You Too Can Now Invest in Startups! What Could Go Wrong? – JULIA GREENBERG. : 11.01.15. . 7:00 AM


You, your mom, or that random guy down your block will all soon be able to join the ranks of startup investors.

The Securities and Exchange Commission voted this past week to approve so-called equity crowdfunding rules for investors, an effort spawned by the passage of the JOBS Act way back in 2012. What that means is that startups or small businesses looking for investors can go through brokers or online platforms to find them—and those investors can now be, well, anyone.

This is a pretty big deal. It marks a shift in the kinds of capital that startups and small businesses can raise. Startups today often turn to venture capitalists, angel investors, bankers, and other accredited investors, but access can require the right connections, which are often hard to come by outside major financial hubs like New York, San Francisco, and Boston.

‘Even if you’re truly invested in investing in a startup, the odds are against you.’

Now, entrepreneurs can turn to the crowd. And if you’ve part of the crowd that’s always wanted to invest in a startup, you may soon be able to in ways that you couldn’t before. But there are some things you need to know. Since the passage of the JOBS Act, experts have worried about putting safeguards in place to protect unsophisticated investors, as well as protections for startups to minimize fraud. The SEC is hoping that its new rules will address those concerns. Here’s what you need to know.

So, You Want to Invest

In the past, only so-called accredited investors have been able to invest in startups. Here’s what that meant in a nutshell: If you made less than $200,000 a year, and you didn’t have a million bucks in assets, you couldn’t invest. Now, starting sometime next year, even if you aren’t that well off, you’ll be able to buy into companies you like.

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Tech Startups Feel an IPO Chill – By ROLFE WINKLER, DOUGLAS MACMILLAN, TELIS DEMOS and MONICA LANGLEY Oct. 19, 2015 10:57 p.m. ET

Dropbox CEO Drew Houston, seen here at a technology conference in Dublin last year, co-founded the Web storage company in 2007.

Dropbox CEO Drew Houston, seen here at a technology conference in Dublin last year, co-founded the Web storage company in 2007. Photo: Naoise Culhane/SPORTSFILE/Corbis

Dropbox Inc. had no trouble boosting its valuation to $10 billion from $4 billion early last year, turning the online storage provider’s chief executive into one of Silicon Valley’s newest paper billionaires.

But the euphoria has begun to fade. Investment bankers caution that the San Francisco company might be unable to go public at $10 billion, much less deliver a big pop to recent investors and employees who hoped to strike it rich, according to people familiar with the matter.

BlackRock Inc., which led the $350 million deal that more than doubled Dropbox’s valuation, has cut its estimate of the company’s per-share value by 24%, securities filings show.

Dropbox responds that it is continuing to increase its business, added 500 employees in the past year, including senior executives, and has no need for additional capital from private or public investors.

Still, the company is a portent of wider trouble for startups that found it easy to attract money at sky’s-the-limit valuations in the continuing technology boom. The market for initial public offerings has turned chilly and inhospitable, largely because technology companies have sought valuations above what public investors are willing to pay.

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Investors Fall Out of Love With Deals – By LIZ HOFFMAN Updated Sept. 28, 2015 9:50 p.m. ET

Corporate executives earlier this year were feeling the love from investors when they announced acquisitions. Now, some buyers are getting burned.

On Monday, pipeline operator Energy Transfer Equity LP’s shares fell nearly 13% on news of its $32.6 billion deal to take over rival Williams Cos., making it the latest acquirer in the past few months to suffer a big stock selloff on deal news. Others include health insurer Centene Corp., index provider McGraw Hill Financial Inc. and chip maker Dialog Semiconductor PLC.

The rebukes represent a reversal of an important driver of the mergers-and-acquisitions boom over the past few years, namely a surge in the stock prices of companies announcing acquisitions. Those rising prices had the twin effect of emboldening other buyers and boosting the value of shares that are often used as currency. Should investors continue to punish acquirers, they could add to threats gathering over an M&A market that is running at a near-record pace.

