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July 2015 – Barry Honig, Dr Frost And More In-Depth

I believe Idi Inc. (NYSEMKT:IDI) is another worthless Brauser and Honig wipeout. This famous wipeout team has joined forces to temporarily resuscitate a fraud ridden shell with a tiny debt collections firm, acquired with $5.7m cash payment, to the unsustainable valuation of $200m or >40x revenue. In what appears a desperate attempt to salvage his failed fraud shell, Frost has clearly gotten involved with the “wrong crowd” and regrettably stained his reputation through association with one of the worst penny stock wipeout teams in America.

Brauser’s biography conveniently “forgets” to include a long track record of fraud lawsuits, bankruptcy and shareholder wipeouts. While touting involvement in Naviant, Brauser neglects to mention he was apparently sued by data fusion giant Equifax (NYSE:EFX) for “fictitious receivables” and by Softbank for “various frauds” with apparent multimillion dollar payments to Equifax. Shockingly, the Naviant debacle barely scratches the surface and Barry Honig’s background looks even worse.

(picture credit IDI)

IDI faces an insurmountable lawsuit while desperate for cash and with a $160m equity shelf filed IDI stock is now “coincidentally” being pumped with an apparent sketchy online Yahoo message board stock promotion campaign, similar to halted and bankrupt Forcefield Energy (NASDAQ:FNRG) where the chairman was arrested for fraud.

IDI is eerily similar to the BVSN, VNRG, USEL, IZEA and DRNE wipeouts thiese people oversaw, With a huge amount of IDI shares becoming unlocked soon, a $160m shelf filed for IDI stock sales and an abusive $31m+ free payment to Brauser and Honig, IDI is at imminent risk of total wipeout.

It’s not often you get to short a cash burning penny stock wipeout team with a declining, $5.7m cash acquisition trading at >40x revenue for <7% cost to borrow. I recommend you pour yourself a tall glass of Gilby’s vodka and sit down as what you read will be shocking….

“Interactive Data” A Tiny, Struggling Debt Collections Business With $0 R&D Spending, Bought With $5.7m Cash

Now that IDI has officially announced they are winding down the China billboard business with huge write offs, 100% of IDI’s ongoing business will be “Interactive Data, LLC”. I think IDI investors are confused and don’t understand what this business actually is.

“Interactive Data, LLC” is the business IDI is pinning their “data fusion!” hype-story on, which IDI just acquired last year with a $5.7m cash payment.

Strip away the hype, we see “Interactive Data, LLC” is a tiny firm with just 9 full time employees founded in 2001. Based in Georgia, Interactive Data seems focused on providing contact information verification to the debt collection business. When a debt collector calls a defaulted creditor, they are not allowed to harass people with similar names and face severe lawsuits if they make that mistake. Therefore, debt collections agencies pay tiny amounts for some very basic offerings which allow them to be sure they are tracking down the correct person.

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The contact verification business is a brutally competitive business where, over the years, Interactive Data finds itself facing larger, superior competitors with cheaper, better products and dominant sales teams. Due to this, Interactive Data has struggled and been apparently forced to hire outside sales consultants and, based on their transactional pricing model, chase after the smallest and least profitable customers in the industry. Interactive Data isn’t even a real technology company anyway because this tiny business seems to have been built largely by acquisition with no R&D in 2012, 2013 and apparently 2014 as well.

We can see Interactive Data’s financial struggling below in the only clear Interactive Data financials I could find, available here.

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(picture credit IDI inc filings)

We can see Interactive Data’s 2014 revenue declined -7% versus last year while gross profit fell -18.5%. Also interesting: Interactive Data claims to have spent zero on R&D in most of 2014, 2013 and 2012 and even with this expense at $0 and without public company expenses or any of the other SG&A Brauser/Honig/etc are layering on this tiny failure, it only generated a ~$474k in profit, which also declined -34.8% from the previous year.

Considering IDI has already opened multiple branches in FL and WA with 8+ engineers and the typical >$400k of annual cash cost just to be a public company, I estimate IDI’s cash burn in the future will be at least -$2m per quarter. Perhaps this is why none of IDI inc’s press releases include the financials of this tiny struggling “business” they just acquired? Clearly the above “business” is worth nothing vaguely close to IDI’s current ~$200m market cap. Recall that there is nothing else here. The only aspect to IDI’s business is this tiny, marginally profitable and extremely competitive company. That’s it.

So what are Brauser and Honig doing with a fraud ridden shell and this tiny struggling debt collection firm? Let us dig deeper to understand what is truly going on here….

Brauser’s “Selective” Disclosures = Fraud Lawsuits, Bankruptcy and Wipeout

As a reminder, Michael Brauser, Barry Honig and their investment vehicle Marlin are clearly the financial architects of IDI to me and I don’t see how IDI would even exist without them.

Michael Brauser: History of Fraud Lawsuits, Bankruptcy and Wipeout

Picture credit IDI inc

Brauser seems to “selectively” tout his background, picking and choosing certain companies while failing to transparently disclose lawsuits around his involvement with other companies. A large number of these undisclosed companies wiped out big piles of retail shareholders.

Naviant = Fraud Allegations

(picture credit Naviant)

For instance, Brauser touts his “Naviant” track record sale with Equifax in his biography. What seems to have been forgotten though is he was apparently sued by Equifax for fraud allegations over that transaction and apparently saw millions of dollars go to Equifax as a result. This amazing lawsuit alleges Brauser “participated in the fraudulent creation of fictitious receivables and further participated in accounting overstatments that disguised Naviant’s true financial condition” going on to allege further:

“maintained one set of book for Naviant that was more accurate and complete and another that omitted the low-priced e-mail transaction, which Naviant provided to Equifax and it’s accountants during merger negotiations.”

Shareholder Softbank also sued, claiming

“Defendant Michael Brauser had been “intimately involved in carrying out various frauds at Naviant and covering up their misdeeds through threats and intimidation.” Softbank also claims that Defendant Michael Brauser represented to Softbank that he was ‘judgment proof’ as a result of transferring away all of his personal assets, with the exception of his Bentley automobile and personal computer”

While the Equifax fraud allegations seem to have resulted in big cash payments it’s not clear to me how the Softbank suit ended. Unfortunately though it appears this Naviant mess is just the tip of the iceberg…

Biozone: “this is not even investment – it is stealing“

Brauser was again sued (with Honig, etc) in a case involving Biozone Pharmaceutical including (emphasis mine):

“an illegal scheme by a group of predatory investors utilizing facially despicable methods”

And goes on to explain that, in addition to allegations involving violations of federal securities laws:

“this group of investors misled Plaintiff Fisher through aninvestment scheme designed to divest Plaintiff of all the economic rights and goodwill be had built through his company over the course of the previous 22 years”

“the defendants (Brauser, Honig, etc) immediate financial motivation in taking a legitimate economic contributor is to turn it into an investment vehicle in which they will pump up the stock price, and then proceed to sell off the shares, without regard to the well being of the business.”

“violating the Racketeer Influenced and Corrupt Organizations Act for engaging in a pattern of similar behavior against other companies.”

This lawsuit is remarkable, and I strongly encourage you read it. This case seems to have also been shuffled around so it’s not clear what the ultimate resolution was for poor Daniel Fisher. However with all the Honig, Brauser, etc lawsuits, I would strongly recommend everyone read all the legal background documents to make sure you truly understand what you are getting yourself into with these people.

Unsurprisingly, Biozone seems to have been a wipeout for original investors as the stock imploded -80.62% over the time frame below and was sued for “breach of fiduciary duty” after basically all of Biozone’s important assets were transferred to another Honig/Brauser company. I remind you that Frost was also somehow convinced to invest in this mess too.

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The List Goes On: Even MOAR Alleged “Misrepresentations” and Bankruptcy

Brauser was sued again 1/30/2009 for fraud in Kast vs. The Tube Media Corp (09-06285) a publicly traded company that apparently also failed, was delisted and seems to have ceased operations 10/2007. Allegations included “filing materially false and misleading financial reports, and intentionally making misrepresentations of material facts”. Also not discussed in Brauser’s biography was the apparent bankruptcy of FL Telephone Co or that Brauser was sued in an adversary proceeding related to that bankruptcy. Murky situations abound with further allegations of improper side deals and Brauser potentially plotting to violate FL law through undisclosed $1m commission payments. Despite all these red flags, retail investors seem to fall for the “Brauser and Honig Show!” over and over again, as yet another lawsuit here against Brauser (as chairman of Sendtec) alleges “violations of securities laws”. While some of these lawsuits seem to have resulted in cash payments like Equifax, other lawsuits seem to have eventually been dismissed or possibly settled, so I recommend you read these legal documents yourself to gain the full picture. Regardless though, investing with anyone who has repeatedly faced such serious allegations clearly warrants extreme caution.

Furthermore, just because you invest in a company and own shares of equity does not make you a “founder” as much as you’d like. If I own Coca Kola (NYSE:KO) stock for years that doesn’t mean I’m a “founder” and even if I sit in on four phone calls per year with the board that obviously doesn’t mean I “built the business!” either. Confused retail stock investors like to tout “but he sold Interclick!”. While ignoring the fact that being on the board is a passive role merely requiring a few meetings a year, ICLK traded at $12.98 before it was eventually sold for $9. That means many shareholders took a severe loss and the company was actually sold at a discount to where it had traded previously.

Interclick: “sometimes even when you win….you lose”

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Brauser seems to love to tout that he was on the board of InterClick when it was sold to yahoo (NASDAQ:YHOO).

As you see above though, before Yahoo stepped into salvage this mess, InterClick was ALSO on its way to being another wipeout. Even with Yahoo buying the company at a premium (and the deal apparently failing later on), the takeout price was still -30% from where it had traded previously. So I see that even in the blind chance Brauser accidentally doesn’t wipe a company out or get sued with fraud allegations, in the biggest success of his whole life, many shareholders STILL lost a substantial part of their investment.

For Brauser’s more recent forays into stocks, as well as virtually everything he touches, bad things happen to retail investors…..

The Honig & Brauser “PlayBook”: Frost’s Name Thrown Around, Then Shareholders Get Wiped Out

Unsophisticated retail investors seem to think Frost’s name on a filing means an investment is a sure thing, ignoring the fact that Frost is ~80 years old and has money in dozens and dozens of investments. Unfortunately, it seems the financial contamination of Honig and Brauser involvement more than overwhelms any limited positive benefit from a claimed Frost connection. Best I can tell the end result is shareholder wipeout, lawsuits or bankruptcy in almost every instance.

It seems to me Frost has gotten mixed up with the wrong guys, and while investing in a company that only Frost is involved in may be worth considering, the moment Honig or Brauser pop up you should basically just light your wallet on fire and get it over with.

With so many people involved in the following wipeouts, the time frames are messy. As a result the % decline estimates and charts in this report are all my best estimate of the best time frame to represent the impact of these people on the companies in question.

