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Health Carriers Hanging Tough Despite D.C. Debacle

by DarkoStojanovic from Pixabay

 

Health Carriers Hanging Tough Despite D.C. Debacle

By Alan Farley | April 6, 2017 — 12:01 PM EDT

Health insurance carriers are holding intermediate support levels despite chaotic political swings that have generated massive opposition to Republican health care reform efforts. This resilient price action tells us investors and market players aren’t worried, at least yet, that industry profits will suffer when the smoke clears, and new legislation becomes the law of the land.

A number of major carriers have already pulled out of ACA coverage, lowering their exposure to legislative surprises, but that might not protect them because new laws are likely to impact the entire system from premium gathering to final payments. Also, taking insurance away from tens of millions of current policyholders could also have an adverse and chaotic effect because that entire premium base will be lost.

UNH

Dow component UnitedHealth Group, Inc. (UNH) broke out above the 2005 high at $64.61 in 2013 and entered a powerful trend advance that continued to post new highs into the first quarter of 2017. Rally momentum escalated after the November election, signaling optimism that new administration policies would underpin profitability. The company pulled out of ACA coverage in 2016.

It hit an all-time high at $172.14 on March 16th and turned lower, posting greater than average selling volume during Congressional negotiations that broke down near month’s end. The decline settled on the 50-day EMA about two weeks ago, with the stock holding like glue to that intermediate support level into April. The selloff had an adverse impact on institutional sponsorship, with On Balance Volume (OBV) falling to the lowest-low since January.

AET

Aetna, Inc.(AET) topped out at $60 in December 2007, following a 7-year uptrend, and sold off to the mid-teens during the 2008 economic collapse. It returned to the prior high in 2013 and broke out, entering an uptrend that peaked at $134.40 in June 2015, ahead of an intermediate correction that found support in the low-90s in the first quarter of 2016. The subsequent recovery wave reached resistance after the election, but the stock failed to break out, instead of turning lower into February.

A bounce at the 200-day EMA gathered momentum into mid-March but reversed about 2-points under the 2016 high, dropping back to the 50-day EMA during the health care debate. On Balance Volume (OBV) has been dropping like a rock since 2016, signaling a bearish divergence that opposes a bullish cup and handle breakout pattern. This marks a major bull-bear standoff that could last into the second half of 2017.

HUM

Humana, Inc.’s (HUM) pattern looks similar to rival AET because the companies were locked into a merger agreement until the Federal government nixed the deal in January 2017. HUM topped out in the upper-80s in January 2008 and sold off into the upper-teens in March 2009. It took more than two years for the subsequent bounce to reach resistance at the prior high, ahead of a 2014 breakout that stalled near $220 in May 2015.

The stock carved a long rounded base into the second half of 2016 and took off in a strong rally that reached the prior highs in December. It pulled back into January 2017, testing the 200-day EMA and returned to resistance once again, completing a cup and handle breakout pattern. The stock is also sitting on the 50-day EMA after the reform debacle but has attracted much strong buying interest than its former suitor.

The Bottom Line

Health insurance carriers have pulled back to their 50-day EMAs and entered holding patterns after the administration, and House of Representative failed to deliver health reform legislation to the U.S. Senate. While UnitedHealth Group has carved the strongest rally in recent years, Humana now shows the greatest upside potential, after completing a cup and handle pattern backed by strong buying volume.
Published at Thu, 06 Apr 2017 16:01:00 +0000

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Bezos is selling $1 billion of Amazon stock a year to fund rocket venture

Amazon and Blue Origin founder Jeff Bezos addresses the media about the New Shepard rocket booster and Crew Capsule mockup at the 33rd Space Symposium in Colorado Springs, Colorado, United States April 5, 2017. REUTERS/Isaiah J. Downing

 

Bezos is selling $1 billion of Amazon stock a year to fund rocket venture

By Irene Klotz| COLORADO SPRINGS, Colo.

Amazon.com founder Jeff Bezos said on Wednesday he is selling about $1 billion worth of the internet retailer’s stock annually to fund his Blue Origin rocket company, which aims to launch paying passengers on 11-minute space rides starting next year.

Blue Origin had hoped to begin test flights with company pilots and engineers in 2017, but that probably will not happen until next year, Bezos told reporters at the annual U.S. Space Symposium in Colorado Springs.

“My business model right now … for Blue Origin is I sell about $1 billion of Amazon stock a year and I use it to invest in Blue Origin,” said Bezos, the chief executive of Amazon.com Inc (AMZN.O) and also the owner of The Washington Post newspaper.

Ultimately, the plan is for Blue Origin to become a profitable, self-sustaining enterprise, with a long-term goal to cut the cost of space flight so that millions of people can live and work off Earth, Bezos said.

Bezos is Amazon’s largest shareholder, with 80.9 million shares, according to Thomson Reuters data. At Wednesday’s closing share price of $909.28, Bezos would have to sell 1,099,771 shares to meet his pledge of selling $1 billion worth of Amazon stock. Bezos’ total Amazon holdings, representing a 16.95 percent stake in the company, are worth $73.54 billion at Wednesday’s closing price.

For now, Kent, Washington-based Blue Origin is working toward far shorter hops – 11 minute space rides that are not fast enough to put a spaceship into orbit around Earth.

Blue Origin has not started selling tickets or set prices to ride aboard its six-passenger, gumdrop-shaped capsule, known as New Shepard.

The reusable rocket and capsule is designed to carry passengers to an altitude of more than 100 miles (62 km) above the planet so they can experience a few minutes of weightlessness and see the curvature of Earth set against the blackness of space. Unmanned test flights have been underway since 2015.

At the symposium, Bezos showed off a mockup of the passenger capsule, which sports six reclined seats, each with its own large window. Also on display was a scorched New Shepard booster rocket that was retired in October after five flights.

Like fellow tech entrepreneur Elon Musk, founder and chief executive of SpaceX, Bezos says that reusability is the key to cutting the cost of space flight. Last week, SpaceX re-launched a rocket for an unprecedented second mission to put a spacecraft into orbit.

“The engineering approach is a little different, but we’re very like-minded,” Bezos said of Musk.

Blue Origin is developing a second launch system to carry satellites, and eventually people, into orbit, similar to SpaceX’s Falcon 9 and Dragon capsule.

Development costs for that system, known as New Glenn, will be about $2.5 billion.

There is no estimate yet for how much Bezos will invest overall on Blue Origin. But Bezos has indicated he will spend what it takes.

“It’s a long road to get there and I’m happy to invest in it,” Bezos said.

According to Forbes magazine, Bezos has a net worth of $78 billion.

 

(Reporting by Irene Klotz; Editing by Leslie Adler)
Published at Thu, 06 Apr 2017 01:35:12 +0000

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Government orders Wells Fargo to reinstate whistleblower

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 Government orders Wells Fargo to reinstate whistleblower

By Pete Schroeder

The federal government has ordered Wells Fargo (WFC.N) to reinstate a former bank manager who lost his job after reporting suspected fraudulent behavior at the bank.

The Labor Department’s Occupational Safety and Health Administration (OSHA) announced on Monday that the bank must rehire the employee, as well as pay back wages, compensatory damages and attorneys’ fees totaling $5.4 million.

