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Category: topSource: bizjournalsNov 25th, 2021

BTFDers Unleashed: Futures, Yields, Oil Jump As Omicron Panic Eases

BTFDers Unleashed: Futures, Yields, Oil Jump As Omicron Panic Eases As expected over the weekend, and as we first noted shortly after electronic markets reopened for trading on Sunday, S&P futures have maintained their overnight gains and have rebounded 0.7% while Nasdaq contracts jumped as much as 1.3% after risk sentiment stabilized following Friday’s carnage and as investors settled in for a few weeks of uncertainty on whether the Omicron variant would derail economic recoveries and the tightening plans of some central banks. Japan led declines in the Asian equity session (which was catching down to Friday's US losses) after the government shut borders to visitors. The region’s reopening stocks such as restaurants, department stores, train operators and travel shares also suffered some losses.  Oil prices bounced $3 a barrel to recoup some of Friday's rout, while the safe haven yen, Swiss franc and 10Y Treasury took a breather after its run higher. Moderna shares jumped as much as 12% in pre-market trading after Chief Medical Officer Paul Burton said he suspects the new omicron coronavirus variant may elude current vaccines, and if so, a reformulated shot could be available early in the new year. Which he would obviously say as his company makes money from making vaccines, even if they are not very efficient. Here are some of the other notable premarket movers today: BioNTech (BNTX US) advanced 5% after it said it’s starting with the first steps of developing a new adapted vaccine, according to statement sent by text. Merck & Co. (MRK US) declined 1.6% after it was downgraded to neutral from buy at Citi, which also opens a negative catalyst watch, with “high probability” the drugmaker will abandon development of its HIV treatment. A selection of small biotechs rise again in U.S. premarket trading amid discussion of the companies in StockTwits and after these names outperformed during Friday’s market rout. Palatin Tech (PTN US) +37%, Biofrontera (BFRI US) +22%, 180 Life Sciences (ATNF US) +19%. Bonds gave back some of their gains, with Treasury futures were down 11 ticks. Like other safe havens, the market had rallied sharply as investors priced in the risk of a slower start to rate hikes from the U.S. Federal Reserve, and less tightening by some other central banks. Needless to say, Omicron is all anyone can talk about: on one hand, authorities have already orchestrated a lot of global panic: Britain called an urgent meeting of G7 health ministers on Monday to discuss developments on the virus, even though the South African doctor who discovered the strain and treated cases said symptoms of Omicron were so far mild. The new variant of concern was found as far afield as Canada and Australia as more countries such as Japan imposed travel restriction to try to seal themselves off. Summarizing the fearmongering dynamic observed, overnight South African health experts - including those who discovered the Omicron variant, said it appears to cause mild symptoms, while the Chinese lapdog organization, WHO, said the variant’s risk is “extremely high”. Investors are trying to work out if the omicron flareup will a relatively brief scare that markets rebound from, or a bigger blow to the global economic recovery. Much remains unanswered about the new strain: South African scientists suggested it’s presenting with mild symptoms so far, though it appears to be more transmissible, but the World Health Organization warned it could fuel future surges of Covid-19 with severe consequences. "There is a lot we don't know about Omicron, but markets have been forced to reassess the global growth outlook until we know more," said Rodrigo Catril, a market strategist at NAB. "Pfizer expects to know within two weeks if Omicron is resistant to its current vaccine, others suggest it may take several weeks. Until then markets are likely to remain jittery." "Despite the irresistible pull of buying-the-dip on tenuous early information on omicron, we are just one negative omicron headline away from going back to where we started,” Jeffrey Halley, a senior market analyst at Oanda, wrote in a note. “Expect plenty of headline-driven whipsaw price action this week.” The emergence of the omicron strain is also complicating monetary policy. Traders have already pushed back the expected timing of a first 25-basis-point rate hike by the Federal Reserve to July from June. Fed Bank of Atlanta President Raphael Bostic played down economic risks from a new variant, saying he’s open to a quicker paring of asset purchases to curb inflation. Fed Chair Jerome Powell and Treasury Secretary Janet Yellen speak before Congress on Tuesday and Wednesday. “We know that central banks can quickly switch to dovish if they need to,” Mahjabeen Zaman, Citigroup senior investment specialist, said on Bloomberg Television. “The liquidity playbook that we have in play right now will continue to support the market.” European stocks rallied their worst drop in more than a year on Friday, with travel and energy stocks leading the advance. The Stoxx 600 rose 0.9% while FTSE 100 futures gain more than 1%, aided by a report that Reliance may bid for BT Group which jumped as much as 9.5% following a report that India’s Reliance Industries may offer to buy U.K. phone company, though it pared the gain after Reliance denied it’s considering a bid. European Central Bank President Christine Lagarde put a brave face on the latest virus scare, saying the euro zone was better equipped to face the economic impact of a new wave of COVID-19 infections or the Omicron variant Japanese shares lead Asian indexes lower after Premier Kishida announces entry ban of all new foreign visitors. Hong Kong’s benchmark Hang Seng Index closed down 0.9% at the lowest level since October 2020, led by Galaxy Entertainment and Meituan. The index followed regional peers lower amid worries about the new Covid variant Omicron. Amid the big movers, Galaxy Entertainment was down 5.4% after police arrested Macau’s junket king, while Meituan falls 7.1% after reporting earnings. In FX, currency markets are stabilizing as the week kicks off yet investors are betting on the possibility of further volatility. The South African rand climbed against the greenback though most emerging-market peers declined along with developing-nation stocks. Turkey’s lira slumped more than 2% after a report at the weekend that President Recep Tayyip Erdogan ordered a probe into foreign currency trades. The Swiss franc, euro and yen retreat while loonie and Aussie top G-10 leaderboard after WTI crude futures rally more than 4%. The Bloomberg Dollar Spot Index hovered after Friday’s drop, and the greenback traded mixed against its Group-of-10 peers; commodity currencies led gains. The euro slipped back below $1.13 and Bunds sold off, yet outperformed Treasuries. The pound was steady against the dollar and rallied against the euro. Australian sovereign bonds pared an opening jump as Treasuries trimmed Friday’s spike amid continuing uncertainty over the fallout from the omicron variant. The Aussie rallied with oil and iron ore. The yen erased an earlier decline as a government announcement on planned border closures starting Tuesday spurred a drop in local equities. The rand strengthens as South African health experts call omicron variant “mild.” In rates, Treasuries were cheaper by 4bp-7bp across the curve in belly-led losses, reversing a portion of Friday’s sharp safe-haven rally as potential economic impact of omicron coronavirus strain continues to be assessed. The Treasury curve bear- steepened and the benchmark 10-year Treasury yield jumped as much as 7 basis points to 1.54%; that unwound some of Friday’s 16 basis-point plunge -- the steepest since March 2020.  Focal points include month-end on Tuesday, November jobs report Friday, and Fed Chair Powell is scheduled to speak Monday afternoon. Treasuries broadly steady since yields gapped higher when Asia session began, leaving 10-year around 1.54%, cheaper by almost 7bp on the day; front-end outperformance steepens 2s10s by ~3bp. Long-end may draw support from potential for month-end buying; Bloomberg Treasury index rebalancing was projected to extend duration by 0.11yr as of Nov. 22 In commodities, oil prices bounced after suffering their largest one-day drop since April 2020 on Friday. "The move all but guarantees the OPEC+ alliance will suspend its scheduled increase for January at its meeting on 2 December," wrote analyst at ANZ in a note. "Such headwinds are the reason it's been only gradually raising output in recent months, despite demand rebounding strongly." Brent rebounded 3.9% to $75.57 a barrel, while U.S. crude rose 4.5% to $71.24. Gold has so far found little in the way of safe haven demand, leaving it stuck at $1,791 an ounce . SGX iron ore rises almost 8% to recoup Friday’s losses. Bitcoin rallied after falling below $54,000 on Friday. Looking at today's calendar, we get October pending home sales, and November Dallas Fed manufacturing activity. We also get a bunch of Fed speakers including Williams, Powell making remarks at the New York Fed innovation event, Fed’s Hassan moderating a panel and Fed’s Bowman discussing central bank and indigenous economies. Market Snapshot S&P 500 futures up 0.6% to 4,625.00 MXAP down 0.9% to 191.79 MXAPJ down 0.4% to 625.06 Nikkei down 1.6% to 28,283.92 Topix down 1.8% to 1,948.48 Hang Seng Index down 0.9% to 23,852.24 Shanghai Composite little changed at 3,562.70 Sensex up 0.4% to 57,307.46 Australia S&P/ASX 200 down 0.5% to 7,239.82 Kospi down 0.9% to 2,909.32 STOXX Europe 600 up 0.7% to 467.47 German 10Y yield little changed at -0.31% Euro down 0.3% to $1.1283 Brent Futures up 3.8% to $75.49/bbl Gold spot up 0.3% to $1,797.11 U.S. Dollar Index up 0.13% to 96.22 Top Overnight News from Bloomberg The omicron variant of Covid-19, first identified in South Africa, has been detected in locations from Australia to the U.K. and Canada, showing the difficulties of curtailing new strains While health experts in South Africa, where omicron was first detected, said it appeared to cause only mild symptoms, the Geneva-based WHO assessed the variant’s risk as “extremely high” and called on member states to test widely. Understanding the new strain will take several days or weeks, the agency said All travelers arriving in the U.K. starting at 4 a.m. on Nov. 30 must take a PCR coronavirus test on or before the second day of their stay and isolate until they receive a negative result. Face coverings will again be mandatory in shops and other indoor settings and on public transport. Booster shots may also be approved for more age groups within days, according to Health Secretary Sajid Javid The economic effects of the successive waves of the Covid pandemic have been less and less damaging, Bank of France Governor Francois Villeroy de Galhau says Italian bonds advance for a third day, as investors shrug off new coronavirus developments over the weekend and stock futures advance, while bunds are little changed ahead of German inflation numbers and a raft of ECB speakers including President Christine Lagarde A European Commission sentiment index fell to 117.5 in November from 118.6 the previous month, data released Monday showed Spanish inflation accelerated to the fastest in nearly three decades in November on rising food prices, underscoring the lingering consequences of supply-chain bottlenecks across Europe. Consumer prices jumped 5.6% Energy prices in Europe surged on Monday after weather forecasts showed colder temperatures for the next two weeks that will lift demand for heating ECB Executive Board member Isabel Schnabel took to the airwaves to reassure her fellow Germans that inflation will slow again, hours before data set to show the fastest pace of price increases since the early 1990s Russia’s ambassador to Washington said more than 50 diplomats and their family members will have to leave the U.S. by mid-2022, in the latest sign of tensions between the former Cold War enemies China sent the biggest sortie of warplanes toward Taiwan in more than seven weeks after a U.S. lawmaker defied a Chinese demand that she abandon a trip to the island A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks traded cautiously and US equity futures rebounded from Friday’s hefty selling (S&P 500 -2.3%) as all focus remained on the Omicron variant after several countries announced restrictions and their first cases of the new variant, although markets took solace from reports that all cases so far from South Africa have been mild. Furthermore, NIH Director Collins was optimistic that current vaccines are likely to protect against the Omicron variant but also noted it was too early to know the answers, while Goldman Sachs doesn’t think the new variant is a sufficient reason to adjust its portfolio citing comments from South Africa’s NICD that the mutation is unlikely to be more malicious and existing vaccines will most likely remain effective at preventing hospitalizations and deaths. ASX 200 (-0.5%) is subdued after Australia registered its first cases of the Omicron variant which involved two people that arrived in Sydney from southern Africa and with the government reviewing its border reopening plans. Nikkei 225 (-1.6%) whipsawed whereby it initially slumped at the open due to the virus fears and currency-related headwinds but then recouped its losses and briefly returned flat as the mood gradually improved, before succumbing to a bout of late selling, and with mixed Retail Sales data adding to the indecision. Hang Seng (-1.0%) and Shanghai Comp. (Unch) weakened with Meituan the worst performer in Hong Kong after posting a quarterly loss and with casino names pressured by a crackdown in which police detained Suncity Group CEO and others after admitting to accusations including illegal cross border gambling. However, the losses in the mainland were cushioned after firm Industrial Profits data over the weekend and with local press noting expectations for China to adopt a more proactive macro policy next year. Finally, 10yr JGBs shrugged off the pullback seen in T-note and Bund futures, with price action kept afloat amid the cautious mood in stocks and the BoJ’s presence in the market for over JPY 900bln of JGBs mostly concentrated in 3yr-10yr maturities. Top Asian News Hong Kong Stocks Slide to 13-Month Low on Fresh Virus Woes Li Auto Loss Narrows as EV Maker Rides Out Supply-Chain Snarls Singapore Adds to Its Gold Pile for the First Time in Decades China Growth Stocks Look Like Havens as Markets Confront Omicron Bourses in Europe are experiencing a mild broad-based rebound (Euro Stoxx 50 +1.0%; Stoxx 600 +0.9%) following Friday's hefty COVID-induced losses. Desks over the weekend have been framing Friday's losses as somewhat overstretched in holiday-thinned liquidity, given how little is known about the Omicron variant itself. The strain will likely remain the market theme as scientists and policymakers factor in this new variant, whilst data from this point forth – including Friday's US labour market report - will likely be passed off as somewhat stale, and headline risk will likely be abundant. Thus far, symptoms from Omicron are seemingly milder than some of its predecessors, although governments and central banks will likely continue to express caution in this period of uncertainty. Back to price action, the momentum of the rebound has lost steam; US equity futures have also been drifting lower since the European cash open – with the RTY (+0.9%) was the laggard in early European trade vs the ES (+0.8%), NQ (+1.0%) and YM (+0.7%). European cash bourses have also been waning off best levels but remain in positive territory. Sectors are mostly in the green, but the breadth of the market has narrowed since the cash open. Travel & Leisure retains the top spot in what seems to be more a reversal of Friday's exaggerated underperformance as opposed to a fundamentally driven rebound – with more nations announcing travel restrictions to stem the spread of the variant. Oil & Gas has also trimmed some of Friday's losses as oil prices see a modest rebound relative to Friday's slump. On the other end of the spectrum, Healthcare sees mild losses as COVID-related names take a mild breather, although Moderna (+9.1% pre-market) gains ahead of the US open after its Chief Medical Officer suggested a new vaccine for the variant could be ready early next year. Meanwhile, Autos & Parts reside as the current laggard amid several bearish updates, including a Y/Y drop in German car exports - due to the chip shortage and supply bottlenecks – factors which the Daimler Truck CEO suggested will lead to billions of Euros in losses. Furthermore, auto supbt.aplier provider Faurecia (-5.9%) trades at the foot of the Stoxx 600 after slashing guidance – again a function of the chip shortage. In terms of Monday M&A, BT (+4.7%) shares opened higher by almost 10% following source reports in Indian press suggesting Reliance Industries is gearing up for a takeover approach of BT – reports that were subsequently rebuffed. Top European News U.K. Mortgage Approvals Fall to 67,199 in Oct. Vs. Est. 70,000 Johnson Matthey Rises on Report of Battery Talks With Tata Gazprom Reports Record Third-Quarter Profit Amid Gas Surge Omicron’s Spread Fuels Search for Answers as WHO Sounds Warning In FX, the Buck has bounced from Friday’s pullback lows on a mixture of short covering, consolidation and a somewhat more hopeful prognosis of SA’s new coronavirus strand compared to very early perceptions prompted by reports that the latest mutation would be even worse than the Delta variant. In DXY terms, a base above 96.000 is forming within a 93.366-144 band amidst a rebound in US Treasury yields and re-steepening along the curve following comments from Fed’s Bostic indicating a willingness to back faster QE tapering. Ahead, pending home sales and Dallas Fed business manufacturing along with more Fed rhetoric from Williams and chair Powell on the eve of month end. AUD/CAD/NZD - No surprise to see the high beta and risk sensitive currencies take advantage of the somewhat calmer conditions plus a recovery in crude and other commodities that were decimated by the prospect of depressed demand due to the aforementioned Omicron outbreak. The Aussie is back over 0.7150 vs its US counterpart, the Loonie has pared back losses from sub-1.2750 with assistance from WTI’s recovery to top Usd 72/brl vs a Usd 67.40 trough on November 26 and the Kiwi is hovering above 0.6800 even though RBNZ chief economist Ha has warned that a pause in OCR tightening could occur if the fresh COVID-19 wave proves to be a ‘game-changer’. JPY/EUR - The major laggards as sentiment stabilses, with the Yen midway between 112.99-113.88 parameters and hardly helped by mixed Japanese retail sales data, while the Euro has retreated below 1.1300 where 1.7 bn option expiry interest resides and a key Fib level just under the round number irrespective of strong German state inflation reports and encouraging pan Eurozone sentiment indicators, as more nations batten down the hatches to stem the spread of SA’s virus that has shown up in parts of the bloc. GBP/CHF - Both narrowly divergent vs the Dollar, as Cable retains 1.3300+ status against the backdrop of retreating Gilt and Short Sterling futures even though UK consumer credit, mortgage lending and approvals are rather conflicting, while the Franc pivots 0.9250 and meanders from 1.0426 to 1.0453 against the Euro after the latest weekly update on Swiss bank sight deposits showing no sign of official intervention. However, Usd/Chf may veer towards 1.1 bn option expiries at the 0.9275 strike if risk appetite continues to improve ahead of KoF on Tuesday and monthly reserves data. SCANDI/EM - Although Brent has bounced to the benefit of the Nok, Sek outperformance has ensued in wake of an upgrade to final Swedish Q3 GDP, while the Cnh and Cny are deriving support via a rise in Chinese industrial profits on a y/y basis and the Zar is breathing a sigh of relief on the aforementioned ‘better’ virus updates/assessments from SA on balance. Conversely, the Try is back under pressure post-a deterioration in Turkish economic sentiment vs smaller trade deficit as investors look forward to CPI at the end of the week. Meanwhile, Turkish President Erdogan provides no reprieve for the Lira as he once again defending his unorthodox view that higher interest rates lead to higher inflation. In commodities, WTI and Brent front-month futures consolidate following an overnight rebound – with WTI Jan back on a USD 71/bbl handle and Brent Feb just under USD 75/bbl – albeit still some way off from Friday's best levels which saw the former's high above USD 78/bbl and the latter's best north of USD 81/bbl. The week is packed with risks to the oil complex, including the resumption of Iranian nuclear talks (slated at 13:00GMT/08:00EST today) and the OPEC+ monthly confab. In terms of the former, little is expected in terms of progress unless the US agrees to adhere to Tehran's demand – which at this point seems unlikely. Tehran continues to seek the removal of US sanctions alongside assurances that the US will not withdraw from the deal. "The assertion that the US must 'change its approach if it wants progress' sets a challenging tone", Citi's analysts said, and the bank also expects parties to demand full access to Iranian nuclear facilities for verification of compliance. Further, the IAEA Chief met with Iranian officials last week; although concrete progress was sparse, the overall tone of the meeting was one of progress. "We remain of the opinion that additional Iranian supplies are unlikely to reach the market before the second half of 2022 at the earliest," Citi said. Meanwhile, reports suggested the US and allies have been debating a "Plan B" if talks were to collapse. NBC News – citing European diplomats, former US officials and experts – suggested that options included: 1) a skinny nuclear deal, 2) ramp up sanctions, 3) Launching operations to sabotage Iranian nuclear advances, 4) Military strikes, 5) persuading China to halt Iranian oil imports, albeit Iran and China recently signed a 25yr deal. Over to OPEC+, a rescheduling (in light of the Omicron variant) sees the OPEC and JTC meeting now on the 1st December, followed by the JMMC and OPEC+ on the 2nd. Sources on Friday suggested that members are leaning towards a pause in the planned monthly output, although Russian Deputy PM Novak hit the wires today and suggested there is no need for urgent measures in the oil market. Markets will likely be tested, and expectations massaged with several sources heading into the meeting later this week. Elsewhere, spot gold trades sideways just under the USD 1,800/oz and above a cluster of DMAs, including the 50 (1,790.60/oz), 200 (1,791.30/oz) and 100 (1,792.80/oz) awaiting the next catalyst. Over to base metals, LME copper recoups some of Friday's lost ground, with traders also citing the underlying demand emanating from the EV revolution. US Event Calendar 10am: Oct. Pending Home Sales YoY, prior -7.2% 10am: Oct. Pending Home Sales (MoM), est. 0.8%, prior -2.3% 10:30am: Nov. Dallas Fed Manf. Activity, est. 17.0, prior 14.6 Central Bank speakers: 3pm: Fed’s Williams gives opening remarks at NY Innovation Center 3:05pm: Powell Makes Opening Remarks at New York Fed Innovation Event 3:15pm: Fed’s Hassan moderates panel introducing NY Innovation Center 5:05pm: Fed’s Bowman Discusses Central bank and Indigenous Economies DB's Jim Reid concludes the overnight wrap Last night Henry in my team put out a Q&A looking at what we know about Omicron (link here) as many risk assets put in their worst performance of the year on Friday after it exploded into view. The main reason for the widespread concern is the incredibly high number of mutations, with 32 on the spike protein specifically, which is the part of the virus that allows it to enter human cells. That’s much more than we’ve seen for previous variants, and raises the prospect it could be a more transmissible version of the virus, although scientists are still assessing this. South Africa is clearly where it has been discovered (not necessarily originated from) and where it has been spreading most. The fact that’s it’s become the dominant strain there in just two weeks hints at its higher level of contagiousness. However the read through to elsewhere is tough as the country has only fully vaccinated 24% of its population, relative to at least 68% in most of the larger developed countries bar the US which languishes at 58%. It could still prove less deadly (as virus variants over time mostly are) but if it is more contagious that could offset this and it could still cause similar healthcare issues, especially if vaccines are less protective. On the other hand the South African doctor who first alerted authorities to the unusual symptoms that have now been found to have been caused by Omicron, was on numerous media platforms over the weekend suggesting that the patients she has seen with it were exhausted but generally had mild symptoms. However she also said her patients were from a healthy cohort so we can’t relax too much on this. However as South African cases rise we will get a lot of clues from hospitalisation data even if only 6% of the country is over 65s. My personal view is that we’ll get a lot of information quite quickly around how bad this variant is. The reports over the weekend that numerous cases of Omicron have already been discovered around the world, suggests it’s probably more widespread than people think already. So we will likely soon learn whether these patients present with more severe illness and we’ll also learn of their vaccination status before any official study is out. The only caveat would be that until elderly patients have been exposed in enough scale we won’t be able to rule out the more negative scenarios. Before all that the level of restrictions have been significantly ramped up over the weekend in many countries. Henry discusses this in his note but one very significant one is that ALL travellers coming into (or back to) the UK will have to self isolate until they get a negative PCR test. This sort of thing will dramatically reduce travel, especially short business trips. Overnight Japan have effectively banned ALL foreign visitors. I appreciate its dangerous to be positive on covid at the moment but you only have to look at the UK for signs that boosters are doing a great job. Cases in the elderly population continue to collapse as the roll out progresses well and overall deaths have dropped nearly 20% over the last week to 121 (7-day average) - a tenth of where they were at the peak even though cases have recently been 80-90% of their peak levels. If Europe are just lagging the UK on boosters rather than anything more structural, most countries should be able to control the current wave all things being equal. However Omicron could make things less equal but it would be a huge surprise if vaccines made no impact. Stocks in Asia are trading cautiously but remember that the US and Europe sold off more aggressively after Asia closed on Friday. So the lack of major damage is insightful. The Nikkei (-0.02%), Shanghai Composite (-0.14%), CSI (-0.22%), KOSPI (-0.47%) and Hang Seng (-0.68%) are only slightly lower. Treasury yields, oil, and equity futures are all rising in Asia. US treasury yields are up 4-6bps across the curve, Oil is c.+4.5% higher, while the ZAR is +1.31%. Equity futures are trading higher with the S&P 500 (+0.71%) and DAX (+0.84%) futures in the green. In terms of looking ahead, we may be heading into December this week but there’s still an incredibly eventful period ahead on the market calendar even outside of Omicron. We have payrolls on Friday which could still have a big impact on what the Fed do at their important December 15 FOMC and especially on whether they accelerate the taper. Wednesday (Manufacturing) and Friday (Services) see the latest global PMIs which will as ever be closely watched even if people will suggest that the latest virus surge and now Omicron variant may make it backward looking. Elsewhere in the Euro Area, we’ll get the flash CPI estimate for November tomorrow (France and Italy on the same day with Germany today), and we’ll hear from Fed Chair Powell as he testifies (with Mrs Yellen) before congressional committees tomorrow and Wednesday. There’s lots of other Fed speakers this week (ahead of their blackout from this coming weekend) and last week there was a definite shift towards a faster taper bias, even amongst the doves on the committee with Daly being the most important potential convert. Fed speakers this week might though have to balance the emergence of the new variant with the obvious point that without it the Fed is a fair bit behind the curve. Importantly but lurking in the background, Friday is also the US funding deadline before another government shutdown. History would suggest a tense last minute deal but it’s tough to predict. Recapping last week now and the emergence of the new variant reshaped the whole week even if ahead of this, continued case growth across Europe prompted renewed lockdown measures and travel bans across the continent. Risk sentiment clearly plummeted on Friday. The S&P 500 fell -2.27%, the biggest drop since October 2020, while the Stoxx 600 fell -3.67%, the biggest one-day decline since the original Covid-induced risk off in March 2020. The S&P 500 was -2.20% lower last week, while the Stoxx 600 was down -4.53% on the week. 10yr treasury, bund, and gilt yields declined -16.1bps, -8.7bps, and -14.5bps, undoing the inflation and policy response-driven selloff from earlier in the week. The drop in 10yr treasury and gilt yields were the biggest one-day declines since the original Covid-driven rally in March 2020, while the drop in bund yields was the largest since April 2020. 10yr treasury, bund, and gilt yields ended the week -7.3bps lower, +0.7bps higher, and -5.4bps lower, respectively. Measures of inflation compensation declined due to the anticipated hit to global demand, with 10yr breakevens in the US and Germany -6.8bps and -8.8bps lower Friday, along with Brent and WTI futures declining -11.55% and -13.06%, respectively. Investors pushed back the anticipated timing of rate hikes. As it stands, the first full Fed hike is just about priced for July, and 2 hikes are priced for 2022. This follows a hawkish tone from even the most dovish FOMC members and the November FOMC minutes last week. The prevailing sentiment was the FOMC was preparing to accelerate their asset purchase taper at the December meeting to enable inflation-fighting rate hikes earlier in 2022. Understanding the impact of the new variant will be crucial for interpreting the Fed’s reaction function, though. The impact may not be so obvious; while a new variant would certainly hurt global demand and portend more policy accommodation, it will also likely prompt more virus-avoiding behaviour in the labour market, preventing workers from returning to pre-Covid levels. Whether the Fed decides to accommodate these sidelined workers for longer, or to re-think what constitutes full employment in a Covid world should inform your view on whether they accelerate tapering in December. It feels like a lifetime ago but last week also saw President Biden nominate Chair Powell to head the Fed for another term, and for Governor Brainard to serve as Vice Chair. The announcement led to a selloff in rates as the more dovish Brainard did not land the head job. In Germany, the center-left SPD, Greens, and liberal FDP agreed to a full coalition deal. The traffic-light coalition agreed to restore the debt break in 2023, after being suspended during the pandemic, and to raise the minimum wage to €12 per hour. The SPD’s Olaf Scholz will assume the Chancellorship. The US, China, India, Japan, South Korea, and UK announced releases of strategic petroleum reserves. Oil prices were higher following the announcement, in part because releases were smaller than anticipated but, as mentioned, prices dropped precipitously on Friday on the global demand impact of the new Covid variant. The ECB released the minutes of the October Governing Council meeting, where officials stressed the need to maintain optionality in their policy setting. They acknowledged growing upside risks to inflation but stressed the importance of not overreacting in setting policy as they see how inflation scenarios might unfold. Tyler Durden Mon, 11/29/2021 - 08:01.....»»

