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Uber gave CEO Dara Khosrowshahi $45 million in total pay last year, but it paid its COO even more

Thu, 04/11/2019 - 5:48pm  |  Clusterstock

  • Uber paid its top five executives $143 million in total compensation last year.
  • CEO Dara Khosrowshahi's pay package was $45 million, but he wasn't Uber's top-paid executive.
  • That was Barney Harford, the company's chief operating officer, who received $47.3 million in total compensation.
  • Uber disclosed the salaries as part of the S-1 document it filed as part of its proposed initial public offering.
  • Visit BusinessInsider.com for more stories.

Dara Khosrowshahi was Uber's $45 million man last year.

But even with that kind of compensation, he still wasn't the top-paid executive at the company in 2018. That title goes to Barney Harford, the company's chief operating officer, whose salary package topped Khosrowshahi's by $2.3 million.

Uber disclosed the salaries of its top executives as part of its initial-public-offering (IPO) paperwork, which it made public on Thursday. The company's IPO could give it a valuation of more than $100 billion.

Read more: Uber has filed to go public in what could be the biggest IPO in years

The San Francisco startup handed out $143 million in total compensation to its top five executives last year, nearly all of which came in the form of stock awards.

Khosrowshahi, for example, received a $1 million salary last year and a $2 million bonus. Uber also gave him three restricted stock grants that it collectively valued at $40.1 million. Additionally, it paid $2 million to provide him with security; reimbursed him for $89,000 of commuting, relocation, and temporary housing costs; and gave him another $98,357 to pay the taxes on those reimbursements.

The big pay came despite massive operating losses

Harford's pay package contained a similar mix of components. Uber paid him $500,000 in salary and gave him a $1 million bonus. It also gave him restricted stock worth $26.3 million and stock options worth $19.6 million. The company paid $189,137 in security-related costs for him, reimbursed him for $40,236 worth of temporary-housing costs, and gave him another $31,347 to pay the taxes on that reimbursement.

The ranks of Uber's top-compensated officers were skewed a bit by the fact that two of them worked for the company for only part of the year. Nelson Chai, Uber's chief financial officer, who took home a total pay package of $28 million, started in September. And Nikki Krishnamurthy, the company's chief people officer, who got a total compensation package of $9.7 million, started in October.

Rounding out the top five was Thuan Pham, Uber's chief technology officer, who got $12.7 million in total pay last year.

The hefty salaries came despite the fact that the company, which has struggled to operate profitably, saw its operations burn through $3 billion for the year. Although Uber turned a profit for the year, that was largely because of the sale of some of its foreign assets to rivals.

The disclosure of the massive pay packages comes amid complaints from the company's drivers about low pay and after a study that indicated the average driver pay for such services has dropped markedly in recent years to just $783 a month.

SEE ALSO: Uber spent $3.3 billion on acquisitions in 2018 and 2019 — 10-times more than Lyft

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Here's who's getting rich on Uber's massive IPO

Thu, 04/11/2019 - 5:42pm  |  Clusterstock

  • Uber is gearing up for one of the biggest tech initial public offerings of all time.
  • Its paperwork has been filed with the Securities and Exchange Commission and made public, giving us a glimpse at its biggest shareholders are.
  • These are the people that stand to gain the most if Uber's entrance as a public company is well received by investors.

Uber just publicly revealed the paperwork for its giant initial public offering (IPO). This paperwork doesn't yet include key details, such as how much the company expects to charge for each share of its stock or how many shares it will sell.

But it does reveal who the biggest shareholders are.

And with that knowledge — plus a little digging on Pitchbook, a database that tracks private companies' financial-deal details — we know which people and investors will score the biggest on Uber's IPO.

Travis Kalanick

Travis Kalanick's rise and fall as Uber's founder and CEO has been well documented. He left the CEO job in summer 2017 (and launched a new company) and sold off a sizeable chunk of his stake to Softbank at that time. That sale put $1.4 billion in his pocket, and it represented only 30% of his stake.

He's the largest individual shareholder. He owns more than 117.5 million shares, or about 8.6% of the company.

Just for fun: If Uber's shares command what Lyft is trading for, about $60 per share, this stake would be worth more than $7 billion.

 

 

 

 



Garrett Camp

Garrett Camp is Uber's original founder. He created an app for hailing black-car limo services that his buddy Kalanick loved. Kalanick invested in the fledgling company, joined the startup, and later became its second CEO.

Camp, who is also known for the other tech company he founded, StumbleUpon, has been on the board since its earliest beginnings, sometimes as chairman and other times as just a board member.

Camp is the second-largest individual shareholder. He owns nearly 82 million shares, or about 6% of the company.

Again, just for fun: At $60 per share (what Lyft is trading for), that stake would be worth nearly $4.9 billion.

 

 



Dara Khosrowshahi

Dara Khosrowshahi is Uber's CEO, hired to navigate the company out of its well-publicized cultural issues and into an IPO.

He's been on the job for about two years now, and one of his major directives was to take the company public. Insiders have told Business Insider that he's been particularly pressured to launch an IPO with a valuation of $120 billion and that he will be eligible for some hefty bonuses if the IPO hits and maintains that valuation.

His stake is 196,000 shares.

 



See the rest of the story at Business Insider

Uber warns its big push into scooters and e-bikes is creating unusual new headaches and risks for the company

Thu, 04/11/2019 - 5:12pm  |  Clusterstock

  • Electric scooters and bicycles present a range of potential problems for Uber, the company said in the prospectus for its initial public offering (IPO), which was released on Thursday.
  • Risks include rider incompetence, failure to use protective gear, careless steering, poor maintenance, and faulty manufacturing from third parties.
  • The company also faces legal and political hurdles that limit where and how it can deploy scooters and bikes.
  • Visit BusinessInsider.com for more stories.

Electric scooters and bicycles present a range of potential problems for Uber, the company said in the prospectus for its initial public offering (IPO), which was released on Thursday.

Uber's "personal mobility" vehicles present different challenges than those posed by its ride-hailing, delivery, and logistics services, the company said. Risks include rider incompetence, failure to use protective gear, careless steering, poor maintenance, and faulty manufacturing from third parties. Uber says injuries to bike or scooter riders could be worse than those to ride-hailing passengers.

Read more: Uber has filed to go public in what could be the biggest IPO in years

"Incorporating dockless e-bikes and e-scooters into our platform will result in increased costs and liability," Uber said.

The company also faces legal and political hurdles that limit where and how it can deploy scooters and bikes. Cities such as Austin and San Francisco restrict the number of dockless bikes and scooters a company can offer, and some cities ban them entirely. The company said that in some cities, like Fort Lauderdale, Florida, it has not been able to obtain the necessary permits for electric scooters and bikes.

"Our inability to expand our dockless e-bikes and e-scooters could harm our business, financial condition, and operating results," Uber said.

Uber’s IPO is one of the most highly-anticipated in recent years. Lyft, one of the company’s biggest competitors, went public at a valuation of over $24 billion on March 29.

Uber did not reveal its projected share price, though the high demand for Lyft’s offering raises the possibility that Uber’s public valuation could exceed that of prior fundraising rounds. The Wall Street Journal reported in 2018 that Uber’s public valuation could reach $120 billion, well above its most recent valuation, $72 billion.

Uber is expected to begin meeting with potential investors in April and list its shares on public markets in May, according to Bloomberg.

SEE ALSO: The life and rise of Travis Kalanick, Uber's controversial billionaire co-founder and former CEO

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Uber spent $3.3 billion on acquisitions in 2018 and 2019 — 10-times more than Lyft (LYFT)

Thu, 04/11/2019 - 5:07pm  |  Clusterstock

  • Uber's S-1, filed publicly on Thursday, revealed around $3.3 billion in acquisition expenses in 2018 and 2019.
  • The company also disclosed its pricetag for JUMP, the bike share company it paid $139 million for in 2018, according to the filing.
  • This means Uber spent 10X on acquisitions between March 2018 and March 2019 than Lyft spent in 2018.
  • Visit Businessinsider.com for more stories.

Uber's S-1, which the company made public on Thursday, is a treasure trove of financial minutiae which reveals what it's like inside the books of one of Silicon Valley's hottest startups.

