Category Archives: Investing

Davos pessimism a ‘valuable contra-indicator’ for investors: Guggenheim’s Minerd

(Reuters) – Guggenheim Partners Global Chief Investment Officer Scott Minerd said on Wednesday that worries about a global recession are inflated, and pessimism expressed by political and business leaders at the World Economic Forum in Davos is a “valuable contra-indicator” for investors and turning him bullish.

“While I concur with my colleagues here in Davos that a synchronized global slowdown is underway, fears of recession are overblown,” Minerd said in a note to clients. “If anything, the outlook is brightening as policymakers are beginning to awaken to the mounting risks arising from a protracted trade war and increasing nationalism.”

Minerd, who oversees more than $240 billion, said markets are “likely to remain choppy, but values abound. If we do not face a near-term recession, risk assets are likely to recover and, in some cases, explore new highs.”

For instance, U.S. stocks are cheaper today than when the bull market reigned at the World Economic Forum in Switzerland last year, Minerd said. “If they were a buy then, they must be a bargain now.”

Minerd noted that last year, “from the moment of my arrival the air was electric with the bullish outlook for global growth. Stocks were in a parabolic rise on tax cut euphoria. As stocks soared, nothing but blue skies were ahead.”

He said then that he had begun to consider the prospect that the mood at Davos served as a contra-indicator for the investment outlook. “Last year, we did not have to wait long as stocks fell into a sickening plunge in February,” Minerd said.

“The amber lights flashing in Davos are signaling the consensus view that global growth is slowing. Given past experience, this may be the signal that the economy is likely to re-accelerate soon and that the party in risk assets continues,” Minerd said.

Minerd said growth in the United States will probably slow but remain at or ahead of potential in 2019.

“Additionally, the Federal Reserve is virtually certain to pause well into the second quarter with the market pricing in a possible rate cut if necessary to sustain growth,” he said.

As the largest economy in Europe, Germany will play a pivotal role as the locomotive for European growth, with monetary fuel likely to be provided by the European Central Bank in the form of a new LTRO (longer-term refinancing operations) program under Mario Draghi’s leadership, Minerd said.

“While Germany may be entering a technical recession, Chancellor Angela Merkel is calling for new tax cuts. Of all nations that can afford fiscal stimulus, Germany stands at the head of the class. It has a history of fiscal discipline and is well-positioned to deliver.”

Beyond tax cuts and new infrastructure programs, the People’s Bank of China has begun easing monetary policy – it announced cuts to the reserve requirement ratio (RRR) with the prospect of actual rate cuts if necessary.

Reporting By Jennifer Ablan; Editing by Susan Thomas

Article source: http://feeds.reuters.com/~r/news/wealth/~3/JHWO0FTaXY0/davos-pessimism-a-valuable-contra-indicator-for-investors-guggenheims-minerd-idUSKCN1PH26Q

How the shutdown affects tuition payments and loans

CHICAGO (Reuters) – With the partial U.S. government shutdown about a month old, a student showed up at the College of Southern Maryland’s financial aid office with two preschool children in tow to request emergency help paying her $3,000 in tuition and fees. She is one of the 800,000 workers not getting paid.

“It was heartbreaking,” said college President Maureen Murphy, who decided the institution needed a plan because it is close to two naval bases and had a lot of affected families.

Normally, colleges do not allow students to attend classes if they miss a tuition payment, and payment plans carry fees. But a handful of colleges – including Connecticut State Colleges and Universities, the Nevada System of Higher Education Institutions and Wayne State University in Michigan – have publicly told students they can stay in college and delay tuition payments without paying penalties.

In addition, schools like the College of Southern Maryland, have provided special scholarships to cover necessities such as books. Students also have access to an on-campus food bank that has been far busier than usual, said Murphy, who added that her school has so far helped about 100 students with tuition.

Many other schools with smaller populations of federal workers have not adopted defined plans, however. They may rely instead on existing pools of money reserved to help students that encounter sudden hardships such as layoffs or family health issues.

