around the corner? Time to tell. You wouldn't know by looking at this place last night, or what we've experienced over the last couple of quarters. And I think about the environment we're in today in employment and getting people to come to work. It's an interesting environment that we're all in. But I'm extremely optimistic about the space, about the experience economy, and where we belong in it. And so you know, I'm very positive, generally speaking. BREWER: What are you seeing right now, Craig? CRAIG BILLINGS: We spent much of the Covid period really just continuing to invest. Invest in our people, invest in our business, and that's borne fruit. And I think we see that every day both in our customer satisfaction surveys and in our numbers. So it's been great over the course of the past few months. On the founder point that you raised, you know, obviously, our founder changed very rapidly. Our founder left very rapidly. And for us, it was really there were kind of three buckets of things that we had to think about. The first was what needed to change very quickly – certain points on governance, the board, etc. The second is that which would never change, really that founder’s mindset, that sense of ownership all the way down to the line level, accountability and our design and development capabilities. And then that which we could evolve. And that's really a multi-year journey. And so much of what we've seen over the course of the past six months is the fruit of that evolution. So you see it in our food and beverage program, you see it in the way we use social media, you see it in our entertainment program. And so we've started to see, you know, that bear fruit and really it's early days in that evolution. BREWER: What do you think? ROB GOLDSTEIN: Well, I’m not in Las Vegas anymore. We sold our properties as you well know, and these guys know. Thrilled to see the rebound of Las Vegas. I’ve been a citizen here for almost 30 years and very proud of the city. A huge fan of it. We are experiencing a different situation because we're Asia- bound. Macao we both have properties – all of us have properties there and it's struggling, as you know. For me, having been with Sheldon Adelson for decades, it's a very difficult time for us emotionally. We sold Las Vegas, it was very hard for me. We sold it for different reasons than people understand. And I think, you know, Sheldon did something that I'll never forget during the Covid time when everybody else was laying people off and I had made a proposal to the board to follow suit. And he tapped me on the shoulder like this. He said, “Rob, not doing that.” I said, “Not doing what?” He said, “I'm not laying people off.” I thought he was confused. So I took him aside explained to him. He said, “I'm not confused.” He said, “I'm not laying people off.” He had a very strong belief in culture and people. And that today resonates with us since we succeed him and try carry on the legacy both in Macao and Singapore. Maybe again in the U.S. at some point. BREWER: But it's really expensive. I mean, if you're in an industry that – GOLDSTEIN: Yes, very expensive. When I told him how much it was, he was very sweet. He said, “Rob I can afford it. We can afford it.” And he said, “I'm not going to fire people. They have made me very wealthy, it's my time to give back to them.” And Sheldon, I had the privilege of watching him on two fronts. Very much a believer in culture and longevity and sustainability with the staff, with the people working with us. And secondly, a big believer in strategic thinking. Sheldon never did anything – whether it being Macao, Singapore, Pennsylvania, Las Vegas, any jurisdiction we tried to go to his first thought was, “what do I bring the table strategically? Why am I different?” And he did it here in Las Vegas and he authored this whole MICE strategy which people thought was hilarious – BREWER: Which is basically convention business, right? Making this – GOLDSTEIN: Yeah, I'm sorry. Yes, convention-based group business was Sheldon's calling card. He grew up in it through Comdex. But my point is all these people we are referencing had a strong strategic perspective of a people, culture thought process. And say what you want about those. Different people have different perspectives. And I think so the fellas that we all came to work for they saw things a different way. They had huge vision and a huge appetite for risk. BILLINGS: Steve was a true founder at heart in every way. And you know, the way that he ran the business was as a founder. Very high accountability, very small corporate staff. And you have to make sure that that continues. And you have to actually take that legacy, be a steward to that legacy, and evolve it. And I think Rob, you said that, too. You can't be afraid to evolve it and make sure that you can meet changing consumer needs and changing consumer trends and stay relevant. But you have to maintain the core and soul of who the business is and who the team is. BREWER: Did that make a difference for Wynn when we saw this massive hiring squeeze when everybody around the nation were desperate for workers? Did that soul of Wynn make a difference in how you were able to retain talent? Attract talent? BILLINGS: No doubt. No doubt it did. I mean, we similar to what Rob was talking about, we too, didn't lay anybody off during the shutdown because you can't reassemble our team in a short period of time. It takes years and years and years to do. And so when we reopened, we actually had a team that was energized, that felt great about where they worked. And our turnover has reflected that. BREWER: You know, it strikes me too, that you're seeing all this boom here. I just can't get over that you can look at Encore Boston Harbor and see that it is out earning any single property you have in Macao. The thought of that before the pandemic would have just been impossible to imagine. That there's been sort of this reversal of fortune. HORNBUCKLE: You know what has been interesting in our business I'm sure, you know, technology and Covid drove us to a couple different places. Even if you go look at this gaming floor, and everyone's doing this. The way we position games just for distance and safety. But we create these unique pods that sit out here now. Well guess what? People enjoy them. And it's worked. And it's brought particularly the type of games that are now demonstrate out here, it's brought millennials to the table in a way that they have not been before in our industry. And so at least we have seen historically, not only here, but universally across all of our properties domestically, we have more millennial business than we've ever had by like 20%. It is a compelling and interesting thing. BREWER: Do you think that the younger people who may not have been really exposed to casinos and gambling before the pandemic, are they drawn by the digital technology? I mean, now there are games where you can sit and only interact with the machine the way that most of us are now used to interacting with our phones, right? So you can sit in a casino where you're near other people but not actually be interacting with a human being. BILLINGS: I think when you smash together the proliferation of sports betting and i-gaming, and the demographic that is engaging with sports betting in particular, which is a younger demographic, you think about the fact that all the effort, time and money that we've spent as an industry here in Las Vegas, investing in non-gaming amenities and things that bring people here despite the casino, all those are going to come together naturally and have a spillover effect that are going to cause consumers – some consumers – to find an affinity for what's on the casino floor. I think it's just a natural happenstance of all of those things. BREWER: I'm really interested if the draw is the experience, if that's the thing that people are hungry for, how does digital play into that yen for experiences? HORNBUCKLE: Look, for a brand like ours, it gives us a chance to connect 360 days a year. It gives us a chance to have a constant dialogue with a customer. It gives them exposure and ultimately a reward mechanism like any loyalty program to be participating in. Yeah, I can do this. I can bet the Mets at home because I’m from New York and I enjoy the Mets and it ultimately translates into something more for them. It's pretty straightforward in that context. And it works. It's big enough scale now. This thing has grown to a point where there is absolute connectivity – the notion of a simple omnichannel relationship with the customer. And what we have all seen is to the extent a customer participates in all three activities, their activity with us is far superior than what it was historically. BILLINGS: Look, sports betting isn't new. I mean people have been betting on sports online for years and years and years. So now you have the opportunity to bet with a brand that you trust and a brand that oftentimes has other physical assets that you can interact with and be entertained by. And so it is a pretty compelling proposition over the longer term. You know, the past couple of years have been interesting for a whole bunch of reasons in sports betting. I think there was a race to get to market and to acquire customers at any cost. I think the industry is becoming increasingly more disciplined in terms of how they approach that, which is great, you know, for us to see. But that omnichannel relationship is important. And I really believe it's a winner in the long run. BREWER: Rob, Sheldon Adelson was such an opponent of internet gambling and invested in it and really was vocal about it and made sure that with all of his political connections, he made it clear where he stood on it. Have you decided to take a very different approach? Have you turned the company in a direction that is very different from what he saw and thought? GOLDSTEIN: Sheldon, the underpinning of his thinking may be different than most people realize. He was a big believer that young people were at risk. He had young boys. He felt people were on their phone at the ballgame. He felt the wrong people could access it. And Bill mentioned 24 hours a day you can bang one in your phone and lose money. And it bothered Sheldon from a pure moral perspective. I know people don't want to believe that, they think he was protecting his land base. The fact is our business has been 90% Asia forever. And so it doesn't affect us because Asia does not have digital gambling. And so it's a nonevent for us from that perspective. So that was Sheldon’s mindset. Would we go into it? Sure we would. We would definitely – and I think Sheldon later in life came to realize it could be managed perhaps. And if it's profitable and we saw the right path, we would pursue it. I'm watching it. It's fascinating to watch what Bill's going through and Craig's been through it and the people at Caesars. And it's fun to watch and see where it goes. I believe it will be very profitable in the long term but there’s some impediments to getting there. BREWER: I overheard you asking Bill about the sort of the backlash in Europe to sports gambling and the way that net there are now very serious limits on how people gamble. Are you guys worried that in your digital venture there could be a backlash here? HORNBUCKLE: Well, let me back up. Backlash in many of those markets – they were gray markets – save the UK. So they weren't regulated at all. They were kind of regulating, they used to call them. So when they are — and again in Germany is a great example – as it's getting regulated, some of the constraints and some of the restrictions are clearly more than they were without any regulations. UK is taking a look at time on device, spending limits, all of the things that would obviously drive addictive behavior. There are, particularly because it's an automated world, there's a lot of things that can be put into play that protect people, that keep things in check, that help responsible gaming in a universal way. And so it is being adopted there. It's going to be transitional to here. We're already starting to put many of those things in play. We've learned from our partner Entain into our BetMGM products. And so yeah, if somebody – you always have to be mindful of it. We do not want to take anyone's last dime full stop. It is not in our business interest to do that. And so we're all mindful of it. On the other side of the coin, we just bought a company will hopefully close next month called LeoVegas. You know, it's a company that's based in Sweden. They have a great footprint, we think great technology. We are very focused on a digital growth pattern not only here domestically, obviously with BetMGM in Canada and ultimately rest of world. We see it as a – not an unlimited because nothing is unlimited, but from a platform where we stand in the scale we have, there's only so many places to go and do what we do and keep our brands true in terms of brick and mortar. And so for us it's a big piece of the next horizon. BREWER: I want to talk a little bit about international too, because you all have international properties and aspirations. I'm especially interested in when going in and co-developing an integrated resort in the Middle East, again, you know, groundbreaking in so many ways. Can you talk about growth internationally and especially where we now see the geopolitical landscape changing. Where we're seeing a lot of uncertainty about what, you know, superpowers, former superpowers, rising superpowers can and will do. BILLINGS: So I think over the course of the past 20 years, you've seen both consumers and governments embrace IRs. I mean, tax revenue, tourism, great experiences, there's all kinds of reasons to support integrated resorts. And I think you are going to continue to see that. I think it'll be interesting to see how the industry – if we do see a proliferation – how the industry keeps pace. I mean, all of us together only have so much development capacity over the course of any given year. And it's not like there's 100 companies like ours. So that'll be interesting to see. But you know, specifically with respect to the UAE, the UAE is obviously a very progressive, transformative place and they're doing a lot of things. A lot of things socially, a lot of things from a legal and regulation perspective. And so we're really excited about that opportunity. You know, puts our brand within 95% of consumers if they want to take an eight hour flight or less. And so it's a meaningful extension of our brand. It's a meaningful opportunity for our team to put their imprint on the company. It's the first property we will do subsequent to Steve. And so it's a very, very important event for us. And I feel great about it. BREWER: Talk to me a little bit about Asia and your feeling now that you sold Las Vegas ahead of this massive rebound. I know because you've told me on multiple occasions that you truly believe in the future of Macao and Singapore. But the Covid restrictions are still at present and an obstacle. GOLDSTEIN: Most of Asia's opening, I mean, Japan's opening, Indonesia, Malaysia, Korea, Vietnam. The market is opening. The biggest challenge there is employees and airlift getting in and out of these countries are still challenging into Singapore. But Singapore is, you know, leading the way in terms of it's a great government, great place to operate. We're thrilled to be there. At its peak was a $1.7 billion property. My guess is that we'll do better than that in the future. Macao I feel even I find it funny that people question Macao's return. Of course it's been a hard couple of years no question. We employ 33-34,000 people. We've not laid anyone off, we’ve been paying them for 30 months. And it's a tough time. You got to basically hunker down and wait for it to turn. But the idea it doesn't turn is kind of hard to imagine it's going to turn probably this year or next. And when it does, Macao will go back to making – you know, we made at the peak $3.5 billion EBITDA. I think we’ll make a lot more than that in the future there. BILLINGS: I agree with Rob. The only thing that keeps me up at night about Macao is the state of my team. I mean, you know, they've been essentially trapped there for years. GOLDSTEIN: Yeah. Brutal. BILLINGS: It's very, very difficult and I appreciate everything they do for us. It is a difficult time to be there. But if you think about the latent demand across the border, you think about the importance of Macao frankly within the Greater Bay area, we're huge, huge bulls on Macao just like Rob. HORNBUCKLE: Again, for the audience, I mean, Macao was seven, eight times Las Vegas in scale. I mean, okay? So it comes back half to begin with and then some and then some. I just, it's the largest gaming market in the world bar none, and it will forever be. BREWER: Are there lessons that you learn from reacting to the pandemic that now you apply toward climate change or geopolitical risk, or the threat – I mean, especially with digital businesses, the threat of cyber attack? BILLINGS: We have always really as a company tried to stay as nimble as possible and have paid dividends during that period. So we were incredibly transparent with our people. And we really empowered our folks to help us adapt, plan, and frankly, just get scrappy. There were many times when we just had to get scrappy and deal with things in the moment. And so I think that reflects within the team, whether we start talking about recession, or geopolitical events that are changing, you know, changing the demand profile – if that happens at some point. I think that that nimbleness particularly as we flexed it during Covid will pay dividends. And so I really believe we are more wired as a company, particularly here in Las Vegas and in Boston than we ever have been. HORNBUCKLE: And we obviously had to take a different approach. I had the unfortunate task of laying off 62,000 employees over Covid. It was painful, but it was costing us 300 million a month. And so we just didn't have the liquidity and the ability to sustain. Now the good news is by and large, we had about half of them back in nine or 10 weeks. But it did present an opportunity because we weren't as nimble at this scale. It's hard to be this nibble at this scale. We did take the organizational opportunity to kind of rethink about the structure, think about the organization, what we were focused on, what we should be focused on. I think one thing that Las Vegas and all of these properties at scale are really good at is corralling around an event, championing it, getting something accomplished in terms of you know, like we've spent $21 million on plexiglass. It was amazing how quickly we all got into that business of making the right environment. And on and all the testing and all of the things that go into something with those kinds of logistics. These companies are just wired to do. We do the convention – the thing about convention business every day, it's that same kind of psyche about task and orientation and go. BILLINGS: Difficult things at scale. HORNBUCKLE: Yeah. And so we are good at that generally. So it enabled us to get quickly into this. So we went up and down, in a matter of three months we had closed everything and we opened it all again. We were in massive Covid protocols in the context of what we're doing, how we're letting customers interact with us. Digitalization, you know, something we planned for 10 years to get silly check in in on a mobile device did it in three months because we had to do it. You know and to this day 25% of our people using it now. It's a big deal. It's a big change. GOLDSTEIN: Necessity. HORNBUCKLE: Yeah, necessity. The reservations 30% of our people are now making reservations online. Because guess what? They checked in digitally and so there's been a lot of benefits and for us, particularly as an organization, we learned a lot, we did a lot. It was little bit more in command and control as a culture I want to set going forward, but we had to just get it done. And so there's a lot of taking some that have been meaningful, but painful. BREWER: The other interesting thing is that we seem to be at this inflection point in the nation, the political divide, the issues over guns and abortion and racial equality. And I'm just wondering where you stand on taking a stand. Your predecessor Bill, felt very comfortable standing up and talking about his political position. Do you think that there's a place for that as the head of a publicly traded company or what's the risk? HORNBUCKLE: Take any issue. Take abortion. 30% of the people are adamantly, you know, thinking that what just happened is appropriate. I don't want to lose 30% of our customers. I think we have an obligation to our stakeholders to be very responsible, be moderate, be measured. Having said that, we employ 62,000 employees across the system who have values who care. That issue alone has impacted some of our employees in Mississippi and Ohio and other states that we operate, so we have to pay attention. Making political statements as the CEO however, I don't know that it's in everyone's best interest. Putting policies in play, doing things that are appropriate for staff and ultimately the communities that I care about not making statements and eventually – Black Lives Matter I put a statement out because I thought it was important to. It got a lot of social media. Good news and not so good news. It's not a place I think that we want to find this company. BILLINGS: I agree with Bill. I think the – I lump it, I put it together with ESG. You know, consumers, particularly younger consumers want companies to stand for something and they want them to do it authentically. And I think that authenticity is what’s really important. So figuring out what you can do for your employees, for your communities, and to reduce your impact on the planet that you can really do. That's what it's about. And it's not about marketing. It's not performative. It's doing. And so, I agree, I don't think it's about wading into politics. I think it's about having an impact. GOLDSTEIN: I will say that I can’t add a thing to that. Well said. I think it's about policies, but I think I'm not sure for public companies, CEOs, that's a role I would take on my political views shouldn't matter. They're not important, in my opinion. Important to me, my family but not to my shareholders. And I think it's better we address – I think Bill and Craig’s comments about your employees and how you think about them. They're our constituents and we want to make sure we're responsive to them and our customers. But my political views I think are not relevant in a public forum. BREWER: Is there a canary in the coal mine about recession coming? Jim Moran has mentioned to me that – he said, “I totally missed the onslaught of the great financial recession of 2007, 2008, 2009 because in our last quarter – fourth quarter of 2007, we had our best quarter ever lifted by the luxury properties like Bellagio.” HORNBUCKLE: Those were good days. GOLDSTEIN: Good days. We remember those days. BREWER: He said, “I should have been looking at Circus Circus.” We've already heard some of your competitors talk about that lower demographic. HORNBUCKLE: We have a pretty obviously broad view on this because we have properties all over the country and obviously we have every marketplace here in Las Vegas as well. We have not seen it, particularly here in Las Vegas. Now, what's happened over the last 18 months has literally been historic and so records. But if you look about how we thought we'd be performing against how we are performing, we're exactly where we thought we would be. We're not naive to think that consistent gas prices, consistent increase in inflation is not going to impact our business. It hasn't yet. BILLINGS: I would agree with Bill. We're in a similar situation. Now how much of that is our customer type? I don't know. But I do think that the industry particularly here in Las Vegas is better prepared strangely, because of because of Covid, frankly, to know the levers that we need to pull to make it through whatever does happen. BREWER: I wonder what keeps you up at night. I'm curious about it. Generally, when you look at your whole company, if there's a thing that you see as a niggling challenge that you haven't quite figured out. BILLINGS: I really have two things to do in my job. Take the legacy. We talked about it earlier. Take the legacy that I've been handed, and make sure that I both maintain it and evolve it and grow the business. And grow the business for us often means development. So when I get up in the middle of the night, it's thinking about those two things, which aren’t, you know, existential threats to our business, rather they are the opportunities for our business. So there is no one particular point that I would think about. BREWER: So you sleep like a baby? BILLINGS: Definitely not. Definitely not. But it's not an existential threat that keeps me up at night. HORNBUCKLE: You know, if you had asked me that question two years ago – BILLINGS: It would be a different answer. HORNBUCKLE: Completely different. We're just in such a different place as a company. Our balance sheet, just how we are capitalized, what we're doing, how we're thinking about going forward. We've just done such an amazing reversal in so many respects, got fortunate in timing, and made some smart moves I think ultimately – we’re sitting on $4.5B in cash. And so we're all operators. We’ve been doing this a long time. The day to day is not the concern. It is the things that are outside our control. So while I don't have the same pressure they do in Macao,  we still have Macao pressure and that's not in our control. Water at Lake Mead, we're going to do everything we can. That's a longer term, you know, just the general environment, what's going to happen over time. You wake up at night and think not only about yourself and the company but your employees and the community. Those are real issues. The continue of social divide of politics and what it's doing to our employees and customers. Not a great place. We're just not in a great place in America in that context. GOLDSTEIN: I do sleep like a baby. I’m up every two hours. At our company, we went through the most dramatic couple of years. It's hard even to even fathom. We lost Sheldon. We lost our business in Macao temporarily. We went to closure in Singapore. And of course, we sold Las Vegas. But looking back on it, we’re in a great place liquidity wise. We got lots of money in the bank. We're very solid. The business climate in Singapore is coming back beautifully. The whole city state. Our license renewals recently we're on the right path. Macao which was a big impediment to the future and that's been resolved looks like to me. And so the one thing we can't do much about is waiting for Covid resolution in China which is inevitable. And when that happens, I think our company returns to a very nice place and hopefully it's sooner than later. But other than that, I don't think about – the bigger issues Bill referenced, I mean, it's painful to watch this country. I'm the oldest guy in the room probably here and I think it's for me it's hurtful and painful to watch this country go into such huge divide on so many issues and it's sad and I hope we can find a way out. We'll get through it. We'll figure it out. But that doesn't keep me up at night because I'm not – I can't solve it. But it sure does make me feel sad. BREWER: The thing about gaming is that figuring it out has been sort of the MO of the industry, of the town, of the leaders. Do you think that there's a takeaway for other industries and other leaders about the adaptability and the flexibility in the innovation of gaming? GOLDSTEIN: Yeah, there's a definite lesson in terms of the same lessons any manager – they are professional managers. How do you apply into evolving environments that change all the time? It's never easy. How do you manage your employee base? How do you manage your customer base? How do you think and stay nimble and stay focused? Life is full of challenges. The only constant is change, right? And these things change every day. Managing these behemoths, these monster buildings, is a really good lesson for any manager and I think it does translate beyond our industry. HORNBUCKLE: And one of the reasons it could and should is, and you know, we are the melting pot of America. We get 40 million visitors, we get everybody that comes here. We know a lot about customer behavior today. And I think we're adept at reacting to that. And I think there's a lot to be learned from that for others. So they're very complex businesses. They're interesting as hell. We've been doing this for a long time because we love it. Hasn't killed us yet, but it’s trying. GOLDSTEIN: It will, Bill. HORNBUCKLE: No one is getting out alive. BILLINGS: I can’t speak for gaming as a whole, obviously, but you know, part of what we do is we really steadfastly do not over corporatize. We have a very small corporate staff. We push a lot of decisions down to the asset, to the property level, to the individual line level. And now, to be fair, we're blessed with quite a small geographic portfolio. Okay, we essentially have four assets. So I think that's easier for us to do than some others in the industry. But you talk about evolution and you talk about change. You have to cascade that down throughout the entire business. And the more your people understand and own their respective pieces of the business, the easier that is to do. And the more you centralize it, the harder that is to do. So it's been in ways heartening and inspiring to go through Covid and to watch what our teams were able to do and what they were able to accomplish and it really was them. HORNBUCKLE: We have a mantra I've been on for about 18 months. A culture of Yes. Given scale, things happen and it's easy to wake up one day and have policies in play and why aren’t we – why are we saying no to a customer. Well, because 15 years ago this happened. And you just wake up one day, you just have this monstrosity of a bureaucratic thing. Culture of Yes down to the line level employees, please say yes to a customer. We will protect you, we will give you the security you think you need, we will honor that decision, and ultimately we'll make it right for both the customer and you. Big deal in these scale places because if you don't, it just, you know, you got 4,000 rooms, you got 8,000 customers, you got 25,000 people in the building every day. Bumping into people all the time and giving and empowering employees to make those decisions is essential. BILLINGS: No doubt. HORNBUCKLE: Essential. BILLINGS: No doubt. BREWER: I just want to thank you again, like you all have very busy schedules and things to do. Thank you for making time for us, Craig, Bill, Rob. GOLDSTEIN: Thank you. HORNBUCKLE: Pleasure. BILLINGS: Thank you. Appreciate it. About CNBC: CNBC is the recognized world leader in business news, providing real-time financial market coverage, business content and general news consumed by more than 544 million people per month across all platforms. The network's 15 live hours a day of news programming in North America (weekdays from 5:00 a.m. - 8:00 p.m. ET) is produced at CNBC's global headquarters in Englewood Cliffs, N.J., and includes reports from CNBC News bureaus worldwide. CNBC at night features a mix of new reality programming, CNBC's highly successful series produced exclusively for CNBC and a number of distinctive in-house documentaries. Updated on Jul 13, 2022, 4:59 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJul 13th, 2022

