Archive for the ‘My two cents’ worth’ Category

IPO in the midst of Japan’s earthquake

March 11, 2011

Our prayers go out for the Japanese people after the massive quake and tsunami.

From the Wall Street Journal page live-blogging the quake comes one small vignette that may amaze investor relations colleagues: Calbee, a snack food maker that is 20% owned by PepsiCo, had its IPO today on the Tokyo Stock Exchange.

The WSJ blog reports:

Calbee’s shares did well, outperforming the market. But for [Akira] Matsumoto [chairman and CEO of Calbee], the day got a lot more memorable after the exchange closed. That’s because he went ahead with a news conference, in front of about 50 reporters, after the closing bell—even as aftershocks following the big earthquake, just 15 minutes or so, continued to rattle the exchange. The conference was held in the bourse building, which shook badly in part because of its quake-absorbing structure.

Even as bourse staff warned colleagues, “Please wear a helmet!” or “Keep your head under the table!,” the press conference kept going. Mr. Matsumoto soldiered right on, stopping briefly only when warnings over the P.A. system temporarily drowned him out.

And he stayed on-message. “I feel very grateful for the price (rise),” he said, after discussing corporate strategy rather than earthquakes.

Wow is all I can say. Congratulations to Calbee for getting the IPO done. But more importantly, we offer our heartfelt sympathy and best wishes to all who are grieving or struggling with the aftermath of this catastrophic natural event.

Tax goodies for investors

December 17, 2010

I’ve been holding my breath until Congress came to grips with not raising taxes – and I can exhale, now that “the Bush tax cuts” have been signed (once again) by a president. George W. Bush and Barack H. Obama – who’d have thought it?

Three cheers for compromise, bipartisanship and not shooting our economy in the foot as of Jan. 1. So here are the tax goodies that apply to investors:

  • The top tax rate on dividends remains at 15% through 2012, a boon to shareholders of companies with healthy yields. Investor relations people for utilities and other firms with attractive dividends should breathe a sigh of relief.
  • The top tax rate on long-term capital gains also remains at 15% for two years. So equity investors are encouraged to keep taking risks in pursuit of gains. And this helps public company shareholders and small business owners with gains in M&A transactions.
  • Some industries may profit from specific cuts – e.g., extensions of the R&D tax credits and incentives for businesses to buy capital goods.
  • Of course, the tax bill is also a stimulus bill. Retail spending and GDP should get a shot in the arm from keeping the Bush-era tax rates for all, AMT patch, extension of unemployment benefits and 2% cut in payroll taxes for 2011.

You can debate whether all this is good policy, either in the way it structures our income taxes or the way it affects near-term deficits. There is controversy. But I’m glad to see it resolved – in favor of keeping money in the hands of the people.

Of the tax-bill coverage I’ve seen, Forbes’ “Tax Dude” blogger Dean Zerbe has the best headline …

The Tax Bill: Santa Comes Early

… and by far the best illustration, showing “Obamaclaus.”

Merry Christmas to all, and to all a good night.

© 2010 Johnson Strategic Communications Inc.

Gridlock? Not the end of the world

November 2, 2010

Of the talking heads on the airwaves and op-ed pages, George Will is one of my favorites – for his insights and the way he offers opinions calmly, without shouting. I appreciate two things Will said on Sunday about the US midterm elections.

Regarding GOP gains in Congress possibly causing gridlock in Washington, which many pundits greatly fear, the conservative Will said on ABC’s “This Week”:

Gridlock is not an American problem – it’s an American achievement. The framers of our Constitution didn’t want an efficient government, they wanted a safe government. To which end, they filled it with slowing and blocking mechanisms: three branches of government, two houses of the legislative branch, a veto, veto override, supermajorities, judicial review. … When we have gridlock, the system is working. [Video here, Will about 5:30]

Asked about calls for more civility in politics, Will likewise gave a contrarian view:

Nothing wrong with that, until you begin to equate civility with the absence of partisanship, as though there’s something wrong with partisanship. We have two parties for a reason. We have different political sensibilities. People tend to cluster – we call them parties. And we have arguments – and that’s called politics. [Video here, Will at about 3:00]

For business issues like taxes and regulation, the new climate in Washington could be contentious. Partisan. Even polarized. The next two years could seem awful to those who wanted the Obama administration’s agenda to fly through. Some analysts like those in this AP story also worry about gridlock hurting the economy.

I think I’m with Will on this one. After all, businesses do not usually get more robust when the government is in activist mode. A unified Capitol Hill can mean businesses have to send more money to Washington, or must try to figure out more 2,000-page laws. So gridlock may be OK, if we can tune out the shouting.

That’s my two cents’ worth. What’s your opinion?