Aside from IDI inc where Tiger Media was already found to involve fraud, there are countless examples. Like VPCO where Frost name was again touted with absurdly promotional articles while Brauser and Honig were also involved and apparently Scott Frohman, who seems to have some past tie to Brauser’s much-touted Seisant (also with some very questionable stuff going on) was also involved. None of that mattered though as Vapor Corp (NASDAQ:VPCO), and the 65%+ retail shareholder based, have experienced a -93.43% disaster (so far).

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And uSell.com which seems to have had Honig, Brauser with current IDI board members Peter T. Benz and IDI director Daniel Brauser (uSell.com’s CEO) all involved. Despite promotional SeekingAlpha articles and Frost’s public involvement, it essentially went straight to $0, falling -99.91% and wiping out anyone unfortunate enough to have invested.

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Frost’s name was again touted with promotional articles from curious authors about IZEA. Barry Honig and Brauser were also involved and (with a ~40%+ retail shareholders base) now sports a $23m market cap as OTC listed Izea, inc (OTCQB:IZEA), which has been a disaster for everyone over any time frame with -99.35 wipeout.

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Or Vringo (NASDAQ:VRNG) which had Frost, Brauser and Honig all involved but apparently Honig/Brauser again offset even Frost’s genius as the ~79% retail shareholder based “enjoyed” a quick -84.87% decline with no recovery.

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These people have done this over and over again. How about Document Security Systems (NYSEMKT:DSS), which I estimate has ~80% retail shareholders, who have also “enjoyed” a quick -82.73% wipeout?

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Frost has been involved in plenty of wipeouts so the list goes on, like Non-Invasive Monitoring Systems, inc (OTCPK:NIMU) where frost was involved and the ~57% retail shareholder base “only” lost -22% (so far – be patient)

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Or Anfield Resources: -94.74% Wipeout

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Or MSLP where shareholders have had a volatile ride to a -64.28% loss

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Or Bullfrog (OTCQB:BFGC) which, with a ~79% retail shareholder base, seems on it’s way to $0.00 with a -97.38% decline already

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Or Fuse Sciences (OTCPK:DROP) which Honig and Brauser seem to have convinced Frost to invest in (unfortunately) through MSLP in 2013. This seems to have gone to $0 with a -100% decline showing

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Or perhaps Silver Horn Mining with Brauser, Honig and Frost all involvedwhich then seems to have become GWSTT and then TRKK but…. basically wiped everyone out on the way to an $8m market cap with (another) swift -61% decline.

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Drone aviation (OTCQB:DRNE) is another good and recent example where Frost’s name was touted, the notorious RedChip was then apparently paid hundreds of thousands of trading shares and cash for their promotion along with current IDI board member Steven Rubin involvement. DRNE has an absolutely egregious 97% retail shareholder base, who have now been wiped out with a -78.42% decline so far

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Michael Brauser Parties With “Nelly”, Retail Shareholders Get Wiped Out

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As long-term readers of mine know, I am a huge Nelly fan. For those of you who don’t click the links in my articles, you should. That said though, I like oldies too. So n that note, I would like to dedicate a songto the Honig-Brauser Gang.

Picture Credit

Quoting directly from the song’s lyrics: “Ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-a, WIPEOUT!” There’s not much else to say about that…

Barry Honig: Lawsuits, Even More Wipeouts and “Curious” Promotional Stock Articles

In case the pages of horrific red flags above are not enough to cause concern, “coincidently” many Barry Honig names also seem to garner curiously promotional SeekingAlpha articles before the stock eventually gets wiped out. As outlined in Bleeker street’s impressive piece of research, there are many questionable ties between Barry Honig and promotional stock report authors.

Picture credit: Bleeker Street

Similar to Brauser, Honig has been named in lawsuits regarding everything from alleged violations of securities laws to situations involving “unjust enrichment“, alleged forgery and a “brutal beating” involving professional boxer Briggs and Honig’s Empire Sports. While I’m not sure what confidential settlements, lawsuit losses or wins may have resulted, the pattern here is clearly startling.

Don’t Let This Happen To You

Strangely, Honig’s boxing disaster Empire Sports seems to have ultimately became Sagebrush Gold (NASDAQ:SAGE) on 6/1/2011? And then, after announcing involvement of Dr. Phillip Frost, the company then changed name to Pershing Gold (NASDAQ:PGLC) in March 2012 and has been a total disaster for shareholders. Since these guys got involved, despite Frost involvement and lots of promotional SeekingAlpha articles by authors who disclose zero PGLC stock ownership, Pershing Gold Declined -72.07%

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Or this other Honig wipeout Spherix inc (NASDAQ:SPEX): -96.49% Decline

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As you can see, investing in anything with Brauser or Honig involved, even when Frost is named somewhere in the filings, is typically a total disaster for poor retail share(bag)holders. It’s not just Brauser and Honig though, IDI inc’s CSO Ole Poulsen, COO James Reilly and CEO Derek Dubner all seem to forget to include the fact that their last company TLO went bankrupt and nearly wiped out shareholders completely.

There are countless other Honig/Brauser disasters and I am getting tired of going through all their wipeouts. I think you get the point already, so in the interest of time I will pose one serious question: of all the Brauser/Honig/Marlin stocks in the market today, how many have market caps >$200m or generate >$2m in profit per year?

Given IDI true market cap is currently >$200m, this is a serious question.

If anyone can find a single current Brauser/Honig/Marlin stock with a $200m+ market cap or one consistently generating >$2m per year of profit, I will video tape myself personally singing you a song on YouTube. Not joking.

What’s in IDI for Brauser and Honig?! 2.5m FREE IDI Shares Worth Over $31m!

Now that you understand what is truly going on here, let’s look at how Honig and Brauser get rich in this scheme and why I believe they are involved.

The most egregious part of this whole IDI debacle to me are the crazy and, what I view as clearly abusive, contracts Honig and Brauser are mistreating IDI shareholders with via their Marlin vehicle. For example, regardless of how much dilutive equity it may take, what business is acquired or at what stock price, it seems to me Brauser/Honig/Marlin basically get 2m+ IDI shares essentially for free with some offensively low hurdles and loose terms set for their payday:

“The Marlin Consulting Agreement provides for equity compensation issued to Marlin in the amount of 10,000,000 Restricted Stock Units (“RSUs”), of TBO, which shall vest in four (4) equal, annual increments beginning October 13, 2015 and ending October 13, 2018, provided that one of the Milestones (as hereinafter defined) has been achieved on or before such date, and subject to Marlin Capital providing services on each applicable vesting date. As used in the Marlin Consulting Agreement, “Milestone” means: (NYSE:I) TBO generating $15 million in revenues over any 12 month period; or (ii) TBO generating $10 million in revenues over any 12 month period and generating positive earnings before interest, taxes, depreciation and amortization (with all stock based compensation not included as an expense) for such 12 month period. “

I would note there is a clear lack of any “per share” measurements and, shockingly, dilutive stock compensation to insiders is specifically excluded from this whole mess.

Even more offensive, Michael Brauser has apparently already received 500k shares of IDI stock rsu for what I view as basically nothing! I estimate this is worth >$1.25m today!

“On October 2, 2014, the Board of Directors approved the issuance of 500,000 RSUs to two consultants. One of the consultants to receive 500,000 RSUs is Michael Brauser,”

Even worse, it seems that part of this plan from the start was to get it all going with a ton of cheap stock given to their group at what I view as unreasonably favorable terms:

“On December 4, 2014, TBO sold 12,360,000 shares of TBO Common Stock to various investors at $0.50 per share on a “best efforts” basis for an aggregate of $6,094,338 in net proceeds after deducting discounts and expenses”

Whatever associates of the Brauser and Honig gang may have participated in this insane capital raise, they seem to have received $6.18m of IDI stock at split adjusted $2.50 per share right before a message board tout campaign started! What a coincidence! Now with IDI at $12.50 per share they are sitting on HUGE gain in a company that was just acquired with a $5.76m cash payment but now (temporarily) trades for a ~$200m valuation!!

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So while primarily retail shareholders in IDI get led to their financial wipeout, Brauser, Honig and Marlin are set to get a free payday of $30m!?! How is that possibly seem fair?!

IDI Inc Partnered With “Palladium Capital Advisors, LLC”: Named Defendant in Madoff Lawsuit?!?

You can tell a lot about the quality of a stock or company by the quality of the investors it is able to attract. “Real” businesses, that honestly have a bright future, have no problem attracting high quality VC investors or other reputable financial partners while questionable shells on their way to wipeout often struggle and are forced to take “bottom tier” money at loan shark terms.

IDI inc lists “Palladium Capital Advisors” as a placement agent for TBO in 11/2014, who received warrant for 28k shares at $2.50 for their help in addition to $70k in cash. A quick Google on this curious financial partner apparently turns up a “Palladium Capital Advisors” as a named defendant in a Madoff Ponzi Lawsuit as recipients of “stolen customer property and other proceeds of the illegal scheme”.

It is not clear to me what happened here as the lawsuit is complex and long, so I’ll leave the reading on this to you, but if IDI was actually forced to partner with a named defendant allegedly involved in the Madoff Ponzi legal debacle, that is very scary stuff indeed.

“But Wait! You Also Get!” MOAR Lawsuits, Spam Email Pump & Dumps, and Shareholder Wipeouts.

While Honig and Brauser are apparently just the leaders of this crew, there are many others equally as bad. IDI director Peter T Benz seems to have been previously named in lawsuit (along with Bi-Coastal Consulting Group and Jonathan Lebed) alleging Fraud, Market Manipulation (stated halfway throug first paragraph), Unjust enrichment and Negligent Misrepresentations in the “Warning Management Services” case. Robert N. Fried was also sued at SearchMedia where he was co-chairman post-merger and CEO of Ideation. The lawsuit alleges “revenues had been massively overstated due to flagrant accounting irregularities” involving “fictitious business transactions“.

Interestingly IDI is also covered by Gilford Securities. Gilford also has a checkered past, including Gregg M Berger, former Gilford broker, who pled guilty and was jailed for involvement in “pump and dump schemes” apparently using spam emails involving thinly traded stocks to generate more than $30m of illegal proceeds. It also appears Gilford was fined $125k by FINRA recently for failing to disclose “the research analyst received compensation“.

Furthermore, it appears the SEC fined Gilford Securities $995k for failing to properly supervise the broker who served Vancouver Spam Promoter “John” Hui and the firm which allegedly facilitated a $33m pump and dump scheme. The SEC also went on to allege Gilford allowed employees to improperly execute customer orders without requisite trading licenses, and violating Regulation S-P by sharing nonpublic customer information with unauthorized third parties.

IDI Inc’s Message Board Stock Promotion Campaign: Similar to Disgraced, Halted and Bankrupt FNRG

How has IDI stock been temporarily pumped up to this obviously unsustainable valuation?

