The Weekend Hangover

It certainly was an interesting week, so this weekend’s hangover is more intense than usual. Coffee will only make your hangover worse, so get something to eat, pound some water, and browse these links because it’s Your Weekend Hangover.

We’ve all heard of obscene lawsuits. Some of my favorites include the one about the burglar who got hurt breaking into someone’s house, sued the victim of the break in, and won. I also liked the on where the guy thought cruise control automatically drove the Winnebago and walked away from the wheel. When the thing crashed, he sued the company and won. Then there was the guy who burned his tongue on coffee at McDonalds and sued them for having hot coffee. This week, I found one that tops them all. A man recently successfully sued his wife for giving birth to ugly children. That has to make dinner conversation awkward…

Website SuggarDaddyForMe.Com suggests what the ideal woman is for Forbes’ Richest Men. Shocker: She has blonde hair, blue eyes, and is extremely good looking. The three most important personality traits are pretty much synonyms: Honesty, Loyalty, and Faithfulness. These guys have this measuring the obvious thing down to a science.

Apparently, most blockbuster-hit movies are a result of nothing more than luck. They say Harry Potter just found a four leaf clover to which I counter: Emma Watson.

College job seeks give themselves an A+ for job readiness, but hiring managers disagree.

If the Red Sox can go from worst to first, nearly anything can be turned around. These are the five steps to make it happen.

Since I’ve been recovering from a knee injury, I’ve spent a lot of time on the bars. (Yes, in bars too, but I’m talking about pull up bars here.) Doing activities like pull ups, toes to bar, dips, and trying my ass of to get a muscle up tore up my hands pretty badly with a couple particularly bad ripped callus over the last few weeks. Here are some hand care tips to prevent the dreaded callus tear.

As a direct follow up to that post, callus tears and workouts can be brutally painful, but new research shows that if you keep telling yourself, “this workout feels good” then it will feel good and you'll perform better. Positive self talk (which oftentimes amounts to self deceit) is very effective.

It is becoming more apparent that we need to save society from itself. The latest example is the movement of the FDA to ban trans fats to go along with the soda ban in NYC.

In 1980, the success rate of a 50+ yard field goal in the NFL was 28.4%. In 2013, the success rate is 66%, which is greater than the likelihood of making any field goal in 1980. The numbers have changed, so why hasn’t the strategy? Teams are only kicking an average of 4.6 50+ yard field goals a season compared to 3 in 1980, despite doubling the odds. What gives?

Nearly 1 in 10 Americans gets their news from Twitter and other fun stats about the social network.

After the Patriots lost the Super Bowl in 2008, the number of circulatory heart-related deaths in Massachusetts increased 20% over the next eight days. I thought my life was ending and was going to die of a broken heart too, but apparently there is something more serious going on since this is pervasive throughout sports. The biology of a sports fan.

Sex, Murder, and the Meaning of Life: When does sex appeal equal political power? Catchy headline… Screw Nate Silver and 538, I’d be a damn good election prognosticator using only one data point. The better looking candidate is probably going to win. (I actually am a huge fan of Nate Silver and 538, you should follow him on twitter here.)

There are three types of romantic partners: Givers, Takers, and Matchers. Givers want to make others happy and please their partner. Matchers tend to keep a balance sheet in a relationship and when they give, they expect to get something in return. Takers treat people well only when it helps them reach their goals. Three guesses to which are the most satisfied in relationships and which are the most desired partners. I have a hypothesis about which category I fall into, but if any ex girlfriends are reading, feel free to jump in.

The 5 worst things you can do with your money according to the Motley Fool

The function of kissing in romantic relationships is complicated. Kissing helps people assess potential mates and maintain relationships, but it doesn’t play a large part in sexual arousal.

If you’ve ever worked in corporate America, the hardest part of your job may be getting people to respond to you, especially via email. Here are three tips to help you write emails that people will read and respond to.

The benefits of good teachers last long beyond primary school. I know a lot of teachers that have young classrooms. You make a world of difference to these kids and it lasts quite a while.

Research shows loneliness is as strong a predictor of early death as alcoholism or smoking 15 cigarettes a day, and it was a stronger predictor than obesity or a sedentary lifestyle.

Research shows that very attractive people

  • Are more likely to be chosen as mates;
  • Are viewed, as children, to be more honest, intelligent, and pleasant—and also assumed to have greater leadership potential
  • Are presumed, as adults, to have desirable social traits—such as strength, on the one hand, and sensitivity, on the other (and talk about the “halo effect!”)
  • Are judged, as politicians, professors, counselors, etc. to be more competent
  • Receive preferential treatment in hiring decisions;
  • Earn higher salaries; and
  • Receive milder punishments for transgressions.

Given all those benefits, it begs the questions… is there something unethical about beauty?

