How To Squeeze Yields Up To 6.9% From Blue-Chip Stocks

Closeup of blue poker chip on red felt card table surface with spot light on chip

Preferred stocks are the little-known answer to the dividend question: How do I juice meaningful 5% to 6% yields from my favorite blue-chip stocks? “Common” blue chips stocks usually don’t pay 5% to 6%. Heck, the S&P 500’s current yield, at just 1.3%, is its lowest in decades.

But we can consider the exact same 505 companies in the popular index—names like JPMorgan Chase (JPM), Broadcom (AVGO) and NextEra Energy (NEE)—and find yields from 4.2% to 6.9%. If we’re talking about a million dollar retirement portfolio, this is the difference between $13,000 in annual dividend income and $42,000. Or, better yet, $69,000 per year with my top recommendation.

Most investors don’t know about this easy-to-find “dividend loophole” because most only buy “common” stock. Type AVGO into your brokerage account, and the quote that your machine spits back will be the common variety.

But many companies have another class of shares. This “preferred payout tier” delivers dividends that are far more generous.

Companies sometimes issue preferred stock rather than issuing bonds to raise cash. And these preferred dividends have a few benefits:

  • They receive priority over dividends paid on common shares.
  • Sometimes, preferred dividends are “cumulative”—if any dividends are missed, those dividends still have to be paid out before dividends can be paid to any other shareholders.
  • They’re typically far juicier than the modest dividends paid out on common stock. A company whose commons yield 1% or 2% might still distribute 5% to 7% to preferred shareholders.

But it’s not all gravy.

You’ll sometimes hear investors call preferreds “hybrid” securities. That’s because they act like a part-stock, part-bond holding. The way they resemble bonds is how they trade around a par value over time, so while preferreds can deliver price upside, they don’t tend to deliver much.

No, the point of preferreds is income and safety.

Now, we could go out and buy individual preferreds, but there’s precious little research out there allowing us to make a truly informed decision about any one company’s preferreds. Instead, we’re usually going to be better off buying preferred funds.

But which preferred funds make the cut? Let’s look at some of the most popular options, delivering anywhere between 4.2% to 6.9% at the moment.

Wall Street’s Two Largest Preferred ETFs

I want to start with the iShares Preferred and Income Securities (PFF, 4.2% yield) and Invesco Preferred ETF (PGX, 4.5%). These are the two largest preferred-stock ETFs on the market, collectively accounting for some $27 billion in funds under management.

On the surface, they’re pretty similar in nature. Both invest in a few hundred preferred stocks. Both have a majority of their holdings in the financial sector (PFF 60%, PGX 67%). Both offer affordable fees given their specialty (PFF 0.46%, PGX 0.52%).

There are a few notable differences, however. PGX has a better credit profile, with 54% of its preferreds in BBB-rated (investment-grade debt) and another 38% in BB, the highest level of “junk.” PFF has just 48% in BBB-graded preferreds and 22% in BBs; nearly a quarter of its portfolio isn’t rated.

Also, the Invesco fund spreads around its non-financial allocation to more sectors: utilities, real estate, communication services, consumer discretionary, energy, industrials and materials. Meanwhile, iShares’ PFF only boasts industrial and utility preferreds in addition to its massive financial-sector base.

PGX might have the edge on PFF, but both funds are limited by their plain-vanilla, indexed nature. That’s why, when it comes to preferreds, I typically look to closed-end funds.

Closed-End Preferred Funds

CEFs offer a few perks that allow us to make the most out of this asset class.

For one, most preferred ETFs are indexed, but all preferred CEFs are actively managed. That’s a big advantage in preferred stocks, where skilled pickers can take advantage of deep values and quick changes in the preferred markets, while index funds must simply wait until their next rebalancing to jump in.

Closed-end funds also allow for the use of debt to amplify their investments, both in yield and performance. Should the manager want, CEFs can also use options or other tools to further juice returns.

And they often pay out their fatter dividends every month!

Take John Hancock Preferred Income Fund II (HPF, 6.9% yield), for example. It’s a tighter portfolio than PFF or PGX, at just under 120 holdings from the likes of CenterPoint Energy (CNP), U.S. Cellular (USM) and Wells Fargo (WFC).

Manager discretion means a lot here. That is, HPF doesn’t just invest in preferreds, which are 70% of assets. It also has 22% invested in corporate bonds, another 4% or so in common stock, and trace holdings of foreign stock, U.S. government agency debt and cash. And it has a whopping 32% debt leverage ratio that really helps prop up the yield and provide better returns (though at the cost of a bumpier ride).

You have a similar situation with Flaherty & Crumrine Preferred and Income Securities Fund (FFC, 6.7%).

Here, you’re wading deep into the financial sector at nearly 80% exposure, with decent-sized holdings in utilities (7%) and energy (7%). Credit quality is roughly in between PFF and PGX, with 44% BBB, 37% BB and 19% unrated.

Nonetheless, smart management selection (and a healthy 31% in debt leverage) has led to far better, albeit noisier, returns than its indexed competitors. The Cohen & Steers Select Preferred and Income Fund (PSF, 6.0%) is about as pure a play as you could want in preferreds.

And it’s also a pure performer.

PSF is 100% invested in preferred stock (well, more like 128% if you count debt leverage), and actually breaks out its preferreds into institutionals that trade over-the-counter (83%), retail preferreds that trade on an exchange (16%) and floating-rate preferreds that trade OTC or on exchanges (1%).

