If you own a stock and the price goes up, that is a good thing and it validates your homework to why you wanted to buy the stock. If the sector in which your stock is in goes up, various private equity owners and CFOs are looking for the opportunity to sell stock. There are many reasons why stock is sold by the company including at times it is less expensive to raise money by selling stock than by issuing debt. The important aspect is a rising stock market.

In an article by Echo Wang and Lance Tupper of Reuters, stock sales reached $4.97 billion in the first week of March, the highest tally since the second week of 2022, according to Dealogic.

Some of the companies issuing stock were American Water Works of $1.7 billion. food giant Mondelez which makes Oreo cookies sold $1 billion stake in Keurig Dr Pepper. Private equity firms Blackstone sold $270 million in dating ap Bumble; and Providence Equity Partners sold a $333 million stake in software provider Double Verify Holdings Inc.

In 2022 according to Dealogic, companies sold $72.5 billion worth of stock sales for public companies, the lowest level since 1996 and 67% below the number for 2021.

Linking to dividend paying stocks, when the stock market is rising, many stock deals come to the fore front and are executed. Wall Street firms make good income from selling stock and institutions with cash eventually need to use the cash to buy stock. As a holder of dividend stocks, you do not have to anything until the dividend is paid and then you can decide to reinvest in the company, invest in other companies or wait till the market falls. When the market falls there is more value if your time perspective is longer than 6 months. Often you can buy good dividend paying stocks at lower prices, have the luxury of waiting for the stock to trade at its original multiple and you make both dividends and capital gains.

There are more questions than answers, till the next time – to raising questions.

For many years growth in the Chinese economy was a given as the country moved to become the 3rd largest economy behind the US and the European Union. Even now, as politicans talk about bringing manufacturing jobs to the US, the reality is if you walk the aisle of Wal-mart and the Dollar Tree or similar outlet, you will see many items from China. As long as the world’s largest retailers are buying from China, the country will remain important to the US economy.

Every year the session of parliament or the National People’s Congress begins with a report on the economy and how the government will make lives better in China. Economic growth is expected to be 5% down from the double digits for the past 20 years and the goal is create 12 million urban jobs up from 11 million.

To bolster growth, the government plans to stick to its playbook of investing in infrastructure, increasing funding for big ticket items with $ 748 billion in special government bonds.

President Xi Jinping will remain as President as he appoints more loyalists to the Congress. China does have problems including fraught relations with the US, try to change its demographic outlook after the 1 child policy left not enough bodies for the future.

Linking to dividend paying stocks, for decades growth in China led to growth in stock markets around the world because China was the world’s manufacturer. To be the world’s manufacturer, great amounts of raw materials flowed into China and goods flowed to Europe and the US. Many companies benefited from this relationship and the stock market was good. If the jobs in manufacturing were in China, it stands to reason jobs in the US and Europe were eliminated. At some level that has come back to politicians in the US and Europe and thanks to COVID, growth in China slowed. It is hard to imagine manufacturing companies moving from China as the support systems exist and labor costs are what they are. For your investments asks what percentage of products and services come from China which makes profits possible.

There are more questions than answers, till the next time – to raising questions.

We all have different metrics to tell us how the economy is doing and depending on where you live, one of the metrics most widely used is auto vehicle sales. In theory, vehicles should last longer but many people enjoy the new car feeling and once their vehicle either reaches a specific age or mileage driven, they are looking to buy a new vehicle. For some cars are a thing to move from point A to point B, while others see their vehicles as part of their status and there are many variations in between. Auto shows continue to draw people and many are interested in how the auto industry is doing.

In an article from the Associated Press, Ford annouced increase production of 6 models to meet the demand. For more than 2 years, sales have been limited due to the shortage of computer chips, but the chip shortage is easing and more cars are rolling off the assembly lines.

In 2022, vehicle sales were 14 million, however LMC Automotive sees sales increasing to 15 million this year. Ford sales were up 22% in February.

GM is increasing sales as well.

According to J.D. Power the average vehicle sold for $46,229 in February.

