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This Hedge Fund Superstar Thinks Climate Change Will Impact All Your Investments—And Soon

Robert-Gibbins-by-Levon-Biss-for-Forbes

Since November, Robert Gibbins has crisscrossed the globe attending scientific conferences, traveling from his home in Geneva, Switzerland, to Arizona, Spain and Austria. The events had a common theme—climate change—and were well attended by academics, bureaucrats and politicians. One group was conspicuously absent. “I didn’t see any other investors there,” he says.

That boggles his mind. “Climate change is something we have to include in every single analysis, every investment,” he says. Most people think—or hope—that global warming is something their children or grandchildren will have to reckon with. Gibbins disagrees. The 49-year-old founder of Autonomy Capital ($5.5 billion in assets) thinks that climate change is happening suddenly and soon.

He structures every bet his hedge fund makes around his belief that the world is skidding toward a future that’s overheated and underwater—and that carbon will be treated as a costly waste product that needs to be captured and stored. Gibbins has already made good money betting on European carbon-futures contracts and expects richer plays to come.

Gibbins has an impressive track record making big calls. His fund, which places large bets on sweeping economic and political trends, is an industry standout, returning an annualized 12.85% net of fees since its November 2003 inception, compared to 8.9% for the S&P 500 index.

The ski-happy, outdoors-loving son of a Vancouver real estate agent, Gibbins made stops at the University of Pennsylvania and the trading desks of JPMorgan and Lehman Brothers before starting Autonomy. For many countries, he believes, climate change will be a major stress on economic stability. If a country is a basket case now, it’s only going to get worse as the seas keep rising and other fast-paced changes hit. “It’s not enough anymore to create a cheap T-shirt, car or semiconductor,” he says. To that end, Gibbins recently shorted the debt and currencies of Turkey and South Africa. He views both countries’ governments—led by Recep Tayyip Erdogan in Turkey and the ANC party in South Africa—as totally inept. “You can choose to be ruled by the ANC or Erdogan, or you can be a modern industrial economy,” he says. “You can’t have both.”

By contrast, he’s going long on Argentina. On recent trips there, Gibbins found people were exhausted after a decade of economic hardship and failed policies, convincing him the country won’t return populist Cristina Fernández de Kirchner to power (she last held the presidency in December 2015). The country’s debt is priced for disaster. “My view is, in Argentina, the society has had enough. It doesn’t want policies that are designed for the next three days,” Gibbins says.

As he sees it, all sophisticated investors these days have access to the best government and economic data. He travels 150 days a year in the pursuit of an edge and expects the 24 investment pros and economists working for him to do the same. He meets with local bureaucrats, journalists and business executives to gauge how decisions are made and how well local institutions function—and whether they can handle chal­lenges like climate change.

What about individual stocks? One obvious thought is to avoid property insurers like AllState and Travelers, which seem likely to get clobbered by rising costs, paying out more as weather-related damage piles up. Gibbins doesn’t buy it. He thinks insurers could fare just fine because much of their business is writing coverage for short periods, giving them the chance to reprice their products. Gibbins says REITs have a lot more risk.

You want even more against-the-grain thinking? Despite President Trump’s decision to pull out of the Paris climate accord, Gibbins anticipates the U.S. will eventually take the lead with Europe on a global deal to limit carbon emissions and penalize countries that don’t comply. So Gibbins thinks big oil stocks, like Exxon, or the currencies of oil-addicted nations, like Nigeria, are vulnerable.

I am a senior editor at Forbes who likes digging into Wall Street, hedge funds and private equity firms, looking for both the good and the bad.

Source: This Hedge Fund Superstar Thinks Climate Change Will Impact All Your Investments—And Soon

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He Sold His First Business To Google And Just Raised $120 Million For His Next Startup

Ray Reddy

Ray Reddy has raised millions of dollars in startup funds, sold a company to Google and is taking on the local business gauntlet in an innovative new way. Yet, he chose to exit Google and Silicon Valley to launch his latest venture.

