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LGUs allow limited access to Taal volcano-affected areas

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SOME local government units in areas affected by the Taal volcano eruption allowed their residents to go home on Friday to feed their livestock, amid the seeming decrease in Taal Volcano’s activity this week.

“So ang sabi ni hepe sa amin nitong meeting namin, nagbigay siya ng oras para magpunta yung mga taga doon para mapakain ang kanilang mga alagang hayop (So out boss said in our meeting that he would give time for people from those areas to return to feed their lifestock),” Jose Clyde Yayong, Chief of the Tagaytay City Disaster Risk Reduction Management Office, said in a briefing which was streamed on Facebook.

Free services continue to be provided for evacuees, including dental services, hair cuts, and film showings, Mr. Yayong said.

“Tuloy-tuloy ang mga serbisyo na binibigay sa mga evacuees na nadito sa Tagaytay. Dental services, libreng gupit, film showing, meron pong konting pag entertain sa mga evacuees po para hindi masyadong malungkot sa evacuation center so tuloy-tuloy po yung gawa ng local government units (We continue to provide services to evacuees here in Tagaytay. Dental services, free haircuts, film showing, a bit of entertainment for the evacuees so they do not get too depressed in the evacuation centers),” he said.

The Philippine Institute of Volcanology and Seismology (Phivolcs) warned there is still a 30% chance that there will be an explosive eruption and that people should stay out of the 14-kilometer danger area.

Phivolcs Director Renato U. Solidum, Jr. said in a conference on Friday that even with the apparently waning activity in the volcano’s crater, they have seen signs that show a risk of a destructive explosion similar to the eruption of 1754.

“There is a three out of 10 chance that the 1754 eruption may happen. It’s the 1754 that is the scale…. and 30% is very high,” Mr. Solidum said.

Taal volcano’s 1754 eruption was the most powerful of those recorded in historical data. That eruption lasted for over six months.

Phivolcs recorded “weak to moderate emission of white steam-laden plumes that went as high as 500 meters” in the past 24 hours according to the bulletin released at 8 a.m. on Friday, Jan. 24.

The agency also measured an average of 224 tons of sulfur dioxide released, according to its 8 a.m. report. This is higher than the 141 tons it measured on Thursday morning.

Phivolcs has also recorded 738 volcanic earthquakes since the Jan. 12 eruption, 176 of which were felt with intensities 1 to 5.

More than 88,000 families in Batangas, Quezon, Laguna, and Cavite were affected by Taal volcano’s eruption, according to the local disaster agency’s 6 a.m. report.

Over 37,300 families are taking temporary shelter in 488 evacuation centers while 37,230 families are being served outside them, it said.

Taal Volcano remained under Alert Level 4, which means a “hazardous explosive eruption is possible within hours to days.”

In a separate development, 1PACMAN Party List Rep. Michael L. Romero filed House Bill 5763 seeking P3 billion in funding for the Phivolcs Modernization Act of 2019.

The amount is expected to equip Phivolcs with the latest instruments and equipment to improve the agency’s capabilities for warning, assessing, and monitoring volcanic eruptions, earthquakes, and tsunami activity.

Under the bill, the Phivolcs Modernization Program will be implemented for an initial period of two years.

The Philippine Amusement and Gaming Corporation (Pagcor) will be mandated to release P1.5 billion to Phivolcs for each year of implementation.

“Earthquakes and volcanic eruptions have killed thousands of Filipinos and robbed them of their future and fortune. It is time to fight back and arm ourselves with state-of-the-art life-saving instruments and equipment available here and abroad,” Mr. Romero said. — Genshen L. Espedido



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Warren Buffett Flashes ‘Urgent’