Linking to dividend paying stocks, we all look to some industries as bell weather industries and for the most part it is true. If sales are increasing at the auto industries, financing is doing well because people can buy new or used and pay their bills. Industries similar to the auto industry have good ripple affects on the economy as most of the parts are contracted out and those factories are busy, and the ripple goes on. For your investments do you know the ripple affects and which companies are bell weather companies?

There are more questions than answers, till the next time – to raising questions.

In the news, some politicians are disagreeing with ESG or Environmental, Social and Governance goals, while many companies including investment managers are agreeing to examine ESG factors. In reality, ESG are factors to help you choose between candidates. In terms of environmental – how does the company treats its wastes and what happens if a spill happens? In the social – the social can be how does it treats its workers and the community it is located in? and governance includes how are decisions made at the Board level and does the company use bribes to secure business?

The issue of bribes is a book called Kickback – Exposing the Global Corporate Bribery Network written by David Montero, published by Viking Press, NY, 2018.

All companies will policies on how much to give in the expectations of continuing business relationship beyond the normal aspects of great products and customer service. How is the decision made to have the contract go to your company? All company executives have to meet their numbers or quota or whatever you wish to call it. Relationship building is part of the tax code and is part of the business, sectors such as hospitality and corporate gift giving depend on it.

In the book, Mr. Montero outlines companies which have paid bribes to government officials to secure large contracts in the country. The big pharma, big oil companies, the big telecommunications companies, the big construction companies and the list goes on, all have paid bribes and many paid fines because of their actions.

In 2009, Jonathan Karpoff, an economist at University of Washington analyzed the Foreign Corrupt Practices Act (FCPA) cases 143 cases ranging from 1978 to 2013. The evidence was companies making bribes are rarely apprehended and that bribe penalities are too low. Mr. Karpoff believes the ratio is 6.4% and while the penalities to the companies are often in the millions, given the companies are worth billions, it is less than 5% of their income or the behavior does not change.

Mr. Karpoff estimates for every $1.00 in bribe paid, it receives $5.60 in benefit. The Justice department believes the number is closer to $10.00 in benefits. In addition, when a company announces a foreign deal, the stock tends to increase 3.15%. Mr. Karpoff found if the firm is fined for bribery, Wall Street yawns, but if the charges include financial fraud or financial manipulation, then the stock tends to go down.

Linking to dividend paying stocks, one of the good things about dividend paying stocks is they tend to have sustainable income every year and many are diversified to where the revenues are received. Some of the revenue is received from outside the US which gives the country a larger pool of customers. Some of the countries outside the US the government officials will need to receive donations to the reelection funds or a number of years ago in Indonesia, the government’s family became a 10% partner in the company. The President was known as Mr. 10%, he is no longer President but the family’s business connections remain. Bribery is an accepted part of doing business, if the company does not want to do it then it often stays a regional company in size.

There are more questions than answers, till the next time – to raising questions.

Every public company has to report its progress every quarter and every public company goes through the same motions. The executive team presents to the world or press on how the business is doing to outsiders and questions are asked about the past and future performance. When the results are positive and operations are moving in the correct direction, the meetings go much easier. When there are concerns the issue is how does the company address the problems. The better the results, the higher the expectations each quarter and what happens if the company does not meet expectations?

In an article by Jack Ewing of the New York Times News Service, two of the companies which have the highest expectations every quarter are Appple and Tesla. The later reported it would build a factory in Mexico to build lower cost Tesla models which was a good thing. The issue is Tesla has been one of the world’s dominant maker of electric vehicles, how does it keep its dominant position?

The company offered a seminar on its manufacturing processes, supply chain organization and software. The message was that Tesla is eons ahead of other automakers in technology and efficiency. Tesla wishes to double its production of vehicles, but the analysts were wondering how?

For a number of years, Tesla had the market to themselves, but the competition both at the higher end models and less expensive models every year is heating up, how will Tesla do? Does investor day exceed expectations?

Linking to dividend paying stocks, every quarter public companies have an investor day to tell their story and if you are an investor the sessions are worth listening or reading about. From the dividend paying perspective after the company has said it made a profit and can pay a dividend, ideally raising the payment, you will want to know how will it continue to execute on its strategy. If you like the answers, you can do nothing, if you begin to see holes in the strategy, you will want to seek alternatives.

