KKR to invest $100 million in wireless infrastructure

KKR is making its 11th infrastructure investment. This time they are focussing on wireless infrastructure in rural America. KKR will be a minority investor in its three different communication companies.

1. PEG Bandwidth is a company that builds and operates backhaul networks. Their focus is on connecting wireless communication towers to the data and fiber backbone networks on the ground.
2. AP Wireless buys cell sites both on the ground and on rooftops (domestic and international.)
3. AP Towers develop wireless communication towers and purchase already existing towers.

With the explosion of smart devices there has been a dramatic increase in demand for data. This demand is driving investments into wireless infrastructure. The current infrastructural grid is drastically outdated and in a large part of the country still consists of copper cable, which is unable to handle the burden of big data.

Raj Agrawal, KKR's Head of North American Infrastructure said, "The need for wireless infrastructure will continue to be driven by increases in wireless data usage that is overwhelming existing network capacity... We are excited about the opportunity to partner with Associated Partners to grow this premier set of businesses with critical telecom infrastructure assets."

KKR appears to be betting on factions of the economy that are driven by technical revolutions. In the last year they have also invested into natural gas. With the development of shale natural gas, the amount of natural gas available has skyrocketed.

"As the shale revolution is driving the growth of natural gas pipelines to transport molecules, the advent of the smart phone is driving a similar wireless explosion to transmit electrons. Wireless communication networks are an essential component of the nation's infrastructure," said Scott Bruce, Managing Director of Associated Partners, L.P. "We are excited to have KKR partner with us as we expand our businesses."

About KKR

Founded in 1976 KKR is  led by Henry R. Kravis and George Roberts. KKR is a leading investment firm with $90.2 billion under management as of September 30, 2013. With offices around the world, and notable global voices such as David Petraeus,  KKR manages assets through a variety of investment funds and accounts covering multiple asset classes. KKR seeks to create value by bringing operational expertise to its portfolio companies and through active oversight and monitoring of its investments.

$1.3 billion net profit for Ford in Q3

Ford reported $1.3 billion in net profits for quarter 3 of this year. This profit was driven by continued strong sales in North America and less losses in Europe. The net income is down from last year by $359 million but is still a good showing for the American automobile maker.

Automotive sales for ford rose 12% this year to $33.9 billion. Much of this progress is attributed to CEO Alan Mulally. Mr. Mulally has turned Ford's North American operations around, broadening their lineup and adding more competitive cars. He also plans to develop identical cars all around the world. So far Ford has seen great success in China with their focus which has become the top selling car name. Shares of Ford have risen 35% this year.

shares have risen 35% this year. compared to the S&P at 22% rise this year. results show continued progress in Mulally's repair of the company since he left boeing co. in 2006.

“The heavy lifting has been done in North America, they’re working through their issues in Europe, and the China growth strategy is in place,” said Michael Razewski, a New York-based principal at Douglas C. Lane & Associates, which oversees $3.4 billion including Ford shares. “This isn’t necessarily a business that needs to be transformed anymore.”

The company expects profit margins to be higher than last year.

Twitter, a great IPO?

There is a lot of buzz around the Twitter IPO. Twitter a company that started as a small microblogging site has developed into a giant microblogging site with millions of users and an enormous reach. Twitter has become one of the most influential websites today.

Twitter announced last Tuesday that they have obtained a $1 billion line of credit from independent American banks, these include Goldman Sachs, Morgan Stanley, JP Morgan, Bank of America, Merrill Lynch and Deutsche Bank.

Twitter has been very closely watched, especially since Facebook went public last year creating a hype around trading social media companies. Although Twitter has grown dramatically in the last couple years to a large size it may not be prepared to be public. First off Twitter is not a profitable company and has lost 2.8 million in the first six months of this year and 6.5 million in revenue.

In order to satisfy investors Twitter needs to answer some important questions

1. How fast will revenue grow and from what sources?
2. When will this turn into a profit?
3. How much can the company profits increase before reaching a plateau?
4. What investments does Twitter plan to make?
5. What is the rate of return expected on investments?

Twitter is currently losing money fast and this loss is accelerating, losses from the 3rd quarter were almost as big as the first half of year. I expect when Twitter finally does go public later this year that the stock will see a large hype before dropping and if the company does figure out how to monazite they the value will skyrocket. We saw a similar performance from Facebook earlier this year.

Carl Icahn turns to Apple

The American businessman and investor Carl Icahn is turning his attention on Apple. Mr. Icahn recently cashed out on his Netflix Investment with a 457% profit. He has now increased his stake in apple to 4.7 million shares. Although this is a daunting number for some it is only half of 1% of Apples outstanding stock.