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(Bloomberg Opinion) — Warren Buffett says he’s in the “urgent zone.” It’s the folksy billionaire’s way of calling himself old. But even as Buffett approaches 90, the spotlight-loving chairman and CEO of Berkshire Hathaway Inc. isn’t ready just yet to talk about who will run his giant company when he’s gone. He still has more to say, and more to do — and that could make for an interesting year ahead.Buffett’s annual letter of intrigue arrived Saturday morning, a roundup of thoughts that the Oracle of Omaha has been publishing for six decades. It’s evolved over time into what reads like a love letter to shareholders, to insurance float — the lucrative gift that keeps on giving at Berkshire — and to America as a whole, while taking the occasional jab at Wall Street’s fee-giddy bankers and anyone who thinks Ebitda is an honest profit gauge. Lately, he’s also lamented the lack of cheap takeover targets. The company’s last splashy acquisition was in 2015, when it struck a $37 billion deal for airplane-parts supplier Precision Castparts. Berkshire had $128 billion of cash as of December, about the same level as the previous quarter and many billions more than Buffett would like to see sitting in a bank. The letter, one of two major yearly events for Berkshire investors and Buffett groupies (the other is the shareholder meeting each May) has become more condensed in recent years. But more important to readers is what’s written between the lines — hints of a major deal and signs that the world’s most celebrated businessman is about to step aside. I suspect the former will come before the latter, though not even Buffett can truly know.As mentioned, Buffett will turn 90 this summer, and his right-hand man Charlie Munger is 96. His letter contained an anecdote about a friend from his past who, at the relatively ripe age of 80-something, kept receiving requests from a local newspaper for biographical data so that it could prep the man’s obituary. The request was marked “URGENT.” “Charlie and I long ago entered the urgent zone,” Buffett wrote, assuring shareholders that their company is “100% prepared” for the sad day of their departure and even sharing some details about his will. In my decade covering Berkshire, it’s the most I can remember Buffett discussing what will happen when he’s gone.Over 12 to 15 years after his death, Buffett’s class A shares will be converted into B shares and distributed to various charities; the executors and trustees are otherwise instructed not to sell any Berkshire stock, no matter what. That’s putting a lot of faith in the next CEO, whoever it is. Buffett’s still keeping hush about his succession plans. But in a first this year, he said that shareholders can direct questions directly to his lieutenants, Greg Abel and Ajit Jain, at the May investor meeting. It’s something I suggested Berkshire should start doing at last year’s meeting, and indeed Buffett did hand Abel the mic in a rather symbolic, if impromptu, moment during the Q&A session. Not long ago, Abel’s title was expanded from head of Berkshire Hathaway Energy to vice chairman of all the company’s various operations — except for insurance, which is overseen by Jain. Notably, this year’s letter signaled a desire to invest more of the energy division’s retained earnings to take on large utility projects. He said Berkshire’s operations in the Omaha-based company’s neighboring state of Iowa will be wind self-sufficient by next year thanks to investments in wind turbines, which have helped to keep rates lower than the competition as profits soar. Berkshire Hathaway Energy and BNSF — the railroad Berkshire bought in 2009 — together earned $8.3 billion last year, making them two of the biggest contributors to profit. Abel’s rising profile, along with the emphasis on energy, leads me to wonder whether he’s not only being groomed to take over for Buffett, but also whether Abel could soon make his own M&A splash. Separately, Todd Combs, who manages some of Berkshire's stock-market portfolio, was recently tapped to be CEO of its Geico insurance business. Despite his dual-function sparking succession curiosity, he didn't get a shout-out in the letter.Buffett’s letter always includes a rant on the topics du jour, and this year’s was corporate governance. He penned a section on the “vexing problem” of subservient corporate boards made up of overpaid aging directors, especially those who don’t tap into their own savings to buy shares in the companies they serve. Of course, Berkshire is guilty of some of that. The average age of its board is 74 (including three nonagenarians). Buffett’s celebrity and track record has also allowed him to skirt many of the corporate governance customs expected of other CEOs, such as quarterly earnings calls, more detailed filings and returning cash to shareholders. His successor may not be given so much leeway, especially not with $128 billion sitting around. Reading that finger-wagging section, it was hard not to think of Boeing Co. and General Electric Co. — one company that was once seen as Buffett-investment quality, and another that in many ways tried to be like Berkshire. The downfall of each has been a devastating display of what can happen when leadership isn’t held to account, and I imagine that’s the sort of thing Buffett had in mind when he was writing. Then again, his investment in Kraft Heinz Co. is almost the pot calling the kettle black. Kraft Heinz juiced Ebitda by irresponsibly under-investing in its business — which goes completely against the Buffett way — and all the while it happened under Buffett’s nose. Berkshire is the largest shareholder, and while the Kraft Heinz holding is carried at $13.8 billion on its balance sheet, it had a market value of only $10.5 billion as of Dec. 31 (and is worth even less than that now).Buffett only reveals what he wants to, and it’s clear that succession is on his mind, as is his unending hunger for deals. Is it urgent enough for him to strike soon? To contact the author of this story: Tara Lachapelle at tlachapelle@bloomberg.netTo contact the editor responsible for this story: Beth Williams at bewilliams@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Tara Lachapelle is a Bloomberg Opinion columnist covering the business of entertainment and telecommunications, as well as broader deals. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.