Category: dealsSource: nytNov 29th, 2021

How much TikTok and ByteDance US employees make in 2021

Data reveals the base annual salaries for some TikTok staffers in engineering, data, monetization, and other roles, from late 2019 to 2021. TikTok COO Vanessa Pappas. Jerod Harris/Getty Images TikTok has been hiring aggressively in the US. Insider combed through public data to get a snapshot of how much TikTok employees in the US make. TikTok and owner ByteDance offered some staffers annual salaries between $59,000 and $480,000. See more stories on Insider's business page. TikTok is hiring aggressively in the US. The company currently has around 1,500 US job openings listed on its website. The app, which is owned by Chinese company ByteDance, started ramping up hiring in 2020, when it offered to add 20,000 jobs in the US to win the favor of the Trump administration.TikTok has been on more favorable footing with the current Biden administration. President Biden signed an executive order in June that revoed Trump's attempts to ban TikTok and another app owned by a Chinese company, WeChat.But TikTok is still staffing up in the US to meet growing demand.Its user base exploded this year, passing one billion monthly active users globally, according to the company. And the growth has led competitors like Instagram, YouTube, and Snapchat to roll out copycat features.In light of TikTok's ongoing hiring push, Insider has updated its analysis of how much TikTok employees make in the US.We combed through public data to get a snapshot of TikTok salary levels.The data, released by the US Department of Labor's Office of Foreign Labor Certification, shows how much TikTok and ByteDance offered to pay employees who it wanted to hire in the US through work visas. The data include base annual salaries only, not forms of compensation such as stock options or cash bonuses. TikTok and ByteDance offered certain staffers between October 2019 and September 2021 annual base salaries ranging from $59,000 to $480,000 for a variety of different roles, according to the data.Our full analysis breaks down salaries for jobs including product and engineering, data and research, and monetization and partnership-focused roles.Read more about how much TikTok employees make, including recent salary offers for specific rolesRead the original article on Business Insider.....»»

Category: topSource: businessinsiderNov 10th, 2021

HSBC Might Re-Enter India Private Banking, Exceeds China Hires

HSBC exceeds its wealth management hiring target in China and explores options of re-entering the India private banking business. HSBC Holdings plc HSBC, which has continuously been making efforts to expand its presence in the growing Asia markets, is already ahead of its hiring targets for the China retail wealth management business. Thus, now, the bank is contemplating re-entering the private banking business in India.As part of a group strategy, HSBC exited India’s private banking business in 2015. However, now that the country is experiencing a surge in the number of super-rich, the bank is exploring options of re-entering the market.Nuno Matos, the CEO of HSBC’s Wealth and Personal Banking division, stated, “We want to bank mass affluent and high net worth customers. At this moment, the two major pillars we are expanding in India are insurance and asset management. On the private banking side, we are not there yet and that's something that demands a strategic decision this year.”Matos added, “On the private banking side, we are now in clear expansion mode.”Presently, HSBC has been catering to the ultra-rich in India from its global hubs in Singapore, London and the Middle East.Notably, HSBC, which already holds a dominant position in the Asia markets, has been aiming to become the region’s top wealth manager by 2025.This February, the bank announced that it is on an expansion spree and it plans to hire 5,000 wealth planners in Asia over the next five years. Along with this, it announced plans of injecting $3.5 billion worth of capital in the region, of which approximately two-thirds will be used to bolster the bank’s distribution competencies via new hires and technology improvements.Further, HSBC stated plans of shifting capital from the underperforming businesses in Europe and the United States to invest $6 billion in Asia over five years. The capital will mostly cater to amplify its wealth management business since management intends to target wealthy clients in mainland China, Hong Kong, Singapore and other parts of the region.HSBC’s Wealth and Personal Banking unit contributed almost 44% to its adjusted global revenues last year.As part of its efforts to expand footprint in mainland China, last year, HSBC initiated a digital-first, hybrid financial management platform — HSBC Pinnacle — in the region. It hired 200 wealth managers in Shanghai, Hangzhou and Shenzen in 2020. It expects to have 700 personal wealth planners by 2021 end, up from 550 mentioned earlier.Matos also said, “We are the leading international bank in China, so we want to squeeze that opportunity.”Our TakeHSBC’s expansion plans in Asia are expected to help offset some of the adverse impacts that the low interest rate environment has been putting on its top line. Nevertheless, competition for fee-generating sustainable businesses in Asia might intensify over the medium term. HSBC is likely to face competition from firms like Bank of America BAC, Credit Suisse Group CS and UBS Group AG UBS.Over the past year, shares of HSBC have gained 14.7% compared with the industry’s growth of 27.6%. Image Source: Zacks Investment Research Currently, HSBC carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. More Stock News: This Is Bigger than the iPhone! It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market. Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.Click here for the 4 trades >>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 Bank of America Corporation (BAC): Free Stock Analysis Report Credit Suisse Group (CS): Free Stock Analysis Report UBS Group AG (UBS): Free Stock Analysis Report HSBC Holdings plc (HSBC): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksNov 10th, 2021

For Onboarding Hires These Days, How a New Job Starts Might Be Why It Ends

Conveying a company’s culture is always hard, and often in-office interactions offer cues that no handbook can capture For all the talk of American workers quitting in droves, it’s surprising we aren’t dwelling more on another career milestone, especially post-Covid: how to start a new job. Some 28% of people leave a new job in the first 90 days, according to new data from the recruiting-software firm Jobvite—and that number is growing. “The way that a new employee interacts with company culture is a major determining factor in their potential for success,” Jobvite advises. “Hiring managers and HR professionals should pay attention to how new employees react to the company culture as they are being introduced to it.” [time-brightcove not-tgx=”true”] To invoke an overplayed meme, how it starts might be why it ends. Conveying a company’s culture is always hard, and often in-office interactions offer cues that no handbook can capture (think office attire, the length of lunch breaks, eavesdropping to gauge tone). The acute challenge these days is that many companies’ culture is in the midst of upheaval amid remote or hybrid work, concerns over a lack of inclusion, fears of worker burnout, and a need to maintain business continuity or, in many cases, meet increased demand. Systems that were in place to onboard a new hire at the beginning of 2020 are simply antiquated and inadequate now. Here are some suggestions for how to do better, based on interviews with hiring managers and workplace experts: Hire differently to meet this moment. In his new book, Remote Leadership, David Pachter argues that you should recruit for different qualities in a work-from-home (WFH) company than you might have during the Before Times. “In building a high-achieving WFH organization, hiring is the key to success,” he writes. “Some people, despite their experience and skills, simply cannot be effective and productive working at a distance.” Those employees, he says, need workplace dynamics, motivation of peers, and the proximity of a boss in the room. Meanwhile, remote or hybrid work relies more on the following qualities: intrinsic motivation, focus, discipline, coachability, accountability, and humility. Ask candidates how working from home has changed their career aspirations and how they stay focused and connected to people on their team and across the organization, suggests Pachter, co-founder of outsourced sales and marketing provider JumpCrew. “When the new job honeymoon phase ends, people are finding it too easy to quit,” he says. Hence, another question: How passionate are they about the role/company? Start onboarding new hires the moment they accept the offer. Ford Motor Co. now ships laptops and accessories directly to a new employee’s home before they start. “We also leverage our online portal for new hires to complete pre-employment forms and access helpful information about the company’s legacy, history, and culture,” says Kiersten Robinson, Ford’s chief people and employee experience officer. The more new hires can do before they start makes for an easier first official week. There’s something about not reporting to a physical space that makes starting a new job right now, quite frankly, weird. Think of how some of us bought entire new wardrobes—or at least a new purse—before starting jobs in the past. A new job is a chance to hit reset on life. Now, for many people it just means a new email address to log into from the home office. Thus, employers can help by creating more excitement and preparedness for the change. Technology and documentation are key to a seamless start. One of the key characteristics Gallup has identified over the years in successful and engaged teams is that employees have the tools they need to do their work. It may seem basic, but getting new staff the right technology delivers on that, and sends a signal of your commitment to the employee as well. Documentation, such as manuals and how-to videos, is another important part of orientation. Gitlab, for example, has a 13,804-page handbook that it makes publicly available, listing everything from company history to a code of conduct to its travel policies. Yours need not be that thorough, but it’s very helpful to new hires for implicit practices, norms, and rituals to be written down. Onboarding must go beyond the first week. In her list of onboarding “don’ts,” Nettie Nitzberg says a big mistake managers make is not checking in every day (you read that right) for the new hire’s first two weeks. “Being at home when you start a new job is lonely enough,” says the co-founder and chief learning officer of Saterman Connect, a consulting company. “When your manager doesn’t care how you are doing or feeling, it sends the wrong message.” Other companies mentioned laying out an agenda of meetings and tasks for the first week, along with broader goals for the 30-, 60-, and 90-day marks. Give them a person, or two. Besides the direct manager of the new hire, many companies mention creating a buddy system, mentoring programs, even “peer circles” to help acclimation move along faster. No question is too small or stupid. “We’ve tried to turn the strangeness of the distanced environment to our advantage,” says Pachter. “Peers often handle onboarding of new employees in keeping with the basic principles of peer learning. These sessions are…intentionally personal, friendly, and open to anyone questioning anything.” The list of who new entrants meet with—and why—is similarly key, says executive coach Sushil Cheema. You are trying to show talent that you see a bright future for them at the company. “Exposure to various parts of the business is also important: The new hire will not only get a better sense of how the company operates overall but also will have a chance to meet more people and have a chance to ask questions and offer ideas,” she says. “The more involved they can get from day one, the more likely it is they will feel comfortable.” Build inclusion. Creating an inclusive workplace does not start and stop with diversity in hiring. It must be woven into all aspects of company culture. Nitzberg suggests a few ways to build inclusion: A team deck where everyone has a slide with their picture, months/years with the organization, and contact info. Maybe include some fun facts, such as favorite foods or pastimes. Have the new hire make one too. Have the CEO record a welcome message for the newcomers or join a video call. Department heads might also consider doing these. Send a welcome gift, swag, or even lunch. Accenture has hired 118,000 people in the past year—54,000 in the last quarter alone. “Before Covid, when you started a job, one of the exciting things was showing up someplace,” CEO Julie Sweet said last week at Fortune’s Most Powerful Women Summit. “What we realized pretty quickly is that people we were hiring were literally shutting their laptop, and then getting the new laptop from Accenture and there was no sense of excitement or connection.” Accenture used corporate swag—desk trinkets, posters, giveaway items with its logo—to try to address some of that problem. The company also bought tens of thousands of virtual reality headsets for employees to share a virtual experience. Even small gestures can go a long way: Personal touches like sending takeout from the new staffer’s favorite restaurant or everyone agreeing to order the same cuisine for a virtual team dinner one night. We are in an era of uncertainty. A part of the reason onboarding has been so rocky in the pandemic is because we are in rocky times. Equipping employees with the skills and tools they need to weather this uncertainty also feels like a necessary and urgent part of onboarding. New hires at Dell, for example, are getting a deep dive on the company’s agile model during their orientation. The agile approach to projects focuses on incremental improvements, theoretically making it easier to weather change. “They go through this to understand processes, our methods and to get to meet people,” says Jen Felch, chief digital officer and chief information officer at Dell. “We treat this like a cohort, but they also get to meet people across the company.” Recap early and often. New hires have a lot being thrown at them in these early days, and procedures others have internalized might take some time to sink in. In that spirit, remember that successful onboarding essentially boils down to: offering tools and information gauging and signaling excitement for the job and investment in the new employee’s career providing ongoing connections to colleagues across the company......»»

Category: topSource: timeOct 19th, 2021

Pre-Markets Bounce Again, Trade Deficit Hits New Record

The U.S. Trade Deficit for August, which sank (or "rose," depending on your perspective) to its widest margin ever: -$73.3 billion. Tuesday, October 5, 2021Pre-market futures are headed back up this Tuesday morning, following another deep day in the red Monday, especially for the tech-heavy Nasdaq, which dropped another 2%+ in its first trading day of the week. With some of the most high-profile names in tech now double-digits off their all-time highs, bargain shopping looks to be in order. The Dow is +150 points at this hour, the S&P 500 is +20 and the Nasdaq is +45 points.One report out this morning is doing nothing to move the needle on stock-buying, but may have longer-term implications. That is the U.S. Trade Deficit for August, which sank (or “rose,” depending on your perspective) to its widest margin ever: -$73.3 billion, well off the expected -$70.6 billion and the downwardly revised July print of -$70.3 billion. It’s also the third-straight month sub-$70 billion, also for the first time in history.Exports, led by natural gas, came in at $213.7 billion, tempered by lower totals of auto parts, corn and travel. Imports rose +1.47% to an all-time high $287 billion, as our gap widened among our top trading partners: China added +$3.1 billion to $28.1 billion, and Canada was +$1.4 billion to $5.1 billion. Since the start of the 21st century, the U.S. trade deficit has mostly been on a steep downward trajectory, save for the initial recovery from the Great Recession more than a decade ago.Speaking of China, another major real estate developer there looks to be in financial trouble. Fantasia, a Shenzhen-based luxury developer, has failed to repay a nearly $206 million bond and another $109 million loan to a company interested in buying up many of Fantasia’s assets. This news follows last week’s plight of Evergrande, an even bigger Chinese real estate developer, which reported it had missed payment on a major loan, as well.In the past, such failures would have likely been tidied up by the central Chinese government, but President Xi Jinpeng has begun to more aggressively employ a different strategy against fast-growing business entities in the country. That is, it now takes a harder line against big companies taking big risks. Some say it foreshadows economic difficulties in China, which are worse than being reported. Others, like the New York Times this morning, see it as a power grab by President Xi.After our opening bell this morning, September reads for PMI and ISM Services will hit the tape, with expectations in-line (PMI) and slightly below (ISM) August headline numbers. Both surveys are expected to come in comfortably ahead of the benchmark 50, which represents growth. The question is: how far, how fast is the Services sector growing in the U.S.? Last week’s PMI and ISM Manufacturing numbers were somewhat hotter than expected.Questions or comments about this article and/or its author? Click here>> Zacks' Top Picks to Cash in on Artificial Intelligence In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>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 Invesco QQQ (QQQ): ETF Research Reports SPDR S&P 500 ETF (SPY): ETF Research Reports SPDR Dow Jones Industrial Average ETF (DIA): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research 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.....»»

Category: topSource: zacksOct 6th, 2021

Trade Deficit Hits a Record-High in August

Trade Deficit Hits a Record-High in August. Pre-market futures are headed back up this Tuesday morning, following another deep day in the red Monday, especially for the tech-heavy Nasdaq, which dropped another 2%+ in its first trading day of the week. With some of the most high-profile names in tech now double-digits off their all-time highs, bargain shopping looks to be in order. The Dow is +150 points at this hour, the S&P 500 is +20 and the Nasdaq is +45 points.One report out this morning is doing nothing to move the needle on stock-buying, but may have longer-term implications. That is the U.S. Trade Deficit for August, which sank (or “rose,” depending on your perspective) to its widest margin ever: -$73.3 billion, well off the expected -$70.6 billion and the downwardly revised July print of -$70.3 billion. It’s also the third-straight month sub-$70 billion, also for the first time in history.Exports, led by natural gas, came in at $213.7 billion, tempered by lower totals of auto parts, corn and travel. Imports rose +1.47% to an all-time high $287 billion, as our gap widened among our top trading partners: China added +$3.1 billion to $28.1 billion, and Canada was +$1.4 billion to $5.1 billion. Since the start of the 21st century, the U.S. trade deficit has mostly been on a steep downward trajectory, save for the initial recovery from the Great Recession more than a decade ago.Speaking of China, another major real estate developer there looks to be in financial trouble. Fantasia, a Shenzhen-based luxury developer, has failed to repay a nearly $206 million bond and another $109 million loan to a company interested in buying up many of Fantasia’s assets. This news follows last week’s plight of Evergrande, an even bigger Chinese real estate developer, which reported it had missed payment on a major loan, as well.In the past, such failures would have likely been tidied up by the central Chinese government, but President Xi Jinpeng has begun to more aggressively employ a different strategy against fast-growing business entities in the country. That is, it now takes a harder line against big companies taking big risks. Some say it foreshadows economic difficulties in China, which are worse than being reported. Others, like the New York Times this morning, see it as a power grab by President Xi.After our opening bell this morning, September reads for PMI and ISM Services will hit the tape, with expectations in-line (PMI) and slightly below (ISM) August headline numbers. Both surveys are expected to come in comfortably ahead of the benchmark 50, which represents growth. The question is: how far, how fast is the Services sector growing in the U.S.? Last week’s PMI and ISM Manufacturing numbers were somewhat hotter than expected. Zacks' Top Picks to Cash in on Artificial Intelligence In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>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 To read this article on Zacks.com click here......»»