Among the gems in Uber's S-1: an outline of where and how the company spent its money on acquisitions.

In 2019, Uber acquired the Middle Eastern ride-sharing company Careem for $3.1 billion — $1.7 billion in convertible notes, and $1.4 billion in cash.

In 2018, Uber made two tiny acquisitions. 

To expand into areas of transportation beyond cars, Uber acquired the bicycle and scooter sharing company JUMP, for $139 million - a price which was previously undisclosed.

That figure was made up from 2.6 million in Uber shares, nearly 500,000 in stock options and $46 million in cash. It included $37 million for JUMP's tech, $4 million to its tax liabilities, $10 million for its assets, $4 million to its liabilities, and $100 million in "goodwill," which is essentially payment for the brand value of a desirable company. 

Uber also acquired a small restaurant technology company called OrderTalk to integrate its food delivery service Uber Eats with the point-of-sale systems inside of restaurants. Uber didn't disclose how much it paid for OrderTalk.

Lyft also kept busy

Uber's small rival Lyft spent $312 million on acquisitions in the fourth quarter of 2018, according its own S-1, filed publicly on March 1. And the company hasn't disclose any acquisitions so far in 2019.

Of that $312 million, $250.9 million was spent on Motivate, a bike sharing platform headquartered in New York and backed by Al Gore. Lyft acquired Motivate to "establish a solid foothold in the bike share market and offer access to new transportation options on the Lyft Platform," according to the S-1.

The S-1 also shared the nitty gritty of exactly how Lyft valued Motivate. About half of the total, $128.6 million, came from the value of Motivate's assets, minus its liabilities. Assets in this case includes its cash, prepaid expenses, property, equipment along with "intangibles" like contracts with cities, user relationships and developed technology.

Perhaps more striking is that $122 million of Motivate's pricetag was in goodwill — which the company defines as "significant estimates and assumptions, especially with respect to intangible assets." That's to say, Lyft spent $122 million on the bet that Motivate would be as good as it thinks it is.

Read more: Video conferencing company Zoom could be valued at $8 billion in upcoming IPO

Lyft also committed to investing $100 million into Motivate's growth in NYC, according to the S-1. News of the deal was announced in July, though it officially closed at the end of November.

But Lyft also made two other acquisitions during the fourth quarter, worth a total of $62 million. These acquisitions are referenced in the S-1 as "two business combinations," which involved $35 million in cash, $25.3 million in stock, and $1.7 million in "indemnification," which is legalese for a guarantee against any losses that one of the parties might face.

While Lyft was light on the details, it was announced on October 23 that Lyft had acquired Blue Vision Labs, a GV-backed AR platform that Lyft added to its self-driving technology division.

TechCrunch previously reported that Lyft acquired Blue Vision Labs for $72 million. According to the S-1, that figure was wrong.

It's unclear at this time what the second acquisition was, or how much of that total $62 million figure includes either one of the acquisitions.

While the details are new, Lyft is far from a novice in the world of acquisitions. The company acquired a range of companies, from the on-demand car wash startup Cherry which it acquired for its operations team in 2013,  to the live-streaming social media platform Kamcord which Lyft acqui-hired for its engineering talent at the end of 2017.

Do you know what Lyft's second mystery acquisition is, or how much Uber paid for OrderTalk? Email bpeterson@businessinsider.com. 

More from Uber's IPO filing:

Uber has filed to go public in what could be the biggest IPO in years

'I won't be perfect, but I will listen to you.' Uber CEO outlines the company's 'enormous' opportunity while acknowledging its turbulent past in letter to investors

SEE ALSO: JPMorgan, Credit Suisse and Jefferies among 29 banks running the Lyft IPO

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Uber has filed to go public in what could be the biggest IPO in years (UBER)

Thu, 04/11/2019 - 5:06pm  |  Clusterstock

  • Uber filed documents for its long-awaited initial public offering (IPO) on Thursday. 
  • The ride-hailing company could net a valuation of more than $100 billion as it hits the stock market. 
  • Lyft, the company's biggest competitor, went public in March, and its stock has dropped more than 20% since. 

Uber has officially filed for an initial public offering (IPO), according to regulatory documents filed on Thursday.

The company's long-awaited prospectus, which was filed confidentially in December, was made public for the first time on Thursday, providing the first public look into Uber's investor pitch and its plans for future growth in ride-hailing, food delivery, self-driving cars, flying taxis, and more. 

Uber will list on the New York Stock Exchange under the ticker symbol UBER, according to its prospectus. Morgan Stanley, Goldman Sachs, Bank of America Merrill Lynch, Barclays, Citigroup, and Allen & Company, among others, are underwriting the offering.

"Our continued success will come from stellar execution and the strength of the platform we have worked so hard to build," CEO Dara Khosrowshahi said in a letter in the filing. "Our network spans tens of millions of consumers and partners and represents one of the world's largest platforms for independent work."

Read more: 'I won't be perfect, but I will listen to you.' Uber CEO outlines the company's 'enormous' opportunity while acknowledging its turbulent past in letter to investors

Uber did not disclose in the filing the price at which it plans to list, though the company's public valuation could easily top that of earlier venture-capital rounds, especially given that Lyft's offering last week was oversubscribed. 

Before the stock prices or begins trading, Uber's executives and bankers will head out on an investor roadshow to drum up demand across the country. Bloomberg reported on Tuesday that the roadshow is likely to kick off this month, with shares hitting markets in May. 

One of the biggest IPO's in years 

As a private company, Uber has raised nearly $20 billion in venture capital across more than a dozen funding rounds that have left the company valued at a reported $120 billion. If the valuation holds, Uber would find itself ranked somewhere between the railroad operator Union Pacific and its fellow tech giant Salesforce in terms of the most valuable public companies. 

That massive amount of capital raised over the past decade has helped Uber to cover most of the world's cities in more than 60 countries, compared with Lyft's much narrower focus on the US and Canada. 

Those funding rounds have also helped subsidize a massively unprofitable ride-hailing business while also investing in other ventures in notoriously expensive self-driving-car research. Unlike Lyft, Uber has been self-reporting some quarterly financial information, so the numbers disclosed aren't completely new, but they are our first look at audited financial statements.

However, in the IPO filing, Uber said it was cash-flow positive in 2018, with a net income of $997 million. That's a massive increase from its 2017 full-year loss of more than $4 million, according to its disclosed balance sheets. 

At the same time, Uber's revenue has grown by more than tenfold since 2014. Last year, the company brought in $11.2 billion, according to the filing, up from $495 million (unaudited) in 2014. 

Read more: Uber and Lyft are both going public — here's how their balance sheets compare 

Uber for Everything

While Uber is best known for hailing a car ride with the tap of a button, the company has plenty of other bets. In Pittsburgh (as well as in Toronto and at its San Francisco headquarters), for example, the company's advanced technologies group (ATG) is developing self-driving-car tech to power an eventual autonomous taxi fleet. 

Read more: Uber insiders describe infighting and questionable decisions before its self-driving car killed a pedestrian

Uber Eats, meanwhile, is one of the fastest growing segments of Uber's business. In many areas, the food-delivery startup is growing even faster than Uber's ride-hailing business. Executives have told Business Insider that Eats is the first of many soon-to-come examples of other services piggybacking on the Uber platform. 

Groceries could soon be the next entrant to that delivery offering, and the company is rapidly scaling up a team to deliver pantry items in its Toronto office, Business Insider reported last year.

Read more: An Uber Eats executive reveals the company's surprising strategy for moving beyond taxi rides

In 2018, Uber purchased a bike-share company called Jump bikes. Like Lyft's purchase of the bike-share operator Motivate, Jump is Uber's pawn in the bike-and-scooter wars that have overtaken many of the world's cities in recent years. Rachel Holt, Uber's head of new mobility, said at Business Insider's IGNITION conference in 2018 that users could expect to see a "pretty massive" expansion of the bikes and scooters into more cities this year. 

Lyft's shadow

Lyft, Uber's biggest competitor, went public first in March. However, the stock's more than 20% decline over its first two trading weeks is expected to cast a shadow on Uber's offering.