OSHA concluded that the manager was “abruptly” forced to leave a Los Angeles branch of the bank in 2010, after he told superiors he suspected two of his subordinates of bank, mail and wire fraud. The manager also called the bank’s ethics hot line. OSHA determined his whistleblowing was “at least a contributing factor in his termination.” The manager was not named.

The bank is planning to request a full hearing on the OSHA decision before the Labor Department’s Office of Administrative Law Judges. Such a step will not halt the initial reinstatement order.

“We take seriously the concerns of current and former team members. This decision is a preliminary order and to date there has been no hearing on the merits of this case. We disagree with the findings and will be requesting a full hearing of the matter,” said Vince Scanlon, a bank spokesman.

According to OSHA, the manager had previously received positive job performance appraisals, but in 2010 he was told he had 90 days to find a new job at the bank after being dismissed as a manager. He was unable to do so and was terminated, and has not found work in banking since.

The manager worked in Wells Fargo’s wealth management group, according to the bank.

The OSHA decision is unrelated to the bank’s woes surrounding the creation of potentially millions of fake accounts by employees looking to hit sales goals. In that case, the bank has also come under scrutiny over whether it punished whistleblowers that notified superiors of wrongdoing involving Wells Fargo employees.

(Reporting by Pete Schroeder; Editing by Tom Brown and Steve Orlofsky)
Published at Mon, 03 Apr 2017 23:11:39 +0000

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Tesla Hits All-Time High, Passes Ford in Market Cap

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Tesla Hits All-Time High, Passes Ford in Market Cap

By Rakesh Sharma | April 3, 2017 — 7:14 PM EDT

Call it a symbolic change of the guard, if you will. Tesla, Inc. (TSLA), which kick started the electric car revolution, passed Ford Motor Company (F), a company that pioneered the car revolution in the United States, in market value today.

At the end of trading, Tesla’s share price was $298.52, an increase of 7.27 percent since the day’s start. That bump brought its total market capitalization to $48.63 billion, making it the second biggest automotive stock in the markets. Only General Motors Company (GM) is ranked higher. In comparison, Ford’s stock price declined by 1.7 percent to $11.44, and its total market capitalization declined to to $45.4 billion. (See also: Elon Musk Mocks Short Sellers After Tesla Stock Surge.)

Tesla’s stock price shot up after the company reported record deliveries of 25,000 vehicles during its first quarter. Investors were enthused by the announcement, as it means that the company is on track to deliver 50,000 vehicles during the first half of this year. In contrast, Ford was hit by an overall decline in passenger car sales in the country and reported a 7.2 percent decline in sales of its cars. (See also: Tesla Reports Record Deliveries in the First Quarter.)

A Wall Street Journal report about Tesla’s soaring stock price draws another parallel between the two companies. Henry Ford was 45 – the current age of Tesla CEO Elon Musk – when he released the Model T, the common man’s car. Musk is scheduled to release the Model 3, an affordable electric car priced at $35,000, later this year. Musk is also said to have cheekily named Tesla’s sedan Model S because the letter S comes before T in the alphabet. (See also: Elon Musk Biography.)

But the stock market’s valuation for both companies is not reflective of the scale of their operations or profits. For example, Ford reported profits of $10.4 billion last year and had a positive cash flow of $6.4 billion. Meanwhile, Tesla reported losses of $773 million and had negative cash flow. Ford delivered 6.6 million vehicles last year, while Tesla delivered 76,000. (See also: Tesla’s Stock Drops on Missed Delivery Forecast.)

However, the market’s assessment of Tesla is based on the electric car maker’s future prospects. Volatility in global oil prices combined with the threat of global warming has resulted in a surge of interest in renewable energy products. Cities and countries have passed legislation that mandates increased penetration for electric cars and solar products. Tesla is well positioned to take advantage of this rapidly expanding market. The company acquired solar panel maker SolarCity Corporation to provide a full stack of renewable energy solutions from solar panels to storage facilities and electric cars to customers.

That, at least, is Tesla CEO Elon Musk’s vision. A critical litmus test for that vision will occur this summer, when the company starts production on its first mass-market electric car, the Model 3. The company is already facing the prospect of a workers’ strike and has weathered criticism from naysayers regarding its capital raise to expand production facilities. But a successful Model 3 debut will ensure Musk’s place in the history books – right next to Henry Ford. (See also: Tesla Model 3 Could Become Safest Car on Road.)
Published at Mon, 03 Apr 2017 23:14:00 +0000

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Ford recalls F-250 pickups that could roll while in park

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Ford recalls F-250 pickups that could roll while in park

The recall, the third announced by Ford this week, affects 2017 model year F-250 vehicles powered by 6.2-liter gasoline engines and built in its Louisville, Kentucky, truck plant, it said in a statement.

Ford, the second-largest U.S. automaker, also said it was unaware of any injuries or accidents associated with the latest issue.

The company said on Wednesday it was recalling 211,000 vehicles in North America to replace potentially faulty side door latches.

Another recall involves 230,000 vehicles that present a fire risk in the engine compartment. Ford said it had reports of 29 fires related to that issue but no injuries.

The Dearborn, Michigan-based automaker had previously recalled nearly 4 million vehicles for door latch issues in six separate announcements since 2014, including 2.4 million vehicles recalled in late 2016.

(Reporting by Frank McGurty; Editing by G Crosse and Bill Trott)

 
Published at Sat, 01 Apr 2017 17:30:18 +0000

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BlackBerry lives! Stock soars on strong outlook

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Blackberry CEO: The smartphone market is saturated
Blackberry CEO: The smartphone market is saturated

BlackBerry lives! Stock soars on strong outlook

Shares of BlackBerry(BBRY, Tech30) surged nearly 15% on Friday after the company reported sales that topped Wall Street’s forecasts. The company also reported beat estimates with its adjusted profit, a figure that excludes restructuring charges and other expenses.

Make no mistake, though: BlackBerry, which used to be known as Research in Motion, is a shell of its former self. The stock is down about 95% from its peak in 2008.

And when you include charges, BlackBerry still lost $47 million in its most recent quarter and $1.2 billion for the full fiscal year. Revenues plunged as well.

It’s well known that BlackBerry’s phone business is essentially dead. BlackBerry is transitioning from a company known mainly for old-school smartphones with physical keyboards to a company that develops software for other phone makers.

And that shift appears to be going extremely well.

CEO John Chen said Friday that the company expects to report a real profit this fiscal year. Not a profit after accounting for one-time charges. An actual profit.

Investors are also happy that the company is no longer burning cash. Not long ago, investors were worried BlackBerry was going to run out of money.

But it finished the quarter with $1.7 billion on its books, up nearly $90 million from the end of November.

The company’s shift from hardware to software seems to be paying off. BlackBerry said last September that it would stop making phones itself and would outsource production of BlackBerry-branded phones to other companies.

It was a stunning admission of defeat for the firm, which was once so popular that people referred to its phones as CrackBerries. Former President Barack Obama and Kim Kardashian West were big fans.

But BlackBerry was late to the smartphone game, relying too long on keyboards and its proprietary operating system. Apple(AAPL, Tech30), Samsung and others in Google’s(GOOGL, Tech30) Android camp vaulted over BlackBerry in market share.

