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The ex-pharma exec leading Trump's COVID-19 vaccine program has $10 million in stock options for a company getting federal funding

Sat, 05/16/2020 - 8:12am

  • Dr Moncef Slaoui, a former pharma executive, was announced last week as a lead figure in President Donald Trump's push for a coronavirus vaccine.
  • Slaoui resigned as a director of the company Moderna — which is trialing one vaccine — to take the position.
  • However, he continues to hold stock options worth more than $10 million in Moderna, which has seen its stock price skyrocket in recent months.
  • Moderna's stock climb was helped by an investment from the federal government, of which Slaoui is now a part.
  • The holding has been called a potential conflict of interest, as Moderna's vaccine could be a beneficiary of the program Saloui is leading.
  • Visit Business Insider's homepage for more stories.

The former pharma executive tapped by President Donald Trump to lead the federal government's hunt for a COVID-19 vaccine has more than $10 million in stock options in one of the companies receiving federal funding.

Dr Moncef Slaoui, a Belgian-American, was this week named Chief Scientist for Trump's "Operation Warp Speed," which aims to develop a working vaccine as fast as possible.

Slaoui addressed the media in a press conference on Friday in the White House Rose Garden, where Trump described him as one of the world's pre-eminent experts on vaccines. He worked for years at GlaxoSmithKline, rising to the position of Head of Research and Development before leaving in 2017.

NEW: Pres. Trump appoints former pharmaceutical executive Moncef Slaoui and Army Gen. Gustave Perna to lead vaccine development.

The two struck notes of optimism about the hoped-for pace of development, while conceding it will be a "herculean task."

— ABC News (@ABC) May 15, 2020

In order to take up the position, Slaoui resigned his role on the board of directors for Moderna Inc., a biotech company based in Cambridge, Massachusetts. According to the Associated Press, Slaoui's White House role is unpaid.

However, filings with the US Securities and Exchange Commission show that Slaoui continues to hold valuable stock options in Moderna.

Described across four separate filings, Slaoui has 155,438 options in Moderna. The stake is worth $10,366,000 at Moderna's current share price, $66.69 at the time of publication.

Moderna shares have almost tripled in value during 2020. The $66.69 figure represents an increase of  184% from the $23.46 it was trading for on January 1.

Part of this sharp increase was fueled by an injection of more than $400 million from the federal government to assist trials of a coronavirus vaccine.

According to CNBC, Moderna, on April 17, announced $483 million of funding from a branch of the Department of Health and Human Services.

The healthcare website Stat News described Slaoui's holding as "a potential conflict of interest" if it works and receives the massive acceleration promised by Trump's "Warp Speed" plan.

In his Rose Garden appearance, Slaoui mentioned data from a particular clinical trial, which he said suggested a vaccine could be successful.

Addressing Trump, he said: "Mr. President, I have very recently seen early data from a clinical trial with a coronavirus vaccine. And this data made me feel even more confident that we will be able to deliver a few hundred million doses of vaccine by the end of 2020."

While Slaoui did not name the trial in question, Stat News said he was "likely referencing" the Moderna trial, which is in a position to provide that data.

After news of Slaoui's holding was published, former presidential candidate Sen. Elizabeth Warren said that Slaoui "must divest immediately."

It is a huge conflict of interest for the White House’s new vaccine czar to own $10 million of stock in a company receiving government funding to develop a COVID-19 vaccine. Dr. Slaoui should divest immediately.

— Elizabeth Warren (@SenWarren) May 15, 2020

Business Insider has contacted Moderna and the White House for comment.

The Daily Beast said it attempted to contact Slaoui, but was unable to reach him.

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A 20-year hedge-fund vet shares the 3-part checklist that guides every investment decision he makes — and breaks down a stock pick he thinks could increase 50 to 100 times in his lifetime

Sat, 05/16/2020 - 8:06am

  • Harris Kupperman, the founder of Praetorian Capital Management and CEO of Mongolia Growth Group, isn't a fan of overly complicated and complex investment strategies.
  • Ideally, he said "three bullet points on a napkin is about everything you need in an investment thesis." 
  • Kupperman has his eye on an under-the-radar cheap stock that looks like it has massive upside potential in the years to come.
  • Click here for more BI Prime stories.

Harris Kupperman, the founder of Praetorian Capital Management and CEO of Mongolia Growth Group, made his way into the investment arena more or less on a whim.

In the middle of the Asian financial crisis in 1997, when Kupperman was still in high school, he found himself befuddled by the amount of money being lost by people he perceived as renowned and educated deep thinkers. 

"I just said to myself: 'I'm going to figure this thing out because I feel like it's solvable,'" he said on the "Value Hive Podcast." "I had cleaned pools that summer, and so I had a couple thousand bucks in my bank account. And I put it into a brokerage account — these were back in the days where you had a dial-up modem — and I started investing." 

As is true for most first-time investors, Kupperman wound up losing "a bunch of money." But he didn't let that initial feeling of being chewed up and spit out by the market deter him.

"Eventually, I kind of cracked the code," he said.

Shortly thereafter, during Kupperman's senior year of college, he was asked to manage funds for his father's friends, to whom he'd been giving stock tips. He started a fund with just two clients and $90,000 in assets under management. In time, he'd wind up managing millions.

"That's where it's all grown from," he said. "I've been doing this for the better part of 20 years now."

3 bullet points

Before we dive into the three bullet points that dictate Kupperman's investing decisions, it's important to note that an emphasis on value lies at the heart of his strategy. He also uses an approach that is made up of about 80% fundamental analysis and 20% technical analysis — an approach he says allows him to identify an entry point with lower risk.

"Three bullet points on a napkin is about everything you need in an investment thesis," he said. "Complex models — usually due to the complexity, people think that they understand it really well because it's a really complex model, and oftentimes, they miss the one key factor that actually matters in the whole investment."

But in Kupperman's view, an investment thesis can be boiled down to just three questions.

1. How do I not get hurt?

To Kupperman, this bullet point is focused on the downside of a prospective investment. To quell the probabilities of losing their capital, he says investors should focus on the company's balance-sheet strength, net cash, and debt levels.

2. What's happening that's going to unlock this capital (value)?

Kupperman refers to this bullet point as "the core of the thesis." In short, it's identifying a catalyst — whether it be secular, company-specific, or something under the radar that the market has yet to catch on to — to unlock value and increase share price. 

3. Am I getting in cheap enough that this is not priced in yet?

The adherence to this idea leads Kupperman to scour the stocks that are making new 52-week lows. In doing so, he can look for turnaround opportunities that the market may not have sniffed out yet.

What's more, Kupperman gains an advantage by employing a longer-term time horizon. He's not interested in what next quarter's earnings look like; he wants to know what earnings will grow to in three to five years.

At this point in the cycle, Kupperman said he found himself investing in "truly terrible businesses" because that's where the opportunities are. However, that doesn't mean he's not doing his due diligence. To him, if he can get in cheaply with a tailwind, the investment should still turn out favorably. 

"The good businesses — the Warren Buffett business, the business you tell yourself you want to own — I find that the multiples are so crazy that the best-case scenario is already priced in, which means that if it doesn't go exactly according to plan, you're going to lose a whole lot of money," he said. 

Beyond Kupperman's bulleted checklist, he also uses a highly concentrated approach, investing in only six to 12 names at a time.

Below is a stock he has high hopes for that occupies one of those spots.

A stock with huge potential 

"A company I'm long right now is a company called St. Joe; I think it's the cheapest stock in the galaxy right now," he said. 

St. Joe owns hundreds of miles of coastline in the rapidly growing state of Florida and is building housing expeditiously upon it, Kupperman said. 

On the surface, St. Joe (JOE) looks like a "perpetual value trap," he said. But after he dug deeper, he came to a completely different conclusion.

For context, Kupperman said that the quote below was attributable to earnings in 2022.

"But when you go there and you actually look at what they're doing — look at how they're strategically positioning the company, and you see what's actually happening — you realize this is a company that's probably growing 20 or 30% a year. And you can come into it at a single-digit earnings multiple, while you get like $200 a share of land on the side for free," he said.

He added: "You can look at what's happening and see what the pipeline of developments are, and you have almost no downside because they have no debts."

Over the course of his lifetime, Kupperman believes St. Joe's share price can increase 50 to 100 times.

