Dividends and Tesla receives 2nd SEC subponea over Musk’s 2018 Tweets about taking the company private

All stock exchanges have regulators, they are seemingly ensure there are some ethics in the buying and selling of securities, understanding if a broker works on commission to raise commission means more trading. Some securities have very low commission, some securities have have higher commissions and when a broker is disciplined it is often in the higher commission securities. For most investors, buy and hold quality stocks is the method to gain wealth over the long term, but everyone who buys and sells wants to have the big gain almost immediately. Having said that often times, those that run the securities and exchanges will point to the quality of the regulators as one of the reasons why investors should feel comfortable trading on the exchange.

If an investor particularly an investor who holds directly and indirectly a large holding makes a statement about their holding and the stock either goes up or down, it will come to the attention of the regulators. There is a principle that all investors should have information as reasonable soon as possible, this is why companies release press releases to state their earnings at a particular time – usually before the exchange opens or after it closes. It this fashion investors can read the releases and act accordingly. Do the results match expectations?

Elon Musk of Tesla loves to tweet and that can be very good, except he sometimes tweets about the value of his company. As the President and largest shareholder what he says is material, he has tweeted maybe I will take the company private? Taking a company private is always possible but it implies he has the financing to do it and will do it at a premium to the stock price in order for the investment companies to buy the shares for the company. If he wanted to take the company at a lower price, investors would demand a premium and not sell. The tweet has financial implications.

In an article from Reuters, Telsa has received its 2nd subpoena from the SEC about his tweets. Likely he will receive more about his proposal buy out of Twitter. A subpoena means Mr. Musk and his lawyers have to testify under oath to investigators from the SEC. They will make recommendations on penalties and normally there are both financial and trading suspensions. The company said it will co-operate with the SEC – arranging both time frames to appear and documents requested.

Linking to dividend paying stocks, there are rules for the bigger players in the market to be fair to the smaller players. If you one share of a company trading in the hundreds of thousands every day, you can have a view but it will not change the outlook of the company. If you own a hedge fund and accumulate over 5%, your views will be heard by senior management because it could sway other shareholders. If senior management which typically has over 50% of the votes at the Annual General Meeting says something about the company, it needs to be widely told or it is inside information. The regulators are there to ensure the large companies have good ethics and the do not do the same thing as the fly by night security firms.

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

Dividends and Why big tech is making a play for live sports

If you watch TV and most people do, what events brings the most people to want to watch TV? The the answers is sports – watching live sports was 95 out of the 100 most viewed programs. If you are a consumer of beer, there are many sports bars or areas where you can eat and drink with patrons while watching TV. If you can not be at the game the next best thing is a sports bar and if you can not be at a sports bar you have your TV at home. If you know the history of FOX, one of the first things they did was to offer the NFL owners a seemingly large amount of money for the rights to show NFL football and eventually the Super Bowl. The ability to show live sports brought viewers and then it was up to FOX to send them to their other shows.

In an article by Tripp Mickle, Kevin Draper and Benjamin Mullin of the New York Times News Service, the strategy of FOX is being replaced by the streaming services of big tech. The streaming services of Apple and Amazon need content and offering sports content will mean people will subscribe to the service for the live sports. The issue is always how much should big tech pay to receive the rights to live sports?

DirecTV has the rights to NFL Sunday Ticket and pays about $1 billion a year, they decided to not to continue which means the price is going up to $2.5 billion annually. DirecTV says it has been losing money $500 million a year (they must have only receive $500 million plus on advertising) but did benefit from the 2 million subscribers.

Apple is the leading contender and President Tim Cook has made the rounds to the NFL and equally important the NFL owners who will vote on the media package. Some of the owners are Jerry Jones of the Dallas Cowboys and Robert Kraft of the New England Patriots.

Other companies which are expected to make bids are Amazon, ESPN+ (owned by Disney) and You Tube (owned by Alphabet).

The biggest media companies such as Disney, Comcast, Paramount and Fox are expected to spend $24.2 billion for live sports rights in 2024 which is nearly double what they spent 10 years ago according to MoffettNathanson, an investment firm that tracks the industry.

Apple started its $4.99 streaming service Apple TV+ in 2019 and has 16.3 million subscribers in the US according to Antenna, an analytics firm for video on demand services. Amazon has 200 million subscribers to Amazon Prime although people can subscribe to Prime Video only for $8.99.