Even Microsoft(MSFT, Tech30) — which hasn’t done all that well with its own Windows Phone business after spending billions to buy assets from Nokia(NOK), another former king of the handset world — has eked out a bigger share of the market than BlackBerry.

Software and services now account for almost 60% of BlackBerry’s overall sales. It’s also a growing player in connected devices, the so-called internet of things.

Ford(F) is a key partner for BlackBerry. The auto giant uses BlackBerry’s QNX software in some of its cars. And Ford just hired 400 BlackBerry workers to develop connected cars.

So even though BlackBerry had to concede defeat in the smartphone wars, and even though it may never again be CrackBerry, its new focus is giving it a good chance of survival.
Published at Fri, 31 Mar 2017 16:40:04 +0000

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The Case for Socialized Medicine

by DarkoStojanovic from Pixabay

The Case for Socialized Medicine

By: John Browne | Thu, Mar 30, 2017


Last week the American political establishment was shaken to its foundation
when the Republican Party leadership withdrew the American Health Care Act
(AHCA) just before the vote was to be taken on the floor of the House of Representatives.
Besides being a most unusual procedure, it exposed a fundamental split in the
country,reflected not merely in Congress but within the Republican Party. GOP
purists, represented by the House Freedom Caucus, demanded more significant
roll backs in socialized medicine that were contained in the Ryan plan. Their
refusal to back the plan, after years of promising complete repeal, doomed
the bill.

Given the political and popular landscape, the legislative fiasco should cast
serious doubt that Washington will ever be able to take any meaningful steps
to roll back government involvement in health care. Although widely considered
a failure of design and execution, Obamacare seems to have succeeded in one
important mission: It has created an even greater dependency on government
in the health care marketplace. Getting government out is now much more difficult
than it was just eight years ago. This may have been the democrats’ plan from
the start. As a result, the choice conservatives now face is to embrace an
increasingly complex, cumbersome, and inefficient public/private hybrid system,
or to acknowledge the political reality and make the most palatable lemonade
they can from the lemons that are available. Believe it or not, that may argue
for a deeper embrace of socialized medicine.

Contrary to the current rhetoric, Obamacare was not in fact America’s first
foray into socialized medicine and it did not represent the kind of crossed
Rubicon that Republicans like to accuse it of being. The door had first been
opened in the Second World War when government imposed wage controls that gave
incentives to employers to bundle health insurance into compensation packages.[1] When
the government then made employer-provided insurance tax deductible, such plans
became the norm. But the government really charged into the market in 1965
with the creation of Medicare and Medicaid. For many years, Republicans have
had to twist themselves into logical pretzels in order to argue that Obamacare
is socialism while Medicare is not.

In granting a brand new entitlement, Obamacare did nothing to address the
problems that have plagued the U.S. health care system for decades. It did
not encourage competition among insurers, it demanded a “one size fits all” approach
to coverage, and most egregiously did nothing to contain the rising medical
costs that threaten to bankrupt the nation. To add insult to injury, it required
that people buy insurance that they really didn’t want.

Although the Ryan plan removed the obligation of individuals to buy coverage,
it made many of Obamacare’s shortcomings worse. It left pre-existing condition
requirements in place, which would guarantee that premiums and deductibles
would continue to rise. It did not relax the state restrictions on insurance
competition, nor did it seek to contain medical costs. In other words, the
Ryan plan would have put Republicans on the same hook from which the Democrats
are now hanging. The alternative of a repeal without a replacement, so much
wished for by the hard right, would have created the kind of political chaos
that would virtually guarantee a Republican massacre in 2018 and 2020.

However, Republicans may still, for now, be able to lay claim as the party
of fiscal responsibility. And as a result, I would suggest a basic cost-benefit
analysis. It is clear from almost any standpoint that the socialized health
care available in other developed nations like the UK, Canada and the 34 developed
free market economies of the Organization for Economic Co-operation and Development
(OECD) delivers health care more efficiently than in the U.S.

In October 2012, PBS Newshour reported the U.S. as the world leader in cancer
treatment and health care research. Given our private wealth and the strength
of our university hospitals, this should come as no surprise. But what we have
gained in high end coverage, we have lost in everyday care. The same report
mentioned that there are only 2.4 practicing doctors and 2.6 hospital beds
per thousand people, which is far below the OECD averages of 3.1 and 3.4 respectively.
In addition, the American life expectancy is 78.7 years, in 2010, versus the
OECD average of 79.8 years. (Jason Kane, 10/22/12)

The World Bank reports that, in 2014, the U.S. spent 17.1% of GDP or $9,403
per person on health care. The UK spent 9.1% of GDP or $3,935 per head; Canada
10.4% or $5,292; the EU 10.0% or $3,613′. In 2000, despite spending approximately
twice the amount per head of any other nation, or group average of nations,
the World Health Organization rated the U.S. health system at only 37th, Canada
30th, and the UK 18th out of 191 nations. (WHO Global Health Expenditure Database)
Clearly, we are not getting what we think we are paying for.

Many OECD countries like the UK and Canada have what is termed a ‘single payer’
system sponsored by the state. In the UK, this means that the National Health
Service provides basic ‘bangers and mash’ coverage which includes provisions
for prior conditions and catastrophic illness. Yes, wait times to see a physician
for non-acute conditions are generally longer than in the U.S., but the bureaucratic
process of paying through insurance, with its never-ending forms, co-pays,
deductibles, and network providers, is largely absent.

In the UK, a thriving private health system that provides higher end ‘roast
grouse and soufflé’ services runs alongside the “bangers and mash” state system.
This means that wealthy people with access to greater resources can still seek
care above and beyond what is available through the state. But since the level
of base care is widely regarded as adequate, the two-tiered system does not
generate significant class resentment.

Furthermore, this system allows top specialists to continue serving in the
public system while supplementing their low state income with the higher fees
paid in their private practices. And while doctors in the UK generally make
less than their U.S. counterparts, they are also free of the crushing malpractice
insurance which tends to be a great equalizer.

I have lived for long periods of my life in the UK and the US, I have had
a good deal of exposure to the two health care systems. And while both offer
mixtures of public and private care, the UK’s is much closer to the type of
socialized medicine that has long been the goal of the American left. I have
always considered myself a conservative but the UK system seems preferable
to the monstrosity that has been created by Washington sausage making.

Of course any state system would involve rationing on some level. But if such
guidelines are developed democratically, public acceptance of such limits can
be achieved. By acquiescing to a move towards a single payer system, Republicans
would be in a strong position to ensure that cost containment would be a priority.
In that sense, conservatives could potentially strike at the root of the health
care problem: The inexorable rise in costs and the crushing burden that health
care currently places on the economy. Currently, the push for socialized medicine
has been the province of the Democrats, with the primary energy coming from
the extreme left figures such as Bernie Sanders and Elizabeth Warren. The worst
scenario for health care would be to allow such big spenders and class warriors
to set the agenda.

Given that many countries have succeeded in providing better overall health
care outcomes with universal coverage and at far less cost, it should not be
too much of a stretch for Congress to take the final step and accept an extension
of Medicare to all. Of course, taxes would have to increase to pay for it,
but citizens and businesses would no longer have to pay for insurance themselves.
If the cost of health care can be brought down, the net result is less money
for health care and more for everything else.