"Lyft shares continue to be weak as many investors we have spoken with have worries about Uber's impending S-1 and roadshow which could be a dark shadow over Lyft's stock in the near-term," Daniel Ives, an analyst at Wedbush, said in a note to clients on Thursday. 

"With Uber, investors will soon have a second option to make a bet on the future of mobility and transportation with the clear market share leader," Ives said. 

In his letter, Khosrowshahi said the company now has an even greater responsibility to deliver on its promises. 

"Taking this step means that we have greater responsibilities — to our shareholders, our customers, and our colleagues," he said. "That's why, over the past 18 months, we have improved our governance and Board oversight; built a stronger and more cohesive management team; and made the changes necessary to ensure our company culture rewards teamwork and encourages employees to commit for the long term." 

More on Uber's massive IPO:

SEE ALSO: Read the email Uber's CEO sent employees about the company's $3.1 billion acquisition of a major competitor

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Uber warns that Apple and Google’s stranglehold over the distribution of apps poses a major risk to its business (GOOG, FB)

Thu, 04/11/2019 - 5:02pm  |  Clusterstock

  • Uber is warning that Google and Apple's collective dominance over the app economy poses a potential big risk to its business.
  • On Thursday, the ride-hailing company filed its S-1 paperwork to go public, offering an unprecedented public look at its business.
  • Companies have increasingly complained in recent years about the stranglehold that Google and Apple's app stores give them over the rest of the tech industry.
  • Uber is also reliant on Google Maps to function, and paid some $58 million to Google to use the technology between 2016 and 2018. 

Apple and Google collectively have a stranglehold over the distribution of apps — and Uber is warning that that poses potential major risks to its business.

On Thursday, Uber finally filed its S-1 paperwork to go public in the coming weeks, offering an unprecedented look at the inner workings of the ride-hailing company. It also provides fresh insight into what the Silicon Valley mega-startup views as some of the biggest risks facing it today — and Google and Apple's dominance of the modern app-powered tech industry makes the list.

"Our platform relies on third parties maintaining open marketplaces, including the Apple App Store and Google Play, which make applications available for download," it tells potential investors. "We cannot assure you that the marketplaces through which we distribute our platform will maintain their current structures or that such marketplaces will not charge us fees to list our applications for download."

The warning highlights the near-total dependence modern app developers have today on the proprietors the Android and iOs app stores. Both companies take a standard 30% cut of most transactions, and these apps are entirely at the mercy of each store's rules on what is and isn't allowed — a state of affairs that has sparked increasing resentment in the digital industry in recent years.

Spotify has publicly attacked Apple's App Store, alleging it abuses its power, and has formally complained with the European Commission. Epic Games, the makers of wildly popular game "Fortnite," declined to make the game available on Android's Google Play store, instead requiring users to download it directly from the company's servers.

Uber clearly harbours the same concerns about reliance on these companies. But its warnings extend beyond the app stores alone, also flagging its reliance on Google Maps as a potential vulnerability.

"We rely upon certain third parties to provide software for our products and offerings, including Google Maps for the mapping function that is critical to the functionality of our platform," it writes. "We do not believe that an alternative mapping solution exists that can provide the global functionality that we require to offer our platform in all of the markets in which we operate ... If such third parties cease to provide access to the third-party software that we and Drivers use, do not provide access to such software on terms that we believe to be attractive or reasonable, or do not provide us with the most current version of such software, we may be required to seek comparable software from other sources, which may be more expensive or inferior, or may not be available at all, any of which would adversely affect our business."

Between the start of 2016 and the end of 2018, Uber paid Google around $58 million for access to its Google Maps service, the S-1 discloses.

The warning also highlights the twisted nature of Uber and Google's tensions. Most directly, Google's sister company Waymo is building self-driving vehicles that aim to directly compete with Uber's business. But Google's privileged position at the top of the app store food chain means Uber is simultaneously dependent on it to survive. 

And all the while, Google's parent company Alphabet is an investor in Uber, following a high profile trade-secrets lawsuit between Waymo and Uber. 

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Uber warns that its reputation may always be a risk for its continued success (UBER)

Thu, 04/11/2019 - 5:01pm  |  Clusterstock

Uber has officially filed to go public.

The ride-hailing giant made its paperwork public for the first time on Thursday, providing us the first comprehensive look under the hood at the company's financials, risk factors, and more. And one glaring risk factor is likely to be at the top of all investors minds.

"Maintaining and enhancing our brand and reputation is critical to our business prospects," the company said in the filing.

It's a fairly standard line for many companies in their risk factors, but with Uber it takes on even more importance given the company's history of scandals that eventually led to the departure of founder and then-CEO Travis Kalanick.

"We have previously received significant media coverage and negative publicity, particularly in 2017, regarding our brand and reputation, and failure to rehabilitate our brand and reputation will cause our business to suffer," the company said of the most high-profile scandal, ignited by the now-former employer Susan Fowler in a damning blog post about her time at Uber.

Read more: Uber pays hundreds of women and men of color a total of $10 million to settle a discrimination lawsuit

Last month, Lyft told investors in its IPO filing that it had benefitted from the very #deleteuber campaign that Uber is warning about.

"In 2017, the #DeleteUber campaign prompted hundreds of thousands of consumers to stop using our platform within days," Uber said. "Subsequently, our reputation was further harmed when an employee published a blog post alleging, among other things, that we had a toxic culture and that certain sexual harassment and discriminatory practices occurred in our workplace."

Uber said it plans to release a transparency report this year to address some of these prior problems, but the reactions to that could also result in a reputation hit.

"The public responses to this transparency report or similar public reporting of safety incidents claimed to have occurred on our platform, which may include disclosure of reports provided to regulators, may result in negative media coverage and increased regulatory scrutiny and could adversely affect our reputation with platform users."

More on Uber's IPO:

SEE ALSO: 'I won't be perfect, but I will listen to you.' Uber CEO outlines the company's 'enormous' opportunity while acknowledging its turbulent past in letter to investors

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Brexit delayed until October 31 after EU leaders reject Theresa May's demand for short extension

Thu, 04/11/2019 - 1:56am  |  Clusterstock

  • Brexit delayed for 6 months until October 31.
  • Prime Minister Theresa May had requested a short extension, but it was rejected by EU leaders after six hours of intense talks.
  • May had promised the UK parliament she would not deliver a long Brexit delay — but now it will be postponed until Halloween. 
  • The prime minister insists she will use the six month extension to pursue a cross-party deal with Jeremy Corbyn's Labour Party.
  • Visit BusinessInsider.com for more stories.

BRUSSELS & LONDON — Brexit will be delayed by up to six months, after European leaders rejected Theresa May's request for a short extension to the Article 50 withdrawal process.

EU leaders, excluding May, met in Brussels on Wednesday evening to discuss her request for the United Kingdom's exit from the EU to be postponed until June 30, 2019. The prime minister had sought a two-and-a-half month delay which she claimed would be enough time for a Brexit deal to pass through the House of Commons, and help the UK avoid taking part in the upcoming European Parliament elections.

However, after hours of intense talks, the leaders of the other 27 EU member states agreed to delay Brexit until October 31, meaning that the UK could remain in the EU until Halloween.

The new extension comes with a "review point" in June, when EU leaders will check to see if the UK is following the conditions of its prolonged membership, including participation in European Parliament elections. Britain could also leave the EU before the new October deadline if MPs agree to a new withdrawal agreement before that time.

"I know that there is huge frustration from many people that I had to request this extension. The UK should have left the EU by now and I sincerely regret the fact that I have not yet been able to persuade Parliament to approve a deal which would allow the UK to leave in a smooth and orderly way," May said in a statement after the new deadline was agreed.

"But the choices we now face are stark and the timetable is clear. So we must now press on at pace with our efforts to reach a consensus on a deal that is in the national interest."

European Council President Donald Tusk confirmed on Twitter just before 1 a.m. (BST) that Theresa May had agreed to a new Brexit day, tweeting: "EU27/UK have agreed a flexible extension until 31 October. This means additional six months for the UK to find the best possible solution."

Brexit was originally scheduled to take place on March 29. However, fundamental disagreements between the UK government and the EU, plus between MPs in the House of Commons, created months of deadlock.