Category: topSource: zacksOct 6th, 2021

Camber Energy: What If They Made a Whole Company Out of Red Flags? – Kerrisdale

Kerrisdale Capital is short shares of Camber Energy Inc (NYSEAMERICAN:CEI). Camber is a defunct oil producer that has failed to file financial statements with the SEC since September 2020, is in danger of having its stock delisted next month, and just fired its accounting firm in September. Its only real asset is a 73% stake […] Kerrisdale Capital is short shares of Camber Energy Inc (NYSEAMERICAN:CEI). Camber is a defunct oil producer that has failed to file financial statements with the SEC since September 2020, is in danger of having its stock delisted next month, and just fired its accounting firm in September. Its only real asset is a 73% stake in Viking Energy Group Inc (OTCMKTS:VKIN), an OTC-traded company with negative book value and a going-concern warning that recently violated the maximum-leverage covenant on one of its loans. (For a time, it also had a fake CFO – long story.) Nonetheless, Camber’s stock price has increased by 6x over the past month; last week, astonishingly, an average of $1.9 billion worth of Camber shares changed hands every day. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2021 hedge fund letters, conferences and more Is there any logic to this bizarre frenzy? Camber pumpers have seized upon the notion that the company is now a play on carbon capture and clean energy, citing a license agreement recently entered into by Viking. But the “ESG Clean Energy” technology license is a joke. Not only is it tiny relative to Camber’s market cap (costing only $5 million and granting exclusivity only in Canada), but it has embroiled Camber in the long-running escapades of a western Massachusetts family that once claimed to have created a revolutionary new combustion engine, only to wind up being penalized by the SEC for raising $80 million in unregistered securities offerings, often to unaccredited investors, and spending much of it on themselves. But the most fascinating part of the CEI boondoggle actually has to do with something far more basic: how many shares are there, and why has dilution been spiraling out of control? We believe the market is badly mistaken about Camber’s share count and ignorant of its terrifying capital structure. In fact, we estimate its fully diluted share count is roughly triple the widely reported number, bringing its true, fully diluted market cap, absurdly, to nearly $900 million. Since Camber is delinquent on its financials, investors have failed to fully appreciate the impact of its ongoing issuance of an unusual, highly dilutive class of convertible preferred stock. As a result of this “death spiral” preferred, Camber has already seen its share count increase 50- million-fold from early 2016 to July 2021 – and we believe it isn’t over yet, as preferred holders can and will continue to convert their securities and sell the resulting common shares. Even at the much lower valuation that investors incorrectly think Camber trades for, it’s still overvalued. The core Viking assets are low-quality and dangerously levered, while any near- term benefits from higher commodity prices will be muted by hedges established in 2020. The recent clean-energy license is nearly worthless. It’s ridiculous to have to say this, but Camber isn’t worth $900 million. If it looks like a penny stock, and it acts like a penny stock, it is a penny stock. Camber has been a penny stock before – no more than a month ago, in fact – and we expect that it will be once again. Company Background Founded in 2004, Camber was originally called Lucas Energy Resources. It went public via a reverse merger in 2006 with the plan of “capitaliz[ing] on the increasing availability of opportunistic acquisitions in the energy sector.”1 But after years of bad investments and a nearly 100% decline in its stock price, the company, which renamed itself Camber in 2017, found itself with little economic value left; faced with the prospect of losing its NYSE American listing, it cast about for new acquisitions beginning in early 2019. That’s when Viking entered the picture. Jim Miller, a member of Camber’s board, had served on the board of a micro-cap company called Guardian 8 that was working on “a proprietary new class of enhanced non-lethal weapons”; Guardian 8’s CEO, Steve Cochennet, happened to also be part owner of a Kansas-based company that operated some of Viking’s oil and gas assets and knew that Viking, whose shares traded over the counter, was interested in moving up to a national exchange.2 (In case you’re wondering, under Miller and Cochennet’s watch, Guardian 8’s stock saw its price drop to ~$0; it was delisted in 2019.3) Viking itself also had a checkered past. Previously a shell company, it was repurposed by a corporate lawyer and investment banker named Tom Simeo to create SinoCubate, “an incubator of and investor in privately held companies mainly in P.R. China.” But this business model went nowhere. In 2012, SinoCubate changed its name to Viking Investments but continued to achieve little. In 2014, Simeo brought in James A. Doris, a Canadian lawyer, as a member of the board of directors and then as president and CEO, tasked with executing on Viking’s new strategy of “acquir[ing] income-producing assets throughout North America in various sectors, including energy and real estate.” In a series of transactions, Doris gradually built up a portfolio of oil wells and other energy assets in the United States, relying on large amounts of high-cost debt to get deals done. But Viking has never achieved consistent GAAP profitability; indeed, under Doris’s leadership, from 2015 to the first half of 2021, Viking’s cumulative net income has totaled negative $105 million, and its financial statements warn of “substantial doubt regarding the Company’s ability to continue as a going concern.”4 At first, despite the Guardian 8 crew’s match-making, Camber showed little interest in Viking and pursued another acquisition instead. But, when that deal fell apart, Camber re-engaged with Viking and, in February 2020, announced an all-stock acquisition – effectively a reverse merger in which Viking would end up as the surviving company but transfer some value to incumbent Camber shareholders in exchange for the national listing. For reasons that remain somewhat unclear, this original deal structure was beset with delays, and in December 2020 (after months of insisting that deal closing was just around the corner) Camber announced that it would instead directly purchase a 51% stake in Viking; at the same time, Doris, Viking’s CEO, officially took over Camber as well. Subsequent transactions through July 2021 have brough Camber’s Viking stake up to 69.9 million shares (73% of Viking’s total common shares), in exchange for consideration in the form of a mixture of cash, debt forgiveness,5 and debt assumption, valued in the aggregate by Viking at only $50.7 million: Camber and Viking announced a new merger agreement in February 2021, aiming to take out the remaining Viking shares not owned by Camber and thus fully combine the two companies, but that plan is on hold because Camber has failed to file its last 10-K (as well as two subsequent 10-Qs) and is thus in danger of being delisted unless it catches up by November. Today, then, Camber’s absurd equity valuation rests entirely on its majority stake in a small, unprofitable oil-and-gas roll-up cobbled together by a Canadian lawyer. An Opaque Capital Structure Has Concealed the True Insanity of Camber’s Valuation What actually is Camber’s equity valuation? It sounds like a simple question, and sources like Bloomberg and Yahoo Finance supply what looks like a simple answer: 104.2 million shares outstanding times a $3.09 closing price (as of October 4, 2021) equals a market cap of $322 million – absurd enough, given what Camber owns. But these figures only tell part of the story. We estimate that the correct fully diluted market cap is actually a staggering $882 million, including the impact of both Camber’s unusual, highly dilutive Series C convertible preferred stock and its convertible debt. Because Camber is delinquent on its SEC filings, it’s difficult to assemble an up-to-date picture of its balance sheet and capital structure. The widely used 104.2-million-share figure comes from an 8-K filed in July that states, in part: As of July 9, 2021, the Company had 104,195,295 shares of common stock issued and outstanding. The increase in our outstanding shares of common stock from the date of the Company’s February 23, 2021 increase in authorized shares of common stock (from 25 million shares to 250 million shares), is primarily due to conversions of shares of Series C Preferred Stock of the Company into common stock, and conversion premiums due thereon, which are payable in shares of common stock. This bland language belies the stunning magnitude of the dilution that has already taken place. Indeed, we estimate that, of the 104.2 million common shares outstanding on July 9th, 99.7% were created via the conversion of Series C preferred in the past few years – and there’s more where that came from. The terms of Camber’s preferreds are complex but boil down to the following: they accrue non- cash dividends at the sky-high rate of 24.95% per year for a notional seven years but can be converted into common shares at any time. The face value of the preferred shares converts into common shares at a fixed conversion price of $162.50 per share, far higher than the current trading price – so far, so good (from a Camber-shareholder perspective). The problem is the additional “conversion premium,” which is equal to the full seven years’ worth of dividends, or 7 x 24.95% ≈ 175% of face value, all at once, and is converted at a far lower conversion price that “will never be above approximately $0.3985 per share…regardless of the actual trading price of Camber’s common stock” (but could in principle go lower if the price crashes to new lows).6 The upshot of all this is that one share of Series C preferred is now convertible into ~43,885 shares of common stock.7 Historically, all of Camber’s Series C preferred was held by one investor: Discover Growth Fund. The terms of the preferred agreement cap Discover’s ownership of Camber’s common shares at 9.99% of the total, but nothing stops Discover from converting preferred into common up to that cap, selling off the resulting shares, converting additional preferred shares into common up to the cap, selling those common shares, etc., as Camber has stated explicitly (and as Discover has in fact done over the years) (emphasis added): Although Discover may not receive shares of common stock exceeding 9.99% of its outstanding shares of common stock immediately after affecting such conversion, this restriction does not prevent Discover from receiving shares up to the 9.99% limit, selling those shares, and then receiving the rest of the shares it is due, in one or more tranches, while still staying below the 9.99% limit. If Discover chooses to do this, it will cause substantial dilution to the then holders of its common stock. Additionally, the continued sale of shares issuable upon successive conversions will likely create significant downward pressure on the price of its common stock as Discover sells material amounts of Camber’s common stock over time and/or in a short period of time. This could place further downward pressure on the price of its common stock and in turn result in Discover receiving an ever increasing number of additional shares of common stock upon conversion of its securities, and adjustments thereof, which in turn will likely lead to further dilution, reductions in the exercise/conversion price of Discover’s securities and even more downward pressure on its common stock, which could lead to its common stock becoming devalued or worthless.8 In 2017, soon after Discover began to convert some of its first preferred shares, Camber’s then- management claimed to be shocked by the results and sued Discover for fraud, arguing that “[t]he catastrophic effect of the Discover Documents [i.e. the terms of the preferred] is so devastating that the Discover Documents are prima facie unconscionable” because “they will permit Discover to strip Camber of its value and business well beyond the simple repayment of its debt.” Camber called the documents “extremely difficult to understand” and insisted that they “were drafted in such a way as to obscure the true terms of such documents and the total number of shares of common stock that could be issuable by Camber thereunder. … Only after signing the documents did Camber and [its then CEO]…learn that Discover’s reading of the Discover Documents was that the terms that applied were the strictest and most Camber unfriendly interpretation possible.”9 But the judge wasn’t impressed, suggesting that it was Camber’s own fault for failing to read the fine print, and the case was dismissed. With no better options, Camber then repeatedly came crawling back to Discover for additional tranches of funding via preferred sales. While the recent spike in common share count to 104.2 million as of early July includes some of the impact of ongoing preferred conversion, we believe it fails to include all of it. In addition to Discover’s 2,093 shares of Series C preferred held as of February 2021, Camber issued additional shares to EMC Capital Partners, a creditor of Viking’s, as part of a January agreement to reduce Viking’s debt.10 Then, in July, Camber issued another block of preferred shares – also to Discover, we believe – to help fund Viking’s recent deals.11 We speculate that many of these preferred shares have already been converted into common shares that have subsequently been sold into a frenzied retail bid. Beyond the Series C preferred, there is one additional source of potential dilution: debt issued to Discover in three transactions from December 2020 to April 2021, totaling $20.5 million in face value, and amended in July to be convertible at a fixed price of $1.25 per share.12 We summarize our estimates of all of these sources of potential common share issuance below: Might we be wrong about this math? Absolutely – the mechanics of the Series C preferreds are so convoluted that prior Camber management sued Discover complaining that the legal documents governing them “were drafted in such a way as to obscure the true terms of such documents and the total number of shares of common stock that could be issuable by Camber thereunder.” Camber management could easily set the record straight by revealing the most up- to-date share count via an SEC filing, along with any additional clarifications about the expected future share count upon conversion of all outstanding convertible securities. But we're confident that the current share count reported in financial databases like Bloomberg and Yahoo Finance significantly understates the true, fully diluted figure. An additional indication that Camber expects massive future dilution relates to the total authorized shares of common stock under its official articles of incorporation. It was only a few months ago, in February, that Camber had to hold a special shareholder meeting to increase its maximum authorized share count from 25 million to 250 million in order to accommodate all the shares to be issued because of preferred conversions. But under Camber’s July agreement to sell additional preferred shares to Discover, the company (emphasis added) agreed to include proposals relating to the approval of the July 2021 Purchase Agreement and the issuance of the shares of common stock upon conversion of the Series C Preferred Stock sold pursuant to the July 2021 Purchase Agreement, as well as an increase in authorized common stock to fulfill our obligations to issue such shares, at the Company’s next Annual Meeting, the meeting held to approve the Merger or a separate meeting in the event the Merger is terminated prior to shareholder approval, and to use commercially reasonable best efforts to obtain such approvals as soon as possible and in any event prior to January 1, 2022.13 In other words, Camber can already see that 250 million shares will soon not be enough, consistent with our estimate of ~285 million fully diluted shares above. In sum, Camber’s true overvaluation is dramatically worse than it initially appears because of the massive number of common shares that its preferred and other securities can convert into, leading to a fully diluted share count that is nearly triple the figure found in standard information sources used by investors. This enormous latent dilution, impossible to discern without combing through numerous scattered filings made by a company with no up-to-date financial statements in the public domain, means that the market is – perhaps out of ignorance – attributing close to one billion dollars of value to a very weak business. Camber’s Stake in Viking Has Little Real Value In light of Camber’s gargantuan valuation, it’s worth dwelling on some basic facts about its sole meaningful asset, a 73% stake in Viking Energy. As of 6/30/21: Viking had negative $15 million in shareholder equity/book Its financial statements noted “substantial doubt regarding the Company’s ability to continue as a going ” Of its $101.3 million in outstanding debt (at face value), nearly half (48%) was scheduled to mature and come due over the following 12 months. Viking noted that it “does not currently maintain controls and procedures that are designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act are recorded, processed, summarized, and reported within the time periods specified by the Commission’s rules and forms.” Viking’s CEO “has concluded that these [disclosure] controls and procedures are not effective in providing reasonable assurance of compliance.” Viking disclosed that a key subsidiary, Elysium Energy, was “in default of the maximum leverage ratio covenant under the term loan agreement at June 30, 2021”; this covenant caps the entity’s total secured debt to EBITDA at 75 to 1.14 This is hardly a healthy operation. Indeed, even according to Viking’s own black-box estimates, the present value of its total proved reserves of oil and gas, using a 10% discount rate (likely generous given the company’s high debt costs), was $120 million as of 12/31/20,15 while its outstanding debt, as stated above, is $101 million – perhaps implying a sliver of residual economic value to equity holders, but not much. And while some market observers have recently gotten excited about how increases in commodity prices could benefit Camber/Viking, any near-term impact will be blunted by hedges put on by Viking in early 2020, which cover, with respect to its Elysium properties, “60% of the estimated production for 2021 and 50% of the estimated production for the period between January, 2022 to July, 2022. Theses hedges have a floor of $45 and a ceiling ranging from $52.70 to $56.00 for oil, and a floor of $2.00 and a ceiling of $2.425 for natural gas” – cutting into the benefit of any price spikes above those ceiling levels.16 Sharing our dreary view of Viking’s prospects is one of Viking’s own financial advisors, a firm called Scalar, LLC, that Viking hired to prepare a fairness opinion under the original all-stock merger agreement with Camber. Combining Viking’s own internal projections with data on comparable-company valuation multiples, Scalar concluded in October 2020 that Viking’s equity was worth somewhere between $0 and $20 million, depending on the methodology used, with the “purest” methodology – a true, full-blown DCF – yielding the lowest estimate of $0-1 million: Camber’s advisor, Mercer Capital, came to a similar conclusion: its “analysis indicated an implied equity value of Viking of $0 to $34.3 million.”17 It’s inconceivable that a majority stake in this company, deemed potentially worthless by multiple experts and clearly experiencing financial strains, could somehow justify a near-billion-dollar valuation. Instead of dwelling on the unpleasant realities of Viking’s oil and gas business, Camber has drawn investor attention to two recent transactions conducted by Viking with Camber funding: a license agreement with “ESG Clean Energy,” discussed in further detail below, and the acquisition of a 60.3% stake in Simson-Maxwell, described as “a leading manufacturer and supplier of industrial engines, power generation products, services and custom energy solutions.” But Viking paid just $8 million for its Simson-Maxwell shares,18 and the company has just 125 employees; it defies belief to think that this purchase was such a bargain as to make a material dent in Camber’s overvaluation. And what does Simson-Maxwell actually do? One of its key officers, Daryl Kruper (identified as its chairman in Camber’s press release), describes the company a bit less grandly and more concretely on his LinkedIn page: Simson Maxwell is a power systems specialist. The company assembles and sells generator sets, industrial engines, power control systems and switchgear. Simson Maxwell has service and parts facilities in Edmonton, Calgary, Prince George, Vancouver, Nanaimo and Terrace. The company has provided its western Canadian customers with exceptional service for over 70 years. In other words, Simson-Maxwell acts as a sort of distributor/consultant, packaging industrial- strength generators and engines manufactured by companies like GE and Mitsubishi into systems that can provide electrical power, often in remote areas in western Canada; Simson- Maxwell employees then drive around in vans maintaining and repairing these systems. There’s nothing obviously wrong with this business, but it’s small, regional (not just Canada – western Canada specifically), likely driven by an unpredictable flow of new large projects, and unlikely to garner a high standalone valuation. Indeed, buried in one of Viking’s agreements with Simson- Maxwell’s selling shareholders (see p. 23) are clauses giving Viking the right to purchase the rest of the company between July 2024 and July 2026 at a price of at least 8x trailing EBITDA and giving the selling shareholders the right to sell the rest of their shares during the same time frame at a price of at least 7x trailing EBITDA – the kind of multiples associated with sleepy industrial distributors, not fast-growing retail darlings. Since Simon-Maxwell has nothing to do with Viking’s pre-existing assets or (alleged) expertise in oil and gas, and Viking and Camber are hardly flush with cash, why did they make the purchase? We speculate that management is concerned about the combined company’s ability to maintain its listing on the NYSE American. For example, when describing its restruck merger agreement with Viking, Camber noted: Additional closing conditions to the Merger include that in the event the NYSE American determines that the Merger constitutes, or will constitute, a “back-door listing”/“reverse merger”, Camber (and its common stock) is required to qualify for initial listing on the NYSE American, pursuant to the applicable guidance and requirements of the NYSE as of the Effective Time. What does it take to qualify for initial listing on the NYSE American? There are several ways, but three require at least $4 million of positive stockholders’ equity, which Viking, the intended surviving company, doesn’t have today; another requires a market cap of greater than $75 million, which management might (quite reasonably) be concerned about achieving sustainably. That leaves a standard that requires a listed company to have $75 million in assets and revenue. With Viking running at only ~$40 million of annualized revenue, we believe management is attempting to buy up more via acquisition. In fact, if the goal is simply to “buy” GAAP revenue, the most efficient way to do it is by acquiring a stake in a low-margin, slow- growing business – little earnings power, hence a low purchase price, but plenty of revenue. And by buying a majority stake instead of the whole thing, the acquirer can further reduce the capital outlay while still being able to consolidate all of the operation’s revenue under GAAP accounting. Buying 60.3% of Simson-Maxwell seems to fit the bill, but it’s a placeholder, not a real value-creator. Camber’s Partners in the Laughable “ESG Clean Energy” Deal Have a Long History of Broken Promises and Alleged Securities Fraud The “catalyst” most commonly cited by Camber Energy bulls for the recent massive increase in the company’s stock price is an August 24th press release, “Camber Energy Secures Exclusive IP License for Patented Carbon-Capture System,” announcing that the company, via Viking, “entered into an Exclusive Intellectual Property License Agreement with ESG Clean Energy, LLC (‘ESG’) regarding ESG’s patent rights and know-how related to stationary electric power generation, including methods to utilize heat and capture carbon dioxide.” Our research suggests that the “intellectual property” in question amounts to very little: in essence, the concept of collecting the exhaust gases emitted by a natural-gas–fueled electric generator, cooling it down to distill out the water vapor, and isolating the remaining carbon dioxide. But what happens to the carbon dioxide then? The clearest answer ESG Clean Energy has given is that it “can be sold to…cannabis producers”19 to help their plants grow faster, though the vast majority of the carbon dioxide would still end up escaping into the atmosphere over time, and additional greenhouse gases would be generated in compressing and shipping this carbon dioxide to the cannabis producers, likely leading to a net worsening of carbon emissions.20 And what is Viking – which primarily extracts oil and gas from the ground, as opposed to running generators and selling electrical power – supposed to do with this technology anyway? The idea seems to be that the newly acquired Simson-Maxwell business will attempt to sell the “technology” as a value-add to customers who are buying generators in western Canada. Indeed, while Camber’s press-release headline emphasized the “exclusive” nature of the license, the license is only exclusive in Canada plus “up to twenty-five locations in the United States” – making the much vaunted deal even more trivial than it might first appear. Viking paid an upfront royalty of $1.5 million in cash in August, with additional installments of $1.5 and $2 million due by January and April 2022, respectively, for a total of $5 million. In addition, Viking “shall pay to ESG continuing royalties of not more than 15% of the net revenues of Viking generated using the Intellectual Property, with the continuing royalty percentage to be jointly determined by the parties collaboratively based on the parties’ development of realistic cashflow models resulting from initial projects utilizing the Intellectual Property, and with the parties utilizing mediation if they cannot jointly agree to the continuing royalty percentage”21 – a strangely open-ended, perhaps rushed, way of setting a royalty rate. Overall, then, Viking is paying $5 million for roughly 85% of the economics of a technology that might conceivably help “capture” CO2 emitted by electric generators in Canada (and up to 25 locations in the United States!) but then probably just re-emit it again. This is the great advance that has driven Camber to a nearly billion-dollar market cap. It’s with good reason that on ESG Clean Energy’s web site (as of early October), the list of “press releases that show that ESG Clean Energy is making waves in the distributive power industry” is blank: If the ESG Clean Energy license deal were just another trivial bit of vaporware hyped up by a promotional company and its over-eager shareholders, it would be problematic but unremarkable; things like that happen all the time. But it’s the nature and history of Camber/Viking’s counterparty in the ESG deal that truly makes the situation sublime. ESG Clean Energy is in fact an offshoot of the Scuderi Group, a family business in western Massachusetts created to develop the now deceased Carmelo Scuderi’s idea for a revolutionary new type of engine. (In a 2005 AP article entitled “Engine design draws skepticism,” an MIT professor “said the creation is almost certain to fail.”) Two of Carmelo’s children, Nick and Sal, appeared in a recent ESG Clean Energy video with Camber’s CEO, who called Sal “more of the brains behind the operation” but didn’t state his official role – interesting since documents associated with ESG Clean Energy’s recent small-scale capital raises don’t mention Sal at all. Buried in Viking’s contract with ESG Clean Energy is the following section, indicating that the patents and technology underlying the deal actually belong in the first instance to the Scuderi Group, Inc.: 2.6 Demonstration of ESG’s Exclusive License with Scuderi Group and Right to Grant Licenses in this Agreement. ESG shall provide necessary documentation to Viking which demonstrates ESG’s right to grant the licenses in this Section 2 of this Agreement. For the avoidance of doubt, ESG shall provide necessary documentation that verifies the terms and conditions of ESG’s exclusive license with the Scuderi Group, Inc., a Delaware USA corporation, having an address of 1111 Elm Street, Suite 33, West Springfield, MA 01089 USA (“Scuderi Group”), and that nothing within ESG’s exclusive license with the Scuderi Group is inconsistent with the terms of this Agreement. In fact, the ESG Clean Energy entity itself was originally called Scuderi Clean Energy but changed its name in 2019; its subsidiary ESG-H1, LLC, which presides over a long-delayed power-generation project in the small city of Holyoke, Massachusetts (discussed further below), used to be called Scuderi Holyoke Power LLC but also changed its name in 2019.22 The SEC provided a good summary of the Scuderi Group’s history in a 2013 cease-and-desist order that imposed a $100,000 civil money penalty on Sal Scuderi (emphasis added): Founded in 2002, Scuderi Group has been in the business of developing a new internal combustion engine design. Scuderi Group’s business plan is to develop, patent, and license its engine technology to automobile companies and other large engine manufacturers. Scuderi Group, which considers itself a development stage company, has not generated any revenue… …These proceedings arise out of unregistered, non-exempt stock offerings and misleading disclosures regarding the use of offering proceeds by Scuderi Group and Mr. Scuderi, the company’s president. Between 2004 and 2011, Scuderi Group sold more than $80 million worth of securities through offerings that were not registered with the Commission and did not qualify for any of the exemptions from the Securities Act’s registration requirement. The company’s private placement memoranda informed investors that Scuderi Group intended to use the proceeds from its offerings for “general corporate purposes, including working capital.” In fact, the company was making significant payments to Scuderi family members for non-corporate purposes, including, large, ad hoc bonus payments to Scuderi family employees to cover personal expenses; payments to family members who provided no services to Scuderi; loans to Scuderi family members that were undocumented, with no written interest and repayment terms; large loans to fund $20 million personal insurance policies for six of the Scuderi siblings for which the company has not been, and will not be, repaid; and personal estate planning services for the Scuderi family. Between 2008 and 2011, a period when Scuderi Group sold more than $75 million in securities despite not obtaining any revenue, Mr. Scuderi authorized more than $3.2 million in Scuderi Group spending on such purposes. …In connection with these offerings [of stock], Scuderi Group disseminated more than 3,000 PPMs [private placement memoranda] to potential investors, directly and through third parties. Scuderi Group found these potential investors by, among other things, conducting hundreds of roadshows across the U.S.; hiring a registered broker-dealer to find investors; and paying numerous intermediaries to encourage people to attend meetings that Scuderi Group arranged for potential investors. …Scuderi Group’s own documents reflect that, in total, over 90 of the company’s investors were non-accredited investors… The Scuderi Group and Sal Scuderi neither admitted nor denied the SEC’s findings but agreed to stop violating securities law. Contemporary local news coverage of the regulatory action added color to the SEC’s description of the Scuderis’ fund-raising tactics (emphasis added): Here on Long Island, folks like HVAC specialist Bill Constantine were early investors, hoping to earn a windfall from Scuderi licensing the idea to every engine manufacturer in the world. Constantine said he was familiar with the Scuderis because he worked at an Islandia company that distributed an oil-less compressor for a refrigerant recovery system designed by the family patriarch. Constantine told [Long Island Business News] he began investing in the engine in 2007, getting many of his friends and family to put their money in, too. The company held an invitation-only sales pitch at the Marriott in Islandia in February 2011. Commercial real estate broker George Tsunis said he was asked to recruit investors for the Scuderi Group, but declined after hearing the pitch. “They were talking about doing business with Volkswagen and Mercedes, but everything was on the come,” Tsunis said. “They were having a party and nobody came.” Hot on the heels of the SEC action, an individual investor who had purchased $197,000 of Scuderi Group preferred units sued the Scuderi Group as well as Sal, Nick, Deborah, Stephen, and Ruth Scuderi individually, alleging, among other things, securities fraud (e.g. “untrue statements of material fact” in offering memoranda). This case was settled out of court in 2016 after the judge reportedly “said from the bench that he was likely to grant summary judgement for [the] plaintiff. … That ruling would have clear the way for other investors in Scuderi to claim at least part of a monetary settlement.” (Two other investors filed a similar lawsuit in 2017 but had it dismissed in 2018 because they ran afoul of the statute of limitations.23) The Scuderi Group put on a brave face, saying publicly, “The company is very pleased to put the SEC matter behind it and return focus to its technology.” In fact, in December 2013, just months after the SEC news broke, the company entered into a “Cooperative Consortium Agreement” with Hino Motors, a Japanese manufacturer, creating an “engineering research group” to further develop the Scuderi engine concept. “Hino paid Scuderi an initial fee of $150,000 to join the Consortium Group, which was to be refunded if Scuderi was unable to raise the funding necessary to start the Project by the Commencement Date,” in the words of Hino’s later lawsuit.24 Sure enough, the Scuderi Group ended up canceling the project in early October 2014 “due to funding and participant issues” – but it didn’t pay back the $150,000. Hino’s lawsuit documents Stephen Scuderi’s long series of emailed excuses: 10/31/14: “I must apologize, but we are going to be a little late in our refund of the Consortium Fee of $150,000. I am sure you have been able to deduce that we have a fair amount of challenging financial problems that we are working through. I am counting on financing for our current backlog of Power Purchase Agreement (PPA) projects to provide the capital to refund the Consortium Fee. Though we are very optimistic that the financial package for our PPA projects will be completed successfully, the process is taking a little longer than I originally expected to complete (approximately 3 months longer).” 11/25/14: “I am confident that we can pay Hino back its refund by the end of January. … The reason I have been slow to respond is because I was waiting for feedback from a few large cornerstone investors that we have been negotiating with. The negotiations have been progressing very well and we are close to a comprehensive financing deal, but (as often happens) the back and forth of the negotiating process takes ” 1/12/15: “We have given a proposal to the potential high-end investors that is most interested in investing a large sum of money into Scuderi Group. That investor has done his due-diligence on our company and has communicated to us that he likes our proposal but wants to give us a counter ” 1/31/15: “The individual I spoke of last month is one of several high net worth individuals that are currently evaluating investing a significant amount of equity capital into our That particular individual has not yet responded with a counter proposal, because he wishes to complete a study on the power generation market as part of his due diligence effort first. Though we learned of the study only recently, we believe that his enthusiasm for investing in Scuderi Group remains as strong as ever and steady progress is being made with the other high net worth individuals as well. … I ask only that you be patient for a short while longer as we make every effort possible to raise the monies need[ed] to refund Hino its consortium fee.” Fed up, Hino sued instead of waiting for the next excuse – but ended up discovering that the Scuderi bank account to which it had wired the $150,000 now contained only about $64,000. Hino and the Scuderi Group then entered into a settlement in which that account balance was supposed to be immediately handed over to Hino, with the remainder plus interest to be paid back later – but Scuderi didn’t even comply with its own settlement, forcing Hino to re-initiate its lawsuit and obtain an official court judgment against Scuderi. Pursuant to that judgment, Hino formally requested an array of documents like tax returns and bank statements, but Scuderi simply ignored these requests, using the following brazen logic:25 Though as of this date, the execution has not been satisfied, Scuderi continues to operate in the ordinary course of business and reasonably expects to have money available to satisfy the execution in full in the near future. … Responding to the post- judgment discovery requests, as a practical matter, will not enable Scuderi to pay Hino any faster than can be achieved by Scuderi using all of its resources and efforts to conduct its day-to-day business operations and will only serve to impose additional and unnecessary costs on both parties. Scuderi has offered and is willing to make payments every 30 days to Hino in amounts not less than $10,000 until the execution is satisfied in full. Shortly thereafter, in March 2016, Hino dropped its case, perhaps having chosen to take the $10,000 per month rather than continue to tangle in court with the Scuderis (though we don’t know for sure). With its name tarnished by disgruntled investors and the SEC, and at least one of its bank accounts wiped out by Hino Motors, the Scuderi Group didn’t appear to have a bright future. But then, like a phoenix rising from the ashes, a new business was born: Scuderi Clean Energy, “a wholly owned subsidiary of Scuderi Group, Inc. … formed in October 2015 to market Scuderi Engine Technology to the power generation industry.” (Over time, references to the troubled “Scuderi Engine Technology” have faded away; today ESG Clean Energy is purportedly planning to use standard, off-the-shelf Caterpillar engines. And while an early press release described Scuderi Clean Energy as “a wholly owned subsidiary of Scuderi Group,” the current Scuderi/ESG Clean Energy, LLC, appears to have been created later as its own (nominally) independent entity, led by Nick Scuderi.) As the emailed excuses in the Hino dispute suggested, this pivot to “clean energy” and electric power generation had been in the works for some time, enabling Scuderi Clean Energy to hit the ground running by signing a deal with Holyoke Gas and Electric, a small utility company owned by the city of Holyoke, Massachusetts (population 38,238) in December 2015. The basic idea was that Scuderi Clean Energy would install a large natural-gas generator and associated equipment on a vacant lot and use it to supply Holyoke Gas and Electric with supplemental electric power, especially during “peak demand periods in the summer.”26 But it appears that, from day one, Holyoke had its doubts. In its 2015 annual report (p. 80), the company wrote (emphasis added): In December 2015, the Department contracted with Scuderi Clean Energy, LLC under a twenty (20) year [power purchase agreement] for a 4.375 MW [megawatt] natural gas generator. Uncertain if this project will move forward; however Department mitigated market and development risk by ensuring interconnection costs are born by other party and that rates under PPA are discounted to full wholesale energy and resulting load reduction cost savings (where and if applicable). Holyoke was right to be uncertain. Though its 2017 annual report optimistically said, “Expected Commercial Operation date is April 1, 2018” (p. 90), the 2018 annual report changed to “Expected Commercial Operation is unknown at this time” – language that had to be repeated verbatim in the 2019 and 2020 annual reports. Six years after the contract was signed, the Scuderi Clean Energy, now ESG Clean Energy, project still hasn’t produced one iota of power, let alone one dollar of revenue. What it has produced, however, is funding from retail investors, though perhaps not as much as the Scuderis could have hoped. Beginning in 2017, Scuderi Clean Energy managed to sell roughly $1.3 million27 in 5-year “TIGRcub” bonds (Top-Line Income Generation Rights Certificates) on the small online Entrex platform by advertising a 12% “minimum yield” and 16.72% “projected IRR” (based on 18.84% “revenue participation”) over a 5-year term. While we don’t know the exact terms of these bonds, we believe that, at least early on, interest payments were covered by some sort of prepaid insurance policy, while later payments depend on (so far nonexistent) revenue from the Holyoke project. But Scuderi Clean Energy had been aiming to raise $6 million to complete the project, not $1 million; indeed, this was only supposed to be the first component of a whole empire of “Scuderi power plants”28 that would require over $100 million to build but were supposedly already under contract.29 So far, however, nothing has come of these other projects, and, seemingly suffering from insufficient funding, the Holyoke effort languished. (Of course, it might have been more investor-friendly if Scuderi Clean Energy had only accepted funding on the condition that there was enough to actually complete construction.) Under the new ESG Clean Energy name, the Scuderis tried in 2019 to raise capital again, this time in the form of $5 million of preferred units marketed as a “5 year tax free Investment with 18% cash-on-cash return,” but, based on an SEC filing, it appears that the offering didn’t go well, raising just $150,000. With funding still limited and the Holyoke project far from finished, the clock is ticking: the $1.3 million of bonds will begin to mature in early 2022. It was thus fortunate that Viking came along when it did to pay ESG Clean Energy a $1.5 million upfront royalty for its incredible technology. Interestingly, ESG Clean Energy began in late 2020 to provide extremely detailed updates on its Holyoke construction progress, including items as prosaic as “Throughout the week, ESG had met with and continued to exchange numerous e-mails with our mechanical engineering firm.” With frequent references to the “very fluid environment,” the tone is unmistakably defensive. Consider the September update (emphasis not added): Reading between the lines, we believe the intended message is this: “We didn’t just take your money and run – honest! We’re working hard!” Nonetheless, someone appears to be unhappy, as indicated by the FINRA BrokerCheck report for one Eric Willer, a former employee of Fusion Analytics, which was listed as a recipient of sales compensation in connection with the Scuderi Clean Energy bond offerings. Willer may now be in hot water: a disclosure notice dated 3/31/2021 reads: “Wells Notice received as a preliminary determination to recommend disciplinary action of fraud, negligent misrepresentation, and recommendation without due diligence in the sale of bonds issued by Scuderi Holyoke,” with a further investigation still pending. We wait eagerly for additional updates. Why does the saga of the Scuderis matter? Many Camber investors seem to have convinced themselves that the ESG Clean Energy “carbon capture” IP licensed by Viking has enormous value and can plausibly justify hundreds of millions of dollars of incremental market cap. As we explained above, we find this thoroughly implausible even without getting into Scuderi family history: in the end, the “technology” will at best add a smidgen of value to some generators in Canada. But track records matter too, and the Scuderi track record of failed R&D, delays, excuses, and alleged misuse of funds is worth considering. These people have spent six years trying and failing to sell power to a single municipally owned utility company in a single small city in western Massachusetts. Are they really about to end climate change? The Case of the Fictitious CFO Since Camber is effectively a bet on Viking, and Viking, in its current form, has been assembled by James Doris, it’s important to assess Doris’s probity and good judgment. In that connection, it’s noteworthy that, from December 2014 to July 2016, at the very start of Doris’s reign as Viking’s CEO and president, the company’s CFO, Guangfang “Cecile” Yang, was apparently fictitious. (Covering the case in 2019, Dealbreaker used the headline “Possibly Imaginary CFO Grounds For Very Real Fraud Lawsuit.”) This strange situation was brought to light by an SEC lawsuit against Viking’s founder, Tom Simeo; just last month, a US district court granted summary judgment in favor of the SEC against Simeo, but Simeo’s penalties have yet to be determined.30 The court’s opinion provided a good overview of the facts (references omitted, emphasis added): In 2013, Simeo hired Yang, who lives in Shanghai, China, to be Viking’s CFO. Yang served in that position until she purportedly resigned in July 2016. When Yang joined the company, Simeo fabricated a standing resignation letter, in which Yang purported to “irrevocably” resign her position with Viking “at any time desired by the Company” and “[u]pon notification that the Company accepted [her] resignation”…Simeo forged Yang’s signature on this document. This letter allowed Simeo to remove Yang from the position of CFO whenever he pleased. Simeo also fabricated a power of attorney purportedly signed by Yang that allowed Simeo to “affix Yang’s signature to any and all documents,” including documents that Viking had to file with the SEC. Viking represented to the public that Yang was the company’s CFO and a member of its Board of Directors. But “Yang never actually functioned as Viking’s CFO.” She “was not involved in the financial and strategic decisions” of Viking during the Relevant Period. Nor did she play any role in “preparing Viking’s financial statements or public filings.” Indeed, at least as of April 3, 2015, Yang did not do “any work” on Viking’s financial statements and did not speak with anyone who was preparing them. She also did not “review or evaluate Viking’s internal controls over financial reporting.” Further, during most or all of the Relevant Period, Viking did not compensate Yang despite the fact that she was the company’s highest ranking financial employee. Nevertheless, Simeo says that he personally paid her in cash. Yang’s “sole point of contact” at Viking was Simeo. Indeed Simeo was “the only person at Viking who communicated with Yang.” Thus many people at Viking never interacted with Yang. Despite the fact that Doris has served as Viking’s CEO since December 2014, he “has never met or spoken to Yang either in person or through any other means, and he has never communicated with Yang in writing.” … To think Yang served as CFO during this time, but the CEO and other individuals involved with Viking’s SEC filings never once spoke with her, strains all logical credulity. It remains unclear whether Yang is even a real person. When the SEC asked Simeo directly (“Is it the case that you made up the existence of Ms. Yang?”) he responded by “invoking the Fifth Amendment.”31 While the SEC’s efforts thus far have focused on Simeo, the case clearly raises the question of what Doris knew and when he knew it. Indeed, though many of the required Sarbanes-Oxley certifications of Viking’s financial statements during the Yang period were signed by Simeo in his role as chairman, Doris did personally sign off on an amended 2015 10-K that refers to Yang as CFO through July 2016 and includes her complete, apparently fictitious, biography. Viking has also disclosed the following, which we believe pertains to the Yang affair (emphasis added): In April of 2019, the staff (the “Staff”) of the SEC’s Division of Enforcement notified the Company that the Staff had made a preliminary determination to recommend that the SEC file an enforcement action against the Company, as well as against its CEO and its CFO, for alleged violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder [laws that pertain to securities fraud] during the period from early 2014 through late 2016. The Staff’s notice is not a formal allegation or a finding of wrongdoing by the Company, and the Company has communicated with the Staff regarding its preliminary determination. The Company believes it has adequate defenses and intends to vigorously defend any enforcement action that may be initiated by the SEC.32 Perhaps the SEC has moved on from this matter and will let Doris and Viking off the hook, but the fact pattern is eyebrow-raising nonetheless. A similarly troubling incident came soon after the time of Yang’s “resignation,” when Viking’s auditing firm resigned, withdrew its recent audit report, and wrote a letter “advising the Company that it believed an illegal act may have occurred” – because of concerns that had nothing to do with Yang. First, Viking accounted for the timing of a grant of shares to a consultant in apparent contradiction of the terms of the written agreement with the consultant – a seemingly minor issue. But, under scrutiny from the auditor, Viking “produced a letter… (the version which was provided to us was unsigned), from the consultant stating that the Agreement was invalidated verbally.” Reading between the lines, the “uncomfortable” auditor suspected that this letter was a fake, created just to get him off Viking’s back. In another incident, the auditor “became aware that seven of the company’s loans…were due to be repaid” in August 2016 but hadn’t been, creating a default that would in turn “trigger[] a cross-default clause contained in 17 additional loans” – but Viking claimed it “had secured an oral extension to the loans from the broker-dealer representing the lenders by September 6, 2016” – after the loans’ maturity dates – “so the Company did not need to disclose ‘the defaults under these loans’ after such time since the loans were not in default.” It’s easy to see why an auditor would object to this attitude toward financial disclosure – no need to mention a default in August as long as you can secure a verbal agreement resolving it by September! Against this backdrop of disturbing behavior, the fact that Camber just dismissed its auditing firm three weeks ago on September 16th, even with delisting looming if the company can’t become current again with its SEC filings by November, seems even more unsettling. Have Camber and Viking management earned investors’ trust? Conclusion It’s not clear why, back in 2017, Lucas Energy changed its name to “Camber” specifically, but we’d like to think the inspiration was England’s Camber Castle. According to Atlas Obscura, the castle was supposed to help defend the English coast, but it took so long to build that its “advanced design was obsolete by the time of its completion,” and changes in the local environment meant that “the sea had receded so far that cannons fired from the fort would no longer be able to reach any invading ships.” Still, the useless castle was “manned and serviced” for nearly a century before being officially decommissioned. Today, Camber “lies derelict and almost unheard of.” But what’s in a name? Article by Kerrisdale Capital Management Updated on Oct 5, 2021, 12:06 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: valuewalkOct 5th, 2021

