Fund Architects Commentary
Baby you can drive my car…
So, how much do you think a five-year-old company with a mobile app that lets people hail a ride with a few clicks and a credit card might be worth? Think 41 billion dollars might be fair?
Yes I'm gonna be a star…
True enough, ride-sharing service Uber Technologies – yet another San Francisco super startup – flagged down a new round of funding last week, and some of the world’s top investors made a hefty round-trip bet that the firm can keep outrunning local taxi companies. Total fare plus tip should enable the still closely-held company firm to expand its workforce, lure drivers, test a delivery service, and subsidize prices in some of the 250 cities around the world where it operates. Continue reading »
A (GOLD) BUG’S STORY
Amazingly, historians have determined that gold was discovered by humans around 5000 B.C. We’ll take their word for it. What’s even more amazing, we think, is that it took humans another seven thousand years to launch the first gold ETF.
Gold has been discovered on every continent on earth
True enough, the first U.S. exchange-traded fund for gold (chemical symbol Au, by the way) was hammered out 10 years ago last Tuesday. Originally launched under State Street Corp.’s now-defunct streetTRACKS brand, what is now known as the SPDR Gold Trust gave investors a stake in gold bars stored in HSBC PLC’s London vaults. GLD quickly became, one might say, the shiniest financial instrument since the Lydians introduced the gold coin in 560 B.C. Continue reading »
Care to guess where Capitol Hill, Wall Street, and the Gulf of Mexico might intersect? (Hint: It’s political crazy season) Why, right over there on the massive pointy end of Sarbanes-Oxley, of course. Just ask fisherman John Yates.
SOX was named for sponsors Senator Paul Sarbanes (D-MD) and Representative Michael Oxley (R-OH), both of whom promptly retired
By way of unpleasant reminder, the bureaucratic kraken now known as “Sarbox” came to life in 2002, an outsized response by lawmakers to spectacular frauds at Enron, WorldCom, and Tyco. Among its many tentacles, the Congressional beast included a provision that made it a crime to knowingly destroy “any record, document, or tangible object” with the intent to obstruct an investigation. Continue reading »
WHEN THE CHIPS ARE DOWN…
For whatever reason, the NYSE sees fit to define “blue chip,” specifically as a “stock in a corporation with a national reputation for ability to operate profitably in good times and bad.” We’re wondering, of course, why the Exchange feels compelled to define the term at all, especially now that the very companies it’s attempting to describe are posting quarter after quarter of woeful results.
The Dow Jones Industrials has been the benchmark for the so-called “blue chips” since 1928
Indeed, a third of the companies in the Dow 30 reported lousy growth numbers over the past year, and nearly a half aren’t even keeping up with the U.S. inflation rate. The list of crumbling chips is remarkable: AT&T, Coca-Cola, IBM, and Wal-Mart have all gone stale. Even GE, the oldest chip of them all, hasn’t topped $30 a share since the financial crisis. Continue reading »
Positive portfolio performance results were lacking in third quarter 2014 (3Q14) as worrisome macro factors overwhelmed investors positioned for rising asset prices. Large capitalization stocks in the U.S. as represented by the S&P 500 were positive but mid and small cap stocks were noticeably lower. International equity indices including developed and emerging markets were considerably inferior as Europe is struggling to remain out of recession, Japan is experiencing difficulty in stoking long-term growth, and developing economies feel the effects of a stronger U.S. dollar and potentially rising U.S. interest rates. Long-term bonds performed positively for the quarter as investors sought safety from many risk assets, while short and intermediate categories were near flat. Commodities, in aggregate, struggled mightily during the period as has been the case for year-to-date and one-year measurements. Continue reading »
PHYSICAL ON 34TH STREET
So, the world’s most prolific e-commerce company is putting up a storefront in the middle of Manhattan. Indeed, Amazon.com Inc., well-known for its good customer service, lightning fast shipping, and selling virtually anything online, plans to unlock the doors on a real brick-and-mortar building where it won’t be doing any of those things. Continue reading »
WHEN ONE DOOR CLOSES…
Another opens. So said Alexander Graham Bell a century and a half ago. We’d have to think the distinguished bond investor Bill Gross might agree. Seems the good Mr. Gross was stepping over the threshold at Janus Capital just as the Pimco door was slamming on his backside. Oh, the irony.
Janus is an ancient Roman god associated with beginnings, transitions, and…doorways
Reportedly, Pimco – the firm Gross founded in 1971 – was indeed about to give the heave-ho to one of the most influential bond investors of all time. Seems tensions had reached a breaking point in Newport Beach, in some part due to Gross’s ongoing battles with his heir apparent and management committee, but also due to the heavy outflows from Pimco’s flagship bond product. Oh, the recent under-performance. Continue reading »
ANOTHER BITE OF THE APPLE
As I was walking down the street one day…
If you missed all the hoopla Tuesday, our friends in Cupertino unveiled what they’re sure will be the next in a long line of hot-selling gadgets: the Apple Watch. According to company CEO Tim Cook, the new line of customizable smartwatches will include two sizes — huge and huger — and three versions: Showy, Showier, and Showiest. Continue reading »
HAVE IT YOUR WAY
By now, most everyone’s heard the report that Burger King intends to acquire Canadian doughnut-chain Tim Hortons. But don’t expect a Whopper-and-Timbits combo meal coming to a restaurant near you…our profit-minded friends from Miami are only cooking up the books.
Burger King began in 1953 as Insta-Burger King in Jacksonville, Florida
Tim Horton's Donut Shop (with apostrophe) opened 1964 in Hamilton, Ontario Continue reading »
FOOL ME ONCE...
Remember the Financial Crisis? Yeah, we do too. Heck, it’s only been seven years – even Wall Street’s memory isn’t that short. Or at least one would suppose. Um, one might be supposing wrong.
Shame on me.
At bottom, literally, of the near-collapse of the U.S. financial system back in ‘08 were loads of worthless mortgage bonds the Street’s worst and greediest had unloaded on investors, unsuspecting and otherwise. Essentially, this toxic waste represented the securitization of about $450 billion worth of non-performing home loans. Think anybody would ever be interested in that kind of wealth-busting garbage again? No way. Umm, way? Continue reading »