The Next Chapter For Rowan Street

Rowan Street Capital commentary for the month of July 2022. Dear Partners, This year we celebrated 7 years since the founding of Rowan Street Capital. In our 2020 year-end letter we shared our story with you and the evolution of our investment approach. Investing is a journey filled with many ups and downs and countless […] Rowan Street Capital commentary for the month of July 2022. Dear Partners, This year we celebrated 7 years since the founding of Rowan Street Capital. In our 2020 year-end letter we shared our story with you and the evolution of our investment approach. Investing is a journey filled with many ups and downs and countless lessons. As they say, investing cannot be taught, it has to be experienced. On Wall Street and in today’s world of information overload, you are constantly bombarded with new ideas that constantly appear “sexier” than what you already know well or the stock is going up much faster than the stocks in your portfolio. If you really think about it, you only need a few best ideas, few extraordinary businesses in your life. The key is to stick with them as long as they remain extraordinary. This is truly the path to extraordinary wealth! And no one knows this better than Charlie — below is one of my favorite videos of him where he explains this simple concept: if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Series in PDF Get the entire 10-part series on Charlie Munger in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more The difficult part here, of course, is saying NO to almost all other ideas because they distract from your best ideas and detract from your process of compounding. Here too, though, there is quite a balancing act. You want to be able to say NO in order to keep your focus on your best ideas, but at the same time you want to be open-minded to learning about new businesses and developments and expanding that circle of competence over time. Unfortunately, this simple realization came to me after many years of investing. About five years ago, we decided to refocus our efforts into just owning a few extraordinary businesses that are run by talented, passionate and honest managers, who are also business owners. Just like rare diamonds or truly special and unique pieces of art, extraordinary businesses and management teams are very rare, and once you find them and understand their magic, you tend to hold on to them. Selling one just because it doubled in price over the course of a year or two does not make much sense; neither does it make sense to sell just because the stock price is dropping. First, you have to pay the capital gains tax. Second, the likelihood of finding another gem that is as good as the one you already own, and finding one that is selling for a reasonable price (true gems are never without a huge fan base) is relatively low. Third, we found that it takes quite a bit of time to truly get to know the management and understand “the magic” of the company. Getting to know companies is very similar to getting to know people. They may give you a great first impression, but it takes a while before you get to know the true person deep down inside. It is very rare to like something just as much or even more after you have owned it for 3 years. That’s why we always say that conviction is a lot like love and trust, it can only be built over time. Which pond do we fish in for extraordinary businesses? We found that they can be absolutely anywhere, in any industry, geographical location and come in any size. What we discovered in our 20+ years of investing, is that extraordinary businesses are always built by extraordinary people. These people are super rare! They possess special qualities, personality traits and a winner‘s mentality. They are passionate entrepreneurs that are absolutely obsessive in their belief and their devotion to their vision for the company that they are building, and they are constantly building and evolving, they never rest on their laurels. Let me give you a few examples. A couple of years ago, I read a book called “The Airbnb Story”. Here are a two quotes from this great book that help illustrate what I’m talking about: Brian Chesky’s (Founder/CEO) fanatical belief in and devotion to what he sees as Airbnb’s higher purpose seem to be the things that drive him more than anything else. He believes in home sharing “down to his toes” and he talks about the company’s mission, “belonging anywhere,” relentlessly, not as a CEO talking up the tagline that sells the product his company makes, but as the reason he was truly put on this earth! Really, honestly. I have seen so many different founders—literally, thousands. And I can tell the opportunists from the believers. It’s way beyond money or even fame for him. For that reason, Chesky may not be cut out for just any CEO role. He’s the kind of leader who leads people to do things that he himself believes in. You could not hire him as the CEO of some random company. Warren Buffett sensed this, too. “He feels it all the way through. I think he would be doing what he’s doing if he didn’t get paid a dime for it.” This kind of mentality and passion drives a unique and special energy, which is contagious. It turns employees into believers and attracts the right people, talents and resources into the company. It instills the certain kind of a “winners DNA” that runs deep in the company's founding roots. This stuff is very intangible and a lot of times you cannot see this in a company's financials or by running a screen on your Bloomberg terminal. Humans have a tendency to want to quantify everything that is meaningful. But so much of whats meaningful is based on human spirit and is unquantifiable. That is why long-term investing is more of an Art rather than Science. Let me give you another example. The mentality of a passionate Founder/CEO drives a completely different thought process and decision-making that makes all the difference. This is a quote by Brian Armstrong, Founder and CEO of Coinbase: “I can speak with some authority and say we are not going to do that because this is not why I started the company — I don't have to give any other justification. Rather than the professional CEO that comes in that is accountable to Wall Street and quarterly earnings may start thinking about the company differently. One of the most scarce things in companies today is risk tolerance. For example, take Tesla vs. Waymo. Tesla launched self-driving cars while Google didn’t. The reason is the founder-CEO (Elon Musk) said that I care enough about the mission that we are ready and we are gonna go for it. Whether a professional CEO is thinking about his/her career trajectory, the founder CEO doesn’t care about the next job and only cares about the mission.” The following quote is from one of my favorite books “100 Baggers” written Christopher Meyer, which drives the same point home: “People (owner-operators) running these companies are in control, so when we experience a drawdown like 2008, that’s precisely when they are going to deploy cash because opportunities are so rich and thats when you want to be spending money. Compare this behavior to agent-operated companies. They loathe spending cash or taking on debt in a highly volatile environment. An agent-operator is so fearful about how that will be perceived by the public and the board and how it may impact his/her career prospects. If you study all the great Founders/CEOs like Steve Jobs, Bill Gates, Mark Zuckerberg, Elon Musk, Warren Buffet, Larry Ellison, Brian Chesky, Reed Hastings, Marc Banioff, Jim Walton and Phil Knight, just to name a few, you will find many similarities in how they ran their businesses and in how they make decisions. What also distinguishes them is they remained majority shareholders (owners) of their companies throughout their careers. While every single founder listed above has experienced their company stock dropping 50% and much more on several occasions, they continued to hold on to every single share — that is what true business owners do, they continue to own and compound their wealth over time. In contrast to agent-operators (hired CEOs) that usually own less that 1% of company stock and consistently sell for “financial planning“ purposes. One question that we always get… Since 2017, you have been heavily invested in digital platforms and in growth-oriented innovative and disruptive firms. At the same time, you look for durable competitive advantages in companies and are looking to own them for the next 5-10+ years. Technology is a rapidly evolving space and it's very hard to predict who gets disrupted, who survives and who gets to be the winner. Why not stay with the safer, predictable companies like you did in the early days? Well, the world has changed quite a bit from the one 50-60 years ago when Warren Buffett was starting to build his empire. The enduring moats of the 20th century were the widely-known brands like Coca-Cola, American Express, See’s Candies, Wrigley’s or low-cost producers like Geico, Walmart, Costco. These businesses were highly predictable. Like Warren Buffett once said: “The internet is not going to change how people chew gum.” Well, who could have predicted that the internet disrupted traditional retailing and drove exponential growth in e-commerce, which hugely affected the traffic in the check-out lines where most chewing gum sales occurred. We live in the 21st century of disruptive innovation and digital transformation. Change is the driving force for creative destruction and value creation! Thus, we need to spend more and more time understanding change and the people behind it rather than trying to find businesses that are unlikely to change over the next 5-10+ years. We also believe that the very definition of technology and the “tech sector” as Wall Street likes to coin it does not make sense anymore. Every single industry out there is being disrupted and if you are not a technologically-focused company, you are guaranteed to be out of business sooner or later. The pandemic of 2020-21 actually was a preview of what’s coming. Traditionally “safe” dividends and predictable “earnings” are no longer safe and predictable! Amazon (NASDAQ:AMZN) disrupted the traditional retail model (was not profitable until 2016 because it heavily reinvested its gross profits into widening its economic moat) Netflix (NASDAQ:NFLX) disrupted Hollywood, Cable TV and movie theatres (cash flow negative until 2020; reinvested $92 billion over past 10 yrs into content) Google (NASDAQ:GOOG) and Facebook (NASDAQ:META) disrupted the advertising industry, traditional media (newspapers, TV) Airbnb (NASDAQ:ABNB) disrupted the hotel and hospitality industry Spotify (NYSE:SPOT) disrupted the music industry and brought it back to life via streaming Tesla (NASDAQ:TSLA) disrupted the auto and transportation industry Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT) disrupted the traditional taxi industry Apple (NASDAQ:AAPL) disrupted everything (the way we spend our time, conduct business, travel, communicate) Zoom (NASDAQ:ZM), Slack (NYSE:CRM) and Snowflake (NYSE:SNOW) disrupting the way we work These are just a few examples of many disruptions going on right now. We cannot stop them, we can only embrace them, study them and be a part of them! Who We Are It is common knowledge that the average return in the U.S. equity asset category over the last century has been in the neighborhood of 9-10%. It just so happens that this figure correlates with the rate of return on the owner’s capital of the typical U.S. company. We posited from this observation that our return on an asset would therefore approximate the return on the owner’s capital, absent any distributions, and assuming a constant valuation. And since our stated goal is to compound our partners' capital at double-digit returns over time, we needed to identify this group of superior businesses, which earn double-digit rates of return on their owner’s capital. We have identified that investing in a few “extraordinary” businesses, as we define them, is the BEST way to achieve our goal. And to tie this back to our earlier discussion, extraordinary businesses are always built by extraordinary, passionate and almost fanatical people. These people are winners, missionaries and exhibit true passion for their vision of what they are building, and they believe in that with every cell in their body. Over many years, as we refined our investment philosophy, we found that our sole focus should be on identifying and partnering with these visionary CEOs and best entrepreneurs in the world, preferably in the earlier-to-mid stages of their careers. We are not venture investors and never just bet on pure ideas and vision. We like to bet on entrepreneurs that have already proven their abilities to execute against all odds. We like to see evidence of the strong competitive advantages forming. We focus all our efforts and energy on winners — companies that either are already #1 or have strong potential in becoming #1 in their respective industries. We found that this particular style and approach to investing fits who we are the best, and thus will create the most value for our investors over time. The process of identifying these requires intense multi-year research effort that dives deep into the DNA and the culture of the company, understanding the roots of the Founder/CEO, their motivations and mentality and the true source of their drive. These things are very intangible, but we believe they tell us the story that no financial statements could. By any means, this doesn’t mean that we don’t pay attention to numbers. We definitely do, but numbers to us are simply a longer-term confirmation that our original thesis is correct and that the management is executing against their strategy, and are in-fact, doing exactly what they promised. The next Chapter for Rowan Street To summarize, over the next 10+ years we will focus every bit of our time and energy on being true long-term business partners with the most extraordinary entrepreneurs in the world, who have already proven their ability to execute against their vision and strategy. We have been transitioning the Rowan portfolio to this strategy over the past 4 years. In our top 4 positions in the fund (Spotify, Meta, Trade Desk, Topicus) we have identified these “extraordinary” businesses that we talked about, and we believe they are run by some of the most passionate and missionary Founder CEOs in the world: Daniel Ek, Spotify (NYSE:SPOT) Founder and CEO Visionary entrepreneur who set out to reimagine the music industry and to provide a better way for both artists and consumers to benefit from the digital transformation of the music industry. He beat Apple, Amazon, Pandora to become the largest music streaming platform. Daniel owns 17% of the company, and his co-founder Martin Lorentzon owns 11%. When Spotify went public in 2018, they were a music-streaming company, but they have evolved dramatically over the last four years. Daniel Ek’s ambitions did not stop at music, as Spotify is focused on building the global audio infrastructure of the Internet. They are continuing to expand and build on the strong foundation in music, applying their learnings and leveraging their leading 420 million user base to move into new verticals like podcasting and audiobooks, ultimately broadening their value proposition. As a result, they are building a more resilient business. For example, in three years, Spotify has gone from basically zero to being the market leader in podcasting — a business that we believe will enable a large influx of high-margin revenue through advertising and direct monetization. Just as video content is a trillion-dollar opportunity, we view audio through a similar lens. Spotify has the potential to become the Google of audio. We believe Spotify is one of the most relevant digital platforms in existence today, as it has transformed itself to a fully-fledged platform where artists and creators can create, engage, and earn. A platform fueled by subscription, advertising and creator service models, applied to music, podcasts, audiobooks and more. At a current market value of just $20 billion, we think Wall Street is not appreciating the true long-term potential of the Spotify Machine. Mark Zuckerberg, Founder and CEO of Meta (NASDAQ:META) Mark does not need an introduction. We started buying Facebook shares back in 2018 when the stock was very depressed as Facebook was dealing with a long ‘dirty-laundry’ list of challenges. We were convinced that Facebook remains an extraordinary business with incredible moat (2.9B users), and they still have tons of opportunities to profitably reinvest their capital. We have been very impressed with how Zuck & Co. handled a long list of challenges over the past few years and managed to keep growing and innovating! There are not many CEOs in the world that are more committed to the long term vision of his company than Zuck. We encourage you to read his recent Founders Letter where Mark has outlined his vision (next chapter for the internet and next chapter for his company) — its hugely inspiring. Jeff Green, Founder/CEO of Trade Desk (NASDAQ:TTD) Jeff has been on a mission to make data-driven advertising as ubiquitous as electronic trading in equities ever since he founded the Trade Desk in 2009. Since day one, his goal was to create a platform where advertisers could value media inventory through data-driven decisions. With the ability to buy and sell advertising inventory electronically or programmatically, advertisers could use data to make better decisions on what, when, and whom to show an ad impression. Jeff owns 10% of the company. Jeff has built Trade Desk into a leader in ad tech, with a record of $6.2 billion spend on the platform in 2021, up 6x since 2016. Revenues are estimated to hit $1.6 billion in 2022, up almost 8x since 2016. Total Specific Solutions (TSS) was an operating group of Constellation Software (CSU:TSX) that was spun out in early-2020. Mark Leonard started Constellation Software (CSU) in 1995. Since then, he’s been on a 27-year acquisition bender of vertical market software (VMS) companies. Today, CSU is a collection of independently managed VMS businesses across dozens of verticals: hospitality, education, healthcare, banking, marine management, libraries, transportation, publishing, utilities, logistics, construction, retail… and the list goes on. Mark Leonard is one of the best compounders of capital in history. CSU stock is up 10,168% since it went public in 2006, which translates to 34% annual return. There are few public equities that can match this track record. The newly formed entity is called Topicus (CVE: TOI), which trades on the Canadian exchange. Topicus, operating in European markets, is effectively a carbon copy of CSU, with a nearly identical decentralized organizational structure, decentralized M&A process, sticky customers, and strong reputation as a perpetual owner of VMS businesses. Even the board of directors has meaningful overlap. In summary, all four entrepreneurs we discussed above have proven their ability to execute against all odds and they have built exceptional companies that are the leaders in their respective industries. Given a long-term investment horizon that we employ, we believe these leaders will continue to create significant shareholder value, and we expect to see significant appreciation in their stock prices over the next 3-5 years. New Position We have taken advantage of the recent downturn in the market to add another position to the fund that is consistent with our goal of partnering with the world’s most extraordinary businesses and entrepreneurs. Tobias Lutke, Shopify (NYSE:SHOP) Founder and CEO When Tobias Lütke opened an online snowboarding store in 2004, he realized how painfully cumbersome e-commerce software was. So he decided to create Shopify — a platform that made it easy for anyone to open up an online store. Tobi has built Shopify into one of the most popular e-commerce platforms in the world, with $175 billion in GMV (Gross Merchandise Value) and $4.6 billion in revenues in 2021. SHOP went public in 2015, when revenues were just lightly above $200 million, and the stock is up 1,233% since its IPO. Shopify stock peaked in November 2021 (traded at astronomical 47x sales), which coincided with peak enthusiasm for the tech-driven, “stay-home” stocks. Since then, the stock is down almost 80% and is currently trading at just 6x 2023E sales. We believe that Mr. Markeat is oferring us an exceptional value, at current price levels, for an exceptional company led by a very talented, visionary founder/CEO Why? Just like the entrepreneurs that we look to partner with, we are deeply passionate about what we do and where we are looking to take Rowan Street over the next 10-20 years. Building a fund like Rowan Street has been my dream ever since I read “The Warren Buffett Way” by Robert Hagstrom back when I was still in college. I believe with every cell in my body that the past 7 years since we started the fund has been a set-up for what’s coming. The experience and the lessons we had learned have given us a laser sharp focus. We know exactly where we are looking to “steer this ship.” This is not just a job to us. This is our life’s purpose — doing what we do at Rowan Street gets us out of bed in the morning. Our goal is to be the best, to establish one of the best and longest track records in the 21st century. And this journey and the achievement of this very audacious goal will not be possible without the trust of our like-minded and patient partners. This ties back to our original vision, which we outlined in our very first letter: “Our vision is to build something special at Rowan Street Capital, LLC where our partners can visualize themselves as part owners of a business they expect to stay with for a long time, just like they would if they owned a rental property or a farm in partnership with members of their family. The goal is to build a portfolio of great companies that will compound our partners’ family wealth at double digit rates of return over a long-term holding period.“ Power of Compounding vs. Human Nature John Maynard Keynes laid out his understanding of the quirky, contrarian nature of investing: “It’s the one sphere of life and activity where victory, security and success is always to the minority, and never to the majority. When you find everyone agreeing with you, change your mind. When I can persuade the board of my insurance company to buy a share, that, I am learning from experience, is the right moment for selling it.” As we write this letter today, the world is full of fear. Investor sentiment is extremely bearish fueled by the endless macroeconomic worries of rapidly rising inflation, increasing interest rates, the “looming recession”, the war, etc. This is in contrast to just 12 months ago, when the world was full of greed and speculative gambling behavior. Just a year ago, everyone was desperately trying to get rid of cash. That was the number one enemy and it was burning a hole in everyone’s pockets. The conventional wisdom was that inflation was going to destroy your cash and you have to desperately deploy your cash into any other asset (stocks, real estate, crypto) no matter what the asking price was. “Just get rid of it!” Now that the irrational, “bubble-like” valuations have come down significantly for almost all asset classes, having cash on the sidelines to take advantage of the newly created opportunities doesn’t seem so bad. Now, conventional wisdom is to sell your rapidly declining stocks and go to cash because that is the “prudent” thing to do in order to protect yourself and your net worth. Well, the conventional wisdom is long on convention and short on wisdom. Past couple of years have given us a perfect example of why more investors do not reap the benefits of compounding. The reason has surprisingly little to do with recessions, depressions, wars, financial crises, political crises, rising interest rates, inflation, stagflation, a global pandemic, or most adverse macroeconomic events. It is not adverse macro events that derail compounding, it is investors’ reactions to them. Majority of investors spend a lot of their time and energy on what we believe to be counterproductive behavior: trying to time the market (trying to sell before the next recession, trying to buy just before the next bull market), “repositioning” portfolios based on what is supposed to do better in the new paradigm (e.g. sell tech and buy energy and commodities), dumping stocks during a downturn, which deprives oneself of the means to eventually recover. This is precisely why compounding over the long term is so challenging and rare: it demands rational, grounded behavior that runs counter to human nature. Well, this is not our game to play! We believe that long-term wealth creation is about investing in great businesses with great people and compounding capital over the long term. So, despite wars, pandemics, recessions, inflations, etc…, it’s those investors that just continue to buy and own great businesses that generate excellent returns. We believe the proven secret to successful investing is simple: stay invested in great businesses and do not get too excited or fearful about the market gyrations that happen every day, and just keep with it. ”To make money in stocks you must have the vision to see them, the courage to buy them, and the patience to hold them. Patience is the rarest of the three.” — Thomas Phelps We have observed that all returns in life, whether its investing and wealth, health, relationships, or knowledge, come from compound interest. Thus, we believe in playing the long-term game with long-term people — this is where the Rowan Street train is going. We truly appreciate all of you that are on board, that trust us, and believe in our vision, and we hope that this ride will create plenty of wealth and satisfaction for all our partners! Office in New York City On a separate note, I have recently relocated to New York City. Joe is still based in Bellevue, WA. We have not opened an office here yet, but something we are considering down the line. Please feel free to reach out if you are visiting NYC this summer. Would be happy to grab a coffee or lunch. Best regards, Alex and Joe Updated on Jul 7, 2022, 9:11 am (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJul 7th, 2022

NEXPE launches as a new real estate platform in Brazilian market

A new platform emerges in the Brazilian real estate market. NEXPE is the result of bringing together six well-established brands Brasil Brokers, CrediMorar, Desenrola, Abyara, Bamberg and Convivera, now powered by shared technology. NEXPE has been created to address the challenges of the customer experience in the real estate market,... The post NEXPE launches as a new real estate platform in Brazilian market appeared first on Real Estate Weekly. A new platform emerges in the Brazilian real estate market. NEXPE is the result of bringing together six well-established brands Brasil Brokers, CrediMorar, Desenrola, Abyara, Bamberg and Convivera, now powered by shared technology. NEXPE has been created to address the challenges of the customer experience in the real estate market, offering end-to-end solutions from the moment one begins the search for a house, flat or office through to renting or acquiring a property, or obtaining real estate credit or financing. “NEXPE is a technological platform that offers our customers the best and most complete experience, from the beginning to the end of the real estate journey,” said Daniel Guerbatin, CEO of NEXPE. The objective of the new group, which has more than 3,000 brokers and more than 2,000 partners in financial services, is to be the best real estate platform in Brazil and to represent 10% of market share by 2026. In 2021, NEXPE companies completed over 17,000 real estate transactions, equivalent to about R$ 7 billion/US$1.5 billion (almost R$ 20 million/US$4.2millons per day). Focus on technology and customer experience Solutions have been designed to enhance the efficiency throughout the real estate acquisition cycle – from the moment of the search to the acquisition of a property or real estate credit. NEXPE’s focus on putting technology to work for the client is significant and tangible. The technology team represents over 15% of employees; in 2021 this tech team have clocked 34,000 hours developing 1255 functions for proprietary systems in 72 sprints. Technology solutions that today is the groups DNA. NEXPE comes at a critical time in the market when customer experience and the provision of services are sought out and much more valued. “Brasil Brokers was founded in 2007 when the real estate market was very different to today. Over the last 18 months, we have gone through a transformation to build a new company with more emphasis on technology, and the launch of NEXPE is the realization of this effort. Our objective is to offer the best experience for clients and ensure greater profitability for the businesses,” highlights Guerbatin. NEXPE is backed by an affiliate of Cerberus Capital Management, L.P. “(Cerberus”), a leading global investor in real estate with more than US$55 billion in assets. With a team of technical experts and network of advisors, Cerberus brings extensive technological expertise to its investment and operating platforms. Adding value and driving operational excellence Currently 75% of NEXPE’s transactions originate through digital channels while the native digital brands, Credimorar and Desenrola represent almost 80% of the group’s revenue. “The six brands integrate the group mission and vision, but have the freedom to act autonomously and independently on a day-to-day basis,” says Guerbatin. In addition, the interaction between the six brands will generate synergies through the sharing of technologies. “As each company works with data, we will be able to offer a number of valuable opportunities with complementary products and services to complete the customer experience,” Guerbatin added.   The market leader in multi-bank home loans in Brazil, fintech CrediMorar has already enabled 22,000 Brazilians to become homeowners and is poised to continue to drive these numbers thanks to its proprietary Credintegrados system. The company has originated more than R$10 billion (circa US$2,110m) home loans to date. Desenrola, created in 2019, is the group’s digital platform for the rental and sale of real estate, and offers clients a model of intermediation that seamlessly integrates the digital and the analogue experience. The Brasil Brokers operation will continue with its strong performance in the property brokerage segment, especially in Rio de Janeiro and Niterói. “NEXPE is the result of a market vision in which customer experiences are fundamental and brands can no longer leave this in the hands of third parties. With various brands that provide a full range of solutions to the market, NEXPE guarantees in-house excellence in customer experience,” says Guilherme Blumer, marketing and digital transformation director at NEXPE. Technology aligned to human factors Allying technology with market experience acquired over more than 15 years of operations means that NEXPE can act assertively. In addition to the significant investment in core technology, NEXPE leadership prioritizes premium optionality for its clients to always have a personal experience. “All our clients can speak to specialists over the phone, visit properties in person and sign documentation in person, if they prefer: it our client’s choice. We will continue to develop options to enhance both digital and physical transactions and continually review and expand these to ensure the best experience. It is the mindset of respecting our user, our customer, to decide how he wants to dialogue with us. Technology creates a lot of scale, but it should be a means, not an end. Our business will always be human to human, people talking to people,” explains Blumer. NEXPE believes in offering a “Phygital” service, in which the process of buying/renting a property can be initiated and completed by digital means, however a visit to know the place, its surroundings and other details, is done in the company of a trusted broker. “We leverage our years of market experience and understanding, and combine it with powerful technology to benefit our clients,” says Blumer. “The aim is to offer the best service throughout the process of buying or renting a property; and the companies that will lead the sector are those that delivers the best customer journey. It is often understood that the result of the business is in the sale of the product, when in fact it is in the service provided,” Blumer concludes. Future of real estate In addition to its robust offering the NEXPE umbrella, management will continue to keep an eye on the market and will not hesitate to buy or create new services if it perceives a new market need.  “The real estate market is always impacted by external factors, such as rising interest rates and inflation, and the role of NEXPE’s brands is to use technology and market knowledge to create as much stability as possible for clients and investors, protecting all our stakeholders from adverse market conditions. NEXPE has been created to be a trusted partner in the very dynamic, complex and growing Brazilian real estate market,” concluded Guerbatin. The post NEXPE launches as a new real estate platform in Brazilian market appeared first on Real Estate Weekly......»»

Category: realestateSource: realestateweeklyMar 30th, 2022

Johnson & Johnson CEO On The Company’s Transformation

Following is the unofficial transcript of a CNBC interview with Johnson & Johnson (NYSE:JNJ) CEO Joaquin Duato and CNBC’s Senior Health & Science Reporter Meg Tirrell live during CNBC’s “Healthy Returns Summit: Reality, Recovery and Opportunity” today, Wednesday, March 30th. CNBC’s Interview With Johnson & Johnson CEO Joaquin Duato MEG TIRRELL: I want to bring […] Following is the unofficial transcript of a CNBC interview with Johnson & Johnson (NYSE:JNJ) CEO Joaquin Duato and CNBC’s Senior Health & Science Reporter Meg Tirrell live during CNBC’s “Healthy Returns Summit: Reality, Recovery and Opportunity” today, Wednesday, March 30th. CNBC’s Interview With Johnson & Johnson CEO Joaquin Duato MEG TIRRELL: I want to bring in now our first guest Joaquin Duato, the CEO of Johnson & Johnson. J&J of course was instrumental in the vaccine race for COVID-19. We’re going to talk about that but Joaquin first I just want to welcome you. You know first time we’ve gotten to chat since you’ve taken the CEO role in January. Thanks so much for being part of “Healthy Returns.” if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q4 2021 hedge fund letters, conferences and more JOAQUIN DUATO: Thank you Meg. So happy to be with you here today in this my first interview, and so proud to be the 8th CEO of Johnson & Johnson in its 135 years of history, and also the first one who is not US born for a company with such a rich global history, a legacy. TIRRELL: Well, absolutely. So, having taken the role in January, but of course, you've been with Johnson & Johnson for 33 years, I believe, what's priority number one in the top job? DUATO: Priority number one Meg is to be able to step up to the moment that we have in front of us in healthcare. I think we are in a moment of opportunity, where the combination that we are having of society recognizing the value of health, and science and technology bringing new therapies, it's gonna create more progress in health in this decade that we have seen in the last 100 years. So I'm very optimistic about the future and how Johnson & Johnson is going to step up to the moment. Now I also understand that we live in, in a difficult situation in volatile conditions. My heart goes to everybody affected by the war in Ukraine and at the same time, as you guys were discussing earlier, COVID-19 is still moving in certain regions of the world and we are monitoring the situation but overall, in taking the job, I’m convinced and filled of hope of the potential of science and technology to continue to deliver progress and how Johnson & Johnson is going to step up to the moment. TIRRELL: And you're also coming into the role at a time when J&J is embarking on a big transformation. You announced last November the plans to separate out your consumer healthcare business into its own publicly traded company. Those are of course the iconic brands that a lot of folks know J&J for, your Tylenol, Band-Aids, Listerine, things like that. So as you prepare to do that, what is the new J&J going to look like without those iconic brands? DUATO: Thank you and as you refer, that's what we do at Johnson & Johnson. We need to be able to evolve to meet the demands of our customers and patients around the globe. And we believe strongly in the rationale of creating two companies. One, our global consumer health company, which is going to be scaled to compete globally with the iconic brands that you described, like Tylenol, Aveeno, Neutrogena, Listerine, and then a new Johnson & Johnson around medtech and pharmaceuticals that is going to be focused in the patient and by combining medicines and surgical techniques is going to be at the forefront of the transformation in healthcare. So, we are very optimistic about what we are doing there. For the consumer health company, it's going to be an opportunity to deepen the relationships with consumers, to attract new investors, to inspire employees, and to be able to have a fit for purpose model, their own capital location priorities to thrive, and then for the new Johnson & Johnson is going to be an opportunity to be more focused, more competitive and to deliver increased growth. TIRRELL: Well, let's talk about some of those business units. You know, one area of focus for investors but also for other people in the healthcare world just trying to get a sense of what's happening with the pandemic. People have been looking at your medical devices business. You're always the first in the space to report earnings every quarter. And so folks look to J&J is kind of this bellwether for the health of folks going to the hospital and having surgeries and procedures. How predictable do you see that business being in the recovery of that business as we move through the pandemic and people are getting these kinds of procedures done again? DUATO: Thank you. So, we have seen a good performance, a strong performance of our medical device business in 2021, with close to 16% growth, so good performance there. Certainly, our medtech business is been affected by COVID and the reduction in elective procedures that COVID has brought. Now as we continue to move out of the pandemic and we are optimistic as you mentioned before that it will become a manageable condition as we continue to move out of the pandemic, what we see is that our medtech business is in a stronger competitive position. We have now we are now gaining share in all our priority platforms and we are poised to deliver also a good 2022 as the year continues to evolve. So, we are optimistic about the future of our medtech business. We think that the fundamentals of medtech are always there, that medtech is crucial to continue to deliver innovation for patients, improve surgical outcomes and our medtech is going to become increasing increasingly more digital, increasingly more connected, increasingly more smarter, and that's going to help surgeons to be able to deliver better surgical outcomes so very bullish about the future overall of our medtech business and our ability to become more competitive as we come out of this pandemic. TIRRELL: Well, let's talk also about your pharma business and where growth is coming from there. You know, what are the areas that you see the most exciting technologies in either inside the company or outside the company and how do you look at external opportunities like M&A, especially at a time when there's so much technology being developed? There's also so many biotech companies, it's really hard to keep track of all of these we hear from a lot of people in this space. How does J&J stay on top of all of that and how do you sort of plan for growth? DUATO: Absolutely. For us, innovation is the lifeblood of our business in everywhere in medtech, in consumer health, and in pharmaceuticals, and we invest in innovation. We increase our investment in innovation in 2021 by 23%, more than 2 billion in the middle of the pandemic. That's a sign of how much we believe in the opportunity that I was describing before of combined science and technology to deliver improvements in patient care. Focusing on our pharmaceutical business, what we have seen is a step change in our R&D productivity. In November, we had an R&D day in which we presented a lineup, a pipeline of 14 new medicines to be filed before 2025. All of them providing significant improvements in the standard of care and at the same time, all of them with more than a billion-dollar potential. What type of things are we seeing there that makes us hopeful about the future different treatment modalities make. For example, we just had the approval of CARVYKTI, which is our first cell therapy for the treatment of a type of cancer called multiple myeloma. CARVYKTI utilizes our immune system to attack the cancer cells and in the clinical trials, we were treating patients that had already had multiple lines of therapy and they were on their way to hospice and we have seen 98% responses there. So, we are very optimistic about the treatment modalities that we are bringing like cell therapy that are going to enable us, have an aspiration to be able to cure some diseases that were thought to be incurable. TIRRELL: Well, that's a great goal to have. And then just to follow up, how much are you looking externally for innovation to potentially partner or to acquire and how is the environment for acquisitions in the biotech space right now? DUATO: Thank you. External innovation has always been very important for Johnson & Johnson. Our company, as broad and as ambitious as we are, needs to look not only inside, but also outside. The best science is not always going to be inside of Johnson & Johnson and historically, our growth has come at least half, 50%, of that from external innovation. So every time we see cutting edge innovation out there, or even programs out there that may be better than our programs, we jump into action. We have a very sophisticated ecosystem to be able to identify and onboard external innovation. It can take different shapes, it can be, be partnerships, it can be, be collaborations, it can be via sometimes acquisitions. We also have, have created over time a network of incubators in which we have had more than 700 companies. We do hundreds of deals every year so external innovation is very important for Johnson & Johnson overall. Now, for the most part, our deals are things that are emerging technologies, areas in which we can create more value by utilizing our scale in discovery, in development, in manufacturing, in commercialization and many of them have translated into significant innovations. For example, we have done that with one of our largest medicines DARZALEX in multiple myeloma. Sometimes we also look at bigger M&A. We did it five years ago when we acquired Actelion. When we look at bigger acquisitions, it's more complex, and obviously, they always have to clear a higher financial barrier and more steep financial metrics. Overall, external innovation will remain a core focus for Johnson & Johnson and the important thing is to have the capability to understand where the pack is going, to understand where science is going, to be the first ones in onboarding new technologies like like cell therapy, gene therapy, that are going to transform the future of medicine and as I said before, Johnson & Johnson is going to be ready to step up to the moment. TIRRELL: Well, we're getting some great viewer questions, one of which dovetails with what the next thing I was going to ask you about, we know that you served as the Interim Chief Information Officer for J&J in 2019 and so you've got to focus on data science. Eric asks, “How are you starting to use artificial intelligence in your medtech devices and also pharmaceutical business” and I’d expand that, are artificial intelligence, data science in general, tell us about J&J’s strategy here. DUATO: Thank you. So, I had the pleasure to be the Interim CIO of Johnson & Johnson for almost a year so that gave me a great appreciation of how the combination of our increased insights into human genetics combined with artificial intelligence and machine learning can accelerate discovery and development of new medicines and I will give you some examples in a moment. But importantly, also how automation, optical recognition, machine learning, artificial intelligence can make surgeries smarter, and can help us through robotics. So, I believe that technology is going to be foundational in being able to deliver these new therapies that I was talking to you before. Let me give you some examples for, in understanding the origins of the disease. Now we can we can do genomic sequencing, and at the same time with large data sets, utilize AI and machine learning to create patterns in which we can correlate diseases with genomic profiling to identify where are going to be the underpinnings of diseases that are going to be the triggers. the targets that we are going to be able to utilize in our discovery. In our discovery now for example, we are using also machine learning and data science and optical recognition to transform we, the way we analyze new medicine. So now we use a cell, a single cell and we drop that test compound and through imaging, we can identify much faster than before what is going to be the pharmacological activity of this profile, what is going to be the expected toxicities and that accelerates the development on discovery of new medicines. Going into development, we can plan much better our clinical trials, we are able to create synthetic control groups instead of having placebo groups and we are also able to stratify and identify patients that are difficult to find in rare diseases utilizing algorithms that enable us to identify them. So, I'm very bullish about the potential of technology in accelerating discovery and developing new medicines but at the same time, I’m equally bullish about the potential of technology, medtech in improving surgical outcomes. I see a future in which all medical devices would be smarter connected to the cloud, being able to provide data to the surgeons for them to be able to in real time improve surgical outcomes and you are seeing that already, through the digitalization of medtech and through robotics, so very bullish on the potential of technology to accelerate progress in human health. TIRRELL: Well, this is fascinating. I could ask you about a half an hour's worth more of questions. We can do a whole conference just on this topic. But I will move on, you know, curious also, how is J&J adjusting to what you're seeing in terms of inflationary pressures? Are you passing those along to consumers at all? What can we expect from J&J there? DUATO: Thank you. As I said before, this is a volatile situation and we're seeing headwinds in different areas, for example, in inflation, in supply chain, in availability of important raw materials and components. We continue to be vigilant in monitoring all those things. And we believe that we are able to manage these things better than, better than most. Our scale, our size enable us to be able to navigate these circumstances better better than most. And most of it is already included in the guidance that we provided earlier in the year which which conveys a healthy growth rate, both in revenues and in EPS. We are optimistic about the future. Some of these trends are going to be mitigated as the year goes by. Some of them as inflation may take longer. But overall, we are very optimistic about the fundamentals of healthcare and the ability that we are going to have to continue to deliver new therapies, new medical devices that step up to the moment and create progress in addressing diseases in completely different ways. TIRRELL: And in the consumer business specifically because that's the one that most directly you're selling right to consumers, will they be feeling that that bite of inflation at all will Band-Aids cost more, you know, will Neutrogena, Aveeno products cost more? DUATO: The consumer business, as you mentioned, is one that obviously is more affected by the inflationary pressures. Overall, we've seen volatility in the consumer demand, but we continue to see a very solid consumer business coming through and we continue to try to deliver what is best for consumers and we continue to try to mitigate our cost increases by improving our own efficiency and in some cases also having price increases but overall, we are bullish about the potential of our consumer health business, and about our ability to navigate the inflationary pressures in a way that is optimal for consumers. TIRRELL: We're just about out of time, but I can't let you go without asking you about your COVID-19 vaccine and the efforts that you've put in there. What do you see is the future for J&J’s COVID vaccine, where you have the CDC having made a preferential recommendation for the mRNA vaccines over J&J’s vaccine? What role will it play going forward, both in the US and around the world? DUATO: Thank you. That's a great question and let me start by saying that we are so proud of Johnson & Johnson being able to develop a COVID-19 vaccine. Back in 2020, our scientists, our researchers, and thousands of people around the company jump in and develop a COVID-19 vaccine that was, that showed easy to distribute, a low-cost platform that is having a significant impact in addressing the pandemic there where it's most needed in places where have low resources, in places where they are still going through the first vaccination. And we are very proud about the role that our vaccine is playing and will continue to play in addressing the pandemic. For example, now in Africa, we just signed an agreement with a South African company in order to be able to manufacture and distribute our vaccine in Africa. So overall, we feel very proud about the role that our vaccine is playing, and we continue to see that important role in addressing the pandemic there where it's most needed. TIRRELL: All right, and I think we're just about out of time, but we did get one more audience question we want to put to you and then I want to bring in Tyler who I think has a question for you. But Mark from the audience asked, “What's the limiting factor for innovation right now? Is it money, talent, regulation, something else? All of the above.” What is it? DUATO: There's, there's, I said before, rather than the limitations, I prefer to focus on the opportunity. As I said, I believe strongly that we can make more progress in this decade than we made in the last 100 years. And there's a combination of factors which are fostering that. One is, on one hand, society has understood the value of having strong healthcare ecosystem. I think that what we have seen with the vaccines and the progress on how vaccines have supported others in the pandemic has reconfirmed society's belief on the importance of healthcare. On the other hand, we're seeing a great explosion on better understanding of the underpinnings of the disease, the genetic basis of the disease that helps us identify in the right targets to affect combined with new treatment modalities and the use of technology in surgery, which is going to improve outcome. So I want to look at the opportunities, opportunities to be able to address suffering globally, to address diseases that remain incurable and that's what I think you're going to see in this decade. Great progress in human health. TIRRELL: Tyler? TYLER MATHISEN: It's great to see you again. And I want to ask a question that that bears on some things that have happened at the company in the past years. You know, Johnson & Johnson, it’s no surprise perennially one of the most respected admired corporations in the country in your DNA I think every every employee lives by a pledge I can't remember exactly the the term that you use to to describe it. And yet in recent years, and there's no company that's probably done more to help more people live better than than your own, but in recent years, there have either been judgments or settlements or payments in at least three areas. One is talc, the other is hip replacement under the pinnacle subsidiary and the third is opioids that have amounted to in some cases, billions of dollars paid out and in others, hundreds of millions and some others that are still under litigation. The company has not under those terms they've not admitted any responsibility. I wonder whether those payments are material to the company's performance financially and have they been material to the company's otherwise sterling reputation? Could you talk me through that just a little bit in light of what's been going on? DUATO: So Tyler, what the plates do refer, it's what we call our credo, which is a statement of principles that dates backs already 75 years that puts the patients and consumer first, then our employees, then the communities and then if we do a good job for all these three stakeholders, then shareholders are going to have their return. So that's what we call our credo which is the DNA of Johnson & Johnson, what guides our decisions and the connective tissue that makes our organization a cohesive group and we understand that we have a reputation. We understand that we have a high bar and a high expectation from society overall and we are ready to step up to the moment as we have done during our more than 135 years of history. Yes, we have some challenges and when you refer to the litigation, we are always trying to have the same principle. We always try to do what is fair and equitable in finding a resolution that is good for all stakeholders. That has been our position in every situation regarding with the litigation. Ultimately, we want to always reach a fair and equitable resolution in order to be able to focus on what we do best and what we do best is to continue to develop medicines, medical devices, consumer products that improve consumer lives, and also are able to address patient's needs in multiple ways to alleviate suffering and to, as I said before, to get diseases that are incurable curable. So that's our mission. Our mission is to continue to affect the trajectory of health for humanity and that's where the 135 employees of Johnson & Johnson are focused every single day. MATHISEN: Forgive me for not remembering the word credo because it was, it was such a, in our last conversation, it was such a central part of it. I appreciate your reminding me. I appreciate your taking my question and the answer, and we're very, congratulations by the way, on your appointment as CEO. DUATO: Thank you. MATHISEN: It's wonderful to see you again Joaquin and Meg thank you so much for your participation as well. Very grateful to both of you and we appreciate it. Thanks, guys. DUATO: Thank you. TIRRELL: Thanks Tyler. Updated on Mar 30, 2022, 2:07 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkMar 30th, 2022

