Many dividend companies have operations outside the state where their headquarters is, even outside the country where they reside or outside the US. They have operations which have been built up over the years and the current management likely inherited the operations. From a corporate perspective, as long as the operations are profitable, the company benefits. A number of years ago, when the Soviet Union broke up, many companies moved into the new countries because there were previously markets which could not be reached.

In the world, things change and sometimes they seem to stay the same. In the case of the Soviet Union, the countries changed and became independent. Russia which is blessed with natural resources, uses the resources to influence and dominate the independent government. If a company has operations in the former Soviet Union analyzing what Russia is trying to do or is doing is a key to continuing success.

In an article by Tom Arnold, Natalia Zinets, and Karin Strohecker of Reuters, Russia has built its military near the Ukraine border. It could be something or it could be nothing but it has an affect.

Aberdeen Standard Investments, with over $640 billion in assets under management, reduced some ruble exposure but remains exposed to Russian and Ukraine bonds. At the moment, Viktor Szabo, portfolio manager said we know that occupying and rebuilding Donbass would come at an extremely high cost for Russia in terms of financials, in terms of lives and in terms of sanctions.

JPMorgan moved to market weight from overweight on Russian local bonds and the ruble. Trim Capital portfolio manager Peter Kisler said he started to build a short position on Russia.

Jupiter Asset Management sold its holdings of Ukraine’s GDP warrants when the news begin to surface. Ukraine is expected to pay $40 million in May based on 2019 GDP growth of 3.2%.

International fund manager including Jupiter and BlueBay have built up defensive positions. If Russia invaded Ukraine, they would quickly exit the positions.

Linking to dividend paying stocks, diversification can be a wonderful thing as long as there is stability. Once there is less stability the first reaction is begun defensive to protect the capital, if conditions change for the worst exit quickly and be on the sidelines and when stability returns find buying opportunities at lower prices. You can do the same for your investments, ensure most of your investments are in countries that are stable and monitor.

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

In one of the Terminators movie, one of the scientists said a line to the effect, when we discovered the arm we learnt so much to move the bar years ahead. In the movie, the Terminator was trying to destroy the firm because robots took over from humans.

We all have an idea that Artificial Intelligence or AI is going to play a larger role in the corporate life, but how does AI become everywhere. The answer is companies such as Microsoft which is the backbone of corporate America adds it.

In an article by Chavi Mehta and Krystal Hu of Reuters, Microsoft is buying Nuance Communications for $16 billion as it builds out its cloud strategy for health care.

If you have been to a Doctors office, they seem to have a lot of paperwork as opposed to digital solutions. Nuance Communications is helping the medical system become less dependent on paper. Microsoft CEO Satya Nadella said, Nuance provides the AI layer at the health care point of delivery. AI is technology’s most important priority and health care is its more urgent application.

Microsoft is buying Nuance at $56 a share. The company is based in Burlington, Mass and reported revenue of $1.5 billion through operations in 28 countries. It is expected Mark Benjamin will remain the CEO of Nuance and will report to Scott Guthrie, EVP of Cloud and AI at Microsoft.

Linking to dividend paying stocks, the more profitable stocks often buy smaller companies to add muscle to their operations. Ideally, the corporate culture and operations fit with the bigger company to be a success, but time will tell. However, likely Microsoft is buying talent and will find out if the medical system can positioned for more AI sooner than later, to grow revenues.

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

President Biden is counting on the Green New Deal to move the US to less dependence on oil and gas or internal combustion engines as the years go forward. However to allow the transition to happen, building blocks need to be in place. One of the considerations will be the price of battery powered vehicles and one of the building blocks in the vehicle will be the battery. At the moment in Europe one can buy the vehicle and the battery separately, not positive how practical it is, but it is interesting.

In an article by David Shepardson, Hyunjoo Jin, and Heekyong Yang of Reuters, the two biggest South Korean battery makers LG Energy Solutions and SK Innovation agreed to settle disputes over electric-vehicle (EV) battery technologies. The US played a part in the agreement.

The core dispute had threatened the EV plans of Ford, Volkswagen as well as new $2.6 billion plant in Commerce, Georgia for SK Innovation that is key to the growing industry.

The global auto industry is racing to develop EVs and President Biden has proposed spending $174 billion to hike their sales and expand charging infrastructure.

The companies agreed to drop all litigation in the US and South Korea and not to raise any further lawsuits for another 10 years. SK Innovation agreed to pay LG Energy Solutions $1.8 billion this year and next and royalities for 6 years. The US Trade Representative was pleased with the settlements.

Besides the Georgia plant, LG Energy Solutions is building a plant in Ohio and wishes to build a $2.3 billion plant in Tennessee.

Linking to dividend paying stocks, when a company’s values and goals is also the government’s values and goals, the levers of the government can help solve thorny problems. The lawsuit was over 2 years in the making and every year was getting nastier.

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

If you think about the past, resources or commodities around the world have made wealth for people and that can be a very good thing. Where the resources are relative to the more developer countries can be where one can quickly see attitudes change. If the resources are in the more developed countries, environmental concerns are now at the forefront, if you look back at history you will see across the country making resource ghost towns. What happens to the environment and who makes profits or money from the commodities is changing or perhaps finally changing to meet the realities of more citizens.