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Can’t afford to buy Amazon or Berkshire Hathaway stock? Now you can buy a fractional share

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Whatever you think comprises the American Dream—a corner office, a private jet, a bulging stock portfolio—the updated version is probably a fraction of that.

A fraction of an office, a fraction of a jet, and a fraction of a stock share.

Think of it as the Fractional Economy, and now it has come to the investing world in a big way. 

Previously the area of smaller shops like M1 Finance, Stash, and Stockpile, fractional share purchases are now being offered by investing giants like Fidelity and Charles Schwab. Both have rolled out their own fractional offerings for retail investors in the last few months.

It’s not a new concept, to be sure—fractional shares have always been available to big institutional investors, for instance. But now they’re available to people with only a few bucks, which makes for an intriguing shift in the retail landscape.

“Thinking in terms of shares is kind of archaic,” says Howard Lindzon, managing partner of venture capital firm Social Leverage and co-founder of social network StockTwits, who has bet on numerous investing platforms like Robinhood, eToro and Rally.

“Why should someone have to invest $2,100 for a share of Amazon? If my daughter wants to invest $1,000, she should be able to break that down whatever way she wants. I think fractional share investing is here to stay, and it makes sense for Millennials who want to invest dollar amounts, not share amounts.”

So why the need? These days, companies aren’t showing much interest in stock splits—which used to happen fairly regularly, and made individual shares more affordable. A Class-A share of Berkshire Hathaway (BRK-A) is around $340,000, Alphabet (GOOGL) is over $1,500, and even humble fast-food eatery McDonald’s is over a lofty $200 a share. 

So if you’re starting small, and aiming to own a piece of a particular company that has caught your fancy, fractional shares can open the door to building a portfolio.

A fractional approach to life and investing certainly seems to be in vogue. Companies like WeWork advanced the fractional idea with shared spaces, while Airbnb lets you share your home, and Uber shares your ride. Heck, these days you can even share back-office corporate services, through firms likes CFOShare.

One benefit of fractional investing is not necessarily the investment itself, but the fact that it potentially automates your saving and forces you to dollar-cost average into the market. If it locks in a monthly $100 contribution, for instance, that is a positive step for most investors. 

What fractional investing is not great for, at least if you are talking about individual company shares: Diversification. Nibbling away at Amazon shares is well and good, but if the company goes into the tank, you are highly exposed to market fluctuations. Beginner investors shouldn’t typically be starting their portfolios with single company shares, but should be looking at broad market indexes.

“Fractional investing incentivizes folks to start portfolios that are very under-diversified,” says Richard Davey, a financial planner with Fiduciary Financial Group. “As a rule of thumb, I really don’t think a client should be buying any individual stock if they can’t afford a whole share.”

A steadier approach to fractional investing might involve exchange-traded funds (ETFs), baskets of stocks which can also be purchased on a partial basis through platforms like Fidelity’s and Schwab’s. 

In fact, the idea of fractional investing isn’t all that new: It’s very familiar to anyone who has a Dividend Reinvestment Plan (DRIP) at their brokerage. If you have a Procter & Gamble investment, say, which throws off a $80 quarterly dividend, then that cash gets plowed back into the company—but that rarely ends up as perfectly whole shares, so what you end up with is fractions.

A final caveat: If all investors can afford these days are mere fractions of shares, it might be a broader indication that market valuations are at “nosebleed” levels, warns financial planner George Gagliardi of Lexington, Mass. As a possible sign of a market top—we are well into the late innings of one of the longest bulls in market history, after all— it would be wise to proceed cautiously.

Generally speaking, though, if a fractional approach ushers more young investors into the market with commission-free trading, that is a positive step for an industry that has historically turned up its nose at investors with smaller sums. 

If you haven’t acquired the American Dream quite yet—well, at least you can start with a piece of it.