Prime Minister May has previously insisted she would not accept a long delay, telling MPs last month: "I am not prepared to delay Brexit any further than June 30."

However, May told her European partners that the UK would use the extension to forge a new cross-party agreement on Brexit.

Talks in Brussels lasted for around hours, with leaders offering a range of views on how long Brexit should be delayed.

French President Emmanuel Macron was particularly keen to push back against suggestions that the UK could stay in the EU for another twelve months, leading to a compromise deadline of October 31.

At a press conference late on Wednesday night, Tusk said he had a message for his "friends" in the UK: "This extension is as flexible as I expected and a little shorter than I expected — but it is enough to find a solution ... Please do not waste this time.”

The UK is also still free to revoke Article 50 and cancel Brexit entirely, he added.

In the past week, the prime minister and her team have held a series of meetings with the opposition Labour party leader Jeremy Corbyn and his advisers about a possible compromise deal.

However, talks have faltered in recent days with Labour insisting that the government has refused to change any of its long-standing red lines.

Labour has demanded that May keep the UK in a customs union with the EU, with large numbers of Labour MPs also pushing for an agreement to hold a referendum on whatever deal is eventually agreed.

The prime minister has repeatedly opposed both of these demands, with Conservative MPs threatening to oust her as their leader if she agrees to a deal with Corbyn.

What happens next?

The prime minister will return to London on Thursday to update the House of Commons on the agreement reached with the EU. May will not have to seek approval of MPs for the UK's new exit date, having already secured a parliamentary majority for delaying Brexit.

The delay also means that MPs are set to next week have their first break from Westminster this year, after previous parliamentary recess periods were cancelled due to the ongoing Brexit deadlock.

However, Brexit talks with Labour will continue on Thursday with the UK government remaining committed to securing an agreement before the European Parliament elections at the end of May.

One proposal under consideration by ministers is to bring forward the legislation for the withdrawal agreement in the coming days and weeks and allow MPs to amend it in an attempt to secure cross-party agreement.

Asked about the proposal on Wednesday, May's official spokesman said that while it was "technically possible" to do this, the government was not committing to doing so at this stage.

SEE ALSO: Revoke Article 50: MPs are gradually moving toward canceling Brexit

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Bank of America scoured hundreds of mutual funds with $1.5 trillion in assets and identified 7 neglected stocks poised to surge after crushing earnings

Thu, 04/11/2019 - 1:54am  |  Clusterstock

  • Price swings in the stock market are usually wider during earnings season, providing an opportunity for stock pickers to profit from those moves.  
  • Bank of America Merrill Lynch has identified seven companies its analysts expect to trounce consensus estimates for earnings — and see a large stock spike. 
  • These companies are also underowned by active fund managers who manage $1.5 trillion in assets.
  •  Visit BusinessInsider.com for more stories.

If there's any time to be a stock picker, it's during earnings season, according to Bank of America Merrill Lynch. 

As S&P 500 companies roll out their first-quarter reports over the coming weeks, analysts are expecting the first year-over-year decline in earnings-per-share growth since 2016. For the diligent stock picker, the next few weeks will provide many opportunities to profit from the gains that accrue from companies that beat earnings expectations.

It also helps that analysts hesitate to publish earnings estimates that stray far away from what their peers expect. According to BAML, so-called consensus-estimate dispersion for the S&P 500 sits at 5.7%, below its long-term average of 9.6%. This means out-of-consensus calls that turn out to be right can be disproportionately rewarded.

As always, there's also the risk of big losses if companies disappoint, which is why BAML's equity strategists advice clients to understand the fundamentals of a company before making investing decisions timed around earnings reporting.  

They've nonetheless provided a starting point by identifying the buy-rated companies that their analysts expect to beat earnings by more than the Street forecasts. In a recent note to clients, they further singled out the companies that are underowned by over 400 active funds with $1.5 trillion in assets under management. 

The list below showcases companies that are underowned among funds, and which BAML analysts expect to outpace consensus earnings forecasts to the greatest degree. It is ranked in ascending order of their earnings-per-share Z-scores — or how much more bullish BAML's analysts are compared to their peers.

SEE ALSO: A stock picker who's dominating 92% of his peers breaks down his market-beating strategy — and reveals 5 stocks he loves, even as earnings growth dries up

FMC Corporation

Ticker: FMC

Sector: Materials

Expected report date: May 6 

BofAML vs. Consensus EPS Z-Score: 0.0 

BofAML vs. Consensus Sales Z-Score: 1.1

Source: BAML



Take-Two Interactive Software

Ticker: TTWO

Sector: Communication Services

Expected report date: May 15

BofAML vs. Consensus EPS Z-Score: 0.7

BofAML vs. Consensus Sales Z-Score: 0.3

Source: BAML



Twitter

Ticker: TWTR

Sector: Communication Services

Expected report date: April 23

BofAML vs. Consensus EPS Z-Score: 1.1

BofAML vs. Consensus Sales Z-Score: 0.7

Source: BAML



See the rest of the story at Business Insider

The National Enquirer and other tabloids owned by American Media Inc. are on the chopping block

Wed, 04/10/2019 - 9:48pm  |  Clusterstock

  • American Media Inc. is exploring the sale of several tabloids — including the embattled National Enquirer — the company said on Wednesday.
  • The release came shortly after a Washington Post report, which said that pressure to sell the tabloids came from hedge fund manager Anthony Melchiorre of Chatham Asset Management, which holds 80% of AMI shares. Melchiorre was "disgusted" with the National Enquirer's reporting practices, a source told The Post.
  • In September 2018, American Media's CEO David Pecker and Chief Content Officer Dylan Howard signed a nonprosecution agreement related to the $150,000 payment to former Playboy bunny Karen McDougal, who claimed to have had an affair with Donald Trump, in a "catch and release" deal to bury the possibly damaging information ahead of the 2016 US presidential election.
  • Pecker cited different reasoning for the potential sale in the company's statement.
  • Visit BusinessInsider.com for more stories.

American Media Inc. is exploring the sale of several tabloids — including the embattled National Enquirer — the company said on Wednesday.

"American Media, LLC today announced that its Board concluded its strategic operational review of its tabloid business, which began last August, and has resulted in the decision to explore strategic options for its National Enquirer (US and UK editions), Globe and National Examiner brands, which will likely result in their sale in the near future," according to a Wednesday-night press release.

The release came shortly after a Washington Post report, which said that pressure to sell the tabloids came from hedge fund manager Anthony Melchiorre of Chatham Asset Management, which holds 80% of AMI shares. Melichiorre was "disgusted" with the National Enquirer's reporting practices, a source told The Post.

American Media has been in both financial and legal straits over the past several years. The publisher faces shrinking newsstand sales and growing debt. In January 2019, the company announced that it "successfully completed the refinancing of all of its outstanding debt capital structure by raising $460 million."

The company is also under the scrutiny of the US Attorney's Office in the Southern District of New York. In September 2018, the company's CEO David Pecker and Chief Content Officer Dylan Howard reached a non-prosecution deal with federal prosecutors.

In addition, American Media admitted to paying $150,000 to Karen McDougal, a former Playboy bunny, who claimed to have had an affair with Donald Trump in a "catch and kill" deal, "to ensure that a woman did not publicize damaging allegations about that candidate before the 2016 election and thereby influence that election." Pecker is a close personal friend of President Trump.

In January of this year, the tabloid also published an expose on Amazon founder and CEO Jeff Bezos and a reported affair with former news anchor Lauren Sanchez — including publishing private text messages. Bezos fired back at American Media in a blog post on Medium claiming that the company said they would publish personal photos of Bezos if he did not say that he didn't think the expose was politically motivated.

Read more: Behind on Jeff Bezos' beef with the National Enquirer? Here's the complete timeline of the feud to catch you up

Bezos' allegations have reportedly led to the SDNY to investigate whether American Media violated its non-prosecution agreement, Bloomberg reported. According to CNN, as soon as this week, Bezos will meet in New York with federal prosecutors.

Pecker cited different reasoning for the potential sale in the company's statement.

"We have been keenly focused on leveraging the popularity of our celebrity glossy, teen and active lifestyle brands while developing new and robust platforms including broadcast and audio programming, and a live events business, that now deliver significant revenue streams," Pecker said. "Because of this focus, we feel the future opportunities with the tabloids can be best exploited by a different ownership."