Oh, this is what the face of a CEO looks like. They always seem to be reasonably good looking dudes…

Research shows corporate executives are wildly overconfident... Well, Duh?!

A writer challenged hackers to investigate him and he was expectedly terrified by what they found. I’m nervous just thinking about the possibility of this ever happening to me.

Since the movie “Limitless” came out, I’ve known exactly what I want my superpower to be. As a kid I could never answer it, but now I know I want it to be unparalleled intelligence and total recall. In essence, I want to learn how to learn faster.  

What business leaders can learn from top sports stars.

 

TMB Recaps The Madness That Was The Twitter IPO

Judging from my Twitter timeline Yesterday, there was a lot of confusion over how the Twitter IPO worked and how to evaluate its success. Yesterday I tweeted that the common investor lost money on twitter despite its rise from $26 to $44 dollars per share, which is because only institutional investors were able to buy the stock at the IPO price. This post will clarify how is how IPOs work and why you and I weren’t able to purchase Twitter at $26 per share.

A company decides to file an IPO after determining it needs more capital and looks to the public in hopes of trading a share of future earnings for cash up front. The company that wants to go public partners with an investment bank (Goldman Sachs, Morgan Stanley and JPMorgan in Twitter’s case), then to generate interest in the company, shares their financial information and business plan to regulators, investors, and the public.

The investment banks take orders from their biggest clients like pension funds, mutual funds, and hedge funds, which get first priority to buy the stock. After the institutional investors the stock is opened to brokerage houses and lastly individual investors fight over the few remaining shares. Based on demand from these clients, the company determines an opening price, which for twitter was $26.

The investment banks then buy the stock, in Twitter’s case for $26 dollars a share for their clients based on the orders they took earlier. This all takes place before the opening bell on the date of the IPO. All the shares that are being offered are owned by the public the night before the IPO, so that on the morning when the NYSE bell is rung, the shares begin trading.

On the morning of the IPO, an experienced trader starts processing orders from the night before. When the market opens at 9:30, traders gather around this experienced trader to start placing their orders. It is the experienced trader’s responsibility to find the right “Discovery” price for a company’s newly offered shares, which may take a few minutes to an hour once the market opens. Twitter’s took nearly an hour to settle on a price of $45.10, which signaled the point that individual investors could start buying shares of the company.

When I posted about Twitter’s IPO yesterday, I said I was planning on buying. When you’re trading stocks, you can set what is called a “limit” so that your broker will automatically purchase a given number of shares of a particular stock when it hits a certain price. My limit yesterday for Twitter was first $30, then I adjusted it to $35 as rumors of the price floated about. When it was announced that it was going to open to individuals at $45.10 I canceled my limit order. I canceled my order because I felt that if the price hit $35 it would blow right by on the way to bottoming out around $15-$20 and I didn’t want the computer to try and catch a falling knife.

Twitter’s stock opened for institutional investors at $26 and closed the day at $44.90 earning a total of about $1.32B, but the average trader lost money since they were only able to buy in at  $45.10 and the stock closed at $44.90. As always, the rich get richer.

The IPO was undoubtedly a success for Twitter, even if the average investor has so far lost money, but lets put the irrationality of investors in perspective. Yesterday Twitter closed at $44.90, after losing over $64M in Q3 alone. In contrast, Facebook closed at $47.73 (Twitter actually had a higher price for a while) and made a profit of over $2B in Q3.

Twitter is still losing money and lacks to coherent business plan. They are banking on integration with TV, additional advertising, and data mining their users, however they haven’t announced how they are going to specifically do any of those things. Most “experts” agree the price of the stock is going to fall back down to earth and settle somewhere around to $25-$29 range. As much as I love using Twitter, I don’t share the same fondness for the stock. For the time being, I’m going to remain an active twitter user and avoid being an active twitter investor.

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Priced at $26 per share, Twitter to raise $1.82B at market cap of $14.2B

Mom and Dad, I’m sorry. Against my better judgment, I’m betting your Christmas presents on the Twitter IPO. Twitter starts trading on the NYSE today under the ticker symbol TWTR and is priced at $26 per share. Twitter will raise $1.82B by selling 70M shares, which translates to a market cap of $14.2B. Looking purely at the numbers that show Twitter is losing money to the tune of $134M annually, it doesn’t quite make sense as a buy. However, I was reminded earlier this year that markets aren’t driven by logical investment decisions based on data, they are driven by hype.

Still, Twitter’s success as a company is going to come down to its ability to leverage data gathered from its users and flood their timeline’s with ads. Neither of those two things are going to be appealing to their 232M active monthly users. Keep in mind, there are already 883M people registered to use Twitter, but only about 25% of them use it on a monthly basis. 651M users have already abandoned Twitter and I can’t believe that adding advertisements and collecting user’s data is going to help. Another study indicated that 36% of people who sign up for Twitter don’t use it after they register. In contrast, that number is only 7% for Facebook.