I have never been a fan of socialized anything. But in the modern world of
instantly diffused outrage and the increasing frustration with a health care
system that is clearly dysfunctional, Republicans should recognize the political
reality and seize the initiative. A soberly devised plan could vastly streamline
health care delivery, minimize waste, control costs, provide basic care for
all, and perhaps even deal a harsh blow to tort lawyers. Moderate Democrats
would jump on board in droves and President Trump and the Republican Congress
could emerge as winners.

Observers should not count President Trump as down. He has a reputation for
coming back. He may recognize a political winner when he sees it and look to
ditch the ideological baggage of his own party. Trump was not put into office
by card carrying conservatives but by middle class populists who would support
anything that makes their lives less anxious.

I believe that private enterprise always delivers higher quality and lower
prices than government. This is true for goods and services and it also would
be true for health care if the markets were allowed to function freely (which
they have not). But voters today do not perceive health care as a good or a
service, but as a right. Conservatives can argue this point, but they will
lose the emotional battle, which is where this fight will occur.


[1] – BERDINE, Gilbert.
Supply and Demand: Government Interference with the Unhampered Market in U.S.
Health Care. The Southwest Respiratory and Critical Care Chronicles, [S.l.],
v. 2, n. 7, p. 21-24, july 2014. ISSN 2325-9205. Available at: <http://pulmonarychronicles.com/index.php/pulmonarychronicles/article/view/143/353>.
Date accessed: 29 mar. 2017.

Read the original article at
Euro Pacific Capital


John Browne

John Browne, Senior Market Strategist
Euro Pacific Capital, Inc.

John Browne

John Browne is the Senior Economic Consultant for Euro Pacific
Capital, Inc. Mr. Brown is a distinguished former member of Britain’s Parliament
who served on the Treasury Select Committee, as Chairman of the Conservative
Small Business Committee, and as a close associate of then-Prime Minister Margaret
Thatcher. Among his many notable assignments, John served as a principal advisor
to Mrs. Thatcher’s government on issues related to the Soviet Union, and was
the first to convince Thatcher of the growing stature of then Agriculture Minister
Mikhail Gorbachev. As a partial result of Brown’s advocacy, Thatcher famously
pronounced that Gorbachev was a man the West “could do business with.” A graduate
of the Royal Military Academy Sandhurst, Britain’s version of West Point and
retired British army major, John served as a pilot, parachutist, and communications
specialist in the elite Grenadiers of the Royal Guard.

In addition to careers in British politics and the military,
John has a significant background, spanning some 37 years, in finance and business.
After graduating from the Harvard Business School, John joined the New York
firm of Morgan Stanley & Co as an investment banker. He has also worked
with such firms as Barclays Bank and Citigroup. During his career he has served
on the boards of numerous banks and international corporations, with a special
interest in venture capital. He is a frequent guest on CNBC’s Kudlow & Co.
and the former editor of NewsMax Media’s Financial Intelligence Report and
Moneynews.com. He holds FINRA series 7 & 63 licenses.

Copyright © 2008-2017 Euro Pacific
Capital, Inc.

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Published at Thu, 30 Mar 2017 09:16:16 +0000

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The Number of Millionaires Continues to Increase

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The Number of Millionaires Continues to Increase

Charlotte Wold | Updated March 29, 2017 — 2:27 PM EDT

The number of millionaires is growing rapidly and is concentrated largely in the U.S.. By comparison, overall the wealth growth since the millennium – $139 trillion – appears to have been slow since the Great Recession, according to a report released by the Credit Suisse Research Institute.

More Millionaires

The number of millionaires in the world has increased by 155%, while the number of ultra high net worth individuals (defined in the report as people with a net worth above US $50 million) increased by 216%. Of the latter, 51% reside in North America. According to a forecast included in the report, the U.S. will have the highest growth of millionaires in the world over the next five years.

How big? The number of U.S. households with a net worth of $1 million or more, not including primary residence (NIPR), increased by 400,000 to reach a record 10.8 million in 2016

In the U.S., there are 13.6 million people with $1 million or more in wealth, up 283,000 from last year. By the year 2021 the number of millionaires will reach 18 million – a 33% increase – significantly higher than any other country. Another report by Spectrem Group released in March, 2017, suggests that the number is even higher, the number of U.S. households with a net worth of $1 million or more (not including primary residence (NIPR)) increased by 400,000 in 2016.

Credit Suisse also suggests that inequality in the U.S. is on the rise. Although the average wealth is $345,000, the median wealth is only $30,000, a significant drop from last year and three times as low as countries with similar average wealth.

Global Wealth

In the UK, 406,000 people now find themselves outside the millionaire’s club, after US $1.5 trillion was wiped from the country’s household wealth. The decline is largely blamed on Brexit. Overall global wealth has grown 5.2% annually in terms of USD since the year 2000 – a modest growth, according to the report. In dollar terms wealth has grown by $139 trillion; by comparison, the estimated GDP of the entire world in 2015 is US $73.2 trillion.

Published at Wed, 29 Mar 2017 18:27:00 +0000

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SEC denies a second application to list bitcoin product

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 SEC denies a second application to list bitcoin product

By Trevor Hunnicutt| NEW YORK

The U.S. Securities and Exchange Commission on Tuesday denied for the second time this month a request to bring to market a first-of-its-kind product tracking bitcoin, the digital currency.

The SEC announced in a filing its decision denying Intercontinental Exchange Inc’s NYSE Arca exchange the ability to list and trade the SolidX Bitcoin Trust, an exchange-traded product (ETP) that would trade like a stock and track the digital asset’s price. Previously, the regulatory agency said it had concerns with a similar proposal by investors Cameron Winklevoss and Tyler Winklevoss.

“The Commission believes that the significant markets for bitcoin are unregulated,” the SEC said in its filing, echoing language from its decision earlier this month on the application by CBOE Holdings Inc’s Bats exchange to list The Bitcoin ETF proposed by the Winklevoss brothers. On Friday, Bats asked the SEC to review its decision not to allow that fund to trade.

“We are reviewing the SEC’s order and evaluating our next steps,” said Daniel H. Gallancy, chief executive officer of SolidX Partners Inc, a U.S. technology company that provides blockchain services. NYSE did not immediately respond to a request for comment.

Bitcoin had scaled to a record of more than $1,300 this month, higher than the price of an ounce of gold, as investors speculated that an ETF holding the digital currency could woo more people into buying the asset.

But after denial of the Winklevoss-proposed ETF, the digital currency’s price plunged as much as 18 percent. It has rebounded partially since then and was at $1,041 on Tuesday, roughly unchanged from the previous day.

Bitcoin is a virtual currency that can be used to move money around the world quickly and with relative anonymity, without the need for a central authority, such as a bank or government.

Yet bitcoin presents a new set of risks to investors given its limited adoption, a number of massive cybersecurity breaches affecting bitcoin owners and the lack of consistent treatment of the assets by governments.

There is one remaining bitcoin ETP proposal awaiting a verdict from the SEC. Grayscale Investments LLC’s Bitcoin Investment Trust, backed by early bitcoin advocate Barry Silbert and his Digital Currency Group, filed an application last year.