There are more questions than answers, till the next time – to raising questions.

In the marketplace there are consumers, but consumers come in all shapes and sizes, they also can be segmented into individuals or institutional. If a business caters to institutional investors, they should have money to spend no matter what cycle the economy is in. If a business caters to the mass public, there will be more competition and people have to know the brand and the cost structure. Why would a typical consumer wish to do business with the company. The individual market and the institutional market are two very different markets and generally, depending on the company which division did the President and past President rise from, will tell you if the company is institutional or retail orientated. Sometimes companies want to do both.

In an article by Saeed Azhar and Lananh Nguyen of Reuters, Goldman Sachs held an investor day and if any company is considered institutional in nature, Goldman Sachs is one of them. The company makes money from its trading, advising governments and large companies around the world. For the past few years, it has wanted to gain access in the consumer business, but it loses money. According to David Solomon, the CEO, the bank is considering strategic alternatives for its consumer business after stumbles led to billions of dollars in losses.

The bank deals with high net value individuals and thought a consumer business was something they could do and gain market share in. The consumer division would be another leg in the Goldman business segments. The reality is in the credit card business, companies such as Capital One issue millions of cards to people, Goldman was not doing that.

Some of the consumer units have been merged into the asset and wealth management. The company said sometimes we fall short, sometimes we do not execute. But we always learn and adapt..

Dan Dees, co-head of global banking and markets, said the division was targeting returns in the mid-teens. One of its priorities is financing across equities, fixed income, currency and commodities. The share of financing has already grown to 22% of revenue last year from 12% in 2013.

The bank expects a return on tangible equity of 15 -17% throughout the cycle with room to grow.

Linking to dividend paying stocks, when companies make money, they think they examine their competition to see why they make money and duplicate it. Sometimes they can, sometimes they cannot for example the big New York banks have branches which bring in low-cost deposits. Lending the money at higher rate as long as loan losses are kept to a minimal amount will make profits for the bank. It is hard to duplicate the success without access to many branches in a reasonably stable part of the economy of the country. The strength the company has it makes money and can try many strategies, some will work, some will not. Institutional players should stick to institutional clients because the decision-making process is different than catering to the mass markets. If one of your investments is moving to different segments ask why?

There are more questions than answers, till the next time – to raising questions.

When a company manages to be successful, the public has a distinct image about the company. If markets shift on the company and the company while still successful is not successful in way the public perceives it, the company must reeducate its investors and the public on what it does. One method is to change the logo. In the world of marketing the colour combination matters, the font matters, the look matters. Years ago, the author worked for a company which changed its logo, but not the rest of the company after a couple years later the biggest shareholder led a shareholder revolt to sack the President because the logo was changed but little else and the company revert back to the old logo.

In an article by Supantha Mukherjee of Reuters, the Finnish company Nokia which a number of years ago was one of the world leaders in mobile phones and the public was aware of the company changed its logo. The company’s share of the mobile phone market was about 1%, which meant under the leadership of Chief Executive Pekka Lundmark a new strategy of reset, accelerate and scale was started. The company reviewed its assets and potential growth markets under the reset stage and determined the company is now a business technology company.

Nokia still produces smartphones, but its emphasis will be selling equipment to telecom companies. Telecom companies were buying equipment from China companies including Huawei, and with many in the intelligence sector believing Chinese companies products send information to China, a space has opened up to compete against Chinese companies.

At the same time of the analysis of reset stage came a new logo to change the public’s and investors perception of the company and use different measurement data to analyze the company.

Linking to dividend paying companies, all companies go through the reset, accelerate and scale process when their high margin core business changes. If a company has high margins, there will be others who want to sell in the same space and if the company is in the low margin business, there is always another company which can lower costs to compete on cost. Hopefully for your investments, there is a very good reason why the high margins are maintained which allows the company to make profits and pay dividends. Logo changes are a sign of changes in the marketplace, if your investment companies are changing logos, do you like them and have you examined the reasons for the change?