6-figure diversity-executive jobs are in high demand. This is what to ask yourself before applying, according to 4 diversity leaders in finance, biotech, and more.

Diversity executives shared the top challenges and rewards of their job and what to consider before pursuing a career in the field. Job listings for diversity and inclusion executives have spiked since summer 2020. mentatdgt/Shutterstock Jobs in the diversity and inclusion industry have exploded since the racial reckoning of 2020. The sector can be lucrative, with executive salaries ranging from $181,464 to $259,647. Senior executives advise aspiring professionals to ask themselves a few key questions. See more stories on Insider's business page. In the aftermath of 2020's racial reckoning, people are holding CEOs accountable to the racial-justice promises they made. To help them carry out this important work, business leaders are hiring diversity, equity, and inclusion (DEI) consultants at record rates.There's been a 71% increase worldwide in all DEI job listings over the past five years, with the role of "head of diversity" growing by more than 107%, according to LinkedIn data. In August 2020, US searches for jobs in DEI were up 35% year on year. Likewise in the UK, searches were up 19%, according to Glassdoor's research on the diversity and inclusion industry.And the job can be lucrative. Median pay for DEI executives normally ranges from $181,464 and $259,647, according to Salary.com. While there is a special risk of burnout in the field, DEI consultants told Insider it could also be especially rewarding. If you're considering pursuing a DEI executive position, here are key questions to ask yourself, according to professionals in the field. Rondette Amoy Smith, head of diversity and inclusion for Europe, the Middle East, and Africa at Nomura Rondette Amoy Smith. SW3 Photography Smith, who grew up in a lower-middle class immigrant family in New York, was always keenly aware of the inequality around her."I realized no matter how smart I was, or how many great excellent scores I got, two things that weren't quite available to me were opportunities because I didn't have a lineage of people who were from wealth or from big corporations," she told Insider. "My parents came from especially humble beginnings, so in addition to opportunity, I also didn't have access."She wanted to work to dismantle that inequality. Smith is now head of diversity and inclusion for Europe, the Middle East, and Africa at the investment bank Nomura. She previously held roles at Goldman Sachs and JPMorgan. She said that starting out, she would never have dreamed of wearing braids, "that I would have my natural curly hair out."A career in DEI is highly rewarding, she said, but it's important to ask yourself a few questions before you decide to pursue a career in the field:Am I truly passionate about the role?Am I willing to have hard conversations? Am I a natural empath? Am I willing to build my network and relationships? Am I capable of being a genuine ally to people? Quita Highsmith, chief diversity officer and vice president at Genentech Quita Highsmith. Genentech Highsmith oversees diversity and inclusion efforts for over 13,000 employees at the biotech company Genentech. She assumed the role in January 2020, but she's been working on diversifying the biotech industry for over a decade. In 2017, she cofounded an initiative to make the company's research more inclusive.She said her thirst for making society more equitable started at an early age, when she experienced racism and harassment. She and her sister were among just a few Black students at their elementary school in Louisville, Kentucky. Every morning, a white teacher at the school would open the side door so that they could come in to avoid being harassed at the front door by students and parents."I learned early on the importance of not only being an ally but being a changemaker, someone who will actively stand up and speak up for change," Highsmith said.  Her role today is a combination of those things. She's working to meet Genentech's goals, which include doubling Black and Hispanic representation at the director and officer leadership level by 2025."This is a tough job because you have to be so many things to the full organization, which can often lead to burnout," she said. "However, having full leadership support keeps me motivated on the challenges."People interested in the field of DEI should ask themselves these key questions, she said: What is my motivation for DEI work, and how can I bring my lived experiences and unique perspectives to the table in this role?Am I willing to ask the tough questions and have uncomfortable conversations to advance equity and make space for those who are underrepresented?How do I respond to failures and celebrate small victories? Am I OK with aiming for progress over perfection?While Highsmith said a college degree isn't necessary to land a DEI role, it definitely helps. Taking an additional certificate course in DEI topics will also make your application more competitive."I would recommend that you get comfortable with asking questions, executing bold and innovative ideas, bringing your authentic perspectives to work, and inspiring and encouraging others from whatever position you are currently in," she said. Lybra Clemons, head of DEI at Twilio Lybra Clemons. Twilio Clemons was working at a research nonprofit when a colleague introduced her to a book, "Our Separate Ways," by Ella Bell and Stella Nkomo. The book features eight years of research that compared the careers of 120 Black and white female managers in the US. Through personal stories, it shows how different their roads were.That book led Clemons to her calling."It changed my life. It was the first time I saw people talking about corporate DEI in a truly intersectional way — not just women's issues in corporate America or Black issues in corporate America — but really looking at the business world with an intersectional lens," she said. "So I left the nonprofit and went to work for American Express in a DEI role, and the rest is history."Since then, Clemons has worked in DEI for over 15 years, driving corporate diversity and inclusion work for companies like Morgan Stanley and PayPal before going to the cloud-communications platform Twilio in September 2020.She knows achieving equity in corporate America is a long game. "One of the biggest challenges I've come to terms with is that no DEI lead will ever be fully 'successful,'" she said. "DEI work is a moving target, so the best a DEI lead can do is to leave each place better than how they found it."While it can take years to see the fruits of your labor in this field, Clemons said, it's incredibly rewarding to hear stories of how DEI initiatives have changed people's lives. Before you pursue a DEI role, she recommends asking yourself these questions: What are my expectations for success? What kind of goals do I want my DEI implementations to achieve, and what do I need from my company and colleagues to reach them?Is my approach to DEI holistic? Is the company I'm looking at going to let me approach my job from multiple lenses?Can I find an organization that will level and resource me appropriately? Will I have a seat at the table where businesswide decisions are being made?  Opeyemi Sofoluke, coauthor of "Twice as Hard" and diversity lead at Facebook Opeyemi Sofoluke. Francis Augusto Sofoluke began focusing on diversity and inclusion work at JP Morgan in 2016 after working in project management for several years.She said she had initially worked in different parts of the business, doing diversity work outside her day-to-day duties."I was committed to working in business-resource groups because it's something that I was passionate about," she said.You have to really care about the work, she added."If you don't care, and if you're not truly genuine about the work, it will eventually show," she said. "And so this is a space that you give a lot of your time to. You give a lot of your energy, and often, you may work long hours or because you care so much — you're dedicated to seeing this change through."This is what she recommends anyone interested in a similar role ask themselves:What am I doing outside work to show I care? Am I trying to educate myself? Am I showing up for my community? How much do I care?What is my vision of success? How do I want to influence my company?  Read the original article on Business Insider.....»»