In his exclusive interview on the DealMakers Podcast, Ray Reddy shared the pros and cons of the valley and his fundraising strategies.

The Art of Business

Always curious, Ray wondered if business was like math and science.  He attended the University of Waterloo to study computer science, then a Masters of Business and Entrepreneurship and Technology.

He says he learned some good foundational principles, how to approach complicated problems, and how to learn quickly. Yet, when entering the business world he found that very little of what he learned had any practical knowledge of applicability. He says “it’s much more about common sense and experience than it is about definitive approaches and how to solve some of these problems.”

After school he went straight into corporate strategy at BlackBerry, doing M&A and venture investments. Yet, he has always not only had a lifelong craving for learning, but a passion for building something and building something that he found had a purpose.

What Google Gets about M&A

The mobile phone was starting to consume other portable electronics. It quickly began to absorb portable navigation, portable GPS, handheld units, and portable media players. Yet, no one seemed to be addressing it. Ray Reddy decided to go solve it himself and built a team of people to go after it.

That startup became PushLife.

Prior to the iPhone, they focused on building an experience that made it very easy for people to move content back and forth between their phone and their computers, specifically music. It took normal phones, and it gave them an iPod-like experience on Android, BlackBerry, and Nokia. PushLife ended up licensing software to major carriers.

It was so successful it was acquired by Google. After the acquisition, he was at Google for four years. First in the Canadian Google office in Waterloo. Then out in Mountain View at Google‘s headquarters.

He ended up running the mobile commerce team for one of their products. Then towards the end, Ray was actually part of the launch team for Google Shopping Express, which was their same-day delivery effort in retail.

The difference with companies like Google, according to Ray, is that they do hundreds of acquisitions a year. They really turn it into a mass production factory. It’s very organized. There are no games. They are very straight-up. From Ray‘s perspective, it doesn’t feel like anyone is trying to overly optimize a negotiation. It makes a lot of sense because the transaction is the beginning of the relationship.

Ray‘s opinion is that Google‘s M&A process is designed in a way to get a group of people that are energized and that deliver a lot of value over the upcoming years. Contrast that with some other acquisition approaches and the result is quite different.

Eventually, Ray found a big new problem to solve. He ultimately concluded that structurally, a big company wasn’t set up to solve this problem, even with all the resources a company like Google has.

Toronto vs. The Valley

Ray moved his founding team to Toronto. Not that the Valley isn’t a really interesting place. He says “On one hand, it is the capital of technology worldwide, but I think there’s also some really weird dynamics there.” The biggest one being that you’ve got a very high concentration of very wealthy people, and they’re all early adopters.

He points to the collapse of the entire on-demand space, everything from on-demand valets to cleaning services several years ago, and a massive false-positive from the Valley.

Because when you have places like Palo Alto where average household incomes are north of $2 million, you can fool yourself into thinking that there are enough people who will pay a big premium for convenience.

As Ray states, “the types of investors living in the Valley are not at all sensitive to paying a $10 delivery fee for having a $10 item brought to them.“ That doesn’t seem weird to them. When you look across average neighborhoods and cities in North America, that’s not necessarily true. You lose sight of that in the Valley. You lose sight of the average person.

Ray says “So, if you’re trying to build a mass market consumer product, you just have to be very careful of false-positives that can come from something working in the Valley“

Then the team went and looked at the reality of building talent there, and hiring, and cost, and a lot of those other things. They decided to move to Toronto instead.

Fundraising Strategy

Ray’s latest startup is Ritual which is a social ordering app that taps into networks of co-workers and colleagues for fast and easy pick-up and pay at a wide variety of local restaurants and coffee shops.

He has already raised $120 million in capital. Greylock led the Series A out of the Valley. Insight did the Series B out of New York. Georgian Partners led the C round out of Toronto.