Futures Tumble, Oil And Treasury Yields Plunge As Lockdowns Return

Futures Tumble, Oil And Treasury Yields Plunge As Lockdowns Return Having briefly touched new all time highs of 4,723.5 overnight, S&P futures tumbled shortly after Europe opened as a fourth wave of the pandemic in Europe resulted in a new lockdown in Austria and the prospect of similar action in Germany wiped out earlier gains and forced stock markets down close to 1% as it overshadowed optimism about corporate earnings and the economic recovery. Friday is also a major options-expiry day, which could trigger volatility in equities. Two progressive Democratic senators said they oppose the renomination of Federal Reserve Chair Jerome Powell to a second term, because he "refuses to recognize climate change" joining Elizabeth Warren in urging President Joe Biden to choose someone else. S&P and Dow futures fell tracking losses in banks, airlines, and other economically sensitive sectors. Uncertainty over rising inflation and the Federal Reserve's tightening also kept demand for value stocks low. At 745am Dow e-minis were down 218 points, or 0.609%. S&P 500 e-minis were down 12.25 points, or 0.26% and Nasdaq 100 e-minis were up 68 points, or 0.41%. With the lockdown trade storming back, Nasdaq futures hit a record high on Friday as investors sought economically stable sectors after a small delay in voting on President Joe Biden's $1.75 trillion spending bill, while fears of Europe-wide lockdowns sent yields plunging. The U.S. House of Representatives early on Friday delayed an anticipated vote on passage of Biden's social programs and climate change investment bill, and will instead reconvene at 8 a.m. EST (1300 GMT) to complete the legislation “Everyone is holding his and her breath to find out who will be the next Fed Chair,” said Ipek Ozkardeskaya, senior analyst at Swissquote. “More or less dovish, will it really matter? The one that will take or keep the helm of the Fed will need to hike rates at some point.” Among major premarket movers, Intuit Inc jumped 10.3% as brokerages raised their price targets on the income tax software company after it beat quarterly estimates and raised forecast. The stock was the top S&P 500 gainer in premarket trade. Chipmaker Nvidia also boosted Nasdaq futures, rising 1.7% in heavy trade after posting strong quarterly results late Wednesday. On the other end, Applied Materials dropped 5.7% after the chipmaker forecast first-quarter sales and profit below market estimates on supply chain woes. Oil firms Exxon and Chevron slipped 2.1% and 1.8% as crude prices sank, while big banks including JPMorgan and Bank of America were down between 0.9% and 1.1%, tracking a fall in U.S. Treasury yields. Carriers Delta Air Lines, United Airlines and American Airlines and cruiseliners Norwegian Cruise Line and Carnival Corp fell between 1.4% and 2.3%. Here are all the other notable movers: Farfetch (FTCH US) shares drop 23% after the online apparel retailer reported 3Q revenue that missed estimates and trimmed its FY forecast for digital platform gross merchandise value growth. Analysts see scope for the shares to stay in the “penalty box” in the near term, but recommend buying on weakness. Workday (WDAY US) analysts say that the software firm’s strong quarterly results and guidance were not quite enough to meet high expectations. The stock dropped as much as 11% in extended trading on Thursday. Intuit (INTU US) climbed 9.7% in premarket as analysts said the tax software company posted strong results that were ahead of expectations and raised its outlook. Several increased their price targets for the stock, including a new Street high at Barclays. Palo Alto Networks (PANW US) shares rise 2.8% in U.S. premarket trading after the cyber- security firm reports results and hikes full-year sales guidance, with RBC saying co. saw a strong quarter. Tesla (TSLA US) shares dip 0.5% in premarket trading. The EV maker’s price target is raised to a joint Street-high at Wedbush, with the broker saying that the EV “revolution” presents a $5t market opportunity over the next decade. Datadog (DDOG US) rises 1.8% after it is upgraded to outperform from sector perform at RBC, with the broker saying that it has more conviction on the software firm following its TMIT conference. Mammoth Energy (TUSK US) jumps as much as 34% in U.S. premarket trading after the energy-services company said a subsidiary has been awarded a contract by a major utility to help build electric-vehicle charging station infrastructure. Ross Stores (ROST US) shares dropped 2.2% in postmarket trading on Thursday after its profit outlook for fourth quarter missed the average analyst estimate. In Europe, banks and carmakers led the Stoxx Europe 600 Index down 0.3%, reversing early gains. Fears of fresh lockdowns have hit travel stocks, but boosted the delivery sector and other pandemic winners, with German meal-kit company HelloFresh jumping as much as 7.1% to a record. Stoxx Europe 600 index tumbled after Germany’s health minister said he couldn’t rule out a lockdown as infections surge relentlessly in the region’s largest economy. That came after Austria said it would enter a nationwide lockdown from Monday. Here are some of the biggest European movers today: Ocado shares jump as much as 8.4%, the most intraday since November 2020, after a Deutsche Bank note on joint venture partner Marks & Spencer highlighted scope for a potential transaction. VGP shares gain as much as 7.7% to a record after KBC raised its rating to accumulate from hold, based on a “strong” 10-month trading update. HelloFresh shares surge as much as 7.1% and other lockdown beneficiaries including Delivery Hero, Logitech and Zalando gain after the German health minister says a lockdown can’t be ruled out. Mall landlords Unibail and Klepierre and duty-free retailer Dufry drop. Truecaller shares rise as much as 14% after it received its first analyst initiations after last month’s IPO. Analysts highlighted the company’s potential for continued strong growth. JPMorgan called current growth momentum “unparalleled.” Hermes shares jump as much as 5.2% to a fresh record, rising for a seventh day, amid optimism that the stock may be added to the Euro Stoxx 50 Index as soon as next month. Shares also rise after bullish current- trading comments of peer Prada. Kingfisher shares drop as much as 5.8%, even after the home-improvement retailer said it expects profit to be toward the higher end of its forecast. Investor focus has probably shifted to 2022, and Friday’s update doesn’t have any guidance for next year, according to Berenberg. GB Group shares tumble as much as 18%, the most since October 2016, after the identity-verification software company raised about GBP300m in a placing of new shares at a discount. Mode Global shares sink as much as 19%, reversing most of this week’s gains, after it said some brands had withdrawn the company as an affiliate. In Fx, the Bloomberg Dollar Spot Index jumped at the London open and the greenback was higher versus all of its Group-of-10 fears apart from yen. Norway’s krone was the biggest loser as energy prices prices dropped after Austria announced a nationwide lockdown starting on Monday, while Germany’s health minister refused to rule out closures in the country.  The pound fell on the back of a stronger dollar; data showed U.K. retail sales rose for the first time in six months as consumers snapped up toys, sports equipment and clothing, while the cost of servicing U.K. government debt more than tripled in October from a year earlier due to surging inflation The euro plunged by 1% to a new YTD low of $1.1255 as the repricing in the front-end of euro options suggests the common currency is settling within a new range. The euro is also falling at the end of the week following the announcement that Austria will begin a 20-day full Covid-19 lockdown from Monday in response to surging case numbers which have far surpassed last year's peak. While fatalities remains well below the peak, they are accelerating and the government is clearly keen to arrest it before the situation potentially becomes much worse. With Germany seeing a similar trend, the question now becomes whether the regions largest economy will follow the same path. Its Health Minister, Jens Spahn, today suggested nothing can be ruled out and that they are in a national emergency. In rates, Treasury yields fell by around 4bps across the board and the bunds yield curve bull flattened, with money markets pushing back bets on a 10bps ECB rate hike further into 2023. Treasury 10-year yields richer by 4.5bp on the day at around 1.54% and toward lows of the weekly range -- bunds, gilts outperform Treasuries by 1bp and 1.5bp in the sector as traders reassess impact of future ECB rate hikes. Treasuries rally across the curve, following wider gains across EGB’s and gilts as investors weigh the impact of further European lockdowns amid a fourth wave of Covid-19. Flight-to-quality pushes Treasury yields lower by up to 5bp across front- and belly of the curve, which slightly outperform.  Bunds and Treasury swap spreads widen, while gilts move tighter as risk assets mostly trade to the downside and demand for havens increases on news regarding coronavirus restrictions. German 10-year swap spreads climbed above 50bps for the first time since March 2020. In commodities, spot gold is little changed around $1,860/oz, while base metals are in the green, with LME copper and aluminum leading peers. Oil tumbled with WTI and Brent contracts down well over 2%.  Brent crudes brief dip below $80 was short-lived on Thursday and prices were continuing to recover on the final trading day of the week until Austria announced its lockdown. Brent crude quickly reversed course and trades almost 2% lower on the day as it takes another run at $80. Oil has been declining over the last week as demand forecasts have been pared back, OPEC and the IEA have warned of oversupply in the coming months and the US has attempted to coordinate an SPR release with China and others. The market still remains fundamentally in a good position but lockdowns are now an obvious risk to this if other countries follow Austria's lead. A move below $80 could deepen the correction, perhaps pulling the price back towards the mid-$70 region. This looks more likely now than it did a day ago and if Germany announces similar measures, it could be the catalyst for such a move. Perhaps OPEC+ knows what it's talking about after all. Looking at To the day ahead now, there is no macro news; central bank speakers include ECB President Lagarde, Bundesbank President Weidmann, Fed Vice Chair Clarida, the Fed’s Waller and BoE Chief Economist Pill. Separately, data highlights include UK retail sales and German PPI for October. Market Snapshot S&P 500 futures down 0.09% to 4,696.25 STOXX Europe 600 up 0.2% to 488.66 MXAP little changed at 199.11 MXAPJ down 0.2% to 648.18 Nikkei up 0.5% to 29,745.87 Topix up 0.4% to 2,044.53 Hang Seng Index down 1.1% to 25,049.97 Shanghai Composite up 1.1% to 3,560.37 Sensex down 0.6% to 59,636.01 Australia S&P/ASX 200 up 0.2% to 7,396.55 Kospi up 0.8% to 2,971.02 Brent Futures little changed at $81.17/bbl Gold spot up 0.1% to $1,860.34 U.S. Dollar Index up 0.43% to 95.96 German 10Y yield little changed at -0.32% Euro down 0.6% to $1.1304 Top Overnight News from Bloomberg Germany’s Covid crisis is about to go from bad to worse, setting the stage for a grim Christmas in Europe. With infections surging relentlessly and authorities slow to act amid a change in power, experts warn that serious cases and deaths will keep climbing Austria will enter a nationwide lockdown from Monday as a record spike in coronavirus cases threatens to overwhelm the country’s health care system The pundits are coming for the Fed and Chair Jerome Powell. Mohamed El-Erian, chief economic adviser to Allianz SE and a Bloomberg Opinion columnist, recently said the central bank has made one of the worst inflation calls in its history. Writing in the Financial Times, the economist Willem Buiter called on the Fed to abandon the more flexible inflation target it established last year Bitcoin continued its slide Thursday, falling for a fifth consecutive day as it slipped below $57,000 for the first time since October, in a retreat from record highs. The world’s largest cryptocurrency hasn’t slumped that long since the five days that ended May 16 House Democrats pushed expected passage of President Joe Biden’s $1.64 trillion economic agenda to Friday as Republican leader Kevin McCarthy delayed a vote with a lengthy floor speech that lasted into the early morning hours ECB President Christine Lagarde said policy makers “must not rush into a premature tightening when faced with passing or supply- driven inflation shocks” Markets are increasingly nervous about the common currency with the pandemic resurgent, geopolitical tensions rising and gas supply issues mounting A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks traded mostly positive after the mixed performance stateside where the S&P 500 and Nasdaq notched fresh record closes, but cyclicals lagged as comments from Senator Manchin cast some uncertainty on the Build Back Better bill. The ASX 200 (+0.2%) was rangebound with upside in healthcare and consumer stocks offset by weakness in tech and a lacklustre mining sector. Crown Resorts (CWN AT) was the stellar performer after it received an unsolicited, non-binding takeover proposal from Blackstone (BX) valued at AUD 12.50/shr which boosted its shares by around 16%, although gains in the broader market were limited as COVID-19 concerns lingered following a further jump of cases in Victoria state. The Nikkei 225 (+0.5%) benefitted from a mostly weaker currency and after PM Kishida confirmed the details of the incoming stimulus package valued at a total JPY 79tln including JPY 56tln in fiscal spending. The KOSPI (+0.8%) was also positive but with gains initially capped as South Korean wholesale inflation surged to a 13-year high and further added to the case for the BoK to hike rates for the second time this year at next week’s meeting. The Hang Seng (-1.1%) and Shanghai Comp. (+1.1%) were mixed with the mainland kept afloat amid press reports that China is considering measures to reduce taxes and fees by up to CNY 500bln, although the mainland was initially slow to start after another liquidity drain by the PBoC and with stocks in Hong Kong spooked amid substantial losses in Alibaba following a miss on its earnings and Country Garden Services suffered on reopening from the announcement of a 150mln-share placement. Finally, 10yr JGBs were rangebound with mild gains seen after the modest bull flattening stateside, but with upside restricted amid the gains in Japanese stocks and lack of BoJ purchases, as well as the incoming fiscal spending and extra budget from the Kishida government. Top Asian News Bitcoin Falls Almost 20% Since Record as Crypto Bulls Retreat Singapore’s Insignia Ventures Intensifies Push Into Healthtech Binance Chief Zhao Buys His First Home in ‘Pro-Crypto’ Dubai Property Stocks Surge; Land Sale Rules Eased: Evergrande Update The earlier positive sentiment in Europe dissipated amid a string of back-to-back downbeat COVID updates – with Austria now resorting to a full-scale lockdown and Germany sounding alarms over their domestic COVID situation and not ruling out its own lockdown. European bourses flipped from the mostly positive trade at the open to a negative picture (Euro Stoxx 50 -0.5%; Stoxx 600 Unch), with headlines also flagging the European stock market volatility gauge jumping to three-week highs. It is also worth noting the monthly option expiries for stocks today, with desks pointing to the second-largest expiry day on record. US equity futures have also seen headwinds from the pullback in Europe, but US futures are mixed with the NQ (+0.4%) benefitting from the slide in yields. Back to Europe, Austria’s ATX (-1.0%) sit as the laggard after the Austrian Chancellor said a full domestic COVID lockdown will be imposed as of Monday for a maximum of 20 days with compulsory vaccination from 1st February 2022. Switzerland’s SMI (+0.2%) owes its gains to the defensive flows into healthcare propping up heavyweights Novartis (+0.5%) and Roche (+0.7%). Sectors overall are mostly negative with Healthcare the current winner, whilst Tech benefits from the yield slump and Basic Resources recover from yesterday’s slide as base metals rebound. The downside sees Banks on yield dynamics, whilst Oil & Gas lost the ranks as crude prices were spooked by the COVID headlines emanating from Europe. In terms of individual movers, Ocado (+6%) resides at the top of the FTSE 100 – with some citing a Deutsche Bank note which suggested shareholder Marks & Spencer could be mulling a buyout, although the note is seemingly speculation as opposed to chatter. Top European News Ryanair Drops London Listing Over Brexit Compliance Hassles ECB Mustn’t Tighten Despite ‘Painful’ Inflation, Lagarde Says Austria to Lock Down, Impose Compulsory Covid Vaccinations German Covid Measures May Bolster ECB Stimulus Stance: El-Erian In FX, it remains to be seen whether the Dollar can continue to climb having descended from the summit, and with no obvious fundamental drivers on the agenda in terms of US data that has been instrumental, if not quite wholly responsible for the recent bull run. However, external and technical factors may provide the Greenback and index with enough momentum to rebound further, as the COVID-19 situation continues to deteriorate in certain parts of Europe especially. Meanwhile, the mere fact that the DXY bounced off a shallower low and appears to have formed a base above 95.500 is encouraging from a chart perspective, and only the Yen as a safer haven is arguably capping the index ahead of the aforementioned w-t-d peak within 95.554-96.090 extremes. Ahead, more Fed rhetoric and this time via Waller and Clarida. EUR - The Euro has been hit hardest by the Greenback revival, but also the latest pandemic waves that have forced Austria into total lockdown and are threatening to see Germany follow suit. Moreover, EGBs are front-running the latest squeeze amidst risk-off trade in stocks, oil and other commodities to widen spreads vs Treasuries and the divergence between the ECB/Fed and other more hawkishly or less dovishly positioned. Hence, Eur/Usd has reversed further from circa 1.1374 through 1.1350 and 1.1300, while Eur/Yen is eyeing 128.50 vs almost 130.00 at one stage and Eur/Chf is probing fresh multi-year lows around 1.0450. NZD/GBP/AUD/CAD - All catching contagion due to their high beta, cyclical or activity currency stature, with the Kiwi back under 0.7000, Pound hovering fractionally above 1.3400, Aussie beneath 0.7250 and Loonie striving to contain declines beyond 1.2650 pre-Canadian retail sales against the backdrop of collapsing crude prices. JPY/CHF - As noted above, the Yen is offering a bit more protection than its US counterpart and clearly benefiting from the weakness in global bond yields until JGBs catch up, with Usd/Jpy down from 114.50+ towards 113.80, but the Franc is showing its allure as a port in the storm via the Euro cross rather than vs the Buck as Usd/Chf holds above 0.9250. In commodities, WTI and Brent front month futures retreated with the trigger point being back-to-back COVID updates – with Austria confirming a full-scale lockdown from Monday and Germany not ruling out its own lockdown. Crude futures reacted to the prospect of a slowdown in activity translating to softer demand. That being said, COVID only represents one factor in the supply/demand equation. Oil consuming nations are ramping up rhetoric and are urging OPEC+ to release oil. The White House confirmed the US discussed a possible joint release of oil from reserves with China and other countries, while it reiterated that it has raised the need for available oil supply in the market with OPEC. Meanwhile, the Japanese Cabinet said it will urge oil-producing nations to increase output and work closely with the IEA amid risks from energy costs. Further, energy journalists have also been flagging jitters of Chinese crude demand amid the likelihood of another tax probe into independent refiners. All in all, a day of compounding bearish updates (thus far) has prompted the contracts to erase all of their APAC gains, with WTI Dec just above USD 76/bbl (76.06-79.33/bbl range) and Brent Jan back under USD 79/bbl (78.75-82.24/bbl range). Elsewhere, spot gold saw a pop higher around the flurry of European COVID updates and despite a firmer Buck – pointing to haven flows into the yellow metal – which is nonetheless struggling to convincingly sustain a breach its overnight highs around USD 1,860/oz and we are attentive to a key fib at USD 1876/oz. Base metals prices are relatively mixed but have waned off best levels amid the risk aversion that crept into the markets, but LME copper holds onto a USD 9,500+/t status. US Event Calendar Nothing major scheduled Central Banks 10:45am: Fed’s Waller Discusses the Economic Outlook 12:15pm: Fed’s Clarida Discusses Global Monetary Policy Coordination DB's Jim Reid concludes the overnight wrap It was another mixed session for markets yesterday, with equities and other assets continuing to trade around their recent highs even as a number of risk factors were increasingly piling up on the horizon. By the close of trade, the S&P 500 had advanced +0.34% to put the index at its all-time high, whilst oil prices pared back their losses from earlier in the day to move higher. That said, there was more of a risk-off tone in Europe as the latest Covid wave continues to gather pace, with the STOXX 600 (-0.46%) snapping a run of 6 successive gains and being up on 17 out of the previous 19 days as it fell back from its all-time high the previous day, as haven assets including sovereign bonds were the beneficiaries. Starting with those equity moves, it was difficult to characterise yesterday’s session in some ways, since although the S&P advanced +0.34%, it was driven by a relatively narrow group of sectors, with only a third of the index’s components actually moving higher on the day. Indeed, to find a bigger increase in the S&P 500 on fewer advancing companies, one needs to go back to March 2000 (though it came close one day in August 2020, when the index advanced +0.32% on 153 advancing companies). Consumer discretionary (+1.49%) and tech (+1.02%) stocks were the only sectors to materially advance. Nvidia (+8.25%), the world’s largest chipmaker, was a key outperformer, and posted very strong third quarter earnings and revised higher fourth quarter guidance. Following the strong day, Nvidia jumped into the top ten S&P 500 companies by market cap, ending yesterday at number eight. The S&P gain may have been so narrow due to some negative chatter about President Biden’s build back better package, with CNN’s Manu Raju tweeting that Senator Joe Manchin “just told me he has NOT decided on whether to vote to proceed to the Build Back Better bill.” Manchin’s position in a 50-50 senate has given him an enormous amount of influence, and separate comments created another set of headlines yesterday on the Fed Chair decision, after The Hill reported Manchin saying that he’s “looking very favourably” at supporting Chair Powell if he were re-nominated, following a chat between the two about inflation. Mr Manchin is seemingly one of the most powerful people in the world at the moment. While the Senate still presents a hurdle for the President’s build back better bill, House Democrats are close to voting on the bill but couldn’t last night due to a three hour speech by House Republican leader McCarthy. It will probably happen this morning. This follows the Congressional Budget Office’s ‘score’ of the bill, which suggested the deficit would increase by $367bn as a result of the bill, higher figures than the White House suggested, but low enough to garner support from moderate House Democrats. Over in Europe there was a much weaker session yesterday, with the major equity indices falling across the continent amidst mounting concern over the Covid-19 pandemic. Germany is making another forceful push to combat the recent increase in cases, including expanded vaccination efforts, encouraging work from home, and restricting public transportation for unvaccinated individuals. Elsewhere, the Czech Republic’s government said that certain activities will be limited to those who’ve been vaccinated or had the virus in the last six months, including access to restaurants and hairdressers. Slovakia also agreed a similar move to prevent the unvaccinated accessing shopping malls, whilst Hungary is expanding its mask mandate to indoor spaces from Monday. Greece imposed further restrictions for its unvaccinated population. So a theme of placing more of the restrictions in Europe on the unvaccinated at the moment and trying to protect the freedoms of those jabbed for as long as possible. That risk-off tone supported sovereign bonds in Europe, with yields on 10yr bunds (-3.0bps), OATs (-4.1bps) and BTPs (-5.5bps) all moving lower. That was a larger decline relative to the US, where yields on 10yr Treasuries were only down -0.3bps to 1.59%, with lower real yields driving the decline. One asset class with some pretty sizeable moves yesterday was FX, where a bunch of separate headlines led to various currencies hitting multi-year records. Among the G10 currencies, the Swiss Franc hit its strongest level against the euro in over 6 years yesterday on an intraday basis. That came as the Covid wave has strengthened demand for haven assets, though it went on to weaken later in the day to close down -0.15%. Meanwhile, the Norwegian Krone was the weakest G10 performer (-0.72% vs USD) after the Norges Bank said it would be stopping its daily foreign exchange sales on behalf of the government for the rest of the month. Finally in EM there were some even bigger shifts, with the Turkish Lira falling to a record low against the US dollar, which follows the central bank’s decision to cut interest rates by 100bps, in line with expectations. And then in South Africa, the Rand also fell to its weakest in over a year, in spite of the central bank’s decision to hike rates, after the decision was interpreted dovishly. Overnight in Asia stocks are trading mostly higher led by the Nikkei (+0.45%), KOSPI (+0.43%), Shanghai Composite (+0.34%) and CSI (+0.18%). The Hang Seng (-1.76%) is sharply lower and fairly broad based but is being especially dragged down by Alibaba which dived -11% after it downgraded its outlook for fiscal year 2022 and missed sales estimate for the second quarter. Elsewhere in Japan headline CPI for October came in at +0.1% year-on-year (+0.2% consensus & +0.2% previous) while core CPI matched expectations at +0.1% year-on-year. The numbers reflect plunging mobile phone fees offsetting a 21% surge in gas prices. If the low mobile phone costs are stripped out, core inflation would be at 1.7% according to a Bloomberg calculation. Prime Minister Fumio Kishida is expected to deliver a bigger than expected stimulus package worth YEN 78.9 trillion ($690 bn) according to Bloomberg. We should know more tomorrow. Moving on futures are pointing to a positive start in US and Europe with S&P 500 (+0.42%) and DAX (+0.39%) futures both up. Turning to commodities, oil prices had been on track to move lower before paring back those losses, with Brent Crude (+1.20%) and WTI (+0.83%) both up by the close and edging up around half this amount again in Asia. That comes amidst continued chatter regarding strategic oil releases, and follows comments from a spokeswoman from China’s National Food and Strategic Reserves Administration, who Reuters reported as saying that they were releasing crude oil reserves. New York Fed President, and Vice Chair of the FOMC, John Williams, upgraded his assessment of inflation in public remarks yesterday. A heretofore stalwart member of team transitory, he noted that they wouldn’t want to see inflation expectations move much higher from here, and that recent price pressures have been broad-based, driving underlying inflation higher. Williams is one of the so-called core members of FOMC leadership, so his view carries some weight and is a useful barometer of momentum within the FOMC. Indeed, Chicago Fed President Evans, one of the most resolutely dovish Fed Presidents, expressed similar sentiment, recognising that rate hikes may need to come as early as 2022 given the circumstances. There wasn’t much in the way of data yesterday, though the weekly initial jobless claims from the US for the week through November 13 came in higher than expected at 268k (vs. 260k expected), and the previous week’s reading was also revised up +2k. That said, the 4-week moving average now stands at a post-pandemic low of 272.75k. Otherwise, the Philadelphia Fed’s manufacturing business outlook survey surprised to the upside at 39.0 in November (vs. 24.0 expected), the highest since April. That had signs of price pressures persisting, with prices paid up to 80.0, the highest since June, and prices received up to 62.9, the highest since June 1974. Finally, the Kansas City Fed’s manufacturing index for November fell to 24 (vs. 28 expected). To the day ahead now, and central bank speakers include ECB President Lagarde, Bundesbank President Weidmann, Fed Vice Chair Clarida, the Fed’s Waller and BoE Chief Economist Pill. Separately, data highlights include UK retail sales and German PPI for October. Tyler Durden Fri, 11/19/2021 - 08:11.....»»

Category: personnelSource: nytNov 19th, 2021

J&J CEO Alex Gorsky On Splitting Into Two Public Companies

Following is the unofficial transcript of a CNBC interview with Johnson & Johnson (NYSE:JNJ) Chairman and CEO Alex Gorsky on CNBC’s “Squawk Box” (M-F, 6AM-9AM ET) today, Friday, November 12th.  Following is a link to video on CNBC.com: Q3 2021 hedge fund letters, conferences and more J&J CEO Gorsky Breaks Down Plan To Split Into […] Following is the unofficial transcript of a CNBC interview with Johnson & Johnson (NYSE:JNJ) Chairman and CEO Alex Gorsky on CNBC’s “Squawk Box” (M-F, 6AM-9AM ET) today, Friday, November 12th.  Following is a link to video on CNBC.com: if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Walter Schloss Series in PDF Get the entire 10-part series on Walter Schloss in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2021 hedge fund letters, conferences and more J&J CEO Gorsky Breaks Down Plan To Split Into Two Public Companies BECKY QUICK:  Let’s dig a little deeper into this top story of the morning, Johnson & Johnson announcing that it is going to be splitting into two publicly traded companies. Joining us right now first on “Squawk Box” is J&J’s Chairman and CEO Alex Gorsky. And Alex, thank you for being here today on this big news. The company goes all the way back to 1886 so this is a huge piece of news. Why now? ALEX GORSKY: Well, happy Friday, Becky. And look, before I answer your question directly, I know it's the day after, I just want to acknowledge Veterans Day and all those men and women in the military, the first responders, the firefighters, the policemen who make that kind of a sacrifice every day and their families so that we can actually do these kind of things. But look, this is a historic day for Johnson & Johnson. This is something that our board has deliberated about for some time and we really believe that by separating our consumer business into a separate publicly traded company, is in the best long-term interest of all of our stakeholders. Look our, we realize this is a very unique time. If you just think of the changing dynamics and innovation in technology, in markets and channels. And our goal is really to create two global leaders, a pharmaceutical and medical device business that has great potential today, but very strong pipelines for the future. And of course, the consumer business that's got iconic brands and we think we’ll be well positioned to even have better focus on their strategy around their execution, around their ability to allocate capital, and ultimately to accelerate growth and to touch more consumers around the world. So, we're excited and again, we think this represents a tremendous opportunity for all of our stakeholders. QUICK: Alex, you mentioned Veterans Day and thanking everyone who served. We should thank you as well. I know you went to West Point and were a captain, was it you were a captain in the army before you kind of moved into your corporate career. So, thank you for your service as well. When did this discussion start? How did it come about? When did you start thinking about this? GORSKY: Well, Becky, we think this is a big, we think this is a bold move. And it's one that has been a topic of discussion on our board of directors for some time. You know, it's important for iconic companies like Johnson & Johnson that in spite of the fact that we have been around for more than 135 years to constantly challenge our strategy. And, and we've been having those discussions on a, on a routine basis for over the past decade. But clearly over the past several years, when you just look at some of the underlying trends, the again this acceleration in innovation, particularly in our pharmaceutical segment, our medical device segment, when you take a look at these changing channels, and, and really where our pharma and our medical device business tends to be much more of a business to business relationship in the way that we work through other intermediaries, you know, compared to the consumer business and most importantly, where we see things going into the future. We feel it now is the right time to make this kind of a move and again, ultimately, it's going to allow us to reach more patients, more consumers, have more innovation, and execute in a much more focused way. QUICK: How will the split work? I know that you are transitioning to Executive Chairman come beginning of the year. I take it you'll be staying with the pharmaceutical and medical device company? GORSKY: Yes, well as you can understand and appreciate something like this is going to take some time. We're predicting it's going to take about 18 to 24 months. I'm going to be staying as the CEO through the end of this year, and I'm very proud to be handing off to Joaquin Duato as of January 3, but I'll be remaining as Executive Chairman. There's still a lot of details that need to be worked out on the exact timing, but the good news Beck is look, we've got a really deep bench of leaders here at Johnson & Johnson and we think both these businesses are going to be well positioned. Joaquin will continue to be the CEO for the Johnson & Johnson our pharmaceutical business, our medical device business. And we know we'll have the right leadership in place in our consumer business going forward as well. QUICK: This is one of the greatest brand names of all time. It's incredibly well known. Which of the two companies is going to keep Johnson & Johnson or do you brand both of them with Johnson & Johnson and run the risk of a little consumer confusion as there is with HP and HP, HPC? GORSKY: Well, our pharmaceutical business and medical business. I'm sorry, our pharmaceutical business our medical device business will be Johnson & Johnson. The name of the new company is yet to be known but, you know, you're absolutely right Becky. The consumer business as a standalone publicly traded company, think about it for a moment, it has more than four brands that are over a billion dollars in sales. We have more than 20 brands that are more than $150 million in sales and these are really iconic brands. Tylenol, Aveeno, Neutrogena, Listerine, Motrin, Benadryl, and we have a very strong pipeline. And again, we think by doing this, it’s going to provide them with even more agility, better opportunity for capital allocation, likely a way to even better configure their corporate versus the, the company structures, you know, and ultimately accelerate growth and to reach more consumers. QUICK: Is the plan definitely to spin it off as a separate company or the board is still considering that too? GORSKY: Well, look, we're looking at all options, but our intent is to spin this off as a publicly traded company. Yes. QUICK: And I take it the liabilities for the talcum powder cases that have come would go with the consumer business? GORSKY: Well, look, this is really about the future. We've been very clear in all of our filings regarding the legal issues that you just mentioned. But this is about creating growth for the future in Johnson & Johnson and the new consumer company. QUICK: Alex, just back to when these conversations started. You said the board's been considering it for a while. This is going back more than a year? Can you give us any kind of insight as to when these conversations really started picking up and taking a serious turn? GORSKY: Look, Becky, as you would expect every year when we go through our strategic planning process with the board, we have fundamental discussions where we try to take a look at where are the markets going in which we compete, what, how are our products doing, what is our pipeline look for the future? And we've consistently addressed this fundamental issue about the future of Johnson & Johnson in our portfolio but clearly over the last several years as we've seen some of these dynamics that I mentioned earlier evolve at an even faster rate, that became a catalyst. I think that the pandemic and COVID-19 particularly as, you know, we've seen on the pharmaceutical side, the development and the regulatory processes, you know, shift quite significantly and the opportunity that that could create, again for both our device and pharmaceutical business, but also the very nature of, you know, consumer demands, how they shop, how they’re thinking about the products that they actually want that also, we really played into this overall decision. QUICK: You know that people will look at the pharmaceuticals right now and maybe say that pipeline is strong there, but it is a riskier business. It goes through fluctuations of ups and downs. How do you make sure that it stays in a position where you have a lot in the pipeline? GORSKY: What's really important I believe in the pharmaceutical business Becky and something that we've demonstrated is to take a long-term approach to the way that you manage it. And what I'm very proud of in our group is that if you look over the last decade, whether we had patent expiries, whether we had, you know, launches of major competitors, we've been able to maintain an above market growth rate throughout that period. And it's because of our long-term focus, our willingness to invest both internally and externally in innovation, in bringing new really innovative products to the market, and also just the way that we're executing every day. And so, in spite of often multibillion dollar shifts due to those kinds of issues, we've been able to, you know, maintain consistent above market growth rates. And if we look at our pipeline going forward, we have, you know, more than 10 filings or approvals expected over the next several years, each over a billion dollars, more than 50-line extensions, 10 of which represent about a half a billion dollar opportunities. We remain very confident in our ability to do that as well. QUICK: Alex, Mike pointed out how both pharmaceuticals and consumer staples have underperformed the S&P. Has that been a frustration to you? And why do you think that is? GORSKY: Well, look, I think it is something that will work itself out in the long run is I look at it, the pharmaceutical industry more broadly, let alone our company and I look at the promise of some of these new technologies, be it cell-based therapies, be it gene therapies. I don't think I've ever in my 35-year career seen a more promising time and seen a greater opportunity for acceleration. And while yes, there are going to be risks about pricing and access in other issues, I clearly think that those are things that can be managed and, and worked with in more of an evolutionary way. And, and so again, I'm we're very optimistic about a pharmaceutical business, about a medical device business and we also believe our consumer business is very well positioned. QUICK: And is it safe to assume that if this is going to take 18 to 24 months to work out that you will stick around as Executive Chairman to oversee that process? GORKSY: Well look, as mentioned in our announcement, I plan on being here as the Executive Chair. We want to make sure there's a smooth transition. I'm incredibly proud of the selection with Joaquin. We've got a strong management team. And Becky the other thing that's really important is we are doing this from a position of strength. You know, if you look at our last quarterly results, for example, all three of our businesses are growing at or above their market rates. Our market shares are showing strong positioning, our pipelines are stronger than they've ever been. So again, we think this is the right time. We recognize again that this is a historic move. But when we think about the long-term for patients and consumers and for Johnson & Johnson and our consumer business, you know, we're confident that this this will be positive for all of our stakeholders. QUICK: Alex, we were just talking with Dr. Scott Gottlieb, the former head of the FDA about Kaiser Permanente and what he sees just in terms of patients coming back, patients who sat out for a year and half not doing some of the surgeries that they could have done because of COVID or maybe they couldn't do it because hospitals weren't doing them. He was talking about how that business is really coming back as people have morbidities that they really have to get in and address. I take it you've seen the same with the medical device business. GORSKY: Absolutely Becky. Look another, another unfortunate downside of COVID-19, not only was the patients who have been impacted by the virus itself, but about all those delayed visits to the physician, all those delays and being diagnosed for example with cancer. And we all know that the later that we're able to treat these things, it increases the potential for an even worse outcome. And so, we do think that there's significant pent-up demand. And again, I want to give a shout out to all the doctors, the nurses, the physicians, the hospital systems, the way they've been managing it. But we do anticipate that that pent-up demand will be working its way back through the system. We're seeing signs of that as we speak, particularly here in the United States, but also in Europe and other places around the world. And again, we think that represents a significant opportunity, not only as we head into 2022 but in years beyond as well. QUICK: And finally, everyone's talking about inflation right now. I'm sure that impacts just about every one of your divisions in the business but maybe consumer products is the one that people will be watching most closely, organic growth there last year of about 4%. What will inflation mean in terms of compression on the margins and how do you handle that? GORSKY: Well, look, we're watching it closely. And I'm really proud of the job that our consumer team, our supply chain has been able to do over the last 12 to 18 months and managing above and beyond inflation just consider the volatility that we saw through 2021 itself and, you know, significant swings across the different product lines. Nonetheless, we were still able to meet that demand. We're absolutely committed to making sure that we maintain an appropriate pricing structure. We're working hard with, you know, our channel partners to, to do that. But we are, we are starting to see some stresses and strains in the systems with some under, underlying supply products but we're managing that closely. And again, we're hopeful that we'll be able to maintain the strong performance, like you just mentioned, we're seeing mid-single digit growth in our consumer business, but also significant improvement in the profitability of our consumer segment as well. And, and we expect that to continue going forward. QUICK: Alex, we want to thank you for being with us on this busy morning. A huge announcement. We appreciate your time. It's really good to see you. GORSKY: Well, hey Becky, if I can just one final shout out for our employees. The 136,000 committed employees of Johnson & Johnson especially those in our consumer group. Without their hard work, their commitment, their support, this would never be possible. So, a huge thanks to all of them and, and thank you, you know, for spending this time this morning. QUICK: 136,000 employees. How many will go to the pharmaceutical and medical devices, how many will be in the consumer business afterwards? GORSKY: Slightly over 20,000— QUICK: For consumer? GORSKY: Exactly of our consumer group on a global basis. QUICK: Alex, again, thanks for being with us this morning. We will continue to look into this. We hope to hear from you again soon. Alex Gorsky is the CEO of Johnson & Johnson. GORSKY: Thank you, Becky. Updated on Nov 12, 2021, 10:10 am (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkNov 12th, 2021