Despite investor’s belief that the share price of Twitter is going to jump from $26 at open to $43.60 at close today, I may have just talked myself out of buying Twitter for the long term.

Follow me on Twitter @Aaron_Kraus and let me know what your plans are for the Twitter IPO. 

Microsoft narrows CEO shortlist to Five

According to reports, Microsoft has narrowed the list of candidates to replace current CEO Steve Ballmer to about five people. Ford CEO Alan Mulally is the most likely successor, but former Nokia CEO Stephen Elop is another strong candidate as are former Skype boss Tony Bates who is currently head of Microsoft’s business development and Satya Nadella, Microsoft’s cloud and enterprise chief. 

Microsoft announced in September that it planned to buy Nokia’s mobile phone and devices business and acquire Stephen Elop’s services along with it. The initial plan called for Elop to become an Executive Vice President at Microsoft, but with Ballmer retiring this may be a very natural transition. Before he became president of Nokia in 2010, Elop ran Michrsoft’s business software division.

Investors are seeking a new CEO who specializes in turning around a business, which is why Ford’s Mulally is the leading candidate. Mulally led ford to reverse its losses and avoid a federal bailout in 2009 when the rest of the industry was under water. Microsoft remains wildly profitable, but has lost ground to Apple and Google in mobile computing.

The process is expected to last another six months, and the decision of whether Microsoft founder Bill Gates remains chairmen of the board will likely affect the choice for the next CEO. Gates has recently been viewed as blocking the radical change necessary to compete with Apple and Google.

Follow me on Twitter @Aaron_Kraus

Starbucks plans to recruit 10,000 vets and their spouses:

Five days before Veteran’s Day, Starbucks announced it is committing to augmenting its 151,000-person workforce with 10,000 veterans and their spouses over the next five year. Starbucks also announced that several locations will donation a portion of their profits to help veterans re-enter the workforce, offering $.10 from every transaction with a minimum annual gift of $100k. The company will add specialized recruiters to match the unique skills of veterans and their families.

Starbucks isn’t the first to launch such an initiative as many companies including Wal-Mart have committed to hiring thousands of military veterans who served in Iraq and Afghanistan.

Given that Starbucks is the world’s largest coffee chain and operates around the globe, veterans’ international experience and foreign language skills will be valuable to the company.

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Tesla shares drop sharply despite earnings improvement:

Shares of electric carmaker Tesla Motors’ dropped over 10% premarket despite beating expectations in Q3. In a matter of minutes last night, about $2B of Tesla’s market capitalization was lost after the automaker announced earnings.

Earnings were solid and beat projections as losses narrowed to $38M from $111M and revenues climbed to $431M from just $50M at this time last year. Vehicle sales were in line with guidance, which translated into sales of just over 5,500. The company was able to produce about 550 cars per week, which sounds like a good figure, but Tesla CEO Elon Must said the company is production constrained, meaning the company is having trouble getting enough cars into the driveways of all the people who want one.

Tesla’s gross profit margin continues to improve as well, as it hit 21% up from 14% last quarter, but it remained below the target automotive gross margin of 25%. The company hopes to reach this benchmark and sell over 6,000 cars by the end of Q4.

If all goes well, I hope to be able to afford the $70,000 Model S by 2025, which may require also living in it.

Follow me on Twitter @Aaron_Kraus

A Dream Deferred

I’m fortunate to have received a great education. At just the graduate level, I’ve studied leadership, personnel selection, performance appraisal, tests and measures, attitudes and values, statistics, and individual assessment from some of the best in those fields. However, for someone going into the business world, I lack comprehensive training in finance. To make up for that deficiency, I read a lot.

One of the books I’ve read recently illustrated why my lack of a background in finance is nothing to be concerned about. 4th and Goal by Monte Burke is a biography of Joe Moglia. Joe was a 30-year-old football coach with a master’s degree in education before talking his way into the financial world and promptly turning it on its head before in route to becoming the CEO of TD Ameritrade.

Joe’s story is one of transition. In 1983, Joe was the defensive coordinator for Dartmouth College’s football team. After spending a decade slowly rising through football’s coaching ranks, and nearing his dream of being a head college football coach, Joe was faced with a decision. He could either continue with a football coach’s salary that put him near the poverty line or find a new way to support his wife and four children.

Joe lives and preaches the mantra, “Be A Man” so he abandoned his dream of being a head football coach and walked onto Wall Street. He earned a place in Merrill Lynch’s MBA trainee program, without an MBA. Once he was through the program, he rose fast and eventually applied his skills as a football coach to change the selling of financial products from an individual activity where individual accomplishments were rewarded, to a team based process that rewarded team success.

