For all companies picking a location is a big deal. A correct location will allow the company to attract the people it needs to continue to be in business for a long time. Large companies often have an office building or structures for their corporate office and for a company such as Unilever they are divided between two companies. The Anglo Dutch company has its offices in London and Rotterdam and has decided while London will continue to play a significant role, Rotterdam is where the company will have its main headquarters. In a column by Kate Holton and Paul Sandle of Reuters, Unilever Chair Marijn Dekkers said the Board of Directors was taking a 30 to 50 year decision not one based on Brexit or recent political events. The company was formed with the 1930 merger of margarine make Margarine Unie and British soap maker Lever Brothers. The company employs 170,000 people around the world and generates $86 billion in revenues.

The company had talks with both heads of countries, but the Dutch offered a better deal.  The company will restructure to have Beauty & Personal Care and Home Care based in London while Foods and Refreshment will be in Rotterdam.

Linking to dividend paying stocks, with Unilever the company is making a 30 to 50 year decision. As long as Unilever can continue with its margins, the company should be operating just fine in 30 to 50 years. With this type of company you need to ensure while it maybe steady but is it continuing to make money?

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

 

 

In all industries themes will come forward and some organizations will run with them. In the radio business, a consolidation of radio stations went forth and iHeart ended up with 849 radio stations. However the big problem was establishing the chain meant using debt. iHeart Media according to Tom Hals of Reuter over $20 billion in debt. The company started with one radio station in San Antonio, Texas where its headquarters is still located. The company had $3.58 billion in revenue, reached 217 million radio listeners. The company sells advertising on digital platforms, live concerts and syndicated programs.

The company spent $1.4 billion on interest payments and has more than $8 billion in debt maturities by the end of 2019. Bond holders – if they are secured and owed $13 billion accepted $5.6 billion in new notes and 94% of the equity in the reorganized company. The creditors also took 89.5% in Clear Channel Outdoor Holdings – the world’s largest billboard company.

The junior debt holders who are owed $2 billion took 5% of the company and $200 million in new notes. The existing shareholders would receive 1% of the company.

Linking to dividend paying stocks, the example above shows the pecking order when too much debt is with a company. The secured bondholders take the lion’s share, the junior bondholders are left little and generally are mad; and the existing shareholders are left with almost nothing. It is why if the company is having difficulty paying their debt it is time to look for alternatives quickly.

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

 

In every industry there are opportunities from learning because companies go bankrupt for a variety of reasons. In the toy industry, Toys “R” Us declared bankruptcy – what lessons can be learnt? Sarah Halzack is a Bloomberg columnist for the consumer and retail industries has some ideas.

The first reason is debt – whether it be personal debt or corporate debt too much is a bad thing. There is a point where it becomes too much and for investors – if the company is spending a great deal of time and energy paying down debt, then it time to stay away. One big clue is accounts payable grow and accounts receivable decrease because suppliers want to be paid before they ship.

For some companies doing everything in-house means they have an expertise to do whatever is required. Toy”R” Us partnered with Amazon, but the partnership did not go well and Toy”R”Us never really caught up in the on line platform.

The retail environment is about keeping things fresh and new, 60 years the concept of Toys”R”Us was new and exciting. Now days, the changes made by executives do not seem to be new and exciting.

In hindsight one strategy for Babies”R”Us might have to gone upscale and high-touch service. It never went that way and it might have been a missed opportunity.

Linking to dividend paying stocks, one of the reasons for the success of the companies is profits are made to reinvest and pay its shareholders a dividend. All companies use debt, it is not necessarily bad, however when it crosses a line the writing is on the wall and you need to find alternatives.

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

In Egypt one of the major tourist attraction is the pyramids and within the great pyramids are tombs for the rulers to have similar experiences in the after level. The Egyptians believed the rulers or gods that ruled them when they died would rule in the after life and had to ensure their tombs had some of the country’s treasures in them. Rulers were buried with their gold or at least some of it. The pyramids were closed up and expected to remain close for thousands and thousands of years. Given the value of gold, many people decided to look at the gold and over the years some of the knowledge came to archaeologists who started to look at the mysteries of the pyramids.