(Reporting by Trevor Hunnicutt; Additional reporting by Gertrude Chavez-Dreyfuss; Editing by David Gregorio and Cynthia Osterman)
Published at Tue, 28 Mar 2017 19:07:02 +0000

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Morgan Stanley Back to November Breakout Level

 

Morgan Stanley Back to November Breakout Level

By Alan Farley | March 28, 2017 — 3:31 PM EDT

Old school investment house Morgan Stanley (MS) stood at ground zero during the 2008 economic collapse but lived to tell the tale, grinding out a less vigorous recovery than rival Goldman Sachs Group, Inc. (GS). To illustrate, it’s trading at an 8-year high after breaking out with the financial sector following the November election but needs another 30-points to reach the 2007 high. Contrast this performance deficit with Goldman, which recently rallied to an all-time high.

Recent sector weakness is starting to take its toll, dropping the stock down to November support in a selling wave could signal the start of an intermediate correction. And there’s no guarantee that dip buyers will come to the rescue in coming months because Congressional tax reform legislation will trigger much lower stock prices if their efforts fail to translate into statute.

MS Long-Term Chart (1993-2017)

MS

The stock came public at $6.64 (post three splits) in February 1993 and eased into a trading range, with support at $6.50 and resistance at $9.50. It held those narrow boundaries into a 1995 breakout that gathered momentum into the July 1998 high at $40.47. The near collapse of Long-Term Capital Management due to the Asian Contagion undermined financial sector sentiment at that time, triggering a steep decline that cut the stock price in half into October.

It returned to the prior high in 1999 and broke out, taking off in a vertical advance that reached an all-time high at $91.31 in September 2000. It lost ground through the rest of the Dot.com bear market, bottoming out in the upper-20s in October 2002 and turning higher in a recovery wave that failed at the .786 Fibonacci selloff retracement level in July 2007. A historic decline then followed, dropping the stock more than 60-points to a 14-year low at $10.15 in October 2008.

A bounce into 2009 stalled in the mid-30s, yielding a 2-year downtrend that posted a higher low in August 2012. Committed buyers then stepped in, lifting price in a steady uptrend that stalled at a 6-year high in the low-40s at the end of 2014. An August 2015 test at that level attracted aggressive sellers, triggering a decline that reached a two-year low in early 2016, while the subsequent recovery wave posted a fresh 8-year high in February 2017.

The monthly Stochastics oscillator has eased into a precarious position, lifting into the overbought level in October 2016 and crossing into a bearish cycle that will yield a long-term sell signal when it crosses back through the black line. The stock is already testing new support at $40, generated by the November rally, and could fail the breakout in conjunction with a bearish crossover. In turn, that has the power to dump price into deep support at the 200-month EMA at 31.

MS Short-Term Chart (2015–2017)

MS

The 2015 decline unfolded in two major selling waves that reached the low-20s in February 2016. A Fibonacci grid stretched across the rally waves into 2017 organizes price action, with a rate of change escalating rapidly after the stock lifted above the 50% retracement level. It posted just a single consolidation pattern between the low-30s and upper-40s, raising odds for a steeper slide if it fails to hold support at the 2015 high (blue line).

On Balance Volume (OBV) topped out in June 2015 and entered a distribution wave that continued into the second quarter of 2016, long after the February reversal. Heavy accumulation from that time into the first quarter of 2017 eliminated the deficit, lifting the indicator to a new high while signaling a bullish convergence that confirms the November breakout. This volume support should limit the downside during a correction.

The Bottom Line

Morgan Stanley turned lower after posting an 8-year high on March 1, losing ground for nearly four weeks in a selling wave that could signal the start of an intermediate correction. The November breakout is at immediate risk because the rally cleared that level by just 7-points while the recent decline has given up an equal number, bringing new support into play.
Published at Tue, 28 Mar 2017 19:31:00 +0000

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BlackRock cuts fees and jobs; stockpicking goes high-tech

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 BlackRock cuts fees and jobs; stockpicking goes high-tech

By Trevor Hunnicutt| NEW YORK

BlackRock Inc on Tuesday said it would overhaul its actively managed equities business, cutting jobs, dropping fees and relying more on computers to pick stocks in a move that highlights how difficult it has become for humans to beat the market.

The world’s biggest money manager has faced active stock fund withdrawals and the revamp is its biggest attempt yet to engineer a turnaround.

Last May, BlackRock said it had recruited Mark Wiseman, the head of Canada’s biggest public pension fund, to oversee the stockpicking operations after he revamped that fund’s operations to embrace data-mining and other technological approaches to investing.

BlackRock is rebranding or adjusting investment strategies on about 11 percent of its $275 billion active stock fund business, putting a greater emphasis on technology-driven investing approaches in the largest set of sweeping changes for the business since transformational mergers that allowed it to grow to manage more than $5 trillion in assets.

Among the changes, BlackRock is removing some seven traditionalist “Fundamental” portfolio managers from their current assignments, according to a source familiar with the matter. More than 40 employees are being laid off, including some of the portfolio managers, according to another source.

The company will also cut fees on some products that are being rebranded as an “Advantage” series of lower-cost active funds.

Planned fee cuts on that group of funds and its “Income” products will slice about $30 million of BlackRock’s revenue, and the company will take a $25 million charge this quarter to reflect severance and other compensation expenses.

The company said it will also expand its investments in data-mining techniques that it said can improve investment performance. Other funds are being refocused to take “high-conviction” bets on stocks.

Active stock managers in the United States have been smacked with withdrawals in recent years as investors increasingly fled to lower-cost products, including index-tracking exchange-traded funds, some of which charge as little as $3 annually for every $10,000 they manage, while the average charged by U.S. stock mutual fund managers is $131, according to data for 2015 from the Investment Company Institute trade group.

An industry bellwether, New York-based BlackRock also owns one of the most prized businesses in asset management, its iShares ETF franchise purchased from Barclays in 2009. Much of the company’s active stock franchise is from its 2006 acquisition of Merrill Lynch Investment Managers.

The changes mark the latest of several attempts by BlackRock to boost an active fund business that represents nearly a third of its assets but an outsized near-50 percent of its fees.

BlackRock CEO Larry Fink has sometimes expressed disappointment in the performance of the company’s actively managed stock funds, and he has pivoted increasingly to focusing on the company’s data-driven “Scientific” equity teams.

“It seems like the Vanguard approach to active equity management,” said Jason Kephart, senior analyst at Morningstar Inc, referring to the giant BlackRock rival that aggressively cuts fees and has also invested in tech-driven investment styles.

“The easiest way to make an active strategy more attractive is just to charge less for it.”

BlackRock’s equity overhaul also invites comparisons to that of another major asset firm rival, Pacific Investment Management Co. In 2015, Pimco’s equity chief left and the Newport Beach, Calif firm liquidated two of its equity strategies after spending years attempting to diversify its investor base to include those buying equity products.

BlackRock shares rose 1.50 percent to $380.63 per share on Tuesday before the announcement.

(Reporting by Trevor Hunnicutt; Editing by Jennifer Ablan and James Dalgleish)

 
Published at Wed, 29 Mar 2017 00:33:07 +0000

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Wells Fargo to pay $110 million to settle lawsuit over account abuses

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 Wells Fargo to pay $110 million to settle lawsuit over account abuses

Wells Fargo & Co (WFC.N) said it agreed to pay $110 million to settle a lawsuit by customers challenging its opening of accounts without their permission, a practice that led to a scandal that cost the bank’s chief executive his job.

