If you were in the economic development position in your local city, one of the things you would love to have is the headquarters of a large company. That combined with other government offices helps to ensure the economy of the area will be less affected by economic cycles than other areas. The company headquarters typically brings spinoffs as accountants and lawyers will tend to be nearby, hotels will be built as people travel and the list goes on. In addition, often head office companies or their founders will contribute to the social life of the community with both donations and whatever they are interested in. For example, one of the Waltons in Bentonville, Arkansas likes to trail ride and has teamed up with Wal-mart to have great trails in the Bentonville area. It has become another reason to visit Bentonville.

In an article by Rebecca F Elliot of the New York Times News Service, Chevron, the second largest US oil company is moving its headquarters from California to Houston, Texas.

Chevron’s ties to California date to the 1870’s and was known as Standard Oil of California. Chevron has people where the oil is and presently has over 7,000 people in the Houston area compared with 2,000 at its San Ramon headquarters. San Ramon is near San Franciso and in 2022, Chevron did a sale leaseback with the space, perhaps the writing was on the wall.

Linking to dividend paying stocks, there are multiple trends which happen in all industries, and when a corporation moves for its best interests, someone else loses. It could be the real estate market which has to absorb the space, homes for sale, the corporate dollars for social events, there can be an affect, and hopefully new companies evolve and will take its place. This is part of the American Dream and in some places it works well with little disruption, in other places they are in a time slowdown until somebody discovers them again. As an investor, you are more of the optimistic side because it can happen and does happen on a regular basis which is a good thing for the economy in general.

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

If you watch the clips about the 10 wealthiest women in the world, on top of the list is a French lady named Francoise Bettencourt Meyers whose family owns shares in the beauty company L’Oreal. The company makes cosmetics for people with the overwhelming majority from women products. If you own shares in a drug store company, you know that cosmetics have large margins and equally important the buyers believe they are getting good value for their money.

In an article by Dave Graham and Dominique Patton of Reuters, L’Oreal announced it is buying 10% of Swiss skin care firm Galderma. L’Oreal is buying into because Galderma is a leader in the booming injectable cosmetics market. The stake of $1.6 billion Swiss francs will be funded through available cash and credit lines.

L’Oreal knows the company well, for it was originally owned 50% by Nestle and 50% by L’Oreal. In 2014 L’Oreal reorganized and sold its stake. The 10% is coming from Sunshine SwissCo AG a group lead by Swedish private equity firm EQT, Abu Dhabi Investment Authority, and Auba Investment Pte. Ltd.

After WW II, the baby boom was created and now those people are senior citizens. With all senior citizens, the skin is less flexible and the beauty industry idealized form says injectable products that can reduce wrinkles such as fillers and neuromodulators which include botox are a must for a portion of those seniors.

L’Oreal CEO Nicholas Hieronimus said about half of Galderma’s revenues come from injectables. The market was worth $10 billion last year.

The penetration rate of these procedures already stands at mid-single digits and it could easily double in the next decade.

The global esthetics market is predicted to grow to $25.9 billion by 2028 from $15.4 billion last year according to Markets-and Markets research.

L’Oreal is positioning their stake in Galderma as strategic to working on research and development for technically the companies are competitors and will remain as strong competitors.

Linking to dividend paying stocks, large companies have access to capital, logistics and product placement but all markets evolve and there are competitors trying to fight their way on the shelves for consumers. The access to capital means all large companies can have strategic positions in companies as they wait till the correct time to buy them and continue to make profits. This time frame can be a luxury for small and medium sized companies but a normal course of action for the large companies.