© 2010 Johnson Strategic Communications Inc.

Not on the agenda

November 2, 2010

At a breakfast meeting this morning of a few colleagues in the NIRI Kansas City chapter, topics ranged widely over investor relations how-tos, idiosyncracies of sell side relationships, and so on. One subject that didn’t come up:

The Election.

Maybe it tells you something. Either we’re all so sick of political ads, or politics itself – or we just want to focus on things we can control. Happy Election Day.

Funny thing about …

October 1, 2010

October. This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February.

- Mark Twain, American humorist, 1894

At a NIRI meeting last night in Kansas City, I commiserated with a friend over dinner about the state of the economy. It’s like a patient drifting in and out of consciousness in the recovery room – we don’t know whether the surgery was a success until the patient wakes up, smiles and moves a bit. Meanwhile, the job market is lousy. Consumers are cautious. The Fed frets. Companies worry. Waves of regulation and additional costs are looming. And the Nov. 2 election? Bah.

This morning brought a new month and fresh outlook. Hey, let’s have some fun in October – look beyond the macro anxieties – and do some good in investor relations this fall. And the market will do what it will do.

© 2010 Johnson Strategic Communications Inc.

The American way

July 2, 2010

Going into Fourth of July weekend, a friend who has helped raise capital for privately owned businesses – and a couple of public companies – offered his theory about why capital isn’t flowing into enterprises that could reignite our economy.

There’s “plenty of money” sitting in private equity funds and other investors’ stashes, this serial CXO and strategic thinker suggests. But people with the wherewithal to fund growth companies, mostly, aren’t taking the plunge right now.

The reason is the way investors feel about Washington, he opines. Not the place, but the US government’s massive extension of its legislative and regulatory reach. Government is seeking to govern so much more: new rules to prevent the next bubble or flash crash or oil spill, new agencies, health care mandates, too-big-to-fail bailouts, tougher penalties, stronger stimulus … public-sector stimulus.

And higher taxes to pay for it all. Bush-era tax rates will yield to higher rates. Revenue enhancement is in vogue. We’re even looking at the value-added tax.

But the worst part? “It’s the uncertainty” – not knowing what the rules of the game will be in one, two or three years. Washington is pressing its ongoing expansion of control in all areas of business – at a time when the economy is fragile.

So investing in a long-term way today means taking on risks of yet-unwritten mandates and so-far-incalculable costs from tomorrow’s “hope and change.”

Before long, this discussion begins to sound uniquely American: complaints from independent-minded business people against an overly ambitious government.

Which brings me around to one of my annual rituals: re-reading the Declaration of Independence around the Fourth of July. The words soar to rhetorical heights:

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness. That to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed.

It’s a reminder of why we’re here – in America. And, apropos of my lunchtime conversation about the uncertainties of government on steroids, this time my eye catches on another line, one of the founders’ grievances against King George III:

He has erected a multitude of new offices, and sent hither swarms of officers to harass our people, and eat out their substance.

No doubt some CEOs, CFOs and even investors feel a bit like that. We’re wondering how much this reform or that Act will eat out “our substance,” how ramped-up regulation will hinder access to credit and raise costs of capital, or what new taxes will come unbidden out of the Beltway.

Not suggesting a revolution – only that we need to give thought to capital formation, to investing and a climate that enhances confidence in the American system. We need investors to resume funding the small and mid-sized firms that, after all, must hire those unemployed workers and create real, sustainable growth.

The American way isn’t negotiated by politicians or codified in 2,000-page bills. It’s not put out for public comment in the Federal Register. Instead, it is thrashed out in the competitive, pressurized, sometimes Wild West openness of the market. The market-driven approach is what, once, put US business on top of the world.

Let’s keep in mind that the American way – still – is about freedom.

Have a great Fourth of July!

© 2010 Johnson Strategic Communications Inc.

Let’s think about year-end

July 1, 2010

Arrival of the second half, naturally I think, sets investors and investor relations people to thinking about year-end. We’re halfway through 2010, so we begin to ask, “What will the outcome of this year be, in earnings and other accomplishments? … or in disappointments?”

As an IR person in the US, I’ve always seen Fourth of July weekend as a kind of pivot for the year. Whether it’s the start of third quarter or the holiday picnics and fireworks that punctuate this time for you, here are some questions to contemplate:

  • What kind of year will 2010 be in your memory, and that of your shareholders, 2 or 3 years from now? Do your communications now reflect that tone?
  • More immediately, when you report second-quarter earnings in the next few weeks, how will you answer questions about full-year 2010 prospects?
  • What do the first-half trends tell you about likely sales, costs and earnings in the next 6 months?
  • Does your outlook include a second-half turnaround, and what evidence can you offer of its probability?
  • What accomplishments has management promised for 2010 that need to get accomplished in the second half? Or do you need to soften those projections?
  • Do the CEO and CFO plan any mid-course corrections? If so, when is the appropriate time to begin to disclose those to investors?
  • What tone and messages will your audience get in the 2010 annual report? Time to get started is coming – whether your “annual” is a robust piece full of image, strategy and performance, a plain 10-K, or something in between.