Rather than waiting until funds are imminently needed to close a round, he says “I think about it differently which is you should always be talking to investors. Always having an ongoing conversation with investors.”

He’s always talking to the next stage of investors and trying to build that relationship. Fundraising comes down to trust, and do they trust your judgment? Do they trust that you can do what you say you’re going to do?

For Ritual, it’s never been about the investor that gives the highest valuation. It has been about who do you want to work with and who do you want to build this company with and spend time with.

He’s had a relationship with each one of those investors for about 9 to 12 months before the round. When it came time for fundraising, it was a no-brainer each time.

Today Ritual has a team of about 300 people globally.

Listen in to the full podcast episode to find out more, including:

  • The process of selling your company to Google
  • Benefits of launching in cities outside of Silicon Valley
  • Ways to build relationships with investors
  • Success factors behind marketplaces
  • Retention as the critical factor for ultimate success in business

Alejandro Cremades is a serial entrepreneur and author of best-seller The Art of Startup Fundraising, a book that offers a step-by-step guide to today‘s way of raising money for entrepreneurs.

I am a serial entrepreneur and the author of the The Art of Startup Fundraising. With a foreword by ‘Shark Tank‘ star Barbara Corcoran, and published by John Wiley

Source: He Sold His First Business To Google And Just Raised $120 Million For His Next Startup

He Left The World of Traditional Employment And Built a Million-Dollar, One-Person Business

Image result for Anthony Martin, 36, has created financial freedom for himself that many people can only dream of.

Anthony Martin, 36, has created financial freedom for himself that many people can only dream of.

He generates $1 million in annual revenue at Choice Mutual, a one-man insurance agency he founded, by selling a very specialized niche product: final expense insurance. It covers burial expenses, so someone’s family doesn’t have to pay the costs, with a payout that is typically in the range of $10,000 to $30,000.

Six years ago, Martin’s life was very different. Working as a manager at an insurance agency in Roseville, Calif., Martin wished he had more control over how things were done. He eventually realized what he really wanted was to be his own boss. In 2013, he took a leap of faith and started the agency from his home.

Martin is one of a fast-growing cohort of entrepreneurs who are breaking $1 million in non-employer businesses, the government’s term for those that have no full-time employees except the owners.

The number of nonemployer firms that generate $1 million to $2.49 million in revenue rose to 36,161 in 2016, up 1.6 percent from 35,584 in 2015, according to the U.S. Census Bureau. That number is up 35.2% from 26,744 in 2011.

So how did Martin grow his agency to $1 million? Recently, he shared his strategies with me. Many of his approaches are instructive for anyone who is selling a consumer product or service online.

Here’s how he pulled it off.

Focus on an area you already know well. It’s easiest to get a running start in a new business if you have already worked in the same industry. By the time he went into business, Martin had already racked up years of experience selling final expense insurance, so there was no need to get a crash course. It was easy for him to explain his product to customers because of that. “I have a very thorough understanding of all of the options out there,” he says.

Find an efficient way to attract customers. Although Martin knew his product well, he didn’t have experience in marketing, so he sought outside help. He hired a company called SellTermLife.com to build a website for him that would rank well in Google and help him get leads, through a customized marketing plan. He put up the website in June 2016.

Even with expert assistance, it was slow going at first. “It took me six months before I got a single lead from Google,” he says. Nonetheless, Martin kept showing up at his desk every day to build up his website. “You’re really going for a long-term play,” he says.

It took stamina to stay committed during those early months. The battle to get market share wasn’t the only one he was waging. For entrepreneurs, he believes, the real fight is to keep showing up for your business, even when it would be easy to slack off. “The majority of the fighting you’re doing is completely against yourself,” he says.

After Martin got his first lead, his momentum accelerated. Two months after that, he started getting daily leads through his site—and now it brings in many more. “It feeds me a never-ending flow of ready-to-buy customers,” says Martin.