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

In the world we live in there is a rule for business, if there is enough profit to be made someone will be involved in the product or service. While much of the world revolves around the line between right and wrong, there is considerable money to be made if an organization goes over the line. If you own shares in the company, you want it to be on the further side of the right side, but somewhere in the background the line may have changed over the years. This rule of being on which side of the line has existed since the East India Company of the UK was the most profitable company in the world when it moved from importing tea from India (it is the reason why many people in the UK drink tea) to selling opium to the Chinese for silver. In the UK. Every time there is a sanction imposed by one country, a firm will use its expertise in logistics to find a solution to sell the product at a higher price. Another example is after the US sanctioned Iranian oil, a firm in Switzerland bought the oil because in their minds the Swiss government had not agreed to the sanctions. The oil went to refineries in Japan and Europe. The most recent example is AI chips from the US.

In an article by Ana Swanson and Claire Fu of the New York Times News Service, as most people know the latest great potential is Artificial Intelligence or using great amounts of data to find potential solutions. The great amount of data means a need for great amount of computing chips to manage the data. The best computing chips in the world are made by the US company Nvidia.

The US government beginning in October of 2022, has set up one of the most extensive technological blockades ever attempted: banning the export to China of AI chips and the machinery to make them.

The bans have made it harder and more costly for China to develop AI, but given the vast profits at stake, businesses around the world have found ways to skirt the restrictions.

AI holds promise to make the world a better place, it can also be used by the military to control the population to a greater extent and most of the world hopes it does. As well as to develop weapons to attack or defend the country.

In the US the agency leading the sanctions is called the Bureau of Industry and Security which oversees the government’s growing trade restrictions. One of their many tools is the entity list, which companies cannot export products from the US to a business on the list unless they obtain a license.

Companies are always looking for loopholes in the rules and one of them is for companies to reroute business through new partnerships or overseas subsidiaries which are not on the list.

The bureau has tried to adapt, tightening its penalties and forming a Disruptive Technology Strike Force with law enforcement and the intelligence community to pursue technology theft and illegal procurement networks.

An example of the process is Nettrix, one of China’s largest manufacturers of AI servers. The company was formed by former Sugon executives as Surgon was on the list not to do business with. Nvidia, Intel and Microsoft were partners with Sugon when the US was encouraging business relations with China. US officials met with Nvidia executives in 2021 and 2022 to discuss how China were using their chips. Nvidia stopped shipping the A100 chip. Nvidia came up with a solution to downgrade the A100 to A800 and this was within the government’s parameters and Chinese companies bought as many as possible. In October of 2023, US government regulations changed and Nvidia stopped shipping the chips.

There are less powerful chips than the A800 and those computer chips are being shipped to China. This has encouraged China to boost their strength in technology and innovation or make it in China, although for the moment, the US leads China in AI chips.

Linking to dividend paying stocks, owning shares in a profitable company is a rare thing because most companies on the exchange do not make profits. However, everyone has a potential to grow or do something and ideally you should watch from the sidelines as they try to do their thing. If they succeed, by being on the sideline and doing your homework if their sector does better than expected you will know which ones to buy. There are and always will be competitors to companies making money, someone will say I think I can do better or we can work on their weaknesses and that is a good thing. fortunately a good profitable company has the resources to buy the same companies and bring synergies to the profitable company. As an investor, you want this to happen and for the company to stay profitable.

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

In terms of shopping, everyone looks for value. If you are buying stocks buying value means trying to determine when a stock is underpriced and with likely rise as investors see why it is undervalued. In terms of shopping, people look for sales and buying brands at good prices. Every day and every week shoppers who shop at grocery stores will see ads which say buy an item because it offers value this week. Next week there is a different item for sale. As the price of an item goes up there are often more than one way to look at what is value.

In an article by David Dolan of Reuters, wealthy tourists are flying to Japan from across the Southeast Asia to buy high-end clothes and handbags at a discount thanks to the weak yen currency.

Some tourists are not buying the goods in their home country, but flying to Japan and shopping. This is good for the shoppers, but not so good for the luxury goods sellers because they can not raise prices to accurately reflect the currency leaving them with lower margins in Japan, at least while the yen stays weak.

An example is Louis Vuitton’s popular Alma BB handbag sells for $2,050 in China and $1,875 in Japan and last month when the yen was lower, was going for $1,725.