Futures Rebound As Yields Drop

Futures Rebound As Yields Drop U.S. index futures rebounded on Tuesday from Monday's stagflation-fear driven rout as an increase in Treasury yields abated and the greenback dropped from a 10 month high while Brent crude dropped from a 3 year high of $80/barrel after API showed a surprise stockpile build across all products. One day after one of Wall Street’s worst selloff of this year which saw the S&P's biggest one-day drop since May, dip buyers made yet another another triumphal return to global markets, with Nasdaq 100 futures climbing 130 points or 0.9% after the tech-heavy index tumbled the most since March on Tuesday as U.S. Treasury yields rose on tapering and stagflationconcerns. S&P 500 futures rose 28 points or 0.6% after the underlying gauge also slumped amid mounting concern over the debt-ceiling impasse in Washington. A key catalyst for today's easing in financial conditions was the 10-year yield shedding four basis points and the five-year rate falling below 1%. In the past five sessions, the 10Y yield rose by a whopping 25 basis point, a fast enough move to trigger VaR shocks across risk parity investors. "We think (10-year treasury yields) are likely to around 1.5% to 1.75%, so they obviously still have room to go," said Daniel Lam, senior cross-asset strategist at Standard Chartered, who added that the rise in yields was driven by the fact that the United States was almost definitely going to start tapering its massive asset purchases by the end of this year, and that this would drive a shift from growth stocks into value names. Shares of FAAMG gigatechs rose between 1% and 1.3% in premarket trading as the surge in yields eased. Oil firms and supermajors like Exxon and Chevron dipped as a rally in crude prices petered out. The S&P energy sector has gained 3.9% so far this week and is on track for its best monthly performance since February. Among stocks, Boeing rose 2.5% after it said 737 MAX test flight for China’s aviation regulator last month was successful and the planemaker hopes a two-year grounding will be lifted this year. Cybersecurity firm Fortinet Inc. led premarket gains among S&P 500 Index companies. Here are some of the other big movers this morning: Micron (MU US) shares down more than 3% in U.S. premarket trading after the chipmaker’s forecast came in well below analyst expectations. Co. was hurt by slowing demand from personal-computer makers Lucid (LCID US) shares rise 9.7% in U.S. premarket trading after the electric-vehicle company said it has started production on its debut consumer car EQT Corp. (EQT US) shares fell 4.8% in Tuesday postmarket trading after co. reports offering by certain shareholders who received shares as a part of its acquisition of Alta Resources Development’s upstream and midstream units PTK Acquisition (PTK US) rises in U.S. premarket trading after the blank-check company’s shareholders approved its combination with the Israel-based semiconductor company Valens Cal-Maine (CALM US) shares rose 4.4% postmarket Tuesday after it reported net sales for the first quarter that beat the average analyst estimate as well as a narrower-than-estimated loss Sherwin-Williams (SHW US) dropped 3.5% in Tuesday postmarket trading after its forecasted adjusted earnings per share for the third quarter missed the average analyst estimate Boeing (BA US) and Spirit Aerosystems (SPR US) climb as much as 3% after being upgraded to outperform by Bernstein on travel finally heading to inflection point The S&P 500 is set to break its seven-month winning streak as fears about non-transitory inflation, China Evergrande’s default, potential higher corporate taxes and a sooner-than expected tapering of monetary support by the Federal Reserve clouded investor sentiment in what is usually a seasonally weak month. Meanwhile, Senate Democrats are seeking a vote Wednesday on a stopgap funding bill to avert a government shutdown, but without a provision to increase the federal debt limit. On Tuesday, Jamie Dimon said a U.S. default would be “potentially catastrophic” event, in other words yet another multibillion bailout for his bank. “Many things are in flux: the pandemic is not over, the supply chain bottlenecks we are seeing are affecting all sorts of prices and we’ll need to see how it plays out because the results are not clear in terms of inflation,” Belita Ong, Dalton Investments chairman, said on Bloomberg Television. Europe’s Stoxx 600 gauge rebounded from a two-month low, rising 0.9% and reversing half of yesterday's losses. Semiconductor-equipment company ASM International posted the biggest increase on the index amid positive comments by analysts on its growth outlook. A sharp rebound during the European session marked a turnaround from the downbeat Asian session, when equities extended losses amid concerns over stagflation and China Evergrande Group’s debt crisis. Sentiment improved as a steady flow of buyers emerged in the Treasury market, ranging from foreign and domestic funds to leveraged accounts.  Here are some of the biggest European movers today: Academedia shares rise as much as 6.9% in Stockholm, the most since June 1, after the company said the number of participants for its higher vocational education has increased 25% y/y. ASM International jumps as much as 7.3%, rebounding from a three-day sell-off, boosted by supportive analyst comments and easing bond yields. GEA Group gains as much as 4.7% after the company published new financial targets through 2026, which Citigroup says are above analysts’ consensus and an encouraging signal. DSV bounces as much as 4.4% as JPMorgan upgrades to overweight, saying the recent pullback in the shares presents an opportunity. Genova Property Group falls as much as 10% in Stockholm trading after the real estate services company placed shares at a discount to the last close. ITM Power drops as much as 6.4% after JPMorgan downgrades to neutral from overweight on relative valuation, with a more mixed near-term outlook making risk/reward seem less compelling. Royal Mail slides as much as 6.2% after UBS cuts its rating to sell from buy, expecting U.K. labor shortages and wage inflation pressures to hurt the parcel service company’s profit margins. Earlier in the session, Asian equities slumped in delayed response to the US rout. MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.43% with Australia off 1.5%, and South Korea falling 2.06%. The Hong Kong benchmark shed 1.2% and Chinese blue chips were 1.1% lower. Japan's Nikkei shed 2.35% hurt by the general mood as the country's ruling party votes for a new leader who will almost certainly become the next prime minister ahead of a general election due in weeks.  Also on traders' minds was cash-strapped China Evergrande whose shares rose as much as 12% after it said it plans to sell a 9.99 billion yuan ($1.5 billion) stake it owns in Shengjing Bank. Evergrande is due to make a $47.5 million bond interest payment on its 9.5% March 2024 dollar bond, having missed a similar payment last week, but it said in the stock exchange filing the proceeds of the sale should be used to settle its financial liabilities due to Shengjing Bank. Chinese real estate company Fantasia Holdings Group is struggling to avoid falling deeper into distress, just as the crisis at China Evergrande flags broader risks to other heavily indebted developers. In Japan, the country's PGIF, or Government Pension Investment Fund, the world’s largest pension fund, said it won’t include yuan- denominated Chinese sovereign debt in its portfolio. In rates, as noted above, Treasuries lead global bonds higher, paring large portion of Tuesday’s losses with gains led by intermediates out to long-end of the curve. Treasury yields richer by up to 4bp across long-end of the curve with 10s at around 1.50%, outperforming bunds and gilts both by 2bp; front-end of the curve just marginally richer, flattening 2s10s spread by 3.2bp with 5s30s tighter by 0.5bp. Futures volumes remain elevated amid evidence of dip buyers emerging Tuesday and continuing over Wednesday’s Asia hours. Session highlights include a number of Fed speakers, including Chair Powell.     In FX, the Bloomberg Dollar Spot Index was little changed after earlier advancing, and the dollar slipped versus most of its Group-of-10 peers. The yen was the best G-10 performer as it whipsawed after earlier dropping to 111.68 per dollar, its weakest level since March 2020. The Australian dollar also advanced amid optimism over easing of Covid-related restrictions while the New Zealand dollar was the worst performer amid rising infections. The euro dropped to an 11-month low while the pound touched its weakest level since January against the greenback amid a bout of dollar strength as the London session kicked off. Confidence in the euro-area economy unexpectedly rose in September as consumers turned more optimistic about the outlook and construction companies saw employment prospects improve. The yen climbed from an 18-month low as a decline in stocks around the world helps boost demand for the currency as a haven. Japanese bonds also gained. In commodities, oil prices dropped after touching a near three-year high the day before. Brent crude fell 0.83% to $78.25 per barrel after topping $80 yesterday; WTI dipped 1.09% to $74.47 a barrel. Gold edged higher with the spot price at $1,735.6 an ounce, up 0.1% from the seven-week low hit the day before as higher yields hurt demand for the non interest bearing asset. Base metals are under pressure with LME aluminum and copper lagging. Looking at the day ahead, the biggest highlight will be a policy panel at the ECB forum on central banking featuring ECB President Lagarde, Fed Chair Powell, BoJ Governor Kuroda and BoE Governor Bailey. Other central bank speakers include ECB Vice President de Guindos, the ECB’s Centeno, Stournaras, Makhlouf, Elderson and Lane, as well as the Fed’s Harker, Daly and Bostic. Meanwhile, data releases include UK mortgage approvals for August, the final Euro Area consumer confidence reading for September, and US pending home sales for August. Market Snapshot S&P 500 futures up 0.7% to 4,371.75 STOXX Europe 600 up 0.8% to 455.97 MXAP down 1.2% to 197.38 MXAPJ down 0.7% to 635.17 Nikkei down 2.1% to 29,544.29 Topix down 2.1% to 2,038.29 Hang Seng Index up 0.7% to 24,663.50 Shanghai Composite down 1.8% to 3,536.29 Sensex down 0.4% to 59,445.57 Australia S&P/ASX 200 down 1.1% to 7,196.71 Kospi down 1.2% to 3,060.27 Brent Futures down 0.7% to $78.53/bbl Gold spot up 0.4% to $1,740.79 U.S. Dollar Index little changed at 93.81 German 10Y yield fell 1.1 bps to -0.210% Euro down 0.2% to $1.1664 Top Overnight News from Bloomberg China’s central bank governor said quantitative easing implemented by global peers can be damaging over the long term and vowed to keep policy normal for as long as possible China’s central bank injected liquidity into the financial system for a ninth day in the longest run since December as it sought to meet a surge in seasonal demand for cash China stepped in to buy a stake in a struggling regional bank from China Evergrande Group as it seeks to limit contagion in the financial sector from the embattled property developer The Chinese government is considering raising power prices for industrial consumers to help ease a growing supply crunch Japan’s Government Pension Investment Fund, the world’s largest pension fund, said it won’t include yuan-denominated Chinese sovereign debt in its portfolio. The decision comes as FTSE Russell is set to start adding Chinese debt to its benchmark global bond index, which the GPIF follows, from October Fumio Kishida is set to become Japan’s prime minister, after the ex-foreign minister overcame popular reformer Taro Kono to win leadership of the country’s ruling party, leaving stock traders feeling optimistic ECB Governing Council member Gabriel Makhlouf said policy makers must be ready to respond to persistently higher inflation that could result from lasting supply bottlenecks Inflation accelerated in Spain to the fastest pace in 13 years, evidence of how surging energy costs are feeding through to citizens around the euro-zone economy Sterling-debt sales by corporates exceeded 2020’s annual tally as borrowers rushed to secure ultra-cheap funding costs while they still can. Offerings will top 70 billion pounds ($95 billion) through Wednesday, beating last year’s total sales by at least 600 million pounds, according to data compiled by Bloomberg A more detailed look at global markets courtesy of Newsquawk Asian equity markets were pressured on spillover selling from global peers which saw the S&P 500 suffer its worst day since May after tech losses were magnified as yields climbed and with sentiment also dampened by weak data in the form of US Consumer Confidence and Richmond Fed indexes. ASX 200 (-1.1%) was heavily pressured by tech and with mining-related stocks dragged lower by weakness in underlying commodity prices, with the mood also clouded by reports that Queensland is on alert for a potential lockdown and that Australia will wind down emergency pandemic support payments within weeks. Nikkei 225 (-2.1%) underperformed amid the broad sell-off and as participants awaited the outcome of the LDP leadership vote which saw no candidate win a majority (as expected), triggering a runoff between vaccine minister Kono and former foreign minister Kishida to face off in a second round vote in which Kishida was named the new PM. KOSPI (-1.2%) was heavily pressured by the tech woes and after North Korea confirmed that yesterday’s launch was a new type of hypersonic missile. Hang Seng (+0.7%) and Shanghai Comp. (-1.8%) conformed to the broad risk aversion with tech stocks hit in Hong Kong, although the losses were milder compared to regional peers with Evergrande shares boosted after it sold CNY 10bln of shares in Shengjing Bank that will be used to pay the developer’s debt owed to Shengjing Bank, which is the Co.’s first asset sale amid the current collapse concerns although it still faces another USD 45.2mln in interest payments due today. In addition, the PBoC continued with its liquidity efforts and there was also the absence of Stock Connect flows to Hong Kong with Southbound trading already closed through to the National Holidays. Finally, 10yr JGBs were slightly higher as risk assets took a hit from the tech sell-off and with T-notes finding some reprieve overnight. Furthermore, the BoJ were also in the market for nearly JPY 1tln of JGBs mostly in 3yr-10yr maturities and there were notable comments from Japan’s GPIF that it is to avoid investments in Chinese government bonds due to concerns over China market. Top Asian News L&T Is Said in Talks to Merge Power Unit With Sembcorp India Prosecutors Seek Two Years Jail for Ghosn’s Alleged Accomplice Japan to Start Process to Sell $8.5 Billion Postal Stake Gold Climbs From Seven Week Low as Yields Retreat, Dollar Pauses Bourses in Europe are attempting to claw back some ground lost in the prior session’s global stocks rout (Euro Stoxx 50 +0.9%; Stoxx 600 +0.8%). The upside momentum seen at the cash open has somewhat stabilised amid a lack of news flow and with a busy agenda ahead from a central bank standpoint, with traders also cognizant of potential month-end influence. US equity futures have also been gradually drifting higher since the reopen of electronic trade. As things stand, the NQ (+1.0%) narrowly outperforms the ES (+0.7%), RTY (+0.8%) and YM (+0.6%) following the tech tumble in the prior session, and with yields easing off best levels. Back to European cash, major regional bourses see broad-based gains with no standout performers. Sectors are mostly in the green; Oil & Gas resides at the foot of the bunch as crude prices drift lower and following two consecutive sessions of outperformance. On the flip side, Tech resides among today’s winners in what is seemingly a reversal of yesterday’s sector configuration, although ASML (+1.3%) may be offering some tailwinds after upping its long-term outlook whilst suggesting ASML and its supply chain partners are actively adding and improving capacity to meet this future customer demand – potentially alleviating some concerns in the Auto sector which is outperforming at the time of writing. Retail also stands strong as Next (+3.0%) upped its guidance whilst suggesting the longer-term outlook for the Co. looks more positive than it had been for many years. In terms of individual movers, Unilever (+1.0%) is underpinned by source reports that the Co. has compiled a shortlist of at least four bidders for its PG Tips and Lipton Iced Tea brands for some GBP 4bln. HeidelbergCement (-1.4%) is pressured after acquiring a 45% stake in the software firm Command Alko. Elsewhere, Morrisons (+1.3%) is on the front foot as the takeover of the Co. is to be decided via an auction process as touted earlier in the month. Top European News Makhlouf Says ECB Must Be Ready to Act If Inflation Entrenched ASML to Ride Decade-Long Sales Boom After Chip Supply Crunch Spanish Inflation at 13-Year High in Foretaste of Regional Spike U.K. Mortgage Approvals Fall to 74,453 in Aug. Vs. Est. 73,000 In FX, the yield and risk backdrop is not as constructive for the Dollar directly, but the index has posted another marginal new y-t-d best, at 93.891 compared to 93.805 yesterday with ongoing bullish momentum and the bulk of the US Treasury curve remaining above key or psychological levels, in contrast to other global bond benchmarks. Hence, the Buck is still elevated and on an upward trajectory approaching month end on Thursday, aside from the fact that hedge rebalancing flows are moderately positive and stronger vs the Yen. Indeed, the Euro is the latest domino to fall and slip to a fresh 2021 low around 1.1656, not far from big barriers at 1.1650 and further away from decent option expiry interest at the 1.1700 strike (1 bn), and it may only be a matter of time before Sterling succumbs to the same fate. Cable is currently hovering precariously above 1.3500 and shy of the January 18 base (1.3520) that formed the last pillar of support for the Pound before the trough set a week earlier (circa 1.3451), and ostensibly supportive UK data in the form of BoE mortgage lending and approvals has not provided much relief. AUD/JPY - A rather odd couple in many ways given their contrasting characteristics as a high beta or activity currency vs traditional safe haven, but both are benefiting from an element of corrective trade, consolidation and short covering relative to their US counterpart. Aud/Usd is clinging to 0.7250 in advance of Aussie building approvals on Thursday and Usd/Jpy is retracing from its new 111.68 y-t-d pinnacle amidst the less rampant yield environment and weighing up the implications of ex-Foreign Minister Kishida’s run-off win in the LDP leadership contest and the PM-in-waiting’s pledge to put together a Yen tens of trillion COVID-19 stimulus package before year end. CHF/CAD/NZD - All relatively confined vs their US rival, as the Franc continues to fend off assaults on the 0.9300 level with some impetus from a significant improvement in Swiss investor sentiment, while the Loonie is striving to keep its head above 1.2700 ahead of Canadian ppi data and absent the recent prop of galloping oil prices with WTI back under Usd 75/brl from Usd 76.67 at best on Tuesday. Elsewhere, the Kiwi is pivoting 0.6950 pre-NZ building consents and still being buffeted by strong Aud/Nzd headwinds. SCANDI/EM - Not much purchase for the Sek via upgrades to Swedish GDP and inflation forecast upgrades by NIER as sentiment indices slipped across the board, but some respite for the Try given cheaper crude and an uptick in Turkish economic confidence. Conversely, the Cnh and Cny have not received their customary fillip even though the PBoC added liquidity for the ninth day in a row overnight and China’s currency regulator has tightened control over interbank trade and asked market makers to narrow the bid/ask spread, according to sources. In commodities, WTI and Brent front month futures have been trimming overnight losses in early European trade. Losses overnight were seemingly a function of profit-taking alongside the bearish Private Inventory Report – which showed a surprise build in weekly crude stocks of 4.1mln bbls vs exp. -1.7mln bbls, whilst the headline DoE looks for a draw of 1.652mln bbls. Further, there have been growing calls for OPEC+ to further open the taps beyond the monthly 400k BPD hike, with details also light on the White House’s deliberations with OPEC ahead of the decision-making meeting next week. Despite these calls, it’s worth bearing in mind that OPEC’s latest MOMR stated, “increased risk of COVID-19 cases primarily fuelled by the Delta variant is clouding oil demand prospects going into the final quarter of the year, resulting in downward adjustments to 4Q21 estimates. As a result, 2H21 oil demand has been adjusted slightly lower, partially delaying the oil demand recovery into 1H22.” Brent Dec dipped back under USD 78/bbl (vs low 763.77/bbl) after testing USD 80/bbl yesterday, whilst WTI Nov lost the USD 75/bbl handle (vs low USD 73.37/bbl). Over to metals, spot gold and silver have seen somewhat of divergence as real yields negate some effects of the new YTD peak printed by the Dollar index, whilst spot silver succumbs to the Buck. Over to base metals, LME copper trade is lacklustre as the firmer dollar weighs on the red metal. Shanghai stainless steel meanwhile extended on losses, notching the fourth session of overnight losses with desks citing dampened demand from the Chinese power crunch. US Event Calendar 7am: Sept. MBA Mortgage Applications, prior 4.9% 10am: Aug. Pending Home Sales YoY, est. -13.8%, prior -9.5% 10am: Aug. Pending Home Sales (MoM), est. 1.3%, prior -1.8% Central Bank speakers 9am: Fed’s Harker Discusses Economic Outlook 11:45am: Powell Takes Part in ECB Forum on Central Banking 11:45am: Bailey, Kuroda, Lagarde, Powell on ECB Forum Panel 1pm: Fed’s Daly Gives Speech to UCLA 2pm: Fed’s Bostic Gives Remarks at Chicago Fed Payments DB's Jim Reid concludes the overnight wrap The main story of the last 24 hours has been a big enough rise in yields to cause a major risk-off move, with 10yr Treasury yields up another +5.0bps to 1.537% yesterday, and this morning only seeing a slight -0.3bps pullback to 1.534%. At the intraday peak yesterday, they did climb as high as 1.565% earlier in the session, but this accelerated the risk off and sent yields somewhat lower intraday as a result, which impacted the European bond closes as we’ll see below. All told, US yields closed at their highest level in 3 months and up nearly +24bps since last Wednesday’s close, shortly after the FOMC meeting. That’s the largest 4-day jump in US yields since March 2020, at the outset of the pandemic and shortly after the Fed announced their latest round of QE. This all led to the worst day for the S&P 500 (-2.04%) since mid-May and the worst for the NASDAQ (-2.83%) since mid-March. The S&P 500 is down -4.06% from the highs now – trading just below the Evergrande (remember that?) lows from last week. So the index still has not seen a -5% sell-off on a closing basis for 228 days and counting. If we make it to Halloween it will be a full calendar year. Regardless, the S&P and STOXX 600 remain on track for their worst monthly performances so far this year. Those moves have continued this morning in Asia, where the KOSPI (-2.05%), Nikkei (-1.64%), Hang Seng (-0.60%), and the Shanghai Comp (-1.79%) are all trading lower. The power crisis in China is further dampening sentiment there, and this morning Bloomberg have reported that the government are considering raising prices for industrial users to ease the shortage. Separately, we heard that Evergrande would be selling its stake in a regional bank at 10 billion yuan ($1.55bn) as a step to resolve its debt crisis, and Fitch Ratings also downgraded Evergrande overnight from CC to C. However, US equity futures are pointing to some stabilisation later, with those on the S&P 500 up +0.49%. Running through yesterday’s moves in more depth, 23 of the 24 industry groups in the S&P 500 fell back yesterday with the lone exception being energy stocks (+0.46%), which gained despite the late pullback in oil prices. In fact only 53 S&P constituents gained on the day. The largest losses were in high-growth sectors like semiconductors (-3.82%), media (-3.08%) and software (-3.05%), whilst the FANG+ index was down -2.52% as 9 of the 10 index members lost ground – Alibaba’s +1.47% gain was the sole exception. Over in Europe it was much the same story, with the STOXX 600 (-2.18%) falling to its worst daily performance since July as bourses across the continent fell back, including the German DAX (-2.09%) and France’s CAC 40 (-2.17%). Back to bonds and the rise in 10yr Treasury yields yesterday was primarily led by higher real rates (+2.1bps), which hit a 3-month high of their own, whilst rising inflation breakevens (+2.3bps) also offered support. In turn, higher yields supported the US dollar, which strengthened +0.41% to its highest level since November last year, though precious metals including gold (-0.92%) fell back as investors had less need for the zero-interest safe haven. Over in Europe the sell-off was more muted as bonds rallied into the close before selling off again after. Yields on 10yr bunds (+2.4bps), OATs (+3.0bps) and BTPs (+6.1bps) all moved higher but were well off the peaks for the day. 10yr Gilts closed up +4.2bps but that was -6.6bps off the high print. And staying with the UK, sterling (-1.18%) saw its worst day this year and fell to its lowest level since January 11 as sentiment has increasingly been knocked by the optics of the fuel crisis here. Given this and the hawkish BoE last week many are now talking up the stagflation risk. On the petrol crisis it’s hard to know how much is real and how much is like an old fashion bank run fuelled mostly by wild speculation. Regardless it doesn’t look good to investors for now. All this came against the backdrop of yet further milestones on inflation expectations, as the German 10yr breakeven hit a fresh 8-year high of 1.690%, just as the Euro Area 5y5y forward inflation swap hit a 4-year high of its own at 1.789%. Meanwhile 10yr UK breakevens pulled back some, finishing -6bps lower on the day after initially spiking up nearly +5bps in the opening hours of trading. This highlights the uncertainty as to the implications of a more hawkish BoE last week. As we’ve discussed over recent days, part of the renewed concerns about inflation have come from a fresh spike in energy prices, and yesterday saw Brent crude move above $80/bbl in regards intraday trading for the first time since 2018. Furthermore, natural gas prices continued to hit fresh highs yesterday, with European futures up +2.69% to a fresh high of €78.56 megawatt-hours. That said, oil prices did pare back their gains later in the session as the equity selloff got underway, with Brent crude (-0.55%) and WTI (-0.21%) both closing lower on the day, and this morning they’ve fallen a further -1.49% and -1.54% respectively. Yesterday, Fed Chair Powell and his predecessor Treasury Secretary Yellen appeared jointly before the Senate Banking Committee. The most notable moment came from Senator Warren who criticized Chair Powell for his track record on regulation, saying he was a “dangerous man” and then saying on the record that the she would not support his re-nomination ahead of his term ending in February. Many senators, mostly Republicans, voiced concerns over inflationary pressures, but both Yellen and Powell maintained their stances that the current high level of inflation was temporary and due to the supply chain issues from Covid-19 that they expect to be resolved in time. Lastly, both Powell and Yellen warned the Senators that a potential US default would be “catastrophic” and Treasury Secretary Yellen said in a letter to Congress that the Treasury Department now estimated the US would hit the debt ceiling on October 18. So we’ve got an important few days and weeks coming up. Last night, Senate Majority Leader Schumer tried to pass a vote that would drop the threshold from 60 to a simple majority to suspend the debt limit, but GOP Senator Cruz amongst others blocked this and went forward with forcing Democrats to use the budget reconciliation measure instead. Some Democrats have pushed back saying that the budget process would take too long and increases the risk of a default. While this is all going on we’re now less than 48 hours from a US government shutdown as it stands, though there seems to be an agreement on the funding measure if it were to be raised as clean bill without the debt ceiling provisions. There is also other business in Washington due tomorrow, with the bipartisan infrastructure bill with $550bn of new spending up for a vote. While the funding bill is the higher short-term priority, there was news yesterday that progressive members of the House of Representatives may try and block the infrastructure bill if it comes up ahead of the budget reconciliation vote. That was according to Congressional Progressive Caucus Chair Jayapal who said “Progressives will vote for both bills, but a majority of our members will only vote for the infrastructure bill after the President’s visionary Build Back Better Act passes.” The infrastructure bill could be tabled once again as there is no real urgency to get it voted on until the more pressing debt ceiling and funding bill issues are resolved. Democratic leadership is trying to thread a needle and the key sticking point appears to be if the moderate and progressive wing can agree on the budget quickly enough to beat the clock on the US defaulting on its debt. Shifting back to central bankers, ECB President Lagarde warned against withdrawing stimulus too rapidly as a response to inflationary pressures. She contested that there are “no signs that this increase in inflation is becoming broad-based across the economy,” and continued that the “key challenge is to ensure that we do not overreact to transitory supply shocks that have no bearing on the medium term.” Similar to her US counterpart, Lagarde cited higher energy prices and supply-chain breakdowns as the root cause for the current high inflation data and argued these would recede in due time. The ECB continues to strike a more dovish tone than the Fed and BoE. Speaking of inflation, DB’s chief European economist, Mark Wall, has just put out a podcast where he discusses the ECB, inflation and the value of a flexible asset purchase programme. He and his team have a baseline assumption that the ECB will double the pace of their asset purchases to €40bn per month to smooth the exit from the Pandemic Emergency Purchase Programme, but the upward momentum in the inflation outlook and the latest uncertainty from recent supply shocks puts a premium on policy flexibility. You can listen to the podcast "Focus Europe: Podcast: ECB, inflation and the value of a flexible APP" here. In Germany, there weren’t a great deal of developments regarding the election and coalition negotiations yesterday, but NTV reported that CSU leader Markus Söder had told a regional group meeting of the party that he expected the next government would be a traffic-light coalition of the SPD, the Greens and the FDP. Speaking to reporters later in the day, he went onto say that the SPD’s Olaf Scholz had the best chance of becoming chancellor, and that the SPD had the right to begin coalition negotiations. Running through yesterday’s data, the Conference Board’s consumer confidence reading in the US for September fell to 109.3 (vs. 115.0 expected), which marks the third consecutive decline in the reading and the lowest it’s been since February. Meanwhile house prices continued to rise, with the FHFA’s house price index for July up +1.4% (vs. +1.5% expected), just as the S&P CoreLogic Case-Shiller index saw a record +19.7% increase in July as well. To the day ahead now, and the biggest highlight will be a policy panel at the ECB forum on central banking featuring ECB President Lagarde, Fed Chair Powell, BoJ Governor Kuroda and BoE Governor Bailey. Other central bank speakers include ECB Vice President de Guindos, the ECB’s Centeno, Stournaras, Makhlouf, Elderson and Lane, as well as the Fed’s Harker, Daly and Bostic. Meanwhile, data releases include UK mortgage approvals for August, the final Euro Area consumer confidence reading for September, and US pending home sales for August. Tyler Durden Wed, 09/29/2021 - 07:42.....»»