Last June, American Media purchased 13 titles from Bauer Media; in 2017 the company purchased US Weekly and Men's Journal from Wenner Media.

Business Insider contacted both American Media and Chatham Asset Management for more information — including about possible buyers — and we will update as necessary.

SEE ALSO: How the National Enquirer's David Pecker, 'the bad boy of magazines,' went from betraying Trump to facing off with Jeff Bezos

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JetBlue is going to London in 2021 (JBLU)

Wed, 04/10/2019 - 6:31pm  |  Clusterstock

  • JetBlue will commence flights to London in 2021.
  • The airline is expected to launch service to London from its bases in Boston and New York. It has not yet selected which of London's airports it will serve.
  • JetBlue will use the Airbus A321LR for its transatlantic flights.
  • Visit BusinessInsider.com for more stories.

JetBlue Airways will commence flights to London in 2021. The airline confirmed the news Wednesday afternoon after days speculation. The boutique US carrier is expected to launch service to London from its bases in Boston and New York.

"Twenty years ago, our founders had a simple formula for choosing a new market — it had to be overpriced, underserved, or both," Joanna Geraghty, JetBlue's president and COO, said in a statement. "The fares being charged today by airlines on these routes, specifically on the premium end, are enough to make you blush."

According to Geraghty, London is the largest metropolitan area not served by JetBlue from New York and Boston.

Read more: The 15 most popular flights in the world.

The airline has not yet selected which of London's airports it will serve. However, travel industry analyst Henry Harteveldt told Business Insider he expects JetBlue to select either Gatwick or Heathrow. According to Harteveldt, Gatwick is the most likely destination for the JetBlue due to the extraordinarily high costs required to obtain landing rights at Heathrow.

JetBlue will use the new Airbus A321LR for the London flights. The LR is an extended-range version of the new Airbus A321neo airliner that is set to enter the JetBlue fleet this year. The A321neo, itself, is an updated version of the Airbus A321 already in service with JetBlue.

In total, JetBlue has 85 A321neos on order with 13 of the 85 aircraft converted to LR specification.

Each of JetBlue's transatlantic A321s will be equipped with an updated version of the airline's Mint business class that features both flatbed seats and enclosed suites.

The New York-based airline is calling London its first European destination, signaling the possibility of expanding to to other cities in the region.

JetBlue currently has 1,000 flights per day to destinations in the US, the Caribbean, and select locations in South America.

SEE ALSO: Lufthansa CEO reveals the biggest change in the airline industry caused by the Boeing 737 Max scandal

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The House passed a bill that could bar the IRS from creating a 'free' tax-preparation software like TurboTax — here's what it means for you

Wed, 04/10/2019 - 6:17pm  |  Clusterstock

  • The House on Tuesday passed the Taxpayer First Act bill, which includes notable changes to the tax code and the IRS.
  • In the bill is a provision that would enshrine the current version of the IRS Free File service and prevent the agency from creating its own tax-preparation service.
  • While it shouldn't make a big difference for most taxpayers, the bigger effect is what Americans could be missing out on.
  • Visit BusinessInsider.com for more stories.

The House on Tuesday passed a bill designed to make some major changes to the way the IRS operates, but it also means that American taxpayers could be missing out on a huge opportunity.

The bill, named the Taxpayer First Act, is intended to update many major IRS systems and improve Americans' interactions with the agency.

But the bill also includes a provision that would codify the IRS's "Free File" system, which allows most Americans to file for free but through only private services. Critics of the bill say that it would make it so that the IRS would be unable to create its own free alternative to existing tax-preparation software such as Intuit's TurboTax or H&R Block's software.

Read more: The House passed a bill banning the government from creating 'free' tax-preparation software like TurboTax, forever

The bill was supported by a bipartisan group of lawmakers, many of whom received campaign donations from Intuit and H&R Block. A similar bill exists in the Senate and would need to pass before the changes could take place.

Senate sponsors of the bill disputed the characterization that the provision would prevent the IRS from creating a filing service, but legal experts and advocacy groups say that the language would block the agency from doing it. Additionally, the IRS already has a memorandum of understanding with some tax preparers not to create a free filing system.

But while there is some back and forth on the exact effects of the provision, it can be hard to discern just what it means for the average taxpayer.

So what could the Taxpayer First Act mean for your tax filing? Here's a breakdown of how this would affect you:

  • If you qualify for free filing now, you can still file for free: As the system stands, Americans in the 70th percentile or below are allowed to file for free. That means, this year, people who made $66,000 or less in 2018 can file their taxes for free.

    Even if the bill becomes law, people below the threshold can still access a number of services through the IRS's Free File landing page that allows you to file for free. Different services have different thresholds to qualify for free filing. TurboTax offers the service to people making $34,000 or less, TaxAct offers it for people making $55,000 or less, and H&R Block offers it for people making $66,000 or less.

    But it is important to note that these are not IRS products, rather the websites listed are privately owned services that allow people below their respective thresholds to file for free.
  • If you already use a private tax service and are above the free-filing threshold: Tax preparation companies and services already in place will continue to operate as they have. Some companies offer free federal-filing services for simple returns and other deals; those will still be available at the discretion of the respective companies.
But what is more important is what Americans are missing out on

While most of the tax-preparation landscape would not change under the bill, the real issue critics have with the measure is the reforms that the bill forgoes.

For one thing, advocates say that the Taxpayer First Act would prevent the IRS from creating a tax-preparation software to compete with or replace private software. According to ProPublica, those of you hoping that you could get rid of TurboTax or H&R Block sometime soon would be sorely disappointed by the bill because it would codify the existing Free File program, which relies on the private services and prevents the IRS from creating a competitor.



Additionally, the new bill does nothing to simplify the tax-preparation system.

Advocates of simpler tax-filing measures have maintained that the IRS could provide most Americans with simpler prefilled tax forms that would use data the agency already possesses. In theory, this would require most Americans to make, at most, minor adjustments to the forms in order to file.

But companies such as Intuit have said that such a system would result in more overpaying by taxpayers and other tax analysts have warned that it would cause complications and reduce transparency.

Regardless of the possible ease or hazards, the IRS has so far been blocked from implementing the system — which already exists in countries such as Sweden and Spain. The new bill would ensure that the system stays that way.

SEE ALSO: A Republican congressman just asked the CEOs of 7 of America's largest banks if they're socialists

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Lyft plunges to an all-time low amid reports Uber is seeking a valuation of up to $100 billion (LYFT)

Wed, 04/10/2019 - 4:14pm  |  Clusterstock

  • Lyft shares plunged 11% Wednesday amid reports suggesting its rival Uber was seeking a valuation of $90 billion to $100 billion. Uber was originally expected to be valued at $120 billion. 
  • Lyft shares have dropped 30% from where they opened when the company went public last week.
  • Watch Lyft trade live.

Lyft shares plummeted 11% on Wednesday to an all-time low after it was reported that the ride-hailing company's larger rival, Uber, was seeking a valuation of $90 billion to $100 billion.

Uber plans to sell about $10 billion worth of stock when it officially files to go public on Thursday, Reuters reported, citing people familiar with the matter.

Uber's new projected valuation, according to Reuters, is below prior estimates for $120 billion. In contrast, Lyft's market cap on Tuesday was just under $20 billion, with the company having raised about $2.69 billion last month in its initial public offering.

Read more: Uber plans to sell about $10 billion worth of stock in its IPO, seeks $90 billion valuation

Lyft has traded in a volatile fashion since its debut, which isn't uncommon for newly minted public companies.

The stock priced at $72 in late March, and opened for trading at $87.24 a share. It dropped below its IPO price in its first full day of trading. Lyft is now down about 27% from its opening price and 11% from where it initially priced.

Last week, news outlets including CNBC and The New York Post reported that the ride-sharing company was planning to sue Morgan Stanley over supporting short-selling in the stock.

A Morgan Stanley spokesperson told CNBC the firm "did not market or execute, directly or indirectly, a sale, short sale, hedge, swap or transfer of risk or value associated with Lyft stock for any Lyft shareholder identified by the company or otherwise known to us to be the subject of a Lyft lock-up agreement."