The yen would have to strengthen to about 136 to the dollar to put the bag’s Japanese price at parity with China. The currency was at 149.3.

Japan had a record 3.1 million foreign visitors in June putting it on track to beat an annual record of almost 32 million foreign visitors in 2019.

Linking to dividend paying stocks, with increased communication and ability to travel, people love shopping and saving money or finding good deals. It happens at the shops in your area and across the world. Where there are bargains, people figure it out relatively easy which makes business very competitive all the time. If the countries nearby offer similar goods and services, people will cross the border to buy, it is something most people have done and will continue to do. The problem for business is trying to capitalize on that trend because at some point in time the currency will be move towards parity and for some the growth expected will not happen as something has changed. When you are investing, try to remember about cycles of the economy.

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

Every company goes through transitions and sometimes they are easy and sometimes there are many changes. The easy ones tend to be when the company is making profits and continues to make profits, the changes is when the company needs to make profits for it has been stumbling. If a large company is stumbling, everyone in the company knows something is wrong and it will take a large effort to turnout the company. One such example is Boeing.

In an article by Abhijith Ganapavaram and Allison Lampert of Reuters, Boeing announced it had selected a new CEO by naming Kelly Ortberg. Mr. Ortberg has been in aerospace for over 30 years working for Rockwell Collins and United Technologies/RTX or he is an outsider to Boeing. One of many tasks Mr. Ortberg had was to integrate the $8.3 billion acquisition Collins made of BE Aerospace.

As an outsider, the Board of Directors did not choose an insider such as Patrick Shanahan, the former Spirit Aero CEO and others who was seen by many analysts as a possible successor to succeed Mr. Calhoun. Which means among the many tasks as CEO is to ensure the executive team works together or bring in new people to solve the reputational and safety crisis Boeing has been facing with its Max planes. How well he does this will be seen in the next few months – will people in the executive team be replaced or find new jobs in the aerospace industry?

Linking to dividend paying stocks, on the investor side everyone would like to see a seamless transition, when you are dealing with people that does not happen automatically. When a person is appointed to an executive position, for the most part they are considered part of the team who could replace the CEO. All teams work in similar fashion which is why there are many movies about teams and some of them do not work, others do and investors need to ask does this team work to ensure profits are delivered?

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

Dividend investors love to invest in companies with a long-standing market dominance that can make profits and pay dividends hopefully for a long time. While this is true, once in while you have to be shaken to understand how quickly things can change if you are not doing your homework.

In an article by Daisuke Wakabayashi and Claire Fu of the New York Times News Service, the story is how the GAC Aion, an electric vehicle maker in China sent a team to Thailand to open up the market. The team arrived with a long list of things to accomplish but no office, no factory, no local employees and no clue. They set up offices in a hotel using the conference rooms and started to find an office, recruit dealers, devise a business strategy. In 74 days after arriving in Thailand, they sold their first EV.

Chinese EV manufacturers such as Aion are stampeding into overseas markets. Thailand is the first country to experience the sudden influx of China’s brands and confronting how their ambition and competitiveness are reshaping the car industry.

Last year sales of popular Japanese brands such as Nissan, Mazda and Mitsubishi plummeted as consumers bought new electric cars from Chinese manufacturers. Dealers that had worked for decades with American and Japanese brands are now turning showrooms to Chinese EVs.

Thailand is the biggest market in Southeast Asia and is known as Detroit of Asia. The country serves as a manufacturing hub, or it is beachhead market. In 2022, Japanese brands accounted for 86% of the market, last year that fell to 75%. 6 Chinese electric-vehicle companies are already selling in Thailand and 3 more are coming this year including BYD, Aion, Great Wall, Neta and Chery.

Aion in its first year in Thailand opened 41 showrooms and started production of a new factory in July. It has announced plans to open a plant in Indonesia and start selling its cars in 9 countries across Southeast Asia.

Tesla started with the higher priced vehicles, the Chinese companies typically start with low price vehicles to gain market share then bring in more expensive EVs.