Category: topSource: businessinsiderOct 5th, 2021

An Alaska helicopter tour company says it"s seen a 250% surge in business compared to 2019 as an influx of tourists travel to the state

Alaska Helicopter Tours is no stranger to the labor shortage, and its biggest hurdle during the travel surge was hiring enough ground staff. Alaska Helicopter Tours glacier landing.Alaska Helicopter Tours Anchorage-based Alaska Helicopter Tours experienced a 250% boom in 2021 sales compared to 2019. Hiring enough ground staff was the company's biggest challenge during the surge in demand. The operator is expecting a strong 2022 season, with presales already doubling 2021. The pandemic wrecked the tourism industry in the northern-most US state of Alaska, but it's seeing a speedy recovery with one tourism company more than doubling its 2019 sales this year.Anchorage-based Alaska Helicopter Tours is a flightseeing company that flies adventurous customers across the beautiful state, offering aerial views of places like Denali National Park, as well as glacier hiking and dogsled tours. Like many other companies across the country, the operator was a victim of the coronavirus pandemic, having temporarily lost its allowance to serve tourists. However, it was fortunate to be able to operate as an essential service flying for the local electric company on behalf of its parent organization, Alpha Aviation.Following strict health and safety protocols as a utility service, Alaska Helicopter Tours was granted a waiver at the end of March 2020 by the state's Congress to offer flight tours to local Alaskans. According to the company's Director of Operations, Jennifer Hanks, who was born and raised in the state, the service helped keep the business going."We could offer something for locals to do to get out of their house," Hanks told Insider. "We were one of the first companies to be up and running and it was really nice to be able to open our doors to local Alaskans."While the company was able to continue business during the pandemic, which was a rarity for tourism operators, it did not expect a huge travel surge in 2021. But, by January, it was clear Alaska Helicopter Tours was in for a big year."We thought it was going to be pandemic style with not many employees and not many helicopters on the tourism side, but we ended up having the craziest, busiest year ever," Hanks told Insider. "2019 was our busiest season and we are already two and half times over that in sales for 2021. And, for 2022, our presales are already double what they were this year."Hanks explained that the surge comes from people desperate for a vacation and finally being able to travel again. She said a chunk of their guests were big families, and she believes that the airlines offering deals on flights helped people visit the state at a lower cost.With the spike in sales came challenges, including finding enough labor and resources to meet demand. Before the pandemic, the company operated a fleet of three helicopters, including two Robinson R44s and one A-Star Helicopter, but had to add one more of each to handle the surge. The company also plans to grow the fleet event more due to the booming 2022 presales.Alaska Helicopter Tours Robinson R44.Alaska Helicopter ToursThough the company's business is growing, Alaska Helicopter Tours is no stranger to the labor shortage. Hanks told Insider that the company's biggest hurdle during the surge was hiring ground staff."Just like everywhere in the US, we could not find people because the hiring pool was very small and a lot of people were on unemployment," she explained. "A lot of Alaska's employees are also J1 [international] students, but they couldn't enter the US, so we did a lot of local advertising and got set up on Indeed."According to Hanks, finding pilots was not an issue because having "Alaska time" for flight is a big benefit for their resumes.Going into 2022, Alaska Helicopter Tours is cautious about the new COVID-19 Omicron variant, but it still expects a strong season."Realistically, the 2022 sales will be about 30% above what we did this year," Hanks told Insider.Read the original article on Business Insider.....»»

Category: topSource: businessinsider2 hr. 51 min. ago

3 reasons the labor shortage could be a "structural change" in the economy, according to S&P

There are both structural reasons and pandemic-specific reasons people are quitting their jobs in large numbers, the agency S&P reported. The US is currently at a 45-year low in labor participation rate.Maskot Credit agency S&P reported people are leaving jobs for structural reasons and pandemic-specific ones. Among the structural reasons include a skills mismatch and an increase in retirement rates. Researchers predict that as more people get vaccinated, more people will re-enter the labor force. The record number of people leaving the workforce signals structural changes in the economy, Standard & Poor's reported last month. The global credit agency's investigation, led by Benn Ann Bovino, concluded that there were two kinds of reasons behind the labor force exodus: structural ones that include an increase in retirement rates and skill mismatch; and pandemic-specific problems, such as location mismatches, virus fears, and child care obstacles. The pandemic-specific problems are the bigger culprit, according to the researchers, but both types of reasons to quit were exacerbated by the spread of the coronavirus. 2021 continues to clock record numbers of people quitting their jobs — as some have called it: the Great Resignation. The US is currently at a 45-year low in labor participation rate, S&P says. 12.7 million Americans left their jobs between July and September, according to the Bureau of Labor Statistics. This is the largest mass resignation the US has seen in the two decades since the government started documenting them.As people quit, employers are scrambling to hire, but the latest jobs report from the BLS shows that hiring slowed in November. More than 12 million people are either long-term unemployed, seeking work to no avail, or employed part-time, despite more than 10 million job openings. All of this adds up to a major mismatch between what Americans are looking for in jobs and those that are available — a mismatch that doesn't have a quick fix.S&P says that the return of prime-age workers — who are about 45% of the 3 million who left the labor force completely — are key to stabilizing the job market. The US government seems to be betting on logistical issues imposed by the pandemic being the overwhelming reason people are resigning for their posts. Treasury Secretary Janet Yellen, for instance, told CBS News last month that the labor supply will revert to normal after "we really get control of the pandemic." At the time, Yellen pointed out several reasons for the shortage, saying that an "abnormally low" supply of labor, including a shortage of childcare workers and teachers, creates problems with child care. She also said that people in public-facing jobs would likely have concerns about increased exposure to the coronavirus. S&P says that's true, to a degree. But structural causes illuminated by the pandemic bear nearly half the responsibility. "U.S. labor market conditions since the pandemic began highlight a possible structural shift in the labor force, with almost two-thirds of the missing workers having left the workforce entirely," S&P found. "We estimate that 42% of the drop in the labor force participation rate is due to structural shifts and 58% of the drop is for reasons that stem more directly from the pandemic and may be temporary." Here are three reasons why S&P says why people are leaving: Employers want different skills than workers haveSkills mismatch has been an issue for several years in the labor force, S&P argues. That problem only worsened during the pandemic, with older workers retiring earlier than they intended due to virus fears. This loss of skilled, older workers explains why the skills mismatch is growing starker — the labor force participation rate among people over 65 experienced the largest percentage drop of all age groups during the pandemic, falling by 10.6% between May 2020 and February of this year. Lingering vaccine hesitancy and an endemic virus S&P researchers agree with Yellen's logic to an extent — people don't want to go to work if it means exposing themselves to the virus. Although the vaccine is now available for children over the age of 5, children younger than that are still at risk, which is why researchers say that their parents might be hesitant to return to the workforce. They predict as more children become eligible for the vaccine, virus fears will decrease. "The wild card," they said, "is whether those reluctant to get themselves or their children vaccinated will decide to get the shot." Wages aren't keeping up with inflation Mass resignations have increased business costs for companies, which means that wages are going up. Inflation is also going up, currently at a 31-year high in the US. This means a few things: workers that businesses can find are ones who require higher pay. Goods such as food, fuel, and household supplies cost more. "That leaves real wages in negative territory," S&P writes. Researchers predict that as pandemic fears subside and more people become vaccinated, the work force will increase again. "Negative real wages squeezing household purchasing power will also help moderate inflation," they said. Read the original article on Business Insider.....»»

Category: smallbizSource: nytDec 3rd, 2021

November Payrolls Huge Miss: Just 210K Jobs Added, But Unemployment Rate Tumbles

November Payrolls Huge Miss: Just 210K Jobs Added, But Unemployment Rate Tumbles With the median Wall Street economist expectation of a 550K print, just slightly above last month;s 531K, and whisper numbers of 564K, any number that came at or above (and wasn't a huge miss) would be seen by the market as validating the Fed's accelerated taper which could be announced as soon as Dec 15. Alas it was not meant to be, because moments ago the BLS reported that in November, the US added just a tiny 210K jobs (down a stunning 336K from October's upward revised 546K), and the smallest monthly increase since December! Needless to say, this was a huge miss to consensus expectations of 550K, and coming in at less than half the expected number the actual print was a whopping 5 sigma miss! With the November gains, total payrolls remain some 3.9 million, or 2.6 percent, from its pre-pandemic level in February 2020. Still, as CNBC's Steve Liesman notes, this number does seem suspect and the reason is because as Goldman noted overnight, the BLS has revised up each of the prior six payrolls reports (including +235k with last month’s release). It is thus probable that this month will also be revised higher, especially since the BLS revealed that the change in total nonfarm payroll employment for September was revised up by 67,000, from +312,000 to +379,000, and the change for October was revised up by 15,000, from +531,000 to +546,000. With these  revisions, employment in September and October combined is 82,000 higher than previously reported. So yes, the upward revisions continue. Adding to the confusion is that the Household Survey found employment rose by a whopping 1.136 million, up from just 359K last month, a substantial divergence from the more closely watched Establishment survey. Some more details from the BLS: Workers unable to work due to bad weather came in at 37,000. The historical average for November is 74,000. Another 163,000 workers who usually work full-time could only work part-time due to the weather last month. The number of persons employed part time for economic reasons, at 4.3 million, changed little in November. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs. This figure was about the same as in February 2020. The number of persons not in the labor force who currently want a job was 5.9 million in November, little changed over the month but up by 849,000 since February 2020. These individuals were not counted as unemployed because they were not actively looking for work during the 4 weeks preceding the survey or were unavailable to take a job. Among those not in the labor force who wanted a job, the number of persons marginally attached to the labor force was little changed at 1.6 million in November. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months but had not looked for work in the 4 weeks preceding the survey Perhaps the bigger story was the plunge in the unemployment rate, which tumbled from 4.6% to 4.2%, beating estimates of 4.5%, and coming below the bottom of the range of 4.3%-4.6%. The chart above shows that the black unemployment rate dropped by 1% to 6.7%. It still has a ways to go before hitting it record lows... hit under Trump. Additionally, as Bloomberg notes, the key metric in the household survey aside from the headline unemployment rate -- the prime working-age (25-54) employment-to-population ratio -- jumped by half a percentage point last month, marking the strongest advance since July. At 78.8%, there’s still ground to cover to return to the pre-pandemic level of 80.5%, but if we keep going at this rate, we’ll be there sometime next year. The underemployment rate for young adults aged 16 to 24 in Nov. was 13.5%, with the total unemployed aged 16-24 at 1,584,000, the marginally attached workers aged 16-24 at 390,000 and those employed part-time for economic reasons aged 16-24 at 860,000. The youth civilian labor force (aged 16-24) was at 20,533,000. As DeBusschere of 22V Research said, “WOW...OK. This number was all over the place. Significant miss on the headline number. But that’s not the story. The u-rate declined significantly with a slight increase in participation. That is because the household employment number was +1.1 million, which is a huge number. Now, household is a volatile number, but it’s hard not to assume this will ultimately be viewed as a somewhat positive report for the labor market -- unless we are totally missing something on the household reading. So we would fade the move lower in short rates.” Helping the plunge in the Unemployment rate is that the number of people Unemployed dropped from 7.419MM to 6.877MM. And with the labor force rising from 161.458MM to 162.052MM, the labor force participation rate jumped to 61.8% from 61.6% previously, the highest. print since the onset of Covid There was some more disappointment on the wage front, with average hourly earnings at 4.8%, missing expectations of 5.0% Y/Y, and flat from a downward revised 4.8% in October. On a M/M basis earnings rose 0.3%, also missing expectations of a 0.4% increase. Average hourly earnings for all employees on private nonfarm payrolls increased by 8 cents to $31.03. Over the past 12 months, average hourly earnings have increased by 4.8 percent. In November, average hourly earnings of private-sector production and nonsupervisory employees rose by 12 cents to $26.40. The average workweek for all employees on private nonfarm payrolls increased by 0.1 hour to 34.8 hours in November. In manufacturing, the average workweek edged up by 0.1 hour to 40.4 hours, and overtime was unchanged at 3.2 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 34.1 hours. * * * Looking at the components of the report, in November, notable job gains occurred in professional and business services, transportation and warehousing, construction, and manufacturing. Of note, it was another bad month for hiring in leisure and hospitality: "employment in leisure and hospitality changed little in November (+23,000), following large gains earlier in the year. Leisure and hospitality has added 2.4 million jobs thus far in 2021, but employment in the industry is down by 1.3 million, or 7.9 percent, since February 2020." Tetail trade also had a poor month. Here are the details: Professional and business services added 90,000 jobs in November. Job gains continued in administrative and waste services (+42,000), although employment in its temporary help services component changed little (+6,000). Job growth also continued in management and technical consulting services (+12,000) and in computer system design and related services (+10,000). Employment in transportation and warehousing increased by 50,000 in November and is 210,000 above its February 2020 level. In November, job gains occurred in couriers and messengers (+27,000) and in warehousing and storage (+9,000). Construction employment rose by 31,000 in November, following gains of a similar magnitude in the prior 2 months. In November, employment continued to trend up in specialty trade contractors (+13,000), construction of buildings (+10,000), and heavy and civil engineering construction (+8,000). Manufacturing added 31,000 jobs in November. Job gains occurred in miscellaneous durable goods manufacturing (+10,000) and fabricated metal products (+8,000), while motor vehicles and parts lost jobs (-10,000). Employment in machinery declined by 6,000, largely reflecting a strike. Employment in financial activities continued to trend up in November (+13,000) and is 30,000 above its February 2020 level. Job growth occurred in securities, commodity contracts, and investments in November (+9,000). Employment in retail trade declined by 20,000 in November, with job losses in general merchandise stores (-20,000); clothing and clothing accessories stores (-18,000); and sporting goods, hobby, book, and music stores (-9,000). These losses were partially offset by job gains in food and beverage stores (+9,000) and in building material and garden supply stores (+7,000). Employment in leisure and hospitality changed little in November (+23,000), following  large gains earlier in the year. Leisure and hospitality has added 2.4 million jobs thus far in 2021, but employment in the industry is down by 1.3 million, or 7.9 percent, since February 2020. Health care employment was about unchanged in November (+2,000). Within the industry, employment in ambulatory health care services continued to trend up (+17,000), while nursing and residential care facilities lost 11,000 jobs. Commenting on the report, Bloomberg's Chris Antsey notes that this his is "a bad-news report from the perspective of the Fed and the Biden administration. It suggests that the job market is tight, even though we’re making less-good progress in returning payrolls to their pre-pandemic level. It strengthens the argument of those saying that Covid-19 has imposed structural changes to the job market, and that pre-pandemic levels of employment aren’t the right metric to use when thinking about full employment." Others were more cheerful: "While the headline number disappointed relative to expectations, the big household survey figure, the rise in the workweek, the increase in the participation rate and employment to population ratio, along with the near 5% average weekly earnings print, all point to a Fed that will quicken the pace of taper as many have said, and we’ll see how that goes before debating rate hikes,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. In his reaction to the market's kneejerk response which saw futures jump and yields initially dip then spike, BMO's Ian Lyngen writes that “treasuries were modestly bid immediately ahead of the payrolls report with 10-year yields as low as 1.418%. Since the release, we’ve seen the market rally a bit further, but is largely range-bond at the moment. The slight steepening impulse is a fade into the weekend; even if there is a policy angle underlying the sentiment.” Chris Zaccarelli at Advisor Alliance said that “we expect this report is a positive for equities and more negative for the bond market, although the knee-jerk reaction in markets has not shown this. Lower interest rates are not what we would expect given the Fed is likely to taper and raise rates more quickly. Clearly there is a lot of skepticism in the bond market over the strength of this economy.” Others were more sarcastic: “One of the weirdest reports I have ever seen,” said Danny Dayan, chief investment officer at Dwd Partners. “The yield curve should be steepening on this in a big way, but rates market participants may be too wary to try that again.” Indeed, as Bloomberg analyst Katia Dimitrieva notes, ;ots of data in this report point to the structural shifts in the workforce and a clear gulf between workers and employers: Number of people not in the labor force but who want a job remains about 850,000 higher than pre-pandemic Long-term unemployed (jobless for 27+ weeks) is 1.1 million higher than pre-pandemic and barely budged in November Number of people working part-time but wanting full-time remains 4.3 million Yet as some noted, today's data may be completely meaningless and comparable to the Feb 2020 report when the world was going into lockdown, but employment data didn’t show it yet. With Omicron having arrived, and it's just a matter of time before it imposes a new round of lockdowns, today's data sadly tells us nothing about how bad the US economy is about to be hit in order to make it easy for Biden to rush out a new round of trillions in stimmies. Tyler Durden Fri, 12/03/2021 - 08:34.....»»

Category: blogSource: zerohedgeDec 3rd, 2021

Who"s Hiring And Who"s Firing In November: More Head-Scratchers

Who's Hiring And Who's Firing In November: More Head-Scratchers As discussed extensively earlier, there were some pretty striking disconnects in today's jobs report: while the headline payrolls number was a huge miss and printed the lowest monthly gain of 2021, the unemployment rate tumbled, the labor participation rate jumped and the number of employed workers actually surged by 1.1 million according to Household survey. In short, the establishment survey suggested employment rose just 0.1% in November, while the household survey suggests employment surged by 0.7%. As Danny Dayan, chief investment officer at Dwd Partners, put it best, this was “one of the weirdest reports I have ever seen." TD Ameritrade chief market strategist JJ Kinahan added some more details to the confusion: “Obviously, the top-line numbers in the November jobs report disappoint, which is a strange contradiction to the unemployment rate having come down so significantly." Then there was Dennis DeBusschere of 22V Research who was laconic: “WOW ... OK. This number was all over the place. Significant miss on the headline number. But that’s not the story. The u-rate declined significantly with a slight increase in participation. That is because the household employment number was +1.1 million, which is a huge number. Now, household is a volatile number, but it’s hard not to assume this will ultimately be viewed as a somewhat positive report for the labor market -- unless we are totally missing something on the household reading. So we would fade the move lower in short rates.” Of course, as we also showed earlier, a big reason for the confusion was the gaping seasonal adjustment factor used by the BLS to "normalize" the November number. Had it used a more in-line adjustment, payrolls would have increased by some 300K more, or above 500K, and in line with expectations. In other words, one month from today we expect the BLS to revise today's 210K print some 200-300K higher. And while we wait, here is our traditional breakdown of the components of the establishment survey, looking at which jobs increased and which dropped, with the knowledge that all of these will change dramatically next month. Here too, some peculiarities emerge. As Jefferies economist Thomas Simons notes, "retail trade payrolls fell 20K (vs +38K in October), while leisure & hospitality payrolls rose only 23K after rising 170K in October and averaging well over 100K for the last few months. We had thought there would be a pickup in both of these, but November was curiously soft on this front. It is not clear if this is a seasonal issue, or some sort of shift in terms of the timing of holiday help, but overall the payroll data does not match up with the alternative indicators of labor market activity that we track.” Meanwhile, TDA's Kinahan further notes that "this report contains a few head-scratchers: for example, leisure and hospitality are up only slightly, and retail being down is odd for this time of year. But we did see strong numbers in important areas -- warehousing, construction, and manufacturing, to name a few." With that in mind, here is the full breakdown: Professional and business services added 90,000 jobs in November. Job gains continued in administrative and waste services (+42,000), although employment in its temporary help services component changed little (+6,000). Job growth also continued in management and technical consulting services (+12,000) and in computer system design and related services (+10,000). Employment in transportation and warehousing increased by 50,000 in November and is 210,000 above its February 2020 level. In November, job gains occurred in couriers and messengers (+27,000) and in warehousing and storage (+9,000). Construction employment rose by 31,000 in November, following gains of a similar magnitude in the prior 2 months. In November, employment continued to trend up in specialty trade contractors (+13,000), construction of buildings (+10,000), and heavy and civil engineering construction (+8,000). Manufacturing added 31,000 jobs in November. Job gains occurred in miscellaneous durable goods manufacturing (+10,000) and fabricated metal products (+8,000), while motor vehicles and parts lost jobs (-10,000). Employment in machinery declined by 6,000, largely reflecting a strike. Employment in financial activities continued to trend up in November (+13,000) and is 30,000 above its February 2020 level. Job growth occurred in securities, commodity contracts, and investments in November (+9,000). Curiously, employment in retail trade declined by 20,000 in November, with job losses in general merchandise stores (-20,000); clothing and clothing accessories stores (-18,000); and sporting goods, hobby, book, and music stores (-9,000). These losses were partially offset by job gains in food and beverage stores (+9,000) and in building material and garden supply stores (+7,000). Employment in leisure and hospitality changed little in November (+23,000), following  large gains earlier in the year. Leisure and hospitality has added 2.4 million jobs thus far in 2021, but employment in the industry is down by 1.3 million, or 7.9 percent, since February 2020. Health care employment was about unchanged in November (+2,000). Within the industry, employment in ambulatory health care services continued to trend up (+17,000), while nursing and residential care facilities lost 11,000 jobs. And visually: While the overall picture was mixed, even the one job sector which has kept on giving since Lehman, namely employees in food services and drinking places (or waiters and bartenders) added just 11K jobs in November. Well, at least they are still hiring. Which brings us to a curious point: as Bloomberg economist Carl Ricadonna observes, "the jobs deficit relative to February 2020, which currently stands at 3.9 million jobs, is entirely comprised of workers who lack a college degree. College-educated workers are now about 2% above their February 2020 employment levels and continue to see the strongest job growth, with high-school-educated workers still about 5% below pre-pandemic levels. Employment among workers with less than a high-school diploma actually declined over the last three months." The good news: all those who spent over $100,000 to major in feminist studies, can take comfort that they will always have a job waiting for them in America's food service industry. Tyler Durden Fri, 12/03/2021 - 11:40.....»»

Category: blogSource: zerohedgeDec 3rd, 2021

A&W made its employees "anti-celeb meals" to attract new workers as fast-food continues to struggle with hiring

A&W is using real employees to poke fun at celebrity meal promotions and recruit new hires. A&W A&W is using real employees to poke fun at celebrity meal promotions. The anti-celeb meals are part of a hiring and retention campaign for the chain. Fast-food chains are closing and cutting hours without enough employees.  A&W is launching an "anti-celeb meal" hiring campaign in response to the recent celebrity partnerships from chains like McDonald's, Popeyes, and Tim Hortons.The burger chain says the campaign, which puts A&W workers side-by-side with celebrity promotional images from competitors puts the "spotlight where it really belongs amid the industry's labor shortage crisis: on the people who keep A&W running" with four actual employees from central Kentucky stores. Hiring employees is one of the main issues A&W restaurants are facing, the company said in a statement. Partnering with celebrities has been a boon to brands over the last two years. McDonald's kicked off the trend with the Travis Scott Meal, which was available for a month in the fall of 2020. It was the first in McDonald's ongoing Famous Orders lineup, consisting of a Quarter Pounder with cheese, bacon, and lettuce, medium fries with BBQ Sauce, and a Sprite — Scott's favorite meal at the chain. The spring BTS meal was also popular, driving traffic to restaurants giving McDonald's its busiest week of the year to date. More recently, McDonald's sold the Saweetie meal, featuring the TikTok star, followed by the current Mariah Menu.A&WA&W's hiring and retention campaign comes at a time of crisis in fast food thanks to chronically understaffed stores and supply chain issues. Restaurant operators overwhelmingly said that finding staff was the number one challenge they face, with 75% agreeing in a survey from the National Restaurant Association. Of owners surveyed, 78% said that didn't have enough workers to handle business, which led to many closing dining rooms or seating areas to lower the number of customers they could serve. Nearly half of operators said that they reduced dining capacities voluntarily. According to the survey, 61% of fast-food restaurants, and 81% of full-service restaurants said that they decided to shut parts of dining rooms in August because they didn't have the workers to serve those areas. Business owners say they're unable to find staff and in some cases even cite a lack of desire to work, while workers say they can demand better pay and benefits in the tight labor market. This mismatch has led to restaurants decreasing hours and closing dining rooms. Customer demand for fast food is higher than ever, but without enough workers, companies have to turn away business. A&W said that this hiring campaign was designed to stand out from all the other campaigns on the market right now. All 625 A&W locations will get yard signs, t-shirts, and other marketing assets to go along with the campaign, which will replace typical menu item-focused advertising.Do you have a story to share about a retail or restaurant chain? Email this reporter at mmeisenzahl@businessinsider.com.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderDec 2nd, 2021

Paying people more may not solve the labor shortage. Here"s what companies need to do to attract more workers, according to a Wharton professor.