Category: blogSource: zerohedgeSep 29th, 2021

3 Furniture Stocks Worth Watching Despite Industry Headwinds

Although rising inflation, macroeconomic uncertainty and supply-chain disruptions pose risks, home remodeling projects along with a focus on digitization and product innovation raise hopes for WSC, LZB and VIRC. The Zacks Furniture industry has been bearing the brunt of supply-chain disruptions, greater inflation, continued investments in e-commerce, macroeconomic and geopolitical uncertainty, and intense competition. However, increasing investments in home improvement and remodeling activities, accompanied with technological advancements and solutions, are expected to drive the industry’s growth. Also, product innovation, as well as accretive buyouts, should favor the furniture industry in expanding its global reach. In addition, efficient cost management should lend support to industry players like WillScot Mobile Mini Holdings Corp. WSC, La-Z-Boy Incorporated LZB and Virco Mfg. Corporation VIRC.Industry DescriptionThe Zacks Furniture industry comprises manufacturers, designers and marketers of residential as well as commercial furnishing solutions. Some of the companies provide kitchen and bath cabinets as well as various engineered components and products in the United States, along with international markets. A few industry players also offer specialty rental services such as modular and portable storage solutions as well as modular space and portable storage solutions. They are involved in designing and producing a wide variety of engineered components and products for homes, offices and automobiles. The industry players cater to different sectors, namely, construction, energy, healthcare, security, government, retail, commercial, education and transportation.3 Trends Shaping the Furniture Industry's FutureSupply-Chain Issues, Rising Inflation & Higher Expenses: The companies have been witnessing supply-chain disruptions, especially in chemicals, semiconductors, labor and transportation, which are constraining volume growth. As such, consumers are increasingly concerned about rising inflation and many expect inflation to outpace income growth. This would be a risk to spending, which makes up two-thirds of the economy. The industry players are distressed by rising raw material prices and logistic expenses. The labor market has also struggled with limited availability of labor, which is driving labor costs.Also, the furniture industry is highly competitive, with home furnishing retailers, department stores and antique dealers giving a hard time. Again, companies need to make incremental investments to address an expanding omni-channel environment, as shoppers tend to look for online options. Growth in online sales may continue to dent traditional furniture retailers’ market share as brands such as Etsy, Things Remembered, Costco and Amazon are finding their way into the market.Soft Growth for Home Repair & Remodeling Activities: Spending for home improvements and repairs is expected to be soft in the near term, given several macroeconomic challenges comprising slowing sales of existing homes, rising mortgage interest rates, and home price appreciation. The slowdown in homebuilding industry, retail sales of building materials, and renovation permits point to a soft environment for residential remodeling, thereby impacting the furniture industry players as well.Innovation, Digital Marketing & Acquisitions: Product innovation plays a decisive factor for market share gain in this industry. Players are investing in new products to improve the product mix in a competitive landscape and drive top-line growth. Also, millennials represent the largest consumer cohort in the furniture market. More money in the hands of this largest and most-active generation of homebuyers should keep demand elevated. Customer experience is getting enhanced by innovative marketing techniques, with emphasis on digital marketing, better merchandising, store remodeling and loyalty programs. Furthermore, the industry players are pursuing acquisitions to broaden their product portfolio and expand their geographic footprint as well as market share.Zacks Industry Rank Indicates Dull ProspectsThe Zacks Furniture industry is an eight-stock group within the broader Zacks Consumer Discretionary sector. The industry currently carries a Zacks Industry Rank #210, which places it at the bottom 16% of more than 250 Zacks industries.The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates tepid near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of the bleak earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually losing confidence in this group’s earnings growth potential. Since May 2022, the industry’s earnings estimates for 2022 and 2023 have been revised 3.6% and 6.8% downward, respectively.Despite the industry’s gloomy near-term view, we will present a few stocks that one may consider adding to their portfolio. Before that, it’s worth taking a look at the industry’s shareholder returns and current valuation.Industry Outperforms S&P 500 & SectorThe Zacks Furniture industry has outperformed the Zacks S&P 500 composite and the broader Zacks Consumer Discretionary sector over the past year.Over this period, the industry has lost 16.8% compared with the broader sector’s 44.6% decline and the S&P 500’s decrease of 18.1%.One-Year Price PerformanceIndustry's Current ValuationOn the basis of the forward 12-month price-to-earnings (P/E), which is commonly used for valuing furniture stocks, the industry is currently trading at 13.1X compared with the S&P 500’s 15.9X and the sector’s 15.4X.Over the past five years, the industry has traded as high as 19.3X and as low as 9.4X, with the median being 14.8X, as the chart below shows.Industry’s P/E Ratio (Forward 12-Month) Versus S&P 5003 Furniture Stocks to Watch NowWe have selected one stock from the Zacks universe of furniture stocks that currently carries a Zacks Rank #2 (Buy). We have also highlighted two other stocks carrying a Zacks Rank #3 (Hold) with solid prospects. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Virco Mfg.: Headquartered in Torrance, CA, this company designs, produces and distributes furniture in the United States. Although the company has been reeling under material cost increases, and higher costs associated with materials, freight and logistics, VIRC has been witnessing higher demand as stimulus funding aids recovery in the school furniture market. Higher shipments owing to efforts to increase factory output continue to deliver high-quality, innovative equipment and furniture to schools across the United States. Higher revenues enabled VIRC to witness greater operating leverage, thereby increasing profitability. A higher funding level for public schools, as well as the competitive advantage it has from its domestic production and distribution model, has been enabling VIRC to consistently take market share from overseas competitors.VIRC’s shares have gained 22.3% in the past year. Earnings of VIRC — a Zacks Rank #2 company — are expected to grow 174.7% in fiscal 2023. Earnings estimates for fiscal 2023 have increased to 71 cents from 39 cents over the past seven days.Price and Consensus: VIRCWillScot Mobile Mini Holdings: This Phoenix, AZ-based company provides modular space and portable storage solutions. The company is benefiting from continuous product innovation, solid segmental results and transformation of the legacy WillScot business into Mobile Mini's SAP platform. Record order backlog, broad-based end-market strength and growth initiatives such as pricing, valued-added products, cross-selling, and acquisitions have been driving growth. Despite macroeconomic uncertainties, WSC expects robust demand to continue into 2023 given order backlog, prospects for infrastructure investment, a net positive inflationary environment, the recent acquisitions and a robust pipeline.WillScot, a Zacks Rank #3 stock, has gained 23% over the past year. The company has an expected earnings growth rate of 76.3% for 2022 and 31.5% for 2023. Earnings estimates for 2022 and 2023 have increased to $1.34 (from $1.31) and to $1.77 (from $1.71) over the past 60 days.Price and Consensus: WSCLa-Z-Boy: Based in Monroe, MI, this company manufactures, markets, imports, exports, distributes, and retails upholstery furniture products, accessories, and casegoods furniture products. LZB has been navigating well through challenges like escalating commodity and freight costs with the help of higher pricing, strong brand presence, vast distribution through multiple channels and strategic investments across the business to drive market share gains. It remains focused on navigating the near-term volatile environment while strengthening business for the long term with the Century Vision strategy.La-Z-Boy’s shares have dropped 34% in the past year. Nonetheless, earnings of La-Z-Boy — a Zacks Rank #3 company — are expected to grow 4.8% in fiscal 2023. Earnings estimates for fiscal 2023 have increased to $3.26 from $3.25 over the past 30 days.Price and Consensus: LZB 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report WillScot Mobile Mini Holdings Corp. (WSC): Free Stock Analysis Report LaZBoy Incorporated (LZB): Free Stock Analysis Report Virco Manufacturing Corporation (VIRC): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacks17 hr. 18 min. ago

Why Sol Trujillo’s L’Attitude Ventures Sees Latino-Owned Businesses as a Growth Market

Trujillo is working to circulate data to help convince leaders they should invest in Latino businesses and appoint more Latino execs Barack Obama and Lin-Manuel Miranda were just a few of the thousands of people who gathered in San Diego this week for the fifth annual L’Attitude conference, an event helping executives understand the potential of Latinos in the U.S. economy. L’Attitude is the brainchild of Solomon “Sol” Trujillo, who has served as CEO of international companies including US West, Orange, and Telestra, the Australian telecoms company. Trujillo has focused, since his return to the U.S. from Australia in 2009, on changing negative perceptions of Latinos in the U.S. Through the Latino Donor Collaborative, a nonprofit he co-founded in 2010, Trujillo is working to circulate data that can help convince leaders that they should invest in Latino businesses and appoint more Latino executives. The total economic output of Latinos in the U.S. was $2.8 trillion in 2020, according to a report released Sept. 22 by L’Attitude. That’s a figure that is higher than the GDP of the U.K., India, or France, and one that he hopes will turn executives’ heads. [time-brightcove not-tgx=”true”] Trujillo is also CEO of L’Attitude Ventures, a venture capital (VC) firm he founded in 2019 to invest in businesses led by Latinos. He says he’s tired of seeing Latino founders coming out of good schools that people don’t recognize and then struggling to secure the funding they need. “The punchline is, they’re hungry,” he tells TIME. “They have ideas and they’re willing to do what’s needed. They just need fuel for their business.” It’s not all that different from how he had to hustle when he graduated from the University of Wyoming in 1974, he says. This interview has been condensed and edited for clarity. CO2.com enables every business to maximize their impact through high-quality climate action portfolios. Created by experts, backed by science and verified by independent third parties. For more information, and to accelerate your climate journey, go to co2.com You were a longtime CEO when you decided to start a nonprofit, the Latino Donor Collaborative. Tell me what motivated that shift. I’ve operated companies all over the world, but I was born in the United States. My family’s roots go back about 500 years. I feel a lot of pride in what our country stands for. But when I was living abroad, I saw people [in the U.S.] talking about building walls, deporting people. I thought, number one, that’s not what our country is about. I was a young business person when Ronald Reagan was telling the Russian President to take down walls. We believed in opening things up. And number two, it doesn’t make sense economically. As a country, we’re aging, and we need workers. Once you start cutting off immigration, then you start running into the problems that we now have in today’s economy. The reason why we have inflation—the driving variable that nobody wants to talk about—is that we don’t have enough workers. The wage inflation drives pricing inflation, which then creates disruptions all over. So when I was coming back in 2009, I decided to start gathering data and create a nonprofit, which was called the Latino Donor Collaborative. I co-founded it with (former San Antonio mayor) Henry Cisneros—he was the Democrat, I was the Republican. We decided to start thinking about the Latino brand, and why the perception was that Latinos are all bad people. We knew the perceptions were wrong. We wanted to get the data so we can help people understand it. What were the perceptions at the time and how did that differ from the reality shown in the data you gathered? A poll we commissioned then found that two thirds of Americans believed that Latinos were here as takers, tying up schools, tying up hospitals, with everyone going on welfare. And only a third thought that they were here as productive, contributing citizens. But we found the Latino cohort is the most productive of all cohorts in the United States. Because people came here to essentially pursue the American dream. They disproportionately serve in the military, protecting our country. They’re the most entrepreneurial—the highest percentage of net new business formations were being developed by Latinos. Our recent study found that out of all net new small businesses with employees, 52% were created by Latinos. Where do those negative perceptions come from? Everywhere in the world we live with perceptions of others. If you’re the most common cohort in a country, you understand that cohort, but then when there’s other people that are different, you make assumptions about them. Part of this stems from the media. Our most recent study shows that although Latinos are 25% of all American youth, Latinos have only 3.1% of lead roles in shows, are only 1.5% of showrunners, and less than 1.3% of directors. In many of these shows, portrayals of Latinos are as gangbangers, drug dealers, criminals. The few that are positive, you have a Latino nanny or maid—or Pablo, the trusted gardener who speaks with an accent and does low paid work. So perceptions develop. Part of your work is trying to change the perceptions that Americans have of Latinos. How do you run that advertising campaign for people who are getting bombarded with the opposite images in the media? We live in a capitalist economy. And one of the common things I’ve seen around the world is those who create wealth have the most influence. And so you need to think about how you help people understand how core the Latino cohort is to the economy, and also show that they’re creating a lot of wealth. That’s why I came up with the idea of this GDP report that shows the total economic output of Latinos in the United States. Between 2010 and 2020, the U.S. Latino GDP was the third fastest growing among the 10 largest GDPs. The broader U.S. economy ranked fifth. If everybody understood that, as we did when we were looking at China 25 years ago or India 20 years ago, it would really help. There’s all this growth, you create funds, you go after it, you allocate capital to grow. So it’s always about capital flow. You make money by investing where the growth is. So it’s not only that this is an economic force that helps the economy but that you, the person reading this message, can benefit from it. Kind of the capitalist pitch almost. Well you know, I’m a believer that capitalism works 92.5% of the time. If capital is flowing properly, you can grow an economy which benefits everybody. And you can help the most productive cohorts become wealth creators. We have a youthful Latino cohort. They’re very entrepreneurial. They’re very productive. So let’s feed capital to them and that will grow the economy for the next 20 years or so. You mentioned that the U.S. economy needs Latinos for demographic reasons too. Can you elaborate on that? If you think about it, the highest periods of GDP growth in our economy in modern times were during two presidential terms—Ronald Reagan’s and Bill Clinton’s. We had 16 years, basically of 3.5% GDP growth. We found the single most explanatory variable in terms of GDP growth was not the unemployment rate or some of the things that you hear Fed chairs talk about. It is basically the labor force growth rate. If you look at it. It’s really logical. GDP is a function of outputs of goods and services that workers produce. If you’re not increasing the numbers of workers, your outputs of your goods and services are flat. Both the Baby Boomer cohort and the Gen Xers that were such a disproportionate share of our economy didn’t replace themselves with high birth rates. And they aren’t running as many businesses anymore. So now, we have a natural phenomenon that’s happening, a youthful cohort called the Latino cohort. So the future success of our economy and the success of the Latino cohort are intertwined. If this part of our economy doesn’t grow, the whole economy is not going to grow. You recently started a venture firm to feed capital to Latino entrepreneurs. What was the motivation behind targeting that demographic? Latinos are creating 50% of all employer-based companies. But I wanted to look and see how well these Latino firms were doing. They’re doing well in terms of growth—to a point. Once you get to be about $1 million in revenue, then you’re really accelerating, you need capital. And, there’s no capital availability. We had Bain & Company do a study and we found that less than 1% of all invested capital by private equity and VCs was flowing into this cohort. I decided rather than continue to try to explain to people that it’s a problem and an opportunity, we’re going to create a prototype called L’Attitude Ventures, in order to show people there’s a lot of companies out there that need capital, and that can create growth. We’ll show you how you should do it. A lot of the leadership of many companies are well intentioned, and they give a lot of good speeches about ESG and diversity and inclusion. But sometimes people don’t know quite how to do it. We are creating the prototype so that people can see and say: “oh, okay. We can start flowing capital like L’Attitude Ventures does.” Why do you think a mismatch exists if these Latino-owned firms have so much potential and there’s money out there looking for places to invest? These firms collect capital, and then put it to work, but they put it to work in the same places as they did in the ’80s and the ’90s. So the same structures have only gotten bigger, but they keep on investing in the same way. And they’re not looking in these other places to grow. A corollary would be—people talk about talent, where do I find talent? Do I keep on going to the same universities and the same places where you used to hire people? The answer is, you start looking in other places, because there’s talent almost everywhere. You really need to start thinking differently in the 21st century. I think a lot of Americans have been taught that this is a zero sum game: If this younger Latino cohort gains, then some other group is losing, and they were taught to fear this. Do you think there’s a way to reverse those perceptions? I think the more we’re educated through news media, through entertainment media, people will learn. We’ve seen a shift in perceptions. A decade ago, two thirds of Americans had negative perceptions of Latinos. Today, two thirds have positive perceptions. What we found was that if you had a neighbor, or if you work with somebody who is Latino, your perceptions were a lot different than if you never did and your perceptions came from entertainment media. So the more we provide data and information, the more people will learn. Which is why I co founded L’Attitude. We’re creating a platform where we invite in what I would call resource allocators of the country. CEOs, public leaders, venture capital funds and private equity funds. So you create that new conversation. You create that new set of data, and you share it and people talk about it and understand how they benefit from it. Now you’ll start seeing changes in boards and changes in senior leadership. For example, Target, which just appointed their third Latina to the board (PepsiCo COO Grace Puma). If you look at their growth in the company, a very high percentage of net sales growth is tied to the Latina mom. So they need people on their boards and in their senior management to help understand that cohort, just like they did the Anglo mom in the ’50s and ’60s, as this country’s demographics looked dramatically different than they do today. Speaking of boards, some states like California have mandated that companies have a certain number of women on their boards. Do you think that mandating a certain number of Latino executives on boards would be an effective policy? Well, I’m not a big believer in mandates, because I like how markets work. So one of the things that I like to do is look at structural reasons why things aren’t happening. What do I mean by that? If capital is flowing, there’s going to be a lot of growth. It will be a natural phenomenon that Latinos are going to be starting businesses more and more frequently and grow to be larger sizes. People are going to see Latinos as entrepreneurs. Elon Musk or Mark Zuckerberg were getting capital even pre-revenue from people that say we don’t invest in startups. Name a Latina that has been able to do that. You’ve worked abroad, in Australia and in Europe as well. Do you think the perception of immigrants is different there? Or is it difficult everywhere if you’re not the majority? Life is the same around the world. When I went to Australia, that first day, on the front page of one of the financial newspapers there was a caricature of me, the new Telstra CEO. It was a Mexican on a burro with a sombrero. That was different. They’d never had anybody like me there. Was that discouraging to you? Actually, those kinds of things charged me up. Because that said that people don’t understand who this cohort was. They found out that their perception was wrong. We were dynamic, we dramatically transformed the company. Rather than being discouraged, you become charged up because you want to help people understand. When I first started in business, I knew I wanted to be the CEO. I graduated from the University of Wyoming. Not Harvard, not Stanford, not any of the elite colleges. So I knew I had to be five times better or 10 times better than the next person to me. But I didn’t carry that as a chip on my shoulder. I carried it as a challenge that said, “Okay, those are the rules of the game.” Once you understand the rules of the game, you play by the rules. If you have to score 10 more goals to be considered a winner. I’ll do it. (For coverage of the future of work, visit TIME.com/charter and sign up for the free Charter newsletter.).....»»

Category: topSource: timeSep 25th, 2022

BMO Capital is Talking About These 6 Restaurant Stocks

In the article, we will discuss the six restaurant stocks BMO Capital Markets is talking about in its recent report about the restaurant sector. To skip the detailed analysis of the firm and its recent report, go directly to BMO Capital is Talking About These 3 Restaurant Stocks. BMO Capital Markets BMO Capital Markets handles […] In the article, we will discuss the six restaurant stocks BMO Capital Markets is talking about in its recent report about the restaurant sector. To skip the detailed analysis of the firm and its recent report, go directly to BMO Capital is Talking About These 3 Restaurant Stocks. BMO Capital Markets BMO Capital Markets handles the investment banking side of the Canadian Bank of Montreal (NYSE:BMO) and provides financial services to its clients. The firm provides equity and debt underwriting, corporate lending and project financing, mergers and acquisitions advisory services, securitization, treasury management, market risk management, debt and equity research, and institutional sales and trading services. BMO Capital Markets operates from 45 offices worldwide, with 16 of them in North America. Since BMO Capital Markets’ inception in 1987, the firm has made around 50 investments and two diversity investments. In this article, we will cover the six restaurant stocks that were mentioned in the recent report covered by the BMO Restaurants and Beverages analyst Andrew Strelzik. Andrew Strelzik Andrew Strelzik is a senior analyst at BMO Capital Markets and currently covers the restaurant division at the firm. From 2015 to 2017, Strelzik was named the “All-America Research Team Rising Star” three years in a row by Institutional Investor. Andrew Strelzik received his BA in political economy from The Murphy Institute at Tulane University. He joined BMO Capital Markets in 2008 as an equity research associate covering the food sector, including packaged food, protein, and agribusiness companies. He was promoted to senior analyst in 2014. Report: The More Things Change, the More They Stay the Same This report was posted by BMO Capital Markets on August 23, 2022. The report included the six preferred restaurants of BMO Capital and a comparison with 12 others in the sector. The piece revolves around the rising stability in the restaurant sector in Q2 2022 after softening low-income spending in the past few years, especially the post-pandemic blow to the restaurant sector. The report was generated in light of the inevitable slowdown in restaurant spending and highlighted the six preferred restaurant stocks of BMO Capital Markets in the current economic conditions. Key Points of the Report The report states that low-income spending has remained stable in limited service brands. On the other hand, casual and fast-casual restaurants reported no significant spending behavior change among their middle or upper-income consumers. Furthermore, the report mentions that “resilient restaurant spending combined with easing inflation are encouraging, but we remain concerned an eventual slowdown in broader restaurant spending is a likely outcome.”  For BMO Capital Markets, Wingstop Inc. (NASDAQ:WING), Papa John’s International, Inc. (NASDAQ:PZZA), and McDonald’s Corporation (NYSE:MCD) remain its “favorite ideas to capitalize on potential consumer trade down in restaurants”. According to the firm, these companies had the most resilient same-store performance in 2008 and 2009’s Great Recession and are expected again to withstand the current economic pressures. Furthermore, Strelzik mentioned that Papa John’s International, Inc. (NASDAQ:PZZA) and Wingstop Inc. (NASDAQ:WING) have the potential to accelerate sales trends in future quarters, and the latter is well-positioned to take advantage of lower input costs. The chicken wing prices took a leap downwards to $1.20 per pound in August from $1.70 in mid-July. The other three firms, Brinker International, Inc. (NYSE:EAT), Bloomin’ Brands, Inc. (NASDAQ:BLMN), and Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY), are BMO Capital’s “preferred ideas on the high end as significant multiple compression creates the most attractive risk/rewards among similar companies”. Among the companies, Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY) has several potential sales drivers positioning the company for under-appreciated demand resiliency. Furthermore, the company’s strong cash position provides a significant upside to its shares. Apart from the six significant stocks, the recession scenario analysis for the fast-casual dining sector was also provided. Moreover, the report included EV/EBITDA valuations, management commentary on consumer spending post-FQ2 earnings, and stock performance of 16 restaurant stocks, including the six prominent companies. Our Methodology The stocks mentioned in the article were taken from the report named “The More Things Change, the More They Stay the Same” by BMO Capital Markets analyst Andrew Strelzik. BMO Capital has provided analyst coverage for each stock in the last six months. The stocks are listed according to their hedge fund sentiment in ascending order, which has been gauged from Insider Monkey’s database of 895 elite hedge funds as of Q2 2022. BMO Capital is Talking About These Restaurant Stocks 6. Wingstop Inc. (NASDAQ:WING) Number of Hedge Fund Holders: 20 Wingstop Inc. (NASDAQ:WING) is an American chain of aviation-themed restaurants, offering chicken wings. The company is headquartered in Texas and has over 1,400 restaurants. BMO Capital reported its latest rating on May 18, where Andrew Strelzik reiterated a Buy rating on Wingstop Inc. (NASDAQ:WING)’s shares with a $140 price target, seeing a 4.82% upside. Wingstop Inc. (NASDAQ:WING) is among BMO’s top 15 stock picks. Wingstop Inc. (NASDAQ:WING) has recently started increasing its brand awareness and expects this move to benefit its topline. The restaurant increased its funding for national marketing per store from 4% to 5%, and the extra sum will be used for advertising. Furthermore, the company plans to use $40-$50 million for customer targeting and enhance its marketing capability. In the second quarter of 2022, the company management noted an apparent pullback in spending from low-income household consumers at Wingstop Inc. (NASDAQ:WING). At the end of Q2 2022, 20 hedge funds held bullish positions in Wingstop Inc. (NASDAQ:WING), with Fundsmith LLP holding the most prominent position, comprising 825,464 shares valued at $61.72 million. Wingstop Inc. (NASDAQ:WING), Papa John’s International, Inc. (NASDAQ:PZZA), and McDonald’s Corporation (NYSE:MCD) are some of the restaurant stocks BMO Capital is talking about. 5. Papa John’s International, Inc. (NASDAQ:PZZA) Number of Hedge Fund Holders: 20 Papa John’s International, Inc. (NASDAQ:PZZA) is the fourth largest pizza restaurant chain in the US and the third-largest pizza delivery company. The company operates in approximately 50 countries through 5,500 locations. Papa John’s International, Inc. (NASDAQ:PZZA) is a healthy dividend stock with a decent cash position. For FY 2022, the company has cash obligations of around $62.59 million, including interest payments, debt, operating, and finance leases. The company has over $52 million in cash and it has paid out $25.1 million in dividends in the first half of 2022, as well as stock repurchases of $73.56 million. As of September 20, Papa John’s International, Inc. (NASDAQ:PZZA) has a dividend yield of 2.21%. The company also announced a quarterly dividend increase of 20% to $0.42 per share in early August. BMO Capital analyst Andrew Strelzik posted his latest rating on Papa John’s International, Inc. (NASDAQ:PZZA) in early May. Strelzik maintained an Outperform rating on the company shares with a $130 price target. On August 17, BTIG analyst Peter Saleh reaffirmed a Buy rating on Papa John’s International, Inc. (NASDAQ:PZZA) shares and increased his price target to $130 from $125.  Here is what Artisan Partners has to say about Papa John’s International, Inc.  in its Q3 2021 investor letter: “Papa John’s is a global operator and franchisor of pizza delivery and carryout restaurants. The company is tracking nicely against our turnaround thesis which hinges upon an improvement in store-level economics leading to accelerating growth in restaurant development activity. Improved store-level economics is being driven in part by market share gains resulting from menu innovation. New menu items—parmesan crusted Papadias, Epic Stuffed Crust, Shaq-a-roni— coupled with enhancements to the digital/loyalty platform and supportive advertising are attracting new customers to the brand, increasing frequency of its existing customers and driving higher unit volumes and returns. As a result, the company is experiencing incremental interest from new and existing franchisees to develop new restaurants. Papa John’s opened a record 123 units in the first half of 2021 and now expects to open 220-260 new stores this year (vs. 140-180 previously)—most of which are outside of the US. Combined with ample white space globally, we believe a higher unit growth trajectory will drive an attractive and sustainable profit cycle.” 4. Brinker International, Inc. (NYSE:EAT) Number of Hedge Fund Holders: 23 Brinker International, Inc. (NYSE:EAT) operates Chili’s and Maggiano’s Little Italy restaurants in the US and internationally. According to the company’s latest quarterly report, it operated 1,596 Chili’s Grill & Bar restaurants and 54 restaurants under Maggiano’s Little Italy brand name. As of September 21, Brinker International, Inc. (NYSE:EAT) has a PE ratio of 10.91 compared to the 19.71 sector average. On August 25, BMO Capital analyst Andrew Strelzik reaffirmed an Outperform rating on Brinker International, Inc. (NYSE:EAT) and lowered the price target to $43 from $48, representing a 43% upside. The analyst mentioned that the company earnings are set to rebound to pre-pandemic levels once the inflationary pressures soften. He further added that the stock is trading at an “extremely attractive multiple.” Brinker International, Inc. (NYSE:EAT) is expected to generate $4 billion in sales in FY2023. In case of a recession, the company is expected to generate an average of $3.846 billion in sales. In addition to Brinker International, Inc. (NYSE:EAT), Wingstop Inc. (NASDAQ:WING), Papa John’s International, Inc. (NASDAQ:PZZA), and McDonald’s Corporation (NYSE:MCD) are some of the favorite restaurant stocks of BMO Capital Markets.      Click to continue reading and see BMO Capital is Talking About These 3 Restaurant Stocks.   Suggested articles: 10 Best Consumer Discretionary Stocks To Buy 10 Monthly Dividend Stocks with Highest Yields 13 Best Semiconductor Stocks To Buy   Disclosure: None. BMO Capital is Talking About These 6 Restaurant Stocks is originally published on Insider Monkey......»»