Since July 1, acquirers’ share prices fell 0.6% on average on the first day of trading following the announcement of an M&A deal over $1 billion, according to data provider Dealogic. That would be the first quarterly decline in three years and follows increases of 4% and 5.4% in the first and second quarters, respectively.

XPO Logistics Inc. is one company that has found itself on both ends of the spectrum. Its shares rose 15% in April the day after the company announced its largest purchase ever, the $3.5 billion takeover of French trucking firm Norbert Dentressangle SA.

The follow-up act landed with a thud. When XPO announced a $3 billion deal for trucking firm Con-way Inc. on Sept. 9, its stock fell 13%. The slide has continued, with shares down 37% since then.

XPO Chief Executive Bradley Jacobs, who has built XPO largely through acquisitions, said he was puzzled by how investors reacted to the Con-way deal, which he expects to boost XPO’s per-share profit within a year. “Of all the acquisitions I’ve done in my career, I’m most excited about Con-way,” he said in an interview. “I’m confident that, over time, the investment community will see the value.”

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How Some Investors Get Special Access to Companies – By SERENA NG and ANTON TROIANOVSKI Sept. 27, 2015 10:24 p.m. ET

A.G. Lafley, Procter & Gamble Co.'s chairman and chief executive, speaks on just one of the company's earnings calls a year but meets regularly with investors in private.

A.G. Lafley, Procter & Gamble Co.’s chairman and chief executive, speaks on just one of the company’s earnings calls a year but meets regularly with investors in private. PHOTO: TIMMY HUYNH/THE WALL STREET JOURNAL

Procter & Gamble Co. Chief Executive A.G. Lafley speaks on just one earnings conference call a year, down from his previous practice of every quarter. The company says that helps him stay focused on pulling P&G out of a growth slump.

But Mr. Lafley still meets regularly with investors in private. In March, Mr. Lafley’s comments during a string of conversations with investors in New York gave a Wall Street analyst who was present the strong impression that he would step aside as CEO sooner than expected. That hunch was confirmed in July.

P&G says it is careful not to reveal market-sensitive information to investors and analysts who get special access to the company. For the past 15 years, selective disclosure by companies has been illegal under U.S. securities rules. Yet the same rules explicitly allow private meetings like those by P&G.

The result is a booming back channel through which facts and body language flow from public companies to handpicked recipients. Participants say they’ve detected hints about sales results and takeover leanings. More common are subtle shifts in emphasis or tone by a company.

“You can pick up clues if you are looking people in the eye,” says Jeff Matthews, who runs Ram Partners LP, a hedge fund in Naples, Fla. He says he never invests in a company without meeting its management.

A Bebe Stores window in New York City. In April, the retailer said it had made an ‘inadvertent disclosure’ while meeting with a ‘select group of investors.’
A Bebe Stores window in New York City. In April, the retailer said it had made an ‘inadvertent disclosure’ while meeting with a ‘select group of investors.’ Photo: Craig Warga/Bloomberg News

Access usually is controlled by brokers and analysts at Wall Street securities firms, who lean on their relationships with companies to secure meetings with top executives. Invitations are doled out to money managers, hedge funds and other investors who steer trading business to the securities firms, which in turn provide the investors with a service called “corporate access.”

Investors pay $1.4 billion a year for face time with executives, consulting firm Greenwich Associates estimates based on its surveys of money managers. The figure represents commissions allocated by investors for corporate access when they steer trades to securities firms.

Publicly traded U.S. companies held an average of 99 one-on-one meetings with investors apiece last year, according to a survey by market-information company Ipreo.

General Electric Co. said in its annual report that it “ensured strong disclosure by holding approximately 70 analyst and investor meetings with GE leadership present” in 2014. The total was roughly 400 when including meetings with other executives, such as those in GE’s investor-relations department, a spokesman says.