Sure, we have a few weeks to relax – except for reporting Q2 results and all the interaction around earnings time – before the real rush to year-end begins. But the onset of second half is a good trigger for starting the thought process.

© 2010 Johnson Strategic Communications Inc.

Sell in May & go away?

May 28, 2010

Among old Wall Street sayings, “Sell in May and go away” holds special attraction. A strategy for a worry-free summer, a way to reduce risk amid seasonal doldrums, a vacation from busyness.

Ahhhhhh …

For investor relations, alas, “go away” doesn’t completely apply. There is, of course, second-quarter reporting. A few meetings. Always the potential crisis. Maybe a slow August. But while some investors disappear, many are still cranking away at their models, trades or questions.

So settle in, makes plans to enjoy some time away, and prepare for what could be an interesting summer. And right now, have a great holiday weekend!

It’s not about ‘flash crashes’

May 20, 2010

Well, that kind of day in the market takes your breath away!

The Dow down 3.6%, broader indices like S&P 500, NASDAQ or Russell 3000 off even more. Not much fun today in investor relations – or capital markets as a whole. We’re officially in “correction” territory now, though not a bear market.

The analysts, pundits and politicians will have much to say. Let me just offer this perspective: Life is about the long haul, not the “flash crashes.” I would suggest three applications of a long-term view:

  • The practice of IR has less to do with today’s market price – especially when your company is caught up in a market stampede, up or down – than it has to do with your company’s performance in the next year, or two, or five. Be energized and on top of everything, but keep your eye on the horizon.
  • Investing isn’t really about the short term, either – although some fortunes are no doubt gained or lost on days like today. Investing is still about putting money to work in businesses with the knowhow and guts to create value … long-term. The lemmings are charging headlong one direction or another, but the wiser heads will survive and even thrive in the long run.
  • Regulation of the markets shouldn’t be about a “flash,” either – whether it’s the May 6 “oops” market or the May 20 “we’re really worried” sell-off. Short sellers, or even trading glitches, don’t do much permanent damage – an economy full of fear does. The focus in Washington should be on fostering an environment that encourages the capital formation that, in turn, fuels economic growth. Flogging investment bankers or hauling fat-fingered traders before Congressional committees, while entertaining, doesn’t really help anyone. Ensuring an honest, free, liquid market that enables new and existing companies to raise capital should be the focus of legislation and regulation.

We live in a world dominated by instant media, politicians and analysts eager to jump in front of a TV camera, opinions driven by Internet chatter – so we see a lot of breathless proclamations of one instant “crisis” or another.

Let’s take the long view.

© 2010 Johnson Strategic Communications Inc.

Thanksgiving thoughts

November 26, 2009

In the USA, we celebrate Thanksgiving today. The tradition has less to do with thanking each other for kindnesses extended than it has to do with thanking our Maker for the grace and mercies He extends. It’s a time for counting our blessings.

Avi Ifergan, an asset manager in Israel, shared good thoughts on thanksgiving a couple of years ago in a post called “The Relationship between Gratitude & Value Investing” in his Israel Value blog. (The blog went dormant after Ifergan got a gig with a bank in 2008, but it’s still interesting to browse for comments on investing.)

The point on value investing is that appreciating value in an asset that others don’t appreciate springs from a habit of gratitude in all areas. So investing meets life. He cites examples of humility and gratitude from Warren Buffett and other investors.

Ivergan offers these thoughts on reasons each of us should feel grateful:

If you woke up this morning with more health than illness, you are more blessed than the million who will not survive this week.

If you have never experienced the danger of battle, the loneliness of imprisonment, the agony of torture, or the pangs of starvation, you are ahead of 500 million people in the world.

If you can attend a church / synagogue meeting without fear of harrassment, arrest, torture or death, you are more blessed than 3 billion people in the world.

If you have food in the refrigerator, clothes on your back, a roof over your head, and a place to sleep, you are richer than 75% of this world.

If you have money in the bank, in your wallet, and spare change in a dish someplace, you are among the top 8% of the world’s wealthy.

If you have ever made a phone call, you are ahead of 50% of the world population that never has.

And if you are reading this blog – and have access to the internet then you are ahead of 90% of the world population that does not have access to the internet.

We have more than ample reasons to be grateful. So, whether you’re in America or a place with other holiday traditions, happy Thanksgiving!


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