IDI is currently being supported by one of the most widespread and extensive online message board tout campaigns I have ever seen. As a reminder, FNRG experienced something similar (but far less egregious than IDI) before FNRG’s chairman was arrested for fraud and the company went bankrupt.

“The strategy for these posters is to seek out companies whose share price has risen strongly and which are getting a lot of attention. The posters then seek to draw readers’ attention to ForceField. Some small portion of the readers end up buying into ForceField, elevating share price and volume. Surprisingly, this strategy can work if there are thousands of postings to other high performing and high interest stocks.”

Similarly, on the Yahoo message boards for example, we see countless yahoo ID’s recently created which only tout IDI across the message boards in huge volume. Tellingly though their promotion campaign doesn’t take place on IDI’s board, presumably since anyone on the IDI board already knows about IDI stock and is not a useful target. I think the goal here is obvious: to lure in unsuspecting retail investors into IDI stock and temporarily inflate the stock price.

For example, we can see username “ermelindarqkabergerc3138? joined yahoo on 6/26/2015 and then immediately began posting comments across unrelated boards, often times literally within seconds of the last comment.

From yahoo message boards

Similar to FNRG touts posting on high traffic stocks, we see IDI touts posting repeatedly on the AliBaba message board, which clearly has zero to do with IDI.

A simple Google keyword search shows IDI touts flooding message boards with an apparent target of the highest trafficked and unrelated yahoo message boards including: Coca Cola , Kinder Morgan, iPath S&P500 VIX etn (NYSEARCA:VXX), EXTR, FITB, PLNR, CNET, LTRE, HUM, and BBY, among many others.

We can also see this tout campaign appears coordinated as we are seeing different aliases post identical promotional messages on IDI

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Among the many IDI tout aliases I have found just on the Yahoo message boards include: “Ermelindarqkabergec3138“, “kennedyfettigovo“, “auroreparagasgql“, “kassikontoseta“, “euniceewelluip“, “fidelatimothycyd“, “dellamlcurtneruts4050“,arnettexvschiffelbeintqo2626 and likely many others.

To be clear, I am not certain exactly who the individuals are by name behind this shady online tout campaign (although I have my guesses). However, I don’t see how anyone would do this kind of extensive and premeditated work for free and typically stock promotion is not done without compensation.

IDI Shareholder Base Is Essentially All Retail: Where Are The Credible “Real” Investors?!?

Given this horrific penny stock wipeout team and yahoo message board tout campaign, it is not surprising to me IDI’s shareholder base is mostly retail. In fact the only institutional investor involved of note is Frost ( through the original failed Tiger Media Investment). If you exclude insiders who didn’t buy their shares on the open market and Frost (who is involved through a failed investment in a fraud), IDI inc is held almost entirely by unsophisticated retail owners. There are no real institutions of any worth involved in IDI other than a few random ETF/Index followers resulting from IDI’s inclusion in the Microcap ETF.

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(picture credit Capiq)

Why doesn’t any “real” investment firm want any part of IDI?

(picture credit me)

TransUnion Lawsuit Renders IDI a “Zero” Immediately Anyway

What IDI’s retail shareholders need to understand is that this lawsuit is devastating to IDI’s desperate technology claims which, in part, support IDI’s temporarily inflated stock price. The TLO IP in this lawsuit took TLO >4 years and $100m+ to develop with a huge team, when IDI loses this lawsuit and any claim to the IP there is simply no way this tiny fraud ridden shell company has any hope of recreating it. Therefore once IDI loses this lawsuit, the only “technology” left will be some tiny debt collections company that has been struggling since 2001 and apparently spends $0 on R&D. Furthermore, now that TransUnion is embroiled in IDI’s technology and business I think if IDI makes any technology claims in the future: Transunion will respond with swift and endless litigation claims claiming any new IDI products are based on “prior art” and Transunion’s IP.

Furthermore, Brauser’s Federal Fraud litigation with Equifax and egregious lawsuit with Transunion clearly renders both of those companies “off limits” to IDI. In the data industry I see no way any company can be successful if they are “black listed” from having any dealings with those two juggernauts. Let alone the fact that Transunion seems intent on destroying IDI and if you read the court documents I believe you will see the TransUnion/TLO team feels offended personally by all of this.

Pic credit Transunion’s TLO

All the documents from the Transunion litigation against Brauer and IDI are free and publicly available here and I especially recommend reading the complaint and any transcripts. In the interest of time I will not go into detail and recommend you read up on this yourself. I will give you my quick-summary read on it though, which is once Transunion tried to enforce their noncompete agreements against IDI employees alleged to have violated them, Brauser tried to extort Transunion over claimed license fees due based on IP which TransUnion already purchased in the TLO bankruptcy auction.

The lawsuit centers around “BOLT code” which is code written in BOLT that scans across data sets. This is a common and any multiple data base tool like lexis Nexis or others have something like this. The other contested IP is the “BParser” code, which converts the BOLT code to C++ (universal programming language).

This is one of the most direct and obvious lawsuits I’ve ever seen because, comically, both of these pieces of IP appears expressly explained and spelled out to me in the 363 asset sale documents Transunion and TLO participated in. I think there is ~100% chance that IDI loses this resoundingly. For example, check out the express and direct description of the assets sold in bankruptcy as cited in doc 61 filed 3/18/15

“[T]o the extent that Ole Poulsen holds or asserts any interests of any kind in the BParser code converter software used or useful by the Debtor in the conduct of the Business (the “BParser Code”) or any other Business Assets, such BParser Code and other Business Asset shall be deemed an Acquired Asset and may be sold to the Buyer free and clear of all such interests….”

Furthermore, Brauser and IDI CEO Derek Dubner were intimately involved in the bankruptcy auction as Transunion states they served the sales order on both Brauser and Derek Dubner, as well as Interactive Data. While after the close of the sale, Poulsen and Brauser both had extensive ongoing involvement with the case concerning division of sale proceeds. Lastly, all of this IP appears to have been created using TLO hardware, stored on TLO’s servers and used 40+ TLO programmers. Even Poulsen was a full time employee of TLO at the time working on the IP and was paid by TLO and then by Transunion for this, and his home was even paid for by TLO, so any claims IP developed at home are his seems worthless as well.

None of this even matters much anyway, as TransUnion’s TLOxp is a dominant competing product that is cheaper and with more functionality than anything IDI can offer.

If you call TLO, their sales people will be happy to explain all the reasons they are superior to anyone else, and even if they were in fact inferior (they aren’t) Transunion’s enormous global sales force would steamroll anyone stupid enough to confront them. If TLO wasn’t superior then why would Brauser try to buy them before and get sucked into this impossible lawsuit over the IP?

TLO and Transunion are far cheaper too as they offer in depth reporting tools with “all you can eat” pricing for <$175 a month. For small, low-volume customers who prefer transactional pricing, TLO’s superior service costs ~$0.30 per search, making IDI’s quoted average price of $0.75 a full +925% more expensive than TLO This makes IDI inc’s desperate product offerings not just hopelessly behind the curve but simultaneously too expensive to be competitive. I don’t see how Transunion doesn’t just eat them alive over time.

IDI Board of Directors: It Gets Even Worse…..

It’s not just Brauser and Honig though, basically everyone involved in this company is tied to financial disasters. You may think these people are protecting your best interest but, for example, take board member Steven Rubin, who is involved in:

MabVax Therapeutics Holdings (OTCQB:MBVX): Swift -79.79% wipeout

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And Kidville (OTCPK:KVIL): -78.86% Disaster

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And one of the “best ones” he is involved in, Non-Invasive Monitoring Systems Inc has been crazy volatile and is “only” down -21.84% at the moment

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The list is nearly endless, so I won’t keep going much longer but look at Sevion Therapeutics (OTCQB:SVON) now -77.78% already despite raging biotech bull market

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And Tiger X Medical (OTCPK:CDOM) which is now down -94.51%

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Another example is IDI board member Robert Swayman, briefly involved in Vapor Corp along with Honig and Brauser, which has (unsurprisingly) been a complete disaster

Vapor Corp -94.23% Stock Decline to date

(click to enlarge)

(all charts from CapIQ)

With everything you’ve read, are these really people you want to invest with? Are you honestly unable to find a SINGLE better company in the world run by better people to invest in?!

IDI Inc Management Response

Since IDI inc has been active in promoting themselves to investors it is not hard to meet them. I spoke with them not long ago but found their responses to issues raised to be underwhelming and disappointing. Instead of offering a clear picture of the current business, I found them to offer excessively promotional claims to TAM size and other vague claims. In response to questions regarding management quality, they claim IDI to be founded by the people who started the data fusion industry. However, the real genius leader of that (Hank Asher) passed away quite some time ago now and the last company these current people were involved in went bankrupt and nearly wiped out equity holders completely. I don’t see how this is reassuring. Furthermore it seems their sales and technology strategy is just “throw money at it” and I don’t see how they can possibly compete against sales and technology beasts like Transunion. IDI claims the lawsuit is irrelevant. However, I think the documents point to a different view while claims of litigation irrelevance ignore the reality I see, which is that Transunion seems intent on crushing IDI and wiping them out completely. Considering any future for IDI is based on technology, I don’t see how Transunion contesting their IP claims, likely forever, is anything other than disastrous.

IDI inc Catalyst: Heinous $160m Equity Shelf, Wall of Dilution as Shares Become Unlocked For Sale

What is rare with IDI is the clear and identifiable catalysts to collapse the share price. Primarily, IDI just filed an absolutely heinous shelf offering for the sale of $160m worth of IDI stock, considering IDI’s total market cap is ~$200m, this alone could wipeout current IDI shareholders.

It gets better though, as we have a huge amount of IDI inc shares becoming unlocked very soon. If you read the lockup agreement, there is no date next to the signature but we know the shares are locked up for 1 year starting sometime late 2014 or early 2015. This means that soon a wall of shares become unlocked for sale for a company trading at >40x revenue I think they will sell aggressively (if they are smart).

IDI inc = Desperate For Cash, Dilutive Secondary Offering Imminent

IDI also seems desperately low on cash, as we see here in 2014 where IDI claims they have enough cash to survive 12 months. However, IDI’s cash burn has ramped up, and the shutdown of the Chinese billboard business will cost at least -$1m in cash to shut down, while we are now nearly 8 months into 2015. This means IDI will have to raise cash within the next 4 months, and given companies rarely wait until their cash account is literally $0, I believe investors should expect another dilutive IDI capital raise sometime in the next 2 months. This seems like a lot of simultaneous wipeout-catalysts occurring very soon.

IDI inc’s Auditor “Deficiencies” and Inability to File SEC Filings On Time

Considering Brauser was sued by Transunion for alleged involvement in falsifying statements, it makes me horrified to see IDI has internal accounting integrity questions.

For example, of the two 10q and 10k filings IDI inc has been required to file since they became IDI inc, a full 100% of those have been filed late (the 2014 10k and the Q1 10q). One of these 10q filings seems to have been given to investors accidentally before IDI inc’s auditor was able to review it?!