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Investors Make Their Case for Buying Chinese Stocks Now – By JULIE WERNAU Updated Sept. 8, 2015 10:27 p.m. ET

Managers look for companies that will benefit from transition to consumer-oriented economy

A deepening slump in Chinese shares is just what Di Zhou has been waiting for.

Ms. Zhou, who manages $11 billion at Thornburg International Value Fund, is snatching up shares of Kweichow Moutai Co. , whose distilled Chinese liquor has been around since the Qing Dynasty. The shares have dropped 22% since June, but she said the stock looks like a good buy thanks to high profit margins.

She isn’t alone. Global investors bought 21.4 billion yuan ($3.4 billion) worth of Shanghai-listed stocks in August through a trading link with Hong Kong, the largest monthly sum since December 2014. In July, investors redeemed 31.5 billion yuan of shares.

Despite dour economic reports and volatility rattling Chinese markets in recent weeks, many portfolio managers believe Chinese stocks are worth a look following a 40% decline in the Shanghai Composite Index since its June 12 peak. They are scouring for insurance, health-care, food and technology companies that they think are poised to benefit from China’s transition to a more consumer-oriented economy.

They are buying Hong Kong-listed China Mobile Ltd. , the biggest mobile carrier in the country, and China central-government bonds whose returns have outstripped U.S. Treasurys since the end of 2013. They are betting on e-commerce behemoth Alibaba Group Holding Ltd. , Tencent Holdings Ltd., whose instant-messenger service is ubiquitous in China, and on Baidu Inc., a Chinese-language search engine more popular than Google Inc.

The selloff has been “indiscriminate,” said Charlie Awdry, who manages about $1.2 billion in China-focused funds at Henderson Global Investors. Markets across the world have suffered large declines and unusually wide swings since Beijing surprised investors Aug. 11 by devaluing its currency.

People ride a double bicycle past a logo of the Alibaba Group at the company's headquarters on the outskirts of Hangzhou, China. ENLARGE

People ride a double bicycle past a logo of the Alibaba Group at the company’s headquarters on the outskirts of Hangzhou, China. Photo: Reuters

In response, Mr. Awdry has been buying U.S.-listed Chinese shares such as Alibaba, which is down 26% since June 12, losing $60 billion of market value. Overlooked, Mr. Awdry said, is that the e-commerce firm is “a great cash-flow-generative business.” Alibaba’s net operating cash flow rose 50% to $6.79 billion in the year ended in March.

A slowdown in China’s economy is widely understood to mean less demand for raw materials, meaning investors should avoid metals and mining stocks, many traders and analysts said. But other sectors will benefit as the middle class deepens, said Samuel Le Cornu, co-head of Asian equities at Macquarie Investment Management, which manages $264 billion.

One way to bet on this trend is to buy stocks of Chinese insurers, which got battered in the recent selloff but carry great potential as more people look to protect their families by taking out life-insurance policies, Mr. Le Cornu said.

Among his top picks is Hong Kong-listed China Taiping Insurance HoldingsCo. , which fell 35% in the recent crash but has still doubled in value over the past two years. Insurers remain relatively cheap, say investors who are buying the shares: their shares in Hong Kong trade on average at 10 times trailing earnings. Taiping trades at nine times its last year of profits.

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Toyota Finally Gets Serious About Self-Driving Cars – ALEX DAVIES. 09.04.15. 2:57 PM

Toyota has joined the race to build a self-driving car.

The Japanese automaker announced it’s dropping $50 million in the next five years to establish research centers with both Stanford and MIT, to work on artificial intelligence and autonomous driving technology.

“We will initially focus on the acceleration of intelligent vehicle technology, with the immediate goal of helping eliminate traffic casualties and the ultimate goal of helping improve quality of life through enhanced mobility and robotics,” says Kiyotaka Ise, Toyota’s head of R&D.

Toyota’s new projects will be directed by Dr. Gill Pratt, who formerly ran Darpa’s Robotics Challenge, a contest to create robot systems to help emergency responders during disaster situations.