Linking to dividend paying stocks, when many long paying dividend stocks, they have near monopoly or operate in those types of markets and that is good for the investor. However, companies around the world can manufacture similar products and if the government is helping the companies expand outside its borders, the companies will have access to low rate credit which can disrupt the market. For your investments it is important to understand the competition and where it is nipping or taking a bite of your company profits.

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

It is normal for people to work for other people or companies. Some you will like; some you will love and others you are looking for another opportunity. Overtime, the ones you love, you begin to believe that the company has your back to. Whether it does, is a different issue, but for now it is important that people will have a relationship with company and they bleed the company’s color.

A book titled Exposure written by Robert Bilott published by Atria Books, An Imprint of Simon & Schuster, NY, 2019 asks what if the company does not have your back?

In the book, Dupont based in Delaware opened up a number of plants to manufacture products from their chemicals. One of the chemicals became well known as Teflon and many homes across the US and around the world had no stick Teflon pans and used them on a regular basis and were happy with the product. At the plant, the chemical that made the Teflon is PFOA and related PFAS, these are chemicals that do a great job, but do not break down in the environment or are called forever chemicals. At every manufacturing company, something has to be done with the wastes. Ideally, it is recycled or reused or minimized or something of that nature, but after WW II when the chemical first started to be used, that was not a top of the line concern. The wastes were sent to a landfill, covered with dirt and out of sight, out of mind. Hundreds of companies did the same thing and anyone that lives near a waste disposable site knows the issues.

The problem is overtime water falls onto the landfill, the wastes breakdown and the chemicals get into the drinking water system. There are solutions, but solutions can be expensive and plant managers were tasked at getting rid of the waste problem at the lowest cost. The issue is always when did a company know about the affects of the wastes and in particular their waste problem.

In the book, which is set in West Virginia, people worked in the Dupont Chemical plant and were paid a middle-income salary which allowed them to have a lengthy career at the company. At the same time, over time the company donated money to parks and schools so most people in the community had positive feelings for the company. Downstream from the landfill was farms and one particular farmer saw his cows die frequently. In 2 years, more than 190 cows were lost, what is going on and how to fix it?

The author of the book started his career as an environmental lawyer defending chemical companies, but because of a personal family connection took the case from the farmer. Initially he thought Dupont was going to be a good citizen and he could work with the company because they were cut from the same cloth. It turns out DuPont did everything in their power, which was plenty to not give information, but every once in a while, Mr. Bilott would discover an email or text referencing an issue. Then it would be more discover and research till he found out what chemical was in the landfill.

Then it would be months before he found out the chemical experts knew about the potential side effects but did nothing except to stonewall the information. If you know where to look, and eventually how the game is played, it is possible to find answers. Upon finding answers then it takes the legal system to bring out penalties and potential solutions.

Eventually Mr. Bilott won the lawsuits, because after using every potential legal avenue they ran out and had to admit responsibility and pay damages.

Linking to dividend paying stocks, some of the solutions would have lessened profits but the company would have continued to make profits. However, the company took the easy way out and then the legal way. which is to delay for as long as possible. The chemicals are still in the water system and everyone in the world has some in their blood because the chemicals have wide use in our daily activities. They also have consequences such as higher cancer rates for people using the chemicals directly. Perhaps the risk analysis for Dupont always came ahead with the status quo. It is nice if a company does the correct thing and branches out to different avenues to making money. For example in this case, if a water treatment plant uses carbon filtration it reduces the amount to 99% acceptable standards. The company could have invested and used its government influence to have carbon filtration mandatory for its new business. Solves a problem and offers a solution, but it did not.

Linking to dividend paying stocks, we often think that because we have a connection to a company that they will do right by you. In reality that is not really the case, although it can happen. For your investments, do the companies really do the right thing? or they expecting someone else to do it?