Category: topSource: insidermonkeySep 23rd, 2022

These 5 former House candidates might"ve been the next AOC, but entrenched politicians blocked their path

Millennial and Gen Z political candidates eagerly seek a foothold in government, but establishment politicians aren't ready to let go of power. Anna Kim/Insider Insider talked to five former House candidates who lost primaries to more-experienced politicians. The younger candidates said they generally got little to no support from official party leaders. One candidate was told to "wait your turn." Another found consultants unwilling to help. Read more from Insider's "Red, White, and Gray" series. For young political candidates, the road to elective office is often turbulent.When Alexandria Ocasio-Cortez in 2018 decided to challenge Rep. Joe Crowley in a New York district anchored in the Bronx and Queens, scores of state and local officials lined up behind the longtime Democratic incumbent, who was seen as a likely House speaker-in-waiting.But Ocasio-Cortez wasn't discouraged, convinced that voters in the district were dissatisfied with the way issues like minimum wage and the climate crisis were being addressed.Fueled by grassroots energy from millennials and progressives, the then-28-year-old Ocasio-Cortez defeated Crowley by nearly 14 percentage points.Since then, Ocasio-Cortez has become the face of the younger side of Congress, a cohort that has come to include members such as the 27-year-old GOP Rep. Madison Cawthorn of North Carolina — who will exit the House in January after losing his party primary — and Democratic Sen. Jon Ossoff of Georgia, who at 35 is the youngest sitting member of the upper chamber.But for many millennial and Generation Z office seekers, simply trying to get local leaders on board with a candidacy can be a frustrating experience with minimal financial or party support.For every candidate like Ocasio-Cortez or Maxwell Alejandro Frost — the 25-year-old Democratic nominee to represent the Central Florida-anchored 10th congressional district and who is poised to be the House's first Gen Z lawmaker — there are dozens of enthusiastic young candidates who are willing to serve but are instead mired in institutional hurdles.Durham County Commissioner Nida Allam competed in this year's Democratic primary for North Carolina's 4th Congressional District.REUTERS/Jonathan Drake'I was told over and over again to wait my turn'Four months in the making, Insider's "Red, White, and Gray" series explores the costs, benefits, and dangers of life in a democracy helmed by those of advanced age, where issues of profound importance to the nation's youth and future — technology, civil rights, energy, the environment — are largely in the hands of those in the twilight of their careers.One former candidate who couldn't break through the establishment is Nida Allam, a 28-year-old Durham County commissioner who ran to represent North Carolina's 4th Congressional District. She was defeated by state Sen. Valerie Foushee, 66, who captured the Democratic nomination over Allam by 9 points, 46% to 37%, in this year's primary. Young leaders-in-waiting often can't help remaining engaged in public policy because they still want to be involved in their communities. But their experiences on the campaign trail reveal some of the obstacles built into the American political system.When Democratic Rep. David Price — who has served in Congress almost continuously since 1987 — announced last year that he was stepping down after the 2022 midterm elections, Allam reflected on the now-82-year-old congressman's legacy and her own future."He's someone that I've looked up to my entire life in the state," she told Insider. "I've been able to build a really great friendship and relationship with him. And I wanted to see this district be represented by a new generation of leadership and someone who could follow in his footsteps but also push our own state party and our leaders to look at issues in a different way."Allam is a progressive who was backed by Sens. Bernie Sanders of Vermont and Elizabeth Warren of Massachusetts, along with several local elected officials and national groups like the Sanders-aligned Our Revolution and the climate-focused Sunrise Movement. She said she felt that it was important to give voters — and especially younger voters — a reason to cast ballots.But when she first sought a seat on the Durham County Board of Commissioners in 2020, Allam said, she wasn't exactly encouraged to run — a sentiment that extended to her House campaign."When I was running for the congressional seat, but even when I ran for county commission, I was told over and over again to wait my turn," she said. "We constantly hear young people being told that narrative as if these policy decisions aren't going to impact us. You can't just keep saying, 'Oh, we want to excite young voters,' but then you don't actually create an opportunity for them."Allam — the first Muslim woman elected to office in North Carolina — credited Republicans for building a farm team of elected officials that she said Democrats hadn't replicated."Here in North Carolina they recruit folks to run for local office," she said of the state GOP. "They build them up to run for the state legislature and then for statewide and federal offices. And we need to have an infrastructure like that on the Democratic Party side. And that means investing in young people."Living in a congressional district that includes Duke University and the University of North Carolina at Chapel Hill, where an issue like the climate crisis has strong resonance, Allam said some politicians had skirted around the subject, alienating younger voters."We have folks who are in elective office and climate change is not something that's going to impact them 50, 60 years down the road," she said. "They don't act with the sense of urgency that our generation does."Former House candidate John Isemann faced ex-state lawmaker Tom Kean Jr. in the Republican primary for New Jersey's 7th Congressional District.Caleb Isemann/Isemann Media'Don't tell anyone I answered this call'When John Isemann decided to run for Congress for the first time as a Republican in northern New Jersey's highly competitive 7th Congressional District, he knew he'd be taking on the scion of local GOP royalty: former state Sen. Tom Kean Jr.But Isemann, 28, told Insider he wasn't deterred."I didn't come from money, but I believed I had the skills to build the organization, movement, and brand and was fortunate to have supporters that also believed in that," he said.Kean, the 54-year-old son of the popular 1980s Republican Gov. Tom Kean, served in the state legislature for nearly 21 years. He also ran for Congress in 2000, was the Republican US Senate nominee in 2006, and launched a House bid in 2020. He announced in July 2021 that he would run for Congress against Democratic Rep. Tom Malinowski in a rematch of their 2020 contest, which he narrowly lost.Neither Kean Jr. nor Malinowski — who has been the subject of a congressional inquiry and failed to disclose numerous stock trades last year — brought a different kind of politics to the historically Republican district, which stretches from the suburbs of New York City to the Pennsylvania line, Isemann said."The incumbent now is under congressional investigation, for ethics reasons, which is still open," he said. "And then on the other side, you have someone who is a Mayflower, generational politician who's been running for this specific seat since I was 6 years old."When Isemann was mulling over entering the race, he said, one particular incident crystallized the roadblocks that he would face in challenging Kean."As soon as you go out to DC consultants and Jersey consultants and say, 'Hey, I'm going to run against Tom Kean Jr.,' I had people hang up the phone immediately and say, 'Don't tell anybody I answered this call,'" Isemann said. "I had other folks pitch me on, 'Hey, I could set you up for a congressional seat in California or North Carolina — just don't run in that race.'"Kean won the GOP primary in June, securing nearly 46% of the vote, followed by Phil Rizzo, a former pastor, with roughly 24% support. Isemann came in fifth place, receiving about 5% of the vote.Despite his defeat, Isemann said he was grateful to have focused on policy during his campaign, rejecting the sensationalism that he argued has become an all too common part of politics."It's going to take a sacrifice on behalf of Republicans and it's going to take a sacrifice on behalf of like-minded Democrats to get us out of this high pace of polarization that we're in," he said.Unlike Allam, he argued that Democrats had been more effective at cultivating political activism among younger voters."I think the challenging party does a very good job of bringing out youth — the rise of AOC in the blue wave," Isemann said. "But I think we have yet to see a true voice of conservatives and Democrats rise up from the millennial generation or Gen Z."J. Miles Coleman, the associate editor of Sabato's Crystal Ball at the University of Virginia Center for Politics, told Insider it's only a matter of time before younger voters "get more into the political bloodstream.""The earliest wave of Gen Z can start running for Congress this cycle, so I'm sure that some of the candidates who lost will have other chances in the future," he said.Ray Reed, who worked on the policy team of then-Missouri Gov. Jay Nixon, ran for the Democratic nomination in the suburban St. Louis-anchored Second Congressional District.Channa Steinmetz/Startland News'You got to go through them to get elected'Ray Reed also contends that Gen Z's time "isn't coming — it's here."Reed, who ran in Missouri's 2nd Congressional District, which draws in much of suburban St. Louis, said he didn't feel as though his current representative — GOP Rep. Ann Wagner — was fighting for his community.He also wasn't convinced that state Rep. Trish Gunby was the right choice to represent Democrats in a congressional district the party had been unable to flip over the past decade.So the 25-year-old Democrat — who served on the policy team of former Gov. Jay Nixon and also worked for the Missouri Democratic Party — decided to jump into the race himself."I felt that she would fit the same mold as candidates who had lost time and time again," Reed told Insider, referring to Gunby. "We knew that we'd get a lot of attention because I was 25 years old, and our job was to capitalize off that."But Reed said Gunby's status as a sitting state lawmaker gave her a major boost with voters."I think what ended up really hurting us was that I ran against someone who had already been elected to a state House seat and had a serious iron grip on the stakeholders in the district," he said. "You got to go through them to get elected."Reed continued: "I was running against an older, middle-aged white woman in my race. And here I am — this skinny 25-year-old Black kid talking about forgiving student loans and free healthcare."In the August Democratic primary, Gunby defeated Reed 85% to 15%.Despite the loss, Reed had a positive view of his campaign, which included his advocacy of gun control, reproductive rights, and an extension of the child-tax credit."We still got a lot of folks involved who normally would not have gotten involved, especially young people in the race," he said. "That's why I ran."Reed also spoke highly of Rep. Cori Bush, who was 44 when she defeated the longtime Rep. William Lacy Clay Jr. in a Democratic House primary two years ago. The 2020 contest was Bush's second try at unseating Clay, whose father had previously occupied the seat for decades.Bush, along with Ocasio-Cortez, is part of the Squad, a group of progressive lawmakers pushing for policies like "Medicare for All" and universal childcare."Lacy Clay didn't show up for the community in the way that Congresswoman Bush does," Reed said. "It matters what you do with your influence in Washington."Immigration attorney Jessica Cisneros ran against Democratic Rep. Henry Cuellar in 2020 and 2022.AP Photo/Eric Gay'People were just waiting for someone to step up'In 2020, an immigration attorney named Jessica Cisneros ran in a primary against Rep. Henry Cuellar, an anti-abortion Democrat, in the South Texas-based 28th Congressional District.Cisneros — a first-time candidate who in 2014 interned in Cuellar's Washington, DC, office — came up short in the intraparty contest, earning 48% of the vote to the congressman's 52%."Nobody had really been running against Cuellar and mounting a serious challenge for a very long time, really since he was elected," Cisneros told Insider. "And then, here comes a 26-year-old candidate, born and raised in the district and ready to put up a fight."While Cuellar had the support of House Speaker Nancy Pelosi, Cisneros did earn the backing of other Democrats, including Ocasio-Cortez, Sanders, Warren, and former Housing and Urban Development Secretary Julián Castro."It was a big leap of faith," Cisneros, now 29, said of her first campaign. "It felt incredibly validating to know that I wasn't alone. People were just waiting for someone to step up."Cisneros, who ran on enacting the Green New Deal and establishing a $15 federal minimum wage, was also critical of the 67-year-old Cuellar over his abortion stance. (Weeks after the May contest, the Supreme Court voted to overturn Roe v. Wade.)  When Cisneros ran against Cuellar for the second time, she held the congressman below 50% of the vote in the initial primary before narrowly losing the runoff election (49.7% to 50.3%).Cisneros said the results reflected a "really tough fight" but also presented an opportunity for the party to engage with newly eligible voters."We talk about the Democratic Party being a big-tent party," she said. "Like this is our chance, right? To show that is true, one thing that I really want to stress to people is not to alienate all of these voters but instead bring them into this conversation about what our priorities as the Democratic Party need to be."Attorney and professor Suraj Patel ran against veteran Reps. Carolyn Maloney and Jerry Nadler in the Democratic primary for New York's 12th Congressional District.AP Photo/Julia Nikhinson'Only one campaign in this race was talking about the future'Suraj Patel, a 38-year-old attorney and professor, ran for the Democratic nomination in a Manhattan-based congressional district in 2018, 2020, and 2022.When he announced his first campaign, he said, local and state Democrats "completely shunned" his campaign."You get phone calls not returned," Patel told Insider. "You get no sort of support in any manner."His campaign this year focused on housing, immigration, and the economy, among other issues.In all of his races, Patel faced Rep. Carolyn Maloney, winning 41% in his first campaign and 39% on his second try, when he came within 4 points of victory. In his third primary race, last month, he also faced Rep. Jerry Nadler, who ran in the new 12th District as a result of court-ordered redistricting. Patel earned 19% of the vote.Nadler, 75, ousted Maloney, 76, from office. The two lawmakers combined have nearly 60 years of experience on Capitol Hill.But where does that leave candidates like Patel who feel as if their major issues aren't being addressed?"Only one campaign in this race was talking about the future," Patel said of his efforts. "At the end of this race, two campaigns were talking about the bills from 1992 or 1994 or contributing to a problem in New York City that's a livability crisis, an inflation crisis, and a rent crisis, all of which stem from a 1990s worldview about development in this city.""If we don't have a new set of leaders with new perspectives on these things," he added, "we are not going to be able to govern this country much longer."Read the original article on Business Insider.....»»

Category: smallbizSource: nytSep 23rd, 2022

3 Stocks in Focus as Domestic Auto Industry Shows Resiliency

With the Zacks Domestic Auto Industry's positioning in the top 50% despite supply chain snarls and economic slowdown, we recommend you to keep a close watch on stocks like GM, F and PCAR, which are well poised to stand the test of time. The Zacks Domestic Auto industry, despite being highly cyclical, seems to be holding its ground. Rising interest rates and high inflation are not weighing on the demand for vehicles. While the devasted supply chain system is certainly a pain point and is affecting production volumes, increasing the prices of vehicles is largely offsetting the decline in output. Automakers are passing on the escalating costs of commodities to consumers by way of a hike in model prices. Most importantly, the popularity of electric vehicles (EVs) is soaring each passing day and auto biggies are fast cementing their position in this domain. Industry participants like General Motors GM, Ford F and PACCAR PCAR should be on your radar to fetch handsome long-term returns.Industry OverviewThe Zacks Domestic Auto industry includes companies that are engaged in designing, manufacturing and retailing vehicles across the globe. These include passenger cars, crossover vehicles, sport utility vehicles, trucks, vans, motorcycles and electric vehicles. The industry — which is highly consumer cyclic and provides employment to a large number of people — is at the forefront of innovation, courtesy of its nature and the transformation that it is going through. The widespread usage of technology and rapid digitization are resulting in the fundamental restructuring of the automotive market. Several companies in the industry have engine and transmission plants and conduct research and development and testing of electric and autonomous vehicles.Key Investing Themes Demand Holds Steady Despite Stubborn Inflation: Despite sky-high inflation, rising interest rates and economic slowdown, buyers’ appetite for vehicles has held relatively steady. The top two Detroit auto biggies General Motors and Ford are not seeing signs of softening demand as yet. In fact, in August, new vehicle sales in the United States rose 4.3% year over year and 0.3% from the July level, per Automotive Industry Portal MarkLines.Supply Chain Snafu Has Been a Major Sticking Point: Automakers are battling a severe chip crisis aggravated by the Russia-Ukraine war and lockdown restrictions in China. Many auto biggies are temporarily suspending operations and slashing their production targets amid logistical challenges. There are no signs of the easing of chip issues in the near term, which are going to limit automakers’ production volumes. Experts expect the shortage to linger in 2023 as well.Commodity and Operational Cost Headwinds Remain: Prices of raw materials are soaring and are not likely to abate anytime soon. Most automakers have already warned that commodity inflation will remain a major headwind for quite some time. Ford recently announced that its third-quarter profits are likely to take a hit as it expects its cost of auto parts to be $1 billion higher than expected. Additionally, massive R&D expenses for the development of high-tech cars would also likely strain near-term cash flows. High Vehicle Prices Mostly Offsetting Cost Woes: As inventory challenges are mounting amid supply-demand imbalance, the average prices of vehicles (both new and used) are shooting up. As automakers are successfully managing to pass on the burden of escalating input costs to consumers, their revenues have not dwindled yet. With prices going through the roof, many customers are willing to pay a premium for their preferred vehicle. But then, another set of consumers is unwilling to pay a heavy premium and is waiting on the sidelines in the light of high prices and high borrowing rates.Soaring EV Sales Continue to be a Bright Spot: Inclination toward green cars is serving as a key catalyst. Climate change concerns, technological advancement and stringent fuel-emission standards are increasing green vehicles’ adoption. Demand for electric cars is off the charts. For the first half of 2022, around 414,000 EVs were delivered. EV share as a percentage of new cars sold improved to 6% in the first half of 2022 from 3% in the corresponding period of last year. The latest Inflation Reduction Act will fuel EV sales further.Zacks Industry Rank Indicates Decent ProspectsThe Zacks Automotive – Domestic industry is a 22-stock group within the broader Zacks Auto-Tires-Trucks sector. The industry currently carries a Zacks Industry Rank #95, which places it in the top 38% of more than 250 Zacks industries.The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates encouraging near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gaining confidence in this group’s earnings growth potential. The industry’s earnings estimates for 2022 have risen around 6% since Jun 30.Before we present you three industry participants worth considering for your portfolio, let's take a look at the industry’s stock market performance and current valuation.Industry Outperforms S&P 500 & SectorThe Domestic Auto industry has surpassed the Zacks S&P 500 composite over the past year. The industry has moved up 1.7% versus the S&P 500 and sector’s decline of 14.6% and 14.9%, respectively, over the said time frame.One-Year Price PerformanceIndustry's Current ValuationSince automotive companies are debt laden, it makes sense to value them based on the EV/EBITDA (Enterprise Value/ Earnings before Interest Tax Depreciation and Amortization) ratio. On the basis of the trailing 12-month enterprise value to EBITDA (EV/EBITDA), the industry is currently trading at 29.34X compared with the S&P 500’s 11.86X and the sector’s 15.82X. Over the past five years, the industry has traded as high as 54.74X, as low as 8.85X and at a median of 15.26X, as the chart below shows.EV/EBITDA Ratio (Past Five Years) 3 Stocks to Add to WatchlistPACCAR: A leading name in the trucking business, PACCAR’s wide range of trucks carries a solid reputation. The launch of Peterbilt 579 and Kenworth T680 along with the new line of DAF trucks in the European Union market with higher fuel efficiencies should boost prospects. PACCAR’s accelerated efforts toward electrification, connected vehicle services and advanced driver-assistance system options augur well. Its Parts and Financial Services segments gain from a broad dealer network. PACCAR’s strong balance sheet is complemented by A+ and A1 credit ratings assigned by Standard & Poor's and Moody's, respectively. The Zacks Consensus Estimate for PACCAR’s 2022 earnings and sales implies year-over-year growth of 45.3% and 22%, respectively. The consensus mark for 2022 earnings has moved north by 7.8% over the past 60 days. PACCAR currently carries a Zacks Rank #2 (Buy) and has a VGM Score of B. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here. Price and Consensus: PCARGeneral Motors: One of the world’s largest automakers, General Motors’ U.S. market share was 14.4% of the industry’s total sales in 2021.U.S. legacy automaker General Motors’ prospects shine bright, courtesy of its hot-selling brands in America like Chevrolet Silverado, Equinox and GMC Sierra. GM’s big push toward EVs is commendable. The automaker plans to roll out 30 fresh EV models by 2025-end.  Key launches, including the GMC Hummer EV, Cadillac Lyriq crossover EV, Equinox EV, Silverdo EV and Blazer EV, among others, are expected to buoy top-line growth. General Motors has enough cash on the balance sheet to weather short-term headwinds and navigate economic cycles.The Zacks Consensus Estimate for GM’s 2022 and 2023 sales implies year-over-year growth of 21.5% and 6.5%, respectively. Over the trailing four quarters, the company surpassed earnings estimates thrice and missed once, the average surprise being 18.9%. General Motors currently carries a Zacks Rank #3 (Hold) and has a VGM Score of A.Price and Consensus: GM Ford: The U.S. auto giant’s prospects are getting bolstered by a strong vehicle mix, supported by F-series trucks, Maverick pickup and SUV models, including Escape, Explorer, Expedition, EcoSport and Edge, which is impressive. With Mustang Mach-E, E-Transit and F-150 Lightning, the robust BEV lineup would further aid deliveries. The Ford+ plan, with a deep focus on increasing profitability, exploring the e-mobility future and enhancing customer experience, sparks optimism. Ford’s ambitious rejig plan to split its EV business into a separate unit within the company will unlock growth opportunities. The company’s improving financials provide a solid foundation for investment in Ford+ priorities.The Zacks Consensus Estimate for Ford’s 2022 earnings and sales implies year-over-year growth of 32% and 16%, respectively. The consensus mark for 2022 earnings has moved 10.6% north over the past 60 days. Ford currently carries a Zacks Rank #3 and has a VGM Score of B.Price and Consensus: F Just Released: Free Report Reveals Little-Known Strategies to Help Profit from the  $30 Trillion Metaverse Boom It's undeniable. The metaverse is gaining steam every day. Just follow the money. Google. Microsoft. Adobe. Nike. Facebook even rebranded itself as Meta because Mark Zuckerberg believes the metaverse is the next iteration of the internet. The inevitable result? Many investors will get rich as the metaverse evolves. What do they know that you don't? They’re aware of the companies best poised to grow as the metaverse does. And in a new FREE report, Zacks is revealing those stocks to you. This week, you can download, The Metaverse - What is it? And How to Profit with These 5 Pioneering Stocks. It reveals specific stocks set to skyrocket as this emerging technology develops and expands. Don't miss your chance to access it for free with no obligation.>>Show me how I could profit from the metaverse!Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report General Motors Company (GM): Free Stock Analysis Report Ford Motor Company (F): Free Stock Analysis Report PACCAR Inc. (PCAR): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 22nd, 2022

4 Textile - Apparel Stocks to Watch Despite Industry Headwinds

The Zacks Textile - Apparel industry participants are battling high inflationary pressure and supply-chain disruptions. Effective digital efforts bode well for Lululemon (LULU), Columbia Sportswear (COLM), Guess? (GES) and Gildan Activewear (GIL). Rising inflationary pressure and supply-chain disruptions have been a concern for several Zacks Textile – Apparel industry players. High SG&A expensesare affecting many firms, especially due to elevated freight and logistic costs.Nevertheless, efforts to boost store and digital operations together with robust brand enhancement endeavors keep Lululemon Athletica Inc. LULU, Columbia Sportswear Company COLM, Guess?, Inc. GES and Gildan Activewear Inc. GIL well-positioned for gains.About the IndustryThe Zacks Textile – Apparel industry includes companies and lifestyle brands, which manufacture, design, distribute, source, market and sell apparel, footwear and accessories for men and women. These include fashion apparel like dresses, pants, skirts, shorts, shirts, jackets, blouses and knitwearas well as intimate apparel like underwear and shapewear. The industry also comprises companies offering apparel for a healthy lifestyle and athletic activities, such as yoga, running, and training, to name a few. Some companies also deal in fitness-related accessories like gloves, bags, headwear and sports masks. The industry participants operate through direct-to-consumer (brick-and-mortar and online), wholesale, and licensing distribution channels. Most players operate through stores and digital networks in the United States and internationally.4 Trends Shaping the Future of the Textile - Apparel IndustryCost Concerns: Textile-apparel companies are encountering escalated input cost inflation, persistently weighing on their profits. Several firms are battling supply-chain disruptions stemming from prolonged COVID-associated factors, congestion at ports and reduced airfreight capacity. The ongoing supply-chain issues are inducing delays and resulting in increased freight costs. Incidentally, textile-apparel players continue to witness higher SG&A costs. Elevated marketing expenses and increased investments toward enhancing store and digital operations have pushed up SG&A costs. The impact of lower demand due to inflation and reduced discretionary expenses is also a major concern for the payers. Also, a challenging and competitive labor market is a concern. These factors pose threats to companies’ margins.International Exposure Poses Risks: Owing to its international presence, Textile-apparel companies are exposed to unfavorable currency fluctuations. Political unrest, like turmoil related to current geopolitical events and the related sanctions, restrictions or other responses, could dent companies’ performance. Several players are facing the impacts of the Ukraine war, including supply-chain and regulatory hurdles.Improved Store Traffic, Solid Digital Trends: Textile-apparel players are capitalizing on the importance of physical retail and the convenience of online engagement. Companies in the space are witnessing a rebound in brick-and-mortar sales driven by an increase in traffic as consumers returned to stores for shopping. Textile-apparel players are focused on investments to enhance the in-store experience. Consumers’ growing inclination toward online shopping has put e-commerce at the forefront for players in the textile-apparel industry. The companies in the space have been investing in improving e-commerce sites, upgrading mobile apps, enhancing payment systems, linking online and store operations, and increasing fulfillment capabilities. Buy online, pickup in-store and curbside delivery options are gaining traction for many industry players.Brand-Enhancing Endeavors: Efforts to bolster brands via marketing strategies, licensing deals, buyouts, and alliances are likely to keep supporting Textile-apparel players. New product launches are an important part of Textile-apparel players’ growth. Companies in the space regularly enhance products through innovation to remain competitive and tap the evolving consumer preferences. The pandemic pushed the comfortable leisurewear category, which has been working in favor of activewear providers.Zacks Industry Rank Indicates Dull Prospects The Zacks Textile – Apparel industry is housed within the broader Zacks Consumer Discretionary sector. The industry currently carries a Zacks Industry Rank #233, which places it in the bottom 7% of more than 250 Zacks industries.The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all member stocks, indicates robust near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.The industry’s position in the bottom 50% of the Zacks-ranked industries results from a negative aggregate earnings outlook for the constituent companies. Looking at the aggregate earnings estimate revisions, analysts are gradually becoming less confident about this group’s earnings growth potential. Since the beginning of May 2022, the industry’s consensus earnings estimate for the current financial year has fallen 9.6%.Let’s look at the industry’s performance and current valuation.Industry Versus Broader MarketThe Zacks Textile – Apparel industry has outperformed the broader Zacks Consumer Discretionary sector while it underperformed the S&P 500 composite in the past year.The industry declined 35.8% during this period compared with the broader sector’s plunge of 40.3%. The S&P 500 has declined 14.6% in the same time frame.One-Year Price PerformanceIndustry's Current ValuationOn the basis of forward 12-month price-to-earnings (P/E), commonly used for valuing consumer discretionary stocks, the industry is currently trading at 11.43X compared with the S&P 500’s 16.59X and the sector’s 21.07X.Over the last five years, the industry has traded as high as 32.1X, as low as 9.98X and at the median of 18.06X, as the chart below shows.Price-to-Earnings Ratio (Past 5 Years)4 Textile - Apparel Stocks to Keep a Close Eye onLululemon: The yoga-inspired athletic apparel company is gaining from strong momentum in its business, driven by a favorable response to its products. Lululemon is keen on capturing the growing online demand through accelerated e-commerce investments. The Zacks Rank #2 (Buy) company is leveraging its stores to facilitate omni-channel capabilities, including the buy online pickup in store and ship-from-store.The Zacks Consensus Estimate for Lululemon’s fiscal 2022 earnings per share (EPS) has climbed 4.6% in the past 30 days to $9.87. LULU’s stock has moved up 2.4% in the past six months. Lululemon has an expected EPS growth rate of 20% for three-five years. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Price and Consensus: LULUColumbia Sportswear: The designer, marketer and distributor of outdoor, active and everyday lifestyle apparel, footwear and accessories currently carries a Zacks Rank #3 (Hold). Columbia Sportswear is gaining from its strategic priorities, like demand creation investments, to drive brand awareness. It remains committed to enhancing consumers’ experience and its digital capacity in all networks and regions.The Zacks Consensus Estimate for Columbia Sportswear’s 2022 EPS has remained unchanged over the past 30 days at $5.18. Shares of COLM have dipped 22.8% in the past six months. Columbia Sportswear has an expected EPS growth rate of 8.1% for three-five years.Price and Consensus: COLMGuess?: The Zacks Rank #3 company is engaged in designing, marketing, distributing and licensing lifestyle collections of apparel and accessories. Guess? has been benefiting from its solid digital business. The company is on track to progress in its customer-centric initiatives, including omnichannel capabilities, advanced data analytics and customer segmentation.Guess?’s commitment to six key strategies also bodes well. These include organization and culture, functional capacities, brand relevance with three main consumer groups (heritage, Millennials and Generation Z customers), customer focus, product brilliance and international footprint. The Zacks Consensus Estimate for Guess?’s fiscal 2023 EPS has climbed almost 4% in the past 30 days to $2.63. GES’s stock has dropped 26.2% in the past six months.Price and Consensus: GESGildan Activewear: The manufacturer and seller of various apparel products is benefiting from strength in its Activewear category. Gildan Activewear is reaping the benefits of its back-to-basic strategy. Focus on supply chain enhancements and cost savings bodes well for GIL.The Zacks Consensus Estimate for Gildan Activewear’s 2022 EPS has remained unchanged in the past 30 days at $3.10. GIL’s stock has dipped 19.4% in the past six months. The Zacks Rank #3 company has an expected EPS growth rate of 9% for three-five years.Price and Consensus: GIL  Just Released: Free Report Reveals Little-Known Strategies to Help Profit from the  $30 Trillion Metaverse Boom It's undeniable. The metaverse is gaining steam every day. Just follow the money. Google. Microsoft. Adobe. Nike. Facebook even rebranded itself as Meta because Mark Zuckerberg believes the metaverse is the next iteration of the internet. The inevitable result? Many investors will get rich as the metaverse evolves. What do they know that you don't? They’re aware of the companies best poised to grow as the metaverse does. And in a new FREE report, Zacks is revealing those stocks to you. This week, you can download, The Metaverse - What is it? And How to Profit with These 5 Pioneering Stocks. It reveals specific stocks set to skyrocket as this emerging technology develops and expands. Don't miss your chance to access it for free with no obligation.>>Show me how I could profit from the metaverse!Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report lululemon athletica inc. (LULU): Free Stock Analysis Report Columbia Sportswear Company (COLM): Free Stock Analysis Report Guess, Inc. (GES): Free Stock Analysis Report Gildan Activewear, Inc. (GIL): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 22nd, 2022

Staffers say Goldman Sachs CEO David Solomon has asked them to help with his DJ account

Insiders say they worry that Solomon is too focused on his vanity projects right now — especially as parts of the business like Marcus are struggling. Good morning, Wall Streeters. Aaron Weinman's out today — this is Lisa Ryan filling in. I oversee newsletters here in Insider's newsroom, so figure I'll kick things off by touting a few great ones I think you'll be into. First, there's Insider Weekly, curated by our business editor in chief Matt Turner. Each Sunday, Matt highlights our top reads of the week — from markets and economy to tech and finance — and takes you behind the scenes of one of our major stories. (Sneak peek: This week it's our inaugural Climate Action 30 list.) Sign up here.And if you're a fan of 10 Things, then you'll love our other newsletters in the franchise: 10 Things in Tech, bringing you the scoops and innovations in Big Tech and beyond, and 10 Things Before the Opening Bell, our morning markets rundown.Now, let's get into what everyone's talking about on the Street.If this was forwarded to you, sign up here. Download Insider's app here.Michael Kovac/Getty Images1. David Solomon is working hard to build up David Solomon. On a Friday in late July, the Goldman Sachs CEO boarded the company's Gulfstream G650 for Chicago. He had meetings scheduled that day with Goldman clients and employees. But in the evening, Solomon — who moonlights as an electronic-music DJ — performed a high-profile set at Lollapalooza. He posted a video of the set, complete with smoke machines and sweaty bodies, on his personal Instagram.And that's the latest in a string of actions showing the intertwining interests of David Solomon the CEO and chairman and the interests of Goldman Sachs itself, my colleague Dakin Campbell reports.Insiders say they worry that Solomon is too focused on his vanity projects right now — especially as parts of the business like Marcus are struggling or need focused attention. Staffers say they've been asked to help with his DJ account and they've noted a new emphasis on sports endorsements.As one Goldman insider told Dakin: "The thing that everyone grapples with is the DJ, the McLaren sponsorship, all the flashy stuff. You can do that if you're performing, but he hasn't gotten book value up. The stock is near a low."Read the full report here.In other news:Larry Fink/Reuters, Tyler Le/Insider2. BlackRock faces an employee exodus after acquiring a money manager to expand in private credit. Former staffers say underwhelming pay and unfulfilled promises led to widespread frustration and departures, Danielle Walker and Rebecca Ungarino report. Get the scoop here.3. The Fed committed even more to inducing a "growth recession" as it raised interest rates. Yesterday's 0.75 percentage point rate hike was the third such increase in a row. Meanwhile, JPMorgan CEO Jamie Dimon warned about inflation in front of Congress – and also slammed bitcoin as a Ponzi scheme.4. Millennium Management tapped Goldman Sachs alum Olga Naumovich to build out its Miami tech hub. The war for local investing and tech talent is heating up as more hedge funds move South.5. Citigroup is planning to close its UK retail bank. The Financial Times reports that this comes as the bank's rivals ramp up their own UK offerings – and after Citi already nixed its global consumer banking division. Read more.6. Fancy a $300 poncho or handmade crochet cardigan? Check out Cash App's merch. The fintech is outfitting customers to drum up brand loyalty, as it competes in the cutthroat financial app landscape.7. Ex-Cravath lawyer Andy Klein wants to raise $5 million for his new startup. Here's his pitch to his "affinity group" of investors — in this case, we're talking about attorneys.8. Stash announced the launch of a new core banking system and refreshed debit card. The investing and banking app inked new partnerships with Mastercard, Stride Bank, Marqeta, and other fintech names. Here's the latest.9. People are losing it over this 8-foot-wide Toronto house that's on the market for $1.95 million. And that's despite having a toilet in the middle of a bedroom. Ah, life in a major financial hub.10. Eataly is selling a majority stake to a European private-equity firm. The deal with Investindustrial involves an investment of nearly €200 million, per the WSJ, and will help the Italian marketplace-chain (and site of many a business lunch) expand globally.  Curated by Lisa Ryan (tweet @lisarya) in New York. Edited by Jeffrey Cane (tweet @Jeffrey_Cane) in New York and Hallam Bullock (tweet @hallam_bullock) in London.Read the original article on Business Insider.....»»