Even more worrisome, IDI inc has curiously changed it’s auditor to “RBSM LLP” who in 2013 was just recently found by the PCAOB to have “audit deficiencies” and “failure to perform sufficient procedures to evaluate the presentation of certain revenue”. This does not appear to have been an isolated incident either as this 2013 inspection followed up an even worse 2009 PCAOB inspection where RBSM had “audit deficiencies” including a “deficiency of such significance that it appeared to the inspection team that the firm did not obtain sufficient competent evidential matter to support its opinion on the issuer’s financial statements”

IDI Inc’s Stated Market Cap on Yahoo Finance Not Accurate

The first thing you need to know is that I believe the yahoo finance stated market caps are NOT completely correct as they do not seem to include the crazy “free” 2m IDI rsu shares that will be issued to Honig and Brauser’s through Marlin if/when IDI hits the comically low hurdle of $15m of sales or $10m of sales and positive EBITDA (excluding stock comp). At today’s price those rsu shares alone are ~15% dilution to current shareholders and if you correct for this, I estimate IDI’s current “true” market cap is $202m.

(click to enlarge)

Valuing IDI: “Best Case” Fair Value Analysis Shows -92.4% Downside

Even if IDI insiders were geniuses AND had shareholder interests at heart AND we use the most optimistic estimates possible, IDI inc is STILL overvalued by somewhere between -83.54% and -98% today.

Thankfully, valuing IDI inc is actually very easy as we have two very direct and recent comparisons we can use to value IDI. One of them is literally the transaction of the company IDI just bought that makes up all of IDI’s ongoing business. The other recent comparison is the recent auction of TLO, LLC which is a superior business to IDI in every way possible but we can use that sale price as the most optimistic upward bound possible for valuing IDI inc.

With these relevant comparisons we can then use some of the most optimistic assumptions possible to estimate “Fair value” for IDI inc. Unfortunately, even using the most optimistic assumptions possible I still come up with per share value for IDI inc stock with between -98% and -83.5% of downside today. Note this would also be very consistent with many other Honig/Brauser wipeouts which quickly fell between -70% and -100%.

(click to enlarge)

(estimated chart created by me)

As you can see above, valuing IDI based on the Interactive Data, LLC transaction they just did shows fair value per share for IDI inc of $0.969 per share for -92.4% downside from today’s stock price. Note that this analysis is using a $5m+ t12m revenue estimate for IDI inc also which I believe is quite generous considering the <$4m in revenue Interactive Data LLC was just producing and the nearly $0 in recent R&D spend they disclosed.

If we use Ole Poulsen and Derek Drubner’s latest bankruptcy TLO, LLC we can see that despite multiple bidders and an extended auction, there was only $19m of equity/stockholder value left. Note that this purchase price by TransUnion likely assumes that TLO’s products could be pushed through TransUnion’s enormous global sales force, allowing Transunion to pay more than would typically be a fair value. If we use that equity valuation as a comp for IDI we see that IDI inc stock is worth a maximum of $0.26 per share, for -98% near term downside for current shareholders.

If we even take the whole analysis to the most optimistic view possible and literally completely ignore ALL of the $100m+ in debt/liabilities TLO, LLC filed bankruptcy with and just give that all to equity holders instead, then retain the bullish $5m+ revenue estimate for IDI inc, we STILL see that IDI inc stock has near term downside of -83.54% from today.

As you can see, IDI inc today trades at what is an impossible “bubblicious” valuation that would make many doc com stocks blush. Educational tip: if you ever see a promotional investor presentation with endless rambling about the “Addressable Market!” but ZERO mention of the company’s current financials or earnings, that company is likely to be a future wipeout.

(picture credit)

Frost Himself Seems To Know IDI inc Not Worth Anything Close to Today’s Prices

Lastly and most hilariously, we know Frost expressed interest in bidding on TLO in bankruptcy. We know TLO had 200+ employees, was built by the founding genius of the industry, had ~$100m of liabilities (likely a good proxy for cash burned), and took 5+ years to be built with its ~$23m of revenue. Clearly this is a superior company to IDI inc in every way possible.

(click to enlarge)

(picture credit)

We also know that Tranunion initially won the stalking horse with their ~$100m bid (which basically wiped out the equity and covered the debt/liabilities) after Frost was rumored to have put in a bid worth ~$100m, leaving ~$0 value for TLO equity/shareholders. From this we can clearly infer that Frost was not interested in paying $100m+ to own the vastly superior TLO company (otherwise HE would have been the stalking horse or done the DIP, etc). Yet now we have IDI inc, inferior in every way imaginable, trading for >$200m implied valuation!

Plungey Makes The Call: IDI Will Be A(nother) Shareholder Wipeout With -92.4% Wipeout (or worse)

(click to enlarge)

(picture credit me and Indiana Jones)

IDI inc: -98% Near Term Downside with Wipeout Coming = DON’T FALL FOR IT.

I believe the bottom line is that under no reasonably reality is IDI worth anything even vaguely close to $200m. The people in charge of IDI saw their last company recently go bankrupt despite leadership from the undisputed king of the modern data era Hank Ahser, who unfortunately passed away and will be deeply missed. Remember TLO took 5 years, hundreds of employees and apparently at least $100m of cash, to build and that still went bankrupt and nearly wiped out the equity investors entirely. Michael Brauser and Barry Honig seem to me a penny stock wipeout team so toxic that even if Frost invests, their involvement virtually ensures wipeout or fraud accusations. The wreckage of bankruptcy and wipeout in their path is truly eye watering. Furthermore, IDI currently trades at a “bubblicious” valuation relative to obviously superior and much larger companies while the current Yahoo message board stock promotion campaign is extremely concerning.

While hyped up “data fusion!” fad claims and yahoo message board stock promotion may temporarily inflate valuation, reality and the wave of IDI stock sales coming will bring this disaster crashing back down, like so many other Honig and Brauser wipeouts. Ultimately, IDI is made up of a tiny, 14 year old, struggling debt collection service paid for with $5.6m in cash and no amount of weirdly promotional stock tout articles or confused “mom & pop” retail stockholders can change that.

This temporarily insane 40x revenue valuation coupled with large $160m shelf offering filed, and a huge volume of shares becoming unlocked, means insiders could aggressively dump their shares onto the market until IDI falls all the way to $4 per share. At which point IDI would STILL have another -85% downside even from there. I believe it is obvious that, like VRNG, IZEA, BVSN, USEL, DROP (and countless others), the end will come suddenly and violently, leaving you with no chance to avoid suffering a crippling financial loss.

DON’T FALL FOR IT.

Source: https://www.valuewalk.com/2018/09/idi-pump-stopper/

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treemist5 · 5 years

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'Space power' India: What Modi's speech means for polls, security

Prime Minister Narendra Modi announced India had joined the US, Russia and China in an elite group of nations that have the capability to target satellites.

In a televised address to the nation, Modi said India has shot down a low Earth orbit satellite, noting the capability was crucial for national security.

"India has today established its name as a space power," Modi said. "Our scientists used an anti-satellite missile to bring down a live satellite, 300 kilometers away in space."

India’s current range of missiles are mostly intended for confrontation with neighboruing rivals China and Pakistan. India has fought three wars with Pakistan and one with China.

Modi’s address comes just weeks ahead of general elections to determine whether he’ll serve a second term as prime minister. Voting will take place in seven phases between April 11 and May 19, with results to be announced on May 23.

‘Nationalist fervour’

“This address is an indication that Mr Modi possibly is not very sure of the election campaign going completely his way,” said Nilanjan Mukhopadhyay, a political analyst who has written a Modi biography, adding he may have violated the election code of conduct. “It’s an attempt to bolster nationalist fervour by another means,” Mukhopadhyay said, after realising the patriotic mood generated by tensions between India and Pakistan was “not sufficient” to continue until the end of elections.

Tensions between India and Pakistan escalated dramatically when India launched airstrikes on February 26 to attack what the government said was a terrorist training camp inside Pakistan. The government in Islamabad retaliated the next day, shooting down an Indian jet. India’s initial airstrikes were in response to a suicide bombing in Kashmir that killed 40 paramilitary troops.

“This is significant. India can now take out Chinese communication systems, for instance,” said Bharat Karnad, Delhi-based security expert at the Centre for Policy Research. “The PM is going to derive whatever political benefits he can in election season -- why would he give up the chance?”

In 2007, China first used a ballistic missile to destroy its own old weather satellite orbiting 535 miles (861 km) above Earth; Russia has been testing a missile that could be used to strike and destroy a satellite or ballistic missile.

India’s space and missile programs—along with its economic growth of more than 7 percent and a bid for a permanent seat in the United Nations Security Council—is major part of the country’s efforts to build up its defense capabilities and establish itself as a world power.

Source: https://www.business-standard.com/article/current-affairs/space-power-india-what-modi-s-speech-means-for-polls-national-security-119032700669_1.html

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treemist5 · 5 years

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Careers Counsel | How to Manage Your Perfectionism

Careers Counsel rounds up the most useful and inspiring articles from around the web. To browse hundreds of jobs from leading brands, visit BoF Careers.

How to Manage Your Perfectionism (Harvard Business Review)

On one hand, perfectionism can motivate you to perform at a high level and deliver top-quality work. On the other hand, it can cause you unnecessary anxiety and slow you down.

Is Social Media Worth Your Time as a CEO? (Inc.)

More than three-quarters of all Americans under 49 are on a social platform but among CEOs that percentage shrinks. Are those execs missing a chance to engage with customers — or dodging a bullet and a time suck?

Why Workplace Perks Are Big Business (Wired)

Such perks are becoming more personalised — and more costly — but can transform the perception of the workplace from a necessary evil to a place people enjoy being at.

Source: https://www.businessoffashion.com/articles/careers/careers-counsel-how-to-manage-your-perfectionism

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treemist5 · 5 years

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Public schools seldom bring rich and poor together–and MLK would disapprove

As America observes Martin Luther King Jr.’s birthday, many carry on his legacy through the struggle for racially integrated schools. Yet as King put it in a 1968 speech, the deeper struggle was “for genuine equality, which means economic equality.” Justice in education would demand not just racially integrated schools, but also economically integrated schools.

The fight for racial integration meant overturning state laws and a century of history–it was an uphill battle from the start. But economic integration should have been easier. In the mid-18th century, when education reformers first made the case for inclusive and taxpayer-supported education, they argued that “common schools” would ease the class differences between children from different backgrounds.

As Horace Mann, the most prominent of these reformers, argued in 1848, such schools would serve to counter the “domination of capital and the servility of labor.” Learning together on common ground, rich and poor would see themselves in common cause–a necessity for the survival of the republic.