Students seeking aid typically are required to show income data. In the case of the federal shutdown, they would need to document government employment and the temporary cutoff in pay.

Justin Draeger, president of the National Association of Student Financial Aid Administrators, said he sent a query asking colleges about responding to the shutdown and received no replies.

“There is probably finger crossing that this gets resolved soon,” said Draeger. “Not all schools can offer payment plans or defer payments. Big state schools will be fine, but vocational, arts and community colleges are tuition-dependent.”

Dawn Medley, associate vice president of enrollment management at Wayne State University, said she fears that if students are not granted tuition relief, they will drop out. That is why Wayne State, in Detroit, has delayed tuition payments for government workers with financial needs, put them on payment plans, provided emergency loans and waived fees.

“There are families that can’t just cough up $6,000 when they do not know when the paycheck will arrive,” said Medley.

Karen McClure, whose husband is not getting paid while still working his government job, said she was relieved when her son Damon was allowed to wait until March to start making his tuition payments at the College of Southern Maryland.

“We would have made it work somehow,” she said, noting that aid has materialized in unexpected places. Friends from church provided $750 in cash and $500 gift cards for groceries, and the family’s landlord pushed back the deadline for January’s rent.

BRIGHT SPOTS

There is some good news: Federal financial aid in the form of Pell Grants and student loans is not affected. Early in the shutdown, financial aid approvals were delayed by a glitch in Internal Revenue Service computers that prevented colleges from getting the electronic tax returns they needed to give financial aid to applicants. The Department of Education resolved that by allowing colleges to accept paper tax returns instead.

Yet, government workers who have existing student loans could have trouble making payments because the Education Department has not granted exceptions based on the shutdown.

Like anyone facing a hardship, government workers could delay or reduce payments by requesting deferment, forbearance or income-based repayment directly from their student loan servicer, the business that collects the loan payments (bit.ly/2R9lNUk)

The Government Accountability Office has found servicers in the past have not always been helpful in comparing options, so do some research on your own, starting at the government’s own website on aid (bit.ly/2by061G).

Government workers who want to eventually get their student loans forgiven after 120 payments may secure that option best by going on an “income-based” payment plan. Such a plan reduces monthly payments based on a person’s income, so a government worker without pay may temporarily reduce their monthly payment to zero.

Whatever you do, “do not ignore your loans,” warned Mark Kantrowitz, publisher and vice president of research for SavingForCollege.com.

If you skip payments without specifically getting relief such as a deferment, you will face penalties and a ding on your credit score.

Editing by Beth Pinsker and Jonathan Oatis

Article source: http://feeds.reuters.com/~r/news/wealth/~3/Zo5kQzlZIbk/how-the-shutdown-affects-tuition-payments-and-loans-idUSKCN1PH2AE

First American: Stock market volatility aids potential homebuyers

In December, potential existing-home sales moderately increased from the previous month and inched forward from 2018 levels, according to First American’s Potential Home Sales Model.

“In December, the market potential for existing-home sales in December increased 1.1% to a seasonally adjusted annualized rate of 6.15 million compared with a year ago, but the housing market still underperformed its potential by 9.6%,” First American Chief Economist Mark Fleming said.

Notably, the report highlights that the gap between actual existing-home sales and the market potential for home sales narrowed by 2.1% from the previous month.

First American points out this represents a 64.7% increase from the market potential low point reached in February 2011.

Fleming explained that the housing market has the potential to support more than 593,000 additional home sales at a seasonally adjusted annualized rate.

The market for existing-home sales is underperforming its potential by 9.6%, or an estimated 593,000 sales. Furthermore, the market performance gap decreased by an estimated 129,000 sales month-over-month, according to the report.

The report highlighted that rising mortgage rates have impacted both existing homeowners and first-time home buyers.