Category: smallbizSource: nytSep 22nd, 2022

Stitch Fix (SFIX) Q4 Loss Widens & Revenues Decrease Y/Y

Stitch Fix's` (SFIX) fourth-quarter fiscal 2022 results reflect a challenging macroeconomic environment. Also, management provides a soft view for the fiscal first quarter. Stitch Fix, Inc. SFIX posted soft fourth-quarter fiscal 2022 results. SFIX reported a wider-than-expected loss per share and lower-than-expected revenues. Both metrics also deteriorated from the year-earlier quarter’s respective reported figures. Results were hurt by a tough macroeconomic backdrop. Record inflation levels and a deteriorating retail environment caused slower discretionary spend in apparel.Shares of this currently Zacks Rank #4 (Sell) Stitch Fix have decreased 24.1% in the past six months compared with the industry’s 15.6% decline.In fiscal 2022, Freestyle revenues rose 21% year over year. Freestyle and SFIX’s original Fix offering appears encouraging. Stitch Fix is consistently working on its transformation efforts to revert to profitability. It is focused on returning to active client growth and optimizing the cost base. It focuses on lowering fixed cost and increasing variable productivity. SFIX is on track to surpass the upper end of its anticipated annual savings in fiscal 2023.Management also remains committed to its go-forward strategy. Stitch Fix has been capitalizing on the health of its present customer base by enhancing the unique experience, growing net active client marketing portfolio expansion, refining the on-boarding experience, controlling costs efficiently and reinforcing the infrastructure.Q4 DetailsStitch Fix posted a loss of 89 cents a share, wider than the Zacks Consensus Estimate of a loss of 60 cents. The bottom line compared unfavorably with earnings of 19 cents a share recorded in the prior-year quarter.SFIX recorded net revenues of $481.9 million, down 16% from the year-ago quarter’s figure due to weak fixed volumes, partly offset by demand in Freestyle. The metric came below the Zacks Consensus Estimate of $489 million.Per management, the month of July was particularly challenging with macroeconomic headwinds. Such trends entered the first half of the fiscal first quarter.Stitch Fix has active clients of 3,795,000 as of Jul 30, 2022, down 9% from the prior-year quarter’s level. Revenue per active client or RPAC reached $546, increasing 8% year over year.Margins & CostsIn the fiscal fourth quarter, gross profit tumbled 27.4% to $192.7 million. Also, gross margin contracted 400 basis points (bps) year over year to 42.5% due to elevated transportation costs coupled with tightening product margins from inflation and higher penetration of national brands.Selling, general and administrative (SG&A) expenses climbed 19% to $291.3 million. Other SG&A, excluding advertising and stock-based compensation, was essentially flat with the previous fiscal year’s reading.Stitch Fix reported an adjusted EBITDA loss of $31.8 million for the fiscal quarter under review against the adjusted EBITDA of $55.4 million posted in the year-ago fiscal quarter.Other Financial AspectsStitch Fix ended the fiscal fourth quarter with cash and cash equivalents of $130.9 million minus debt and shareholders’ equity of $322.7 million. SFIX had an undrawn $100 million revolving line of credit at the end of the period.SFIX provided $55.4 million cash from operating activities during fiscal 2022. Also, Stitch Fix had a free cash flow of $9 million in the aforementioned period.OutlookFor the first quarter of fiscal 2023, management projects net revenues of $455-$465 million, indicating a decline of 20-22% from the year-ago fiscal quarter’s reported figure. Stitch Fix expects adjusted EBITDA in the bracket of a negative $10 million to a negative $15 million with a margin contraction of 2-3%. This view assumes net active clients to decline quarter over quarter.For fiscal 2023, management projects revenues between $1.76 billion and $1.86 billion, and adjusted EBITDA in the bracket of a negative $25 million to a negative $45 million.The Zacks Consensus Estimate for earnings is pegged higher at $525 million for the fiscal first quarter and $2.12 billion for fiscal 2023.Key Picks in RetailSome better-ranked stocks are Designer Brands DBI, Buckle BKE and Capri Holdings CPRI.Designer Brands, the leading footwear and accessories designer, presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Designer Brands’ fiscal 2022 sales and earnings per share (EPS) suggests growth of 6.9% and 23.5%, respectively, from the corresponding year-ago levels. DBI has a trailing four-quarter earnings surprise of 55.1%, on average.Buckle, a leading retailer of apparel, footwear and accessories, has a Zacks Rank #2 (Buy) at present. BKE has a trailing four-quarter earnings surprise of 8.3%, on average.The Zacks Consensus Estimate for Buckle’s fiscal 2022 sales and EPS suggests growth of 6.8% and 4.5%, respectively, from the year-ago corresponding figures.Capri Holdings, a global fashion luxury group consisting of iconic brands, namely Versace, Jimmy Choo and Michael Kors, carries a Zacks Rank of 2 at present.The Zacks Consensus Estimate for Capri Holdings’ current financial-year sales and EPS suggests growth of 3.3% and 10.1%, respectively, from the corresponding year-ago period’s actuals. CPRI has a trailing four-quarter earnings surprise of 32.4%, on average. This Little-Known Semiconductor Stock Could Be Your Portfolio’s Hedge Against Inflation Everyone uses semiconductors. But only a small number of people know what they are and what they do. If you use a smartphone, computer, microwave, digital camera or refrigerator (and that’s just the tip of the iceberg), you have a need for semiconductors. That’s why their importance can’t be overstated and their disruption in the supply chain has such a global effect. But every cloud has a silver lining. Shockwaves to the international supply chain from the global pandemic have unearthed a tremendous opportunity for investors. And today, Zacks' leading stock strategist is revealing the one semiconductor stock that stands to gain the most in a new FREE report. It's yours at no cost and with no obligation.>>Yes, I Want to Help Protect My Portfolio During the RecessionWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Buckle, Inc. The (BKE): Free Stock Analysis Report Stitch Fix, Inc. (SFIX): Free Stock Analysis Report Capri Holdings Limited (CPRI): Free Stock Analysis Report Designer Brands Inc. (DBI): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 21st, 2022

3 Defensive Stocks With 60-Year Dividend Hike Streaks

Procter & Gamble Company has increased its annual dividend in each of the last 66 years Johnson & Johnson has raised its dividend every year since 1962. The Coca-Cola Company marked the 60th consecutive year of dividend increases in February Cal Ripken Jr.’s 2,632 consecutive starts. Wayne Gretzky’s 51-game point streak. UConn Women’s Basketball’s 90-game winning […] Procter & Gamble Company has increased its annual dividend in each of the last 66 years Johnson & Johnson has raised its dividend every year since 1962. The Coca-Cola Company marked the 60th consecutive year of dividend increases in February Cal Ripken Jr.’s 2,632 consecutive starts. Wayne Gretzky’s 51-game point streak. UConn Women’s Basketball’s 90-game winning streak. In sports, there are plenty of memorable records etched into our minds. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more   Find A Qualified Financial Advisor Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now. The stock market boasts some impressive records of its own. Some, like the Nasdaq’s 19-day run in 1979, are legendary. Others, like 2022’s seven-week S&P 500 slump, are forgettable. In the category of ‘Best in Dividends,’ a handful of companies stand out from the crowd. Over the last 60-plus years, annual dividend increases have been as constant as the changing of the seasons for only 10 U.S. stocks.  Not even Black Monday in October 1987, the Dot-com Bubble of March 2000, the Financial Crisis of 2007-2008, or the more recent coronavirus could stop this elite group from keeping their historic dividend hike streaks intact. And with the U.S. economy staring at another recession, it may be a good time to lean on the stability and income of the dividend growth champs. These three defensive names rise to the top of the list. Which Consumer Staples Company Has the Longest Dividend Streak?  The Procter & Gamble Company (NYSE:PG) has increased its annual dividend in each of the last 66 years. Only Dover Corp. and Genuine Parts can claim the same, and only American States Water Co.’s 67 years tops it. On average, the household essentials giant has raised its dividend by 6% over the last five years. That has brought the current annualized payout to $3.65. With the stock trading roughly $30 below its January 2022 peak, this gives P&G a 2.66% forward yield. It is a yield that is no longer on par with the 10-year Treasury yield but still a good income-producing alternative that, unlike its risk-free counterpart, comes with the potential for significant share price appreciation. Procter & Gamble’s financial strength has supported its ability to boost dividends for more than six decades straight. Simply put, its cleaning and personal care products are a source of steady consumer demand. Popular brands like Charmin, Scope, and Tide generate healthy profit margins, which leaves the company lots of money to pay its bills and rewards shareholders with dividends. Not only has P&G put together an industry-best dividend increase streak, but it has paid a dividend every year dating back to 1890. What Drives Johnson & Johnson’s Dividend Increases? Johnson & Johnson (NYSE:JNJ) has raised its dividend every year since 1962. No other healthcare company can match the feat although Becton, Dickinson & Co. is not far behind at 50 years. Even though more than 40% of J&J’s earnings are returned to shareholders as dividends, the company has ample cash left over to pursue organic growth opportunities and M&A. J&J has a good track record of integrating acquisitions which means it gets the most out of its new businesses to maintain solid cash flow growth. Interestingly, its 1961 takeover of Belgian drug company Janssen Pharmaceutica seemed to kick start the dividend hike campaign. It was the same year that Tylenol became available over-the-counter.  The current annual dividend of $4.52 means investors can get a 2.75% yield on a blue chip stock that is recovering from a rare four-month losing streak. We have to go back to early 2018 to see the last time J&J went on such an extended skid. History is of course no guarantee of the future, but it's noteworthy that the stock then moved higher for six straight months to establish a new record high.  Will Coca Cola Keep Raising Its Dividend? When The Coca-Cola Company (NYSE:KO) raised its quarterly dividend from $0.42 to $0.44 in February, it marked the 60th consecutive year of dividend increases. The beverage maker’s two cents gives stockholders a $1.76 annual cash payout and prospective investors an attractive 2.95% forward yield. Compare that to the yield on the average consumer staples stock of 1.9%. The predictability of Coca Cola’s business together with the dividend are the main attractions of the equity investment. Its expanding portfolio of sodas, juices, teas, and coffees derive steady profits that are reinvested in the business, paid as dividends, and used for share repurchases. Look no further than Warren Buffet, whose Berkshire Hathaway is the largest Coca Cola owner with some 400 million shares.  In recent years, the pace of the dividend increases slowed as Coca Cola took a cautious stance on pandemic-related supply chain disruptions and inflationary effects on consumer spending. Coke’s board opted for 2.4% to 2.6% dividend growth rates from 2019 to 2021. The good news is the recent boost was an acceleration that brought the growth back to pre-2019 levels of around 5%. Typically Coca Cola’s dividend growth rate follows the trajectory of its earnings growth. Despite the impacts of inflation and the strong dollar, Wall Street’s estimate for 2023 EPS growth is around 5%. If things go as predicted, look for Coke to tack on another couple of pennies to its dividend and the streak to extend to 61 years. Cherry Coke in hand, the Oracle of Omaha will drink to that! Should you invest $1,000 in Procter & Gamble right now? Before you consider Procter & Gamble, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Procter & Gamble wasn't on the list. While Procter & Gamble currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here Article by MarketBeat.....»»