Offer top-quality content. In working on his marketing plan, Martin had learned from the team at SellTermLife.com that it was important to publish high-quality, informative content to attract people to his site. As readers clicked on practical articles he wrote on topics such as state-regulated life insurance, life insurance for 89-year-olds and buying insurance for your parents, the site gradually built a strong organic rank in Google.

Here again, sticking with a niche subject he knew served Martin well. “You cannot find another website that sells this type of insurance that has anywhere near the level of in-depth, accurate information about this product,” says Martin.

Creating robust content took a serious investment of time, given that Martin did not have a writer on retainer. Every day during the week and for five to eight hours on the weekends, he’d create articles that address commonly-asked questions about final expense insurance. The articles attracted people who were already seriously interested in his product and also helped him to “own” certain search-term keywords, including “long-tail” phrases—such as questions customers might type into a search engine.

To figure out which keywords mattered most,  Martin researched which ones were most commonly used, relying on tools such as Google’s keyword planner and SEM Rush. He also tapped his own knowledge of the field. “After selling this type of insurance for so long, I know the words people use,” says Martin.

Automate your leads. Martin’s site enables people to “request to apply” for the insurance by filling out a form. By the time a prospect has filled out the form, Martin knows he or she is serious.

To avoid losing track of these leads, Martin set up his site so the leads automatically go to his customer relationship management (CRM) system. Once it feeds him their contact information, he reaches out by phone, prioritizing the newest leads. “The person who has submitted a lead most recently is always the best person to call,” he says.

Thanks to this system, Martin never has to chase anyone down to get them to listen to a sales presentation. “I’m in a really unique situation in the world of selling insurance,” says Martin. “I actually don’t really sell anymore. For all intents and purposes, I’m more of a cashier. I just take orders.”

Embrace remote work. Many insurance agents spend a good part of their day driving to and from appointments with customers. Not Martin.

When customers decide to buy, Martin guides them by phone through a remote application process that the insurance companies have put in place. Sometimes customers sign documents using a program such as DocuSign. Other times, they use a voice signature on the phone.

Working virtually in this way helps Martin make the most of his time every day. “I’ve never met a person face to face to process the deals,” he says. “It’s all done remotely.”

Stay focused. Some of Martin’s contacts have recommended that he sell Medicare supplements or cancer plans. He always says no. “The reason I’m really successful in this space is I have been hyper-focused at being the most expert authority you can imagine on this type of insurance,” says Martin. When he gets an inquiry from someone who wants to buy insurance outside of his niche, he refers the prospect to a trusted industry colleague.

Martin does not look for reciprocal referrals, finding that leads that arrive this way are generally not as inclined to buy as the prospects who come in through his own website. “Right now if I had to choose between serving a customer who has said ‘I’m ready to apply. Please sign me up,” or a referral who has a question, I’m not going to make as much money from a referral,” he says. “That’s why I tell people ‘Don’t refer people to me.’ I allocate my working hours to people who are ready to sign up.”

One thing that helps Martin attract business is having a large number of positive online reviews. He requests reviews from customers automatically using TrustPilot’s automated system.

Keep overhead low  Martin started out working from home in Roseville, Calif., but when his website traffic started to increase dramatically in March 2017 and he saw the business’s full growth potential, he realized there would be tax advantages to locating to Nevada, which has no state income tax. Licensing costs were also lower. He rented an office there for $2,500 a month.

Having the space is important because soon, Martin believes, he’ll need to hire other agents. “I have so much web traffic and so many leads that if I want to continue to monetize a lot of what is possible, I will have to hire agents to process those deals as well,” he says.

In the meantime, Martin keeps the rest of his overhead to about $500 a month. That covers his errors & omissions insurance, licensing fees and CRM subscription.

 Protect your most precious resource. In a one-person business, where you have no one to back you up, staying healthy is essential.