In a recent letter from Mr. Icahn to Apple's CEO Timothy Cook, he called for immediate tender of stocks. Icahn is pushing the company to repurchase 150 billion in stock at 525 a share. This tender offer would be funded by a combination of new debt and available cash. In addition he want Apple to raise its dividends to share holders.

Icahn claims that this tender would increase earnings per share to 33% through a reduction of share count. He also claims that the result would be a rise in price per share to $1250 in the next three years. Mr Icahn vowed that he would not participate in the tender or sell his shares.


In a statement  he said, “In my opinion, any further delay in executing the buyback we hereby propose will reflect this lack of expertise on the board,” he writes. “My firm’s success and my expertise as an investor would be difficult for anyone to argue.” Although Mr. Icahn has a large amount of shares, he does not have a considerable amount of control of the company. He has however gained considerable influence due to his considerable winning streak.

Mr. Icahn is one of a many "activist investors" who want to give more capital to shareholders. Apple stock is down 25% from its 705$ peak around this time last year. Apple is expected to report their quarterly earning on Monday October 28th. The letter from Icahn to Cook is published on his activist website www.shareholderssquaretable.com

To read more

Lazard sends George Bilicic to Chicago to reinvigorate the office.

George Bilicic new lead Lazard Ltd. investment banker in Chicago

Two senior bankers on the deal-making side of Lazard Ltd.'s advisory business have exited the Chicago office earlier this year. In response Lazard has send George Bilicic Jr. to take control and reinvigorate the company office in Chicago.

This is Mr. Bilicic second stint working with the Chicago office. He first started supervising the office remotely in 2006.

When asked about his previous experience Mr. Bilicic said, "The chief lesson learned from that was that you couldn't be a suitcase banker and be successful with companies in the Midwest." In this round of work Mr. Bilicic is moving to the windy city with his family. He has never lived in Chicago before and plans to expand business by becoming active in city business as well as the civic scene, joining organization boards in the city and having his bankers to the same.

Kenneth Jacobs, Lazard CEO

While Bilicic has not stated any specific boards or charities he plans to participate in his direct superior, Lazard CEO Kenneth Jacobs is a member of the board of trustees for the University of Chicago.

Lazard is a midsize international financial advisory and faces competition from Larger entities such as Goldman Sachs Group Inc. The company has about 2,400 employees world wide and aims to cut around 250 this year while expanding growth.  Lazard earning nearly doubled in the second quarter with $59.9 million. This is in part due to its jump in deals in its consumer, health care services and technology areas.

Facebook acquires Onavo

Facebook Inc the social networking company recently acquired Israeli analytics app maker Onavo. Facebook supposedly bought Onovo for a project aimed at making the Internet available to billions of people around the world who are not currently online, Onavo's data-saving capabilities have promise for this project.

Onovo's mobile app helps people cut their phone costs, their app claims to be able to use data more efficiently and allow users to get up to five time more usage out of a data plan. Their data saving features are likely to help Facebook provide internet by reducing the amount of data downloads required to run its mobile internet applications.

"We expect Onavo's data compression technology to play a central role in our mission to connect more people to the internet, and their analytic tools will help us provide better, more efficient mobile product," said a Facebook spokeswoman.

Facebook supposedly paid between $150 million and $200 million in the deal. This is the largest deal for the social networking site since their purchase of Instragram last year.

Part of the deal will include Onavo's Istraeli offices. Facebook will transfer some of its employees, and run a research and development facility in Israel.

What will happen if the U.S. defaults.

October 17th, Thursday is the debt ceiling deadline for congress. With the government still shut down there is some argument about what will actually happen if or when congress does not reach a consensus.

A couple things will happen when the U.S. doesn't make its deadline on Thursday. Financial shockwaves will run through banks and blow a hole in the economy comparable to the 2008 financial crisis. This will result in a rise in unemployment. The loss of confidence in the U.S. treasury will affect the value of the dollar. Devaluation of our currency will affect many things including interest rates, and mortgage rates.

The markets will go down and investments will dry up. In 2008 the major stock indexes took a 37% hit. After 2008 the U.S. saw its worst recession since the Great depression, it is staggering to think that law makers are willing to create a similar crisis. To prevent a further downward spiral the U.S. treasury pumped 3 trillion dollars into the financial system and provided 300 billion in fresh capital to the nations banks. The 2008 crisis was caused by a private financial institution no where near the size of the U.S. government, the scale of the crisis if the U.S. defaults would be much larger. 

Stocks on the rise during the shutdown?

A trader looking up at a screen on the floor of the New York Stock Exchange. 

The government is on day 15 of the shutdown. All across America federal employees are furloughed and a large number of government institutions are barely running. With so much of the country out of commission and the default deadline looming over congress, why does it appear that the financial sector has not taken notice.