In article by Niall McGee, Mining Reporter for the Globe and Mail, Barrick Gold Corp has a new partnership agreement with the Papua New Guinea (PNG) for its Porgera gold mine.

PNG will own 51% of the mine up from 5% and Barrick and China’s Zijin Mining Group will own 49% down from 95%. Barrick will be the operator of the mine and front the entire cost of reopening the site.

The theory is part of a loaf is better than no loaf, as the mine is presently shut down. The mine is 5% of Barrick’s portfolio of mines but the grade is rich and it is a relatively low cost operation. The cost is about $985 and with gold trading in the range of $1,740, the mine will generate profits.

The mine has been in operations since 1990 and Barrick became an operator after it bought Placer Dome. The mine was closed after the New Guinea government refused to issue a mining permit saying it was owed $191 million in back taxes. PNG’s President James Marape vowed to the citizens it would seek more lucrative agreements with foreign operators of the country’s resources assets.

Linking to dividend paying stocks, companies in the commodity business for years had a one sided operation with taking the commodities out of the earth, in return for jobs and some economic interests. It has taken many years before the country where the commodity is located has been seen as a partner. In relatively low cost operations, there is still many millions of dollars to be made and spread out to the company and the country where it is operated. When the country operates the mine, often times it assures the company of stability of production and operation and that is a good thing. Attitudes to commodity extraction take years to change, will they as a society we move to move sustainability discussions?

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

The CEO of JPMorgan Chase Jamie Dimon by virtue of being the head of the largest bank in the US and Chair of the Business Roundtable is often seen as the face of the US banking sector or his views count for something.

In an article by Elizabeth Dilts Marshall of Reuters, on the JPMorgan Chase website, Mr. Dimon published his views of the economy in general. He said because of savings (people have not been able to spend on entertainment and hospitality) quantitative easing, a new infrastructure bill, a successful vaccine rollout, and a general feeling of getting out of the pandemic, the economy could boom until 2023.

Mr. Dimon said corporations would be willing to pay more in taxes, if the government adopted a rigorous budgeting, transparency and discipline when it comes to spending. Ideally they follow the corporate example of how to spend.

As a banker, the danger to a banker is writing off loans as uncollectable. Mr. Dimon is focusing a growing economy which should mean access to credit for both individuals and businesses.

Linking to dividend paying companies, in a growing economy, treasurers or CFOs should have a friend at the bank and be able to discuss a variety of financial options which is good for the company. The Treasurers should be using the banks access to credit with little problems, are they?

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

The company which pays has the biggest dividend payments in England is BP and for the past 100 years has been a very stable company to own. The British Royal family owns shares, but last year in the early stages of COVID, people stopped using their vehicles which led to oil prices falling and oil companies losing money. As the year went on, people started using their vehicles, the price of oil increased and oil companies have reaped the rewards as share prices increased.

In an article by Yadarisa Shabong of Reuters, BP announced it expects to hit its $35 billion net debt target in the first quarter of 2021 which is sooner than expected and can buy back shares.

CEO Bernard Looney said a combination of higher oil prices and the ability to sell assets faster than anticipated is allowing for the change. The buybacks will be in the range of $2 billion a year.

The reason why BP is selling assets is a shift to become a low carbon energy investments and pay down debt.

Linking to dividend paying stocks, many of these companies have tremendous assets which are carried at low book values. When the company decided to exit some businesses, there are assets to be sold which allows the company to pay down debt and change focus. The issue is how profitable are the new assets, relative to the ones they are selling, but sometimes consumers change and it is worthwhile going forward.

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

One of the reasons more individual investors are investing in the stock market is Reddit, which people chat about things. Other reasons are a bull market, low commissions, and keeping up with Jones, (you hear or see what other people in your age group are doing and wonder should I do the same thing?). If you remember, GameStop which is a traditional store front in malls selling video games. It is important to remember gamers size is similar to the entertainment industry – worth billions. One of the advantages of the internet is everyone has access to information, it is a little dauting at first to find it, but once you are used to it, the information is available to read and analyze. People were posting on Reddit about GameStop and many people bought stock and options and some made money as the price went from $19 to $347 and has settled in the $185 range will swings every once in a while.

In an article by Uday Sampath Kumar and Joshua Franklin of Reuters, the management of GameStop announced it will sell stock from $100 million to $1 billion to capitalize on the trend to owning its shares.

Every company to grow needs to raise money – it can be short term notes, sell bonds, issue stock, access lines of credit and something in between or combination. The company goes to investment bankers who for a fee help raise whatever the market is looking for at a good price for the company and investors.

GameStop with the money could transform its business becoming the digital go to company for games or invest in services for Gamers or some new businesses and it may one day be valued at the prices the stock is. One can hope or dream and watch how they can execute a business plan.