Like any other preferred fund, you’re heavily invested in the financial sector at nearly 73%. But you do get geographic diversification, as only a little more than half of PSF’s assets are invested in the U.S. Other well-represented countries include the U.K. (13%), Canada (7%) and France (6%).

What’s not to love?

Brett Owens is chief investment strategist for Contrarian Outlook. For more great income ideas, get your free copy his latest special report: Your Early Retirement Portfolio: 7% Dividends Every Month Forever.

I graduated from Cornell University and soon thereafter left Corporate America permanently at age 26 to co-found two successful SaaS (Software as a Service) companies. Today they serve more than 26,000 business users combined. I took my software profits and started investing in dividend-paying stocks. Today, it’s almost impossible to find good stocks that pay a quality yield. So I employ a contrarian approach to locate high payouts that are available thanks to some sort of broader misjudgment. Renowned billionaire investor Howard Marks called this “second-level thinking.” It’s looking past the consensus belief about an investment to map out a range of probabilities to locate value. It is possible to find secure yields of 6% or more in today’s market – it just requires a second-level mindset.

Source: How To Squeeze Yields Up To 6.9% From Blue-Chip Stocks

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Critics:

A blue chip is stock in a stock corporation (contrasted with non-stock one) with a national reputation for quality, reliability, and the ability to operate profitably in good and bad times. As befits the sometimes high-risk nature of stock picking, the term “blue chip” derives from poker. The simplest sets of poker chips include white, red, and blue chips, with tradition dictating that the blues are highest in value. If a white chip is worth $1, a red is usually worth $5, and a blue $25.

In 19th-century United States, there was enough of a tradition of using blue chips for higher values that “blue chip” in noun and adjective senses signaling high-value chips and high-value property are attested since 1873 and 1894, respectively. This established connotation was first extended to the sense of a blue-chip stock in the 1920s. According to Dow Jones company folklore, this sense extension was coined by Oliver Gingold (an early employee of the company that would become Dow Jones) sometime in the 1920s, when Gingold was standing by the stock ticker at the brokerage firm that later became Merrill Lynch.

Noticing several trades at $200 or $250 a share or more, he said to Lucien Hooper of stock brokerage W.E. Hutton & Co. that he intended to return to the office to “write about these blue-chip stocks”. It has been in use ever since, originally in reference to high-priced stocks, more commonly used today to refer to high-quality stocks.

References:

Tokenized Apple, Tesla And Coinbase? Why Binance Is Bowing Out.

Binance Chief Executive Officer Zhao Changpeng Interview

Tokenized stocks, or digital assets pegged to the price of company shares, are no longer available for purchase on Binance.com. Offerings had included Tesla, Apple, and Coinbase shares, which Binance claims were fully backed through shares held by its partner, German-based investment firm CM-Equity AG.

Support for stock tokens was first made available on Binance.com in April, 2021, which was enabled through a partnership with Digital Assets AG, a firm focused on issuing tokenized financial products.

“Today, we are announcing that we will be winding down support for stock tokens on Binance.com to shift our commercial focus to other product offerings,” the announcement reads.

Although the exact reason for the about-face is unclear, Binance’s reversal on tokenized stocks comes as financial regulators around the world are putting pressure on the firm. Officials in Germany, Thailand, Japan, Canada, and the United Kingdom have all issued warnings about the exchange over recent months, the firm has been dropped by the payments processor Clear Junction, and certain banking relationships in Europe and around the world are coming into question.

More broadly, it raises doubts about Binance’s hyper growth strategy of rapidly launching new products around the world such as debit cards and derivatives products.

Users currently holding stock tokens have 90 days to sell their shares. Clients in the European Economic Area and Switzerland have the option to transfer their holdings to a new digital asset platform from CM-Equity AG. After October 14, 2021 they will not be able to manually sell or close their positions on the Binance site.

Follow me on Twitter or LinkedIn. Check out my website.

Source: Tokenized Apple, Tesla And Coinbase? Why Binance Is Bowing Out.

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Critics:

Binance will list MicroStrategy, Microsoft and Apple, providing Binance users with exposure via the tokenization of equities. The tokens are expected to be denominated in the exchange’s stablecoin, BUSD.

The move means Binance users will be able to qualify for economic returns on the underlying shares, which will include potential dividends. The tokens also allow Binance customers to purchase as little as one-hundredth of a regular stock using BUSD.

Binance’s stock tokens are tokenized equities that can be traded on traditional stock exchanges. Each tokenized stock represents one ordinary share of the stock and is backed by a depository portfolio of underlying securities held by CM-Equity AG, Germany, according to the post.

Two stock tokens have begun trading on Binance including electric vehicle maker Tesla and cryptocurrency exchange Coinbase. Those listings are already ruffling the feathers of regulators who say the exchange has not acquired the necessary license to begin marketing equities to the public.

Cryptocurrency exchange Binance is allowing its users to buy fractions of companies’ shares with a new tokenized stock trading service, starting with Tesla.

  • The crypto exchange announced Monday the launch of Binance Stock Tokens, zero-commission digital tokens that qualify holders for returns including dividends.
  • As of 1:35 p.m. UTC (9:35 a.m. ET) April 12, users will be able to buy fractions of actual Tesla shares, which trade at $677 a share at the time of writing.
  • Users will be able to purchase as little as one-hundredth of a Tesla share, with prices settled in Binance USD (BUSD).
  • The exchange’s native crypto Binance Coin (BNB) has surged more than 25% in the last 24 hours, reaching an all-time high of $637.44. It is priced at $590.51 at press time. It’s not immediately clear what is driving the price of the coin.
  • It’s not the first tokenized stock play in crypto land: Terra Labs’ Mirror Protocol went live in December.
  • But where Mirror uses synthetic stocks (or tokenized representations of actual equities), the Binance product is “backed by a depository portfolio of underlying securities” managed by an investment firm in Germany.