Although Martin works long hours as he grows his business, he always finds time to work out. Rising at 4:30 a.m. every morning, he goes to a gym where he can do strength training and play basketball. Then he heads home for breakfast and starts making phone calls from his office around 7:30 a.m.

On the weekends, Martin and his wife, Christelle, love to enjoy the outdoors with their German Shepherds, Bear, and his new adopted sibling, eight-week-old Olive. “I could definitely sleep more,” Martin says—but his life is too full of good things at the moment to spend much time hitting the snooze button.

Elaine Pofeldt is author of The Million-Dollar, One Person Business (Random House, January 2, 2018), a book looking at how to break $1M in revenue in a business staffed only by the owners.

I am the author of The Million-Dollar, One Person Business, a Random House book looking at how everyday Americans are breaking $1 million in revenue in businesses

Source: He Left The World of Traditional Employment And Built a Million-Dollar, One-Person Business

Which Company Could Be The Next Permian Basin Acquisition Target?

Following the news that Chevron had agreed to pay a nearly 40% premium to acquire Anadarko Petroleum, investors quickly bid up the shares of other potential acquisition targets.

As I argued in the previous article, I believe the Permian was the key to the Anadarko acquisition, but there are plenty of other targets in the region. There are also several companies with the capability of making acquisitions.

In recent years, the few mergers and acquisitions in the oil and gas industry have been largely focused on the Permian Basin. The supermajor integrated oil and gas companies have been increasingly making forays into the Permian.

In addition to Chevron’s new acquisition, in 2017 ExxonMobil paid $6.6 billion to acquire Permian acreage from the Bass family of Fort Worth, Texas. ExxonMobil also spent $41 billion in 2009 to acquire XTO, which has a major presence in the Permian.

Permian Players

Today major acreage holders in the Permian Basin include the supermajors Chevron and ExxonMobil, as well as Occidental, Apache and Concho Resources. Occidental, in fact, reportedly attempted to acquire Anadarko prior to Chevron sealing the deal. But Occidental may now find itself in the crosshairs of a bigger player looking to shore up their Permian portfolio.

But there are many other major producers in the region, including ConocoPhillips, EOG Resources, Pioneer Natural Resources, Noble Energy, Devon Energy, and Diamondback Energy. Smaller producers in the region include WPX Energy, Parsley Energy, Cimarex Energy, Callon Petroleum, Centennial Resource Development, Jagged Peak Energy and Laredo Petroleum.

Let’s first take a look at the largest companies operating in the Permian according to enterprise value. This metric is preferred over market capitalization, because it includes a company’s debt. In the case of a potential acquisition, the acquiring company would be responsible for this debt in addition to the purchase price. Hence, it is a more comprehensive representation of a company’s market value.

I have included the integrated supermajors that could have the ability to make major acquisitions, three of the larger exploration and production companies (which could make an acquisition or be a target themselves), and Anadarko for comparison. All data were retrieved from the S&P Capital IQ database.

Metrics for major oil companies operating in the Permian Basin.

Metrics for major oil companies operating in the Permian Basin.

Robert Rapier

  • EV – Enterprise value at the close on April 12, 2019 in billions of U.S. dollars
  • EBITDA – TTM earnings before interest, tax, depreciation, and amortization in billions of U.S. dollars
  • TTM – Trailing 12 months
  • FCF – Free cash flow in billions of U.S. dollars
  • Debt – Net debt at the end of the previous fiscal quarter
  • 2018 Res – Total proved oil and gas reserves in billion barrels of oil equivalent at year-end 2018
  • EV/Res – The value of the company divided by its proved reserves

Potential Buyers

Based on their size and debt metrics, ExxonMobil and Chevron still appear to be the most capable of pulling off a major deal. Shell has been moving in the direction of becoming a natural gas company, and has already made major capital expenditures in this area in recent years. Further, in 2016 they made their own major acquisition — a $70 billion deal for BG Group.  Meanwhile, Total hasn’t shown much interest in the Permian.

