Activist Investor Sets His Fiscal Sights on Congress; Ferrari Races to IPO; UPSet

Icahn do it…

Image courtesy of  iosphere/FreeDigitalPhotos.net

Image courtesy of iosphere/FreeDigitalPhotos.net

Many U.S. companies are taking a breather for the moment since billionaire activist investor, Carl Icahn, has shifted his attentions away from struggling businesses and instead to Washington D.C. And just like he ousts under-performing CEO’s, he now plans to give the boot to under-performing congressman.  Icahn tweeted  earlier today, “I am starting a Super PAC with my initial commitment of $150 million to help end the crippling dysfunction in Congress.” I’m just wondering why his millions are going to be more effective than the millions of taxpayer dollars Americans have been throwing at congress until now. But I digress. Icahn, by the way, happens to be a dear pal of Presidential candidate Donald Trump. “Basically he’s by far the best of what I see out there,” and “The Donald” would like to install Carl Icahn as his treasury secretary. Laugh all you want, but with Trump pulling in some great numbers, you might end up crying come November 2016. This Super PAC has  more than a bit to do with the letter Icahn sent out to Congress this week demanding that it pass corporate tax reform legislation that would dissuade U.S. companies from leaving to other countries with more favorable tax laws at what Icahn calls “the worst time imaginable.” He also wants Congress to offer companies like Apple a “tax holiday” that would allow it to bring back its trillions of dollars at much much lower rate. That cash can then be used to invest and create jobs. Sounds fair.  Boom.

Ciao bella…

Image courtesy of sattva/FreeDigitalPhotos.net

Image courtesy of sattva/FreeDigitalPhotos.net

Ferrari, one of the world’s most valuable and utterly fabulous brands, made its U.S. stock market debut today in true Ferrari-style. Several of the high-performance, extremely pricey automobiles were parked by Wall Street, as the company stock opened at $52, the high-end of its range. And from there, the stock even cruised a bit higher. $893 million was raised and 17.18 million shares were dished out under the ticker symbol RACE. Catchy, huh? And just like it’s hard to come-by cars, there was more demand than there were shares. The IPO is a way for Fiat Chrysler to finance a $54 billion investment program that will help expand the Jeep, Alpha Romeo and Maserati brands. As for the Ferrari family, the founder’s son, Piero Ferrari, has a 10% stake and has now earned his billionaire badge with this IPO.  The Agnelli family, however, remains the biggest shareholder with more than a 30% stake in the company. In the meantime, Fiat Chrysler CEO, Sergio Marchionne, took time out of his busy morning from ringing the opening bell at the New York Stock Exchange to let the world know that he thought the EU’s charges that his company evaded $23 million in taxes “absolutely ludicrous.” He should really start hanging out with Carl Icahn.

Brown paper packages tied up with false claims…

Image courtesy of Iamnee/FreeDigitalPhotos.net

Image courtesy of Iamnee/FreeDigitalPhotos.net

UPS is not having a very good day after having to fork over $4.2 million to settle charges that it over-charged 17 states and three local entities. It seems the company falsely recorded packages reaching their destination on time when, in fact, they didn’t.  Customers paid to have packages delivered via next day service, however, those packages did not arrive by the promised time. These incidents ran from 2004-2014. UPS employees used “exception codes” and filed false claims that would excuse late arrivals for reasons like inclement weather and other difficult circumstances.  By using these codes, customers could not even file a claim to get a refund. And while whistleblower Robert Fulk can look forward to a piece of that $4 million pie, UPS has no plans to acknowledge any wrongdoing, even though the company already had to pay $25 million for a different settlement with the U.S. Department of Justice back in May for similar allegations. The company says it ponied up the settlement cash in order to avoid a costly litigation trial. Uh huh.

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Is Netflix Saying Ni-Hao to China; Ann Taylor is Dressing Up for a Merger; Dear Apple…Love, Carl

How do you say “Orange is the New Black” in Chinese?