Linking to dividend paying stocks, fortunately these companies have the most options when it comes to how markets are doing and what the appetite for investors are. When stock prices reach new highs it is a good thing to sell more stock and when prices fall, the company can buy back the stock, the company can do bond issues; the important aspect is more the company to take advantage of what the markets of the world are giving them. If not, one has to question management of why they did not take advantage of opportunities?

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

Often times when a firm is successful, many investment bankers knock on their door to offer help. If the firm has been consistently successful over a few years, the interest is even higher. Archegos Capital Management is run by Bill Hwang and its clients are family interests. When a company manages family interest the regulatory environment is very low, because it assumed the family manages the governance. Archegos Capital Management was managing $12 billion, but it was concentrated in a very few names. The company became the largest shareholder of ViacomCBS and as the shares rose, the investment bankers offered the firm a way to make bigger returns. The investment banks would hold the shares in their name and sell Archegos synthetic products to increase the leverage and increase the return, this made Archegos control $20 billion in ViacomCBS stock. Under Mr. Hwang, the stock were from $12 to $50 to $100. All is good when share prices rise.

With a higher price, the management of ViacomCBS went into the markets to sell shares, they were going to sell $ 3 billion and Mr. Hwang was expected to buy $300 million of it. He did not buy because some of his other investments were not doing well, the other shareholders were allocated his holdings, but did not want they and they sold. The price went down and Mr. Hwang received a margin call.

The investment bankers included Goldman Sachs, Morgan Stanley, Deutshe Bank, Nourma Securities and Credit Suisse. All were making increased fees from Archegos, but the risk level was rising or if and when share prices decreased, margin calls were made, however Archegos did not have the money to pay down the debt requirements. Goldman and Morgan Stanley sold billions of dollars of shares to take them off their books, the other investment bankers were slower to sell and thus incurred losses. (there is a movie called Margin Call staring Kevin Spacey which would give you the idea of how it happens).

At Credit Suisse according to an article by Brenna Hughes Neghaiwi and Matt Scuffman of Reuters, the CEO of Credit Suisse Thomas Gottstein fired the heads of its investment bank and risk divisions for allowing a concentration of money into Archegos as Credit Suisse lost $5.9 billion on the sales by Archegos. The issue is why not the exposure to Archegos Capital Management become so big?

The risk department is suppose to ensure risk levels are manageable, and investment bankers bring in fee income but the income should be consistent. At a large investment bank, there is no reason to back a frim, unless the government is offering a bailout if something happens. Ideally, firms such as Credit Suisse pay millions to manage risk, what would cause Credit Suisse have no more exposure?

Credit Suisse also lost money when a UK firm called Greensill, which was disrupting the supply chain system declared Chapter 11 bankruptcy.

Linking to dividend paying stocks, everyone loves profits, but profits need to be managed. It can be very expensive to chase fees with seemingly low regard for what happens if everything does not work out and prices fall or contracts which people hope for do not materialize. It is easier to say yes, but no can save you money and there is always a balance. Consistently profitable companies tend to know when to say no, they are not perfect but they tend not to need growth at any cost. With your investments, the companies tend to receive many opportunities but say no to most of them, do you have a sense of when they say no?

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

If you think about Atlanta Georgia, one of the reasons you may have know about it is the prime airport for Delta airlines. Ever since the late 1970’s the major airlines have been using a hub and spoke model – American Airlines uses Dallas; United uses Chicago and Delta uses Atlanta. This strategy had made these very busy airports even busier which translates in jobs at the airport and jobs inside the airport servicing the public. In Atlanta, Delta is the largest private sector employers with over 34,500 in corporate office and in the airport. In the airline business as we have seen, government support is critical and Delta has a long history of working with local, regional and national politicians.

After the Presidential and Senate elections in Georgia where Democrats won, the Republicans who traditionally controlled elected power decided to change the rules to ensure Republicans had every advantage and the Democrats would be disadvantaged. Normally parties think about their policies and why those policies did or did not sell with the voters, but if you control the voting process why not change it? In most states, it would have gone through and there would be concern but not a backlash.

This time around, the motivation for change was seen because the normal reason is to combat fraud, but an election which was counted 3 times and enough election fraud to change the result could not be found, it seems strange to rationalize voter fraud in an election. Because the rationalization was so bad, corporate executives including the biggest in Georgia – Delta, Home Depot and Coke all said the legislation has to change to seem to be fair. One might wonder why the long voting lines in Georgia exists for Democratic voters while Republicans have short lines?

In an article from the Associated Press the Republicans in the Georgia House, Senate and Governor has sent a backlash to Delta by cancelling a gas tax rebate. In the world of airlines, fuel costs are the reason why Boeing and Airbus come with new models which use less fuel. Fuel costs affect the bottom line because fuel costs is a variable and needs to be used. Prices on airline similar to auto fuel goes up and down.

Linking to dividend paying stocks, most companies internally try to reflect social concerns for employees and customers but try not to say politically unless it is okay to do so or society has changed. Companies which come out for a political party although it is hard not to write a check to help the parties. Companies giving hundreds of thousands of dollars typically want something more than an individual giving $100. The issue for politicians as in the case of Georgia is companies have options of where to invest – in the state giving them grief or another state which would welcome the company with open arms and many tax deferrals.

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