See also: Binance Faces CFTC Probe Over US Customers Trading Derivatives: Report

Related Stories

Stocks, U.S. Futures Dip on Delta Strain Concerns: Markets Wrap

Asian stocks dipped Tuesday amid concerns a more infectious Covid-19 strain will derail an economic recovery. Treasuries and the dollar were steady after gains.

An MSCI index of Asia-Pacific shares was on track for its first decline in six days as countries in the region are struggling to contain the highly transmissible Delta variant of the virus. U.S. futures dipped after technology stocks led U.S. benchmarks to fresh records Monday. New limits on travel from Britain, which is seeing a spike in cases, dragged on cruise operators and airlines.

The Treasury yield curve flattened amid month-end index rebalancing and the break in auctions until July 12, reducing supply. Oil extended a decline with the market expecting OPEC+ producers to increase supply at an upcoming meeting. Bitcoin was steady around mid-$34,000.

Global stocks are poised to close out their fifth quarterly advance amid a worldwide vaccine rollout that powered an economic recovery and sparked concerns about increasing prices pressures and the withdrawal of stimulus measures. The recovery also drove the reflation trade as more economies reopened, though that is being hampered as some countries, especially in Asia, are falling behind in their vaccine strategies.

The U.S. is now the best place to be during the pandemic due to its fast and expansive vaccine rollout stemming what was once the world’s worst outbreak. Meanwhile, parts of the Asia-Pacific region that performed well in the ranking until now — like Singapore, Hong Kong and Australia — dropped as strict border curbs remain in place.

“The Delta variant has also emerged in our client conversations as a potential threat to reflation/inflation,” JPMorgan Chase & Co. strategists led by Marko Kolanovic said. “The economic consequences are likely to be limited given progress on vaccinations across developed market economies. It could, however, pose some risk of a delay in the recovery in countries where vaccination rates remain lower.”

Read: Asean Equities May Have Priced In Virus Setback: Taking Stock

For more market commentary, follow the MLIV blog.

Here are some events to watch in the markets this week:

  • OECD meets in Paris to finalize a proposal to overhaul global minimum corporate taxation Wednesday
  • China’s President Xi Jinping will deliver a speech as the nation marks the 100th anniversary of the founding of the Chinese Communist Party Thursday
  • OPEC+ ministerial meeting Thursday
  • ECB President Christine Lagarde speaks Friday
  • The U.S. jobs report is due Friday

These are some of the main moves in markets:

Stocks

  • S&P 500 futures dipped 0.1% as of 1:26 p.m. in Tokyo. The S&P 500 rose 0.2%
  • Nasdaq 100 futures fell 0.2%. The Nasdaq 100 rose 1.3%
  • Topix index fell 1%
  • Australia’s S&P/ASX 200 Index dropped 0.4%
  • Kospi index lost 0.6%
  • Hang Seng Index retreated 0.8%
  • Shanghai Composite Index was down 1%
  • Euro Stoxx 50 futures were little changed

Currencies

  • The yen traded at 110.56 per dollar
  • The offshore yuan was at 6.4638 per dollar
  • The Bloomberg Dollar Spot Index edged up
  • The euro traded at $1.1913

Bonds

  • The yield on 10-year Treasuries held at 1.48%
  • Australia’s 10-year bond yield dropped five basis points to 1.53%

Commodities

  • West Texas Intermediate crude was at $72.56 a barrel, down 0.5%
  • Gold was at $1,774.24, down 0.2%

— With assistance by Rita Nazareth, Vildana Hajric, and Nancy Moran

By:

Source: Stock Market Today: Dow, S&P Live Updates for Jun. 29, 2021 – Bloomberg

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Critics:

Beginning on 13 May 2019, the yield curve on U.S. Treasury securities inverted, and remained so until 11 October 2019, when it reverted to normal. Through 2019, while some economists (including Campbell Harvey and former New York Federal Reserve economist Arturo Estrella) argued that a recession in the following year was likely,other economists (including the managing director of Wells Fargo Securities Michael Schumacher and San Francisco Federal Reserve President Mary C. Daly) argued that inverted yield curves may no longer be a reliable recession predictor.

The yield curve on U.S. Treasuries would not invert again until 30 January 2020 when the World Health Organization declared the COVID-19 outbreak to be a Public Health Emergency of International Concern, four weeks after local health commission officials in Wuhan, China announced the first 27 COVID-19 cases as a viral pneumonia strain outbreak on 1 January.

The curve did not return to normal until 3 March when the Federal Open Market Committee (FOMC) lowered the federal funds rate target by 50 basis points. In noting decisions by the FOMC to cut the federal funds rate by 25 basis points three times between 31 July and 30 October 2019, on 25 February 2020, former U.S. Under Secretary of the Treasury for International Affairs Nathan Sheets suggested that the attention of the Federal Reserve to the inversion of the yield curve in the U.S. Treasuries market when setting monetary policy may be having the perverse effect of making inverted yield curves less predictive of recessions.

See also

 

Morrisons Shares Surge As Investors Bet On Low U.K. Supermarket Valuations

Morrisons, CD&R. Tesco, Sainsbury's, Asda

Shares in U.K. publicly-listed supermarket chain Morrisons surged by almost a third in morning trading today, after Britain’s fourth biggest grocer rebuffed a $7.6 billion takeover from U.S. private equity giant Clayton, Dubilier & Rice.