The bank said on Tuesday it expects the settlement to resolve claims in 11 other pending class actions, and will cover claims between Jan. 1, 2009, through the date the agreement is executed.

The settlement agreement is yet to be approved by the court.

After attorneys’ fees and costs of administration, claimants will be reimbursed for any wrong fees, Wells Fargo said on Tuesday.

The remaining amount will be distributed to the claimants, based on the number and kinds of unauthorized accounts or services claimed, the bank said.

The lawsuit resolves claims that Wells Fargo’s high-pressure culture drove branch workers needing to meet sales quotas to open unauthorized accounts, including with forged signatures.

Customers said this saddled them with accounts they did not need or want, and fees they knew nothing about.

The lawsuit dates from May 2015, sixteen months before Wells Fargo agreed to pay $185 million in penalties to settle regulatory charges over the sham accounts, estimated to number as many as 2 million.

That settlement with the U.S. Consumer Financial Protection Bureau and Los Angeles City Attorney Mike Feuer prompted national outrage, leading to the departure in October of the bank’s longtime chief executive, John Stumpf.

The named plaintiffs in the lawsuit are Shahriar Jabbari, a Californian, and Kaylee Heffelfinger, from Arizona.

They believed they each had two accounts at Wells Fargo, but said the bank opened a respective nine and seven accounts for them, according to court papers.

Wells Fargo, which has abandoned sales quotas, had already set aside enough money to cover the $110 million settlement.

Its new chief executive, Tim Sloan, in January told analysts that the bank still has “a lot of work to do” to rebuild trust with customers, employees and other stakeholders.

“This agreement is another step in our journey to make things right with customers and rebuild trust,” Sloan said in a statement on Tuesday.

The case is Jabbari et al v. Wells Fargo & Co et al, U.S. District Court, Northern District of California, No. 15-02159.

(Reporting by Jonathan Stempel in New York and Nikhil Subba and Swetha Gopinath in Bengaluru; Editing by Shounak Dasgupta)

Published at Tue, 28 Mar 2017 21:38:51 +0000

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Companies to Gain from India’s Solar Boom

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SunPower Corp. (SPWR) Chief Executive Officer Tom Werner says the world’s largest democracy is set to become the world’s biggest market for solar energy.

Werner attributes his bullish outlook on the forthcoming Indian solar boom largely to Prime Minister Narendra Modi’s commitment to building out the sector. Modi’s administration has announced plans to spend $3.1 billion on state aid for solar panel manufacturing in efforts to increase India’s photovoltaic capacity and build out an export industry.

Goal: 40% of Power from Renewables

The Indian subcontinent, with a rising population of approximately 1.34 billion people, representing approximately 18% of the world’s total. In a country wherein 300 million individuals lack connection to an electrical grid, solar power represents a cost-effective means for Indians to produce their own electricity.

Along with Modi’s solar manufacturing initiative, named Prayas, the government has pledged to draw 40% of India’s total energy from renewables​ by 2030. In November, India built the world’s largest solar plant, capable of powering an estimated 150,000 homes.

Elon Musk, CEO of the merged entity formed by his two companies, SolarCity and Tesla Motors Corp. (TSLA), has also suggested an upcoming entrance into the Indian market. In February, Musk responded to a question on Twitter indicating he’s “hoping” Tesla will launch in India by this summer. (See also: SunPower CEO Skeptical About Tesla’s Solar Roof.)

The Bottom Line

Despite a short-term shock to the alternative energy industry in the U.S. due to heightened uncertainty after Donald Trump’s win and structural headwinds resulting from pricing changes and restructurings, speculation regarding the Indian market is just one example of solar energy’s long-term prospects around the globe. Worldwide, nations are choosing solar contracts over fossil fuels.

While major solar energy providers’ offerings become cost-competitive and nonreliant on changing government regulation, the global arena is simultaneously taking a more serious tack on climate change. (See also: 2017: A Turning Point for the Solar Industry.)
Published at Mon, 27 Mar 2017 02:34:00 +0000

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Micron Gets Six Price Target Hikes on Stellar Q2

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Micron Gets Six Price Target Hikes on Stellar Q2

By Shoshanna Delventhal | March 26, 2017 — 4:08 PM EDT

Shares of U.S.-based DRAM and NAND chip market leader Micron Technology Inc. (MU) hit a multiyear high on Friday, closing up 7.4% at a price of $28.43 per share.

As the Boise, Idaho-based semiconductor manufacturer’s stock reflects an approximate 174% increase year over year (YOY), a wave of analysts issued bullish notes on the chip maker, upgrading shares and lifting their price targets after fiscal Q2 earnings and guidance blew past expectations.

‘The Sun, the Moon and the Stars …’

Analyst Betsy Van Hees at Loop Capital, who maintains a buy rating and lifts her price target on MU from $30 to $25, indicates “the sun, the moon and the stars remain aligned for Micron as it benefits from the sweet spot of the memory cycle.” MKM Partners, Deutsche Bank, Credit Suisse, Nomura, Barclays, Pacific echoed this sentiment.

Barclays’ Blayne Curtis, with an overweight rating on Micron’s shares, lifted his price target from $26 to $35, noting “favorable supply/demand dynamics continue to support healthy pricing and the company improves cost.” Curtis also noted the magnitude of outperformance​ as attributable in part to Micron’s recent integration of Taiwanese Inotera Memories and new technologies ramp up. The analyst concluded, “we remain cognizant that the environment could eventually reverse.” (See also: Micron Closes $4.0 billion Inotera Deal.)

Joining the Bandwagon

MKM Partners, with a buy rating on Micron stock, increased its price target from $34 to $38, as Deutsche Bank, also with a buy rating, lifted its price target from $35 to $30.

John Pitzer of Credit Suisse, with an outperform rating on Micron’s shares and a new $40 price target says, “while MU is clearly benefiting from better cyclical pricing, the more important drivers seem more sustainable—mix, cost-downs and scale efficiencies.”

Nomura’s Romit Shah reiterated a buy rating on Micron and lifted his price target 33% to $40, applauding Micron’s record FQ3 annual earnings guidance of $6.

“Micron is benefiting to an almost comical degree from strong memory trends,” said Pacific Crest analyst Weston Twigg, with a sector weight rating on shares of the DRAM and NAND chip market leader. (See also: Micron Soars on Another Upbeat Earnings Report.)

 
Published at Sun, 26 Mar 2017 20:08:00 +0000

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After Trump rally, equity investors move into healthcare, retailers

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 After Trump rally, equity investors move into healthcare, retailers

By David Randall| NEW YORK

High U.S. share prices are pushing Lipper Award-winning equity fund managers into the shares of beaten-down healthcare companies, retailers and emerging-market stocks that they say offer a greater chance for outsized gains.

Fund managers from Poplar Forest, Parnassus Investments and Brandes Investment Partners are among the 2017 Lipper Award winners who are concerned about the high valuation of the benchmark S&P 500 index. With a forward price-to-earnings ratio above 18, the index is at the high end of its historical range.

Even after tumbling on Tuesday, the index is up more than 10 percent since Donald Trump’s unexpected U.S. presidential election victory on Nov. 8.