“The housing market has experienced a decades-long decline in the 30-year, fixed mortgage rate, dropping from a high of 18% in 1981 to a low of nearly 3% in 2012,” Fleming continued. “This long-run decline increased affordability and encouraged existing homeowners to move. However, in 2016, the trend reversed, and mortgage rates began to slowly increase, reaching nearly 5% last November.”

According to Fleming, this period of rising rates has dissuaded existing homeowners from selling their home.

Furthermore, Fleming notes that rising rates have reduced affordability in some high-cost markets, discouraging some potential first-time home buyers from entering the market.

However, Fleming indicates that recent stock market volatility is actually helping homebuyers.

“A steep sell-off in U.S. stocks caused by investors seeking safe-haven from global and domestic economic uncertainty caused the 10-year Treasury yield to decline, and mortgage rates fell alongside it,” Fleming said. “In fact, the average 30-year, fixed-rate mortgage in December fell 23 basis points compared with the previous month.

Fleming said the decline in mortgage rates is a welcome relief to prospective home buyers who have mostly experienced a year of rising rates and house prices.

NOTE:  First American’s potential home sales report measures existing-homes sales, based on the historical relationship between existing-home sales and U.S. population demographic data, including income and labor market conditions, price trends in the housing market and conditions in the financial market.

Article source: https://www.housingwire.com/articles/47974-first-american-stock-market-volatility-aids-potential-homebuyers

Your Money: Can you make $100 grow into a house?

NEW YORK (Reuters) – My preteen daughter earned her first dollars in 2018, so I wanted to seed her retirement account. But what can you do with $100 or so?

For people just starting to invest, those first steps are always the hardest. Most financial institutions do not even want you. Choose wrong, and your whole balance can be eaten up in fees.

On the other hand, if you get it even a little bit right, you could enjoy the magic of compounding interest.

Dennis Nolte, a certified financial planner in Winter Park, Florida, had one of his career highlights when a couple came to thank him for his help setting up a savings plan from zero.

Nolte worked at Disney’s credit union when the couple came to see him. They were in their twenties, not yet married and struggling to make ends meet. They did not have $2,500 to meet the money market minimum, so Nolte set them up with a savings plan of $20 per pay period. If they got raises or bonuses, they promised to increase the amount.

“Four years later, during the market meltdown when everyone’s hair was one fire, this young woman walks in and says she’s there to put a $5,000 down payment on their house,” Nolte said. “It was like water in a desert.”

Here are some tips for small-fry investors:

* Child earnings

Financial advisers love Roth IRAs, retirement accounts that take after-tax contributions, because the growth is tax-free. But you need earned income to contribute. The maximum contribution is $6,000 in 2019.

Some custodians, like Fidelity, offer accounts for minors under age 18 with no minimum balance and no annual fees. You pay $4.95 for trades unless you pick from a special selection of mutual funds and exchange traded funds.

With a small investment, do not worry about diversification, said certified financial planner James White, of Pottstown, Pennsylvania. And do not worry about market volatility, because the time horizon is so long, White added.

Pick a solid index fund like the Vanguard 500 or Schwab Total Stock Market Index and do not overthink it.

My daughter’s initial $115 could be worth more than $1,000 by the time she is 59 if it grows at a reasonable 5 percent. If she contributes more over time as her earnings grow, she could be well set by her 30s, and she could take out the principal for a down payment on a house.

* College savings

The longer the time horizon, the better you will do. That is the chief incentive for starting early and small with college savings, even just $25.

Most financial advisers recommend 529 savings plans for this purpose, which give you a tax deduction in many states and grow tax-free.

Target-date funds that balance stocks and bonds for you over time are a good choice for this purpose, Nolte said. Pick an end date when your child will be in college and roll forward until it is time to pay tuition, adding as much as you can over time.

* General savings

If you are looking for safety, keep your savings in a high-yield savings account or certificates of deposit that are FDIC-insured. You can find the highest rates at a site like bankrate.com, but read the fine print, because some have minimum balances or require regular contributions.