More than 150 years later, the nation has yet to realize this vision. In fact, it has been largely forgotten. Modern Americans regularly scrutinize the aims and intentions of the Founding Fathers; but the early designs for public education–outlined by Mann, the first secretary of education in Massachusetts, as well as by leaders like Henry Barnard, Thaddeus Stevens, and Caleb Mills–are mostly overlooked. Today, the average low-income student in the U.S. attends a school where two-thirds of students are poor. Nearly half of low-income students attend schools with poverty rates of 75 percent or higher.

Education historians, like myself, have generally focused their research and attention on racial segregation, rather than on economic segregation. But as income inequality continues to deepen, the aim of economically integrated schools has never been more relevant. If we are concerned with justice, we must revitalize this original vision of public education.

Shared community

Early advocates of taxpayer-supported common schools argued that public education would promote integration across social classes. They thought it would instill a spirit of shared community and open what Horace Mann called “a wider area over which the social feelings will expand.”

And, generally speaking, it worked. The ultra-rich mostly continued to send their children to private academies. But many middle- and upper-income households began to send their children to public schools. As historians have shown, economically segregated schools did not systematically emerge until the mid-20th century, as a product of exclusionary zoning and discriminatory housing policies. Schools weren’t perfectly integrated by any means, particularly with regard to race. They were, however, vital sites of cross-class interaction.

Many prominent Americans–including U.S. presidents–were products of the public schools. Commonly, they sat side by side in classrooms with people from different walks of life.

But over the past half-century, students have been increasingly likely to go to school with students from similar socioeconomic backgrounds. Since 1970, residential segregation has increased sharply, with twice as many families now living in either rich or poor neighborhoods–a trend that has been particularly acute in urban areas. And segregation by income is most extreme among families with school-age children. Poor children are increasingly likely to go to school with poor children. Similar economic isolation is true of the middle and affluent classes.

Contemporary Americans commonly accept that their schools will be segregated by social class. Yet the architects of American public education would have viewed such an outcome as a catastrophe. In fact, they might attribute growing economic inequality to the systematic separation of rich and poor. As Horace Mann argued, it was the core mission of public schools to bring different young people together–to consider not just “what one individual or family needs,” but rather “what the whole community needs.”

Many parents do continue to seek out diverse schools. A number of school districts have worked to devise student assignment plans that advance the aim of integration. And some charter schools are reaching this market by pursuing what has been called a “diverse-by-design” strategy. As demonstrated by research, diverse schools can and often do improve achievement across a range of social and cognitive outcomes, such as critical thinking, empathy, and open-mindedness.

Largely overlooked, however, has been the political benefit of integrated schools. One rarely encounters the once-common argument that the health of American democracy depends on rich and poor attending school together. This is particularly surprising in an age of tremendous disparities in wealth and power. Members of Congress, on average, are 12 times wealthier than the typical American. Moreover, lawmakers are increasingly responsive to the privileged, even at the expense of middle-class voters.

If elites are isolated from their lower- and middle-income peers, they may be less likely to see a relationship of mutual commitment and responsibility to those of lesser means. As scholars Kendra Bischoff and Sean F. Reardon have argued, “If socioeconomic segregation means that more advantaged families do not share social environments and public institutions such as schools, public services, and parks with low-income families, advantaged families may hold back their support for investments in shared resources.”

What can be done?

Today more than 100 school districts or charter school chains work to integrate schools economically. Cambridge, Massachusetts, for instance, has four decades of experience balancing enrollments by social class, seeking to match the diversity of the city as a whole in each school.

This, of course, is only possible in a diverse place. Median family income in Cambridge is roughly $100,000, while 15 percent of city residents live below the poverty line. It is also made possible through heavy investments in public education in the city. After all, it is far easier to convince middle-class and affluent parents to send their children to the public schools when per-pupil expenditures rival the highest-spending suburbs, as they do in Cambridge.

But not every district has Cambridge’s advantages. Nor does every district have similar political will.

The latter of those two constraints, however, may soon begin to change. Faced with a growing divide between rich and poor, Americans may begin to demand schools that not only serve young people equally from a funding standpoint, but also educate them together in the same classrooms.

Common schools by themselves are not enough to solve the problem of economic inequality. Yet if Americans seek to create a society in which the rich and the poor see themselves in common cause, common schools may be a necessary–and long overdue–step. We must come to see, in the words of Martin Luther King, that, “We are caught in an inescapable network of mutuality, tied in a single garment of destiny.”

Author Jack Schneider is assistant professor of education, University of Massachusetts Lowell. This article is republished from The Conversation under a Creative Commons license. Read the original article.

Source: https://www.fastcompany.com/90294508/americas-schools-seldom-bring-rich-and-poor-together-and-mlk-would-disapprove?partner=feedburner

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treemist5 · 5 years

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Markets Live: Monday, 10th September 2018

11:06 am

Good morning, welcome, hi. You might've noticed a ghost session appear briefly where the headline claimed it was Friday.

11:07 am

.............. so ................... let's ignore all macro and overview and stuff to get straight into plastics.

RPC Group PLC (RPC:LSE): Last: 824.80, up 141.2 (+20.66%), High: 857.40, Low: 800.00, Volume: 3.27m

11:09 am

So. Bloomberg did a ...... story? Let's call it a story? on RPC over the weekend about it considering strategic options including a possible sale,

Which as you'll remember followed Standard Life Aberdeen, 10% shareholder, telling the Sunday Telegraph that the company is “highly vulnerable” to a takeover

11:10 am

That story also mentioned sector peer Berry Global ..... which, yeah, okay.

So today, we get .... confirmation? Let's call it confirmation.

11:11 am

The Board of RPC Group Plc ("RPC" or the "Company") notes the recent media speculation and confirms that preliminary discussions are taking place with each of Apollo Global Management and Bain Capital which may or may not result in an offer for the Company.

"Media speculation" ........ heh. Good. Fine. Words don't mean anything anymore, so fine. Good.

So ................ the backdrop here is that RPC's been kicked for 18 months solid.

11:13 am

Largely on the idea that it's a rollup that uses acquisitions to fudge bad and deteriorating cashflow.

However! We have two potential bids out there! Apparently!

11:15 am

For a company whose core business doesn't really do cashflow generation in any demonstrable way and is already levered at 2x. Classic PE target, clearly.

Okay, so reversing out of my cynicism a little and starting at the top -- RPC's cheap against peers.

11:16 am

RPC’s international peers trade on a FY1 EBITDA multiple of 9.9x and an FY2 EBITDA multiple of 9.1x. Putting RPC’s FY19E EBITDA of £613.9 million on 9.9x and using FY19E net debt of £1,065 million implies a per share equity value of 1,262p, an 85% premium to the last close. The peers in our universe are Amcor, AptarGroup, Berry, DS Smith, Pact Group and Silgan.

And also note the bids all over the sector recently.

There have been a number of M&A transactions in international packaging in recent months. These include Amcor's offer for Bemis at 11.7x EBITDA pre-synergies, Transcontinental's offer for Coveris at 9.7x EBITDA pre-synergies and AptarGroup’s bid for CSP Technologies for 13.0x EBITDA presynergies.

11:18 am

Peel Hunt makes similar arguments about valuation ......

The right price and what the offer will be are not always going to be the same (Tomkins’ shareholders might remember what happened in 2010). Applying the Amcor/Bemis maths for its August approach. the implied Bemis price was $57.75, which was a PE of 20.7x and an EBITDA multiple of 11.7x, which fell to 8.9x post synergies. The Bemis price at Friday’s close was $49.80, so a current PE of 17.8x and an EBITDA multiple of 10.1x. If we crudely overlay the current Bemis valuation onto RPC we get to 1,330p on a PE basis and 1,230p on an EBITDA basis. This compares to RPC on a PE of 9.1x and EBITDA multiple of 6.4x.

There's a couple of important caveats to all that though.

11:19 am

First, it's difficult to think of a buyer for RPC other than private equity.

(Some might argue that it's difficult to think of a buyer for RPC including private equity. But I said I'd wind back the cynicism a bit.)

PE's trickier to make the numbers work.

11:20 am

Amcor’s ongoing bid for Bemis would seemingly rule them out while Berry Global, with a current market capitalisation of $4.5bn, is probably not big enough unless it possibly joined up with a private equity player to generate hard synergies. It would not be a surprise to see additional private equity players appear.

The next month will be pivotal for RPC. If there is no bid, the bears will take hold, while if there is a bid we expect it to come at a healthy premium to Friday’s close of 684p but accept that the Bemis read across is ambitious given the lack of hard synergies available to the private equity bidders.

11:20 am

Something about this one reminds me of FirstGroup-Apollo ............

As in, you had PE interest in a company sending out obvious distress signals

11:22 am

That leaked very, very early in the process.

Though it did result in a second indicative offer, albeit one management couldn't accept.

... and that was followed by reports last week of interest from elsewhere, which the market completely dismissed as soon as it crossed the tape.

11:24 am

FirstGroup PLC (FGP:LSE): Last: 98.87, up 4.07 (+4.30%), High: 99.40, Low: 93.45, Volume: 2.42m

.... anyway, Northern Trust Capital Markets is sticking to its guns here.

RPC (Sell): Still view a buyout as unlikely, an opportunity to sell

11:25 am

Concerns are mostly repeating previous stuff about cash conversion and phantom profit growth

Limited synergies, cost savings programmes coming to an end: RPC is the largest EU plastic packaging manufacturer, with 5% market share.

11:26 am

While the company has been investing increasingly outside of Europe (ex-EU is 23% of sales up from 6% when Vision 2020 strategy started), it is largely a European business and the largest in the region.

Most of the cost savings programmes [e.g. plant closures] have happened in Europe and the most recent and largest cost saving programme is coming to an end in FY19.

11:27 am

.............. with existing assets, we think

11:28 am

................ the ability for private equity

................. to increase operating margins further from here

...................... without incurring large cash costs is limited.

11:29 am

(Apologies that I had to quote it like that. The ludicrous ML spam filter kept rejecting the final sentence, for no apparent reason.)

As we have stated, a takeover/buyout is the main risk to our sell thesis. That risk is higher today given RPC is in early discussions with two buyers. However, given the importance to buyout firms of cash generation and stable profit growth, our central view remains a detailed look at the cash generation at RPC will not lead to an acquisition.

There, Mr McGuire. Rather more than one word on plastics.

11:30 am

Debenhams PLC (DEB:LSE): Last: 10.83, down 1.97 (-15.39%), High: 12.14, Low: 10.34, Volume: 11.47m

11:30 am

The gist being that they're looking at a CVA to exit shops and restructure debt.

11:33 am

The Times version of the same story adds that credit insurers have reduced cover to suppliers by 1/3, having already reduced cover by 1/3 in July.

Quick line from Liberum, one of the few brokers that still follow.