“It’s absolutely harder to find stocks at attractive valuations” now than it has been in the past few years, said Todd Ahlsten, lead portfolio manager of the Parnassus Core Equity fund.

As a result, Ahlsten said he has been adding to his positions in healthcare stocks such as Gilead Sciences Inc (GILD.O), Allergan PLC (AGN.N) and Novartis AG (NOVN.S).

Healthcare stocks had fallen in price on concerns over possible drug price controls ahead of the vote on the Republican bill to repeal and replace President Obama’s signature healthcare law. Shares of Gilead Sciences have slumped 5.5 percent since the start of the year; shares of Novartis are up 2 percent over the same time.

The vote, scheduled for Thursday, has now been postponed.

The S&P is up about 5 percent in the year to date.

“We feel like the rhetoric out there is creating opportunities,” Ahlsten said.

J. Dale Harvey, portfolio manager of the Poplar Forest Partners fund, said he has been trimming his energy and materials shares exposure and buying into brick and mortar retailers whose stocks have come under pressure as Amazon (AMZN.O) continues to expand.

“Mall-based businesses are facing declining traffic, but we’re trying to look for the proverbial baby thrown out with the bath water,” he said. “So far that has been early, but we have a habit of being early.”

He recently added a position in mall-based Signet Jewelers Ltd (SIG.N), which is looking to expand its number of freestanding stores. Shares of the company are down nearly 30 percent for the year to date and trade at a price-to-earnings ratio of 9.7.

“There’s a lot of negativity embedded in its valuation that we think is not warranted,” Harvey said.

Not every Lipper Award-winning fund is turned off by the high valuations, however.

Robert Marvin, portfolio manager of the Hood River Small-Cap Growth fund, said the recent stock market rally prompted him to buy recreational boat builder Brunswick Corporation (BC.N) and recreational boat and yacht dealer MarineMax Inc (HZO.N). Shares of both are up more than 10 percent in the year to date.

“We’re starting to see significant improvement in demand as middle- and upper-income consumers feel the wealth effect,” he said.

Kenneth Little, a co-portfolio manager of the Brandes Global Equity fund, said high valuations have left his fund “significantly underweight” the U.S.

Instead, his fund has been adding positions in emerging markets such as South Korea, Russia and Brazil, with large overweight in energy holdings and healthcare.

The fund is focusing mostly on large-cap companies such as Russian oil producer Lukoil, Brazilian aircraft maker Embraer SA, and South Korean auto parts maker Hyundai Mobis Co.

“The U.S., broadly speaking, looks pretty fully valued to us,” he said. By comparison, in emerging market stocks, “if you look through the short-term challenges, you have very good companies trading at very attractive prices,” he said.

Thomson Reuters Lipper is a division of Thomson Reuters Corp, the parent company of Reuters.

 

(Editing by Jennifer Ablan and Bernadette Baum)
Published at Fri, 24 Mar 2017 13:48:07 +0000

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If healthcare vote fails, would jeopardize ‘Trump trades’: Gundlach

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If healthcare vote fails, would jeopardize ‘Trump trades’: Gundlach

By Jennifer Ablan| NEW YORK

If the U.S. healthcare legislation overhaul is not passed, or is postponed, it will put “a lot of doubt” on the “Trump trades,” which include higher U.S. equities and bond yields, DoubleLine Capital Chief Executive Jeffrey Gundlach said on Wednesday.

“Surveys show that people believe the (Obamacare) repeal is the most likely part of Trump’s agenda to be passed,” Gundlach, who oversees more than $101 billion in assets at DoubleLine, told Reuters. “So if you can’t pass the repeal, everything else is in doubt for sure.”

Investors have been bracing for Thursday’s floor vote scheduled in the U.S. House of Representatives, with safe-haven securities including Treasuries and gold seeing price gains on Wednesday. Trump and Republican congressional leaders appeared on Wednesday to be losing the battle to get enough support to pass the Obamacare rollback bill.

Gundlach repeated his recommendation that investors would do better selling U.S. equities into any kind of stock rally and diversifying into emerging markets. He noted that the iShares MSCI Emerging Markets ETF (EEM.P) has outperformed the Standard & Poor’s Index by over 4 percentage points since early March.

Gundlach, who is known on Wall Street as the Bond King, said Tuesday’s stock-market slump illustrated how “investors are questioning whether the pro-growth U.S. policies are really going to happen.”

In early March, Gundlach said on his investor webcast that he expected a minor yield high on Treasuries, and then a rally. The benchmark 10-year U.S. Treasury note US10YT=RR currently trades around 2.40 percent, down from 2.60 percent in mid-March.

(Reporting by Jennifer Ablan; Editing by James Dalgleish
Published at Wed, 22 Mar 2017 20:33:44 +0000

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Hedge fund Millennium hires portfolio manager from Steve Cohen’s firm

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 Hedge fund Millennium hires portfolio manager from Steve Cohen’s firm

By Svea Herbst-Bayliss| BOSTON

Millennium Management, one of the industry’s biggest hedge funds, has hired a portfolio manager from billionaire stock picker Steven A. Cohen’s investment company, two sources familiar with the matter said.

Ariel Masafy specializes in consumer stocks and had worked for Cohen, who invests roughly $11 billion, since 2011. Masafy could not be reached for comment and a spokesman for Cohen’s firm, Point72 Asset Management, declined to comment.

Moves by portfolio managers between fund firms are closely watched on Wall Street especially now that many firms posted lackluster 2016 returns which could signal an uptick in moves.

Millennium, led by billionaire Israel Englander, employs a large number of trading teams that invest some $34 billion in assets. The firm’s flagship fund ended 2016 with a 3.3 percent gain, far below the double-digit gains it earned in past years.

In 2013 SAC plead guilty to insider trading charges and was forced by the government to stop managing outsiders’ capital. Cohen was never charged. A year later, the firm turned into a family office that invests Cohen personal fortune and changed its name to Point72. At that time, a number of Cohen’s fund managers left to set up their own firms.

(Reporting by Svea Herbst-Bayliss; Editing by David Gregorio)
Published at Tue, 21 Mar 2017 16:41:49 +0000

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Exclusive: Hedge fund Pine River loses more partners after asset decline – sources

 

Exclusive: Hedge fund Pine River loses more partners after asset decline – sources

By Svea Herbst-Bayliss and Maiya Keidan| BOSTON/LONDON

Hedge-fund firm Pine River Capital Management LP is losing two more partners following a difficult year that involved a restructuring and major decline in assets, people familiar with the matter told Reuters.

Franklin Parlamis, the firm’s most senior executive on the West Coast who had been with the firm for a decade, left Pine River in late-February, said two people familiar with the matter who were not permitted to discuss the private fund’s personnel movements publicly. He is now working on his own business, Aequim Alternative Investments.

Annette Krassner, who has been Pine River’s chief administrative officer since 2012 and oversees human resources, facilities, events, administrative staff and internal communications, will leave at the end of March, the people said.

Once Krassner leaves, Pine River will have 11 partners, compared with 16 partners in 2016. The firm does plan to name new partners in the coming weeks, one source said.

Pine River established itself as an industry powerhouse after its Pine River Fixed Income Fund earned a spectacular 93 percent gain in 2009.