The huge spike in its valuation was prompted by emerging news over the weekend that Morrisons had become a takeover target for CD&R, potentially sparking a bidding war for the grocer.

The news prompted shares to rise across the grocery sector, as investors bet that other supermarket groups could become targets for private equity investors or that a bidding battle could erupt, with online giant Amazon AMZN -0.9% – which has an online delivery deal with Morrisons – one possible bidder for its partner.

American private equity firms Lone Star and Apollo Global Management APO +1.9% have also been mentioned as possible suitors for Morrisons, which has been battling with a declining market share, now down at 10%, from 10.6% five years ago. There is a sense that the U.K. supermarket sector could be ripe for more potential takeovers. The share price performance of the entire sector is seen as under-performing compared with U.S. grocers, for example, despite being profitable and achieving typical dividend yields of around 4%.

CD&R has history, having previously made investments in the discount U.K. store chain B&M, from which it made more than $1.4 billion.

Morrisons Rebuffs Bid But More Could Follow

Morrisons first announced on Saturday that it had turned down a preliminary bid by Clayton, Dubilier & Rice, which is believed to have been made on or around 14 June. The Bradford-based company said that its board had “unanimously concluded that the conditional proposal significantly undervalued Morrisons and its future prospects”.

CD&R had offered to pay nearly 320c a share in cash, while Morrisons’ share price closed at 247c on Friday, before its surge today as trading reopened for the first time since the announcement.

The New York-headquartered private equity firm has until 17 July to make a firm offer and to persuade a reluctant Morrisons management team to recommend that shareholders agree to the deal.

Sir Terry Leahy, a former Tesco chief executive, is a senior adviser for CD&R and, like its market-leading rival Tesco, Morrisons’ shares have been trading below their pre-pandemic levels as higher costs due to operating throughout the pandemic have taken their toll despite booming sales at essential stores across the U.K.

Morrisons currently employs 121,000 people and made a pre-pandemic profit of $565.5 million in 2019, which plunged to $278.6 million in 2020. It owns the freehold for 85% of its 497 stores. One-quarter of what it sells comes from its own supply chain of fresh food manufacturers, bakeries and farms.

CD&R has so far declined to comment on whether it will return with a higher bid, but analysts believe its approach is probably just the first salvo.

Previously, former Walmart WMT +0.9%-owned Asda was snapped up by the U.K.’s forecourt billionaire Issa brothers along with private equity firm TDR Capital in a debt-based $9.4 billion buyout. Likewise, CD&R could adopt a similar model and combine Morrisons, which has just a handful of convenience stores after a number of limited trials of smaller store formats, with its Motor Fuel Group of 900 gas stations.

There are also wider political concerns that it could emulate the Issas by saddling Morrisons with debt and selling off its real estate assets and CD&R is understood to be weighing political reaction before determining whether or not to come back with a higher bid.

Supermarket Takeovers More Likely Than Mergers

For tightly-regulated U.K. competition reasons, takeovers or mergers between supermarket groups appear increasingly complex. The competition watchdog blocked a proposed $9.7 billion takeover by Sainsbury’s for rival Asda two years ago, determining that the deal threatened to increase prices and reduce choice and quality.

However, comparatively relaxed rules on private equity bids mean few such restrictions apply to takeovers. Private equity firms have acquired more U.K. firms over the past 18 months than at any time since the financial crisis, according to data from Dealogic, and Czech business mogul Daniel Křetínský has established a 10% stake in Sainsbury’s, the U.K.’s second biggest supermarket chain. Having failed in an attempt to take over Germany’s Metro Group last year, he could yet make an offer for a British grocer.

AJ Bell investment director Russ Mould added in an investor note this morning that Morrisons’ balance sheet looks highly attractive, in particular to a private equity firm looking to sell business assets to release cash.

“Morrisons’ balance sheet has plenty of asset backing and the valuation was relatively depressed before news of private equity interest,” he said. “The market value of the business had weakened so much that it clearly triggered some alerts in the private equity space to say the value on offer was looking much more attractive.”

Follow me on Twitter or LinkedIn. Check out my website.

I am a global retail and real estate expert who looks behind the headlines to figure out what makes consumers tick. I work as editor-in-chief for MAPIC and editor for World Retail Congress, two of the biggest annual international retail business events.  I also organise, speak at, and chair conferences all over the world, with a focus on how people are changing and what that means for the retail, food & beverage, and leisure industries. And it’s complicated! Forget the tired mantra that online killed the store and remember instead that retail has always been dog-eat-dog: star names rise and fall fast, and only retailers that embrace the madness will survive. Don’t think it’s not important, your pension funds own those malls!

Source: Morrisons Shares Surge As Investors Bet On Low U.K. Supermarket Valuations

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Critics:

Wm Morrison Supermarkets plc (Morrisons) (LSEMRW) is the fourth biggest supermarket in the United Kingdom. Its main offices are in Bradford, West Yorkshire, England.The company is usually called Morrisons. In 2008, Sir Ken Morrison left the company. Dalton Philips is the current head. The old CEO was Marc Bolland, who left to become CEO of Marks & Spencer.

As of September 2009, Morrisons has 455 shops in the United Kingdom. On 15 March 2007, Morrisons said that it would stop its old branding and go for a more modern brand image. Their lower price brand, Bettabuy, was also changed to a more modern brand called the Morrisons Value. This brand was then changed again in 2012 as Morrisons started their low price option brand called M Savers.