SEE ALSO: A real-estate investor who generates $342,000 of annual cash flow shares his unique spin on a popular investment strategy that's helped land him 114 units

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Warren Buffett's Berkshire Hathaway slashed its Goldman Sachs stake by 84% last quarter

Sat, 05/16/2020 - 8:04am

  • Warren Buffett's Berkshire Hathaway slashed its stake in Goldman Sachs and exited its positions in Philips 66 and Travelers in the first quarter, a financial filing on Friday showed.
  • The billionaire investor's company cut its Goldman holdings by 84%, driving their value down from about $2.8 billion to less than $300 million.
  • Berkshire also trimmed its stakes in Amazon, JPMorgan, Sirius XM, and other companies.
  • The stock sales, along with the coronavirus sell-off, reduced the value of Berkshire's stock portfolio by 27% to $176 billion.
  • Visit Business Insider's homepage for more stories.

Warren Buffett's Berkshire Hathaway slashed its Goldman Sachs holdings and sold its stakes in energy group Philips 66 and insurer Travelers in the first quarter, according to a Securities and Exchange Commission filing released on Friday.

The famed investor's conglomerate cut its Goldman position by 84%, from about 12 million shares at the end of December to fewer than 2 million at the end of March. The sales, coupled with the investment bank's stock tumbling by a third in the period, resulted in Berkshire's Goldman stake shrinking in value from about $2.8 billion to less than $300 million.

Berkshire exited its positions in Philips 66 and Travelers, which were worth about $25 million and $43 million respectively on December 31. It also trimmed several holdings including Amazon, JPMorgan, Liberty Global, Sirius XM, Synchrony Financial, Teva Pharmaceuticals, and Verisign.

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The company only made a few stock purchases in the period. It boosted its stake in regional bank PNC by 6%, and surprisingly raised its stakes in two of the "big four" airlines before dumping them all in April.

Berkshire's stock sales, coupled with the coronavirus sell-off, meant the total value of its stock portfolio tumbled by 27% in the first quarter, from about $242 billion to $176 billion.

The SEC filing confirmed Buffett's comments at Berkshire's annual meeting this month, where he signaled the company has been relatively inactive.

Berkshire's first-quarter earnings revealed it made just $1.8 billion in net stock purchases in the period, surprising many people who expected Buffett to deploy the group's massive cash pile to buy stocks during the market meltdown.

Moreover, the company netted about $6.1 billion from stock sales in April after ditching the airlines.

Read more: Buy these 13 tech stocks that are abnormally disconnected from Wall Street's expectations for profit growth and poised to rocket higher, Credit Suisse says

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Morgan Stanley just published a comprehensive guide to utility investing — and handpicks 12 energy stocks to buy now

Sat, 05/16/2020 - 7:07am

  • Electricity demand is projected to fall by 5% this year in the wake of the coronavirus pandemic.
  • Coronavirus has caused near-term volatility among utility stocks, but Morgan Stanley says investors should look through the noise. 
  • The bank recommends investing in utility stocks that are low-risk and undervalued or high-risk and "deeply undervalued." 
  • It lays out four drivers of outperformance including a "second wave" of renewable energy that promises to wipe out many of the country's coal plants.
  • Visit Markets Insider to view the latest on oil prices.

Utilities have long been considered safe havens for investors. They provide essential products like electricity and gas — which people need even in a downturn — and typically they offer high dividends. 

But what happens when demand for electricity drops off? 

In the wake of a pandemic that closed large swaths of the country, US demand for electricity was down as much as 14% in some cities last month.

For the year, analysts at Morgan Stanley led by Stephen Byrd expect power demand to be down by about 5% overall. For the commercial sector, that number is closer to 11%.

Click here to subscribe to Power Line, Business Insider's weekly clean-energy newsletter.

But that doesn't mean investors should start ditching utility stocks, Byrd says.

"We believe the long-term earnings power, and growth potential, for US utilities is unchanged," his team said in a note published Thursday. "We believe investors should 'look through the noise' of COVID-19." 

In the note, Byrd's team laid out what they think will drive outperformance among energy utilities in the long term — and which ones will benefit most as a result. 

A 'second wave' of renewable energy promises to give utilities a boost

Renewable energy has become so cheap that it's putting coal power plants across the country at risk. In fact, as many as a third of the coal facilities across the US will become "economically at risk" over the next decade, Byrd's team said.

That's good news for the average customer, they added. Energy users across the country could save more than $3 billion collectively per year, the bank estimates, if utilities swap out coal power plants with cheaper renewable energy sources, such as solar. 

It will also benefit the utilities themselves. A so-called "second wave" of renewable energy growth can create a triple benefit for utilities, which consists of higher earnings per share, lower customer bills, and "much lower carbon emissions," Byrd's team said.

Morgan Stanley says the biggest winners are NextEra Energy (NEE), AES Corp. (AES), American Electric Power Company (AEP), Xcel Energy (XEL), Pinnacle West Capital Corporation (PNW), Dominion Energy (D), Duke Energy (DUK), and Ameren (AEE). 

The analysts also said they see "a surprisingly attractive opportunity" for retail electricity providers NRG Energy (NRG) and Vistra Energy (VST) "to substitute lower-cost renewables in Texas for their higher-cost fossil generation output, improving overall profitability." 

All utilities are benefitting from a 'constructive regulatory environment,' but a handful are out in front

The Federal Energy Regulatory Commission (FERC), which regulates the utility industry, has shown continued support for "transmission returns," the analysts said.

The utilities that will benefit most from what they call a "constructive regulatory environment" include FirstEnergy (FE), Southern Co (SO), NextEra, Dominion, Entergy (ETR), CMS Energy (CMS), DTE Energy (DTE), Ameren, Xcel, and Atmos Energy (ATO). 

Meanwhile, some states including California, New York, New Jersey, and Arizona have a tougher regulatory climate, they said. And that could present challenges for the following utilities: PG&E (PCG), Sempra Energy (SRE), Edison International (EIX), Consolidated Edison (ED), South Jersey Industries (SJI), Public Service Enterprise Group (PEG), and Pinnacle West. 

Be wary of utilities with high-risk projects

"We remain cautious on utilities involved in major projects that could face risks of cost overruns, permitting delays/rejection risk, and risk of legal challenges," the analysts said. 

The New Jersey utility South Jersey Industries faces the greatest risk, due to its PennEast pipeline project, they said. 

Byrd's team also believes that the Atlantic Coast Pipeline — a Dominion Energy and Duke Energy project, which is set to run from West Virginia to North Carolina — "will not move forward due to legal challenges." 

However, the team notes that "little to no value for this project is embedded" in stocks for Dominion Energy and Duke Energy.

Finally, the analysts said there's a risk of cost overruns and schedule delays for Southern Co.'s Vogtle nuclear project, but those risks are already reflected in the company's stock. 

Wildfire and hurricane seasons make some utilities less favorable

The analysts point to two major risks on the horizon: wildfire season in California and hurricane season in the southeast and Gulf region. 

Legislation in California that provides for a wildfire fund will help reduce the risk to shareholders, they said, but they continue to "see such risk as very meaningful." The potentially impacted utilities are PG&E, Sempra, and Edison International.

"One scenario we are concerned about: Additional fires cause the depletion of the utility-wide wildfire fund, followed by a requirement that the fund be replenished in part with shareholder capital," the analysts said. 

Recovery of hurricane costs in the south and southeast, on the other hand, is "highly likely," they said — good news for Duke Energy, Southern Co., NextEra Energy, and Entergy. 

"But we are concerned that, if hurricane costs rise, the impact to customer bills might 'crowd out' utility capex, which could reduce the [earnings per share] growth outlook for these utilities." 

Morgan Stanley's top utility picks

In the note, Byrd's team writes that the bank recommends a "barbell" approach to investing in utility stocks.

That means owning low-risk, undervalued utilities including American Electric Power Company and FirstEnergy and higher-risk, "deeply undervalued stocks with solid fundamentals including AES Corp., Exelon (EXC), and Public Service Enterprise Group.

Morgan Stanley also says the retail electricity providers NRG Energy and Vistra Energy also screen "highly attractive," owing to "resilience to COVID-19 impacts, stability provided by large retail energy marketing businesses, low leverage, and very high free cash flow available to shareholders." 

The bank also favors a handful of stocks that are equal-weight — meaning, the analysts have a neutral outlook on the stock. Those are Algonquin Power & Utilities (AQN), Duke Energy, Edison International, DTE Energy, and Sempra Energy. 

And finally, the bank lists a handful of stocks to avoid: Consolidated Edison, Southern Co., ONE Gas (OGS), Eversource Energy (ES), Xcel Energy, Spire (SR), and South Jersey Industries.

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A Gmail scammer tried to impersonate a four-star US Army general to catfish a married woman

Fri, 05/15/2020 - 10:22pm

  • Gmail users posing as US Army Gen. Paul Nakasone, chief of US Cyber Command chief the National Security Agency, sent flirty messages to women, according to a CyberScoop report.
  • The actual Nakasone is married with children, a family that he affectionately calls "Team Nakasone."
  • Catfishing attempts from people posing as US military service members are not unheard of, but it is still unusual for someone to impersonate a four-star general still in the military.
  • When CyberScoop and the woman confronted the account, they received an unlikely response: "I am sending my troops to get you, I will also make a contact for the FBI to get you."
  • Visit Business Insider's homepage for more stories.