Image courtesy of cooldesign/FreeDigitalPhotos.net

Image courtesy of cooldesign/FreeDigitalPhotos.net

Looks like Netflix might soon be needing “House of Cards” translated as its been rumored that the video-streaming company has been in talks with a few Chinese companies about bringing their premium entertainment to that part of the world. It’s estimated that the online video market in China is close to $6 billion so, it’s probably a good idea if Netflix gets started on that venture sooner rather than later. It should be duly noted that Netflix hasn’t been chatting with just any Chinese companies either. Heard of Wasu Media Holding Co.? If that name doesn’t ring a bell, then what about the name Jack Ma? The mastermind billionaire behind Alibaba, China’s biggest e-commerce site, also backs Wasu. But rumor has it Netflix was also talking with another giant Chinese media company, BesTV New Media Co. A few months ago, Netflix’s Ted Sarandos initially said that there were no plans for the company to enter into any “joint” ventures,  whether Chinese or not. But the thing is, if any company, even Netflix, wants to do business in China, then teaming up with a big important Chinese company is a must. Especially if that company wants to have a pleasant and sustainable relationship with the Chinese government. While no contracts or agreements have been signed with regard to Kevin Spacey’s character, Frank Underwood, going east, Netflix’s stock still went up on just the talk.

Stylin’…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Ann Inc. was looking particularly stylish as it was just scooped up by Ascena Retail group for a very fashion-forward  $2.15 billion. Ascena, which also owns Lane Bryant and tween chain Justice, among others, picked up its latest apparel chain for a very cool $47 per share, which happened to be more than a 21% premium over its closing price on Friday. Wall Street liked the new joint venture and sent Ann Taylor’s stock up over 20%. Ascena’s stock also went up a bit, but then came back down to little, if no, fanfare. Several companies have gone the merging route lately. They do this when their sales have been less than impressive for an extended period of time. Ann Taylor and Ascena were no exceptions to this trend but its now expected that this new adventure between the two retail giants will rake in a combined revenue of $7.4 billion.

Very Truly Yours….

Image courtesy of Iamnee/FreeDigitalPhotos.net

Image courtesy of Iamnee/FreeDigitalPhotos.net

Activist investor Carl Icahn poured his fiscally minded heart out in an open letter to Apple CEO Tim Cook. In the letter he did nothing short of gush about how Apple’s stock is “dramatically undervalued” and that he sees its price target at $240 per share. That figure is a whopping 55% more than its closing price in Friday. The stock is currently hovering at around $130 per share, mind you. And while Mr. Icahn is profoundly moved by Apple’s decision to repurchase stocks, alas, he wants the tech company to repurchase even more. Some of his love and devotion stems from the fact that Apple, besides being the largest company in the world by market cap, is delving into the fiscally vibrant worlds of television (2016) and automobiles (2020).

Louisville Slugger is “Finnished”; eBay’s Big Changes; Housing Bummers

Take a swing at this…

Image courtesy of vectorolie/FreeDigitalPhotos.net

Image courtesy of vectorolie/FreeDigitalPhotos.net

It seems like only yesterday when John Hillerich carved out the iconic wooden baseball bat that would eventually become the Louisville Slugger. Actually it was closer to 1884, but details, my friend. Since then, more then 100 million Louisville Sluggers have been sold and it is the official bat of Major League Baseball. It’s been used by 60% of the ball players including Babe Ruth and Mickey Mantle. Now,  Hillerich & Bradsby descendant, John A. Hillerich, announced he’s selling the company to Wilson, a company owned by a larger Finnish company, called Amer Sports. Not finish – as in , wood finish, mind you. That would make more sense. I wrote Finnish. As in Helsinki. As in, do they even have baseball in Finland? The reported cost for selling off this iconic brand to a company based nowhere near Kentucky, or the United States  for that matter, is about $7o million. Louisville Slugger, alone, raked in $75 million in revenue in a $2.4 billion global baseball and softball industry. The U.S. is responsible for $1.4 billion of that. The move will cost 52 employees their jobs.

Board to tears…

Image courtesy of iosphere/FreeDigitalPhotos.net

Image courtesy of iosphere/FreeDigitalPhotos.net

Things are heating up at eBay as it gets set to bid adieu to PayPal later this year. If you recall, investor Carl Icahn wanted eBay and PayPal to do the splits. Venture capitalist Marc Andreessen was not down with that idea at all. Considering that Carl Icahn is the largest shareholder in eBay, he managed to get his way. Thus, Andreessen said buh-bye back in October and a whole new crew is set to run the show. For now we only know a few of them. Devin Wenig will be the new eBay CEO while Dan Schulman takes the CEO spot at PayPal. So where does that leave current eBay CEO John Donahoe? Good question but one to which I have no answer. But the exciting news today is the announcement of two new board members added to eBay. GoPro president and former Skype exec Tony Bates joins the board along with American Red Cross CEO Gail McGovern. McGovern becomes the third woman to join the board, by the way.