Losses, outflows, and a key management change that helped spark the decision to shutter some funds have left Pine River with $9.8 billion in assets, down 35 percent from the $15 billion it managed in 2015.

Management, including founder Brian Taylor, spent much of last year overhauling the business and closing seven funds, including its prominent fixed-income fund. Pine River now manages four funds.

Parlamis ran the Pine River Convertibles Fund which had $250 million at its peak in 2015, but shrank to just $100 million at the end of last year, people familiar with its performance said.

Although the fund’s performance was strong, management decided to close the fund and return remaining investors’ money because it was too small to keep going profitably. The fund gained roughly 17 percent last year and had an annualized return of roughly 11 percent since its 2009 launch.

Parlamis’s departure was amicable, both sources said.

The strategy of investing in convertible securities will still be offered through the firm’s flagship Pine River Fund and separately managed accounts, where clients’ money is managed without mixing their investments with others.

Adam Stein, a New York-based portfolio manager who worked closely with Parlamis for years and relocated to the East Coast in 2016, will be in charge of those types of investments, which convert into other types of securities under certain circumstances.

Since Taylor launched the streamlining and restructuring effort last year, Pine River has closed seven portfolios that may have been too small and unable to generate much future interest from investors.

Among them were one of its best-known offerings, the Pine River Fixed Income fund, which posted huge returns early in its eight-year life before losing money in 2015 and in early 2016.

Steve Kuhn, who ran the Pine River Fixed Income fund, left in 2016 to focus on philanthropy. He was the firm’s most public face, representing Pine River at conferences and other events.

Pine River is now concentrating on its flagship fund, as well as the Pine River Liquid Rates fund, the Pine River Liquid Mortgage fund and the Pine River China fund, whose planned spin-off has been delayed.

Taylor wrote to investors about the restructuring last summer and then crisscrossed the world to explain his thinking regarding the changes.

He also laid out ways for long-term investors who made big financial commitments to pay less in fees.

The flagship Pine River Fund returned 8 percent over the last 12 months and was up 0.9 percent in 2016 after a 2.75 percent loss in 2015. Aaron Yeary, Colin Teichholtz and James Clark manage the multi-strategy fund. The Pine River Liquid Rates Master Fund earned 17.3 percent in 2016 and 13.5 percent in 2015.

Richard Knight, a partner who had been in charge of business development left last year as well. Brendan McAllister, a partner who co-managed the fixed income fund, also left recently to focus more attention on his family.

Michael O’Connell, who had run Pine River’s capital structure arbitrage strategy, left with his team to rival fund Paloma Partners late last year.

 

(Reporting by Svea Herbst-Bayliss in Boston and Maiya Keidan in London; Editing by Lauren Tara LaCapra and Bernard Orr)

(Why?)
Published at Thu, 16 Mar 2017 21:22:04 +0000

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Cooking up financial success with chef Marcus Samuelsson

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 Cooking up financial success with chef Marcus Samuelsson

By Cheryl Lu-Lien Tan| NEW YORK

As success stories go, chef Marcus Samuelsson’s is as geographically varied and fascinating as they come.

Born in Ethiopia and separated from his family a few years later during the Ethiopian civil war, Samuelsson was then adopted and raised by a Swedish couple, who taught him his earliest lessons about money and work ethic.

In the span of his career, the 46-year-old Samuelsson has won awards both for his cooking at New York City’s Aquavit and later his own restaurant, Red Rooster, as well as for his books. These range from a memoir to several cookbooks, including the 2016 “The Red Rooster Cookbook: The Story of Food and Hustle in Harlem.”

In May, the New York City-based Samuelsson will open a London outpost of Red Rooster. He talked to Reuters about his recipes for cooking up financial success.

Q: What were some of your first lessons about money?

A: My mom came from poverty and understood the value of money. She was very responsible and looked at her bank account every day to make sure it added up correctly. Even when her financial situation changed for the better, she was always very smart with her money.

Q: Who else taught you the value of money?

A: My uncles were fishermen. Where they stood with money could change swiftly because of the weather. If they went fishing on the roughest day, the price of the fish went up, and on good weather days, they might not go out because the prices would be so low. Even though they didn’t have a lot of money, they always ate well.

Q: What was your first job?

A: My first job was fishing, and it definitely shaped my work ethic. You wake up early and have to clean the boat and other equipment. You’d be out there all day sometimes battling a rough sea, and then you’d come back and collect your wages. There was also a social aspect of it that was fun. It definitely taught me the value of hard work.

Q: What drove you to open your own restaurant?

A: I was inspired by advice from my mom about cooking for people in the community where I lived. Up until that point, I had been cooking for the 1 percent. It just made sense to open a restaurant in Harlem – which was also where I made my home. I love that the clientele at Red Rooster are a mix of local Harlemites, the downtown crowd, and people from all over the world visiting. It’s very much in-and-of the Harlem community.

Q: What has running your own restaurant taught you about finances?

A: Humility. You can have a great day and then the next day will be the opposite because of the weather or something breaks in the kitchen. Being an entrepreneur is an endurance test that challenges you and your team.

Q: How do you give back?

A: Coming from a humble background, I wouldn’t be here without people being charitable, so I think about that all the time. I try to select charities across various matters including culinary education or clean water in Africa, or something else needing immediate action. In addition, I’ve also been involved with many organizations over the years and am currently a board co-chair at C-CAP (Careers through Culinary Arts Program), which prepares underserved youth for careers in the professional world of culinary and hospitality.

Q: What life lessons did you father teach you about money?

A: Growing up, my father made it clear that his money was his money and not mine. He was happy to help out, but never paid for everything. He taught us if we wanted it, we’d have to do it ourselves. When I wanted to visit Japan, my dad paid for half, but it was up to me to come up with the other half so I could travel. It took me a year to save for that trip, and it felt so good once I was on the plane knowing I had worked hard to make it happen.

Q: What’s the best piece of advice about money that anyone ever gave you?

A: Respect it.

 

(Editing by Lauren Young and David Gregorio)
Published at Thu, 16 Mar 2017 13:09:45 +0000

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Snap shares drop 4 percent, fall below $20 for the first time

 

Snap shares drop 4 percent, fall below $20 for the first time

Snap Inc shares tumbled below $20 on Thursday for the first time since the company’s $3.4 billion public listing after the Snapchat owner received another “sell” rating from an analyst.

The social media company this month pulled off the hottest technology offering in three years, but after two days of explosive gains its stock has steadily retreated from a peak of more than $29 as investors worry about Snap’s high valuation and lack of profitability.

Snap was down 4 percent at $19.92 in afternoon trade.

(For a graphic on Snap Inc since its IPO, click bit.ly/2mzcuP2)

MoffettNathanson analyst Michael Nathanson on Thursday launched coverage of Snap with a “sell” rating, warning in a note that “the market has priced SNAP for perfection.”

Others on Wall Street have flagged Snap’s slowing user growth, widening losses and lack of voting rights for outside investors. Snap has warned it may never be profitable.

Including Nathanson, six analysts recommend selling shares of Snap, while three have neutral ratings and none recommend buying, according to Thomson Reuters data.

The stock remains up 17 percent from its $17 IPO price set on March 1.

 

(Reporting by Noel Randewich; Editing by Meredith Mazzilli)
Published at Thu, 16 Mar 2017 19:20:36 +0000

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