Gmail users posing as US Army Gen. Paul Nakasone, chief of US Cyber Command chief the National Security Agency, sent flirty messages to women and attempted to induce them to install Google Hangouts, according to a CyberScoop report on Friday.

Catfishing attempts from people posing as US military service members are not unheard of, but it is still unusual for someone to boldly impersonate a four-star general still in the military.

According to CyberScoop, the correspondence began after a New York City-based woman named Susan received Facebook messages from someone pretending to be US Transportation Command chief, US Army Gen. Steve Lyons.

The account belonging to the purported Lyons commented on Susan's public Facebook post, and she later messaged him a request for him and his soldiers to contact elderly residents at a health care facility where she worked, CyberScoop reported. The Facebook account pretending to be Lyons included several photos of the actual general.

Susan and the fake Lyons sent messages between each other, but his account suddenly tried to coax her to send an email to Nakasone, who "was a widow and ... needed some company," an Susan reportedly recalled.

The actual Nakasone is married with children, a family that he affectionately calls "Team Nakasone."

Susan gave the fake Lyons her email, and she later received another Gmail email from a fake Nakasone. The fake Nakasone reportedly claimed he was deployed to Syria and was on patrols and doing "some paperwork," the former task being highly unusual for the real Nakasone's pay-grade.

The fake account also sent religious messages and requests for her to download Google Hangouts, which was met with questions from Susan. The purported general claimed he wanted to use the chat application because "rebels" and the Taliban were trying to "dent my image."

Susan, who informed CyberScoop of the incident, pressed the fake account for proof of identity, even posing a technical question about the legalities of warfare. The fake account replied by copy-and-pasting its response from a study by the Harvard National Security Journal published in 2011.

When CyberScoop and Susan confronted the account, they received an unlikely response: "I am sending my troops to get you, I will also make a contact for the FBI to get you."

Facebook has since removed the fake Lyons account after being informed by CyberScoop.

The US military regularly warns service members of romantic scams, particularly when troops were deployed overseas during Operation Iraqi Freedom and Operation Enduring Freedom.

The US Army Criminal Investigation Command, the service's law enforcement body, says there are numerous "red flags," which include:

  • A general officer will not be a member of an internet dating site.
  • Soldiers are not charged money or taxes to secure communications or leave.
  • Soldiers do not need permission to get married.
  • Deployed Soldiers do not find large sums of money and do not need your help to get that money out of the country.

In October 2019, two US Army reservists were arrested after they were accused of attempting to receive $3 million from an operation that included romantic scams aimed at elderly women, according to The Army Times. In the federal complaint, a 67-year-old widow from North Carolina was said to have been contacted by a man who claimed to be an engineer and was unable to access his bank account in the Philippines. The woman sent $75,000 to the man, who claimed he would pay her back with interest.

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Jack Dorsey just unveiled where he's donated more than $87 million of his pledged $1 billion towards COVID-19 relief

Fri, 05/15/2020 - 8:54pm

  • Twitter CEO Jack Dorsey has donated over $87 million towards his COVID-19 relief pledge. 
  • His donations have ranged across a number of causes from stopping domestic violence, to giving equal access to the internet for students. 
  • Visit Business Insider's homepage for more stories.

Twitter CEO Jack Dorsey announced last month that he was donating $1 billion of his Square equity to COVID-19 relief, and so far he's dispersed over $87 million. 

Dorsey created a new charity fund called Start Small LLC, which will initially focus on relief efforts to help with the impact of the coronavirus pandemic. Dorsey estimated that the fund is around 28% of his total wealth. 

The Twitter CEO released a spreadsheet, which so far only shows $73 million in donations, accounting for how much and to where donations are being made. According to the spreadsheet, Dorsey has made contributions to organizations tackling domestic violence due to the pandemic, HIV/AIDS, refugees, advocacy for prisoners, among many others. 

#startsmall is up to $87.8M in disbursements. Most are in the tracking sheet, some in process for next week. Interested in helping? All these are incredible and impactful orgs...find one that resonates with you. And now a thread on 6 new grants...

— jack (@jack) May 15, 2020

However, in a tweet, Dorsey added that there are several initiatives that have not been added to the spreadsheet yet. 

Dorsey has so far donated over $1.3 million to two organizations that will screen for HIV as well as address how the current pandemic is impacting HIV in marginalized communities. 

"Funds will support the Elton John AIDS Foundation (EJAF) COVID-19 Emergency Fund to support EJAF frontline partners to respond to the pandemic and its' effects on HIV prevention and care for the most marginalized communities," Dorsey's spreadsheet wrote. 

Experts have worried efforts to limit the spread of and treat infectious diseases like HIV could be significantly reduced due to the pandemic. 

Tolbert Nyenswah, a research associate at Johns Hopkins University, previously told Business Insider that in countries where patients rely on clinics for medication, a lack of personal protective equipment means entire facilities that many rely on could be shut down if one hospital worker gets sicks. 

That leaves people dealing with infectious diseases at risk. "This will have longtime consequences for decades to come," Nyenswah said

Domestic violence has also increased as more people were sheltering in place. Business Insider previously reported that calls to hotlines in major cities increased during the lockdown. Dorsey is funding multiple initiatives to address the concern totaling more than $2.2 million. 

He's also invested in organizations that provide necessary food for people in need, providing support for the homeless, mental health initiatives, as well as $10 million into the Oakland School Fund to close the educational gap between students who don't access to the internet and those who do. 

According to The San Francisco Chronicle, officials in Oakland launched the initiative on Thursday to raise $12.5 million for 25,000 laptops and internet hotspots to families in the city. In a tweet Dorsey' wrote that he saw the initiative and funded it "immediately."

"$10mm to give EVERY single child in Oakland access to a laptop and internet in their homes, closing the digital divide," he wrote on Twitter.

The Chronicle added that 50,000 students in the cities public school system "are disconnected or under-connected from technology at home."

Here's a list of all of Dorsey's contributions so far:
  • Mayor's Fund LA-$2,100,000.00

  • Direct Relief-$2,000,000.00

  • Masks For The People-$1,000,000.00

  • GiveDirectly-$333,333.00

  • New York City's Mayor's Office to End Domestic and Gender-Based Violence-$161,815.00

  • Covenant House (New Orleans)-$167,000.00

  • World Central Kitchen (New Orleans)-$333,000.00

  • Second Harvest Food Bank of Greater New Orleans & Acadiana-$333,000.00

  • Total Community Action-$167,000.00

  • Médecins Sans Frontières (MSF)-$333,000.00

  • Hispanic Federation Non-Profit Emergency Assistance Fund of Puerto Rico-$167,000.00

  • The Elizabeth Taylor AIDS Foundation / GAIA's Community-Based HIV Testing Services-$33,000.00

  • Direct Relief-$26,667.00

  • Team Humanity-$13,333.00

  • CDE Foundation-$1,000,000.00

  • Hospitality Helps-$100,000.00

  • Indiana University Foundation-$25,000.00

  • UCSF Foundation-$300,000.00

  • Share Our Strength (No Kid Hungry)-$207,500.00

  • World Central Kitchen-$207,500.00

  • UCLA Foundation-$415,000.00

  • NAMI: National-$41,500.00

  • NAMI: Greater Houston-$124,500.00

  • NAMI: New Orleans-$83,000.00

  • NAMI: New York-$83,000.00

  • NAMI: Metro (Detroit)-$83,000.00

  • Matthew 25: Ministries-$830,000.00

  • Bread of Life, Inc.-$830,000.00

  • Dia de la Mujer Latina-$415,000.00

  • Food Bank Council of Michigan-$297,180.00

  • The Bail Project, Inc.-$25,000.00

  • Community Foundation of Greater Flint-$425,000.00

  • Freedom House-$50,000.00

  • Center for Popular Democracy Action Fund-$125,000.00

  • Wayne Metropolitan Community Action Agency-$500,000.00

  • Southwest Counseling Solutions-$79,000.00

  • DigDeep - Navajo Water Project-$1,000,000.00

  • Community Association of Big Sur-$100,000.00

  • CORE: Community Organized Relief Effort-$10,000,000.00

  • Give2SF-$15,000,000.00

  • Elton John AIDS Foundation-$1,000,000.00

  • Oakland Public Education Fund-$10,000,000.00

  • Project 100=$10,000,000.00

  • Live In Peace-$530,000.00

  • CommonLit-$600,000.00

  • Mayvenn-$500,000.00

  • Think of Us -$450,000.00

  • Kakenya's Dream -$720,000.00

  • REFORM Alliance - $10,000,000.00

Dorsey said after that after COVID-19 is contained, his charity will focus on funding girls' health and education, as well as universal basic income, Business Insider previously reported. 