Recently Apple Sports added MLB or Major League Baseball.

Amazon agreed to pay $1 billion a year for Thursday night NFL games an increase of 50%.

ESPN outbid Amazon for Formula One racing for $75 million, a 15 fold increase from the prior contact according to the Sports Business Journal.

Comcast which owns NBC Universal closed down NBC Sports Network and moved the games to Peacock where it aired some English Premier League soccer games.

CBS owns Paramount+ and has shown US league soccer games.

The NBA is with ESPN and Turner through the 2024-25 season.

Linking to dividend paying stocks, sports brings in viewers and many viewers bring its advertising which brings in revenues to make the cycle pay for itself. As long as people enjoy watching sports, advertisers who are looking for a mass market will pay. There will be many delineations to the target audience but in general advertises need to seek consumers. If sports is the way, sports is the way. Where does your favorite team play? given stadiums have a name to them.

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

Dividends and Ford to buy EV batteries from CATL

If you were to look under the hood of any internal combustion engine vehicle you would see a number of brands ensuring the engine runs well. Most of the parts likely have a generic or inhouse ability to make, but many manufacturers including car companies outsource the parts to other companies and the manufacturer puts the parts in correctly. As the car companies evolve from internal combustion engines to electric vehicles, the brand names will and are changing. This means over time, but not tomorrow, the companies that make parts for the internal combustion engine will make less or have to switch to electric vehicle parts. Sometimes it is easier for the manufacturers to find new partners in their manufacturing process.

In an article by Joseph White and Ben Klayman of Reuters, Ford announced it will import lower cost lithium iron batteries (LFP) for its trucks and SUVs from Chinese battery maker CATL.

Ford VP Lisa Drake said by 2026 the batteries should be made in the US, for now they will be made in China.

Ford’s decision to use lithium iron batteries in its best selling North American EV’s is the latest sign that lithium iron’s lower cost is worth the tradeoff in range.

Tesla is offering LFP batteries in its lower priced Model 3. Truck and van maker Rivian is using LFP batteries.

Ford is in talks with the big mining giants of Rio Tinto, Vale, Huayou Cobalt and BHP to secure lithium and nickel for the batteries.

Linking to dividend paying stocks, one of the aspects of being a successful company is making the transition to the new standards. If you remember video cassettes and the technologies were beta or VHS. One became a standard and sold billions of units, one died away until CDs changed the market. Picking the company that becomes the standard is the key, but what becomes standard is seemingly only obvious in retrospective. When companies particularly manufacturing companies announce their new partners you have to evaluate is that good?

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

Dividends and KKK has no plans to lead Toshiba bid, but could join a deal: sources

In some countries around the world, to encourage development some private companies received the government’s blessing to become conglomerates or to be involved in many different industries. At the time, there seemed to be a ration reason by the government, for example in Japan after WW II, the country needed to be rebuilt. Companies that became successful were given responsibility for national interest divisions which the government funded most of the research and development. However through the funding of the national interest division, the company was given a favored status in the areas where there was more competition. One thing lead to another and soon there were a number of large conglomerates in Japan (and other countries) which still exist.

In an article by Makiko Yamazaki, Scott Murdoch and Kane Wu of Reuters, KKR & Co has accumulated shares of Toshiba and believes if the company was taken private and split up to become public again, there would be wealth to be gained. With giant fund companies such as KKR, they have access to capital to with their various funds but need the government’s blessing that it is in the best interests of Japan. To do a buyout would cost around $22 billion and Toshiba said over the past month it has received 8 initial buyout proposals as well as 2 offers for capital alliances that would see it remain listed.

KKR’s competitors are Apollo Global Management, Bain Capital, Blackstone Inc, Baring Private Equity Asia, CVC Capital Partners, and MBK Partners. As well as Japan Investment Corp (JIC) is forming a consortium with domestic private equity firm Japan Industrial Partners to bid.

Linking to dividend paying stocks, at one time conglomerates were seen as too big or too protected by the government, but times change and evolve. Once the protection by the government is seen to lessen, conglomerates are evaluated the same as any other stock and management must perform to the satisfaction of shareholders. If you are a small investor, this means the large funds are expecting the same results as you are. However if the results do not measure as a small investor you are likely to find alternatives, the larger funds are likely to change management and the company from the inside.