Moglia spent 17 years at Merrill, before eventually accepting an offer to be the CEO of what was then Ameritrade Holdings. In his seven years with Ameritrade, Joe grew client assets from $24B to over $300B and increased the company’s market capitalization from $700M to $12B. He oversaw the merger with TD Waterhouse that led to the company now being called TD Ameritrade. Joe led TD Ameritrade thorough the 2007 financial crash by eschewing junk bonds and credit default swaps, and as a result posted profits while other financial institutions were crumbling.

At the height of his success in the financial world, Joe stepped down from TD Ameritrade citing the desire to pursue other interests. Those “interests” were football and coaching. The fact no one wanted to hire a football coach over 60 years old and 30 years removed from the game whose experience with the SEC was limited to the Securities and Exchange Commission didn’t stop Joe. He became an unpaid intern at the University of Nebraska before eventually getting a shot with the UFL’s Omaha Nighthawks. In 2011, Joe won Big South Conference Championship and Coach of the Year award in his first season with Coastal Carolina.  This year, Joe and his team are 9-0 with three games left to go before playoffs. He’s a contender for coach of the year.

4th and Goal is an inspiring book about a man overcoming odds and finding success in places he had no business succeeding. Given my love of football, interest in coaching, fascination with finance, and obsession with success, this was one of the most captivating books I’ve ever read. The art of storytelling is not easy, and Monte Burke does Joe Moglia’s brilliant story justice. 

For more information on Joe’s transitions see: Joe Moglia Transitions From Boardroom to Locker Room. Check this Forbes article for an excerpt from the book. I highly recommend you buy the print or audio version of the book here.  

Follow me on twitter @Aaron_Kraus

SAC Capital to Pay $1.8B for Insider Trading:

On Monday, SAC Capital agreed to plead guilty to five counts of insider trading violations and pay a record $1.2B criminal penalty and another $600M to the Securities and Exchange Commission, becoming the first wall street firm since the late 1980s to confess to criminal conduct. Also part of the deal is a five-year probationary period on the firm and a ban on managing outside investors’ money. The firm’s founder and namesake Stephen A. Cohen and his $8.8B net worth managed to escape without criminal prosecution, although the deal did not grant future immunity for any individual. Of the $15B that SAC managed, about half of it belongs to Cohen and his employees.

Cohen built SAC Capital into one of the biggest and most powerful hedge funds in the financial world. The firm was exceptionally competitive and portfolio managers were handsomely rewarded for trading success and swiftly punished for losses. The firm achieved great success, but the criminal investigation began 11 years ago after the firm posted average annual returns of nearly 30%, which was unprecedented even for them.

Charges include traders using confidential inside information to make bets on pharmaceutical firms that netted more than $276M and large gains posted on the back of insider information from Dell computers. In all, the list includes over 20 public companies; with at least eight former SAC employees have been charged with insider trading. Most of those traders have pled guilty to the charges.

Follow me on Twitter @Aaron_Kraus

Kellogg to Cut 7% of Work Force

Kellogg, the food manufacturing company with brands that include Frosted Flakes, Pop Tarts, Eggo, and Kashi, released third quarter earnings and announced it would be cutting the company’s work force by 7% over the next four years. It is calling the initiative “Project K: A global four-year efficiency and effectiveness programs” which of course is a nice branded way of saying 2,170 jobs are about to go away.

The company expects to save up to $475M per year as a result of this initiative, with the savings being reinvested in other strategic focus areas of the company. The project will focus on Kellogg’s supply chain, business services, and operations. They want to increase efficiency and margins by reducing facilities and eliminating excess capacity.

Kellogg had solid earnings with a Q3 EPS of $.90 beating by $.06 and revenue of $3.72B beating by $.01B. However, sales in North America fell 1.3% to $2.4B on broad weakness across segments. Profit narrowed slightly on high cost of goods.  . Revenue from their Morning Foods declined 2.2% to $883M for the quarter, and U.S. Snack Foods saw net sales decline 2.5% to $886M.

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Twitter Increases IPO Price to $25 per share.

Twitter must be feeling pretty good ahead of its IPO scheduled for later this week to boost the price range of its initial offering to $23-$25 per share up from a range of $17-$20. This increase in price could raise up to $2B for the company and give it a market value of about $15.6B. The company is set to price shares Wednesday November 6th and start trading the following day.

Reports are indicating that even with the increased price, Twitter will easily be able to sell the 70M shares it is offering.

Twitter is a seven-year-old micro-blogging social network that reported losses of $134M last year on revenue of nearly $422M. Twitter is cautiously trying to avoid replicating Facebook’s disastrous IPO that didn’t provide a return for investors until nearly a year later.

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