"Why UBI and girl's health and education? I believe they represent the best long-term solutions to the existential problems facing the world," Dorsey said in a follow-up tweet. "UBI is a great idea needing experimentation. Girl's health and education is critical to balance."

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US stocks edge higher as continued oil rally offsets weak retail-sales data

Fri, 05/15/2020 - 4:05pm

  • US equities edged higher on Friday as a continued oil-price rally outweighed jarring retail-sales data and intensifying US-China trade tensions.
  • West Texas Intermediate crude futures climbed 7.3% on Friday, capping off a roughly 19% weekly gain for the commodity.
  • Consumer spending tumbled by an unprecedented 16.4% in April, nearly double the record contraction in March, the Commerce Department announced.
  • The Trump administration said on Friday that it aimed to block semiconductor shipments to Huawei Technologies. China's state media fired back, saying the country would "restrict or investigate" US tech firms if such a policy were implemented.
  • Watch major indexes update live here.

US stocks edged higher on Friday as a continued rally in oil prices offset dour retail-sales data and escalating tensions between the US and China.

Consumer spending sank by an unprecedented 16.4% in April, the Commerce Department announced. The figure was nearly double the record contraction of 8.3% in March. The decline was starker than economists expected; the median estimate compiled by Bloomberg was a 12% drop.

Here's where US indexes stood at the 4 p.m. ET market close on Friday:

Read more: Buy these 13 tech stocks that are abnormally disconnected from Wall Street's expectations for profit growth and poised to rocket higher, Credit Suisse says

The market opened about 1% lower before steadily crawling upward, notching minor gains across all three major indexes.

Equities declined in early trading as dueling remarks between the Trump administration and China revived trade stresses. The White House on Friday moved to block shipments of semiconductors to Huawei Technologies, saying that such a policy "cuts off Huawei's efforts to undermine US export controls."

China fired back, with the editor-in-chief of the state-run Global Times newspaper tweeting that the country would "restrict or investigate US companies such as Qualcomm, Cisco and Apple" if the US blocked Huawei's supply chain.

Semiconductor stocks including Qualcomm and AMD slid more than 2% on the news in early trading.

Read more: A 20-year hedge fund vet shares the 3-part checklist that guides every investment decision he makes — and breaks down a stock pick he thinks could increase 50 to 100 times in his lifetime

JCPenney stood out as one of the day's biggest winners, surging as much as 59% after making a last-minute interest payment. The company had reportedly been considering bankruptcy and avoided defaulting on its debt with the Friday payment.

West Texas Intermediate crude oil gained as much as 8.6%, to $29.92 per barrel. The US commodity rose roughly 19% for the week, driven by widespread production cuts and signs of demand creeping back into the struggling market. Brent crude, oil's international benchmark, rose 5.3%, to $32.78 per barrel at intraday highs.

Friday's tepid session followed a 377-point gain for the Dow on Thursday. Surging bank stocks pulled indexes higher, overshadowing bleak labor-market data. Weekly jobless claims reached 3 million last week, bringing the metric's eight-week total to more than 36 million. Though the latest update was the sixth straight decline for weekly claims, it still dwarfed average readings.

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As more consumers shop online, the need for fast, secure, and convenient payments is more important than ever before. Here's what Visa is doing to help.

Fri, 05/15/2020 - 3:00pm

Long before the effects of COVID-19 accelerated a global shift to digital for consumers and merchants, consumer spend was rapidly evolving from physical to digital[1]. In our "new normal," online shopping has already increased 35% in the US alone[2]. Which is why now more than ever, Visa is focused on helping merchants by providing them with an easy way for even more online shoppers to checkout quickly and securely.

Continued momentum with new ecommerce partners

To scale merchant acceptance, Visa is expanding its Digital Commerce Program for Payment Service Providers, Gateways, and Acquirers by adding 27 new partners. As part of the program, Visa works with the acceptance ecosystem to create digital terminals, bringing the same ease of paying in person to the digital space for merchants and cardholders. Our 27 new partners include Adyen, Aurus, Bambora, BlueSnap, Cardknox, CyberSource, Dalenys, eGHL, HST, iVeri, Moneris Solutions Corporation, NA Bancard, Omise, PayPlug, and WalletDoc, among others.

Visa and its partners connect more than 61 million merchant locations*, placing us in a unique position to help broaden our digital capabilities globally. Last year, Visa launched a new click to pay experience, built on the EMVCo® Secure Remote Commerce (SRC) specification. This click to pay experience eliminates passwords and the need to manually type card details and other information necessary to complete an ecommerce transaction once a cardholder has enrolled.  While the new, interoperable checkout solution supports multiple card brands, online shoppers who enable their cards can use their Visa credit, debit, or reloadable prepaid cards to pay when they see the click to pay icon at participating merchant sites that accept Visa.

Visa has successfully migrated more than 10,000 online merchants to the click to pay experience in the US since January and is proud of the continued momentum. Now, more merchants and consumers in the US can benefit from a streamlined payment experience — either through an integrated experience within a merchant checkout page or through the click to pay button for consumers.

Digital platform partnerships

To further elevate the capabilities of digital payment experiences, Visa is partnering with Mozilla to deliver safe, secure, and widely available online payment capabilities for Firefox users. Firefox, brought to you by Mozilla, will be the first web browser to adopt click to pay with Visa as an extension of their web-based payment capabilities.

Similarly, Visa will continue to work with the World Wide Web Consortium to support standardization of our approach on web browser integrations for click to pay with Visa so that the security options provided by SRC can reach web users around the globe.

In an effort to further improve security for cardholders and the overall ecosystem, other browser players are evaluating secure remote commerce and the possibility of leveraging tokenization technology to power their PAN-based form-fill experience.

The time for tokens

A critical part of click to pay's design incorporates an extra layer of security through interoperability with the tokenization standard. Tokenization replaces sensitive payment information with a unique identifier, or "token," protecting the underlying sensitive payment information. The click to pay feature can also help boost authorization rates and reduce fraud rates when used with Visa Token Service, which was developed to create secure environments to help accelerate innovation in ecommerce and mobile payments. Visa Token Service recently added 28 new partners to further strengthen digital payment security globally. The latest lineup of partners will help make digital transactions more secure by tokenizing both one-time and recurring payments made with Visa credentials.

"Keeping cardholder data secure while ensuring our merchants have peace of mind when using Moneris Vault for card-on-file requirements has always been our priority," said Patrick Diab, chief product officer at Moneris Solutions Corporation. "The Visa Token Service increases the layers of security within Moneris Vault. The ability to request a token from Visa and then provide that within a Moneris token for merchant authorization, allows merchants to benefit from the combined security and value added services offered by Moneris and Visa."

As the impact of COVID-19 continues to reshape seemingly all aspects of daily life and business, Visa remains committed to enhancing the future of digital commerce. With the extra layer of security and support of tokenization and strategic partnerships, the click to pay experience continues to provide consistency and fewer steps at checkout. By using these new digital standards for online payments, Visa is here to make couch commerce — a trend as ubiquitous as video conferencing — as convenient as shopping in your favorite local business.

Learn more about how Visa is helping consumers shift to digital-first commerce.

This post was created by Visa with Insider Studios.

*Data provided to Visa by acquiring financial institutions and other third parties.

1. Central Bank data; Oxford Economics; Euromonitor Merchant Segment Study 2018; eMarketer; Comscore.
2. PYMNTS 2020 Remote Payments Study, April 2020


SEE ALSO: Demand for digital transactions is on the rise. Here's how Visa's Fast Track program is helping fintechs handle this new environment.

SEE ALSO: 6 things every business should know about operating in the 'new normal' of COVID-19

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These 6 'fallen angel' companies had their debt ratings slashed to junk in April (RCL, HI, SVC)

Fri, 05/15/2020 - 1:53pm

  • As the coronavirus ripples through the economy, a record number of companies are on watch for having their credit ratings downgraded.
  • In finance, a "fallen angel" is a company that had its debt rating reduced to junk status due to a deteriorating financial position. 
  • A lower credit rating means a higher interest rate expected by investors, which in effect increases the cost for a company to raise cash via debt.
  • Here are six "fallen angels" that had their debt rating reduced to junk status in the month of April.
  • Visit Business Insider's homepage for more stories.

As the impact from the coronavirus pandemic spreads through the economy, a record number of companies are on watch for potentially becoming a "fallen angel," according to a report from S&P Global published on Thursday.

In finance, a "fallen angel" is a company that had its debt rating reduced to junk status due to a deteriorating financial position. 