Employers should think more broadly about recruitment if they want to attract talent, said Peter Capelli, a Wharton professor of Management. Hiring remains a challenge for many businesses during the pandemic.Wilfredo Lee / AP Employers should think more broadly about recruitment to attract staff, said a Wharton professor. Peter Capelli spoke to Knowledge@Wharton podcast about his latest report on the labor market.  Childcare and a desire for flexibility, not just pay issues, are keeping people out of work. Everyone seems to be talking about the state of the labor market.Businesses across multiple sectors complain that they're been struggling to hire staff for months. At the same time, record numbers of Americans are leaving their jobs — a record 4.4 million quit in September. There are many reasons behind what has been dubbed "the great resignation," and many companies are increasing wages and offering bonuses to retain and attract staff.But employers should use labor market issues as an opportunity to think more broadly about recruitment, according to Peter Capelli, Wharton professor of management and director of the school's Centre for Human resources.He spoke on the Knowledge@Wharton podcast about a recent report he co-authored, which looked at how the pandemic has changed employees' attitudes towards work — and how employers should react.When it comes to recruitment, Capelli said that employers became "picky" about hiring following the Great Recession [in 2008] — where the labor market was great for employers. They started asking for college degrees in requirements for roles that hadn't previously needed them, even though the work itself hadn't changed. He gave the example of a legal secretary."Couldn't we think a little more broadly about who you could hire for these jobs? Maybe you should take a look at people that you may have passed over before because you had tons of candidates," Cappelli said.  He said employers are not good at predicting who is going to be a good worker. A degree also doesn't mean that someone is going to be better at a certain role either. At a broader level, while Capelli's report said employers should expect to pay more for workers, it found that there are other reasons keeping people from looking for work "more aggressively" that employers need to address."The first is still fear of COVID. The second is a belief that opportunities are going to get better," said Capelli.There are things that employers can do to persuade candidates that they're going to be safe, Capelli said. But it's still unclear to what extent people will have some flexibility with being able to work from home. Capelli said childcare responsibilities were another reason why people weren't returning to the labor market. According to the Centre for American Progress, 51% of Americans lived in a 'childcare desert' in 2018. "A lot of people have taken on childcare obligations because their job wasn't going to pay enough or the commute was too difficult if they were going back to work," he said. According to Capelli, some employers still haven't figured out how remote working will help them as a business, rather than just being something they offer staff. Too many are waiting to see what other employers are doing before acting themselves, he said.Overall, while there will be some employers that return to how they operated pre-pandemic, Capelli said there will be a "critical mass" of employers who will do things differently."I think there's an opportunity here for employers to do things that might make their employees happy, might make them stay with you longer, and might be better for the organization," he said. "There's a window for doing something about it that'll probably go on for a little while." Read the original article on Business Insider.....»»

Category: topSource: businessinsiderDec 2nd, 2021

Kroger Reports Third Quarter 2021 Results and Raises Full-Year Guidance

CINCINNATI, Dec. 2, 2021 /PRNewswire/ -- The Kroger Co. (NYSE:KR) today reported its third quarter 2021 results and will update investors on how key initiatives are positioning the company for long-term sustainable growth. Comments from Chairman and CEO Rodney McMullen   "Kroger's strategy to lead with fresh and accelerate with digital continues to connect with our customers. Our agility, and the commitment from our amazing associates, is allowing us to navigate current labor and supply chain conditions and provide the freshest food at affordable prices across our store and digital ecosystem. "Our focus on execution, combined with our continued discipline in balancing investments in our associates and customers with exceptional cost management, and growth in our alternative profit business allowed us to exceed internal expectations and deliver strong sales and earnings growth. "Across all aspects of our business, we are innovating and executing with speed against the key initiatives that are transforming our business. Kroger is in a position of strength. We are committed to delivering for our associates, customers, and communities, and we remain confident in our ability to deliver total shareholder returns of 8% to 11% over time." Third Quarter Financial Results 3Q21 ($ in millions; except EPS) 3Q20 ($ in millions; except EPS) ID Sales* (Table 4) 3.1% 10.9% EPS $0.64 $0.80 Adjusted EPS (Table 6) $0.78 $0.71 Operating Profit $868 $792 Adjusted FIFO Operating Profit (Table 7) $974 $871 FIFO Gross Margin Rate* Decreased 41 basis points OG&A Rate* Decreased 49 basis points *without fuel and adjustment items, if applicable Third Quarter Results versus Two Years Ago 3Q21 ($ in millions; except EPS) ID Sales Two Year Stacked* (Table 8) 14.0% EPS Two Year CAGR (Table 8) 41.4% Adjusted EPS Two Year CAGR (Table 8) 28.8% Operating Profit Two Year CAGR (Table 8) 84.9% Adjusted FIFO Operating Profit Two Year CAGR (Table 8) 22.1% FIFO Gross Margin Rate Compared to Q3 2019* Decreased 43 basis points OG&A Rate Compared to Q3 2019* Decreased 79 basis points *without fuel and adjustment items, if applicable Total company sales were $31.9 billion in the third quarter, compared to $29.7 billion for the same period last year. Excluding fuel, sales increased 2.9% compared to the same period last year. Gross margin was 21.66% of sales for the third quarter. The FIFO gross margin rate, excluding fuel, decreased 41 basis points compared to the same period last year. This decrease primarily related to higher supply chain costs and continued price investments partially offset by sourcing benefits.   The LIFO charge for the third quarter was $93 million, compared to $23 million for the same period last year. This increase was primarily attributable to higher inflation across several categories, including grocery and meat. The Operating, General & Administrative rate decreased 49 basis points, excluding fuel and adjustment items, which reflects sales leverage and the execution of cost savings initiatives. Kroger recorded a nonrecurring benefit of $47 million, or $0.07 per diluted share, primarily due to the favorable outcome of income tax audit examinations covering multiple years. This amount is excluded from the company's adjusted net earnings per diluted share result for the third quarter. The income tax rate for the third quarter was 13.8%, compared to 24.2% for the same period last year. Capital Allocation Strategy Kroger continues to generate strong free cash flow and remains committed to investing in the business to drive long-term sustainable net earnings growth, maintaining its current investment grade debt rating, and returning excess free cash flow to shareholders via share repurchase and a growing dividend over time. Kroger's net total debt to adjusted EBITDA ratio is 1.68, compared to 1.74 a year ago (Table 5). The company's net total debt to adjusted EBITDA ratio target range is 2.30 to 2.50. During the quarter, Kroger repurchased $297 million of shares and year-to-date, has repurchased $1 billion of shares. As of the end of the third quarter, $511 million remains on the board authorization announced on June 17, 2021.   2021 Guidance Comments from CFO Gary Millerchip   "Driven by the momentum in our third quarter results and sustained food at home trends, we are raising our full-year guidance. We now expect our two-year identical sales stack to be in the range of 13.7% to 13.9%. We expect our adjusted net earnings per diluted share to be in the range of $3.40 to $3.50.   "Kroger is executing against its key financial and operational initiatives and continues to invest in strategic priorities that will drive attractive and sustainable total shareholder returns. We believe our business is emerging stronger through the pandemic and is well positioned to grow beyond 2021." Full Year 2021 Guidance IDs (%) EPS ($) Operating Profit ($B) Tax Rate** Cap Ex ($B) Free Cash Flow ($B)**** Adjusted* (0.4%) - (0.2%) $3.40 - $3.50 $4.1 - $4.2 22.1% - 22.5% $3.1 - $3.3 $2.4 - $2.6 2-Year Basis*** 13.7% - 13.9% (Stack) 25% - 26% (CAGR) 17.0% - 18.4% (CAGR) $3.3 - $3.4 (Average) * Without adjusted items, if applicable; Identical sales is without fuel; Operating profit represents FIFO Operating Profit. Kroger is unable to provide a full reconciliation of the GAAP and non-GAAP measures used in 2021 guidance without unreasonable effort because it is not possible to predict certain of our adjustment items with a reasonable degree of certainty. This information is dependent upon future events and may be outside of our control and its unavailability could have a significant impact on 2021 GAAP financial results. ** This rate reflects typical tax adjustments and does not reflect changes to the rate from the completion of income tax audit examinations or changes in tax laws, which cannot be predicted. Accordingly, this does not reflect the effect of the $47 million benefit recognized in the third quarter of 2021. *** Identical sales, without fuel, guidance for 2-year basis represents the sum of actual 2020 identical sales percentage and 2021 identical sales rate guidance. The 2-year basis guidance items denoted with CAGR represent the compounded annual growth rate utilizing 2019 as the base year. Average free cash flow is the average of actual 2020 free cash flow and 2021 guidance. **** 2021 free cash flow guidance includes a $300M payment of deferred payroll taxes. This excludes planned payments related to the restructuring of multi-employer pension plans. Third Quarter 2021 Highlights Leading with Fresh Surpassed $1 billion in annualized sales for Home Chef, becoming the newest Our Brands billion dollar brand in Kroger's portfolio Our Brands launched 216 new items during the quarter with plans to launch several innovative and unique products focused on helping customers enjoy the holiday season like Private Selection Holiday Trail Mix and Simple Truth Cranberry Pistachio Bread Expanded launch of our End-to-End Fresh program to over 50 additional stores Announced plans with Kipster Farms, the award-winning system founded in The Netherlands, to bring the world's first carbon-neutral, cage-free eggs to retail shelves under Simple Truth® brand Accelerating with Digital Launched Kroger Delivery Now nationwide with Instacart to provide 30-minute delivery, enabled by first-of-its-kind virtual convenience store shopping experience Introduced Boost by Kroger Plus, an annual membership program that provides customers free delivery and additional fuel points on purchases in four divisions Shared plans for five new customer fulfillment centers powered by the Ocado Group including expansions in California and Florida and entrance for the first time into the Northeast region Announced collaboration with Bed Bath & Beyond and buybuy Baby on a national e-commerce experience via Kroger.com and a small-scale physical store pilot to expand home and baby product offerings Kroger Precision Marketing launched a new programmatic advertising marketplace   allowing agencies and brands to reach consumers by applying Kroger customer data to campaigns within their preferred ad-buying platform Associate Experience Increased Kroger Family of Companies' average hourly wage to greater than $16 and with comprehensive benefits, will be greater than $21 by the end of 2021 Received two Brandon Hall Group - Excellence in Human Capital Management Awards, including Gold recognition for Leading through a Crisis during the COVID-19 pandemic and Silver recognition for A Fresh Welcome, organization's new and innovative onboarding program, which launched in 2020 Held nationwide hiring event with more than 20,000 opportunities in retail, e-commerce, manufacturing, merchandising, corporate, healthcare and more Live Our Purpose Kroger Health partnered with Anthem Blue Cross and Blue Shield to offer new Medicare Advantage plans that include an allowance to help customers purchase groceries and health items Kroger Health has administered more than 8.5 million COVID-19 vaccine doses to date, supporting customers and associates Marked one-year anniversary of organization's Framework for Action: Diversity, Equity and Inclusion plan to better use company's platform to create and advocate for more equitable communities. Shared the following progress: 405,000 associates completed diversity and inclusion training Increased our partnerships with Historically Black Colleges and Universities and Hispanic-Serving Institutions from six to seventeen Achieved $4.1 billion in diverse supplier spend in 2020, a 21% increase versus prior year The Kroger Co. Foundation collectively invested $3.1 million to advance racial equity through partnerships with Black Girl Ventures, Everytable, LISC, Thurgood Marshall College Fund, and other organizations Scored 100 on both the Disability Equality Index presented by Disability: IN and the American Association of People with Disabilities (AAPD) and the Corporate Equality Index presented by the Human Rights Campaign Foundation The Zero Hunger | Zero Waste Foundation Innovation Fund made impact investments during the first-ever Venture Showcase in two peer-selected startups, Agua Bonita and Matriark Foods About KrogerAt The Kroger Co. (NYSE:KR), we are Fresh for Everyone™ and dedicated to our Purpose: To Feed the Human Spirit®. We are, across our family of companies, nearly half a million associates who serve over 11 million customers daily through a seamless shopping experience under a variety of banner names. We are committed to creating #ZeroHungerZeroWaste communities by 2025. To learn more about us, visit our newsroom  and investor relations site. Kroger's third quarter 2021 ended on November 6, 2021. Note: Fuel sales have historically had a low gross margin rate and operating expense rate as compared to corresponding rates on non-fuel sales. As a result, Kroger discusses the changes in these rates excluding the effect of fuel. Please refer to the supplemental information presented in the tables for reconciliations of the non-GAAP financial measures used in this press release to the most comparable GAAP financial measure and related disclosure. This press release contains certain statements that constitute "forward-looking statements" about the future performance of the company. These statements are based on management's assumptions and beliefs in light of the information currently available to it. Such statements are indicated by words or phrases such as "achieve," "believe," "committed," "confident," "continue," "deliver," "expect," "future," "guidance," "positioning," "strategy," "target," "trends," and "will." Various uncertainties and other factors could cause actual results to differ materially from those contained in the forward-looking statements. These include the specific risk factors identified in "Risk Factors" in our annual report on Form 10-K for our last fiscal year and any subsequent filings, as well as the following: Kroger's ability to achieve sales, earnings, incremental FIFO operating profit, and adjusted free cash flow goals may be affected by: COVID-19 pandemic related factors, risks and challenges, including among others, the length of time that the pandemic continues, new variants of the virus and the effectiveness of vaccines against variants, continued efficacy of vaccines over time and availability of vaccine boosters, the extent of continued vaccine disinformation and vaccine refusal, and global access to vaccines, as well as the effect of emerging  vaccine and/or testing mandates and related regulations, the potential for additional future spikes in infection and illness rates including breakthrough infections among the fully vaccinated, and the corresponding potential for disruptions in workforce availability and customer shopping patterns, re-imposed restrictions as a result of resurgence and the corresponding future easing of restrictions, and interruptions in domestic and global supply chains or capacity constraints; the pace of recovery when the pandemic subsides; labor negotiations or disputes; changes in the unemployment rate; pressures in the labor market; changes in government-funded benefit programs; changes in the types and numbers of businesses that compete with Kroger; pricing and promotional activities of existing and new competitors, including non-traditional competitors, and the aggressiveness of that competition; Kroger's response to these actions; the state of the economy, including interest rates, the inflationary and deflationary trends in certain commodities; changes in tariffs; the effect that fuel costs have on consumer spending; volatility of fuel margins; manufacturing commodity costs; diesel fuel costs related to Kroger's logistics operations; trends in consumer spending; the extent to which Kroger's customers exercise caution in their purchasing in response to economic conditions; the uncertainty of economic growth or recession; changes in inflation or deflation in product and operating costs; stock repurchases; Kroger's ability to retain pharmacy sales from third party payors; consolidation in the healthcare industry, including pharmacy benefit managers; Kroger's ability to negotiate modifications to multi-employer pension plans; natural disasters or adverse weather conditions; the effect of public health crises or other significant catastrophic events, including the coronavirus; the potential costs and risks associated with potential cyber-attacks or data security breaches; the success of Kroger's future growth plans; the ability to execute our growth strategy and value creation model, including continued cost savings, growth of our alternative profit businesses, and widening and deepening our strategic moats of fresh, our brands, personalization, and seamless; and the successful integration of merged companies and new partnerships. Our ability to achieve these goals may also be affected by our ability to manage the factors identified above. Our ability to execute our financial strategy may be affected by our ability to generate cash flow. Kroger's effective tax rate may differ from the expected rate due to changes in tax laws, the status of pending items with various taxing authorities, and the deductibility of certain expenses. Kroger assumes no obligation to update the information contained herein unless required by applicable law. Please refer to Kroger's reports and filings with the Securities and Exchange Commission for a further discussion of these risks and uncertainties. Note: Kroger's quarterly conference call with investors will broadcast live at 10 a.m. (ET) on December 2, 2021 at ir.kroger.com. An on-demand replay of the webcast will be available at approximately 1 p.m. (ET) on Thursday, December 2, 2021. 3rd Quarter 2021 Tables Include: Consolidated Statements of Operations Consolidated Balance Sheets Consolidated Statements of Cash Flows Supplemental Sales Information Reconciliation of Net Total Debt and Net Earnings Attributable to The Kroger Co. to Adjusted EBITDA Net Earnings Per Diluted Share Excluding the Adjustment Items Operating Profit Excluding the Adjustment Items Two-Year Financial Results   Table 1.THE KROGER CO.CONSOLIDATED STATEMENTS OF OPERATIONS(in millions, except per share amounts)(unaudited) THIRD QUARTER YEAR-TO-DATE 2021 2020 2021 2020 SALES $    31,860 100.0% $ 29,723 100.0% $    104,840 100.0% $   101,761 100.0% OPERATING EXPENSES MERCHANDISE COSTS, INCLUDING ADVERTISING,      WAREHOUSING AND TRANSPORTATION (a),      AND LIFO CHARGE (b) 24,959 78.3 22,901 77.1 81,820 78.0 77,906 76.6 OPERATING, GENERAL AND ADMINISTRATIVE (a) 5,177 16.2 5,194 17.5 17,692 16.9 18,162 17.9 RENT 197 0.6 205 0.7 648 0.6 682 0.7 DEPRECIATION AND AMORTIZATION 659 2.1 631 2.1 2,168 2.1 2,073 2.0      OPERATING PROFIT  868 2.7 792 2.7 2,512 2.4 2,938 2.9 OTHER INCOME (EXPENSE) INTEREST EXPENSE (135) (0.4) (129) (0.4) (438) (0.4) (438) (0.4) NON-SERVICE COMPONENT OF COMPANY-SPONSORED      PENSION PLAN COSTS (77) (0.2) 9 - (44) - 28 - (LOSS) GAIN ON INVESTMENTS (94) (0.3) 162 0.6 (694) (0.7) 952 0.9      NET EARNINGS BEFORE INCOME TAX EXPENSE 562 1.8 834 2.8 1,336 1.3 3,480 3.4 INCOME TAX EXPENSE  77 0.2 202 0.7 239 0.2 816 0.8      NET EARNINGS INCLUDING NONCONTROLLING INTERESTS 485 1.5 632 2.1 1,097 1.1 2,664 2.6 NET INCOME ATTRIBUTABLE TO      NONCONTROLLING INTERESTS 2 - 1 - 7 - 2 - NET EARNINGS ATTRIBUTABLE TO THE KROGER CO.  $         483 1.5% $       631 2.1% $         1,090 1.0% $       2,662 2.6% NET EARNINGS ATTRIBUTABLE TO THE KROGER CO.      PER BASIC COMMON SHARE $        0.64 $      0.81 $           1.44 $         3.39 AVERAGE NUMBER  OF COMMON SHARES USED IN      BASIC CALCULATION 742 772 747 777 NET EARNINGS ATTRIBUTABLE TO THE KROGER CO.      PER DILUTED COMMON SHARE $        0.64 $      0.80 $           1.43 $         3.35 AVERAGE NUMBER OF COMMON SHARES USED IN      DILUTED CALCULATION 752 780 757 785 DIVIDENDS DECLARED PER COMMON SHARE $        0.21 $      0.18 $           0.60 $         0.52 Note: Certain percentages may not sum due to rounding. Note: The Company defines First-In First-Out (FIFO) gross profit as sales minus merchandise costs, including advertising, warehousing and transportation, but excluding the Last-In First-Out (LIFO) charge. The Company defines FIFO gross margin as FIFO gross profit divided by sales. The Company defines FIFO operating profit as operating profit excluding the LIFO charge. The Company defines FIFO operating margin as FIFO operating profit divided by sales. The above FIFO financial metrics are important measures used by management to evaluate operational effectiveness.  Management believes these FIFO financial metrics are useful to investors and analysts because they measure our day-to-day operational effectiveness. (a) Merchandise costs ("COGS") and operating, general and administrative expenses ("OG&A") exclude depreciation and amortization expense and rent expense which are included in separate expense lines. (b) LIFO charges of $93 and $23 were recorded in the third quarters of 2021 and 2020, respectively.  For the year to date period, LIFO charges of $177 and $77 were recorded for 2021 and 2020, respectively.   Table 2.THE KROGER CO.CONSOLIDATED BALANCE SHEETS(in millions)(unaudited) November 6, November 7, 2021 2020 ASSETS Current Assets Cash $                   324 $                   367 Temporary cash investments 1,964 1,813 Store deposits in-transit 1,140 1,102 Receivables 1,914 1,610 Inventories 7,520 7,478 Prepaid and other current assets 518 576 Total current assets 13,380 12,946 Property, plant and equipment, net 23,316 21,902 Operating lease assets 6,655 6,843 Intangibles, net 954 1,012 Goodwill 3,076 3,076 Other assets 2,448 2,686 Total Assets $              49,829 $              48,465 LIABILITIES AND SHAREOWNERS' EQUITY Current Liabilities.....»»