More must-read stories from Fortune:

—What will get people to save more for retirement? Letting them “opt out”—America’s heading for a tax on the middle class
—Why only one-quarter of the world will get true 5G wireless
—How Blackstone became the world’s biggest corporate landlord
—A legendary investor offers a green-energy manifesto



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The Gas Station M&A Frenzy Looks Like a Bubble

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(Bloomberg Opinion) — Investors in the retail sector can’t get their fill of gas stations. Seven & i Holdings Co., the Japanese company that controls 7-Eleven, is in exclusive talks to acquire Marathon Petroleum Corp.’s Speedway gas stations for about $22 billion, people familiar with the matter told Scott Deveau, Kiel Porter and Manuel Baigorri of Bloomberg News.That’s not the only deal out there. EG Group, a closely held U.K. forecourts operator that had also shown an interest in Speedway, this week offered A$3.9 billion ($2.6 billion) in cash for the gas stations owned by Caltex Australia Ltd.Alimentation Couche-Tard Inc. is also bidding for Caltex’s entire business, including its refinery and fuel distribution unit as well as the retail gas-station network. Couche-Tard, Seven & i, and Berkshire Hathaway Inc. went on a similar spree for U.S. fuel retailers, truck stops and convenience stores in 2017.The argument for these deals is quite straightforward. Grocery retail for several decades has been shifting away from the stereotype of large nuclear families doing weekly shopping trips in big-box supermarkets, toward individuals, working parents and retirees picking up a few things from a local convenience store several times a week.If you’re looking to expand into convenience stores, gas stations are a target-rich environment — scattered through urban areas and along major highways, and ripe for upgrading beyond their traditional fare of basic fuel for vehicles and their drivers. In the meantime, the constant need to fill up gas tanks provides a reliable stream of cash, although one that’s highly leveraged to the price of oil.Seven & i hopes to echo the revival of its domestic business by offering a wider range of products and fresh food to customers. EG Group, which has grown from a single U.K. gas station in 2001 to encompass around 5,900 sites on three continents, makes a similar argument. It hopes to eventually make about 70% of its profits from non-fuel retail, up from around 50% currently, by bringing recognized retail brands into its forecourts to create mini-malls.There’s just one problem with this bold vision. Fuel retail is on the verge of a major structural revolution — and the result isn’t likely to be a pretty one for gas stations.The most obvious bear scenario would come if automakers’ rush to electrify their product ranges succeeds in bringing about the decline of the internal combustion engine. Around 10 million electric vehicles will be on the road by the end of this year and there’s already nearly a million EV charging stations, according to BloombergNEF.While that still represents a small share of the car market, the situation should change rapidly in the second half of this decade, as the costs of electric vehicles fall definitively below those of conventional ones and government phase-out targets in the 2030s start to loom. On a global basis, the International Energy Agency expects gasoline demand to peak in the late 2020s. The sorts of developed markets where the current gas station M&A frenzy is playing out are unlikely to be the most resilient to that shift.Even if gas stations invest in their own charging infrastructure — a relatively costly activity, and one that would commit them to purchasing from third-party utilities rather than the vertically integrated refining businesses they’re often bundled up with — they risk losing their traditional monopoly on fuel supply to chargers in homes and workplaces. That threatens footfall, a key metric for retailers who depend on high volumes of customer traffic to make the most of their store assets.Things may be somewhat better if the electric-car revolution fails to catch light. Even then, though, fuel-efficiency mandates mean fewer trips to buy gas, leading to a similar effect on footfall. Combined with a shift toward more online delivery, the effect could be dismal: By 2035, more than a quarter of gas stations will be unable to make economic profits in even the least electrified scenario, according to a report last year by Boston Consulting Group. All of this would be fine if convenience stores were going to be so profitable over the next few years that they could afford to make a quick buck and transform themselves before they’re overwhelmed by change.There’s little sign of that, though. EG Group made just 16 million euros ($17.3 million) of net income on an underlying basis in its latest results, despite more than 12 billion euros of revenue (on a statutory basis, there was a 138 million euro net loss). Net income margins at Seven & i’s U.S. unit tend to hover around 3%, and returns on equity are an unspectacular 8% or 9%. Viva Energy Group Ltd., a competitor to Caltex which operates Shell-branded forecourts in Australia, has lost about 25% of its market capitalization since an initial public offering in 2018.The days of the conventional gas station are numbered. Anyone who wants to make money from transforming them had better have their foot firmly pressed on the accelerator.To contact the author of this story: David Fickling at dfickling@bloomberg.netTo contact the editor responsible for this story: Rachel Rosenthal at rrosenthal21@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.



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