A lower credit rating means a higher interest rate is expected by investors, which in effect increases the cost for a company to raise cash via debt. 

According to S&P Global, "The number of potential fallen angels has risen to a record 111 issuers globally, compared with 96 in our last report."

High-profile companies that had their debt ratings downgraded to junk prior to April include Ford, Macy's, Delta Air Lines, and Kraft Heinz.

Here are six "fallen angels" that had their debt ratings reduced to junk status in the month of April.

Read more: 10 big money managers shared with us their favorite hidden gems in the market, and the contrarian trades they're making amid the pandemic

1. Royal Caribbean Cruises Ltd.

  • Date of downgrade: April 2
  • Old rating: BBB-
  • New rating: BB
  • Rated debt affected: $1.75 billion

2. Service Properties Trust

  • Date of downgrade: April 2
  • Old rating: BBB-
  • New rating: BB+
  • Rated debt affected: $5.35 billion

3. ZF Friedrichshafen

  • Date of downgrade: April 3
  • Old rating: BBB-
  • New rating: BB+
  • Rated debt affected: $7.03 billion

4. Renault SA

  • Date of downgrade: April 9
  • Old rating: BBB-
  • New rating: BB+
  • Rated debt affected: $24.9 billion

5. Rockies Express Pipeline LLC

  • Date of downgrade: April 10
  • Old rating: BBB-
  • New rating: BB+
  • Rated debt affected: $2.05 billion

6. Hillenbrand Inc.

  • Date of downgrade: April 20
  • Old rating: BBB-
  • New rating: BB+
  • Rated debt affected: $1.25 billion

JCPenney skyrockets 59% after dodging debt default with a last-minute interest payment (JCP)

Fri, 05/15/2020 - 1:53pm

  • JCPenney stock soared as much as 59% on Friday after the company, which has reportedly been considering bankruptcy, avoided defaulting on its debt with a $17 million interest payment.
  • Several retail giants, including J. Crew and Neiman Marcus, have already filed for bankruptcy protection as the coronavirus pandemic wipes out demand.
  • Trading of JCPenney shares was halted after the market open. Its stock has since relinquished some gains.
  • Watch JCPenney trade live here.

JCPenney shares spiked as much as 59% on Friday after the retailer made a $17 million interest payment to avoid default.

The company was scheduled to make an interest payment on May 7 and used a five-business-day grace period to consider alternatives, a Friday regulatory filing said. JCPenney has reportedly been considering bankruptcy, and the filing said it continued to weigh "strategic alternatives."

Trading of the retailer's stock was halted at the market open before shares soared as high as $0.31. Shares later pared some gains and traded at about $0.25 as of 12:15 p.m. ET.

Read more: Buy these 13 tech stocks that are abnormally disconnected from Wall Street's expectations for profit growth and poised to rocket higher, Credit Suisse says

Several retailers have filed for bankruptcy protection in recent weeks as the coronavirus pandemic saps demand. J. Crew announced on May 4 that it filed to begin bankruptcy proceedings. Neiman Marcus filed for bankruptcy three days later, citing the pandemic and lofty debts.

Friday's interest payment doesn't get JCPenney out of the woods. Prolonged lockdowns still weigh on its revenue stream, and the company is still in the middle of a major overhaul — JCPenney said in February that it hired six executives to lead a turnaround.

The company's market cap is down more than 99% from its late-1990s peak as e-commerce's rise eats away at the physical retail sector.

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Citadel Securities has handled 4 IPOs without setting foot on the NYSE floor. Here's an inside look at how the firm went remote.

Fri, 05/15/2020 - 1:31pm

  • Citadel Securities has handled nine of the 10 initial public offerings held at the New York Stock Exchange since the temporary closure of the floor on March 23. 
  • The group that handled the process, known as designated market makers, completely revamped its framework in order to do it entirely remotely. 
  • Communication was key. Citadel Securities sent more than 70,000 emails to listed companies in March. And bridge calls were set up between all the parties involved in public debuts.
  • As a result, Citadel Securities was able to execute two remote IPOs on the same day, in addition to a secondary listing, raising just shy of $1 billion via the public markets.
  • While all previous IPOs Citadel Securities handled during the closure were special purpose acquisition vehicles, Friday will be the first remote IPO of an operating company — ADC Therapeutics.
  • Click here for more BI Prime stories.

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No trading floor? No problem.

Citadel Securities' designated market makers, a group that typically operates out of the New York Stock Exchange's trading floor, has managed to keep business up despite the temporary closure of the iconic trading floor for the past two months. 

The electronic market maker has handled nine of the 10 initial public offerings held at NYSE since the temporary closure of the floor on March 23, including four of which were managed entirely remote. In addition to bringing those companies to the public market, Citadel Securities also handled two secondary listings during that time. 

In total, the firm has raised more than $3.7 billion via the public markets, including nearly $1 billion in a single day.

All of it was done via a framework that was essentially set up on the fly.

"We're building up processes around a capability that didn't exist eight weeks ago." Peter Giacchi, head of DMM floor trading for Citadel Securities, told Business Insider. "We had to be willing to think outside the box."

Read more: A UBS exec lays out the benefits and pain points of all-electronic trading after coronavirus concerns cleared the floor at NYSE

During a typical IPO at NYSE, DMMs run an auction to set the opening price for the stock, gauging interest from traders on the floor while communicating with the investment banks backing the listing. The closure of NYSE's trading floor forced Citadel Securities' DMMs to reconsider how it would operate.

While trading firms weren't allowed on the floor, DMMs could work out of the trading floor for IPOs and secondary listings. However, with uncertainty around the potential for lawmakers to enact even stricter rules that would limit DMMs access, and in a push to reduce travel required by employees, Giacchi said the decision was made to create a framework for conducting an IPO entirely remote.

Giacchi said it was important to make sure public investors, underwriters and the companies being listed were all represented properly under the new policy. 

Transparency was a key consideration, he added. Without the benefit of having everyone on the floor together, Citadel Securities had to ensure information was streamlined, with data continuing to go out to the Street in real-time to keep everyone abreast of the situation.

That point remained a top priority for the entire business, not just during IPOs. In March, when volatility was at its highest, Citadel Securities sent more than 70,000 emails to listed companies to provide market updates. 

When it came to IPOs, communication between the various parties was also important with bridge calls set up between Citadel Securities and NYSE, and the underwriters and the exchange.

"The [business continuity plan] environment has created a need for new and innovative ways to communicate without a significant human presence on the trading floor," Giacchi said. "A big part of this has involved using technology to facilitate the efficient flow of information between the NYSE, the DMMs and the underwriters."  

After testing from multiple locations, Giacchi said the firm was ready for its first remote IPO on May 1 (Fortress Value Acquisition Corp.). In addition to the lead DMM, who was connected to NYSE's system via a VPN from his home, a second, back-up DMM was also ready. Giacchi, who was positioned on NYSE's trading floor, represented the final backstop. 

With the successful execution of the IPO, Citadel Securities upped the ante, handling two remote listings — Sustainable Opportunities Acquisition Corp. and Live Oak Acquisition Corp. — on the same day, May 6. That was in addition to a secondary listing done on the trading floor for Norwegian Cruise Line Holdings.

Together, the trio raised just shy of a billion dollars via the public markets.

Thursday marked another successful remote IPO with the listing of GigCapital3. And while all previous IPOs Citadel Securities has handled during the floor closure were special purpose acquisition vehicles, Friday will be the first remote IPO of an operating company — ADC Therapeutics SA — which will also be done by Citadel Securities, according to a source familiar with the situation. 

On Thursday, NYSE president Stacey Cunningham announced the exchange would slowly begin to open its trading floor starting on May 26. In an op-ed in The Wall Street Journal, Cunningham said DMMs will "largely" continue to do their work away from the floor. 

"During our floor closure, we demonstrated that these larger companies can operate effectively with remote connectivity," Cunningham wrote.

Joe Mecane, Citadel Securities head of execution services at Citadel Securities, said the entire experience served as a lesson in the power of using tech to evolve how business is done. 

"In the environment we're in, when many companies need to raise cash, it's especially important for us to have a flawless execution," he added. "All of that points to how we're continuing to leverage technology in new ways to help investors and Main Street." 

Read more: NYSE's COO explains why the exchange is committed to reopening its iconic trading floor even as Wall Street quickly adapts to remote work

SEE ALSO: NYSE's COO explains why the exchange is committed to reopening its iconic trading floor even as Wall Street quickly adapts to remote work

SEE ALSO: NYSE's COO explains why the exchange is committed to reopening its iconic trading floor even as Wall Street quickly adapts to remote work

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Goldman Sachs is going through a huge transformation under CEO David Solomon

Fri, 05/15/2020 - 1:16pm

  • The storied investment bank is seeing leadership shakeups under CEO David Solomon and a slew of partner departures. 
  • Goldman has been moving away from high-risk businesses like trading and is making pushes into more stable areas like consumer lending, wealth management, and transaction banking. 
  • There have been big cultural changes, too. Solomon is looking to create a more transparent workplace, while new tech execs are taking cues from Silicon Valley heavy-hitters. 
  • At Business Insider, we are closely tracking the latest developments at Goldman. You can read all of our Goldman coverage on BI Prime.