In 2005 Morrisons bought part of the old Rathbones Bakeries for £15.5 million which make Rathbones and Morrisons bread. In 2011, Morrisons opened a new 767,500 square/foot centre in Bridgwater for a £11 million redevelopment project. This project also made 200 new jobs.

References:

  1. “Morrisons Distribution Centre Preview”. Bridgwater Mercury. Retrieved 6 July 2012. This short article about the United Kingdom can be made longer. You can help Wikipedia by adding to it.

China’s Xtep Closes At New Record On Hillhouse Investment; Ding Clan’s Fortune Tops $2 Bln

Xtep

Shares in China sportswear supplier Xtep ended the week at a new record high today after the company announced investment hook-ups with China private equity firm Hillhouse Capital Management, one of China’s largest private equity firms.

Xtep’s Hong Kong-traded shares rose 5.6% to HK$13.16 today; they’ve more than doubled since mid-May.

Xtep said it would raise HK$500 million from the sale to Hillhouse of bonds that can be converted into its own underlying shares. In addition, subsidiary Xtep Global raised $65 million from Hillhouse from the sale of bonds that can be converted into that unit’s shares. (See announcements here and here.) Funds will help boost sales of Xtep-owned brands.

The doubling of Xtep’s stock price has lifted the fortune of company’s controlling Ding family to $2.3 billion.  Trusts held by chairman Ding Shui Bo, executive director Ding Mei Qing (his sister) and executive director Ding Ming Zhong (his brother) collectively own 1.3 billion shares that were worth $2.2 billion today. Xtep’s annual report doesn’t give a clear down of the ownership split among them. Shui Bo has another 60.7 million shares worth another $103 million.

Spending on sportswear in China has picked up amid a continuing economic recovery from the Covid-19 pandemic. Xtep, whose rivals include Anta and Nike, said in April first-quarter sales had a mid-50% increase compared with a year earlier. Nike has faced backlash in China after a statement in March expressed concern about alleged forced labor practices its Xinjiang region.

Hillhouse is led by billionaire Zhang Lei, who is worth $3 billion today on the Forbes Real-Time Billionaires List.

See related story:

Hong Kong Is Gaining On The U.S. As An Alternative For Tech Listings

@rflannerychina

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I’m a senior editor and the Shanghai bureau chief of Forbes magazine. Now in my 20th year at Forbes, I compile the Forbes China Rich List. I was previously a correspondent for Bloomberg News in Taipei and Shanghai and for the Asian Wall Street Journal in Taipei. I’m a Massachusetts native, fluent Mandarin speaker, and hold degrees from the University of Vermont and the University of Wisconsin at Madison.

Source: China’s Xtep Closes At New Record On Hillhouse Investment; Ding Clan’s Fortune Tops $2 Bln

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Critics:

Xtep International Holdings Limited (SEHK stock code: 1368) is a Chinese manufacturing company of sports equipment based in Kowloon Bay, Hong Kong.[2] Established in 2001, the company was listed on the Main Board of the Hong Kong Stock Exchange on 3 June 2008.[3]

Xtep engages mainly in the design, development, manufacturing, sales, marketing and brand management of sports equipment, including footwear, apparel, and accessories. Xtep is a leading professional sports brand with an extensive distribution network of over 6,300 stores covering 31 provinces, autonomous regions and municipalities across the PRC and overseas.

In 2019, Xtep has further diversified its brand portfolio which now includes four internationally brands, namely K-Swiss, Palladium, Saucony and Merrell. Xtep is a constituent of the MSCI China Small Cap Index, Hang Seng Composite Index Series and Shenzhen-Hong Kong Stock Connect.

In August 2019, Xtep signed on famous Asian basketball player Jeremy Lin as spokesperson, marking its foray into the basketball business realm. Xtep also unveiled its “Basketball Product Co-Creation Plan” to come up with basketball products via product co-creation.

After previously supplying then-Premier League side Birmingham City and La Liga side Villarreal in 2010 and 2014 respectively, Xtep left the major football scene in 2017 and focused on other sports, mainly in running. In mid-2018, Xtep returned again to the football scene by signing a contract with Saudi Professional League side Al-Shabab ahead of the 2018–19 season in a reported three-year contract. On 13 October 2019, Egyptian Premier League side Al Ittihad Alexandria announced Xtep as their new official kit supplier until 2022, replacing German company Uhlsport.

References

  1. “الاتحاد السكندري يُعلن عن الزى الجديد .. و يتعاقد حصرياً مع شركة سعودية للملابس الرياضية” [Al Ittihad Alexandria reveals new kits for the 2019–20 as they announce new deal with Chinese-Saudi Arabian company Xtep]. Al Ittihad Alexandria Club official website. 13 October 2019. Retrieved 5 January 2020.
  1. Xtep 2019 Interim Report [2019-08-21]
  2. XTEP INT’L Forms JV to Run Merrell, Saucony Brands – AASTOCKS [2019-03-04]
  3. Xtep buys E-Land Footwear to develop series – The Standard [2019-05-03]
  4. Xtep expands its sportswear portfolio into basketball shoes and apparel, signing on star Jeremy Lin as brand spokesman – South China Morning Post [2019-08-09]

Meet The World’s Newest And Youngest Self Made Billionaire Luminar’s Austin Russell

The race to commercialize self-driving car technology has attracted billions of dollars of investment but not created many billionaires. Luminar founder and CEO Austin Russell is among the rare exceptions. With the Nasdaq listing of the laser sensor company he founded at age 17, the optics prodigy is one of the first billionaires to emerge from the autonomous-vehicle world—and the youngest self-made billionaire in the world.