Housed…

Image courtesy of phanlop88/FreeDigitalPhotos.net

Image courtesy of phanlop88/FreeDigitalPhotos.net

As if we don’t have enough aggravation from this never-ending winter and unusually frigid March, leave it to the National Association of Realtors to disappoint us over sales of pre-existing homes. According to the NAR, February was less than spectacular. A lot less. While sales didn’t necessarily go down, they barely went up, by 1.2% to 4.88 million. That was especially annoying because January was no great shakes in terms of sales either. The median price of a home in February was $202,600, up from 2014’s $188,4000. So who’s to blame? Well, weather always plays its mean little part. But Mother Nature wasn’t the only factor toying with our fiscal emotions. Home values are going up way faster than paychecks are. That tends to put a damper on things. Also, there’s a lot less inventory out there. Part of that problem is that so many people owe more on their homes than their homes are actually worth. So, basically, they stand to lose by selling their homes. But luckily, there is still a chance to reverse the fiscal tide. The busiest time of the year for selling homes is just around the corner and with credit rules easing and an improving job market, there’s no need to fret. Yet.

 

IBuMmer; Icahn/Andreesen Billionaire Smackdown; Valeant/Allergan Smackdown

 Big Blue-boo…

Image courtesy of renjith krishnan/FreeDigitalPhotos.net

Image courtesy of renjith krishnan/FreeDigitalPhotos.net

Perhaps you recall IBM?  Perhaps you don’t. The once powerful company that sat at the forefront of technology is now at the forefront of…nothing as the company just released its very disappointing earnings. The once mighty maker of chips – and I don’t mean potato (though we might be seeing better earnings if the chips were indeed of the potato variety), has sold that portion of its business. Revenue was down 4% to $22.4 billion which might seem like a nice beefy number except that analysts were expecting $1 billion more than that. And the company’s revenue has been going down for a few years now.  Analysts expected  the company to at least pull in $4.32 per share. It didn’t. Instead, profits for IBM took a 10% dive earning $3.68 per share.  Oh well. There’s always next quarter.

Love doesn’t live here anymore…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

It’s official. Marc Andreesen and Carl Icahn are not friends. And I don’t think they ever can be. At least not anymore after Mr. Icahn said in an interview that Andreessen is “what’s wrong with corporate America” and Andreesen telling CNBC that Carl Icahn lies and “makes stuff up.” Where is the love gentlemen? In any case, the latest episode in the Icahn/Andreessen saga is that Marc Andreesen has bid a not-so-fond farewell to the board over at EBay. It seems the extremely prescient Silicon Valley billionaire, Andreesen, and activist investor, Icahn,  got themselves tangled in yet another kerfuffle which has probably something to do with the kerfuffle they had earlier where Mr. Icahn accused Mr. Andreesen and fellow board member, Scott Cook, of having conflicts of interests where PayPal and EBay are concerned. I shall spare you the lurid details. Mr. Andreesen and Mr. Cook vehemently disagreed with Mr. Icahn’s accusation. But alas, it matters not as PayPal is no longer one with EBay. As for hopes of Mr. Andreesen and Mr. Icahn burying the corporate hatchet (or whatever it is that insanely wealthy executives do), don’t hold your breath.

A wrinkle in plans…

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Image courtesy of patpitchaya/FreeDigitalPhotos.net

Perhaps you may recall pharmaceutical giant Valeant? Perhaps you recall how this pharmaceutical giant wanted to take over another pharmaceutical giant by the name of Allergan, notable for perennial fan fave Botox? And perhaps you recall that Allergan would prefer if Valeant would just go away? Well, it looks like that’s not going to happen anytime soon as Valeant just released some very impressive earnings, easily trumping analysts’ expectations. Except that Valeant also had good earnings. But no matter because Valeant really wants very badly to scoop up Allergan even though Allergan very badly does not want that to happen. Activist investor Bill Ackman, and his Pershing Square Capital Management LP, who is gunning for an Allergan takeover, just might make that even likelier and hostile-r because of Valeant’s newly announced, financially robust numbers, since numbers like those will allow him, together with Valeant, to up the ante to buy out the fabulous Botox maker.