Storied Wall Street bank Goldman Sachs is going through some massive changes under CEO David Solomon.

It's taken big steps involving transparency and inclusion to change up its culture. It has seen a slew of partner departures — many in the securities division. And it's making big pushes into businesses like wealth management and transaction banking.  

The latest on people moves, wealth strategy Culture and talent Coronavirus response Consumer push, transaction banking, wealth management Technology Trading Alternatives Deals Investor day 2020 Careers   

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Bank of America raises $1 billion in a corporate bond offering to help health industry fight pandemic

Fri, 05/15/2020 - 1:05pm

  • Bank of America has priced a $1 billion corporate bond issue to help fight COVID-19.
  • A confidential source told Bloomberg on Thursday that the bank sold fix-to-floating rate notes to fund COVID-19 related social issues. 
  • Analysts at Moody's Investors Service are bracing for an uptick in sustainable investing this year due to the pandemic. 
  • Visit Business Insider's homepage for more stories.

Bank of America has priced a $1 billion corporate bond issue to help fight the coronavirus pandemic.

According to Bloomberg data, it is the first sale from a US financial institution that earmarks all funds raised to mitigating the pandemic. 

The bank sold fixed-to-floating rate notes to finance investments that aim to rectify social issues related to coronavirus, a confidential source who was not authorized to speak on the matter told Bloomberg.

The source said the bonds will generate a yield 1.30 percentage points higher than US Treasurys. 

Read more: Todd Ahlsten has dominated the market and his competitors for 2 decades. He lays out the 6 stock-picking decisions that reshaped his portfolio after the coronavirus meltdown.

Bloomberg data shows that borrowers have raised over $102.6 billion of debt this year in the fight against coronavirus. 

Bank of America's announcement follows similar measures by big players in other industries and countries. 

AXA Investment Managers said it has invested €230 million ($249 million) in COVID-19 bonds across portfolios on behalf of its parent group AXA Group and third-party clients. 

Read more: A fund manager who's doubled his competitors' returns for 15 years breaks down 2 stock picks for a market recovery - including the US airline that may benefit most from the crisis

At the end of March, pharmaceutical giant Pfizer announced the completion of a $1.25 billion 10-year sustainability bond paying interest of 2.625% semi-annually with a bond maturity date of April 1, 2030.

Moody's analysts are bracing for an uptick in sustainable finance investing given the pandemic. 

"Greater emphasis on social finance and sustainable development will likely be one of the lasting outcomes of the coronavirus crisis," Moody's said in a report in May. 

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Why Goldman Sachs, which has a $509 billion wealth business geared towards ultra-rich clients, is buying a small Virginia fintech for financial advisers and retail investors (GS)

Fri, 05/15/2020 - 12:52pm

  • Goldman Sachs is buying Folio Financial, a small custodian with $11 billion in client assets and financial-tech provider for independent financial advisers, in a deal expected to close next quarter. 
  • The combination underlines bulge-bracket firms' reach into the world of registered investment advisers (RIAs), a corner of the wealth management industry that has ballooned in recent years.
  • If the deal closes as they expect this year, Folio will operate under its global markets division, and the company's chief executive will join the firm as an advisory director. 
  • Visit BI Prime for more stories.

Goldman Sachs is diving deeper into the world of independent financial advice with its plan to buy Folio Financial, a small custody, financial-technology, and clearing company primarily serving registered investment advisers.

It's looking for exposure to clients who tend to be less wealthy than the super-rich crowd the New York investment bank has long served. On Thursday, Folio chief executive Steven Wallman said in a statement that the two firms started discussing a combination last year, and expect the deal to close in the third quarter of 2020.

Registered investment advisers, or RIAs, tend to be smaller, independent wealth management shops with lower account minimums than larger wealth advisory firms and private banking arms. Folio serves some 450 RIAs and has some $11 billion in assets under custody — a tiny player in the custodian business compared to giants like BNY Mellon's Pershing arm with $1.8 trillion in client assets. 

While the firms aren't disclosing the deal's value, typically companies would disclose to investors if an acquisition was worth more than $500 million, Reuters noted when it first reported the deal. A spokesperson for Goldman Sachs declined to comment on the deal's value, and Folio did not respond to a request for comment. 

With the deal, Goldman Sachs is reaching into a corner of the wealth management industry that has ballooned in recent years and become a formidable competitor to traditional wealth managers.

Assets under management in the independent RIA space grew at a compound annual growth rate of 10.1% between 2013 and 2018, according to the most data from industry research firm Cerulli Associates. Independent and hybrid RIA firms together managed some $4.8 trillion in assets through the end of 2018, according to Cerulli.

With new technology, setting up shop as an independent adviser has become easier than ever, and once-wirehouse advisers have pointed to discontent with compensation structures as one reason for going independent. 

The acquisition marks a clear play for the middle and smaller-tier segments of the wealth management marketplace over the high-net-worth base, said Michael Spellacy, senior managing director for capital markets at Accenture. The combination is also indicative of more deals on the way. 

"You should, and can, expect a wave of consolidation and structural change across the wealth management landscape," Spellacy, who has worked with Folio in the past and declined to comment on aspects of the deal directly, said in a phone interview on Thursday.

Mike Foy, the senior director of the wealth management practice at J.D. Power, said the deal appears to be a move to diversify Goldman's business. In recent years, many financial services firms and even startup robo-advisers have aimed to become one-stop shops for clients, tacking on new services catering to their overall financial wellbeing. 

"You could look at it as part of their core strategy of expanding their addressable market, down-market," Foy said in an interview with Business Insider.

Folio, based in the wealthy northern Virginia suburb of McLean, also provides technology and services for financial advisers and a self-directed trading business for retail investors, which it touted last year as a long-standing product when legacy brands like Charles Schwab started slashing commissions and talking about offering fractional shares.

Trying to 'capture' it all

For Goldman, the deal marks the second acquisition in the wealth arena in two years under chief executive David Solomon, who has been presiding over a period of change at the bank. It acquired the RIA United Capital last year, recently re-branding it as Goldman Sachs Personal Financial Management. It's unclear whether Folio could or would be able to custody that unit's assets.

The bank reorganized its business lines earlier this year and placed a new focus on wealth with its Consumer & Wealth Management division. Within its money-management operation, the firm groups clients in three main segments: the ultra-high-net-worth set, with more than $10 million in assets, the high-net-worth, with $1 million to $10 million in assets, and the mass-affluent space, with less than $1 million in investable assets. Before, there was no such distinct "mass-affluent" focus.

Goldman oversaw $509 billion in client assets as of March 31, according to its first-quarter earnings. 

"These are all very large markets, trillions of dollars in each," consumer and wealth management head Eric Lane said at the first-ever investor day earlier this year, according to a transcript on the platform Sentieo. "Small movements in our market share in any of them will drive significant revenue opportunity for Goldman Sachs. We have a plan to capture it."

With United Capital, Folio, and the Marcus consumer banking suite it's built, Goldman is trying to move beyond the mega-deals it's long financed and super-wealthy clients its long catered to. 

"The only firms that are going to add value are those that have scale, or serve a niche," Will Trout, global head of the wealth management research practice at Celent, a division at consultant Oliver Wyman, said in an interview.

The deal announced on Thursday has shades of rival New York investment bank Morgan Stanley's $13 billion E-Trade acquisition set to close later this year.

That will give Morgan Stanley a small foothold in the RIA space — though people familiar with that deal said the driving force was mainly the stock-plan administration and brokerage business, not the RIA capabilities — and opened it up to day-trading retail investors who have long flocked to E-Trade and could one day become lucrative wealth clients.

Folio has some 160 employees, and it's unclear who exactly will be taken on through the acquisition. And Goldman and Folio have been loosely connected before: in 2013, the bank led a $25 million round of funding for the fintech Motif, which shuttered last month. Last week, Folio acquired Motif's clients and assets, while Charles Schwab acquired Motif's technology and intellectual property.

If the deal closes as they expect this year, two-decade-old Folio will operate under its global markets business, and Wallman, Folio's chief executive, will join Goldman as an advisory director. 

"Make way for Steven Wallman, who at age 46 could join you in the annals of mass-market financial ground-breaking," the Wall Street Journal wrote in 2000 as Folio, then called FOLIO.fn, launched.