“It’s been insanely intense, grueling . . . everything through every day that we’ve had to go through, scaling this up. And of course it’s incredibly rewarding to have an opportunity to be able to get out there now and get into the public markets and scale through this IPO SPAC,” 25-year-old Russell tells Forbes in a video interview from his office in Palo Alto, California. “I’m still relatively young, but … a lot of blood, sweat and tears have gone into it. And I was fortunate enough to be able to retain a good enough stake.”

Good enough, indeed. Russell’s 104.7 million shares, about a third of Luminar’s outstanding equity, was worth $2.4 billion at the close of Nasdaq trading on Thursday. The listing, announced in August, resulted from a merger with special purpose acquisition company Gores Metropoulos, a unit of Beverly Hills-based finance firm The Gores Group, and raised Luminar’s estimated market value to $3.4 billion prior to the start of trading. Investors in the newly public company include fellow billionaire Peter Thiel (net worth: $4.6 billion), who helped get Russell started with Luminar by making him a Thiel Fellow in 2012; Volvo Cars Tech Fund; Alec Gores of The Gores Group, another billionaire ($2.2 billion), who is also a Luminar board member; and billionaire Dean Metropoulos, the company’s chairman.

Thiel, the Paypal cofounder who famously created a fellowship offering extraordinary young people $100,000 to drop out of college to pursue their dreams, has been an advisor to Russell since he left Stanford to start Luminar in 2012. As a mentor, Thiel is impressed not just by the new tech billionaire’s intellect, but also his ability to hold on to a significant chunk of Luminar as it moved from Russell’s garage concept to Nasdaq.

“You can build a billion-dollar business but that does not mean you can become a billionaire,” says Thiel. “It’s remarkable from a financing perspective to retain a financial stake of that size.”

Russell, who’s also a Forbes 30 Under 30 alum from the class of 2018, isn’t looking to take on self-driving tech giants like Alphabet’s Waymo or GM-backed Cruise, but instead is perfecting sensors that help autonomous cars “see” their surroundings by bouncing a laser beam off objects in their path. Known as lidar for “light detection and ranging,” the technology is fundamental for autonomous vehicles. Luminar is competing in that space with Velodyne, the early leader in lidar for autonomous vehicles, and newcomer Aeva, both of which are also going public via SPAC mergers. Russell has sold prototype sensors to major auto companies for the past few years, but more recently secured production orders from Volvo Cars, Daimler and Intel’s Mobileye that may ensure revenue growth for several years. 


You can build a billion-dollar business but that does not mean you can become a billionaire. It’s remarkable from a financing perspective to retain a financial stake of that size. Peter Thiel


Luminar will likely post sales of just $15 million this year, but could generate at least $1.3 billion by 2026, based on estimates in an SEC filing.    

Russell’s abilities extend beyond the lab to the boardroom, according to Alec Gores, who helped arrange Luminar’s listing. “When we were negotiating, he was so on top of everything, the small details. Sixty-year-old guys who’ve been in the business for 40 years don’t understand this stuff, but he took time to study the SPAC,” he says. “I’m looking at this guy and saying, ‘You asked more questions than anybody I’ve seen that’s been doing this sh*t for a long time.’”

The lanky 6-foot-4 Russell, with shaggy strawberry blonde hair and a light beard to match, was racking up notable achievements long before his new billionaire status. As the story goes, he memorized the periodic table of elements at 2 years old and rewired his Nintendo DS game console into a crude mobile phone when he was in the sixth grade after his parents forbade him from having one. At 13, he filed his first patent: an underground water recycling system that catches sprinkler water and saves it for future gardening to reduce wastewater. Rather than go to high school, he spent his teen years at the University of California at Irvine’s Beckman Laser Institute. 

Next came admission to Stanford to study physics, but that didn’t last long. He dropped out midway through his freshman year after winning a $100,000 Thiel Fellowship stipend for his lidar concept, founding Luminar not long after obtaining his driver’s license. 

Excluding inherited fortunes, Russell is ​one of about a dozen people on the planet to make a billion dollars before they turned 30.

Lidar was an early fixation for Russell as he believes it has the potential to save lives both as part of self-driving cars and as a component of advanced driver-assistance systems that Volvo and other carmakers are bringing to market in the next two to three years. As a teenager, he’d looked at what Velodyne and other companies were doing with laser sensors, but determined a completely different approach was needed to make them cheap enough to be ubiquitous.

“It should not be a 16- or 17-year-old and then subsequently a 25-year-old that can build a business like this,” says Russell. “We’ve been able to accelerate this because no one has really done this before.”

It doesn’t hurt that Russell has zero distraction from social media or time-sucking general education requirements of college and high school degrees. Unlike most 25-year-olds, he has neither Twitter nor Instagram accounts, but confesses to learning most of what he knows about the world from avid Wikipedia and YouTube explainer consumption.

As a Gen Y billionaire, Russell is also thinking about his impact. Though he has no immediate plans for Bill Gates-like philanthropy, he sees his contribution as eradicating automobile accidents. “When this becomes a new, modern safety technology on vehicles that’s integrated on every vehicle globally produced, that’s when I’d firmly say that we’ve accomplished the goals that we set.” 