If you have money for investing, open a brokerage account at any number of financial institutions and start buying stocks and bonds. Some, like Charles Schwab and TD Ameritrade, have no minimums. An app like Acorns can help you put aside spare change and put it to work in investments, for a monthly fee of $1 to $3.

Wealthfront.com is among those that have a $500 minimum. Spokeswoman Kate Wauck said the company wants to make sure that investors have a demonstrated ability to save and are ready to invest.

Nolte said he started his teen daughter’s brokerage account with $1,000. He bought individual stocks that meant something to her, like Target, before shifting to broad index funds.

Note: These accounts will affect financial aid if any of your children are soon applying to college, especially assets in a child’s own name. You will also have to pay tax on the child’s dividend income above $1,050.

Editing by Lauren Young and Tom Brown

Article source: http://feeds.reuters.com/~r/news/wealth/~3/r6p-WFd7jGg/your-money-can-you-make-100-grow-into-a-house-idUSKCN1PA18T

Your Money: Baby boomer primer

NEW YORK (Reuters) – Baby boomer art collectors have a problem: Their heirs may not know the difference a $100 print from a garage sale and a $1 million paradigm of Abstract Expressionism.

When investment bank UBS recently surveyed high net worth art collectors with more than $5 million in investable assets, their No. 1 concern was what happens when they pass on their art to the next generation.

The biggest intergenerational wealth transfer in history is already underway, with baby boomers handing down an estimated $68 trillion over the next 25 years, according to research firm Cerulli Associates. The trickiest part of this shift may not involve stocks, bonds or cash, but something hanging on a wall.

Educating heirs about art worries 58 percent of collectors in the survey, while 57 percent fret over the tax implications.

“I do see trends where more collectors are involving their families into the art-buying process,” said Kipton Cronkite, a curator and advisor who divides his time between Los Angeles and New York.

That means getting the younger generation to get up to speed on fine art, a process akin to transforming Cockney flower girl Eliza Doolittle into the toast of society in “My Fair Lady.” Crash courses on art history, tours of top museums, and mix-and-mingles at popular events like Miami’s Art Basel can all be on the itinerary.

Of course, all the art education in the world will not solve the central question: Do you have a vision that you want your heirs to carry out? Or will you risk giving them total control of your collection?

That is why Daniel Lebensohn, a 47-year-old real estate entrepreneur, has already taken his two young daughters to New York to tour the iconic Metropolitan Museum of Art, and to Miami to see the famous Wynwood street murals. He has introduced them to artists from whom he has commissioned pieces.

“I believe that the most significant thing a collector can do is empower the next generation, not look to control it,” Lebensohn said.

So what do art collectors need to keep in mind, when passing on their beloved works? A few pointers:

1. Outline a plan.

If you have a vision for your collection, you need to put it in writing. Some high-end collectors end up creating their own museums, like the Rubell Family Collection in Miami.

If you are divvying it up among heirs, explain why “one person gets this piece and another gets that piece,” said Liz Jacovino, a Connecticut wealth strategist with RBC Wealth Management. Otherwise, you may invite family squabbles that often result from the reading of wills.

You may want to discuss your thoughts with your heirs because the truth is, they may not want a certain piece of art, or any at all. Often their primary concern is “liquidity,” Jacovino said, as in “just the cash, please.”

2. Think about early gifting.

The 2019 lifetime estate-tax exemption is $11.4 million, scheduled to sunset back to $5 million in 2025. So bequeathing high-priced artwork after you pass away could come to bite your heirs later on.

Gift it now into a trust, and only the current value counts against that estate-tax figure. So if a $100,000 painting climbs to $5 million in value, only the $100,000 will count against lifetime limits.

3. Appoint an adviser.

Most high-end collectors already have art consultants who can also serve the next generation in that capacity.

“Ideally collectors can leave guidance for executors, on who would be a good advisor to help oversee the collection,” said Jacovino. “That way, the next generation can start to learn about what they have just inherited.”