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

Dividends and Goldman Sachs beats rivals and expectations with 2nd quarter results

For the past number of decades, the best and most profitable Wall Street firm has been Goldman Sachs. When there is a bull market, the money flows to Goldman, in a bear market they still make a profit. Goldman has many institutional and government clients across the world, if there is money to made in a country, Goldman is there.

In an article by Stephen Gandel of the New York Times News Service, Goldman Sachs reported its 2nd quarter profit falling 50% to $3 billion. Analysts were expecting a 60% fall or profit was better than expected.

Goldman’s executives said the bank was being cautious for the rest of the year and are reviewing stock buybacks but increased its dividend by 25%.

The bank recorded a 55% jump in 2nd quarter revenue from the buying and selling of bonds, currencies, equities and commodities.

In a bear market, there are fewer IPOs and revenue fell in the investment banking group, a drop of 41% from a year ago. The backlog of deals fell considerably, Goldman offered few details.

Linking to dividend paying stocks, a company such as Goldman Sachs makes money every quarter whether there is a bull or bear market, the issue is how much? If you own investments that make profits throughout the cycle you will be rewarded over the long term. There will be fluctuations in the stock price but profit making companies are good to hold on to and when the price is lower, more can be bought. If you are confident the company can make profits you can determine what is the company’s most important revenue source and when the company reports you will have your answer to hold or look for alternatives.

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

Dividends and After initial hesitation, chip designers warm to US bill to boost industry

If you have a computer or laptop, there might be a advertisement from intel on it saying the chip inside. If you are similar to most people, they really do not know what is inside and which company it is made from, they just want the computer to work efficiently when they turn on the computer. However it is important to note who makes the chip inside, for the large companies involved it is a billion dollar business. The reality is most of the hardware inside the phone or computer is made outside the US, in many cases the design is made in the US, but the chips and hardware – China or Taiwan or Japan or somewhere in the Far East. For many years that was good and ok with policy makers. President Trump liked to announce a company was going to build but little ground was ever broken. The Senate has taken up the case and maybe some chips will be made in the US.

In an article by Stephen Nellis of Reuters, the Senate wishes to pass a bill that is worth $52 billion in subsides and investment tax credit to boost US computer chip manufacturers.

Similar to all bills passed or expected to be passed by government, there are some winners and losers depending on how their business model is structured.

A company such as Intel which had released press releases to spend $20 billion on a factory in Ohio as well as 2 new plants in Arizona would be expected to benefit from the bill.

Companies such as Texas Instruments and Micron Technology who design and build their chips would benefit.

Companies such as Advanced Micro Devices (AMD), Qualcomm, and Nvidia design their own chips but use partners to make the chips would see no direct benefit from the subsidies to build plants or tax support for tools. The companies support a bill which contains both the manufacturing tax credit and a tax credit for chip design. The second aspect would benefit the companies.

The association of chip designers is called the Semiconductor Industry Association (SIA) and it supports the second bill or benefits to both designers and manufacturers.

One person who is not from Intel said Intel could get $20 billion with CHIPS Act plus $5 or $10 billion under the FABS Act. So $30 billion benefit to a direct competitor and nothing to you, is that fair?

The House and Senate passed the bill in the last week of July, although they added a few more items including robotics, quantum computing and artificial intelligence to increase the bill to $252 billion. Gina Raimondo, the Secretary of Commerce said there are a lot of strings attached and a lot of taxpayer protection.

Linking to dividend paying stocks, most of deal with hundreds and thousands and a few million if we are fortunate, large companies often deal in billions. Would the billion benefit change the decision to invest in the US or is it better to deal with partner firms making chips? There are always plus and minus each way, however the fact the government is willing to give the company billions in tax incentives and subsidies means a smaller company would have a hard time competing. There is a reason why they are called moats.

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

Dividends and Mattel opens vault to revitalize toy brands

A company in business for a long time has built up goodwill along the way and that is worth money. They likely have assets that they do not use very often but could. Some companies own tracts of land that have increased in value as cities change; some have ideas or products that consumers bought years ago. Sales slowed and the company introduced new products, but the old ones were put on the shelf for some time in the future. Once in while, companies will see new trends that are emerging and some of their old products seem to fit the new trends, so maybe just maybe they can become hits in the future.