One of the greatest treasures because grave robbers did not know or missed the grave. Tutankhamun only ruled for 10 years and shortly after he died the next leader started to change the history books about Tut. The next leader tried even more to wipe the name Tut from the history books. This is good for Tut’s treasure because if no one is looking for the treasure his era has low demand or economic value. It was rumored however there was a large treasure untouched near the great pyramids. Eventually Howard Carter and Lord Carnarvon found the treasure shortly after WW 1. It is the contention of Gerald O’Farrell that there was a deception in regards to King Tut. The book is called The Tutankhamun Deception published by Sidgwick & Jackson, London, UK 2001.

Mr. O’Farrell believes Howard Carter found the treasure, fortunately for him WW 1 happened and he was fortunate to take two thirds of the treasure out to be sold. The other one third was for show when the tomb was opened. It maybe true we do not know but in an earlier time museums around the world received their share before the country’s museums. The book did not go into whether Mr. Carter could afford the lifestyle of Lord Carnarvon – if he did more proof he stole some of the gold.

Linking to dividend paying stocks, in most industries there is some myth around them. How the company was started, why it is in the position it is, what rules were broken and how they are establishment sorts now days. As investors we what to believe in the myths although we suspect some of the stories are myths. The important aspect is the dividend sustainable and consistent. Then myths can be delved into on a later basis.

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

Similar to many people, during the winter going to a gym or a pool is part of the normal routine. It is good for health and given the weather outside, it seems easier to do. On arrival at the gym, there is a need to change clothing. 95% of the time, my feet go towards the same locker even though there is no lock on 95% of the lockers for they are day use only. Out of the 80 lockers, all of the same size, most the same distance from the bench and all of them having 3 hooks. my feet lead me to the same number was being used. After a time, it is noticed the other people tend to go towards the same locker in a similar fashion that I do. If  an analysis is done, my actions are not much different than most participants.

Linking to dividend paying stocks, we are creatures of habit and likely you have heard that expression many times over. There maybe a practical reason why we do something in the first place, but by the third time the rational aspect begins to disappear and the habit begins to come in. The big question is how do you ensure you have good habits in the first place, for most of us are not rational human beings. One method is to invest in profitable companies. If you start with profitable companies that means you tend to stay away from unprofitable companies which have a great possible story but no sales or too much debt. If you start with that premise then you will keep more of your money.

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

In an article by Dana Hull and Anders Melin of Bloomberg News – two of Tesla’s largest shareholders are supporting a plan to award Elon Musk a compensation package valued at $2.6 billion. The two companies are Baillie Gifford & Co and T. Rowe Price Group which own about 14% of the shares. Mr. Musk owns about 20%.

Edinburgh based Ballie Gifford founded in 1908 and one of the world’s most active technology inestors owns about 7.6% while Baltimore based T Rowe Price owns about 6.4% in various funds.

What is interesting in the story is reading who owns what. Chances are you may have heard about T Rowe Price but did you know Baillie Gifford? They are on the internet in case you want to examine the company.

Linking to dividend paying stocks, in the technology sector there are numerous methods to invest. Buy the company, ETFs. mutual funds, etc. and most of the time we are biased towards the area we live in. It is good to read who are the major shareholders and how you might be able to catch a ride with them. The folks in Edinburgh, Scotland and Baltimore, Maryland are away from Wall Street in New York and may know a thing or two.

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

The Nazi Officer’s Wife is about one lady surviving the Holocaust The  book was written by Edith Hahn Beer with Susan Dworkin published by William Morrow, NY, 1999. Edith  was born in the in the early 1920’s and similar to many in Austria was Jewish. They did not have a strict Jewish home and identified as Austrian more than Jewish Austrian. The family made a middle income living, the children were expected and did attend post secondary and life would continue. At the time the Nazi’s invaded Austria, Edith was one credit away from becoming a lawyer. The Nazi’s restricted all the rights of Jews and it is always surprising to me how any country the Nazi took over quickly embraced the new government’s regulations.

The Jews of Austria saw the writing on the wall and given they had very few rights and many regulations to be controlled (people on the internet think they are being watched, the Nazis tried to watch everybody without the internet) tried to leave the country. Most countries did not want too many Jews and many had to stay. Edith took a different route she went to Germany, for in Germany unlike the rest of the world, women were expected to raise children and take care of the men (in other countries, women were expected to take the place of men in the factories). Edith eventually met a low ranking officer and as long as they did not talk politics but kept the conversation to keeping the house clean and looking after children. All was okay. The book discusses how the Germany bureaucracy tried to keep track of people so Edith was always trying to find ways to stay off the official matters – one method was volunteer for the Red Cross allowed extra food rations.