Lyft analysts are concerned about the company's uncertain path to profitability and a highly competitive ride-hailing space. Regulatory uncertainties may also pose a challenge, some analysts say, while others think the stock is overvalued.

"While we believe the ridesharing market will continue to grow and expect LYFT to be a prime competitor, in our view, current valuations reflect an overly optimistic view of consumer behavior in the US," Michael Ward, an analyst at Seaport Global, said in a note to clients last week.

Now read more about Lyft on Markets Insider:

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NOW WATCH: The founder and CIO of $12 billion Ariel Investments breaks down how his top-ranked flagship fund has crushed its peers over the past 10 years

McDonald's, Nvidia and Salesforce all want a bite of the Tel Aviv tech crop. Here's what you need to know about Israel's bustling M&A scene. (INTC, CRM, NVDA)

Wed, 04/10/2019 - 3:57pm  |  Clusterstock

  • In mid-March, the US chip company Nvidia announced an eye-popping $6.9 billion acquisition of Israeli semiconductor company Mellanox, underscoring the buzz around Israeli tech companies.
  • Two weeks later a more curious US-Israeli tech deal took place when McDonald's acquired AI company Dynamic Yield for more than $300 million.
  • While the highs are getting higher, mid-$100 million exits remain the common exit for Israeli tech startups, according to experts in the space.
  • Here's what you need to know about the bustling tech mergers and acquisitions scene in Israel.
  • Visit Businessinsider.com for more stories.

In late March, McDonald's announced its $300 million-plus acquisition of Dynamic Yield, an Israeli startup that uses algorithms to personalize shopping experiences to the individual. 

The Golden Arches were a surprising new home for the eight-year-old company, which launched as a publisher-focused project at Bessemer Venture Partner's office in Tel Aviv, before picking up speed with retailers like Sephora and Ikea.

Fast food chains aren't known for their software-as-a-service offerings, and cheeseburgers aren't even kosher. But at $300 million, Dynamic Yield's sale fit perfectly into the Israeli tech scene's template for a successful outcome.

"I call that our bread and butter, in terms of exits," said Adam Fisher, founding partner at Bessemer Israel, which has had 13 exits (acquisitions or other transactions that let VC backers cash in their investments) since launching the firm's Israeli outpost in 2007. "Below $100 million, it's hard to make an impact. Above $500 million — we all aim for that, but it requires a special kind of company."

While founders and investors in Silicon Valley pursue $100 million venture capital rounds at billion-dollar valuations, their peers in Israel — affectionately dubbed the "51st state" — tend to eschew hypergrowth and world-domination for the security of a corporate parent company.

In 2018, there were 61 exits of venture-backed Israeli tech companies, with an average deal size of $81 million, according to consulting firm PwC, which excluded deals valued under $5 million from the study. Fifty-two of those exits were acquisitions, while just nine companies, primarily in biotech, opted to sell shares to the public.

"When I joined the industry 15 years ago, it was really rare to see a $200 million exit. Nowadays, a $200 million exit is the lower bottom," said Natalie Refuah, an investor with Viola Growth, which led Dynamic Yield's $38 million Series D just months before it got acquired.

"I do think that this is increasing and probably in the years coming it will be a higher amount," Refuah said. "We are great believers in the billion dollar company."

Billion-dollar exits are rare

The impact of American corporate M&A on Israel can be charted across the Tel Aviv skyline. Amazon, Microsoft, Apple, Google, IBM and Cisco all have large research and development facilities in the city or just outside in Herzliya, an affluent suburb that draws frequent comparison to Silicon Valley's Menlo Park. 

Intel, the chipmaking goliath which opened its first Israeli office in 1974, is the country's largest tech employer. The company's footprint in Israel has increased thanks to a combination of organic growth and acquisitions, including its eye-popping 2017 acquisition of autonomous vehicle chip company Mobileye for $15.3 billion.

For Leonard Rosen, CEO of Barclays Israel, it's the big deals that keep things interesting. At the end of February, Rosen and his team closed KLA's $3.4 billion acquisition of the semiconductor company Orobtech, for whom Barclays was the exclusive advisor. That deal was delayed nearly a year after it was first announced due to regulatory holdups in China.

"A lot of these companies will buy here just so they have a stake to start looking at other companies and earlier stage companies, and keep ahead of the game," said Rosen from his office in Tel Aviv, just hours after news broke about Nvidia's $6.9 billion acquisition of the publicly-traded chip company Mellanox.

It was Nvidia's first big move in the country, and it beat out both Intel and Barclay's own reported client Xilinx in the process.

"Competition is really tough in the world, and Israel has an advantage. If you don't have a presence here and your competitor does, you're potentially missing out on technologies that will help you lead," Rosen said.

Scaling big means leaving Israel

The strong American presence has its pros and cons for the local startup scene. As in Silicon Valley, cohorts of ex-employees tend to leave tech giants where they get their start with a dream to build the next big thing. And more startup exits means more wealthy founders and investors who recirculate that capital into other startups.

But anecdotally, industry people lament that Amazon's new office in the Sarona Tower, the largest skyscraper in Israel, has driven up wages for talented engineers. 

Read more: Half of all US startups expect to get acquired, but the number of companies that don't have a plan is growing

And Silicon Valley's appetite for Israeli startups may be nipping growth potential. There were just four acquisitions valued at more than $1 billion in 2018, and all four of those acquisitions were a second-exit for a company that had already gone public or was owned by a strategic acquirer. It's just not very common for an Israeli tech company to get that big.

Fisher, an early backer in Wix before it had the biggest IPO in Israeli history, thinks founders have good reasons to exit before reaching the acclaimed "unicorn," of $1 billion valuation,  status. While Israel has tons of engineers, most tech companies need to build out sales and marketing teams in the US once they surpass $15 million to $20 million in revenue, he said. Oftentimes, the CEO needs to relocate to California. 

Growing that big takes a lot of work, Fisher said, and a couple hundred million dollars isn't nothing.

"As much as capital is flowing into Israel, I think everybody here is cognizant of the fact that that could change over night," Fisher said. "We live in a volatile region of the world, we know that people get skittish all of a sudden. We're highly dependent on foreign capital. And sometimes, a bird in the hand is what you want to go with."

Talent is key for corporate acquirers

For the corporate acquirers, it's a pretty good setup.

John Somorjai, executive vice president of corporate development at Salesforce, said the company has found success building out its research and development operations in Israel. The San Francisco giant has bought four Israeli startups since 2011, including its July 2018 acquisition of Datorama for $766 million, one of the biggest deals of the year.

"What we found is that we're able to hire incredible talent in Israel, and they've made a lot of contributions, specifically to our AI innovation," Somorjai said.

Though Datorama was fairly large, Somorjai said that the sweet spot for most Israeli startups to sell is when they are "sub-scale," before they've built large go-to-market organizations that can tackle global sales. 

Somorjai, who's based in San Francisco, said he travels to Tel Aviv twice a year to meet with employees, founders and venture capitalists, and his team in London makes more frequent trips because of the proximity. Beyond acquisitions, Salesforce has made 12 venture investments in Israeli startups, including Redkix, a small email startup that Facebook bought last summer.

IPOs are rare but that could change

Despite the Israeli ecosystem's drive toward exits, the IPO well has been more or less dry over the last few years. Just nine Israel tech companies went public in 2018, and of those seven were in the life science sector, according to PwC.

However, that could all change in the next few months.

"In IPO, there's always been heights and downs. And for many years, the IPO was closed for Israeli tech companies," said Refuah. "I hope that it's changing. It looks like there are signs that it's opening but it's yet to be seen."

Already, 2019 is starting strong. The cybersecurity company Tufin will kick off the year with an IPO on Thursday, where it will list on the New York Stock Exchange. The company is expected to see a market cap around $500 million.

Read more: Meet the jet-setting Goldman Sachs banker who led Qualcomm through a hostile takeover, got stuck in Trump's trade war, and made magic happen across the semiconductor industry

Payments company Payoneer, a rare Israeli unicorn, has reportedly hired a bank to mull over a possible IPO, and the cloud company Zerto is reportedly considering its own listing in New York. The freelancing marketplace Fiverr has also reportedly hired banks for its own public offering at around an $800 million valuation.