Liberum view: The company has not made any comment, at this stage, in relation to the press reports, although if the rumours are true it would not come as a great surprise to us. On the negative, it would suggest Debenhams' turnaround strategy to date has not been enough to improve its financial performance to help alleviate the ongoing pressures that have led to three profits warnings and a greater than 50% cut to consensus over the past 9 months. The group continues to rank poorly when looking at a variety of quality metrics – three year forecast EPS CAGR -25%, fixed charge cover (EBIT basis) 1.2x, operational gearing of over 20x and net debt:EBITDA 2.0x. If a positive were to be taken from this newsflow, we believe it is that management is now potentially looking at much more drastic action, which could bring about a more appropriately sized store estate and cost base quicker. This is exactly what we think is required for any successful turnaround to set the business on a path to achieve long-term sustainable profit growth.

11:34 am

And since we've reached the midpoint of today's ML, you're going to have to indulge me in an anecdote.

So. I was in Westfield Shepherds Bush yesterday, on the hunt for school shoes.

And since it's September, needless to say, every school shoe rack in every decent shop had been picked over. That led us to Debenhams.

11:37 am

They had some on the shelf! And since the shop was completely deserted, we had time to find a left and a right that were the same size (which was less easy than you'd assume; it was a lot of orphan shoes).

So ....... success ............ went to the till.

And waited 15 minutes as the lone till jockey signed up the people in front to a loyalty card.

11:39 am

Then, finally, getting to the front, they ring through at a third less than the ticket price.

Why? "Dunno." Is there any kind of promotion going on? "Dunno."

So, fine, super. Not going to argue. And without even paying the extra 5p they're packed up in a big plastic bag that says Merry Christmas from Debenhams.

11:41 am

It's this kind of flawless execution that has made Debenhams what it is.

Anyway, we're now at the stage of looking at secondary effects.

11:42 am

Intu Properties PLC (INTU:LSE): Last: 149.90, down 0.1 (-0.07%), High: 150.75, Low: 148.35, Volume: 816.97k

Reits have been running pretty poor all month

And you have to imagine that rent negotiation won't be easy from here. Westfield, as mentioned, is allegedly your AAA-rated mall ....

11:44 am

...... but it has about a fifth of its blocks fallow and is anchored on the South side by a Debenhams and a House of Fraser. If that's your AAA-rated, what's happening at the B and Cs?

Caz wrote a bit about this last week.

We remain of the view that it is unlikely prime mall portfolios will see negative like-for-like rental growth in a benign economic environment. However, we acknowledge the asymmetric risk in the direction of rents, and now see investor expectations of rental growth as the main driver of yield shift and valuation changes, even if positive rental growth is recorded. Using DCF analysis across four rental scenarios, we have revised down our capital growth for UK shopping centres from an average of -1% to -4% pa for our five-year forecast period. NAVs come down by an average of -9.5% for each year in the same period and PT’s come down by an average of 12.5% for those companies exposed to UK retail.

11:45 am

In terms of UK exposure ......

Close to 100% exposed Intu sees a downgrade of -20.5% to 175p and 100% exposed CapReg -24% to 57p. More diversified BLND sees a downgrade of just 2.7% (715p) and LAND -6.7% to 1120p. We remain OW LAND, HMSO and CapReg, Neutral Intu and BLND.

11:47 am

(@hornblower: nah, don't think we'll bother.)

Well done to Ben on shaking out Revolution.

11:48 am

Revolution Bars Group PLC (RBG:LSE): Last: 123.50, down 3.5 (-2.76%), High: 135.00, Low: 122.00, Volume: 643.35k

Why confirmation took until shortly before 6pm on Friday is anyone's guess.

11:49 am

And the shares were already up, what, 11% by Friday's close

Here's Canaccord to talk us through where things stand.

At last, it looks like there's been an outburst of common sense in the RBG boardroom. It's a shame it's taken another 12 months to get to this stage following the collapse of Stonegate's opportunistic bid for Revolution last year. We retain our BUY recommendation and 190p target price.

11:50 am

You'll remember the Stonegate bid was 203p and failed to get 75% acceptances.

Stonegate then ruled itself out of returning, though I don't think that's binding in any technical sense should they change their mind.

11:51 am

Since then RBG's share price has virtually halved, we downgraded our RBG forecasts in June and we expect trading to have continued to be poor after a difficult summer. After nine months without a CEO, RBG has just appointed Rob Pitcher from M&B and the prelims in October could have been a baptism of fire for the new bar-tender without the helpful distraction of talks with Deltic.

There are merits to putting the businesses together. In brief there are (1) c.+£7m of synergies to be captured, (2) RBG can use Deltic's cashflow to build out the bars business, (3) both businesses are too small and (4) Peter Marks, CEO of Deltic, is well-placed to become CEO of the enlarged business.

RBG is valued on a PE of 11.1x, an EV/EBITDA of 5.3x and FCF yield of 14.2% for FY18E changing to 8.7x, 4.6x and 17.3%, respectively, for FY19E. Our 190p share price target is based on an EV/EBITDA of c.7.5x and a c.10% FCF yield for FY18E. We do not strip out pre-opening costs from our EPS (Dil. Adj) forecasts as (1) we view them as an ongoing cost of business and (2) this treatment is consistent across our universe of stocks. Last year, we wrote that Stonegate's 203p/share offer valued RBG on a trailing exit EV/EBITDA multiple (including pre-opening costs added back) of 6.4x. Assuming £7.7m of synergies identified by Deltic then the exit multiple drops to a measly 4.4x.

11:52 am

A sensible, fair approach to the process could create a c£35m EBITDA business with an enhanced management team, c0.5x net EBITDA and good growth opportunities.

Peel notes fewer synergies this time around but argues that it still makes sense to stick the businesses together, as three-quarters of Revolution's sales happen pre midnight.

Which makes it vertical integration, in a sense.

11:55 am

Also notes trading's likely to have been garbage for both through the summer.

We expect both RBG and Deltic had a difficult summer, without which both companies should be growing profitability. Late-night businesses tend to suffer during heatwaves, but typically only c20% of annual profits are earned between June and August.

11:55 am

Both boards are displeased that RBG has been forced to make this statement. This is disruptive for the staff, as it was last year. After last year’s events, the last thing either company needs is for this to be played out yet again in the public arena.

............... ah well. Tiny violins at the ready.

As RBG is potentially acquiring Deltic, this transaction could occur without altering Stonegate’s lock up, which expires on 17 October 2018. However, this is early days, and RBG’s shareholders need to be on board. Then, the transaction should effectively be an equity merger, with the three main decisions being: equity split; management split; and head office location. After last year’s events, this needs to be simple, and low cost, and without further leaks.

11:57 am

@Rabbit: sorry, I know nothing about Allied Minds.

Allied Minds PLC (ALM:LSE): Last: 79.50, up 5.9 (+8.02%), High: 79.50, Low: 75.00, Volume: 91.23k

11:59 am

They're up on three subsidiary announcements, which I'll summarise here.

· Federated Wireless announced two important milestones in commercializing shared spectrum: the submission of its proposal for Initial Commercial Deployments on the Citizens Broadband Radio Service (CBRS) spectrum band to the FCC, and the introduction of a new training program for Certified Professional Installers (CPI) of Citizens Broadband Radio Service Devices (CBSDs)

· BridgeSat raised $10.0 million in Series B financing led by Boeing HorizonX Ventures, proceeds from the transaction will be applied to accelerate the build out of BridgeSat's optical ground station (OGS) network

· HawkEye 360 completed second closing of its Series A-3 funding round raising aggregate proceeds of $14.9 million, led by Raytheon Company, the Series A-3 round included participation from the Sumitomo Corporation of Americas, Razor's Edge Ventures, Shield Capital Partners, Space Angels, and Allied Minds

Delayed H1 due September 28th, isn't it?

12:00 pm

Not sure why anyone would want to take a view before that.

And while in smalls, Abcam

12:00 pm

Abcam PLC (ABC:LSE): Last: 1,273, down 211 (-14.22%), High: 1,384, Low: 1,009, Volume: 2.14m

FY beats but 2019 margin guidance amounts to a soft warning.

36% EBITDA margin in 2019 is 2-3 percentage points below consensus

12:02 pm

Not huge downgrades as a result. But when you're at 45 times 2018 and 2019 it doesn't need huge downgrades

(@vv75: yes. Anything sub FTSE 250 is a small cap.)

12:03 pm

we make less than 1% changes to our 2019 and 2020 EPS forecasts, and believe that investors should take the strong revenue guidance positively. However, with consensus margins having drifted higher than management had previously intimated, we expect consensus EPS to fall into line with our forecasts, implying a c3% reduction for FY 2019. We reiterate our Buy rating and 1,640p price target.

And a bit more detail on the cut.

New guidance is for 11% constant currency growth in FY 2019 (including more than 20% growth in recombinant antibodies and immunoassays) and low double-digit growth in the mid-term (previously 9-11%), with the gross margin expected to continue to rise gradually. The company had previously indicated that operating leverage would be reinvested in the business, and it has now been more explicit, guiding to a 36% EBITDA margin in FY 2019. This is 2-3ppt lower than consensus, and likely to offset the stronger revenue outlook in the near term.

12:04 pm

Having encountered setbacks in its ERP system, Abcam is now taking a more phased approach, but this means a further £16m cost in FY 2019, and additional expenses in FY 2020. With an additional £12m of payment for Spring Bio in FY 2019 that we had failed to model, our period-end net cash estimate falls to £108m, from £138m.

The downgrade at EBITDA level's about 10%, note.

Oh, hang on, Panmure say exactly that.

12:05 pm

We expect changes to estimates to reduce EBITDA consensus by around £7m, taking circa 10% from EPS. The fall in expected profitability is due to increased investment in the ERP system, beyond what that previous forecast, as a slower phased rollout of the system is planned for 2019. In addition, further investment in stocking and manufacturing systems is expected, aiming improve the rate delivery of product to customers; an area where Abcam has consistently been weak.

In our view Abcam is trading at a level which required outperformance in FY2018, rather than just in line, and guidance at least meeting FY 2019 consensus. We expect the disappointment in the numbers to result in a rapid fall in the shares.

12:07 pm

Abcam shares trade at very elevated levels on 44.7x FY19 P/E compared to peers on 33x FY1 P/E, a 35% premium. We believe the expected downgrades to FY19 and FY20 numbers will cause a contraction in this premium

.... or were, but are now under review.

12:07 pm

Okay, that'll do for today.

12:09 pm

Which reminded me that Sackler was a nomination in last year's Person of Interest awards -- https://ftalphavil...2017-the-longlist/ ............... And we're happy to have contributed even slightly to the tarring and feathering of his family name.

12:13 pm 12:13 pm

Source: https://ftalphaville.ft.com/marketslive/2018-09-10/

#read more #see more #check it out #interesting #learn more

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treemist5 · 5 years

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Viagogo fraud claim ludicrous, says Ed Sheeran's promoter

By Shari Vahl Reporter, You and Yours

7 September 2018

Ed Sheeran's promoter has told the BBC that fraud allegations made by ticket reseller Viagogo are "ludicrous".