Research at MIT will focus on “advanced architectures” that will let cars perceive, understand, and interpret their surroundings. That will be led by Daniela Rus, who recently worked on self-driving golf carts and the laser, or LIDAR, sensors autonomous vehicles typically use to map the world around them.

The folks at Stanford will concentrate on computer vision and machine learning. That technology is key to teaching cars to navigate the outside world, where just about anything can happen. It will also work on human behavior analysis, both for pedestrians outside the car and the people “at the wheel.”

Before today’s announcement, Toyota talked little about autonomous research. A year ago, its deputy chief safety technology officer publicly rejected the idea, saying “Toyota’s main objective is safety, so it will not be developing a driverless car.”

The automaker has expressed interest in advanced safety systems, which use radars, cameras, and simple calculations to brake when a collision is imminent, or adjust the steering if the car drifts out of its lane. The research it’s now talking about would enable far more than those functions.

Toyota’s still not saying if it intends to build a car that will drive itself, or when that could happen. Its rivals are more bullish. Nissan and Mercedes have pledged they’ll put self-driving cars on the market by 2020. Audi’s already working on the human machine interface the technology will require.

In 2017, Volvo plans to put 100 customers in cars with autonomous capabilities and turn them loose in Sweden, to test its technology. And Google’s covering 10,000 autonomous miles a week on public streets.

Ford, GM, Honda, and Nissan are involved in University of the Michigan’s Mobility Transformation Center, a 32-acre faux metropolis designed specifically to test automated and connected vehicle tech. In June, Ford announced its autonomous technology research was moving to “advanced engineering,” the second of three phases before it’s ready for the market. Industry supplier Delphi sent an autonomous car across the country earlier this year.

Toyota hasn’t revealed its longterm intentions, but if this research goes well, it could play a big role in the coming shift to robo-drivers.


Oil-trading legend Andy Hall thinks everyone is dead wrong about one big thing – Akin Oyedele Sept 4 2015

crude oil spewing

Ulet Ifansasti/Getty Images

Andy Hall, hedge fund boss and the so-called god of oil trading thinks the market is wrong about how “oversupplied” the oil market is, according to a letter obtained by Bloomberg.

Crude oil prices crashed 60% from highs last year, rebounded for a few months this year, and then tumbled into a bear market.

Many in the oil market attributed the collapse to a market that was heavily oversupplied.

According to the US Energy Information Administration, crude oil stocks are currently near an 80-year high.

But as Bloomberg’s Simone Foxman and Saijel Kdishan report, Hall’s most recent letter to clients said, “the world, whilst moderately oversupplied, is not awash in oil.”

Hall’s Astenbeck Capital Management hedge fund was, however, crushed by the ugly downturn in oil prices two months ago and lost about 17% in July — its second-largest loss ever. The fund was flat in August.

According to Bloomberg, Hall said in his latest note to clients there’s still room to store about 200 million barrels of oil, adding that current prices reflect a “worst case scenario.”

Again, official data from the EIA show that US crude stockpiles have definitively surged within the past year, though it seems that Hall doesn’t think this as dire a signal for the market as current prices reflect.


Warren Buffett has his eyes on a mega-supplier of nuts and bolts – MIKE STONE, JENNIFER ABLAN AND JONATHAN STEMPEL, REUTERS Aug. 8, 2015, 7:36 PM

warren buffett

Jason Reed/ReutersWarren Buffett

(Reuters) – Warren Buffett’s Berkshire Hathaway is nearing an agreement to buy Precision Castparts, in what could be the company’s largest purchase ever, according to a person familiar with the matter.

The purchase of Precision Castparts, which makes aircraft components and energy-production equipment, could be announced as soon as next week and cost more than $30 billion, assuming typical premiums for mergers, according to the Wall Street Journal, which first reported the news. Precision Castparts’ market value was $26.7 billion on Friday.

Neither Berkshire nor Precision Castparts returned calls and emails seeking comment.

Berkshire is one of Precision Castparts’ largest shareholders, with a roughly 3 percent stake worth $882 million as of March 31, according to securities filings.