Most companies considering an IPO will look to New York, and other foreign exchanges in London and Australia for their listings, rather than the local exchange in Tel Aviv.

Whether this crop of companies make it to the public markets before attracting interest from a big acquirer is yet to be seen. 

SEE ALSO: Salesforce is quietly investing $100 million in Zoom ahead of its big IPO — here are its 5 biggest investments in public companies

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'We need to identify new products': The cofounder of investing startup YieldStreet says more deals could be on the way after its $170 million art financing bet

Wed, 04/10/2019 - 3:22pm  |  Clusterstock

  • YieldStreet, a fintech platform that just wrapped up a $62 million Series B funding round, is buying an art financing company from private equity firm Carlyle.
  • YieldStreet already offers investments ranging from real estate to maritime financing. The $170 million acquisition will allow the platform's investors – right now, all wealthy individuals, though the company plans to expand to the masses – to add art loans to their portfolios. 
  • The fintech's cofounder told Business Insider that art is a good investment for investors of all stripes, but academic research from Stanford cautioned "the returns of fine art have been significantly overestimated, and the risk, underestimated." 
  • Visit Business Insider's homepage for more stories.

Wealthy individuals who want to reap the financial benefits of investing in a Monet without actually owning an $80 million painting will soon have a new option. 

YieldStreet, a financial platform that offers exotic investment products like marine finance and loans to law firms to the mass affluent, is buying an company called Athena Art Finance from private equity firm Carlyle in a deal valued at $170 million. YieldStreet's 100,000 investors will be able to invest in art financing as a result of the deal.

The deal comes as more financial technology players are trying to open up access to investments previously reserved for institutional or ultra-wealthy investors, such as private equity. Earlier this week, Nasdaq and iCapital, a BlackRock-backed alternative investment company, said they're working to create a platform that will launch later this year to allow private fund investors to sell their stakes before the end of a fund's life. 

YieldStreet offers alternative investments to accredited investors, who earn at least $200,000 a year or have $1 million in net worth, and requires a minimum investment of $5,000. Rather than conventional assets like stocks or bonds, the company's portfolio consists of loans to commercial real estate projects, small businesses, and law firms – and now, individual pieces of art and portfolios. New York-based YieldStreet is just coming off a major funding round, raising $62 million in a Series B in February meant to fuel new hires and these types of acquisitions

The platform will continue to add more investment options, with two new products set to launch in the next three months, cofounder and president Michael Weisz told Business Insider. 

"We need to identify new products," he said, adding that one area for expansion could be private equity. "Our average deal sells in minutes and 88% of our investors get locked out." 

See more: A 257-year-old asset manager profited from Ariana Grande's hit single '7 Rings,' and it's a business Wall Street's getting excited about

Weisz said art's an attractive investment because it's a less mature and competitive market than more established asset classes, like real estate, but it's big enough to provide scale.

"The art market in general over the last 20 years has been doing phenomenally well," he said. "But the average person hasn’t had visibility into luxury goods and how they translate into strong consistent investments."

Weisz also said that investors are more protected in a downturn because art can simply be stored in a warehouse, unlike a commercial building, which might need to go through an expensive and time-consuming foreclosure process or sale. 

While Weisz said art is an appropriate investment for investors of all stripes, a trio of professors from Stanford and other schools found in a 2013 paper that "the returns of fine art have been significantly overestimated, and the risk, underestimated." Their research showed the total annual return of art as an asset class from 1972 to 2010 as 6.5%. 

"Buy paintings if you like looking at them," the researchers concluded. "You can hope that your children will sell one or more of them later for a gain — but paintings are primarily aesthetic investments, not financial ones." 

Despite the researchers' pessimism, art as an investing strategy is increasingly appealing to rich millennials, who are twice as likely as other collectors to view it as a financial asset, according to a Bank of America survey last year.

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NOW WATCH: Elon Musk sent a $100K Tesla Roadster to space a year ago. It has now traveled farther than any other car in history.

The Fed isn't ruling out a rate hike this year

Wed, 04/10/2019 - 3:13pm  |  Clusterstock

  • The Federal Open Market Committee is still open to a rate hike this year.
  • Minutes out Wednesday revealed officials see slower growth but expect consumer spending to improve in the coming months. 
  • Officials most recently voted to increase the benchmark interest rate by a quarter percentage point, bringing it to a target range between 2.25% and 2.5% at the end of 2018.

Federal Reserve officials expect some aspects of the economy to improve in the coming months and could still increase interest rates later in the year, minutes from its latest meeting revealed Wednesday.

"Some participants indicated that if the economy evolved as they currently expected, with economic growth above its longer-run trend rate, they would likely judge it appropriate to raise the target range for the federal funds rate modestly later this year," the minutes said.

At the conclusion of its March meeting, the Federal Open Market Committee signaled no additional hikes this year and penciled in just one for 2020. Officials cited a series of strains, including the fading effects of tax cuts passed in 2017, ongoing trade tensions, and slowing activity in Europe and China.

Some market watchers have seen an increasing possibility of a rate cut in recent weeks, while officials see an adjustment in either direction as possible.

According to the minutes, the Fed acknowledged slowing growth but also noted expectations for consumption to improve in the coming months. Several measures of consumer spending, which accounts for more than two-thirds of economic activity, came in surprisingly soft in the first quarter.

"The minutes of the March meeting, when the FOMC formally abandoned its prior expectation of two rate hikes this year, are a bit less dovish than might have been expected," said Ian Shepherdson, chief economist at Pantheon Macroeconomics. "They are happy to be seen as 'patient' for now, but they are cognizant of upside risks to both growth and inflation."

The 12-member FOMC most recently voted to increase its benchmark interest rate by a quarter percentage point, bringing it to a target range between 2.25% and 2.5% at the end of 2018.

SEE ALSO: Trump's Fed shakeup could leave US policymakers' hands tied during a recession

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NOW WATCH: The founder and CIO of $12 billion Ariel Investments breaks down how his top-ranked flagship fund has crushed its peers over the past 10 years

A Republican congressman just asked the CEOs of 7 of America's largest banks if they're socialists

Wed, 04/10/2019 - 2:51pm  |  Clusterstock

  • The CEOs of seven of America's largest banks testified before the House Financial Services committee on Wednesday.
  • During the hearing, GOP Rep. Roger Williams asked all seven bank CEOs the same question.
  • "I want to ask each one of you, starting with Mr. Corbat, a straightforward question: Are you a socialist or are you a capitalist?" Williams asked.
  • Every bank CEO replied that they were a capitalist.
  • This was not the first time Williams has asked witnesses at the Financial Services whether they prefer socialism or capitalism.
  • Visit BusinessInsider.com for more stories.

Republican Rep. Roger Williams wanted to clarify one thing with the CEOs of seven of America's largest banks during a congressional hearing on Wednesday: Were they capitalists or socialists?

Williams started off his questioning of the seven CEOs — Michael Corbat of Citigroup, Jamie Dimon of JPMorgan Chase, James Gorman of Morgan Stanley, Brian Moynihan of Bank of America, Ronald O'Hanley of State Street, Charles Scharf of BNY Mellon, and David Solomon of Goldman Sachs — by decrying socialist policies in other countries and warning what would happen if economic system came to the US.

After the preamble, Williams asked the seven bank CEOs his binary question.

"I want to ask each one of you, starting with Mr. Corbat, a straightforward question: Are you a socialist or are you a capitalist?" Williams asked.

Each of the CEOs in attendance confirmed they were capitalists.

"Well it's a shutout for the socialists today," Williams replied.

The question elicited some chuckles from another member on the committee, who in a hot mic moment laughed about Williams asking the leaders of some of the world's largest financial institutions whether they were capitalists.

The issue of socialism has recently been gaining steam in political discourse with the rise of candidates and lawmakers, such as Rep. Alexandria Ocasio-Cortez, who are affiliated with the Democratic Socialists of America.

Read more: Here's the difference between a 'socialist' and a 'Democratic socialist'

While there are differences between democratic socialism and pure socialism, Republicans have used the affiliations to attack Democrats and their policy proposals, invoking failed socialist and communists states, most frequently Venezuela.