There are more questions than answers, till the next time – to raising questions.

If you think about a small entrepreneur, there are many tasks he/she has to do well, but the entrepreneur is not expected to do everything inhouse. It is normal to use multiple suppliers to ensure customer satisfaction is high and sales are repeated. As the company grows to become medium sized and perhaps into a large company, while the tasks still have to be done well, the company is more dependent upon its partners. Most companies do not do everything themselves; most companies use partners or suppliers to do the bulk of the work, the companies provide the end result. You will hear or read about discussions should the company do in house or external supplier and there are multiple variations. There are benefits to doing projects inhouse and using suppliers, the reality is if you look at the insides of a company, they are using many suppliers.

In an article by Foo Yun Chee and Stephen Nellis of Reuters, one of the biggest software companies Microsoft is trying to enhance its gaming division with a purchase of Activision. The deal is being held up by regulators in Europe and the US. To ensure more users have access to Microsoft games, Microsoft is partnering with Nvidia, best known for making silicon chips to ensure computers run faster and smoothly. Nvidia has a division called GeForce Now which is a streaming service for gamers and has over 25 million users in 100 countries. The partnership with GeForce Now, according to Phil Eisler, VP and GM titles such as Microsoft’s games such as Minecraft will be available right away. Games from Activision such as Call of Duty will have to wait until the completion of the deal between Activision and Microsoft. The deal is for 10 years.

Nvidia’s GeForce Now supports the Microsoft acquisition of Activision. Microsoft by signing up partners hopes to both put pressure and show the regulators Microsoft is willing to open up Activision games to a wider audience. While the regulators have concerns over less competition in the gaming industry, Microsoft is open to greater co-operation for at least 10 years. Microsoft sees buying Activision as growth in the mobile and cloud gaming segments.

Linking to dividend paying stocks, if you read stories about the early days of manufacturing automobiles for example Ford, most of the operations were done in-house in the Rouge plant. Mr. Ford liked it that way and for a long time he was successful. Over the decades, auto companies asked why are they doing everything? why not just put things together and sell the finished product. The growth of supplier auto parts companies grew and few customers realized the auto companies did not make everything. The growth of supplier parts lead to globalization of parts, to both lessen the costs and let others specialize in the parts. Now we are in the midst of some changes to the model, and it is important to know how your company investments are filling in the dots. What is the relationship? how does the model work or is working?

There are more questions than answers, till the next time – to raising questions.

In every public company, mergers and acquisitions are a normal part of the business. Some companies are always growing externally, some companies try to do many items themselves or organically, there are multiple variations. The companies which are growing externally, tend to have a core group of people who make the decisions of which companies to buy as the company grows in size and market share. How the company ensures the synergies expected or how the logistics flow to the bottom line is a different skill set, but often a CEO will be on the search for companies to buy or people they want in the firm.

In an article by Julie Zhu and Xie Yu of Reuters, one of the more prominent deal makers in the Chinese banking sectors is Bao Fan of China Renaissance. In the world of China, if the government likes what you are doing, they encourage you, if they do not like you, you are removed for a period of time. In the case of China Renaissance, Bao Fan is the founder, chairman and CEO of the bank. In China at the moment, the government is trying to slow down the corruption and it was decided that Mr. Fan was part of the problem or linked to the former President Cong Lin and had to be detained.

While Mr. Fan was the dealmaker and is absent, co-founder Kevin Xie and the head of investment banking Wang Lixing are running the bank. The firm was started in 2005 to match capital-hungry startups to venture capitalists and private equity investors. The firm expanded into services including underwriting, sales and trading.

Linking to dividend paying stocks, although every person is important, the market tends to rely on a few people who are the face of the company and present the highlights of the public company on investor days. When one of the people the market knows either retires, moves firms, or leaves, the market needs to learn to know another person. It is natural for a a company for a smooth transition to not be affected by the news, but a company without a smooth transition the stock will tend to fall. It will be senior management to reassure the market as they get to know them and then the stock can move up again. If the transition in your company is not smooth, you should seek out alternatives.

There are more questions than answers, till the next time – to raising questions.