In an article by Gregory Schmidt of the New York Times News Service, the toymaker Mattel best known for the Barbie doll is reintroducing 3 dormant lines that have not graced toy shelves for decades – Major Matt Mason, Big Jim and Pulsar.

If you do not them, they are action figures and Mattel has a division called Back in Action.

Mattel reported a 19% jump in sales in 2021, and part of the recent success is expansion of legacy brands.

At the moment, if you went down a toy aisle, many of the products are tied to a movie or a TV show or a video game.

Mattel’s strategy for reviving a dormant brand is to engage in hard core fans first, said Richard Dickson, the company’s president and chief operating officer. If the fans take to it, the next step is come up with tie-in content and create a line for children.

Mattel used the formula for Masters of the Universe and now is working on Monster High.

In the toy world, Comic-Con which is held in many cities around the country is an important marketing venue (if you never been to one, you should drop by and see the passion of the fans).

Linking to dividend paying stocks, all companies that celebrate high birthdays have assets somewhere. Once in the while the assets are brought to the marketplace to create even greater assets. For the companies you invest in, do you know what the hidden assets are?

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

Dividends and Boeing vies for orders worth more than $15 billion at British airshow

Every industry has conferences and manufacturers have trade shows. Although there will be more than one conference to be attended, one conference seems to stand above the other. If you think about consumer electronics it is the trade show in Las Vegas held in January. If you are in the airplane manufacturing business for civilian aircraft the trade show is the Farnborough Airshow. Talks begin weeks in advance but results are announced at the show.

In an article by Tim Hepher and David Shepardson of Reuters, Boeing and Airbus will announce dels with airliners across the globe. Boeing announced deals with Delta Air Lines and Lufthansa worth over $15 billion for 737 Max 10 and 777 X jets.

Easyjet announced 56 Airbus A320neos.

Linking to dividend paying stocks, in every industry there are conferences and at some companies announce purchases. For the companies you own stock, it is good to know when the important conferences are to be held and watch for news from the event. If news is good, then you can hold, if news is not good then you might be looking for alternatives.

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

Dividends and Robots are not done transforming how warehouse work

In every city there is a demand for warehouse space and manufacturing space, often times due to the size required by the company they are looking for inexpensive real estate relative to office space which is more expensive. The companies in the area tend to similar work and clusters of warehousing space bring employment to the area. Inside the warehouses, much of the movement of material and goods was done by hand or using power jacks, but times are changing and the pandemic of COVID met times changed faster than normal.

Technology is improving every year and one of the improvements is the world of robots. Given many of the jobs are repetitious. companies are eager to find a method to use a robot for the most repetition work and they are investing and finding robots to help the business.

In an article by Patrick Sisson of the New York Times News Service, robots are changing the workplace as companies spend billions of dollars on robotics. In the next 5 years, according to the Material Handling Institute adoption of robotics in warehouses is expected to grow 50%. The idea is the robots steered by software and AI can move boxes and products in a seamless environment.

The biggest company in the robotics industry is Amazon which accounted for 38% of the robotics investment in the industry in 2021. The company acquired the robotics company Kiva Systems and has deployed more than 500,000 units. In addition, it set up the Industrial Innovation Fund to invest in firms such as Agility Robotics.

Walmart recently announced a deal with Symbotic to bring its system of belts, pickers and autonomous vehicles to all of the retailer’s 42 main storing facilties.

Kroger has opened 5 of its 20 planned warehouses outfitted with the Ocado automated system for packing and shipping fresh groceries.

For investors in real estate warehouses, the challenge is old buildings will need 2 or 3 times the power generation of previous generations including the latest wireless and 5G networks or many will need upgrades to suit the demands of robots. At the moment, a human and a robot tend to have similar space requirements, but only one needs a lunch room.

Linking to dividend paying stocks, as robots become common in the workplace they will tend to have a brand name and the brand name will mean recurring revenues for the company. The capital cost for the robot and the operating cost to ensure the warehouse and factory remain operational. With every change there are opportunities, sometimes it is hard to see them but seeing where companies spend their money is a good way to start.

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