Category: earningsSource: benzingaDec 2nd, 2021

Bonhoeffer 3Q21 Commentary: Case Study – Millicom

Bonhoeffer Capital Management commentary for the third quarter ended September 2021, providing a case study for Millicom International Cellular SA (NASDAQ:TIGO). Q3 2021 hedge fund letters, conferences and more Dear Partner, The Bonhoeffer Fund returned -2.8% net of fees in the third quarter of 2021. In the same time period, the MSCI World ex-US, a […] Bonhoeffer Capital Management commentary for the third quarter ended September 2021, providing a case study for Millicom International Cellular SA (NASDAQ:TIGO). 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 Dear Partner, The Bonhoeffer Fund returned -2.8% net of fees in the third quarter of 2021. In the same time period, the MSCI World ex-US, a broad-based index returned -0.7% and the DFA International Small Cap Value Fund, our closest benchmark, returned -2.5%. Year to date, the Bonhoeffer Fund has returned 22.9% net of fees. As of September 30, 2021, our securities have an average earnings/free cash flow yield of 14.3% and an average EV/EBITDA of 4.7. The DFA International Small Cap Value Fund had an average earnings yield of 11.1%. These multiples are lower than last quarter primarily due to increasing earnings and declining share prices. The difference between the portfolio’s market valuation and my estimate of intrinsic value is greater than 100%. I remain confident that the gap will close over time and the portfolio quality will continue to increase as we increase allocations to faster-growing firms. Bonhoeffer Fund Portfolio Overview Our investment universe has been extended beyond value-oriented special situations to include growthoriented firms using a value framework, including companies that generate growth through consolidation. There have been modest changes within the portfolio in the last quarter in line with our low historical turnover rates. We have sold Cambria Automotive which is in the process of being acquired and used the proceeds to increase our holdings in Asbury Automotive, Countryside Properties, and Millicom. As of September 30, 2021, our largest country exposures include: South Korea, United States, United Kingdom, Italy, South Africa, and Philippines. The largest industry exposures include: distribution, telecom/media, real estate/infrastructure, and consumer products. We added to some smaller positions within the portfolio and are investigating additional consolidation plays with modest valuations in industries that have nice returns on invested capital such as fiber rollouts, convenience stores, and IT services. Compound Mispricings (37% of Portfolio; Quarterly Average Performance -8%) Our Korean preferred stocks, the nonvoting share of Telecom Italia, Wilh. Wilhelmsen, and some HoldCos all feature characteristics of compound mispricings. The thesis for the closing of the voting, nonvoting, and holding company valuation gap includes evidence of better governance and liquidity. We are also looking for corporate actions such as spinoffs, sales, or holding company transactions and overall growth. Throughout the year, Net1 UEPS has been accumulating cash from the sale of its non-core assets including a Korean transaction processing network and its stake in a crypto bank. This cash, in addition to issuing some debt, was used to purchase Connect, a merchant transaction processor catering to small and medium businesses. This acquisition will complement its consumer fintech EasyPay transaction and ATM network and expand Net1 UEPS’s total addressable market to include small and midsized businesses and lead to profitability. The Korean preferred discounts in our portfolio are still large (25% to 73%). The trends of better governance and liquidity have reduced the discount in names like Samsung Electronics, and more preferred names trade at a premium to common shares. We continue to like the prospects for LG Corp preferred post LX Holdings spinoff from both a business and discount perspective. The current discount to NAV is 74% for the LG Corp preferred. In addition, this discount is based upon a base value of LG Corp with reasonable implied EV/EBITDA multiples of LG Corp subsidiaries of 4.7x for LG Electronics, 13.6x for LG Chemical (including LG’s EV battery division), and 16.7x for LG Household & Health Care. Public LBOs (37% of Portfolio; Quarterly Average Performance -1%) Our broadcast TV franchises, leasing, building products distributors, and roll-on/roll-off (RORO) shipping fall into this category. One trend I’ve noted in these firms is growth creation through acquisitions which provide synergies and operational leverage associated with vertical and horizontal consolidation and the subsequent repurchasing of shares with debt. The increased cash flow is used to pay the debt and the process is repeated. Millicom, this quarter’s case study, is a public LBO that has financed many of its investment opportunities with debt. The recently announced buyout of its Guatemalan JV partner illustrates this. The debt, when used in situations like this, has been paid down over time as Millicom generates a lot of free cash flow and can increase returns like leveraged rollups, as described below. Distribution Theme (41% of Portfolio; Quarterly Performance +3%) Our holdings in car and branded capital equipment dealerships, convenience stores, building product distributors, and capital equipment leasing firms all fall into the distribution theme. One of the main KPIs for dealerships and shopping is velocity or inventory turns. We own some of the highest-velocity dealerships in markets around the world. There have been challenges in some markets hit by COVID, like South Africa and Latin America; but there should be recovery now that vaccines have been approved and distributed. GS Retail, the second largest convenience store operator in Korea (with 14,600 convenience stores and 320 grocery stores), is the security we received for the buyout of GS Home Shopping. We have applied our growth methodology described in the last quarterly report. The following is a summary: The convenience store business is growing and consolidating worldwide. As a result of the acquisition, management is planning on using the younger customer data from GS Retail, the older customer data from GS Home Shopping, and the GS distribution network (42 logistics centers supporting convenience, grocery, and home shopping customers) to provide older and younger customers their products instore (convenience store) or next-day home delivery across Korea. Management expects 10% growth overall, composed of underlying convenience store growth of 4-5% and 5% from cross selling and digital commerce from the merger. Given the fixed costs in the convenience store network and distribution infrastructure, management expects cost synergies to generate net income margins of 5.0%. If these revenue and growth rates are realized, then a P/E closer to comparable convenience stores BGF Retail (Korea), Seven & I, and Alimentation Couche-Tard of 15-20x is not unreasonable. This range has significant upside from current P/E multiple of 5.9x and five-year forward P/E of 4.3x. Telecom/Transaction Processing Theme (36% of Portfolio; Quarterly Performance -2%) The increasing use of transaction processing in our firms’ markets and the rollout of 5G will provide growth opportunities. Given that most of these firms are holding companies and have multiple components of value (including real estate), the timeline for realization may be longer than for other firms. Telecom Italia continues to work with the Italian government and Fiber Corp to merge their telecommunications infrastructures together. Vivendi has called an emergency board meeting to ensure Telecom Italia will retain control of the combined telecommunication infrastructure after the merger. We view this action as a positive despite the decline in Telecom Italia’s share price. The updated sum-ofthe- parts analysis (as detailed in previous letters) implies an upside of 80–100%. In my opinion, much of the recent decline is due to concerns that Telecom Italia will give up control of the combined telecommunications infrastructure. Consumer Product Theme (10% of Portfolio; Quarterly Performance -7%) Our consumer product, tire, and beverage firms comprise this category. The defensive nature of these firms has led to lower-than-average performance due to the stronger performance from more recoverycorrelated names. One theme we have been examining is the increase in sales of adult products (tobacco, alcohol, and lottery) in convenience stores as other stores are removing these products from their product offerings. GS Retail is taking advantage of this trend in Korea. Real Estate/Construction Theme (23% of Portfolio; Quarterly Performance -3%) In my opinion, the pricing of our real estate holdings has been impacted by both a recession and the communist takeover in Hong Kong. The current cement and construction holdings (in US/Europe via BFS and Countryside and in Korea via Asia Cement) should do well as the world recovers from COVID shutdowns and governments start infrastructure programs. Asia Standard also declined during the quarter due to the concern over the decline in its Chinese real estate developer bond holdings. Asia Standard holds a large number of Chinese real estate developer bonds, including those of Evergrande and Kaisa. The Evergrande bonds have declined to about 20% of face value as of September 30 (they were at 40% of face value on July 31, 2021, the last market-to-market valuation date for Asia Standard’s bond portfolio) while the Kaisa bonds have declined to 85% of face value. I ran a stress test assuming a 25% decline in the bond portfolio from July 31, 2021. This is 2x the 13% decline in the portfolio from Evergrande and Kaisa bond prices between July 31, 2021, to September 30, 2021. The resulting NAV/share is $8.09 versus the $10.09 NAV as of July 31, 2021. The September 30 stock price of $0.85 is at a 91% discount to the stressed NAV and 92% to the July 31, 2021, NAV. Consolidation Frameworks In our Q1 letter, we described how we are examining growth opportunities associated with consolidation in fragmented industries. Growth from consolidation can be a resilient form of growth as it is dependent upon the availability of target firms and associated cost and revenue synergies versus overall market growth. When consolidation growth is combined with modest industry growth, some exciting growth can be realized. If the firms also exhibit operational leverage from economies of scale/scope, then the combined effect can be significant growth in earnings or free cash flows. The advantage of this type of growth is that it is realized over time and not recognized by the market in advance. This can be seen in the price charts of many of these firms moving from the lower left to the upper right over time as the growth is realized. Fragmented markets can have long runways associated with consolidation and economies of scale and scope which can lead to cash flow growth in excess of the market growth for many years. We try to identify these markets and firms that can ride the consolation wave over a long timeframe. Some of these firms have valuations reflecting some of the future growth and some have little to no premium reflecting future growth from consolidation. Currently, the internet (an innovation) is providing more consolidation via additional fragmentation of retail demand from offline, online, and omni-channel selling channels. An example is traditional auto dealers using an omni-channel sales approach and Carvana who is exclusively online. Bonhoeffer is looking for businesses that are adopting the innovation (internet distribution) which will enhance growth going forward but where it is not recognized by the market yet, as evidenced by the current stock price. Some analysts have developed useful frameworks to evaluate consolidation or serial acquirer situations. Scott Capital has developed a useful framework1 for categorizing consolidators, shown below: Scott has categorized these types of firms depending upon the level of target integration. Most of the firms we have been examining recently have been rollups (firms in the same industry) with scale-driven synergies and operational leverage. We also hold one platform (Wilh. Wilhelmsen) and one holding company (LG Corp). Another way to look at these firms is cross-sectionally based on total addressable market (TAM) size and integration of operations, as described by Canuck Analysts Substack2 below: Using this framework for our current areas of interest (rollups), I have been monitoring acquisition multiples in the car dealers (Asbury Automotive), local TV and radio firms (Gray Television), building supply distribution (Builders First Source), Latin American telecommunications (Millicom), cement firms (Asia Cement), equipment leasing firms (Ashtead), and network processing (Net 1 UEPS). In each of these segments, multiples have been modest. None of these firms have done international “diworsifying” deals to date and some have recently divested unrelated firms (Net 1 UEPS, Daelim Industrial and LG Corp). In each of these markets, the market share of the top firms is less than 10% except for GS Retail, where itself and FRB have a dominant share of 31% each, and Millicom, where it has a leading or number two position in eight of its nine markets where it competes. The small market shares provide a large runway for consolidation in its existing industry for years to come. Also, none have made international expansion into new markets outside their existing footprints. A return benchmark developed by the Canuck Analysts Substack3 is shown below: This framework, used in combination with calculating return on incremental capital, can illustrate where the invested capital returns can be modest. As an example, we will look at Asbury Automotive. Asbury’s returns on invested capital averaged 13%, and the return on equity averages 31% over the past 10 years plus an organic growth rate of 2 to 3% per year based upon US auto sales and maintenance service costs. This results in an ROIC plus ½ of annual organic growth of about 15%. The size of Asbury’s acquisitions has been about $1.4 billion over the past five years. Below is Asbury’s return on incremental invested capital over the past 10 years which has averaged in the upper teens during that period. For other serial acquirers like Ashtead, the organic growth rate is 6% and its ROICs over the past 10 years is 14% resulting in an ROIC plus ½ of annual organic growth of about 17%. The size of Ashtead’s acquisitions has been about $2.0 billion over the past five years. Conclusion As always, if you would like to discuss any of the philosophies or investments in deeper detail, then please do not hesitate to reach out. Until next quarter, thank you for your confidence in our work and have a safe and warm year-end holiday season. Warm Regards, Keith D. Smith, CFA Case Study: Millicom International Cellular SA (TIGO) Millicom International Cellular SA (NASDAQ:TIGO) provides mobile and broadband telecommunications services to consumers and businesses in Central America (Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica, and Panama) and South America (Columbia, Bolivia, and Paraguay). TIGO provides legacy voice, wireless and data services, and fiber-based services to firms and individuals. Currently, TIGO has 43.1 million wireless subscribers, including 20.3 million 4G subscribers and 4.9 million home customers, including 8.4 million revenue generating units (RGUs) and 4.1 million broadband subscribers. In addition, TIGO’s network includes 5,400 points of presence and 300,000 business customers. TIGO is the number one or two broadband and wireless provider in eight of the nine markets in which TIGO competes. Recently, TIGO announced the purchase of its joint venture (JV) partner’s share of its JV in Guatemala for $2.2 billion. This transaction will be financed by debt and a shareholder friendly common stock rights offering. TIGO provides mobile money/banking services for five million customers in six countries. TIGO also has 10,000 towers and 13 data centers which can be sold and leased backed. TIGO is in the process of separating its towers and data centers (like Telefónica and América Móvil) and its mobile money/banking service to facilitate sales or investments by third parties. In 2017, TIGO sold 3,410 towers in Columbia, El Salvador, and Paraguay for $417 million or $122,287 per tower. Historically, TIGO operated in both Africa and Latin America. Over the past five years, TIGO has divested its African telecommunications assets and purchased additional assets in Latin America. TIGO’s network passes over 12.2 million homes (24% penetration of total homes) and covers 80% of mobile phones. The firm is in the midst of rolling out fiber to homes to provide broadband connectivity to Latin American customers. This rollout is being funded by cash flow from operations. The firm has been described as building a Charter Communications under a wireless Verizon umbrella. This is similar to our Consolidated Communications play with the additional benefit of having a wireless network and a mobile money business. In most countries in which TIGO operates, they have joint ventures or minority interest local partners. TIGO currently has an average high-speed internet (HSI) penetration rate (a take rate of HSI for homes passed) of about 39% across the countries it serves. This has increased by 1.4% since year-end 2020. To put this in context, most cable broadband penetrations are in the 50% plus range. In seven of the nine countries they serve, TIGO is the number one or two competitor in wireless and broadband in two-player markets (Guatemala, Honduras, El Salvador, Costa Rica, Panama, Bolivia, and Paraguay) and number three in two markets (Nicaragua and Costa Rica). The Q3 2021 mobile average revenue per RGU was $6.40 per month, and the broadband revenue per RGU was $28.10 per month. The largest shares of proportional EBITDA are from Guatemala (38%), Bolivia (11%), Paraguay (11%), Panama (10%), and Columbia (9%). In terms of regions, 70% of EBITDA is from Central America and 30% from South America. TIGO has developed a customer-focused culture at the corporate and country level using NPS as a metric which is collected and used as a management incentive to increase customer satisfaction. In addition, the countries that TIGO serves have stable currencies versus the US dollar. Since 2000, the EBITDA weighted average currency movements have been only 0.7% per year. Another positive trend is the movement of suppliers to US-based firms moving from China to a closer location with political and currency stability—Central America. If we look at the index of economic freedom for the Central American countries in which TIGO primarily operates, they have a moderately free ranking. For the subcategories most of interest to suppliers (tax burden and trade and business freedom), they all are ranked free or mostly free (highest ratings). Millicom and Fiber-optic Rollout The Latin American telecommunications services market is a local, fragmented market. Consolidation has occurred over the past 10 years amongst these local players, and the next generation of technology (fiber-optic connections) is being rolled out. Fiber-optic rollouts are generating organic growth and economies of scale with high incremental user profitability. Millicom has created economies of scale depending upon the geography of the acquired telecommunications firm. There is also the vertical integration across telecommunications services (like wireless, voice, data, cable, and hosting) in a given geography which can create additional economies of scale. With these rollouts, telecommunications companies compete with the local cable companies—and in some cases wireless providers—to provide HSI and other services to customers in their local footprints. Historically, telecommunications and cable firms have had poor customer service, as evidenced by low net promoter scores (NPSs). Keith Rabois, a founder of PayPal, has tweeted, “Formula for startup success: Find large highly fragmented industry w low NPS; vertically integrate a solution to simplify value product.” Part of simplifying the solution is providing multiple services and good customer service. The telecommunication services market fits this description. The new fiber rollouts are analogous to organic startups and thus can also be successful in the vertical integration into these markets. Business and Service Analysis One way to look at telecom business is to divide it into slowly growing (wireless) and quickly growing segments (HSI). The slower-growing wireless business is mature and is growing about 2% per year. The HSI business is growing at an 8% annual rate driven by fiber rollouts in TIGO’s countries. Millicom’s overall mix of wireless and HSI revenue is 33% HSI and 67% wireless, with 67% recurring subscription revenue (HSI and post-paid wireless) but varies by country. The current revenue growth rate is 4.3% and will increase to 5%, by the end of 10 years and the HSI/wireless mix approach 50%/50%. If we look at unit economics of the fiber rollout, it is also quite favorable. According to management, the estimated cost to pass each new customer is about $150; and the cost to connect a customer is $100. This is similar to the cost reported by Oi, a telecommunications firm rolling out a fiber-optic network in Brazil. If you have a final penetration rate of 45% using the current HSI monthly charge of $28/month, and a steady-state EBITDA margin of 45% (which management believes are both achievable at scale; the current margin is 40%), then the payback time is between six and seven years, and the unlevered IRR is 26% and a levered return of 52%. See Exhibit A for details. Latin America Broadband Telecommunications Market The broadband telecom business in Latin America is a fragmented market on an international basis and a concentrated market on a country-by-country basis. The market is a local market, so the smaller country markets only have a few competitors. This leads to less price competition for TIGO than in larger, more urban markets where there are more competitors. Gig speed internet and wireless are core infrastructure services that will be required in the internet service economy. Currently, broadband usage is growing at a 30-40%/year rate and is expected to increase going forward, as more bandwidthintensive applications are developed and rolled out over time. Since most of TIGO’s competition is from cable companies and incumbent telecom firms (that have low NPSs), TIGO has an opportunity to provide improved customer service versus the cable companies. This highlights the importance of the decentralized management system, incentivized and shareholding country managers, and including NPSs in management’s incentive compensation at the corporate and country levels. Of the other publicly traded Latin American telecommunications firms, TIGO has the largest potential to increase HSI organic revenue growth (by 8%) via a fiber rollout in its incumbent territories. This can be seen in the projections based upon the currently planned and financed fiber rollout shown in Exhibit B. The tilt toward the faster-growing Central American countries (which should get some opportunities to replace China as exporters to the US) versus the slower-growing South American countries will also add a nice tailwind. The countries TIGO services had an average real GDP growth rate of 3.2% per year over the past five years versus the overall 0.7% GDP growth rate for all of Latin America. Downside Protection TIGO has been reducing debt over the past few years with a current proportional debt/EBITDA of 2.7x and a goal of 2.0x. TIGO has a bond rating of Ba2 and yields 3.5% for five- to 10-year bonds. TIGO is in a defensive business—telecommunications services—which has a large amount of recurring revenue. HSI data revenues are increasing, while wireless revenues are increasing at a slower rate. See below for projections and Exhibit B for more detailed projections. Below is the proportional historical and projected revenue, EBITDA, and FCF since 2016 when the Guatemalan and Honduran JVs were deconsolidated. Management and Incentives One of the risks in emerging-markets investing is management, as they may have different incentives than those to which Western investors are accustomed. In this case, you have a management team based in the US (Miami) that has been historically influenced by the firm’s domicile, Sweden. TIGO is led by a former Liberty Latin America executive, Mauricio Ramos. He brings the Liberty Media playbook (a successful leveraged rollup strategy of cable-related properties and associated shareholder friendly corporate actions) to the markets that TIGO serves. TIGO is listed in Sweden and the United States and brings the corporate governance practices, capital allocation, and shareholder renumeration approaches to its operations throughout Latin America. In many countries, TIGO has local JV partners which provide TIGO with access to the local connections. TIGO has management incentives, including TIGO stock (with minimum levels for country managers) at both the corporate and country levels. The capital allocation is also done at both the corporate and country levels. This country-level capital allocation, incentives, and stock ownership is unusual for a Latin American company. The major categories of capital allocation for TIGO are: 1) purchasing minority interests from partners, 2) investing in the HSI broadband rollout described above, 3) selective acquisitions, 4) repurchasing shares, or 5) distributing dividends. Categories 1, 2, 3 and 4 have the most well-defined and highest returns and have been used by management in the past. In 2020, the CEO’s management compensation was 20% base salary and 80% incentive-based bonus, of which short-term incentive (STI) is 50% equity based (TIGO shares) and 50% cash based and long-term incentive (LTI) is 100% equity based (TIGO shares). The 2020 STI compensation was based on service revenue growth, EBITDA growth, operational cash flow growth, NPS, and other operational goals. The 2020 LTI compensation is based upon service and EBITDA growth and relative total shareholder return versus peers. The 2020 equity-based shares were issued at $38.09 per share, and the 2019 shares were issued at $42.70 per share. Overall, 700,000 shares were granted in 2020 (about 0.7% of shares outstanding per year). The management team owns 0.7% of TIGO common stock. TIGO has stock ownership guidelines of 5x the salary for the CEO, 3x for other senior managers, and 1x for country managers. Valuation The valuation of TIGO is an interesting exercise because its expected growth rate is accelerated by the fiber rollout and share buybacks described above. The implied growth using the Graham Formula, adjusted to today’s interest rates ((8.5 + 2g)*(4.4/AAA bond rate)) and the current P/E, is -1.8%, clearly implying that the market expects TIGO’s cash flows to continue to decline. Some benchmarks for growth are the projected sales growth rates of 4.5% per year (based upon the fiber rollout), an EBITDA growth rate of 6% per year, and an adjusted free cash flow growth of 12%. The question is whether this growth rate is sustainable over the next seven years. Given the key penetration, margin, investment, and timing assumptions in the projection model, I believe it is. TIGO is the only Latin American publicly traded telecom firm that has a rollout of this magnitude (adding 18% to revenue) scheduled over the next five to seven years. One firm that also has a Latin American footprint is Liberty Latin America (LILA). LILA has grown revenues and EBITDA at about 8% per year since 2015. The EBITDA margin is similar to TIGO, but historically the conversion to FCF from EBITDA was 50% less than TIGO—25% for TIGO and closer to 12% for LILA. The current FCF multiple of LILA is about 16x. If that multiple is applied to TIGO’s FCF, it yields a value of $74 per share, which I believe is a reasonable 12-month target. If, over the five to seven years, a 12% FCF growth is attained, then the earnings will be $8.19. Applying a 23.8x multiple to these earnings (implying a 4% growth rate over the subsequent seven years) means a value of $195 per share is obtained. Another way to look at valuation is on an enterprise basis. If we value TIGO on a forward EBITDA basis of 9x EBITDA (the current multiple of cable overbuilder WOW!), then the resulting value is $200 per share. If we consider both benchmarks, then a $200 price target is not unreasonable. See Exhibit B for details. This results in a five-year IRR of about 42%. In addition to the core assets, TIGO has about 10,000 towers (with an additional 2,000 under construction), 13 data centers, and a mobile banking division. According to management, these non-core assets are being prepared for either sale-leasebacks or investments by third parties. The estimated value of the towers and data centers is about $2 billion—$1.1 billion for the towers and $900 million for the data centers. The tower valuation of $1.4 billion is based upon an estimated value per tower of $120k based upon tower transaction values (TIGO’s historic transactions averaged $122k/tower and a 2021 Telxius transaction was $110k/tower, 9,300 Latin American towers for €900 million) and Telesites’s current valuation of $252k/tower times 12,000 towers. The data center valuation of $750 million is based upon an estimated value per data center of $58k which is based upon Latin American data center transactions (Anxel data centers were purchase by Equinix for $58k/center, three data centers for $175 million, and Telefónica data centers were purchased by Asterion for $58k/data center, nine data centers for €550 million) times 13 data center. Adding together the towers and data centers, the total valuation of these assets is $2.1 billion. The mobile banking division (TIGO Money) can be valued using a range of values based upon the value of African mobile banking firms and Latin American neobank firms. The mobile banking business had 5 million customers and 48 million transactions in 2020. If we use African mobile banking transactions (20 million Airtel customers were purchased for $2.6 billion and 46 million MTN customers were purchased for $5.0 billion), the average value per user is $121. If we use $121/customer times 5 million transactions, it implies a $600 million value for TIGO Money. If we use recent Latin American neobank transactions (40 million Nubank (Brazil) customers were purchased for a $30 billion valuation and 3.5 million Ualá (Argentina) customers were purchased for a $2.45 billion valuation), the average value per user is $750. If we use the midpoint of the African mobile banking and Latin American neobanks of $435, we get $435 times 5 million customers, and the resulting value is $2.2 billion. This is additional value of $2.7 to $4.2 billion ($27 to $42 per share) in addition to the core business value estimated above. So, for example, if you assume a 12% FCF growth rate and the value of non-core assets, you get a total value of $255 to $270 per share. Comparables Given the fiber rollout and the size of TIGO, the comparable firms include US and Italian small-cap telecommunications firms. One of the larger issues in Latin American firms versus developed markets is currency risk, however; as described above, TIGO’s currency risk is similar to developed markets’ risk. The following are the comparable firms in the US and Italian telecommunications markets. The smaller Italian telecom firms have smaller floats than the US firms and are majority controlled (70%+) by the original owners. There have been some private equity acquisitions in the US rural local exchange carriers (RLEC) space, namely Cincinnati Bell and Alaska Communications. These firms have a similar dynamic associated with their respective fiber rollouts, and private equity firms have invested in these firms for similar reasons that make CNSL attractive. Cincinnati Bell has been purchased by the private equity firm Macquarie Infrastructure Partners, which outbid an original offer from Brookfield Asset Management. Alaska Communications is also in the process of being purchased by ATN International and Freedom 3 Capital. The EV/EBITDA paid by these buyers was 6.5 to 6.9x EBITDA for assets with lower margins than the current price of TIGO (4.6x EBITDA). Benchmarking In comparison to other US and Italian firms, TIGO has above-average (but good) FCF ROE and a high EBITDA margin. With TIGO’s fiber rollout and customer take-up, the fixed asset turns and ROEs should increase. With these favorable operational metrics, TIGO has one of the lowest current and 2021 P/FCF ratios of either group. Risks The primary risks to achieving a target valuation of $72 per share for TIGO include: a lower-than-expected broadband penetration of fiber rollout communities; and a quicker-than-expected decline in the legacy telecom lines. Potential Upside/Catalysts The primary upsides/catalysts include: faster-than-expected penetration of uptake of broadband services; operational leverage due to economies of scale; and re-rating to reflect higher growth. Timeline/Investment Horizon The short-term target is $72, which is more than double today’s price. I think the investment thesis can play out over the next three to five years. By that time, TIGO’s net income and earnings should have appreciated by 75%, and the fair multiple could triple with a 4% increased growth rate. If that is the case, then TIGO will attain a 6.7x return to $235 over five years or 46% annualized. This is similar to a “Davis double,” where both underlying earnings increase along with the fair value multiple. 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Category: blogSource: valuewalkDec 1st, 2021