I think the answer here is that no one on wall street truly believes that we will default. The general consensus is that there is no way our politicians would be so selfish and crash the economy in order to win a pissing contest.

The financial sector's confidence is reflected in last weeks markets. Stocks closed high on Friday under hopes of discussion and a deal. The Dow Jones rose 64 points or 0.4% to 15301 after being down 100 points. The S&P rose 7 points also 0.4% to 1710 and the NASDAQ gained 23 points a 0.6% gain to 3815.

If we ever get over this political crisis, is there growth ahead?

So far the market has not really been phased by the government shutdown. We have seen a small downturn this week but no large change. However if the U.S. does does not come to a consensus over the Affordable HealthCare Act and we don't raise the Debt Ceiling it could have catastrophic consequences on the economy. Most investors seem to be complacent saying that the shutdown/debt ceiling is not a reason to sell stocks. However, if the U.S. does reach what many think to be a 0% chance scenario where we are unable to pay the interest on our loans it is predicted that the S&P 500 would crash to 850, about a 50% drop.

However if we do make it past this Political fiasco the economy may still have juice left to climb. I have written a few times before about KKR, as experts in the market they often provide useful insights. Alex Nevab KKR's co-head of Americas private equity said, "We actually see the economy recovering and has further to go through 2016 or 2017." KKR believes that if we do get past this debt ceiling crisis that the market was not at a low point or a high point and is showing a good environment for growth. Other notable leaders in KKR include former RNC chairman Kenneth Mehlman and General David Petraeus.

High Dividend Stocks for 2014

In this piece I just want to outline some high dividend stocks with upsides for 2014. Most of the research I'm presenting here was done by Meena Krishnamsetty a Marketwatch corespondent, see the link below.

There are only 47 stock in the S&P 500 that pay dividends higher than 4%. Here is a list of some of the best investments on this list.

Merck: 4.1% dividend and shares have risen more than 9% in 12 months.
Intel: Shares yield 4.2%,  one of few in its sector with such high yields.
Verizon: 4.6%, ranked third among many as a mega dividend favorite.
Conoco Phillips: Only Oil and Gas industry to pay out a dividend of at leas 4%.
Lockheed Martin and Altria Group: both pay out yields greater than 5%

http://www.marketwatch.com/story/6-high-dividend-stocks-with-upside-potential-2013-02-14

Groupon Saw Growth in 2013.

Groupon if you have not heard of it is a deal-of-the-day website that features discounted prices for local or even national companies. The company was first launched in November of 2008, and was first marketed in Chicago, it later spread to Boston, New York and Toronto. Groupon grew into over 150 markets by 2010 and has been growing since. Today Groupon is up 368% from its 52 week low of $2.60, they have reported positive earnings.

KKR china

Supported by their global institute run by David Petraeus and Ken Mehlman KKR has been expanding into Asian markets. In China specifically they have recently agreed to buy a 10% stake in Qingdao Haier Co Ltd. a large appliance maker. This stake in QHC is KKR's biggest investment in China to date and is their third asian deal with in a week. The investment is speculated to be around $550 million, a small portion of their $6 billion Asian investment fund.

KKR expects to see a large growth in the appliance market in China, at lease 1/5th in the next two years and they are not the only ones. Two months ago Whirlpool Corp, the worlds larges appliance maker also invested a similar sum into China.

Smart Cars are everywhere!

Smart cars have been gaining in popularity but your probably wondering how do I invest in Smart automobile. Well Smart Automobile is a branch of Daimler AG. Daimler AG is a German company and a multinational corporation. They are headquartered in Stuttgard Germany. In addition to Smart their other brands include Mercedes-Benz, Mercedes-AMG, Freightliner, Western Star, Thomas Built Buses, Setra, BharatBenz, Mitsubishi Fuso. They also own shares in Denza, KAMAZ and Renault-Nissan Alliance. 

Daimler is the 13th largest car manufacturer in the world and is looking to expand into China. However they are not keeping up with companies such as Audi or BMW, seeing 18% and 15% growth respectively compared to Daimler AG which was flat. With respect to their other brands, china is an expanding market. China is expected to have an increased demand for luxury cars in the years to come. It is not apparent yet weather Daimler will be able to fill the Chinese market but their stock is up this year sitting at $78.16 today up from a low this year of $44.90.

Yelp

Not all .com companies have seen the same growth this year. However Yelp is one of the good ones. Starting the year off below $20 a share they have seen steady growth and today are sitting close to 70.16. Yelp is an online company that aides in local search. Their main source of revenue is from advertising on their website. Their ranking system of businesses as well as the use of comments and ratings has been under some controversy.