Viagogo claims that Stuart Galbraith's firm, Kilimanjaro Live, set up fake Viagogo stalls during Mr Sheeran's 2017 tour where it voided genuine tickets and told fans to buy new ones.

Mr Galbraith dismissed the allegations and told the BBC that he doubted the claim would succeed.

He said his firm still hadn't received any court papers regarding the claim.

Viagogo's action, filed with a court in Germany, was "a diversion tactic" over the tickets seller's refusal to attend a commons select committee earlier this week, Mr Galbraith told BBC Radio 4's You and Yours programme.

"Of course we're not defrauding anybody, it is ludicrous that they'd suggest it.

"Their press release and court action was purely and simply a smoke screen to divert attention away from the fact they didn't have the courtesy to turn up at a commons select committee," he said.

Viagogo said it could not comment on the Mr Galbraith's criticism because it was in the middle of legal proceedings.

Viagogo sues Ed Sheeran's promoter

Viagogo is ticket industry's 'boil to lance'

Don't choose Viagogo, minister warns

The Commons hearing earlier this week was on the issue of secondary ticketing.

Damian Collins - the chair of the Digital, Culture, Media and Sport (DCMS) Committee, criticised the secondary ticketing platform for not attending the hearing, which would look into the site's practices.

Many in the industry have criticised resellers, which have been accused of misleading fans by claiming they are official sellers of tickets, overcharging buyers or selling tickets that are invalid if they are resold.

Consumer protection law

In April the manager of Arctic Monkeys, Ian McAndrew, called on the government to shut down Viagogo after tickets for the band's upcoming UK tour appeared on the site for as much as £2,200.

Viagogo has long been accused of allowing touts to sell huge numbers of tickets for inflated prices, denying genuine fans access to tickets at face value.

In August, the competition watchdog said it was taking Viagogo to court over concerns it is breaking consumer protection law.

Viagogo has also accused Mr Galbraith of using its reselling site to sell tickets, and of threatening it when they refused to give him preferential rates.

Mr Galbraith told the BBC he hadn't used Viagogo to sell tickets since 2011.

"When they first launched in 2008 they were a legitimate peer-to-peer sales platform, and in 2010 and 2011 they sold about 1,500 tickets for us for a small range of our concerts, most of those at face value some were sold for higher prices"

"By the time we got to 2011 we realised they were as a company they were not reputable and not giving good customer services and were turning into nothing more than a platform for glorified touts and powers sellers."

Source: https://www.bbc.co.uk/news/business-45449408

#read more #see more #check it out #interesting #learn more

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treemist5 · 5 years

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Opinion | Jet Airways job crash: Do you have a protocol in place?

We complain about the AC being too cold, or the coffee machine spewing drain-water. The lifts are slow. The benefits shrink. The increments thin. We groan about Monday mornings. But take that job away and there is a sudden sound of silence. The routine is gone. The reason for getting up in the morning is alarmingly not there. And the monthly ding on the phone that announces the salary credit is eerily missing. Unless there is a resolution, over 16,000 jobs are at stake as Jet Airways suspended operations on 17 April 2019. Thousands of families of the Indian mass affluent will now struggle with rent, EMIs, school fees, groceries and premium payments. The writing has been on the wall for months of impending doom, and many families were already dipping into their savings as salaries were delayed for a few months. How to handle this crisis? Do you have a sudden job loss protocol in place?

The sudden job loss protocol is like this. Make a basic needs budget to see what you need every month to live. Rent, home loan payments, school fees, utilities (yes, broadband is a utility now, but maybe cut out the Netflix or Tata Sky?) food, life and medical insurance premiums must be funded. Cut out the discretionary spends harshly. Next, find out what you have to fund these expenses for at least six months. If you have an emergency fund, this is the time to dip into it. Ideally, you should have had at least six months of spends in your emergency fund. Don’t have that money? It is time to audit all your resources. Use the money in savings bank accounts first. Then look at fixed deposits (FDs) and recurring deposits (RDs). Take that half percentage point hit on the return and break the deposit. Use gold funds if you have them or sell the gold bars you had bought. Selling jewellery is usually a bad idea, unless it is the last resort. Next tap into your mutual funds—use debt funds first. Then use equity funds. If you have shares, sell those. And no, it does not matter if you are selling at a loss. This is about survival. That’s why you have these assets—to help you when you need the money. Don’t fall into the borrowing trap. Rein in credit card payments.

What if the home EMI is too big to sustain? If you live in the home that you are paying the EMI on, then it is worth using your Provident Fund money to pay off the loan. A roof over your head and some basic necessities is what it takes to recover and re-enter the work force. Start the process to withdraw this corpus. But if you have an EMI for a home that you bought for investment, it could be time to sell. Selling a house will take a few months. Begin the process.

Next, stop all investments, whether it is an RD or an SIP. The two things you should try and maintain are the life and medical covers. Maintain the term cover that insures your life and is not a Ulip or a traditional plan. If you have such products, speak with the insurance firm for a premium holiday. Some firms may work with you for such a holiday. Your medical cover is a key financial product now. Find the money to pay that premium. If you don’t have it, buy it fast. Refer to Mint SecureNow Mediclaim Ratings if you want help with this crucial decision.

This is a good time to audit your life and see what new skills you need for the job market. Use the time out of work to renew your skill set. There are lessons for everybody in a job from these instances of a business going out of business. As robotics and AI take over more and more jobs, it is good for everybody to be prepared. The time for not reinventing yourself every few years is over. Having a plan B or C is a good idea for generating income, even if you feel totally secure in your job. Be prepared.

Monika Halan is consulting editor at Mint and writes on household finance, policy and regulation

Source: https://www.livemint.com/money/personal-finance/opinion-jet-airways-job-crash-do-you-have-a-protocol-in-place-1555863562410.html

#read more #see more #check it out #interesting #learn more

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treemist5 · 5 years

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Boeing Anti-Stall Software Likely Active When Ethiopian Airlines Flight Crashed

With Boeing's shares still stuck in a rut, the investigation into flight ET302 - the second Boeing 737 MAX 8 to mysteriously crash within a five-month period - has analysts and investors worried about the possibility that the Boeing's controversial MCAS software might have played a role in the crash, which killed nearly 160 people. It's widely suspected that the anti-stall software contributed to the Ethiopian Air crash, as well as an October accident involving a Boeing 737 flown by Indonesian budget carrier Lion Air, which, like ET302, crashed just minutes after takeoff.

With preliminary results from the Ethiopia Airlines probe expected as soon as later this week, EA CEO Tewolde Gebremariam offered the Wall Street Journal a glimpse into the results...which appeared to confirm what many have suspected.

That is, according to the initial analysis of data from the flight, it appears MCAS was active when ET 302 plunged out of the sky and crashed in a field outside the Ethiopian capital of Addis Ababa.

Investigators are using information from the plane’s data and cockpit recording devices to probe the crash, and they could release a preliminary report as early as later this week. Mr. Gebremariam isn’t part of that probe, but he is familiar with many aspects of the six-minute flight of the jet, which ended in the death of all 157 aboard.

Mr. Gebremariam didn’t detail how he had made his determination about MCAS. He doesn’t have access to the precise detail from the data and voice recording devices, but he has listened to recorded radio communications between the cockpit of the flight and the tower at Addis Ababa airport, from which the flight departed on March 10.

"To the best of our knowledge," MCAS was activated on the flight, Mr. Gebremariam said in the interview, adding though that he wanted to wait for the investigation for conclusive evidence. Aviation authorities have noted similarities between the short flights of the Ethiopian jet and one that crashed in October in Indonesia, based on flight data including things like altitude and speed. Citing those similarities, they have grounded the plane model around the world.

Boeing has already promised to revamp its flight control systems and offer more resources to help train pilots, but the company wasn't available for comment for the WSJ story. In any case, Gebremariam said that it would be difficult for Boeing to "restore trust" in its products following the deadly crashes, though he added that the airline still "believes in Boeing", the company should have been more forthcoming about changes to flight software when EA first purchased the planes.

In a statement by Ethiopian Airlines early on Monday, Mr. Gebremariam said the airline still “believes in Boeing.”

MCAS is designed to help pilots avoid the plane’s nose pitching up and entering a stall, leading to a loss of control of the plane. But on the Lion Air flight, MCAS was fed erroneous information from a sensor, causing the system to misfire, accident investigators into that probe have said. The system repeatedly pushed the plane of the nose down even though the jet wasn’t at risk of stalling.

Mr. Gebremariam said he thought Boeing should have been more proactive on informing airlines about the MCAS system when they delivered the planes, and especially after the Lion Air crash.

"In retrospect I would have expected them to have been more transparent on the MCAS, the technicalities of the MCAS, what it does and what it doesn’t do," Mr. Gebremariam said. "And even after the Lion Air crash…more should have been done from the Boeing side in terms of disclosure, in terms of coming up with strong procedures, stronger than what they gave us," he added.

The aerospace company has been roundly criticized for selling "optional" safety features that critics like Ralph Nader have argued should have been packaged with each jet. And if the software is found to have been the cause of both the Lion Air and Ethiopia Air crash, expect to see more airlines cancel their orders.

Source: https://www.zerohedge.com/news/2019-03-25/boeing-anti-stall-software-likely-active-when-ethiopian-airlines-flight-crashed

#read more #see more #check it out #interesting #learn more

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treemist5 · 5 years

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Here's how much American retirees spend in a year

How much does it cost to get by in retirement? Pretty close to what it costs to live before retirement, according to federal data.

U.S. households led by someone who is 65 or older spend a whopping $50,178 a year, according to the latest federal data on consumer spending, which covers the 12 months from July 2017 through June 2018. By comparison, the average across all households is $60,815.

So, where is all that money going every golden year? The biggest expenses for older households are many of the same as those for younger Americans. They include:

1. Housing

A whopping one-third of older-household spending is related to housing. That translates to an average of $16,723 per year, which compares with $20,001 for the average U.S. household.

That spending includes rent and mortgage costs as well as hidden homeowner costs such as property taxes, insurance, maintenance and repairs. It does not include utilities — which are detailed in section No. 5.

It's not the usual blah, blah, blah. Click here to sign up for our free newsletter.

2. Transportation

Commuting expenses might vanish during retirement, but that doesn’t mean all transportation costs will.

Older households spend an average of $7,472 on transportation costs such as vehicles, gas and insurance each year. That compares with an average of $9,735 for all households.

3. Health care

Now, here’s an example of an expense that increases in retirement. Older households spend an average of $6,700 on health care annually — compared with $4,924 for all households.

Related: The Shortest Path to an Amazing Retirement

The bulk of consumers’ health care spending — for both older households and the average household across all ages — is on insurance. The rest is on medical services, medical supplies and drugs.

4. Food

Members of older households spend an average of $6,513 per year on food, including both the food they eat at home and eating out. That’s lower than the $7,869 spent by the average household.