4. Give them some latitude.

As much as you love art, your kids or grandkids may not share the same passion. So while you can certainly try to spark their interest, there are no guarantees.

“Telling them exactly what they should do is a failing formula,” advised Daniel Lebensohn. His hope for his daughters is that they keep the pieces most meaningful to them, and find good homes for the rest.

Editing by Beth Pinsker and Richard Chang

Article source: http://feeds.reuters.com/~r/news/wealth/~3/QXzJpkDyhKo/your-money-baby-boomer-primer-perfecting-the-art-of-giving-art-idUSKCN1PG1E6

Your Money: The words and wisdom of Jack Bogle

NEW YORK (Reuters) – America just lost a true giant in investing legend and Vanguard Group founder Jack Bogle.

The creator of the first indexed mutual fund died on Wednesday reut.rs/2Cu5i09 in his longtime home of Bryn Mawr, Pennsylvania. He was 89.

Bogle could have been a billionaire many times over, but he structured Vanguard so that proceeds would return to shareholders, which tells you all you need to know about the man.

In 2016, I interviewed Bogle for Reuters’ “Life Lessons” reut.rs/2dAMG1I series about what he had learned over the course of his remarkable life.

One problem with that conversation, as was often the case with Jack, was that there was too much good stuff to squeeze into a single article about a man who was often dubbed by the industry as the ‘patron saint’ of the investing business.

Here are some outtakes from that exchange on creating a life of legacy.

Bogle on growing up in the Depression: “There were three of us Bogle boys, and we all started working at the age of 12. I worked as a pinsetter in the bowling alley of the Sea Girt, New Jersey fire department. You put ‘em up, and they knock ‘em down. After six hours of doing that every day, I realized that wasn’t what I wanted to do for my career. Then those automatic pinsetters came along, and I was disrupted out of a job.”

Bogle on wealth: “It takes a long time to get to that point, but you have to handle it with care. Luckily, my wife and I get along very well financially. Many couples are not on the same agenda, and spend too much money. But we always knew exactly how much was coming in and going out every week, even when we weren’t making much at all.”

Bogle on living a meaningful life: “You are rich if you have more money than you need. It is nice to have money, but it is not so good if you are just throwing it away on useless objects. I prefer money going towards something that has meaning, like our family home in the Adirondacks. I have 12 grandchildren now, and the whole summer, I don’t think there is a day where someone isn’t there.”

Bogle on role models: “I never tried to copy anybody, because they are who they are and I am who I am. But there are some people I think are exceptional. Like [value investing legend] Benjamin Graham, although I didn’t know him personally. Warren Buffett is another, and I have gotten to know him pretty well. (Former Federal Reserve Chairman) Paul Volcker, David Swensen at Yale, Cliff Asness from AQR. I have also been close to a couple of economists, like Peter Bernstein and Paul Samuelson.”

“What those people all mean to me is not only their common sense and sound thinking, but also that they are people of high character. They are just solid human beings, and that comes before any other measure of success.”

Bogle on success: “I would define success as using your God-given talents for the greatest advantage of society. And that doesn’t have anything to do with money. It has a little bit to do with leadership. You could even be a loner and be a success. I’m a bit of a loner. I keep my own counsel and live in my own little world of investing and family. But I’m happy that way, and happy with who I am.”

Bogle on his heart transplant: “This gets to the person that I am…I received a transplant from a donor whose heart was still beating. Now I’m getting old, but after all these years, I’m still vigorous in voice and attitude. So I have no complaints about life.”

Bogle on indexing: “I haven’t done any active trading in the stock market for 35 years. I got rid of all my individual stocks at that time, and haven’t held any since. I learned the hard way. It wasn’t like I lost a lot of money, but I never really examined what I owned.”

“I swear if a broker calls you up and says ‘Buy A and sell B,’ you’re better off doing the opposite. A broker has to sell you something, or he doesn’t eat at the end of the month. In any trade, there is someone who is right and someone who is wrong. The only one who is always right is the man in the middle.”