Though it began building that stake in 2012, it remains among the smaller investments in Berkshire’s portfolio. Such investments are normally picked by Buffett’s investment managers, Todd Combs and Ted Weschler.

The addition of Precision Castparts would extend Buffett’s decade-long push into the industrial sector, where he has bought such companies as parts maker Marmon, Israeli toolmaker Iscar, and specialty chemicals company Lubrizol.

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Companies are going to have to start publicly comparing how they pay their CEO and their workers – Updated by Matthew Yglesias on August 5, 2015, 4:00 p.m. ET

On Wednesday, the Securities and Exchange Commission finally wrote a long-delayed rule mandating that publicly traded companies disclose information about how much their CEO makes versus how much their median employee makes. A provision requiring this disclosure was put into the Dodd-Frank financial regulation overhaul bill five years ago, but industry opposition and agency foot-dragging have prevented a specific rule from being written until now.

The rule passed with the SEC’s three Democrats voting yes and its two Republicans voting no. The question at hand nominally relates to financial regulation and investor rights, but much more plainly reflects larger social concern — or lack thereof — about inequality.

The rule is sort of about protecting investors

Proponents of the rule have framed it as a question of transparency for investors — a companion to another Dodd-Frank rule mandating that shareholders get a “say on pay” and formally vote on whether executive compensation packages are excessive.

Realistically, though, it does not seem all that likely that the liberal groups, many of them closely aligned with labor unions, that have pushed for the rule are worried that America’s executives are exploiting America’s capitalists. Their realistic interest is more likely in the denominator of the ratio. If you create a cultural norm that a high CEO-to-worker pay ratio is bad, then executives looking for a huge payday are going to have an incentive to find ways to pay their typical workers more.

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Lending Athens a Pot of Gold – By Stephen Kinsella July 28, 2015

CATHAL MCNAUGHTON / REUTERS A demonstrator waves the national flag as people gather to protest against austerity policies in central Dublin, January 31, 2015CATHAL MCNAUGHTON / REUTERS A demonstrator waves the national flag as people gather to protest against austerity policies in central Dublin, January 31, 2015

CATHAL MCNAUGHTON / REUTERS A demonstrator waves the national flag as people gather to protest against austerity policies in central Dublin, January 31, 2015CATHAL MCNAUGHTON / REUTERS A demonstrator waves the national flag as people gather to protest against austerity policies in central Dublin, January 31, 2015

After three long weeks of closure, Greece’s banks are beginning to open their doors to an expectant public. Following tense bailout negotiations, Greece received a seven billion euro ($7.6 billion) bridging loan to pay down 6.8 billion euros ($7.4 million) of the debt it owed last week to its official creditors. Essentially, it’s a new loan to pay off the old one. Or more accurately, it’s paying off the old loan plus interest. But the end of the deadlock has at least returned some normalcy to Greece. Checks can now be cashed. Limited transfers are again possible. Withdrawals are no longer limited to 60 euros ($66) per person per day, although capital controls remain in place, and will for some time. For now, the maximum withdrawal is 420 euros ($460) per day, and money cannot yet leave the country without approval from the finance ministry. This comes at the cost of more fiscal discipline for the Greeks, even though on the whole the country has already endured a level of austerity seen only during times of war or depression.

In all this, Ireland, a small and open economy that completed its own bailout program only two years ago, has stood shoulder to shoulder with the creditor nations of Europe in denying Greece any debt forgiveness. That is shameful.

Ireland is now recording some of the fastest growth rates in the eurozone. But during its own crisis, it, like Greece, eventually lobbied heavily for debt relief. In late 2010, Ireland received an 85 billion euro ($94 billion) loan package in exchange for austerity, recapitalizing and restructuring the banking system, and passing structural reforms. At that time, it did not ask for debt relief, and none was offered.

Ireland’s Prime Minister Enda Kenny speaks during a news conference ahead of an EU leaders meeting in Brussels, March 14, 2013.