 

Luck O’ the Apple’s Alleged Transfer Pricing; eBay and PayPal Headed for Splitsville; Confidence Bruiser

An Apple away…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

 

There are some very complicated things going on with Apple on the other side of the Atlantic. Except Apple probably won’t get in too much trouble for any of it. Well, maybe a little. It depends on whom you ask. As for Ireland? Well, the Emerald Isle just might be in a whole vat of hot water. At issue is whether or not Apple did something called transfer pricing, the details of which I will gladly spare you. Though some would argue all the trouble has to do with whether or not Apple was getting illegal tax breaks from Ireland – a very major no-no, in the eyes of the EU anyways. In any case, there is a report coming out from an EU commission and, in keeping with the spirit of all things that involve government, it’s all very convoluted.  If anyone or any entity, for that matter, gets fined, it will likely be Ireland, that very corporate-hospitable country, who some people argue was a little too friendly to Apple and whose allegedly generous tax-breaks amounted to, I kid you not, nothing short of “state aid,” according to the Commission. And if you were wondering how any of this affects you, then rest assured – it doesn’t, really.

Breaking up is not so hard to do…

Image courtesy of sdmania/FreeDigitalPhotos.net

Image courtesy of sdmania/FreeDigitalPhotos.net

What Carl Icahn wants, Carl Icahn gets. Eventually, anyways. For instance, activist investor Carl Icahn wanted eBay and PayPal to march head first into splitsville hoping for a “tax-free” spin-off. And wouldn’t you know it, the two companies did just that. How convenient. It helps that Icahn owns about 30 million shares of eBay and scored about $100 million today from the move. EBay, by the way, pulled in revenues of almost $10 billion this year, while PayPal pulled in $7.2 billion. Before you scoff at PayPal, know that PayPal grew at a 20% rate compared to eBay’s 10% rate. So now who’re you gonna scoff at? Huh? This move frees up PayPal to pursue a whole bunch of opportunities that might have held it back if it was still tied to eBay. Staying together would have proved “less advantageous” for both. Ah! What a break-up story. I wonder which studio is going buy the rights to this corporate tearjerker.

Speaking of self-esteem…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Looks like consumers aka you, me, us aren’t feeling very fiscally confident these days, that is, according to an informative index that actually gauges our collective confidence level. Which, by the way, weighs in at at disconcerting 86. It’s disconcerting in that last month our collective confidence level was over a 93 – a seven year high, mind you. Quite the tumble, I’ll say. So what exactly is shaking our confidence lately? Not so minor things like job growth that hasn’t been growing quite as quickly as we’d like. And if that isn’t enough of a confidence deflater then how about the fact that Americans also don’t much care for the slow-ish economic growth. But some really intelligent economists out there find that this months “86” index reading is but a minor hiccup in an otherwise positive, albeit, slow economic recovery. So fear not, oh faithful consumer, as falling gas prices and job growth (even though slow, at times) are all within reach.

UPS Gets Hacked; Dollar Store Battles: Short on Glamour, Long on Drama; Housing Hits It

Do I need to sign for that?

Image courtesy of Victor Habbick/FreeDigitalPhotos.net

Image courtesy of Victor Habbick/FreeDigitalPhotos.net

UPS now joins that distnguished, tadly crowded field of hacking victims. Between January 20 and August 11, over 100,000 transcations may have been affected by a data breach. But lucky for UPS that it is nothing like the Target behemoth, whose own data breach affected some 70 million customers. That’s because UPS stores are not interconnected, but rather individually owned. Hence, of the over 4,500 UPS locations, only a little over 50 stores in 24 states were affected. How convenient. Sort of. Anyways, UPS, which now became the 58th largest company, taking out a not-so-smug-anymore Eli-Lilly & Co., will offer customers affected by the breach free credit monitoring and identity theft protection for a whole year. How convenient. Sort of. Anyways, after that you’re on your own.