President Donald Trump has tried to connect Democrats to socialism and has said the 2020 election will be a "referendum on socialism versus capitalism."

This is also not the first time Williams has posed the question during a hearing. On March 13 during a hearing on the National Flood Insurance Program, the Texas Republican also asked a panel of experts whether they were socialists or capitalists.

Watch Wednesday's moment below:

.@RepRWilliams asks panel of Global Bank CEOs: "Are you a socialist or are you a capitalist?" pic.twitter.com/O6grnycTm8

— CSPAN (@cspan) April 10, 2019

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Nintendo and Xbox have an increasingly close relationship — and there's a simple reason for that

Wed, 04/10/2019 - 2:38pm  |  Clusterstock

  • Nintendo and Microsoft are direct competitors in the video game business.
  • But the two companies have been working together in recent years, and the depth of that relationship has grown substantially in the last 12 months.
  • Between a push into cross-play gaming and ongoing "Minecraft" support on Nintendo platforms, it's clear that walls are breaking down in the video game industry.
  • Visit Business Insider's homepage for more stories.

Nintendo and Microsoft directly compete in the video game business, so why are they becoming so friendly?

The answer is surprisingly simple: Because they've realized how mutually beneficial it is to work together while Sony's PlayStation — the sales leader by a longshot — looks like an old coot.

The last 12 months in particular have seen the two companies repeatedly come together on major initiatives.

Here's a walkthrough of their blossoming relationship:

SEE ALSO: Microsoft just accidentally revealed its plans to expand Xbox Live to more platforms, and it could help break down longstanding barriers in the gaming industry

1. "Minecraft" is where this all started.

Microsoft has owned "Minecraft" since 2014 — the result of a historic $2.5 billion acquisition deal. But despite that high price tag, Microsoft didn't lock away the game as an exclusive.

Instead, the game has remained on nearly every platform — with ongoing support from Microsoft.

It was the first sign of Microsoft moving past the old dividing lines in the video game business that traditionally kept certain games locked to one platform or another.

So it used to go: "Halo" is only on Xbox consoles, "Uncharted" is only on PlayStation consoles, and "Mario" is only on Nintendo consoles. 

But "Minecraft" represented an easing off of that old standard. Microsoft makes "Minecraft" for PlayStation 4, Xbox One, Nintendo Switch, Windows 10, OS X, iOS, and Android. 

Moreover, Microsoft used "Minecraft" as a means of breaking down those barriers ever further: The "Better Together" update introduced the ability for "Minecraft" players across all platforms to play together — including Nintendo's Switch.



2. "Better Together."

Games like "Call of Duty," "Overwatch," and "Minecraft" are functionally identical across platforms. Why shouldn't I be able to play "Overwatch" on Xbox One with my friend on PlayStation 4?

The reason, of course, is business.

Sony's in the lead by a large margin, and has no real incentive — financially — to work with Microsoft on making games work between PlayStation 4 and Xbox One.

But Nintendo? That's a different story.

As of June 2018, Nintendo Switch "Minecraft" players are able to play with their friends on Xbox One and every other "Minecraft" platform...except for PlayStation 4. 

Nintendo and Microsoft even released a commercial together:

Youtube Embed:
//www.youtube.com/embed/wH1rzghneDM
Width: 800px
Height: 450px

Sony has since relented a bit on the concept of cross-play, and now allows "Fortnite" on PS4 to work with every other version of the game. It has yet to give in on "Minecraft."



3. Xbox Live on Nintendo Switch.

Through "Minecraft," Microsoft implemented a limited form of its Xbox Live service on the Nintendo Switch. After launching the game, you could sign in with your Xbox Live account.

But Microsoft is taking that another full step forward with outright Xbox Live integration on a system level for the Nintendo Switch. That means you could earn Achievements, access your Xbox Live friends list, and other functionality tied to Xbox Live.

The company announced as much back in March at the annual Game Developers Conference:

"Xbox Live is about to get MUCH bigger," a panel description said. "Xbox Live is expanding from 400M gaming devices and a reach to over 68M active players to over 2B devices with the release of our new cross-platform XDK. Get a first look at the [software development kit] to enable game developers to connect players between iOS, Android, and Switch in addition to Xbox and any game in the Microsoft Store on Windows PCs."

This is the kind of move that can only happen with cooperation from Nintendo — notably, Sony's PlayStation 4 is absent from Microsoft's list.

But why would Nintendo allow Xbox Live on the Nintendo Switch? One particularly notable reason is that Microsoft created a gold standard in online game with Xbox Live. If Microsoft's willing to implement Xbox Live for various games, it offers Nintendo Switch a suite of services — voice chat, friends list, achievements, and more — that are otherwise less great on Nintendo's console.

Microsoft gets to sign up new Xbox Live users, and Nintendo gets a well-respected service with limited control on its popular game platform — it's a win-win.



See the rest of the story at Business Insider

'Whisper listings' are one of the best-kept secrets in NYC luxury real estate — and they give wealthy buyers exclusive access to penthouses other people don't even know about

Wed, 04/10/2019 - 2:25pm  |  Clusterstock

  • There’s a little-known world of "whisper listings" in New York City's most exclusive real-estate circles.
  • Word-of-mouth "whisper listings" give wealthy buyers access to penthouses and homes that aren't listed online, The New York Post reported.
  • These secret listings reportedly include a $110 million penthouse in the Woolworth tower and an Upper East Side mansion owned by a Mexican billionaire.
  • In some cases, sellers use whisper listings as a strategy to avoid disclosing price cuts and the length of time a property has been sitting on the market.

At 520 Park Avenue, one of New York City's ritziest new buildings on Billionaires' Row, only one residence is officially on the market: a full-floor, four-bedroom condo for $31 million.

But what you'd never know by scouring real estate listings is that the tower is also selling a 12,398-square-foot triplex penthouse for a whopping $130 million. To even know this penthouse exists, you'd have to be connected — and probably a billionaire.

Some of the city's most exclusive multimillion-dollar homes are bought and sold as "whisper listings" that you'll only find out about via word-of-mouth, The New York Post reported.

These whisper listings include an $80 million mansion right across the street from the Metropolitan Museum of Art that's owned by Carlos Slim, the richest person in Mexico. According to the Post, Slim unsuccessfully tried to sell the mansion for years and then took it off the market to instead be marketed through billionaires' word-of-mouth.

In the historic Woolworth tower downtown, a five-floor, $110 million penthouse was briefly on the market in 2017 and then mysteriously disappeared. On the building's website, the most expensive unit is selling for $18.8 million. But according to the Post, the $110 million penthouse is still on the market for those with insider knowledge — and those who have the cash.

According to Bloomberg, these whisper listings can also be a sneaky strategy for keeping properties off sites like Zillow, which displays price cuts and how long the listing has been on the market. 

It can also be a matter of privacy for wealthy individuals who don't want to flaunt their sizeable real-estate transactions.

"There's so much talk today about income inequality and the 1% versus the 99%," Jason Haber of Warburg Realty told Bloomberg. "There are people who would prefer to avoid any glare and would prefer to sell it off market."

This trend of secrecy extends to the worlds of hospitality and fashion, too. At some ultra-luxury hotels, the most expensive and exclusive rooms aren't posted online. They're available only for well-connected clientele who know of the rooms through word of mouth and have the funds to pay for them, as Business Insider's Lina Batarags previously reported.

And then there's Goyard, a two-century-old Parisian brand that does virtually no advertising for its products.

"Goyard's prime press strategy is silence," Hillary Hoffower previously wrote for Business Insider. "It forgoes any advertising, e-commerce, and celebrity endorsements. It rarely grants interviews and very occasionally makes products available to the mass market."

This world of secret spaces and products is clearly betting that in some cases, super-wealthy buyers want discretion and exclusivity above all else.

SEE ALSO: I spent a day on NYC's Billionaires' Row. Here's your ultimate guide to one of the city's glitziest streets, which borders Central Park and is home to the most expensive apartment ever sold in the US.

DON'T MISS: An unknown buyer just paid $34 million for a condo in the same Billionaires' Row tower as Ken Griffin's record-breaking $238 million penthouse. Here are the other big-name buyers in the building

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