5. Utilities and public services

Older households spend an average of $3,714 per year on utilities like natural gas and electricity and services such as phone and water. By comparison, the average spent across all households is $3,956. (Article continues after video.)

Click to expand

UP NEXT

Source: http://www.msn.com/en-us/money/retirement/heres-how-much-american-retirees-spend-in-a-year/ar-BBQuGgu?srcref=rss

#read more #see more #check it out #interesting #learn more

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treemist5 · 5 years

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„Länger kann …. nicht zugewartet werden“

In einer Strafsache machte der Staatsanwalt mächtig Druck. Am 21.03. übersandte er mir die Ermittlungsakte zur Einsicht. Im Begleitschreiben hieß es:

Einer eventuellen Stellungnahme wird bis zum 02.04. entgegengesehen.

Ich wies freundlich darauf hin, dass ich so schnell keine Verteidigungsschrift vorlegen kann. Ich habe ja noch zwei weitere Mandanten, für die ich auch mal was machen muss. Aber bis zum 17.04. würde ich die Stellungnahme schon hinbekommen. Deshalb bat ich höflich darum, mir doch diese Zeit zu geben.

Antwort:

Frist wird gewährt bis zum 10.04. Länger kann mit Blick auf den Beschleunigungsgrundsatz nicht zugewartet werden.

Eine weitere Kommunikation war mir dann zu blöd. In der Sache sitzt niemand in Haft. Die angebliche Tat liegt schon anderthalb Jahre zurück. Ich schrieb die „Frist“, die ja ohnehin keine echte ist, also in den Wind. Mein Schreiben ging am 14.04. (Samstagsarbeit!) raus.

Und was soll ich sagen? Mitte Oktober stand nun eine Wiedervorlage im Kalender. Deswegen sah ich die Unterlagen erstmals wieder. Ich forderte sicherheitshalber die Akte an, um zu sehen, was sich seitdem Dramatisches getan hat. Ihr werdet es fast erraten, was in der Zwischenzeit passiert ist:

Nichts.

Ich notiere jetzt eine großzügige Wiedervorlage auf März 2019. Der Beschleunigungsgrundsatz für Strafverfahren lacht sich in der Zwischenzeit voraussichtlich weiter kaputt. Und Samstagsarbeit tue ich mir bei dem Staatsanwalt sicher nicht mehr an.

Source: https://www.lawblog.de/index.php/archives/2018/11/09/laenger-kann-nicht-zugewartet-werden/

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treemist5 · 5 years

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Cash Flow vs. Equity: Which Pays Off for Investors in the Long Run?

As I’ve been searching for topics to write about, in terms of finance and real estate investment are concerned, I keep running across the different ongoing conversations regarding equity and cash flow. Specifically, which one is better and why? I thought this would be a good topic to analyze from a financial perspective, especially in terms of residential investment property.

Let me present to you a story that I often use for comparisons regarding owner occupied purchases and how to handle refinances for rate/term improvements or cash out refinances down the line. I use the story to help clients compare small vs. big down payments, making the scheduled payment on your property or paying more, getting a long term mortgage (like 30 years) or a shorter term mortgage (15 years), and the reasons why you should consider these different options every time you get financing for property.

(Note: I’ve tailored this situation for an investment property using a duplex rather than a single family house.)

The Scenario: 2 Cousins

OK, so let’s set the stage here for our analysis. In this scenario, we have two cousins who are going to buy a duplex. The price of each duplex is $250,000. Each duplex is exactly the same, consisting of two 2 bedroom/1 bathroom units. Each cousin will live in one unit and rent out the other unit to a prospective tenant. Each cousin is employed in a salaried job and makes $75,000 per year in income. Each cousin has $50,000 in savings. Let’s also assume that each of the cousins was able to negotiate zero out of pocket closing costs (for the sake of this analysis).

Cousin A

Cousin A is a highly motivated individual and wants to pay off the property as soon as possible. Cousin A only knows one way to use financing, and that’s the way that his parents taught him how to do it: Put down as much money as possible and finance as little as possible. Cousin A is going to put down 20% because that’s what his parents did when they bought their home, and he’s going to get a 15-year fixed, which will allow him to pay off the property in just 15 years.

Then, on top of that, any cash flow that is achieved by renting out the second unit should be put toward the monthly mortgage payment, and Cousin A might even be able to pay it off faster than 15 years. Cousin A wants to build as much equity as possible and as fast as possible, while at the same time paying down the mortgage as fast as possible. The duplex is kept up, and it appreciates at 3% per year.

Cousin B

Cousin B is also a highly motivated individual, but he grew up on the other side of the country. His parents didn’t teach him much about finance, so he had to study it on his own. He’s come to the conclusion that he’s going to do exactly the opposite of what Cousin A is going to do. He’s going to take as long as possible to pay off the mortgage, and that means getting a 30 year amortization on his mortgage loan.

Related: Equity Rich and Cash Poor: A Real Life Case Study on How I Saved My Mother’s Home

He’s going to put as little down on the property as possible, and in this case, it’s only 3.5% with an FHA loan. He’s going to save the difference in monthly mortgage payments ($302) and put that in his savings. Just as in Cousin A’s duplex, Cousin B’s duplex is kept up, and it appreciates at 3% per year.

The Initial Numbers

Here’s what each cousin’s scenario looks like today when they are purchasing the identical duplexes.

Cousin A Cousin B Purchase Price: $250,000 $250,000 Down Payment: $50,000 $8,750 Loan Amount $200,000 $241,250 Interest Rate: 3.75% 4.00% *Monthly Payment: $1787 $1485 Difference in Monthly Payment: $0 $302 Equity: $50,000 $8750 Cash after Down Payment: $0 $41,250 Rental Income: $1500/mo $1500/mo Cash Flow -$287/mo +15/mo Appreciation 3%/year

3%/year

For the next five years, everything goes as planned for both Cousin A and Cousin B. The renters seem to be long term. The rent hasn’t gone up or down, but at least it has been consistent. The property is most certainly worth more 5 years later, so they’ve both built a little equity in the property. They still have consistent income, so nothing seems to be wrong as far as monthly payments are concerned (except the fact that Cousin A has to pay a little bit every month, whereas Cousin B actually makes a few bucks every month).

The Numbers in 5 Years

Here’s where the cousins are at after 5 years:

Cousin A Cousin B Duplex Value (5 years): $289,818 $289,818 Loan Amount (5 years) $145,355 $218,204 Loan Amortization: 15 years 30 years Interest Rate: 3.75% 4.00% Monthly Payment: $1787 $1485 Difference in Monthly Payment: $0 $302 Equity (5 years): $144,463 $71,614 Savings $0 $59,370 Equity + Savings: $144,463 $130,984 Rental Income: $1500/mo $1500/mo Cash Flow -$287/mo +15/mo Appreciation 3%/year 3%/year

Finally, at year 7 into the process, something happens. Cousin A loses his job, and since he put such a large down payment down on the property in order to “pay the property off faster,” he has absolutely no savings (also because he had negative cash flow). The renter in Cousin A’s duplex decides it’s time to move out, and he no longer has income coming in from the rental. I would call this a “rainy day” event because it’s a major malfunction of the system at this point in time.

Coincidentally, the same exact thing happens to Cousin B. He loses his job, and the renter in his duplex also decides to move out at exactly the same time as the renter with Cousin A.

The Numbers After 7 Years

Here is where each stands after 7 years financially.

Cousin A Cousin B Duplex Value (7 years): $308,339 $308,339 Loan Amount (7 years) $120,468 $207,618 Loan Amortization: 15 years 30 years Interest Rate: 3.75% 4.00% Monthly Payment: $1787 $1485 Difference in Monthly Payment: $0 $302 Equity (7 years): $187,871 $100,721 Savings $0 $66,618 Equity + Savings: $187,871 $167,339 Rental Income: $0/mo $0/mo

This is where the situation becomes divergent. Since Cousin A has no more income whatsoever because of the job loss and rental income loss, he’s forced to make a tough choice. Either he can’t make his mortgage payment or he’ll have to sell the house. Most likely, he’ll have to sell the duplex to get his equity.

Cousin B, on the other hand, is totally good with where he stands financially after the job loss and the tenant loss. He can make the mortgage payment for many years with just his savings alone. He can take his time to find a tenant who fits the mold of exactly what he’s looking for. And he’s got the cash to cover expenses that he may run into for a while.

The End.

Now, I know there are several variables in this story that may or may not happen. I give you this story to illustrate a few points about residential investment real estate, real estate finance, and money in general.

Here’s my take:

The Takeaway

Cash vs. Equity

Cash is liquid money and is absolutely essential when you finance real estate. Cash is much easier to use if something goes wrong, whereas equity is completely useless. You’d have to sell your asset if you ever need the money quickly, and that is not always the choice that someone needs to make if an event occurs.

Value vs. Financing

The value of a residential property will go up or down regardless if you have a mortgage on the property. Value is completely out of your control in residential real estate because it’s usually based on someone’s opinion instead of cash flow (like commercial real estate). This is an important point when investing. Since mortgage money is the cheapest money that you’ll ever borrow, why not finance as much as possible?

If the numbers don’t work for the smallest down payment possible, move on to the next property. Remember, a good investment property is one that cash flows to your liking, not one with “equity.” That is to say that the income generated by the property is greater than the expenses of the property.

Related: Should I Invest for Cash Flow or Growth? An Investor’s Analysis

Smaller Down Payments vs. Bigger Down Payments

This goes along with reason number one. Nobody cares about equity unless you’re trying to determine your “net worth.” And net worth is as useless as the “g” in lasagna. So, when given the choice of putting down a lot of money or a little money, put down a little money and either save or invest the rest. Leverage is key. Use other people’s money (in this case, the bank’s money) to the best of your ability. Don’t put more money into a property to try and generate a cash flow. Just move on to the next one.

Long Term Mortgages vs. Short Term Mortgages

Remember, when you’re financing an investment property, you can always pay more, but you can NEVER pay less. Leverage is key here. A shorter term mortgage means that your payment is going to be higher — period. Regardless of the interest rate you’ve obtained on your short term mortgage, it will be more than a longer term product, even if the longer term product has a higher interest rate. Every single dime, nickel, or penny you give to the bank is money that you’ll never get back unless you refinance (borrow against the house as collateral) or sell. Those are usually major transactions.

As you look through the ideas listed above, realize that this is what commercial real estate investors do all day long. Commercial real estate is so much more about the numbers of a given property rather than emotions or opinions, like residential real estate is.

Challenge yourself to find a cash flowing residential property that enables you to make a small down payment, get a long term mortgage, and spend as little of your own capital as possible. The cash flow that you achieve will most certainly be better than the equity you’ve gained.

We’re republishing this article to help out our newer readers.

What do you think: Do you agree with my points in the cash flow vs. equity debate? If not, what’s your counterargument?

Leave your comment below, and let’s discuss!

Source: https://www.biggerpockets.com/renewsblog/2015/01/29/investors-focus-cashflow-over-equity/

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