"Wallman's Internet-based brainchild is not likely to push the competition toward extinction," the Journal said, adding "if investors flock to FOLIO.fn the way venture capitalists have, the big firms might be tempted to chow down his company when it goes public."

SEE ALSO: Why Morgan Stanley, which has 15,000-plus financial advisers catering to the super-wealthy, is buying a discount broker known for its talking baby ads

SEE ALSO: Goldman Sachs just revealed a new wealth brand at its first-ever investor day. It shows how the bank is trying to reshape its strategy — and image.

SEE ALSO: UBS is rolling out the red carpet for ultra-rich people and family offices who want in on private-market deals

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Power Line: How coronavirus will permanently change the future of energy, and why cheap oil is not all to blame for the decline of the US shale industry

Fri, 05/15/2020 - 12:38pm

Welcome to Power Line, a weekly energy newsletter brought to you by Business Insider.

Here's what you need to know:

The unofficial start of summer is just over a week away! 

But unfortunately, summer is canceled. Not to mention, the window to take advantage of cheap gas for your road trip is closing fast. 

In Wisconsin — where gas was as low as 87 cents just weeks ago — the bottom is now up to a whopping $1.44. Who can even afford that?

Rising gas prices are just one sign that oil markets are starting to recover, in step with global oil demand. That's great news for an industry that faced one of the worst springs in history

Now we're starting to ask: What will the energy industry look like when the pandemic is in the rearview?

For starters, we asked a bunch of CEOs. 

CEOs from across the energy industry told us how the pandemic is transforming their companies

We had the pleasure of interviewing eight top energy execs — from BP's Susan Dio to Duke Energy's Lynn Good — about how the coronavirus will change their companies and the industry at large.

Theme 1: The transition to low-carbon energy remains at center stage even as majors slash their budgets. 2020 forecasts aside, the pandemic won't do much to slow it down. 

Theme 2: People are craving energy resilience, especially as wildfire and hurricane seasons draw near. That could give residential solar and infrastructure projects a boost. 

Here are a few of the comments that stood out to me. You can read all of them here

  • "California had one of the driest months of February in its history, and because of COVID-19, we've seen reports of fewer prescribed burns, which increases the risk of wildfires this fall," Sunrun's CEO Lynn Jurich said.
  • "We have a wire or a pipe connected to businesses in every county of the Lower Peninsula of Michigan," CMS Energy's CEO Patti Poppe said. "The question for us in the midterm is how will those businesses come back." 
  • "We are a little bit worried about the electrification of transportation right now because I think the transportation sector is suffering a lot," Energy Impact Partners' CEO Hans Kobler said. "Electric vehicle sales will be down 40%." 
What will 2040 look like? Here are 3 scenarios

I don't know what I'm eating for lunch or where I'll be living in two months, let alone what the world will look like in 20 years.

But if anyone is up for the task of predicting the future of energy, it's analysts at the research firm Wood Mackenzie. This week, they sketched out three paths that a recovery could take, and what each means for energy. 

"Full recovery": A coronavirus vaccine becomes available next year, and governments around the world pour money into spurring economic growth.

  • Oil demand returns to pre-pandemic levels of around 100 million barrels per day (bpd) in the 2020s and then reaches a peak of more than 110 million bpd by the mid-2030s.
  • Natural gas and cheap renewable energy sources would slowly replace coal, causing it to decline slightly by 2040.

"Go it alone": The virus is tough to defeat, trade and travel are restricted, and the world suffers from a long recession. 

  • Global demand for oil increases very little after an initial rebound.
  • "By 2030 it is barely any higher than was expected for 2020 if the pandemic had not hit," they said. 

"Greener growth": A short recession is followed by a strong rebound that includes government support for low-carbon energy. 

  • Oil demand wouldn't move much for the next decade or so and then decline steeply in the 2030s.
  • Most remarkably, "the combined share of oil, gas, and coal in total primary energy drops to 68% in 2040, down from 84% in 2019," the analysts said. 

The future for America's shale industry (is bleak)

Oil prices have rallied in recent weeks, but the US shale industry — once synonymous with American energy dominance — is not exactly celebrating.

As we reported earlier this week, its problems began well before the coronavirus pandemic took root. 

History lesson: In the last five years, US shale companies have failed to deliver investor returns and accrued billions of dollars of debt. 

  • Investors made a lot of money when they invested on "the dip" around 2009, when oil prices were low. 
  • Those investors helped fuel the fracking revolution of the 2010s, which supercharged America's oil output. 
  • An unintended consequence was that fracking brought M&A — the main source of capital gains for investors — to a near standstill over the following years. (I explain why here.)
  • So when investors once again backed US shale in the last downturn, beginning around 2014, they never saw returns. 

Where we are now: Of the 500 or so US oil and gas companies backed by private equity, about 400 of them don't have bids, according to an investor who's been tracking the industry for years. 

  • That means they'll be forced to go into what he called "blowdown" — diverting cash from production to investors, causing oil output to decline over time. 
  • US production could fall by as much as 4 million barrels of oil per day by the end of next year, the investor said. 

Where we are headed: "What you're seeing is the rapid shrinkage of the industry," he said. "A lot of companies are going to cease to exist."

Read more: '$500 billion in capital destroyed': How the US shale industry vaporized money even before the pandemic struck — and why the market meltdown is only hastening its decline, according to a top investor

3 big stories we didn't cover 
  • Renewables vs. coal. Renewable energy is on track to outpace coal this year for the first time ever, according to the US Energy Information Administration
  • Clean energy jobs. It's bad news. The clean-energy industry has lost almost 600,000 jobs, or 17% of the workforce, since March, according to a new report by BW Research. 
  • Big Oil's support for clean energy. It might be wavering in the near-term. "Oil giants' pace of clean energy deals has slowed greatly as oil prices have collapsed," Axios reports

That's it! 

Ps. Here's some hummus I made this week because a) pandemic, and b) I'm vegetarian and therefore I must love hummus. (I do.)

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NOW WATCH: Tax Day is now July 15 — this is what it's like to do your own taxes for the very first time

From stay-at-home dealmaking to virtual internships, here's how Wall Street is transforming

Fri, 05/15/2020 - 12:32pm

  • The coronavirus sent Wall Street banks scrambling to set up workers at home. 
  • The US is grappling with the economic consequences of the pandemic, which has roiled global markets and shut down much of the country.
  • Banks and other Wall Street players are rethinking tech and office space needs. 
  • Wall Street internships are going remote, and new full-time hires are being onboarded virtually. 
  • Here's a look at how financial institutions that dominate dealmaking, trading, and consumer banking are being shaped by the pandemic. 
  • Visit BI Prime for more Wall Street stories.

The global spread of coronavirus has pushed Wall Street into a new era with little warning. 

Bank executives, fund managers, and traders had to figure out how to keep employees and clients safe while also keeping their sprawling operations running with as little disruption as possible.

After making the transition to working from home, some firms are already considering how coronavirus will change the way they work in the long run.

Amid all this, Wall Street is as busy as ever. Business Insider is tracking how banks, private-equity firms, hedge funds, exchanges, and fintechs are all handling this new reality. See below to read the latest.

Virtual banking internships Wall Street culture in the era of remote work How Wall Street is thinking about a return to the office How banking and private equity made the switch How wealth managers are working with clients Exchanges & fintech firms

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NOW WATCH: How waste is dealt with on the world's largest cruise ship

Deflation is a bigger risk than inflation as Fed injects trillions into economy, BofA says

Fri, 05/15/2020 - 11:55am

  • The reflexive argument made by investors after the Fed injects trillions of dollars into the economy is to prepare for inflation, but Bank of America expects deflation, according to an analyst note published Friday morning.
  • The bank argued that the net impact of the COVID-19 crisis and the policy response from Congress and the Fed was deflationary.
  • "Core measures of inflation fell significantly in April and the weakness was broad-based across sectors," the bank noted.
  • Visit Business Insider's homepage for more stories.

When the Fed and Congress inject trillions of dollars into the economy, most investors' gut reaction is to prepare for a period of inflation, as easy money sloshes around the economy.

But Bank of America takes the other side of that thinking, and instead expects deflation, analysts explained in a note published Friday morning.

The bank said the "reflexive argument" being made now was also made coming out of the 2008-2009 recession, as many investors "pointed to the massive 'money' creation by the Fed and the huge fiscal stimulus."

Read more: A real-estate investor who generates $342,000 of annual cash flow shares his unique spin on a popular investment strategy that's helped land him 114 units

But when looking at core CPI, prices have historically fallen both during and after recessions. 

Based on the data so far, BofA is right.

In April, core CPI dropped 0.45%, marking the weakest data point since the index was created back in 1957.