Alan Ohnsman

Alan Ohnsman

From Los Angeles, the U.S. capitol of cars and congestion, I try to make sense of technology-driven changes reshaping how we get around. Find me on Twitter at @alanohnsman

Alexandra Sternlicht

Alexandra Sternlicht

I’m the Under 30 Editorial Community Lead at Forbes. Previously, I directed marketing at a mobile app startup. I’ve also worked at The New York Times and New York

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Luminar, an autonomous vehicle technology startup, is set to go public through a SPAC merger with Gores Metropoulos Thursday. Luminar founder Austin Russell joins “Squawk Box” to discuss. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi » Subscribe to CNBC TV: https://cnb.cx/SubscribeCNBCtelevision » Subscribe to CNBC: https://cnb.cx/SubscribeCNBC » Subscribe to CNBC Classic: https://cnb.cx/SubscribeCNBCclassic Turn to CNBC TV for the latest stock market news and analysis. From market futures to live price updates CNBC is the leader in business news worldwide. The News with Shepard Smith is CNBC’s daily news podcast providing deep, non-partisan coverage and perspective on the day’s most important stories. Available to listen by 8:30pm ET / 5:30pm PT daily beginning September 30: https://www.cnbc.com/2020/09/29/the-n… Connect with CNBC News Online Get the latest news: http://www.cnbc.com/ Follow CNBC on LinkedIn: https://cnb.cx/LinkedInCNBC Follow CNBC News on Facebook: https://cnb.cx/LikeCNBC Follow CNBC News on Twitter: https://cnb.cx/FollowCNBC Follow CNBC News on Instagram: https://cnb.cx/InstagramCNBChttps://www.cnbc.com/select/best-cred…#CNBC#CNBCTV

Bankrupt Hertz Seeks Permission To Raise $1 Billion In Preposterous New Stock Sale

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Hertz Global Holdings, in a filing Thursday, asked the court overseeing its Chapter 11 bankruptcy reorganization to authorize a stunning plan to raise $1 billion by selling 246.8 million new shares.

“It’s bananas,” says Matthew Cavenaugh, a bankruptcy attorney with Jackson Walker, who has no involvement in the case. “The whole concept of funding a Chapter 11 through an equity raise, in the first month, in this unprecedented environment, strikes me as ludicrous.”

This is because by almost any stretch of the imagination, shares in Hertz should already be considered worthless — with equity holders so far down the totem pole that they would be foolish to believe a Hertz reorg would leave them with any value whatsoever.

But don’t tell that to retail investors who have inexplicably piled into Hertz since its May 22 bankruptcy filing, driving up the share price from 56 cents to as high as $5.53 earlier this week. In after-hours trading last night the stock has shot up nearly 50% to $3.

It’s “a unique opportunity,” according to the Hertz court filing, “to raise capital on terms that are far superior to any typical debtor-in-possession financing.” Typically, when bankrupt companies need to raise cash to get them through a restructuring, the funds come with high borrowing costs. But issuing new stock, says Hertz in the filing, would not impose restrictive covenants, would not impair any of the creditors, and would carry no repayment obligations, “and the Debtors would not pay any interest or fees to those who provide the funding by buying shares at the market.”

bitmax2

Hertz is essentially saying that if morons are offering free money, why not take it? Bondholders will still end up taking over anyway. “Caveat emptor,” says Jeff Anapolsky, managing director of Crossroads Strategic Advisors and co-author of The Art of Distressed M&A: Buying, Selling and Financing Troubled and Insolvent Companies. “While Hertz common stock may be an interesting gamble, it’s not a good investment.” With $2.7 billion of Hertz senior notes trading in the 30s, even raising $1 billion will not make the creditors whole, explains Anapolsky: “If the value of Hertz is less than the amount of the debt, then the creditors are likely to receive the new equity in the reorganized company, leaving the old equityholders with nothing.”

There’s very little precedent for this kind of move, says Anapolsky, and long-running debate as to whether exchanges and regulators should allow shares of insolvent companies to continue trading in bankruptcy. Is it too much mothering to prevent companies from baiting naive millenials — on new day-trading platforms like Robinhood — into handing over free money?

How can we be so sure that Hertz stock will end up worthless? Look at the capital structure. According to court filings the bankruptcy of Hertz Global Holdings involves $2.7 billion in debt (its $14.5 billion in vehicle-related debt is not subject of these proceedings). That $2.7 billion face value debt is currently trading at about 35 cents on the dollar — for an implied market value of about $950 million. Even if Hertz (via its investment bankers at Jefferies) could hypothetically sell $1 billion in new stock, that wouldn’t be enough to make its bonds whole, and the creditors would still end up taking over.

Even if the court allows Hertz to sell its 246.8 million in additional shares, there looks to be zero chance of raising anywhere close to the $1 billion headline number. At $3 per share, Hertz has a current implied market cap of just under $300 million. Because an additional equity offering would be overwhelmingly dilutive to existing holders, the only direction for the share price to go is down — at least in a rational market with rational participants.

But this is 2020, so who knows, maybe it will work.

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Tracking energy innovators from Houston, Texas. Forbes reporter since 1999.

Source: https://www.forbes.com/

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Hertz HTZ Stock Analysis // Will bailout save equity investors from bankruptcy // Hertz is currently the second most popular stock on the Robinhood investing platform. In this video I share my thoughts on Hertz, and suggest a few questions for you to think hard about before buying this stock.

How BEV Traders Brings The Full Power of AI TRADING BOT

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Cisco, Tilray, Aurora Cannabis, Alibaba, Trade Talks – 5 Things You Must Know

Here are five things you must know for Wednesday, May 15:

1. — Stock Futures Lower Amid Subsiding Trade War Worries

U.S. stock futures were lower Wednesday though sentiment was lifted by a softening of the rhetoric from Donald Trump in the U.S.-China trade war and suggestions that talks could resume in the coming weeks.