The buck stops here…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

In the drama-packed world of dollar stores, the latest episode has Family Dollar rejecting a $9 billion buyout offer from Dollar General. Instead, the dollar chain store is thought to be seriously considering another offer from contender Dollar Tree not so much because it’s offering more money – because it is not. Dollar Tree offered only $8.5 billion. Rather, because the deal from Dollar Tree would likely allow Family Dollar CEO Howard Levine to keep his day job. The deal from Dollar General would probably have Levine taking LinkedIn resume workshops by now. Apparently there are also some anti-trust issues associated with a deal from Dollar General. Allegedly. Back in June, activist investor Carl Icahn had a hefty 9.4% stake in Family Dollar. These days his stake is around 3.6%. What that tells us could be a lot. Or nothing at all. But probably a lot. And while all this talk about dollar stores might seem funny to you, just know that there is nothing funny about the tens of BILLIONS in cash that these discount stores rake in.

Home sweet affordable home…

Image courtesy of hywards/FreeDigitalPhotos.net

Image courtesy of hywards/FreeDigitalPhotos.net

It’s been an exciting July. Maybe not for you. But for the housing market it sure has been. And yes, the words housing market and excitement can go hand in hand, especially since July marks the fourth straight month that existing home sales increased – a sure sign that the housing market is headed in the right – up – direction. Unfortunately, as I have written several times, the housing recovery just hasn’t been happening quick enough. Sure, sales were up 2.4%, but that percentage is still way down from where it should be in a truly healthy market. Right now, it’s like the housing recovery is at the end stages of a cold, still some coughing and a slightly runny nose.  However, home construction surged a very impressive  15.7%. That and the fact that interest rates are low and there’s more inventory coming up should make for an equally riveting August. We hope.

Wall Street Is Sour On Lulu, Phil Mickelson In the Clear and Sale Away

Namistakes…

Image courtesy of Master isolated images/FreeDigitalPhotos.net

Image courtesy of Master isolated images/FreeDigitalPhotos.net

Shares of Lululemon (LULU) went sour today after the company announced its quarterly earnings. While the athletic apparel company barely beat Wall Street’s predictions by $0.02 a share, its profits fell to a very un-zen $19 million from over $47 million a year ago. Its see-through yoga pants debacle certainly helped bring in those awful numbers. But it wouldn’t be right not to mention and wonder if some of these earnings come courtesy of Lululemon’s founder (no longer, chairman) and biggest shareholder Chip Wilson. Wilson idiotically remarked that heavy – and even not so heavy women – should steer clear of his company’s merchandise. An ignorant statement like that – see-through yoga pants or not – ought to help destroy a company’s earnings. Besides that, the company is staring at some fierce competition from Gap’s Athleta brand and Under Armour. Shares of the company went downward dog by 35% in the past twelve months.

SEC no longer teed off at Phil?

Image courtesy of Naypong/FreeDigitalPhotos.net

Image courtesy of Naypong/FreeDigitalPhotos.net

Pro-golfer Phil Mickelson is happily teeing off now that SEC is pulling back from its investigation into whether he might have been involved in insider trading. Apparently the eleventh ranked golfer in the world wasn’t buying Clorox, shares of it that is, while billionaire Carl Icahn was planning to buy the company. However, the Feds are still curious about some “well-timed trades” by Mickelson and his buddy, pro-gambler Billy Walters back in 2012. While Phil Mickelson scored a million bucks on those trades, Walters allegedly notched a whopping $15 million on shares of Dean Foods.

Where o’ where does the economy stand?

Image courtesy of jscreationzs/FreeDigitalPhotos.net

Image courtesy of jscreationzs/FreeDigitalPhotos.net

The economy once again is toying with our emotions as it continues to pull in numbers with very mixed messages. The good news is that retail increased. The bad news is that it didn’t increase enough gaining only by 0.3% instead of the 0.6% predicted (and hoped for) by some supremely intelligent economists. Then there’s our fickle little job market. The good news: In May we say 217,000 jobs added. It’s been five years since the country has seen monthly job growth of over 200,000 per month. Yippee, right? No because the bad news: The number of people filing for unemployment went up to 317,000 last week. However, that number is still less than the yearly average so a slight yippee can be uttered. Then there’s the issue of wage growth. The issue being that wages aren’t doing that much growing.