That's on top of a 0.10% decline in March. A spike in prices for groceries was offset by a plunge in energy prices.

Another indicator of near-term deflation is a swift drop in producer prices, "with the headline measure down 1.5% over the two months and the core down 1.1%," BofA said. 

Additionally, the April NFIB survey of small businesses showed the share of firms raising their prices was at its lowest level since 2009.

While prices are clearly falling, household inflation expectations are rising, based on the University of Michigan's recent survey of consumers' five- to 10-year inflation expectations.

Influencing the discrepancy is perception. 

Read more: 10 big money managers shared with us their favorite hidden gems in the market, and the contrarian trades they're making amid the pandemic

"Items that are most in demand due to the shutdown - groceries, cleaning products, PPE etc. have risen in prices. Less visible [to consumers] are the numerous falling prices. For example, some people have been unable to pay their rent, pushing down the average paid price of housing services," BofA wrote.

Going forward, extreme price distortions due to the lockdown should subside, and the main driver of disflationary pressure will remain high levels of unemployment and unused productive capacity.

"The COVID crisis and the policy response to it are deflationary, and in the next couple of years outright deflation is a bigger risk than serious inflation," BofA concluded.

BofA isn't alone in expecting deflationary pressures to pick up in the future.

Billionaire investor Chamath Palihapitiya recently laid out his case for deflation and explained why he views bitcoin as the only investment vehicle to hedge against a future drop in consumer prices.

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NOW WATCH: What makes 'Parasite' so shocking is the twist that happens in a 10-minute sequence

Job openings in March fell to lowest level since 2017 in the earliest weeks of the coronavirus pandemic

Fri, 05/15/2020 - 11:45am

US job openings slumped on the last day of March as the impact of the coronavirus pandemic began to take hold. 

Available positions fell to 6.2 million in March from 7 million in February, according to the Job Opening and Labor Turnover Survey, or JOLTS, released by the Labor Department Friday. The median economist estimate was for a fall to 5.8 million, according to Bloomberg data. 

"The JOLTS data for March only captured part of the coronavirus shock, but the numbers released this morning are still astounding," Nick Bunker, an economist at Indeed, said in a Friday note. 

He continued: "Workers lost jobs at a horrifying rate. And back in March, the coronavirus shock was only being felt in the second half of the month."

It's the latest report to show just how much the coronavirus pandemic and country-wide shutdowns to contain the disease have divested the US labor market. Since mid-March,36.5 million Americans have filed for unemployment insurancece, a Thursday report showed. Last week's April jobs report showed that the US economy erased 20.5 million payrolls during the month, and the unemployment rate surged to 14.7%, the highest since the Great Depression. 

Read more: A 20-year hedge fund vet shares the 3-part checklist that guides every investment decision he makes — and breaks down a stock pick he thinks could increase 50 to 100 times in his lifetime

The month also ended a two-year streak where job openings outnumbered unemployed workers — at the end of March, there were 1.2 people for every open job, according to the report. 

 The rate of hires also decreased in March to 5.2 million from nearly 5.9 million in February. Separations surged to 14.5 million, a series high, led by a spike in layoffs. The largest increase in layoffs was seen in the accommodation and food services industry, which had 4.14 million during the month.  

Read more: Warren Buffett calls the prospect of negative interest rates the 'most interesting question I've seen in economics.' We had 5 financial experts weigh in on how they could impact the investing world as we know it.

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NOW WATCH: Pathologists debunk 13 coronavirus myths

Wall Street's most-photographed broker details his 47 days battling the coronavirus and transitioning to recovery: 'There is collateral damage'

Fri, 05/15/2020 - 11:43am

  • Peter Tuchman, considered the "most photographed man on Wall Street," detailed his battle with coronavirus in a recent Instagram post.
  • Tuchman, who contracted the virus on March 17, said it took him roughly 47 days to get over the Illness and he's now entering recovery stage, in a post on May 7. 
  • "There is collateral damage. As you can hear from my voice, there is some scarring going on in my left lung. There are some neurological problems. My wiring seems a little twisted, as a result of the virus." Tuchman said. 
  • Click here for more Wall Street stories.

One of the most recognizable faces on Wall Street detailed his battle with the novel coronavirus, which he says has left him with "collateral damage."

Peter Tuchman, a floor trader at the New York Stock Exchange who is considered the "most photographed man on Wall Street", said he is entering into recovery mode after a 47-day battle with the coronavirus, which he contracted on March 17

In a post to his personal Instagram on May 7, Tuchman said he tested positive for coronavirus antibodies and no longer had any aggressive symptoms. 

"It has been a long and arduous task in every possible way," Tuchman said. "There is collateral damage. As you can hear from my voice, there is some scarring going on in my left lung. There are some neurological problems. My wiring seems a little twisted, as a result of the virus."

Journey of a lifetime

WeWork's revenue growth rate was cut in half in Q1, as the company burned through nearly $500 million in 'free cash outflow'

Thu, 05/14/2020 - 7:04pm

  • WeWork's revenue totaled $1.1 billion last quarter, the office-space sharing company announced in an email to staff on Thursday.
  • The revenue growth rate of 45% marked a sharp slowdown from the more than 100% growth rates that WeWork regularly generated a year ago.
  • The company said its "free cash outflow" of $482 million was significantly less than during the final quarter of 2019.
  • In the email, the company's chief financial officer underscored flexibility as WeWork's advantage, echoing the CEO's comments on CNBC earlier this week. 
  • For more WeWork stories, click here.

WeWork's revenue growth rate slowed sharply in the first three months of the year and the company burned through hundreds of millions of dollars amid a pandemic that has caused workers to avoid offices and stay home.

The office-sharing startup, which was already facing major challenges to its business before the coronavirus outbreak, said in an email sent to employees on Thursday that its Q1 revenue totaled $1.1 billion, up 45% year-over-year. That's a significant slowdown from just one year ago, when WeWork was regularly doubling its topline each quarter.

"The world is navigating uncharted territory and this current climate is undoubtedly having an impact on every business," Chief Financial Officer Kimberly Ross wrote in the email. 

The company did not provide information on occupancy rates at its vast network of offices spread in cities across 38 countries. But it said that "memberships" increased 49% to 693,000.

The fact that WeWork's revenue is still growing — albeit at a much slower pace — amid the worst economic crisis in years may in itself count as good news. WeWork's Ross sought to portray the results as a positive, noting that quarterly revenue surpassed $1 billion for the first time.

While WeWork posted a "free cash outflow" of $482 million, Ross noted that the burn rate represented a 60% improvement from the fourth quarter of 2019.

"Our efforts to rightsize and refocus the business are beginning to show results — a significant milestone as we work towards becoming a leaner and efficient company," Ross wrote.

Among the other select data included in WeWork's Q1 email:

  • Cash and unfunded cash commitments: $3.9 billion
  • Overall footprint: 828 locations across 149 cities and 38 countries across the world. 
  • Total memberships: 693,000, a 49% year-over-year increase. Enterprise – companies with more than 500 employees – made up 45% of those memberships, versus 43% last quarter.

Large customers, including IBM and BlackRock, can write bigger and more consistent checks than the entrepreneurs and freelancers who made up WeWork's original customer base. 

WeWork, like other real estate and flexible-office providers, is grappling with the global effects of the pandemic on its business. The company has kept its US locations open and is reconfiguring spaces to include more sanitation and distance. 

"Flexibility has become the most valuable currency as companies around the world rethink their workplace needs and are in search of safe, turnkey options at a global scale," Ross said.

See more: 'We fell short in Q4': WeWork only hit 73% of an internal enterprise growth target in 2019, leaked memo shows

Like many of its peers, the office company is cutting hundreds of staff in global layoffs that new CEO Sandeep Mathrani has said would wrap up by the end of May. WeWork is reorganizing its building managers in a process that includes applying for new roles, Business Insider previously reported

WeWork is also caught in the middle of an investor fight that's led to two lawsuits, as early investors and founder Adam Neumann sue SoftBank, its largest investor, for walking away from a $3 billion stock purchase plan last month. On CNBC earlier this week, Mathrani said the fights are "noise in the background" and the company is focused on navigating through the pandemic. 

Have a tip? Contact this reporter via encrypted messaging app Signal at +1 (646) 768-1627 using a non-work phone, email at, or Twitter DM at @MeghanEMorris. (PR pitches by email only, please.) You can also contact Business Insider securely via SecureDrop.

SEE ALSO: Leaked WeWork document reveals a huge reorg under way for people who manage its buildings. Here's how the new structure works — and the complex process for staff to save their jobs.

READ MORE: The coronavirus is a 'nuclear bomb' for companies like WeWork. 10 real-estate insiders lay out the future of flex-office, and how employers are preparing now.

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