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Markets also were soothed by weaker-than-expected economic data from China that pointed to not only slowing growth in the world’s second-largest economy but also a weakening bargaining position in Beijing’s trade standoff with Washington.

With Trumps describing the dispute with China as “a little squabble” on Tuesday, as well as confirmation from the U.S. Treasury that Secretary Steven Mnuchin will soon travel to Beijing to resume trade talks, markets were happy to add risk following Tuesday’s gains on Wall Street.

Contracts tied to the Dow Jones Industrial Average fell 85 points, futures for the S&P 500 declined 8.70 points, and Nasdaq futures were down 23 points.

The economic calendar in the U.S. Wednesday includes Retail Sales for April at 8:30 a.m. ET, the Empire State Manufacturing Survey for May at 8:30 a.m., Industrial Production for April at 9:15 a.m., and Oil Inventories for the week ended May 10 at 10:30 a.m.

2. — Cisco, Alibaba and Macy’s Report Earnings Wednesday

Alibaba Group Holding (BABAGet Report)  posted stronger-than-expected fiscal fourth-quarter earnings as consumer growth on its online marketplace surged and its tie-up with Starbucks (SBUXGet Report) , the world’s biggest coffee chain, helped boost revenue and its cloud computing sales surged.

Macy’s (MGet Report)  earned 44 cents a share on an adjusted basis in the first quarter, higher than estimates of 33 cents. Same-store sales rose 0.7% in the quarter vs. estimates that called for a decline of 0.6%.

Earnings reports are also expected Wednesday from Cisco Systems (CSCOGet Report) and Jack in the Box (JACKGet Report) .

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3. — Tilray Rises After Revenue Beat, Aurora Cannabis Slumps

Tilray  (TLRY) shares were rising 4% to $50.71 in premarket trading Wednesday after the Canadian cannabis company posted stronger-than-expected first-quarter sales, while its domestic rival Aurora Cannabis (ACBGet Report) slumped after revenue missed analysts’ forecasts amid caps on retail store growth in the Canadian market.

Tilray said first-quarter revenue rose 195% from a year earlier to $23 million, as sales in Canada surged following the country’s decision to legalize cannabis for recreational use. The adjusted loss in the quarter was 27 cents a share, wider than analysts’ estimates, after a 5.7% drop in the average price per kilogram sold.

CEO Brendan Kennedy also said Tilray was looking to further its partnerships with U.S. and international companies as the potential $150 billion global market for cannabis undergoes a generational change in both regulation and consumer acceptance.

“We’ve been inundated with contacts from Fortune 500 companies who are interested in exploring partnerships with Tilray,” Kennedy told investors on a conference call late Tuesday. “And it’s a range of companies from a broad variety of industries.”

“We’re also starting to have conversations with U.S. retailers who are interested in carrying CBD product in the second half of this year,” he added.

Aurora Cannabis, meanwhile, was tumbling 4.7% to $7.99 in premarket trading after its fiscal third-quarter revenue of C$75.2 million missed Wall Street forecasts of C$77.2 million and consumer cannabis sales were just under C$30 million as provincial regulators limited the number of retail outlets.

The company reported a loss attributable to shareholders in the quarter of $C158 million said Aurora Cannabis said it was “well positioned to achieve positive EBITDA beginning in fiscal Q4.”

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4. — Walmart Considering IPO for U.K. Unit Asda

Walmart (WMTGet Report) is considering an initial public offering for its U.K. grocery subsidiary Asda, a listing that that could value the company at as much as an estimated 8.5 billion pounds ($11 billion), Bloomberg reported.

The news comes just weeks after U.K. antitrust regulators blocked a planned merger between Asda, Britain’s fourth-largest supermarket, and rival J Sainsbury.

“While we are not rushing into anything, I want you to know that we are seriously considering a path to an IPO,” Judith McKenna, the company’s international chief, told employees at an event in Leeds, according to a summary of the event provided by Asda. Any preparations for going public would “take years,” she said, Bloomberg reported.

5. — Nelson Peltz’s Trian May Wage Activist Campaign at Legg Mason – Report

Nelson Peltz’s Trian Fund Management may wage an activist campaign at Legg Mason (LMGet Report) and push the mutual fund company to improve its flagging results, The Wall Street Journal reported, citing people familiar with the matter.

It would be the second time in 10 years that Trian has targeted the mutual fund company, according to Reuters.

Trian recently has held discussions with Legg Mason about the need to cut costs and improve profit margins, the people told the Journal. The two sides may still negotiate a settlement that sidesteps a proxy fight, the sources added.

On a conference call with analysts Monday, Legg Mason CEO Joseph Sullivan said the company was moving to slash expenses.

“While there is much work to be done, we now have increased visibility into and have gained even greater confidence in our ability to deliver $100 million or more of annual savings now within two years,” he said.

By:

 

Source: Cisco, Tilray, Aurora Cannabis, Alibaba, Trade Talks – 5 Things You Must Know

Glencore gives shares $1 billion buyback lift after U.S. subpoena — peoples trust toronto

https://ift.tt/2u89QF5 July 5, 2018 By Justin George Varghese and Zandi Shabalala (Reuters) – Commodities trader and miner Glencore will buy back shares worth $1 billion in a move analysts said looked timed to soothe investor nerves just two days after a subpoena from U.S authorities rattled the stock. Glencore’s shares suffered their worst day […]

via Glencore gives shares $1 billion buyback lift after U.S. subpoena — peoples trust toronto

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