Bogle on investing: “My advice is typical. Diversify, focus on low costs, invest for the long term. Don’t speculate – and don’t be distracted by volatility.”

Editing by Lauren Young and Bernadette Baum

Article source: http://feeds.reuters.com/~r/news/wealth/~3/-j-yjyJgB_g/your-money-the-words-and-wisdom-of-jack-bogle-idUSKCN1PB2GK

Asset managers brace for more job cuts amid market turbulence

LONDON/NEW YORK (Reuters) – Turmoil on financial markets is expected to deepen layoffs and accelerate acquisitions in the fund management industry.

BlackRock (BLK.N), the world’s largest money manager, and industry No. 3 State Street (STT.N) announced job cuts this month after the worst year for many stock indexes since the financial crisis and losses across most other financial assets. Hedge funds AQR Capital and Balyasny Capital took similar steps.

“It will be a common industry trend,” said Kyle Sanders, an analyst with financial services firm Edward Jones.

“When markets go down, the first place asset managers look to cut costs is with headcount.” Until last year, rising markets – buoyed by easy money from central banks – had helped keep fund managers comfortably afloat, with many enjoying profit margins of 20-40 percent, even though fees have fallen.

For an interactive version of the below graphic, click here tmsnrt.rs/2RUbOqo.

GRAPHIC: Margin pressure squeeze hurts money managers png – tmsnrt.rs/2RPka2I

But the prospect of tighter monetary policy and concerns around economic growth saw $168.1 billion drained from mutual funds globally in the final quarter of 2018, data from Lipper at Refinitiv showed.

For an interactive version of the below graphic, click here tmsnrt.rs/2HhyNYA.

GRAPHIC: Tough end to Q4 for many asset managers png – tmsnrt.rs/2HhH0Mq

Early January saw some money return to equity markets but it is too early to say if that will be sustained. In the meantime, without market performance to bolster their assets under management, investment managers’ revenues, largely based on charging a fee on those assets, will suffer.

BlackRock reported a smaller-than-expected fourth quarter profit and analysts expect fourth-quarter earnings for SP 500 asset managers and custody banks to drop 0.8 percent on average. At the beginning of October, they had forecast growth of 10.3 percent, Refinitiv data show.

“With revenue-growth expectations dialed back, it’s not surprising that firms like AQR and BlackRock are reprioritising,” Neal Epstein, Vice President at Moody’s Investors Service, said.

BlackRock, State Street and Balyasny Capital declined to comment. Claudia Gray, a spokeswoman for AQR Capital, said the company had experienced record growth in staffing over the past three years.

“Recent small reductions in headcount reflect the need to balance our workforce growth with the current needs of our business,” Gray said in a statement.

CONSOLIDATION DRIVE

If market volatility prompts more investors to pull their money it will compound existing pressure on asset managers from increased competition, particularly from cheaper index-tracking products that have driven down fees. Tougher regulations and investments in technology and data have also inflated costs with compliance managers and data specialists continuing to be hired.

Despite plans to cut 3 percent of its global workforce, BlackRock has said its staffing levels would be 4 percent higher this year as it invests in other areas, including technology.

Elsewhere, the cost-cutting pressure is particularly acute for smaller asset managers which lack the heft to compete on price against behemoths such as BlackRock, which has nearly $6 trillion in assets under management.

Smaller companies will have to go further to shore up their bottom line and, in addition to firing staff, may look to join forces with larger rivals to help share mid- and back-office costs, accelerating a trend begun over the last few years.

A 10 percent fall in assets under management could see profit margins slide by 700-1,000 basis points, which would “absolutely drive consolidation”, UBS analyst Mike Werner said.

A total of 915 deals with a combined value of $50 billion were sealed last year, two thirds more valuable than in 2017, Refinitiv data showed, including Invesco’s (IVZ.N) $5.7 billion acquisition of OppenheimerFunds.

