Yesterday I wrote to you about the government probe into Fidelity. My view continues to be that this looks to be a non-starter. But unfortunately, when you’re in the headlines, questions are always going to be asked. The thrust of the probe is related to an infrastructure fee Fidelity negotiates with other mutual fund companies for the privilege of listing their funds for sale on Fidelity’s FundsNetwork. The infrastructure rate is agreed upon between the two parties and is listed in the fund prospectus or plan document. A plan document is used by retirement plans such as 401(k)s to make … [Read more...]
Archives for February 2019
Hedge Funds All-In on FAANGs. Strategy Could Come back to Bite Them
Hedge funds have been moving out of most stocks, but the few stock purchases they are making are increasingly concentrated among the big American and Chinese tech names. Bloomberg's Lu Wang and Melissa Karsh write that Goldman Sachs data shows "the top 10 holdings on average made up 70 percent of a fund’s long portfolios, the highest since at least 2002." The narrow band of stocks being traded by the hedge funds are highly correlated and basically constitute one trade. If the sector is hit, the lack of diversification could send hedge funds reeling. Wang and Karsh write: As a group, … [Read more...]
Big Deal: British Air to Replace its Aging 747 Fleet with Boeing 777s
In The Wall Street Journal, Robert Wall details a major purchase of Boeing 777-9 jetliners by British Air (International Consolidated Airlines Group). BA will replace its fleet of aging 747s with the new jets. Wall writes: International Consolidated Airlines Group , ICAGY -1.79% as IAG is formally known, said it would place a firm order for 18 Boeing 777-9s and take options for up to 24 more. The deal has a combined value of $18.5 billion at list price before industry standard discounts. The jetliners will eventually replace BA’s aging 747 jumbo jets in another sign twin-engine long-range … [Read more...]
Government’s Fidelity Probe Looks to be a Non-Starter
There is an article in today’s Wall Street Journal about a government probe into Fidelity regarding a fee charged to some mutual funds. It’s called an “infrastructure fee,” and is charged by Fidelity Investments to certain mutual fund companies (not Vanguard) to list their funds on Fidelity’s FundsNetwork. Most funds on Fidelity’s FundsNetwork are accessed through retirement accounts such as 401(k)s and/or 403(b)s. As such, they are governed by ERISA laws which are overseen by the Department of Labor. The article references a fee of 0.15%, which is misleading because not all companies … [Read more...]
AT&T Prevails in Case to Acquire Time Warner
The Editorial Board of the Wall Street Journal calls AT&T's defeat of the Department of Justice over its acquisition of Time Warner a "stone cold knockout." The Justice Department sued AT&T to block its acquisition over carriage-fees, but failed miserably, with the D.C. Circuit Court of Appeals writing a 127-page opinion rebutting the DOJ's position. The Board writes: The three-judge appellate panel comprised of two Democratic appointees largely agreed, notwithstanding some nits with Judge Leon’s legal diction. As is its custom, the D.C. Circuit judges reviewed the trial … [Read more...]
Trump Pick to Oversee Fannie Mae and Freddie Mac
Congratulations to Mark Calabria on his advance by the Senate Banking Committee yesterday to become the next director of the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac. I know Mr. Calabria from his work with the Cato Institute, and I like his free market principles. If confirmed this Spring, Mark will move to the FHFA directorship from his current role as chief economist and senior aide to Vice President Mike Pence. You can listen to the hearing, and read Calabria's prepared testimony below. Originally posted on Your Survival Guy. … [Read more...]
Illinois: New Governor, Same Old Pension Pyramid Scheme
Writing at Forbes, Elizabeth Bauer asks if Illinois' public retirement system is a pension fund or a pyramid scheme. The evidence doesn't look good. Despite electing a new governor, Illinois seems to be using the same old tactics to plug its pension holes. Bauer explains: Illinois's new elected officials and their advisors simply don't believe that it matters that public pensions are pre-funded. They view pension funds as something that exists on paper, and pension reporting as a nuisance to be avoided where possible, and ignored otherwise. Through their actions -- and indeed their words … [Read more...]
Grocery Delivery Joint Venture Stirs Excitement in Advanced E-Commerce Market
The United Kingdom is one of the world's most advanced e-commerce markets, and a new joint venture between Marks & Spencer and online delivery startup Ocado Group, is getting attention. Ocado is a 16 year old online grocery retailer with over 580,000 active customers. It has previously made news in the United States after Kroger, America's largest grocery business, bought 6% of the company last year. The attraction by big grocery businesses to Ocado is the company's high-tech warehousing and logistics technologies including advanced robotics and software. For Marks & Spencer, … [Read more...]
Will the Dow’s Mega-Companies Use Blockchain to Change the World?
You may still not have recovered consciousness after the 19% drop from October 3 through Christmas Eve. So, I wouldn’t blame you for not noticing the Dow’s rapid 16% rise over the past nine weeks. One question I receive quite often is, “what are your thoughts on technology?” My quick response—I love technology. But when it comes to investing, the company better pay a dividend. I want to be—and I want you to be—paid for investing in stocks. One area in tech I’ve been writing to you about is blockchain. It’s the backbone behind cryptocurrencies such as Bitcoin and Ethereum. And as I’ve told … [Read more...]
Your Apps Are Giving Your Most Sensitive Information to Facebook
Planning on getting pregnant? Buying a home? Trying to diet successfully? If so, and if you're using an app on your smartphone to help you manage the process, chances are Facebook is fully aware of it all. The Wall Street Journal has investigated some of the most popular apps and found that many of them were sending customers' information directly to Facebook without their knowledge. Some, but not all, of the Apps stopped sharing information with Facebook after the Journal contacted them about such behavior, but the investigation only surveyed 70 out of the millions of apps that exist. Sam … [Read more...]
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