At the end of the war, Edith skills as a lawyer were needed for she became a judge to help the city rebuild. Eventually Edith left Germany and lived most of her adult life in England and then Israel.

One of the more interesting sentences is when an idea is idiotic to begin with its application never makes any sense.

Linking to dividend paying stocks, everyday there are ideas to make money on the markets – some of them are good, some of them are less so. When you consider the ideas think of the implementation and the consequences of the ideas. One idea that has been good for many years is buy profitable companies which pay a dividend. As look as the company remains profitable you do not have to do anything except reap in dividends and higher multiples paid for the stock.

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

President Trump has a view of the world but he seems to rooted in the past and beginning not to match reality. On February 28, the President was having a discussion with the steel and aluminium makers who among other things supply the auto makers who have over the years have moved the method in which cars are produced. The auto makers use countries around the world for parts and supplies and often put them together in the home country. The President wants more autos and trucks made and produced in the US, although he forgets more and more manufacturing is done by robots not people. Auto plants will never be big employment generators, but autos and trucks are still an important part of the economy. While meeting with car makers he told the world, I will impose a tariff on steel and aluminum.

In the past, countries have tried to impose tariffs to ensure domestic competition has an fair or reasonably equal opportunity to earn contracts. The US imposed tariffs on steel and aluminium 10 years ago, it lasted less than a year. The problem is the big giant steel mills can not compete with new steel mills. The large companies carry a larger fixed costs and the steel they use to make profits on, the margins are very thin because of smaller steel mills. There are wonderful learning sessions about the steel industry and how it changed by Clayton Christensen’s Theory of Disruption. If you want to read about it or watch the videos on You Tube. They are worth watching.

President Tump has picked steel and aluminum to go after the trade imbalance of China however, China is not the number maker and importer of steel and aluminium, the US allies and biggest customers are. Prior to the 1970’s Trump would have been correct, in the 2000’s he is playing a game that alienates his allies. In additon much of the manufacturing is offshore because American companies moved their operations to other countries to cut costs and the tax system helped encourage them to do it.

If someone goes into Walmart much of the items you will see and save money on will be made outside the US. It is similar to many retail stores. The world has changed and the President does not seem to realize it and corporate America has benefited from the supply system changes. Consumers may have benefited from lower prices, but combined with lower wages and wage stagnation, they might remember an easier time. The President who changes his mind on policies daily, makes it hard to do investment decisions because of his instability and his lack of understanding the facts. If only the President would read his reports rather than watching TV.

The President is pushing other countries to do something back for if they do nothing, their home elector will see them as weak. In addition, the President is in the midst of trying to examine trade deals with Mexico and Canada which border the US. Negotiations were made much more difficult.

Linking to dividend paying stocks, as investors we pay a great deal of attention to the President of the organization because he/she speaks for it. The person can pick whatever side they wish, it will have consequences. If the person can be seen as understanding the trade offs, one might be able to invest. If the person is not seen as understanding both sides before they speak, uncertainty is the normal course of events. Many people choose to wait on the sidelines when uncertainity is the norm.

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

One of the pictures that is seen is the President leaves the White House to fly to another place. The President just before he enters, turns and waves and he off. The plane he enters is a Boeing and it is called Air Force One. In an article by Jennifer Epstein and Julie Johnsson of Bloomberg News, the office of the President and Boeing agreed to new plane for $3.9 billion.

Much of the cost of the planes is the extra modifications to ensure the plane can operate as a White House in the air. The plane has two electrical systems (one for a back up) the communications system, self defense capabilities, work and rest quarters and other features. In the world of the President he likes to say he saved money by his negotiations which is a good thing, if it happens. According to the office of the President, they were expecting to spend $3.95 billion on two planes to serve as Air Force One. The deal came in at $3.9 billion. Somehow the President saved the country $1 billion and Boeing tweeted “President Trump negotiated a good deal on behalf of the American people.”

Linking to dividend paying stocks, this is an example of the company can play second fiddle to the buyer. Boeing sells planes around the world which is good and it has to deal with many complex Presidents – from the rational to the emotional and they have learned to deal with their customers. In the world of win-win, how does the company allow its customers to believe they have won while still making money.

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