For an interactive version of the below graphic, click here tmsnrt.rs/2RMjXNO.

GRAPHIC: Asset management MA png – tmsnrt.rs/2RW2Adg

That trend is expected to accelerate, particularly in Europe, where listed asset managers’ share prices have been hit hard, and banks and insurers, which held onto their asset management arms during the financial crisis, may be more tempted to sell.

“As the value… is declining, potential sellers may be more inclined to close a deal, leading to increased consolidation,” said Christian Edelmann, head of global banking and wealth asset management at consultants Oliver Wyman.

Over 2018, the Thomson Reuters global fund managers index .TRXFLDGLPUINVM fell 27 percent with Standard Life Aberdeen (SLA.L) down 40 percent, France’s Amundi (AMUN.PA) down 35 percent and Italy’s Anima (ANIM3.SA) down 39 percent.

By comparison, the MSCI World index .WORLD fell 10.4 percent.

Additional reporting by Ritvik Carvalho; Editing by Sinead Cruise and Carmel Crimmins

Article source: http://feeds.reuters.com/~r/news/wealth/~3/xcdxJV-Jw0I/asset-managers-brace-for-more-job-cuts-amid-market-turbulence-idUSKCN1PF1JY

Gulfport pledges share buybacks after hedge fund demand

BOSTON (Reuters) – Natural gas and oil firm Gulfport Energy Corp said it would buy back $400 million of shares on Thursday, just hours after a public demand to that effect from hedge fund investor Firefly Value Partners.

After the close of trading, Oklahoma City-based Gulfport announced plans to buy back $400 million worth of shares in the next two years and said it bought $90 million worth of shares in the last weeks of 2018.

“I want to underscore our commitment to further enhancing shareholder value with a newly authorized $400 million stock repurchase program to be executed within the next 24 months,” David Wood, who was named chief executive officer late last year, said in a statement.

On Thursday morning, New York-based hedge fund Firefly had said it wanted Gulfport, which has a market capitalization of $1.5 billion, to buy back $500 million of shares.

Firefly, which owns 8.1 percent of Gulfport, said in a public letter that such a large share buyback could translate to a doubling of Gulfport’s share price.

It criticized how Gulfport had allocated capital and complained that current board members might not be committed to pushing for improvements.

In its statement announcing the share buyback, Gulfport did not refer to Firefly or address its complaints.

But by the afternoon, when the eight member Gulfport board ended its meeting, management and the directors laid out a plan that some analysts said could neutralize the hedge fund’s requests.

Firefly declined to comment on the Gulfport statement.

Gulfport also forecast free cash flow of more than $100 million this year and said this year’s capital expenditures would be between $565 million and $600 million and be paid with cash flow.

Last year, Gulfport had authorized $200 million worth of buybacks.

In its critique of the company and its board, Firefly said directors do “not seem up to the task of fixing the company’s capital allocation strategy and regaining investors’ trust.” It added that it may be time to add a shareholder to the board who could energize the group to push for these changes.

“We propose an action plan that we believe allows Gulfport to create at least $9 per share of value for stockholders (over 100 percent of the current market capitalization) over the next 12 months,” Firefly’s letter said. Rising commodity prices would make the impact of the share buybacks even bigger.

The company’s shares, which closed at $8.82 on Thursday, have tumbled 32 percent in the last year.

This is the time of year investors who are pushing for change traditionally write public letters to companies that detail their complaints. Later they may run a proxy contest to seat newcomers on the board.

Firefly has been invested in Gulfport since 2013 and there have been private discussions, the hedge fund acknowledged.

There was turmoil at the company late last year. In December it appointed Wood as CEO to replace Michael Moore, who resigned after accusations that he had misused the company’s chartered aircraft and a company credit card.