Category: blogSource: valuewalkSep 21st, 2022

Transcript: Albert Wenger

     The transcript from this week’s, MiB: Albert Wenger, Union Square Ventures, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ ANNOUNCER: This is Masters in… Read More The post Transcript: Albert Wenger appeared first on The Big Picture.      The transcript from this week’s, MiB: Albert Wenger, Union Square Ventures, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ ANNOUNCER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio. BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: This week on the podcast, what can I say, I have yet another extra special guest, Albert Wenger, managing partner at Union Square Ventures. He has a fascinating background in technology and software, and is interested in all sorts of interesting things, ranging from climate change to humanism, to the huge transitions that humans have gone through as a species and what it means to society, investing, scarcity and just the quality of life that we will enjoy as a species. I found this conversation to be really intriguing. If you’re interested in venture capital, in technology, in how to think about early stage investing, well, strap yourself in, this is a great one. With no further ado, my conversation with Union Square Ventures’ Albert Wenger. You have quite a fascinating history. Let’s delve into that, starting with your background. You won a national German competition in computer science in high school. Tell us about that and where that led you. ALBERT WENGER, MANAGING DIRECTOR, UNION SQUARE VENTURES: Well, I fell in love with computers very early on when I was a young teenager. And my parents were super indulgent of this at a time when that was very unusual, and they bought me an early Apple II computer, one of the earliest Apple IIs to be sold in Europe, actually. And I’ve stuck with that, my entire life. I’ve studied computer science as an undergrad and as a graduate student. And I’ve been investing in a lot of computer companies over the years. So it’s been a central to what I do and who I am. RITHOLTZ: So let’s talk about the timing of school. You graduate Harvard in 1990, with an Economics and Computer Science degree, perfect for the explosion of the Internet; a PhD from MIT and Information Technology in ‘96. So when you were leaving school, were you interested in the Internet, or was it more hardware and software? WENGER: No. The web was really exploding while I was at MIT. And I actually finished my PhD in ’99, but I started a company in late ‘96, early ‘97. And I was kind of doing the company and the thesis at the same time, which wasn’t great for either, and also wasn’t great for our marriage. We kind of managed to get through that. But I was really fascinated with the web from when I first discovered it, which was in a computer lab at MIT where I’m trying to do my stats homework. So — RITHOLTZ: So let’s talk a little bit about some of the other companies you either founded or run, the most famous is probably del.icio.us, which ended up getting picked up by Yahoo. Tell us a little bit about — WENGER: It was an early Web 2.0 darling, Joshua Schachter had started. He was working at Morgan Stanley actually full time. He had started this as a side project. And it was kind of this idea that you would share your bookmarks with others, because bookmarks were kind of an indication of something that was actually interesting on the Internet. And Joshua added tags to that, and so you could browse things by tags. And at that time, Union Square Ventures’ Fred and Brad had started the firm, they had just raised the first fund. I had just finished another project I was been working on. And they were like, “Hey, we’re talking to this guy, Joshua, what do you think?” So I met up with Joshua, and they wound up investing, and I wound up to become the president. RITHOLTZ: So you’re president of del.icio.us, you see it through in order to be acquired by Yahoo in the early 2000s. Tell us a little bit about that experience. WENGER: The del.icio.us team was tiny. It was sub 10 people, basically. RITHOLTZ: Wow. WENGER: And it was a very rapidly growing service. I made myself sufficiently unpopular during the acquisition because I insisted on certain things, I’m like, “We’re not doing this. We’re not doing this. We’re not doing this.” At they at the end, they were like, “We want all of you except for this Wenger guy. We don’t want him,” which was perfect for me, mind you, because I didn’t want to relocate out to the West Coast. So I got to just take my marbles and start making angel investments. RITHOLTZ: So is that what led you to Etsy and Tumblr was the del.icio.us acquisition? WENGER: Yeah, exactly. I had a little bit of money and I met Rob Kalin, the founder of Etsy. He had just come back from the West Coast. He had tried to raise money on the West Coast, was unsuccessful with that. And so I wrote an angel check here, and then I brought Union Square Ventures in as the first Series A investor. RITHOLTZ: Is that what led to your transition from entrepreneur to venture capital? WENGER: Well, I was basically hanging out at the USV offices after the sale of del.icio.us and — RITHOLTZ: Just because you had no place else to go. WENGER: Because I knew both Brad and Fred really well, and so it was kind of a natural thing to do. I did these angel investments. I led the Union Square Ventures investment in Etsy, I became a venture partner for that, and then became a GP in the 2008 fund. RITHOLTZ: So Etsy, also Tumblr was another one. And if memory serves, were they acquired by Yahoo? WENGER: They were also acquired by Yahoo. Yes. RITHOLTZ: Okay. So you’re working at a contact list. What was that experience like now not as a president, but as an outside investor? WENGER: It was a very, very lucky landing for Tumblr, because Yahoo really was the only bidder and they were bidding against themselves, but they didn’t really know that. RITHOLTZ: So what eventually led you to say, “You know, I think I could do this venture stuff full time. Let me hang my hat at Union Square Ventures and focus solely on something else.” WENGER: Yeah, that had really been my goal since my own first startup in ’96, ‘97, which was a company called W3Health that ultimately failed. From that experience, I realized that I really loved startups, but then I was never going to be good operator, but I thought I could maybe be a decent investor. RITHOLTZ: Let me make a digression here, and since you’re in front of me, I have to ask this question. So I deal with traders, investors, fund managers, economists down the list, there is no group of people that seem to be prouder of their failures than venture capitalists. Why is that? WENGER: Because it’s an integral part of the business. And if you can’t deal with failure, you can’t be a VOICE, because many of the startups you invest in fail. RITHOLTZ: Statistically, that’s your expectation? WENGER: Yes, absolutely. RITHOLTZ: So it just seems like the healthiest way to think about what is unavoidable, yet so many people within the world of finance, kind of dance around it, try not to deal with it. There’s a little bit of denial. It’s almost like an object of pride, “Look, here are all the companies we invested in that didn’t make it. Look, here are all the great companies we passed on.” It’s almost like a point of pride, this sort of self-awareness. WENGER: Well, it’s also important too, how the venture capital model works overall, right? So the most you can ever lose in venture capital is the amount of equity you’ve put in. RITHOLTZ: Right. WENGER: But the upside is nearly limitless. I mean, it’s what Nassim Taleb calls convex tinkering, right? It’s the perfect example of that. You take many small, relatively small positions, and any one of them can become very, very large. But you also learn a lot from the things that don’t work. You know, sometimes you learn a lot more from that than you learn from the ones that do succeed. RITHOLTZ: Sure. You tend to learn more from losers than winners usually. And then I have to ask the same question, so Union Square Ventures, by definition Union Square is here in New York City. What’s it like being a venture investor on this side of the country, as opposed to what seems to be, you know, the gravitational black hole of venture out in Silicon Valley in California? WENGER: Well, first of all, it’s no longer that. So you know, Sequoia just opened a New York City office. Andreessen Horowitz has people on the ground here. So New York City is now, today, one of the epicenters. When we started, that wasn’t the case. When we started, people were like, “Oh, there’s been no tech company in New York City. There’s been no IPO.” Of course, you know, we were involved with two of the major IPOs. We led the Series A in Etsy. I also led the Series A — we — Union Square Ventures led the Series A in MongoDB, the big New York City-based success story. So it was incredibly healthy, though, because we were never caught up in the “Oh my God FOMO” of we have to have one of these and one of those, and everybody else is investing in the sector. It was always a “Let’s form our own thesis. Let’s figure out what we believe, and then let’s find companies that fit with that.” And we’ve always been extremely competitive in winning deals in the West Coast. In Twilio, I led the Series A, for Union Square Ventures, and there was a, you know, San Francisco-based company. So — RITHOLTZ: Last question on this topic, how different is venture in New York versus California, or is there really no big difference? WENGER: There used to be a noticeable difference between East Coast and West Coast. Today, I think that’s completely erased. RITHOLTZ: Quite interesting. So let’s talk about the thesis-driven venture capital firm, which is how USV describes itself. Tell us what these theses are and how do they drive your investment? WENGER: Yeah. So there’s been an evolution over time. I would say, you know, what we call Thesis 1.0 was that we invest in large networks of engaged users, differentiated by user experience, and those were investments like Twitter and Tumblr. And then we started to focus on companies that had less obvious network effects, so more data behind the scenes, companies like Sift, for example. And then we added to our thesis sort of infrastructure, and infrastructure investments included Twilio and MongoDB, Cloudflare. Stripe. There’s a whole bunch of infrastructure investments, infrastructures for building digital businesses. Our current iteration, what we call Thesis 3.0 is about broadening access to knowledge, capital and well-being by leveraging existing networks and protocols, and building trusted brands. And each part of that thesis actually means something very concrete. So let me just pick one of them, building trusted brands. For us, a lot today is about is your business model fundamentally aligned with your customer or not? The advertising model, as we have learned is not aligned with customers’ interests, right? If you’re YouTube, you want to serve the most engaging video so that you can show more ads. You don’t want to serve the most appropriate video, right? But if you have a subscription model, let’s say like Netflix, you want to show something that somebody actually really truly deeply is going to relate to, so that they stay as subscriber long term. So each part of this thesis means something and we use the sort of high level thesis to then look for very concrete things. So for example, I said broadening access to capital, so we’ve done a lot in lending, like, how can we do better underwriting, better, cheaper, faster loans, for instance, to small businesses, investment, like a company like Funding Circle, or to individuals, like a company like Upgrade, in a way that actually helps people, so where you’re not dragging them into like a debt hole, but you’re actually helping them build up their credit score while you’re giving them — extending their credit. RITHOLTZ: So 3.0 sounds a lot like World After Capital, I’m hearing some very similar themes. WENGER: Absolutely. There’s a strong relationship between some of the ideas in the book and some of the ideas that inform our investing. RITHOLTZ: We’ll circle back to the book in a little bit. Let’s talk about a couple of companies you invested in because I’m picking up a theme there, Meatable, Terra, Living Carbon, Marvel Fusion, Legendary Food, climate sustainability impact investing. WENGER: Yeah. So those are all personal investments, not Union Square Ventures investments. But I made those investments in the run up to us forming a climate thesis, and now a Climate Fund. So those are all investments that go back a few years, when I sort of became really interested in what kind of opportunities come out of the climate crisis. The climate crisis, if we don’t get on top of it, none of the other stuff will matter. None of the money we’ve made will matter. It’s so big. It’s so much bigger than COVID, for example, in ways that I think people still don’t appreciate. And so I made some personal investments first, and then we started talking to our LPs about it. And then during COVID, we raised the first Climate Fund, $160 million Climate Fund. We’re almost done investing that. And so the climate thesis is very simple. We want to invest in companies that either reduce emissions, draw down existing emissions, or help with adaptation. So I’ll give an example of an adaptation investment. We invested in a company out of Australia called FloodMapp. And what they do is they predict where things are going to flood. They also measure the actual flooding. Floods are one of the biggest problems coming out of the climate crisis, and they’re here today. This is not some future problem. And mega floods in Pakistan, a third of Pakistan is underwater as we speak. I don’t think people understand how horrific the devastation there is. RITHOLTZ: It’s the other side of the droughts that are everywhere. It’s what’s dry gets drier, what’s wet gets wetter. WENGER: Absolutely. Talking about emissions reductions, we’ve made investments, for example, in our first ever investment in Africa, in a company called Shift EV. What Shift EV does is it takes existing delivery vans and retrofits them in a space of a couple of hours, from internal combustion engine to electric. RITHOLTZ: A couple of hours? WENGER: A couple of hours. Yes. RITHOLTZ: Because if you want to take an old 911 and convert it to EV, it will take you about a year, assuming if you can get on the list. It’s that backed up for that shift itself. WENGER: So they have completely industrialized this process. RITHOLTZ: That’s amazing. WENGER: You drive a minivan in and a couple of hours later, drives out as an EV. RITHOLTZ: Wow. What do they do with the internal combustion engine and — WENGER: That’s a great question. I need to ask Ellie what they do with that. I don’t know. RITHOLTZ: I mean, it seems like that’s a lot of hardware to just throw away. WENGER: I don’t know. Great question. RITHOLTZ: Really interesting. WENGER: And then I’ll talk about one of the drawdown investments. We’ve invested in a company called Brilliant Planet out of the U.K. What they do is they build ponds in the desert and they pump seawater in, and then they grow algae very, very rapidly, continues algae bloom, and it takes a huge amount of carbon out of the atmosphere. RITHOLTZ: Algae in ponds — WENGER: In the desert. RITHOLTZ: — can move the needle? WENGER: Yes. Absolutely. RITHOLTZ: That’s quite fascinating. Two questions come out of this, one is structural and one is fund based. Let’s do the fund one first. So John Doerr had a climate fund started about 10 years ago at Kleiner Perkins. Some people have said it kind of lagged other similar era venture funds. Was he just early? How do you look at this in terms of not just having a positive impact on the planet but generating a return on investment? WENGER: Yeah. The early green tech funds, they were too early in one sense. But in another sense, they were actually crucial to our having a shot at overcoming the climate crisis. Because if it hadn’t been for the investments, we wouldn’t have gotten on the cost curve, for instance, for solar PV, right? So the reason we have really cheap PV today, the reason we have really relatively cheap batteries today is because of some of the investments that were made back there. And there’s this pattern in the world where every big technological shift starts with a bubble, right? RITHOLTZ: Right. WENGER: So when we had ships, we had the South Sea bubble, right? And when we had railroads, we had the railroad bubble. There was an automotive bubble. There was dot-com bubble, multiple bubbles in crypto. There was a green tech bubble. But, now, it’s a decade-plus later and all the things that they were rightly concerned about are all coming true. And we are now reaping some of the benefit, but we’re also now building on — we’re sort of standing on the shoulders of giants, as it were. RITHOLTZ: And to clarify, I believe that fund doubled over 7 or 10 years, not like it was a sinkhole, but compared to what it could have done, had that money been invested elsewhere, it might have seen better returns. But it wasn’t — I don’t want to make it sound like it was total loss. So the second question is, you’re making seed investments, how does that work if you want to bring one of those seeds to your firm, to Union Square Ventures? And from a public market, that sounds like it’s a compliance and conflict nightmare. You guys approach it differently. WENGER: In our LPA, we can write checks up to $100,000. So we can’t make massive investments in startups. So all of the companies you mentioned have a sub $100,000 investment. And then the only one where I’ve invested more is Marvel Fusion. We can invest more once the fund has passed on something. So if the fund says we’re not doing this, then we can invest. RITHOLTZ: Got it. Interesting. So along those lines, there are some venture firms that don’t really seem to care a lot about valuations and others seem to focus on a little bit. How do you fall in that spectrum? Is valuation significant, or is it, hey, we’re going to make 100 investments and if two or three workout, the valuations are irrelevant? WENGER: No, we’ve definitely always been disciplined on valuation, and we’ve let a number of things go. Sometimes we let them go and they do great, like, “Well, we could have made money if we had invested.” And sometimes you’re very happy at that. Our approach is we’ve always kept our fund sizes small, so we don’t need to be in everything that’s out there. Our latest funds are — our core fund is $250 million. So these aren’t big funds in the scheme of things when you have other firms that raised $3 billion. $8 billion, $15 billion per fund. And as a result, if we think the price is too high, we can just find something else. RITHOLTZ: So let’s talk a little bit about some of those bigger funds, and I guess we’ll hold Softbank off to the side because that was really aberrational. But do you end up when you have lots of $10 billion and $20 billion venture funds, with too much capital chasing to a few good deals? How does this impact the whole ecosystem that’s out there? WENGER: Largely, it’s great for us because we’re early stage investors. So it means there’s lots of money to come in and fund later rounds of the companies we’ve invested in. So we haven’t really spent much of our time worrying about it. And then every once in a while, these firms go. We’re going to go really early and some of them do spread money early. But we find, because we’re thesis-driven and because we are opinionated, on deals that we’re really interested in, we can win those deals. Sometimes they’ll take a small check from somebody else along for the ride, but they know that we work with early stage companies that we roll our sleeves up, that we’re involved, and that we have a thesis. And you know, we take the approach we’d rather disagree with the founder and then not invest than sort of like — be like, “Oh, well, whatever it is you want to do.” Like, we have a thesis as to why we think this is interesting. Let’s talk about this. If it’s aligned, great. And obviously things may change after we’ve invested. We’re not like stubborn, you know. But let’s talk about why we are excited. And if that aligns with you, that’s great. If it doesn’t, let’s go separate ways, right? So we take a kind of — I call it a high alpha approach investing. We’d rather have really upfront conversations about what we like and don’t like than sort of get married as it were. And actually, it’s harder to get rid of VC than it is to get a divorce. So like we think it’s good to have these conversations up front, right? RITHOLTZ: What about follow-up rounds, or some firms that will do a seed round, and then participate in an A or B round? Is that something that Union Square does? WENGER: Well, we reserve a lot of funds for follow-on, and we have a very sort of, I think, sophisticated reserves methodology that we’ve honed over many funds cycles now, where we actually built kind of a Monte Carlo analysis of the portfolio to see how much money we think we need to keep in reserve. But eventually, when the valuations get too high, the rounds get too large, we don’t follow on. We have a separate vehicle called the Opportunity Fund, where we sometimes write bigger checks into late-stage rounds in some of our portfolio companies, but not always. RITHOLTZ: So let’s talk a little bit about this book, “The World After Capital,” starting with what is technological nonlinearity? I liked that phrase. WENGER: The basic idea is that every once in a while in humanity’s history, we invent things that radically change what we, as society, have as a binding constraint on us. So let me make that very concrete. For hundreds of thousands of years, our ancestors were foragers. They were hunter-gatherers. They would go out and find things, and eat berries and kill little squirrels. And then roughly 10,000 years ago, we had a bunch of inventions. We figured out that you could plant seeds, that you could irrigate them, that you could domesticate animals, that you could use the dung from the animals too as a fertilizer. We figured all those things out and we got agriculture. And the constraint shifted from how much food can you find to how much land — arable land do you have. And when that constraint shifted, we changed just about everything, about how humanity lives. Like, we went from being migratory to being sedentary. We went from very flat tribal societies to very hierarchical agrarian societies. We went from being, clearly, like polygamous, polyamorous, whatever you want to call it, to being monogamous-ish. We went from having religions where, you know, everything was a spirit, a tree, a rock, everything had a spirit, and then we went from that to theistic religions where there was some different number of gods. Then fast forward to a couple 100 years ago, we had sort of the enlightenment. With the enlightenment, we had sort of big scientific breakthroughs and we figured out how to dig up stuff out of the ground and burn it and create energy, and make heat and electricity and all those things. And the constraint of it again shifted from, you know, how much land do you have to how much physical capital can you create? How many machines can you build? How many buildings, roads, railroads, et cetera? RITHOLTZ: That’s really interesting. WENGER: And we changed everything yet again. And so now the point of the book is, guess what? We have to change everything yet again, because capitalism, this is why the book is called “The World After Capital,” capital is no longer the binding constraint. Instead, it’s human attention. RITHOLTZ: Human attention, so that’s the third great shift is. So we went from agricultural scarcity to having enough food. WENGER: We went from forager to agrarian, so from food scarcity to land scarcity, then we went from land scarcity to capital scarcity. And now, we’re going from capital scarcity to attentional scarcity. RITHOLTZ: Capital is no longer scarce. So now attention is the new scarcity, which there’s a line in the book that really caught my eye, attention is time plus intentionality. Explain that. WENGER: Yeah. So speed just tells you how fast you’re going. Velocity tells you how fast you’re going towards something, towards some destination. RITHOLTZ: Speed plus direction. WENGER: Speed plus direction is velocity. And the same is true for attention. Time just tells you how much time has elapsed, you know, two hours. Attention is what was your mind and your body doing during those two hours. Were you, you know, just scrolling Twitter, or were you like working on a solution to the climate crisis? RITHOLTZ: So you say something about these transitions that really jarred me. Previous transitions like agriculture emerged over thousands of years and was incredibly violent. Industrial Age lasted over hundreds of years, and also involved lots of violence and bloody revolutions, and two World Wars, which raises the obvious question, what sort of violence is the next transition based on attention scarcity potentially going to involve? WENGER: Well, at the moment, the leading candidate is the climate crisis. We have known about it for literally hundreds of years, actually, and we have refused to do enough about it. And so now, we have entered the state where we’re getting extreme heat events. We’re getting extreme drought events. The food supply is definitely in question. Something that we have taken for granted for many years now. We’ve taken for granted that you can go to the store and buy food. Unless we really course correct very hard, very dramatically, and by dramatically, I mean, the level of government activation that we had in World War II. In World War II, we spend roughly 50% of GDP on the war effort. We need to spend roughly 50% of GDP on the climate crisis for several years sustained in order to actually avert it. RITHOLTZ: So that suggests that you don’t think there’s going to be some technological magic bullet going to appear out of nowhere? WENGER: Well, if you look at World War II, the government went to Ford and said, “We need you to build airplanes, not cars.” And actually, there’s a chart in my book that shows that output of cars dropped. We need to get to a similar point where we’ll say there’s certain things we’re just not going to do for a while because we need to do these other things. There are great technologies. We don’t need to invent some magic bullet that doesn’t exist. We just need to build a lot of what we already know how to build. Like, we need to build a lot of nuclear power plants. We need to build a lot of these ponds in the desert that can draw down carbon. There’s 1001 different things that we need to build. We just need to take our physical capital and point it at that. And when you do that at that scale, incredible things become possible. So, during World War II, Ford Motor Company built a plant, it was called the Willow Run facility. And in Willow Run, they built the B-17 Liberator bomber. Now, that’s a four-engine bomber, with lots of gun turrets to defend against fires. At peak production, they finished — they finished one of these every hour. RITHOLTZ: Amazing. WENGER: They finished a complete airplane every hour. And my point is once we decide to take our attention, and allocate our attention to what the real problem is, we can redirect our physical capital. We have plenty of physical capital. People say, “Oh, you can’t build nuclear power plants fast enough.” That’s if you built them in peacetime mode. If you built them in wartime mode, you could build them very rapidly. RITHOLTZ: So when you say this requires a substantial commitment of capital, let’s put a dollar amount on that. Are you talking — WENGER: Half of GDP. I’m saying half of GDP. RITHOLTZ: So you’re saying $10 trillion? WENGER: Yeah. RITHOLTZ: Just in the U.S. alone? WENGER: Yeah. RITHOLTZ: Now, we just passed a climate bill, arguably, that was a couple of billion dollars, $100 billion maybe over 10 years. And it was like pulling teeth, it was a miracle it just managed to skate through. And that’s a fraction of a trillion dollars. How you’re going to get 10x or 100x? Do things have to get much worse before they get much better? WENGER: Yeah. I mean, there’s a book about the climate crisis called “Ministry for the Future,” by Kim Stanley Robinson. And the book starts with a devastating heat event in India, where tens of millions of people die. I don’t know what it takes. But I can tell you, it’s only going to get worse, it’s going to get a lot worse. And at some point, hopefully, people — enough people will wake up and say, “No, no, we really actually have to get into a wartime footing. RITHOLTZ: So up till now, a huge swath of the population has been asked my grandkids problems, what wakes them up? Is that sort of events? I mean, you see what’s happening in California. You see what’s going on in lots of the United States with droughts. It seems like people are starting to pay attention. WENGER: Oh, absolutely. Yale does an incredible survey of climate attitudes. And it is very clear that even in the U.S., which has been lagging on this, a significant majority of people believe that the climate crisis is real, that is caused by humans, and the government should do something about it. So I actually believe this is going from a kind of a losing proposition for politicians to a winning proposition. And I think politicians need to be much more into it. Most of them still aren’t willing to acknowledge the full extent of this crisis. And the physics of this crisis are extraordinary. So because of all the CO2 we’ve put in the atmosphere, the amount of heat that we’re now trapping that used to radiate out into space, do you know how much heat it is? It is four Hiroshima-sized nuclear bombs every second. RITHOLTZ: It’s insane. I read that in your book and I was like, no, no, he must mean every week. Every second? WENGER: Every second. Now, imagine for a moment you had alien spaceships above Earth, throwing four Hiroshima-sized nuclear bombs into our atmosphere every second. RITHOLTZ: That would put us on a wartime footing? WENGER: And what will we do? Yeah. We would drop everything, right? We would be like, “They’re trying to kill us. We have to get rid of them.” I mean, we made a movie about it called Independence Day. RITHOLTZ: Four nuclear bombs every second? WENGER: Yeah. RITHOLTZ: And it’s just — WENGER: Of every minute of every hour of every day, it’s a mind-boggling amount of heat. RITHOLTZ: So there’s a couple of other things in the book I wanted to touch on. You mentioned alien visitors. We’ll hold off on the Fermi paradox discussion because nobody wants to hear me babble about that. But one of the things I thought was kind of interesting is the transition of the nature of scarcity. You’re right, it changes the way we measure human effort. It makes it more difficult, and we need increasingly more sophisticated ways of providing incentives to sustain unnecessary level of effort. Flash that out a little more. WENGER: So if you think of hunter-gatherers, right, I mean, you can see the results of effort immediately. RITHOLTZ: Right. WENGER: Like, you go to the forest, you either come back with something or not. RITHOLTZ: Right. WENGER: So it’s very easy to create incentives. Like, if you don’t find something, go back hunting and come back with something. RITHOLTZ: Or you’ll go hungry. Right. WENGER: When you go to agriculture, you have these, you need to see, you need to take care of it, and you don’t know how big a harvest you’re going to get. So you need a little more sophisticated incentive, and a lot of those incentives were often provided by a religion. Religion is sort of saying you have to apply yourself to this backbreaking work. This is the work of the Lord, et cetera. And then when we went over to capital, now it gets even more complicated because you might not see results of some effort for many, many years. I actually think when I say more sophisticated incentives, in the book, I talked a lot about just freeing up humans to pursue their interests, to make it so that you can freely allocate attention. And I’m always very inspired by mathematics. Like, you can’t get rich as a working mathematician, basically. I mean, yes, if you wind up going to Wall Street, you can. But if you actually keep working as a mathematician, that’s not a — you know, there’s also no patents. And you know, the only thing math works on recognition by peers, and there’s some prizes. There’s like the famous Fields Medal, and there’s some other prizes. And yet, the amount of math that’s been produced over the last, you know, few decades is just mind-blowing extraordinary. And I believe we need to bring that type of model to many, many more parts of the economy and parts of activity. So in a way, what all of “The World After Capital” is about is how can we shrink all the explicitly incentivized economic activity, where there’s an explicit, okay, you go to work and you get paid a wage kind of thing. And here’s a market transaction, how can we shrink that and make room for things that are super, super important, but cannot have prices, cannot be economically incentivized? Let me give concrete examples of that. Obviously, we’ve talked about the climate crisis. But let’s talk about death from above. Like, every million years or so, the earth gets hit by something very large out of space. That’s very, very bad when it happens. But there’s no market for allocating resources to that. There’s no supply and demand for it. So we, as humanity, need to decide that this is a real problem and we ought to be working on it. RITHOLTZ: Now, aren’t we tracking various large observed asteroids and doing some stuff? WENGER: We are, but the amount of effort we’re putting into this relative to the size of the problem is minuscule. The number of people who sort of truly globally work full time on this is a tiny fraction of the people we actually should have. And we’re also not working sufficiently on like what will we do if we detected one that’s clearly headed for us, right? RITHOLTZ: Well, you send Bruce Willis up and — WENGER: Exactly. Yes. RITHOLTZ: — he takes it, right? WENGER: Yeah, he does. RITHOLTZ: I mean, it’s not unknown. We know the regular major extinction events. There’s a real interesting theory that as the sun goes around the galaxy and passes over and above the galactic plane, that affects the asteroid belt and — WENGER: The famous Oort cloud is where a lot of these objects — yeah. RITHOLTZ: Right, which is full 360 around the — WENGER: Yes. So we know all of this. And here’s the interesting thing. When we went from the agrarian age to the industrial age, we didn’t get rid of agriculture. This agriculture today, right, we all eat food that’s grown in agriculture. But what we did is we shrunk how much human attention is required to do agriculture, and we took it from being like 80% of human attention to like sub 10%. RITHOLTZ: It’s less than 2% in United States. It’s tiny. WENGER: So what I want to do is, let’s do the same with the rest of the economic sphere. I’m not an anti-capitalist. I’m not a degrowth. Person. I’m not suggesting we should get rid of markets. I’m just saying we should compress market-based activity from absorbing much of human attention to absorbing maybe 30% of human attention, and we should free the rest up to work on these incredibly important thing. Some of them are threats, and some of them are opportunities, right, opportunity to cure cancer, opportunity to create incredible wildlife habitats, restore those wildlife habitats, opportunity to travel to space. I mean, all these opportunities that we’re not paying attention to because they’re not — again, they’re not really market price based and can’t be market price based. There’s just no prices for them. RITHOLTZ: So the conclusion of the book had a list of action goals, which was not what I was expecting in a book on venture capital and “The World After Capital;” mindfulness, climate crisis, democracy, decentralization, improving learning, and humanism. Address whichever those you feel like. WENGER: Well, these are all core components of how to have a — hopefully, a transition that’s not a violent transition, right? These are all about how could we get out of the industrial age into the knowledge age without some cataclysmic event, without a world war, without killing billions of people through the climate crisis, right? They’re also all components of what a knowledge age society might look like. Right? So let’s talk about mindfulness for a second. We’re constantly assaulted with new information now. You know, our brains evolved in an environment where when you saw a cat, there was an actual cat. Now, there’s an infinity of cat pictures. So if you don’t work on how you — how much you are in control of your mind, external sources will control your mind. So mindfulness, which is a much abused word, but it has become much more important in a world where we’re constantly assaulted by information flows, right? Let’s talk about humanism for a moment. Humanism is about recognizing that humans are the prime movers on this planet. We are the ones who have brought about the climate crisis. We are the ones who put a theory to solve it, or wind up getting wiped out by it. And it’s about this idea that, you know, with great power comes great responsibility. And so, we are responsible for the whales, not the whales for us. There is — at the moment, because we’re in this transition period already, and because things are going so poorly for so many people in this transition, there’s no a flight back to religion, there’s a flight to populism. And a big part of the book is about, no, there is a secular alternative way of thinking about society that embraces science, that embraces progress, that embraces humans and all types of humans, and that recognizes that we are first and foremost human, and only secondarily are we American, or Russian, or male or female or something else. You know, these are all secondarily. But primarily, we’re humans, and humans are fundamentally different from all the other species on the planet. RITHOLTZ: Quite fascinating. So let’s talk about the current state of the world for venture capitalists. We’ve seen valuations come way down for public companies. They’re pretty reasonably priced these days, about 16 times for the S&P 500. That’s historically, more or less, average. Where do you see the state of the world in early stage valuations? How are they holding up? A year ago, late stage valuations had gone just bonkers. Tell us a little bit about what’s going on today. WENGER: The correction always, basically, is a trickle-down type of correction. It happens very rapidly in the public markets. Then you still get some high-priced private rounds that either were in the works, or they have a lot of structure. In the later stage markets, you know, there’s a headline number. But then nobody talks about all the war in coverage that’s behind the scenes. And then the early stage valuations tend to sort of lag behind all of that. But we’re seeing early stage valuations come down. And as a firm, we’ve always been disciplined on valuations. So we just let a lot of things go where we just thought it was — RITHOLTZ: Are they down off the peak, or are they cheap and attractive? WENGER: The down of the peak, whether they’re cheap or attractive, I think, you know, time will tell. But we are back in a situation where, you know, there are seed deals getting done that’s below $10 million, certainly below $20 million, and you know, seed rounds that have a reasonable size. So you know, for a while we were seeing these $10 million, $20 million, $30 million seed rounds. RITHOLTZ: It sounds pricey. WENGER: Yeah. And that’s not happening anymore. But at Union Square Ventures, we’ve also always tried to basically be at the next era, at the next thesis and evolve our thesis before everybody else gets there. And once everybody else gets there, try and evolve our thesis. And so, for example, in the Climate Fund, we’ve made any number of reasonably priced investments, very reasonably priced. RITHOLTZ: So I always assumed it was tied to the public markets. But sometimes you just don’t realize, when you have a good couple of years in a row in the public markets, like we saw in the 2010, pretty much straight up through 2021, you see that impact and what people are looking for, what sort of deals get done, and valuations generally. WENGER: I always find it relatively surprising how much private early stage valuations are tied to public markets because our holding — RITHOLTZ: That’s the exit, right? WENGER: But our holding periods are 5, 8, 10 years. And so, like, what’s the current public — RITHOLTZ: Right. WENGER: And so there’s a couple of different explanations. One, obviously, is just investor sentiment, right? RITHOLTZ: Right. WENGER: You know, when investors are like bearish because of what they’re seeing in the public markets, they take a bearish attitude towards their own investing. We try — at Union Square Ventures, we try to have a pretty steady pace as one way of contracting our own sort of — you know, whatever our own emotions may be about the public markets. There is, however, another effect that sometimes is underestimated, which is that the people who give money into venture funds, so these are pension funds and endowments, and so forth, they have a certain whip from the public markets, because when they’re feeling flashed on the public markets then their private allocation, you know, as a percentage of their overall portfolio, they have a certain target in mind. Then when the public markets come down a lot, all of a sudden, they’re overallocated, so they want to pull back. So there is a mechanism by which the current public markets transmit into the private markets. There’s a real financial mechanism. There’s a psychological mechanism and a real financial mechanism by which some transmission, some contagion basically happens from the public market into private market. But it doesn’t make very much sense. Like, if people were sort of more cognizant of both that emotional reaction and this mechanism, they’d be like, “Well, yeah, but innovation is happening at some pace. In some area, there’s some innovation and we should be funding that innovation.” RITHOLTZ: So I’m just making notes, investors are irrational. WENGER: Deep and profound insight right here. RITHOLTZ: Right. There you go. WENGER: You’ve never heard this one before. RITHOLTZ: So to put that into a little context, 2020, 2021, very founder-friendly deals. Now, it seems like a little more investor-friendly, a fair assessment or not quite there yet? WENGER: Well, when it comes to founder-friendly versus investor-friendly, there’s a lot more to deal than valuation. There’s all the other terms. And while I believe we will see a correction on valuation that’s pretty significant, I don’t think we’re going to go back to where venture capital was 20 or 30 years ago, that had all these super draconian terms. Certainly, even at the early stage, even at the early stage, there were all these like — there were redemption provisions in the early stage deals. I don’t think that’s going to come back. We are not fans of structure in latest stage deals. Like, just to give a good example, when I was still on the board of Twilio, Twilio had the option of doing a totally clean, no structure round and call it $1,000,000,001. In a highly structured round with like — you know, we’re going to have a full ratchet into an IPO at a $1,000,000,005. And I was — you know, some of the other investors at the table really wanted the $1,000,000,005 number because it’s a big headline number. And I talked to Jeff and I said, “It doesn’t make any sense.” RITHOLTZ: Right. WENGER: You don’t actually know what your deal is until many years. Like, just take the deal where you know what the deal is today and you know what the deal is a year from now, and two years from now, because it’s not going to change based on circumstances. RITHOLTZ: Right. WENGER: And so Jeff took the clean deal, and that enabled Twilio to go public when the IPO window reopened. Whereas at the $1,000,000,005 deal, they wouldn’t have been able to go public. And that worked incredibly well for Twilio to become a public company. RITHOLTZ: Really interesting. So since we’re comparing early stage investments to the public world, lately, everybody has been looking at different sectors the past year. Energy has done well, technology not so much. Within venture, do you see that same sort of segmentation, different sectors have different — WENGER: Well, we were basically the first sort of venture firm to have a dedicated climate fund. And now, many of the venture firms are following suit, either adding a climate pocket to their existing funds, or a climate thesis or, you know, some people call it sustainability fund. Ours is very focused on climate. So for instance, we don’t deal with water waste. It’s strictly about atmospheric carbon. So there’s a lot money rotating into that sector. There’s still healthy sort of activity around Web3. So you know, Web3, there’s still — RITHOLTZ: Crypto, blockchain, all that? WENGER: Yeah. There’s still healthy sort of activity. I do think that certain kind of software companies that had found it very easy to raise money, I think they’re finding it a lot harder, just because people have looked at it and said, “Wow, I think we’ve reached some stage of normalization in this market.” You know, like, not everything in this market is going to be a $50 billion outcome. There’s going to be many, much smaller outcomes, and so we need to adjust accordingly. And also, many of these markets had just too many companies raised venture capital doing basically more or less the same thing. RITHOLTZ: So it was easy to raise money for a fund today, a little more challenging, even if you’re a pretty decent sized VC with a 10, 20-year history. Are they having difficulty going back to their clients saying, “Hey, we’re doing another billion dollars?” WENGER: You know, I think that we will only see a year from now, or two years from now. There were a lot of funds that have put out a lot of money very, very rapidly, and we’ll see just how big the hangover is. But we won’t know that for some time. RITHOLTZ: So some of the folks who give advice to founders like Chamath and Jason, and the crew with the All-In Podcast, they’ve been talking about — preaching really about cutting costs and reducing your burn rate, and get ready for a tough year or two. How do you see this environment? Is that good advice, or do you really have to, you know, go all out and get more funding as opposed to trying to make a more modest burn rate last longer? WENGER: There’s very little one size fits all advice that makes sense. RITHOLTZ: Fair. WENGER: Nonetheless, we held a call early this year for all of our portfolio companies. And we said this really is a big adjustment and it’s not a one or two months’ blip. This is a long-term adjustment. And it was great because we had some CEOs in our portfolio who had managed through the implosion of dot-com bubble, and they spoke about just how difficult the funding environment can get. So generally speaking, we did a lot in ’21 because we saw this coming. To me, the biggest sign of the bubble really was — that we really were reaching the tail end, was all these incubation efforts that were being raised. And I knew this because I had raised money into an incubator in ‘99, towards the end of the dot-com bubble. And I think when investors think, “Oh, I don’t even need the entrepreneur, I can just start the company myself,” that’s kind of when you know that it’s gotten too easy, right? And that’s not going to lie. So in ‘21, we took a lot of liquidity. We sold a lot of things that we were able to sell. And we told all of our portfolio companies to raise money. And so — RITHOLTZ: Last year, this is — WENGER: ‘21. Yeah. Well, it’s best to do things before. RITHOLTZ: Sure. Sure. WENGER: Right? So as a result, we have very few companies in our portfolio that need to raise. We have some, but we have very few. And then, you know, at the beginning of this year, we told everybody who had raised successfully, “You got to make this money lasts much longer than you thought when you raised it.” And so, yes, absolutely. You know, companies were operating with very inefficient growth. Because it was easy to fund inefficient growth, you could be burning $1 million, $2 million, $3 million, $4 million a month. And you know, if you were growing 405%, 50%, 60%, that was good enough. That’s not going to be the case. So you’re either growing very fast, or you have something very compelling, in which case you can raise money, or you are growing, you know, 20%, 30%, but you are growing very, very efficiently, right? So being in the sort of 50% growth, but you’re super inefficient, that’s going to be a really tough place to be. RITHOLTZ: All right, so before I get to my favorite questions, I have two questions I’ve been sitting on sort of from the book and some from your blog continuations that I want to hear where you go with this. And the first one is a quote from the book, “Malthus could not foresee the scientific breakthrough that enabled the Industrial Revolution.” I think you let him off the hook a little too easy. It’s just an abject failure of imagination. And you are in the imagination business. The Malthusians, weren’t these folks just unable to imagine any sort of progress or technological development? WENGER: Well, we have had more progress and more technological development than people were able to imagine. I think, conversely, we’re now in the opposite trap. We can’t imagine that things could get really, really bad. We can’t imagine that the climate crisis could disrupt our food supply to the point where billion people starved. We simply can’t wrap our head around this idea. So I think we’re in the opposite trap at the moment. We’ve been so used to the success of progress, and we’ve so neglected the engines that produce progress, that I think we’re in the opposite trap at the moment. RITHOLTZ: What are the other engines? Is it early stage investing from governments when the project has a 10 and 20-year ROI that the private sector won’t do it? WENGER: It’s foundational research. We’ve not had a true breakthrough in science since quantum mechanics. It’s a hundred years ago. So general relativity and quantum mechanics are hundred years ago. Now, we’ve made some progress in biology. Biology, we’ve had some really good progress. But you know — RITHOLTZ: You’re talking fundamental science not technology. WENGER: Fundamental science. RITHOLTZ: Like, I immediately think of semiconductors was a giant — WENGER: Oh, no, incredible progress. But fundamental science, we’ve not had a true big unlock in a hundred years. Now, I think when we talk about engine of progress, this is also how hard is it to start a business? How many regulations do you have to comply with? How expensive is it to comply with those regulations? We’re also talking about — we’re still subsidizing oil and gas globally, to the tune of trillions of dollars. RITHOLTZ: Yes. Yes. WENGER: Subsidizing oil and gas, it’s crazy. RITHOLTZ: Which by the way, helps to explain why so many people have an incentive to either question the impact, the source or the reality of climate change. WENGER: Yes. RITHOLTZ: There’s forces that work there. WENGER: And so, I believe we’re in this sort of opposite trap today. And you know, people like to make fun of Greta Thunberg. But young kids, young activists understand the severity of the climate crisis in a way — RITHOLTZ: Right. WENGER: — in a way that most adults don’t seem to be willing to accept. RITHOLTZ: Right. I don’t think climate change is going to impact my life. You know, I’m 60. I’m going to run out the clock. WENGER: You’re not. RITHOLTZ: Someone your age — WENGER: The reality is you’re not. You’re not going to escape. You and I are not going to escape this. It’s here, it’s now and it’s only going to get worse. RITHOLTZ: I don’t doubt that for a second, but — WENGER: And here’s the thing, I think — RITHOLTZ: I challenge — WENGER: We could live in this amazing, incredible future. Like, wouldn’t you rather live in a city that has mostly electric or all electric cars in it? Like, the air would be so much better. Wouldn’t you rather live in a world that has huge — like, think of all the Midwest, instead of growing corn to feed cows — RITHOLTZ: Right. WENGER: — super inefficient. If we can grow the meat of the cows in the vast instead, we could have like incredible forests. We could have incredible wildlife areas. Like, we could have this amazing, incredible future. We could have energy reserve. If we build more nuclear power, electricity could basically be almost free. So we have this amazing thing we can go. Instead, we’re headed for this complete disaster and we’re mostly like, “eh.” RITHOLTZ: I think that’s a fair assessment. I think you definitely have that. And I certainly see people my generation, absolutely think it’s not going to impact them or minimum impact, it’s really the grandkids’ problem. WENGER: Yeah. And it’s just — that’s totally, utterly wrong. RITHOLTZ: All right, one other curveball I have to ask you about, which involves Yuval Noah Harari, who says in Sapiens, “All value systems are based on equally valid, subjective narratives, and humans have no privileged position as a species.” You say he’s wrong. Explain. WENGER: Not just wrong, it’s completely dangerous because it opens the door to absolute moral relativism. It’s sort of like, well, if you believe that, then, you know, the ISIS narrative is just as valid, you know, and I just think that’s wrong. And I do think there’s an objective thing, which is humans have knowledge. And by knowledge, I mean, I can read a book today that somebody else wrote in some other part of the world a thousand years ago, right? No other species on the planet has this. I mean, other species have amazing things about them, but none of them has knowledge. And that puts us in a privileged position. By the way, privilege comes with obligation. That’s usually what it used to mean. Today, we think of privilege just it lets you do whatever you want. But it used to mean that you had real obligations, right? And I believe because we have the power of knowledge, we have real obligations to other species. Other species don’t have much of an obligation to us, but we have an obligation to them. RITHOLTZ: And the interesting thing about what you said is not only does no other species have the ability to access anything, anybody has written, anytime in history, pretty much this is the first generation that had access in that way, across — pretty much across the whole board. WENGER: Well, this is the amazing thing about digital technology, right? We could use it to make all the world’s knowledge accessible to everybody in the world. And great things could come from that, right? So there’s some people like Elon Musk and others who are like, “Oh, my God, the population is going to, you know, decrease a lot and that will be bad.” I’m like, no, we have 8 billion people at the moment, peak population. The present trajectory might be 11 billion, although if we don’t get on top of the climate crisis, it will decrease actually rapidly. But we’re making such poor use of it. Why? Because so many people don’t have access to knowledge, don’t have a shot. I always love the story of Ramanujan, the famous mathematician, who used to send a letter to Hardy. And Hardy was like, “We should bring this guy over to England and he would have been a very productive mathematician.” There are Einsteins, and Ramanujans, and Elinor Ostrom, and Marie Curies all around the world today, and we’re not giving them — so we’re vastly undertapping human potential. And we can use digital technology to change that and to give everybody access. And that’s one of the things, one of the great opportunities that we have in this transition to the knowledge age. RITHOLTZ: Quite, quite fascinating. So let me jump to my favorite questions that I ask all of my guests, starting with, tell us what kept you entertained over the past couple of years. What have you been watching or listening to? WENGER: I really don’t watch much. At the moment, the only thing I watch with any kind of regularity Sabine Hossenfelder’s YouTube series called Science Without the Gobbledygook. RITHOLTZ: I’ll take a look at that. I’m a giant fan of YouTube Premium, and I’m always astonished that people I know who are YouTube junkies won’t spring for the 8 bucks a month to pull out commercials and distractions. But YouTube is just an endless rabbit hole. WENGER: Well, YouTube is an example of the best and the worst of the Internet all in one place, right? There’s so much amazing knowledge like Sabine’s videos, Veritasium. I mean, you could learn almost anything from how to fix your dishwasher to how — you know, the theory of general relativity works. At the same time, YouTube is also this place where tons of people, you know, become radicalized or redpilled, or whatever it is, because the algorithm — the algorithm has the wrong objective function, right? Its objective function is engagement. It’s not lifting people up. RITHOLTZ: Tell us about some of your mentors who helped shape your career. WENGER: I was super, super fortunate when I was an early teenager. We talked about this, when I first fell in love with computers. I lived in a relatively small village in Germany. And there was one computer science student there who was maybe 10 years older than I was. And he just spent time with me, and he gave me his books, and he gave me his floppy disks with software, and he helped me sort of understand all this. And I’m forever grateful to (Anstur Guenther), wherever you are in the world. RITHOLTZ: That’s really interesting. Have you spoken to him anytime recently? WENGER: No, because I haven’t been able to find him. Basically, he seems to have disappeared. RITHOLTZ: Well, if you’re listening, reach out to Albert. Tell us — we mentioned a number of books. Tell us about some of your favorite and what you’re reading right now. WENGER: Favorites, I would say David Deutsch, “The Beginning of Infinity” is definitely one of my favorites. RITHOLTZ: I just ordered that because of you. WENGER: I’m reading at the moment, a book by Ada Palmer called “Perhaps the Stars.” It’s the fourth book in a series called the Terra Ignota Series. She’s a professor at the University of Chicago. RITHOLTZ: What sort of advice would you give to a recent college grad who is interested in a career in either entrepreneurship or venture capital? WENGER: Develop a mindfulness practice, you know, whatever works for you, whether that’s yoga, running, for me, it’s conscious breathing. I just think it’s such a superpower not to get hijacked by your emotions. It’s a true superpower. And the more humans can cultivate it, the more we can achieve. RITHOLTZ: That’s really, really intriguing. And our final question, what do you know about the world of venture today that you wish you knew 30 or so years ago when you were first getting started? WENGER: There will always be another bubble. RITHOLTZ: There will always be another bubble. That’s amazing. Just human nature can’t be avoided. WENGER: It can’t be avoided. RITHOLTZ: And what should we do in anticipation of during and after bubbles? WENGER: We should acknowledge that they will come, that they’re part of how we operate, that you can make money before, during and after. RITHOLTZ: There you go. Really, really fascinating stuff. We have been speaking with Albert Wenger. He is managing partner at Union Square Ventures. If you enjoy this conversation, well, be sure to check out any of our previous 400 or so discussions we’ve had over the past eight years. You can find those at iTunes, Spotify, or wherever you get your favorite podcasts from. We love your comments, feedback and suggestions. Write to us at mibpodcast@bloomberg.net. Sign up for my daily reading list at ritholtz.com. Follow me on Twitter @ritholtz. I would be remiss if I did not thank the crack staff that helps put these conversations together each week. Sarah Livesey is my audio engineer. Sean Russo is my head of Research. Paris Wald is my producer. Atika Valbrun is our project manager. I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio. END   ~~~   The post Transcript: Albert Wenger appeared first on The Big Picture......»»

Category: blogSource: TheBigPictureSep 20th, 2022

4 Large Drug Stocks to Watch as Fundamentals Stay Strong

Drug/biotech companies are likely to see significant advances in innovation in 2023. In the Large-Cap Pharmaceuticals industry, AbbVie (ABBV), Novartis (NVS), Merck (MRK) and AstraZeneca (AZN) are worth retaining in your portfolio. Investors flocked to the biotech industry during the pandemic years of 2020 and 2021. The successful vaccines and effective antivirals made by the big drugmakers sent the pandemic to the rear-view mirror early his year. However, the post-pandemic trade recovery and strong economic growth have shifted investors’ money to the less expensive sectors. This coupled with a rapid rise in interest rates and inflation has sent biotech valuations plunging recently.Nonetheless, though biotech industry valuations are currently experiencing a correction, fundamentals remain strong.  It is expected that innovation will continue to drive growth in the industry in the second half of 2022 and into 2023. Meanwhile, M&A deals are also picking up, which is a sign of growth. Among the large drugmakers, AbbVie ABBV, Novartis NVS, Merck MRK and AstraZeneca AZN are worth retaining in your portfolio.Industry DescriptionThe Zacks Large Cap Pharmaceuticals industry comprises some of the largest global companies that developmulti-million dollar drugs for a broad range of therapeutic areas like neuroscience, cardiovascular and metabolism, rare diseases, immunology, and oncology. Some of these companies also make vaccines, animal health, medical devices, and consumer-related healthcare products. All these players invest millions of dollars in their product pipelines and line extensions of their already marketed drugs. Continuous innovation is a defining characteristic of pharma companies and these large drugmakers are constantly investing in drug development and the discovery of new medicines. Regular mergers and acquisitions and collaboration deals are a key feature of large drug companies.What's Shaping the Future of the Large-Cap Pharma Industry? Innovation and Pipeline Success: For big drugmakers, innovation in their pipeline is a competitive necessity and key to top-line growth. Pharma companies are constantly striving to ramp up innovation and spending a significantly high portion of their revenues on R&D.  Successful innovation and product line extensions in important therapeutic areas and strong clinical study results may act as important catalysts for these stocks.Aggressive M&A & Collaboration Activity: The sector is characterized by aggressive M&A activity. Given that it takes several years and millions ofdollars to develop new therapeutics from scratch, large pharmaceutical companies sitting on huge piles of cash regularly buy innovative small/mid-cap biotech companies to build out their pipelines. Also, the sloppy sales of mature drugs, dwindling in-house pipelines, government scrutiny of drug prices, and the emergence of big tech firms like Apple and Google in the healthcare industry whet the M&A appetite of large drugmakers.The fast-growing and lucrative markets such as oncology and cell and gene therapy are likely to remain focus areas for M&A activities. Also, collaborations and partnerships with smaller companies are in full swing.With target valuations dropping to historic lows, big pharma players may use the opportunity for large-scale M&A later this year.Pipeline Setbacks & Other Headwinds: The failure of key pipeline candidates in pivotal studies and regulatory and pipeline delays can be setbacks for large drug companies and significantly hurt their share prices. Other headwinds for the industry include pricing and competitive pressure, generic competition for blockbuster treatments and a slowdown in sales of some of the most high-profile older drugs.Uncertainty Surrounding the Pandemic: The pandemic hurt demand trends of physician-administered drugs of most companies. Though trends recovered in 2021, infection rates shot up significantly in the last quarter of 2021, with the rapid spread of the Omicron variant. In 2022 so far, major waves of variants of concern have emerged quickly, become dominant and have been superseded by the next variant. There is still uncertainty about the duration and contemplated impact of the pandemic on companies’ results and outlook in the second half of 2022.Zacks Industry Rank Indicates Bright ProspectsThe Zacks Large Cap Pharmaceuticals industry is a 13-stock group within the broader Medical sector.  The group’s Zacks Industry Rank is basically the average of the Zacks Rank of all the member stocks.The Zacks Large Cap Pharmaceuticals industry currently carries a Zacks Industry Rank #99, which places it in the top 40% of more than 250 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.Before we present a few large drug stocks that are well-positioned to outperform the market based on a strong earnings outlook, let’s take a look at the industry’s performance and its current valuation.Industry Versus S&P 500 & SectorThe industry has outperformed the S&P 500 as well as the Zacks Medical Sector this year so far.Stocks in this industry have collectively declined 3.7% this year so far compared with the Zacks S&P 500 composite’s decline of 17.9% and the Zacks Medical Sector’s decline of 20.1% in the said time frame.Year-to-Date Price PerformanceIndustry's Current ValuationBased on the forward 12-month price-to-earnings (P/E), a commonly used multiple for valuing large pharma companies, the industry is currently trading at 13.99X compared with the S&P 500’s 16.98X and the Zacks Medical Sector's 20.59X.Over the last five years, the industry has traded as high as 16.16X, as low as 13.31X and at a median of 14.83X as the chart below shows. Forward 12-Month Price-to-Earnings (P/E) Ratio4 Large Drugmakers to Keep an Eye OnAbbVie: AbbVie has successfully expanded the labels of its cancer drugs, Imbruvica and Venclexta. It has several new drugs in its portfolio, which have the potential to drive revenues once Humira loses U.S. exclusivity in 2023.  New immunology drugs, Skyrizi and Rinvoq are going strong, bolstered by approval in new indications. AbbVie has several early/mid-stage candidates that have blockbuster potential. Allergan’s acquisition has diversified AbbVie’s revenue base into new therapeutic areas, enhancing its long-term growth potential.AbbVie has a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for 2022 EPS has remained stable at $13.90 per share over the past 30 days. The stock has risen 5.2% this year so far. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Price and Consensus: ABBV  Merck: Merck has a Zacks Rank of 3. The company boasts more than six blockbuster drugs in its portfolio, including the PD-L1 inhibitor, Keytruda, which is approved for several types of cancer and alone accounts for around 40% of its pharmaceutical sales. Keytruda, Gardasil vaccine and Bridion have been driving sales.Keytruda has played an instrumental role in driving Merck’s revenue growth in the past few years. Keytruda is growing continuously and expanding into new indications and markets globally. With continued label expansion into new indications & early-stage settings, Keytruda is expected to remain a key top-line driver.Animal health and vaccine products are core growth drivers. Merck’s new COVID oral antiviral pill, Lagevrio has been a key top-line driver in 2022. Merck boasts a strong cancer pipeline, including Keytruda, which should help drive long-term growth.Shares of Merck have risen 13.2% in the past year. The Zacks Consensus Estimate for 2022 EPS has risen from $7.32 to $7.33 over the past 30 days.Price and Consensus: MRK  Novartis: Novartis has a strong and diverse portfolio. Solid momentum in key brands like psoriasis drug, Cosentyx, a cardiovascular drug, Entresto, gene therapy, Zolgensma, the oncology portfolio, and the launch of Kesimpta continue to boost performance. The launch of additional drugs like Pluvicto, Piqray, Leqvio and Mayzent, and the label expansion of key drugs should also boost performance further. The pipeline progress is also impressive and the company has some promising candidates. Management’s focus on cost savings should boost the bottom line as well. Management recently decided to separate its generics business, Sandoz into a separate company to focus on its core pharma business.The Zacks Consensus Estimate for 2022 EPS has remained stable at $6.06 per share over the past 30 days.Novartis is a #3 Ranked stock. This Swiss drugmaker’s stock has declined 7.7% this year so far.Price and Consensus: NVS  AstraZeneca: AstraZeneca’s key drugs, mainly cancer medicines, Lynparza, Tagrisso and Imfinzi should keep driving revenues. Its pipeline is strong, with several phase III data readouts lined up. It has also been engaged in external acquisitions and strategic collaborations to boost its pipeline while investing in geographic areas of high growth like emerging markets. Cost-cutting efforts should drive earnings. The Alexion buyout strengthens its immunology franchise, adding several drugs that can boost its top lineAstraZeneca has a Zacks Rank #3. The Zacks Consensus Estimate for this British drugmaker’s 2022 EPS has remained stable at $3.31 over the past 30 days. The stock has declined 0.2% this year so far.Price and Consensus: AZN   Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AbbVie Inc. (ABBV): Free Stock Analysis Report AstraZeneca PLC (AZN): Free Stock Analysis Report Novartis AG (NVS): Free Stock Analysis Report Merck & Co., Inc. (MRK): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 16th, 2022