BP may not have an appetite for an acquisition as it continues to be weighed down by its obligations from the 2010 Deepwater Horizon oil spill. As an aside, the continued fallout from that disaster has also resulted in BP having the cheapest reserves on the books by far of any company listed in the table. Also note that the EV/Res metric for integrated supermajors isn’t directly comparable to pure oil producers like Anadarko, as the former also have midstream and refining assets.

ConocoPhillips appears to be the most attractive target for an acquisition from a pure valuation perspective, but as the largest pure oil company it would be a large bite for even ExxonMobil. With respect to making an acquisition, ConocoPhillips CEO Ryan Lance stated earlier this year that the company isn’t feeling any pressure to do so.

Occidental also falls into the category of potentially making an acquisition or of being acquired. On a relative basis, they are more expensive than ConocoPhillips, but on an absolute basis the price would be more manageable.

What about smaller players like Parsley, WPX Energy, or Cimarex Energy? Based on the price movement following the announcement of the Chevron-Anadarko deal, investors are clearly betting that more deals will follow. Below are some of the metrics of potential acquisition targets (with Anadarko for comparison), including some of the large players listed in the previous table:

Metrics for smaller oil companies operating in the Permian Basin.

Metrics for smaller oil companies operating in the Permian Basin.

Robert Rapier

  • 1-Day Change – Change in share price on April 12, 2019, the day the Chevron-Anadarko deal was announced

Note that the double-digit gains of both Pioneer Natural Resources and Parley Energy imply that investors believe they could be next on the acquisition list. Parsley looks attractively priced according to its enterprise value and total reserves. Several other companies stand out, such as Devon Energy and Cimarex, although all of these companies outspent their cash flow in 2018. An acquisition by one of the larger players could give them the efficiencies and economies of scale to rectify that.

Another name on the list that stands out is Diamondback Energy, which has long been one of my favorite Permian Basin oil companies. Diamondback has been an outstanding performer in recent years, but now looks to be the most richly valued according to several metrics following its 2018 acquisition of Energen.

The biggest challenge with the smaller players is that they may not have enough reserves to really move the profit needle for the biggest players. Laredo Petroleum’s 200+ million barrels of oil and gas reserves might not be sufficiently appealing to ExxonMobil, which had 24 billion barrels of reserves at the end of 2018. But it could be appealing to a company like EOG Resources, which closed the year with 2.8 billion barrels of reserves.

Ultimately, price and valuation are only part of the equation. Anadarko wasn’t the cheapest acquisition target for Chevron, but Chevron liked the synergies of Anadarko’s locations. Thus, every major operator in the Permian is more likely to acquire companies whose properties are adjacent to their own. A deeper dive thus becomes an exercise in not only value, but in studying maps of the Permian producers — large and small.

Robert Rapier has over 25 years of experience in the energy industry as an engineer and an investor. Follow him on Twitter @rrapier or at Investing Daily.

Robert Rapier is a chemical engineer in the energy industry. Robert has 25 years of international engineering experience in the chemicals, oil and gas, and renewable ene…

Source: Which Company Could Be The Next Permian Basin Acquisition Target?

The Business Case for Positive Company Culture

Carin Taylor, chief diversity officer at Workday, shared some of the results during a Business Leader Forum at the most recent Workday Rising. Nearly 40 percent of all respondents indicated that unfairness or mistreatment played a major role in their decision to leave a company; 30 percent of women of color felt they had been passed up for a promotion; and a large percentage of Asian and Caucasian men and women felt they were treated unfairly by leadership and management…………

Source: The Business Case for Positive Company Culture

11 Websites That Will Make You Smarter About Money

Not everyone has a financial adviser, and not everyone has the time to read a personal finance book. Luckily, there’s the internet. We’ve made learning about money easier for you by compiling a list of some of our go-to websites for money advice……..

Source: 11 Websites That Will Make You Smarter About Money

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