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

The majority of businesses in operation are private companies and they are owned by families. If you think about English Kings, the King needed a male heir to continue the blood line to maintain the place as King of the country. Similar to all successful companies, over time assets build up and the desire to maintain the assets in the family eventually is a dominate theme. The founder or Chair of the family will have their choice for different reasons. Most of the time the issues are fought over in private, but once in while it is possible to see the fights in public.

In an article by Jim Rutenberg and Jonathan Mahler of the New York Times News Service, one of the battles is being fought in public. Rupert Murdoch owns media interests in Australia, the UK and the US and became an American citizen when he bought the Fox Network.

The Murdoch’s are fortunate that the children of Rupert have turned out to be good seasoned executives, but Mr. Murdoch’s political leanings are to the right, and he believes most of his children are in the center, he wants someone leaning right. The eldest son Lachlan fits the mold.

In major disputes, eventually one parties sues the other party and then the information becomes public or before a judge. In this case, Mr. Murdoch’s other children – James, Elizabeth and Prudence were caught off guard with a change in the trust agreement and have sued. They sued in Nevada. The lawsuit has changed relations with the children and Mr. Murdoch and only Lachlan attended a wedding between Mr. Murdoch and his 5th wife Elena.

The suit is in Nevada, because the state is popular for dynastic family trusts because of favorable probate bylaws and privacy protections. The court specializes in family trusts and estate disagreements.

When Mr. Murdoch sold some of the Fox Network to Disney for $71.3 billion, all the children received $2 billion each.

Linking to dividend paying stocks, all organizations invariably deal with succession planning and who is become the chief decision maker. Sometimes in the news 2 companies announce they will merge, but it falls apart largely based on who will be in charge in a year or so. The issue is not about money, it is about decision making. The wonderful thing about succession planning is everyone can have an opinion on who should be the next CEO or President and why. If you like the result, you can keep your shares, if not, then finding alternatives is a good thing to do.

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

No matter what state you are in, the largest landowner is the government. Most of the land outside the urban areas has some forests or desert, but when thinking about the forests, the largest landowner is the government. There are multiple government departments you can think about, but most private timber companies lease land from the government to cut wood. The timber companies own a little of their cuttings, but they pay the government (whether you think it is enough is a different issue) and cut wood to provide jobs to both the people in the field and at the mill.

If you go to other countries, the equation remains the same and in Brazil the government maybe changing its way. In an article by Fabiano Maisonnave of the Associated Press, for years the Amazon Rail Forest has been cut back to expand farming. This was reduced the size of the Forests and for some has been a factor toward increasing carbon in the environment. The rational being the trees need CO2 in order to grow, less trees mean less CO2 being used by the trees.

The government has both allowed it to happen and has not considered how the Amazon should be cut, but there maybe a change. The government announced an area the size of the island of Costa Rica will have selective logging or less clear cutting.

In Brazil, similar to other countries with forests, vast lands are designated as public lands yet have no special protection or enforcement and are vulnerable to land grabbing and illegal deforestation. Criminals frequently take over the land and clear cut it, hoping the government will eventually recognize them as owners, which happens more often that not.

The new rules mean companies that do get timber concessions or leases, have to follow strict rules. They can log up to 6 trees a hectare over a 30 year period.

The idea behind recently elected President Luiz Inacio Lula da Silva is to expand the rules from the size of Costa Rica to the size of Italy. Rules are good for a country because if they are broken leases can be cancelled.

Linking to dividend paying stocks, when people came to America they were amazed at the number of trees. The history of the country is trees can be cut down faster than they grow and people moved westward. At some point there was a desire to save trees or slow down the cutting and planting trees to grow. At the same time, the issue of the value of the leases and how high or low should they be? One side wanted higher; the other side wanted lower to maintain the ability to move the logs to the mill at a profit. Governments make a choice and it is up to the communities and the companies to adapt to it. Often times in the past, the people in the government that made a choice were closely connected to the logging industry, perhaps that has changed a bit. If you invest in companies that own natural resources it is always important to note at what fee does the company make less money?

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