Reporting by Svea Herbst-Bayliss, Editing by Rosalba O’Brien

Article source: http://feeds.reuters.com/~r/news/wealth/~3/xmjjOun8-8g/gulfport-pledges-share-buybacks-after-hedge-fund-demand-idUSKCN1PB28X

Return of risk-on fuels worst government debt outflows since October: BAML

LONDON (Reuters) – Government bonds suffered the biggest weekly outflows since October last year as investors plowed money into emerging market and high-yield debt, Bank of America Merrill Lynch (BAML) said on Friday.

The bank’s report – which is based on EPFR data and tracks fund flows from Wednesday to Wednesday – said high-yield bond fund enjoyed $2.8 billion of inflows, the biggest since April 2017, while emerging market debt added $2.5 billion. Government bond funds shed $1 billion.

Equity redemptions hit $4.8 billion over the same period, with U.S. stocks haemorrhaging $7.7 billion, BAML researchers wrote in their note to clients. Emerging market stocks saw inflows of $3.4 billion.

BAML’s bull-bear indicator rose to 2.5 from 2.1, moving away from its extreme bearish reading of January 3.

Reporting by Karin Strohecker, editing by Sujata Rao

Article source: http://feeds.reuters.com/~r/news/wealth/~3/R5tfExaKTt0/return-of-risk-on-fuels-worst-government-debt-outflows-since-october-baml-idUSKCN1PC0XZ

Trian to skip PPG board challenge after new commitments: sources

(Reuters) – Trian Fund Management LP will not challenge PPG Industries Inc’s (PPG.N) board of directors at its 2019 shareholder meeting after the U.S. paints and coatings company met some of the activist hedge fund’s demands and announced new financial targets, people familiar with the matter said on Thursday.

Trian, run by billionaire Nelson Peltz, asked PPG last October to replace its Chief Executive Michael McGarry with former CEO Chuck Bunch, look at how it uses its balance sheet, explore a break-up of the company, and eliminate the company’s practice of re-electing only a portion of its board instead of its entirety every year.

PPG unveiled financial targets for 2019 on Thursday and said it would explore separating its architectural from its industrial coatings, as well as destagger its board and remove super majority voting.

The company said on Thursday that the U.S. Attorney’s office for the Western District of Pennsylvania is also looking into improper accounting practices from 2017 into which the U.S Securities and Exchange Commission opened a probe in June.

PPG on a conference call with analysts said it was fully cooperating with the SEC and the U.S. Attorney’s office on the investigation.

Trian will not submit its own nominees to challenge PPG’s board of directors at the company’s upcoming shareholder meeting, the sources said. The deadline for nominations is at the end of this week.

“Over the last several months, PPG has actively engaged with many of our shareholders. The targets and objectives announced today resulted from PPG’s planning process, are responsive to a broad set of shareholder feedback and demonstrate confidence in the Company’s long-term prospects and operational excellence,” McGarry said in a statement.

A PPG spokesman declined to comment on Trian’s plans. Trian also declined to comment.

Among the 2019 targets PPG announced were sales growth of 3 to 5 percent and a minimum 10 percent earnings-per-share growth as the standard for executive incentive compensation.

PPG shares were trading up 4 percent at $106.58 in afternoon trading in New York on Thursday, giving the company a market capitalization of more than $25 billion.

Trian’s investment in PPG last year came after the Pittsburgh-based company was hit by several missteps. It acknowledged accounting irregularities that caused it to restate its earnings. In 2017, PPG made a $30 billion hostile bid for Dutch peer Akzo Nobel SA (AKZO.AS), which ended unsuccessfully.

Trian’s largest investments are General Electric Co (GE.N) and Procter Gamble (PG.N), where the hedge fund has board seats.

Reporting by Svea Herbst-Bayliss in Boston and Greg Roumeliotis in New York; Editing by Susan Thomas

Article source: http://feeds.reuters.com/~r/news/wealth/~3/fPt661aVudc/trian-to-skip-ppg-board-challenge-after-new-commitments-sources-idUSKCN1PB2NA

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