Covid Woes And Supply Chain Issues Among The Drivers In FTSE Reshuffle

The FTSE All Share Index Quarterly Review is based on closing prices today and is due to be announced on Wednesday 1 December, with the changes effective after the close on Friday 17 December. Q3 2021 hedge fund letters, conferences and more A sparky performance by Electrocomponents pushes it into a prime position to move into […] The FTSE All Share Index Quarterly Review is based on closing prices today and is due to be announced on Wednesday 1 December, with the changes effective after the close on Friday 17 December. 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 A sparky performance by Electrocomponents pushes it into a prime position to move into the FTSE 100. Dechra pharma, another FTSE 100 contender has clawed opportunity from the soaring popularity for pets. Cyber Security firm DarkTrace set to slip out of the FTSE 100 following a share slide as the lock-in IPO period ended. Johnson Matthey’s position in the FTSE 100 looks shaky after it abandoned its battery plans. Supply chain issues plague electrical retailer AO World as it looks set to slide from FTSE 250. Petershill Partners eyes up a FTSE 250 position and fresh acquisitions of private equity assets. Fresh Covid woes hit The Restaurant Group as it looks set to slide out of the FTSE 250. Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown summarises the runners and riders: Electrocomponents – Contender To Enter The FTSE 100 "The sparky performance by Electrocomponents plc (LON:ECM), with adjusted pre-tax profits up 91% for the first half of the year, has led to a surge in its share price, pushing it into a prime position to move into FTSE 100 territory. The vast range of industrial and electronics products held by the distributor is partly behind its success, as well as its smooth online operations fulfilling the lucrative business-to-business segment. It’s not been immune from higher transport and labour costs, and global supply chain issues, but it appears to have deftly managed its inventory and kept margins intact. Although there are likely to be further cost pressures ahead, Electrocomponents appears in a robust position, particularly given that demand for electrical parts shows little sign of waning." Dechra Pharma - Contender To Enter The FTSE 100 "Dechra Pharmaceuticals plc (LON:DPH) has clawed opportunity from the soaring popularity for pets during the pandemic. Its share price has bounded upwards and it is a prime contender to take a walk into the FTSE 100. With so many more people working from home, it’s been an ideal opportunity to settle in a new furry friend and Dechra is in the business of keeping them healthy throughout their lifetimes. Demand for the pharmaceutical company’s veterinary products has been strong, with full year results showing pre-tax profits almost doubling. There is a risk that with incomes facing a squeeze from rising inflation, spending per head could decline, so there could be headwinds to navigate. But other results from pet orientated companies indicate that demand for pets doesn’t seem to be falling away, which bodes well for future revenues streams." Darktrace – Likely To Be Demoted From The FTSE 100 "Cyber security firm Darktrace PLC (LON:DARK) made a stealthy entry into the top-flight at the last reshuffle, but it’s a leading contender to leave the blue chip index given that shares have fallen by 52% since reaching a record high in September. This appears to be down to the end of the lock-up period following its IPO, with big chunks of new shares flooding the market prompting the falls. Darktrace is not alone in being a former IPO darling, now experiencing the pain of a rapid deceleration in its share price. Its successful launch in the spring was seen as a coup for the London market, and if it exits the top-flight it will leave a big tech gap in the FTSE 100. However, given ongoing growth reported by the company and some pretty upbeat trading updates, it may not stay outside the top-flight for long.  There is growing demand for sophisticated technology to counter the growing armies of cyber criminals and Darktrace uses AI to scan regular business operations and detect tiny irregularities, providing an early warning system of cyber-attacks. The ongoing shift to digital is likely to keep opening up new opportunities and markets for Darktrace as firms scale up their operations to meet demand, whilst trying to ensure their systems stay secure." Johnson Matthey – Likely To Be Demoted From The FTSE 100 "Investors are clearly worried about Johnson Matthey PLC (LON:JMAT)’s strategy for the future and amid this uncertainty, the company risks sliding out of the FTSE 100. The engineering company’s decision to abandon plans to become a battery supplier by selling off its eLNO business saw shares slide, because this appeared to be JMAT’s answer to the shift towards electric vehicles and away from combustion engines, for which it makes catalytic converters. Management says it will focus on other potential growth avenues, but ultimately the group will be starting from scratch as it looks for new opportunities alongside the new greener auto industry. Although catalytic converters won’t be rendered obsolete immediately, the clock is ticking and as the transition to electric vehicles speeds up, Johnson Matthey will need to quickly find a new sense of direction." AO World – Likely To Be Demoted From The FTSE 250 "Online electrical retailer AO World PLC (LON:AO) was well set up to capitalise on the accelerated shift to e-commerce during the first stages of the pandemic, with profits soaring as demand for white goods and IT equipment bounded higher. But the company has come down to earth with a bump, falling to a £10 million half year loss, sending shares plummeting, and this dramatic reversal of fortunes is likely to see it kicked out of the FTSE 250. Its rapid growth seems to have been part of the problem, given that it hasn’t had as much time to build up deep relationships with suppliers, so when the supply crunch hit for electrical goods, it was lower down on the list of priorities. Higher labour and transport costs exacerbated by the shortage of drivers have also dented margins, given that it’s so reliant on its delivery network to make sales and provide after care. A quick turnaround is unlikely given that the company has warned that the crucial Christmas trading period will be tough, with supply chain issues lingering, so AO World may find it hard to climb back up the ladder into FTSE 250 territory for some time." The Restaurant Group – Likely To Be Demoted From The FTSE 250 "As fears about the Omicron variant swirl, there are fresh concerns that restrictions could be tightened on hospitality firms and The Restaurant Group PLC (LON:RTN) hasn’t escaped this fresh round of volatility. Although shares are up marginally today, they have fallen by 35% over the past month as investors worry that despite a big round of cost cutting and the slimming down of its restaurant footprint, a big bounce back in fortunes remains elusive.  Although its star brand Wagamama is dishing out fast food as fast as it can make it to crowds queuing outside restaurants or ordering in from home, its airport concessions arm has struggled with a 53% fall in like-for-like sales at the last quarterly reading, as tourism has been slow to recover. Like many other firms in the sector the company is also facing the challenges of higher costs and wage pressures, amid a shortage of staff and those problems look set to linger." Provident Financial - Contender For The FTSE 250 "Provident Financial plc (LON:PFG), the sub-prime firm known for specialising in credit cards, online loans and consumer car finance is likely to gain a foothold in the FTSE 250 after its valuation recovered as it’s pivoted the business. The company called time on its doorstep lending business earlier this year as part of its attempt to climb out of a financial black hole, after being forced to pay compensation for mis-selling its products. Shifting its business model away from riskier high interest loans towards a mid-cost credit model is now more of a focus for the company and it’s a direction of travel investors have embraced. Although the shine has come off the share price in recent days, which may be partly due to fears that if the new variant leads to another downturn, the potential for bad loans could increase, shares are still up by 41% over the past six months." Petershill Partners – Contender For The FTSE 250 "Petershill Partners PLC (LON:PHLL) only started trading on the London Stock Exchange in September but already it’s a leading contender to step into the FTSE 250. Petershill owns minority stakes in a range of alternative asset managers such as venture capital firms and private equity companies, many of which had been managed by Goldman Sachs for a decade or more.  Assets under management at the investment firm increased by 8% in the third quarter, and it has its eye on fresh prizes with new acquisitions being sized up. Petershill has capitalised on the hunger for private equity investments in an era of ultra-low rates, enabling firms to borrow cheaply to finance takeovers.  With an increase in interest rates looming there is a risk that appetite for such assets may wane, and that might partly account for a slight nudging downwards in the share price over the past month." About Hargreaves Lansdown Over 1.67 million clients trust us with £138.0 billion (as at 30 September 2021), making us the UK’s number one platform for private investors. More than 98% of client activity is done through our digital channels and over 600,000 access our mobile app each month. Updated on Nov 30, 2021, 12:19 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: valuewalkNov 30th, 2021

Disney Under Fire For Blocking Simpsons Episode From Hong Kong Streaming Services

Disney Under Fire For Blocking Simpsons Episode From Hong Kong Streaming Services A month ago we reported that Hong Kong's new pro-China film censorship law could see an eventual ban on Netflix and Amazon and other streaming services. The legislation was part of the continuing unfolding of the sweeping pro-China 'national security law' of June 2020, with the film censorship even working retroactively for any movies or programming "found to be contrary to national security interests". Questions are now being asked about why Disney's streaming service in Hong Kong, Disney Plus, has blocked a popular episode of the "Simpsons". The episode in question features reference to the famous "tank man" photo from the June 1989 Tiananmen Square protests and massacre. The episode entitled "Goo Goo Gai Pan" also features jokes or references that could be deemed offensive to people of Chinese or Asian descent. The Simpsons The censorship law which was enacted late last month brings Hong Kong in closer to conformity to the kind of blatant censoring and wholesale blocking of content that's long existed on the mainland. The law spells out that films are prohibited from any content aiming to "endorse, support, glorify, encourage and incite activities that might endanger national security." According to The Wall Street Journal on Monday: Disney launched its streaming service, Disney+, earlier in November in Hong Kong featuring an array of programming owned by the entertainment giant, including 32 seasons of the animated comedy series. Yet one episode is missing from "The Simpsons" lineup: Titled "Goo Goo Gai Pan," the episode from season 16 centers on a trip to China by the show’s namesake family. Along the way they encounter a plaque at Tiananmen Square in Beijing that reads: "On this site, in 1989, nothing happened." The scene is an obvious sarcastic shot aimed directly at Chinese Communist propaganda and its well-known whitewashing of the whole events of June 4, when the PLA military declared martial law and occupied central parts of Beijing, forcibly quelling the protests through gunfire. In the episode the family actually takes a trip to China where they happen upon the iconic square where "nothing happened".  Chinese state official have downplayed the death toll, saying in the past that up to 200 civilians died in the mayhem, while activists and student leaders have said over 3,000 or more deaths resulted in the PLA crackdown, which included live ammunition, and use of tanks against civilian crowds. Official Chinese media and politicians tens to only reference what they dub "the incident". Confirmed this second by a friend in Hong Kong. S16E12 of The Simpsons is removed from Disney+ in Hong Kong. pic.twitter.com/9QIp2vcOCD — Thor J (@thorcmd) November 27, 2021 The WSJ notes that it's as yet unclear if Disney caved to pressure from China, as the US company has yet to publicly comment on why the episode in question remains blocked. But there's little doubt Disney has in the recent past shown its willingness to "play nice" and avoid offending Beijing while protecting its billions in revenue there: "Disney has huge business interests in China, a market that it and other Hollywood studios are careful not to offend for fear of losing access," the WSJ report describes. "Disney, with resorts in China and Hong Kong and extensive sales from its movie business in the region, has moved aggressively to maintain the peace with China over the years, a fact that has brought it some controversy in the U.S." Shortly after the HK policy was enacted, there were questions over how it would impact US-based streaming services. The AFP observed at the time: "Pro-Beijing lawmakers criticized the government for not including online streaming companies in the current wording, meaning services like Netflix, HBO and Amazon may not be covered but the new rules." But "In response, Commerce Secretary Edward Yau said all screenings, both physical and online, were covered by the new national security law." Tyler Durden Mon, 11/29/2021 - 19:20.....»»

Category: blogSource: zerohedgeNov 29th, 2021

FlexJobs Names 50 Virtual Companies Thriving On Remote Work

A growing number of companies of all sizes and across industries operate in a fully virtual environment Q3 2021 hedge fund letters, conferences and more Boulder, CO, November, 29, 2021 – A recent FlexJobs survey revealed that 58 percent of respondents prefer a fully remote job post-pandemic. However, 42 percent also report that their employers […] A growing number of companies of all sizes and across industries operate in a fully virtual environment 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); Q3 2021 hedge fund letters, conferences and more Boulder, CO, November, 29, 2021 – A recent FlexJobs survey revealed that 58 percent of respondents prefer a fully remote job post-pandemic. However, 42 percent also report that their employers will require them to return to the office full-time, and 27 percent will be expected to return to a hybrid model. To highlight the many different companies that do operate in a fully remote capacity, and to help connect job seekers to careers they can do entirely from home, FlexJobs has identified 50 virtual companies that are currently or have recently been hiring for fully remote jobs. “The pandemic pushed many people to reconsider the relationship between their personal and professional lives, and it’s telling that now 44% know someone who has quit or is planning to quit because of in-person work requirements,” said Sara Sutton, Founder and CEO of FlexJobs. “We hope this expansive list of virtual companies helps connect job seekers to the types of remote job opportunities they’re pursuing, and showcases the many different types of companies that embrace remote work as their standard business practice,” Sutton concluded. 50 Virtual Companies Thriving On Remote Work The 50 companies highlighted below allow all of their team members to work remotely full time and are currently or have recently been hiring for 100 percent remote jobs. The list was based on researching tens of thousands of companies in the FlexJobs database, although it is not an exhaustive list of the companies that are fully remote.  They are listed in alphabetical order. Aha Andela Anedot Automattic Basecamp BenchSci Betterworks Blackthorn Boulevard Software BRYTER GmbH Chainlink Labs Clevertech Close Codeless Community.co Customer.io Endgame360 Evolving Wisdom FingerprintJS Food Revolution Network GitLab Greenback Expat Tax Services Hello Alice Higharc InVision Knock Life360 LoveToKnow Media Mattermost Modern Tribe MomsRising Nathan James Netlify RealSelf Remote Year Scopic Scrapinghub ShipHero Sourcegraph TaxJar (a Stripe Company) Theorem.co Time Doctor Toggl Toptal Upworthy Vistaprint Working Solutions Wrapbook XWP Zapier To support professionals throughout their job search journey, FlexJobs’ Career Coaching team offers the following key advice for navigating the current job market and landing a coveted, work-from-home position: Research and Identify Remote Opportunities Evaluate whether a fully remote position is the right fit for personal and professional goals by reviewing these eight traits of a successful remote employee, and consider using this four-step system to identify potential new career opportunities. Be Persistent and Plan Accordingly Having a good course of action and executing a consistent networking plan will help to maximize a candidate’s chances for success. Job seekers should spend time identifying the key tasks they need to do as a part of the job search, such as updating their resume or cover letter, enhancing their online presence, or doing additional upskilling, and then break them down into smaller, more manageable goals to accomplish each week. Tailor Every Application Top remote candidates tailor their resumes and cover letters for every application. They also include details about previous remote experience throughout both, highlighting the specific skills that make a great remote worker, such as written and verbal communication, organization and productivity, and time and task management. Additionally, the career coaches at FlexJobs have compiled creative tips for how remote employees can thrive in a virtual work environment: Establish a morning routine Work outside the house at least once or twice per week Designate a specific space and time to work Stay active while working Create an ergonomic workspace Use tech to collaborate with coworkers Take breaks and use them wisely Don’t neglect your professional development Consider relocating to a new city About FlexJobs FlexJobs is the leading career service specializing in remote and flexible jobs, with over 100 million people having used its resources since 2007. FlexJobs provides the largest database of vetted remote and flexible job listings, from entry-level to executive, startups to public companies, part-time to full-time and freelance. To support job seekers in all phases of their journey, FlexJobs also offers expert advice and career coaching services. In addition, FlexJobs works with leading companies to recruit quality remote talent and optimize their remote and flexible workplace. A trusted source for data, trends, and insight, FlexJobs has been cited in top national outlets, including CNN, The Wall Street Journal, The New York Times, CNBC, Forbes magazine, and many more. FlexJobs also has partner sites Remote.co and Job-Hunt.org to help round out its content and job search offerings. Follow FlexJobs on LinkedIn, Facebook, Twitter, Instagram, TikTok, and YouTube. Updated on Nov 29, 2021, 3:40 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: valuewalkNov 29th, 2021

Why (And How) B2B Companies Should Raise Prices Right Now

In March, a massive ship named the Ever Given ran aground in Egypt’s Suez Canal, which had knock-on effects around the world. Since then, and as we have headed out of the pandemic, other serious supply chain issues have surfaced. More recently, the great resignation has made it harder than ever to find top talent, […] In March, a massive ship named the Ever Given ran aground in Egypt’s Suez Canal, which had knock-on effects around the world. Since then, and as we have headed out of the pandemic, other serious supply chain issues have surfaced. More recently, the great resignation has made it harder than ever to find top talent, and a recent study found that 88% of Americans are worried about inflation as we head into the holiday season. Nowadays, there is more concern than ever about something bad happening to the economy. All these issues can squeeze company profits. What should B2B companies do about it? .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 Ray Dalio Series in PDF Get the entire 10-part series on Ray Dalio 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 When profitability suffers, the first order of business is to lower company costs. For example, Lean Process Improvement can have lasting positive effects on the bottom-line. Businesses can and should also consider outsourcing functions like IT, payroll, and even manufacturing. There may be alternate raw material suppliers, contractors, or temps that are capable of bringing instant skills to your organization. Cost reductions aside, to maintain profitability in these strange times, companies will also need to take pricing action. Different approaches are available for raising prices, but increases must be carefully implemented, with an eye to the competition. It is also important to look out for possible disruptors lurking in the shadows. Strategy Any pricing initiative should start with an understanding of company growth engines and the important sources of volume. Don’t jeopardize those. It is also necessary to have good tabs on market participants, since competition and differential value sets the boundaries for pricing. Improving the differential value of offerings makes it easier for customers to pay more! At the core of business strategy is segmentation, based on a solid understanding of customers performance needs, purchasing process and criteria. Do they want to buy direct or through a distributor, and where are there price sensitivities? Less profitable SKUs can be sold through alternate channels like ebusiness. Be more aggressive with price in segments where there are no clear substitutes. Make sure value propositions are fine tuned for each target segment. Do the company offerings help customers reduce cost (e.g. faster adhering glue for speedy processing), or increase revenue (maybe enabling a green claim with water based auto paint). There is nothing wrong with charging different prices in different markets. Re-Frame The Price Products, services and parts can be classified by how unique they are. Custom products and parts can be marked up, while items like nuts, bolts and hose need to be lower priced to avoid substitution. Having Good, Better and Best products for entry level, target level and show off products allows pricing flexibility. Lower price offerings with higher margins, like private label items or insourced entry level products also have their place in the product range. Items that are usually bought together can be bundled into an assembly or dispersion that makes subsequent processing faster. Parts used for routine maintenance, including consumables, lend themselves well to bundling. Imagine the convenience of a kit for gasket replacement, saving time and trips to the hardware store. Bundles can be priced slightly lower than the sum of the parts, or higher if there are efficiency gains. If an offering is late in its life- cycle and sales are declining, customers can be migrated to SKUs with better margins. Exploit price elasticity when switching costs are high, or there is a great degree of customization. Re-Define The Product Product definition can be changed by adding a valuable service component like installation or vendor managed inventory to a physical product. Delivery or maintenance contracts can be branded and productized for better price differentiation. Changes in product packaging are relatively easy -adding color coding on boxes, or offering tote quantities of liquids both offer opportunities for price adjustments. Price structure can be modified with a different unit of measure, and charging by activity like hours flown, gallons pumped or number of students trained. Industrial customers often prefer renting over buying, whereas Government customers may have easier access to capital budgets. Subscription models are popular in software and can also be used for consumables or rental equipment. Automatic renewals make the relationship stickier. The same product can be offered with different variations of fixed and variable price. Certain customers will prefer a monthly fixed fee with a variable usage charge, over a higher fixed fee with a capped variable. Communicate Value Many companies are shy about communicating quality and value. Be explicit about a product's price position in the market. Don’t let prospects guess -if you have a unique or premium product, say so to justify a higher price. Research customer operations in detail, and determine what end benefit your product contributes. Then value- price accordingly, while being very collaborative around innovation and product development. Stimulate new demand with an offering and pricing configurator tool on the website. Active Use of Terms Change the price context and mark up freight and rush orders, and have a surcharge for small orders. New clients can be hooked with a basic service, then offered self-serve upsell for more functionality. Changing cut-offs and target levels for volume discounts and rebates helps improve margins. Enforce surcharge rules in contracts for fuel, shipping costs or raw material price pass-throughs. Optimize price for high use/ high utility SKUs. If price increases are risky, there might still be a share of wallet to be had. If there is a great need to differentiate pricing between customers, payment terms can be adjusted. Implementation Before implementing price increases, charter a cross-functional pricing team including Sales, Marketing, Finance, and Operations. When deciding on pricing adjustments, reexamine prices line by line. SKUs that have not had increases recently may be priced too low, hence there will be less resistance to increases. Always make sure to provide product and service options to retain price sensitive customers. Cheaper, stripped-down “Good” versions work well for retaining customers, as do lower priced offerings made available in limited quantities only. When communicating price increases, provide an explanation for your decision. Don’t shy away from mentioning how long it’s been since prices were previously adjusted, or highlighting how much the customer has raised their selling prices. It is also a good idea to signal pending price increases directly to important customers. Announcing upcoming price moves through trade press is not collusion, and gives competitors a chance to follow suit, increasing industry profitability across the board. Bottom Line It is difficult to make a conventional price increase stick. Effective pricing starts with segmentation of the market, based on customer needs. With pain points well understood, an offering meeting segment needs can be designed and priced according to the value it provides. Adding service components to products can add differentiation, as can innovative pricing models like subscriptions or activity-based pricing. No matter how a company arrives at a price, it is important to communicate the value of each product and service. About Per Ohstrom Per Ohstrom is a CMO with Chief Outsiders, the nation’s fastest growing “executive-as-a-service” company. Updated on Nov 29, 2021, 3:05 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: valuewalkNov 29th, 2021