You are cordially invited to the Investor Symposium hosted by Matson Money.
When: Thursday, July 31, 2014 – Saturday, August 2, 2014
Where: Horseshoe Casino & Conference Center
1000 Broadway, Cincinnati, OH USA
Speakers Include:
Arthur B. Laffer, PhD: Chief economic advisor to Ronald Reagan
Terrance Odean, PhD: Professor at Cal-Berkley, expert in the field of investor behavior
Lyman Ott, PhD: Expert in the field of statistics, providing validity to Free Market Portfolio Theory
Concert featuring country singer (and former leader of Hootie & The Blow Fish) Darius Rucker
Seating is limited. RSVP by emailing reservations@matsonandcuprill.com. Admission is free to all Matson & Cuprill clients and their guests.
Retirement Planning for Baby Boomers
Recent academic research from Boston College, The Wharton School of Business and the University of Michigan (among others) detail a fundamental shift in retirement planning for those nearing retirement or those already retired. The Baby Boomer Retirement Course at College of Mount St. Joseph is designed as a comprehensive personal finance course for those in the early stages of retirement or those about to retire. It addresses difficult retirement decisions such as Optimal Asset Allocation, Income Planning, Social Security Maximization and the pitfalls to avoid. You will receive access to over 26 academic reports detailing the “New Rules of Thumb” as well as financial tools to help you better understand risk, taxes, budgeting and estate planning.
You Will Learn:
Optimal Asset Allocation in Retirement
Defining Core Priorities
How Money Affects Your Life
How to Develop an Income Plan
Sequence of Returns Risk
Questions to Ask a Potential Advisor
When to Take Social Security
3 Reasons Retirees Run Out of Money
Tuition Includes:
Financial House in Order Guidebook
Managing Your Money in Retirement Guide
Getting Your Estate in Order Guide
Personal Wealth Index Scores Report
Social Security AnalysisReport
Course Workbook and Essential Reports
Presenter:
Dan Cuprill
Syllabus:
Click Here
Course Fee:
$49.00 (including $10 early discount)
Course Location & Address:
College of Mount St. Joseph
5701 Delhi Rd.
Cincinnati, OH 45233
Course Dates/Times:
Tuesday, 4/22/14, 6:30 PM – 8:30 PM
Tuesday, 4/29/14, 6:30 PM – 8:30 PM
Tuesday, 5/06/14, 6:30 PM – 8:30 PM
Thursday, 4/24/14, 6:30 PM – 8:30 PM
Thursday, 5/01/14, 6:30 PM – 8:30 PM
Thursday, 5/08/14, 6:30 PM – 8:30 PM
To register, call 1-855-703-7654 or visit
http://www.richnessoflife.org/msj
In The Headlines
Union Pacific Uses Technology to Get an Edge on Climate Change
In an old-guard industry with over 150 years of history, railroad companies like Union Pacific Corporation are embracing technology to promote fuel efficiency in the 21st century. Union Pacific Railroad, the nation’s largest railroad company, has over 8,000 locomotives and serves 23 states west of Chicago, IL, and New Orleans, LA. The aim is to lower costs and cut fossil fuel gas emissions.
Michael Iden, the company’s general director of car and locomotive engineering, with a team of engineers have developed Arrowedge, a technology that is intended to make freight trains carrying containers stacked one on top of the other more aerodynamic and therefore more fuel efficient.
After building balsa wood models by hand, Iden took the project to Brigham Young University for further refinement. There, he and a group of graduate students, conducted wind tunnel testing for six months to try to perfect the design, which Union Pacific has now patented.
“It’s like NASCAR,” said Union Pacific spokesman Tom Lange about the technology’s ability to reduce drag, decrease the amount of locomotive power, and save fuel. The 48-foot Arrowedge has a signature tapered body to let air flow around each train’s top freight containers. Since last September, Union Pacific introduced the technology to its freight service between Joliet, IL, and Long Beach, CA.
Other enhancements Union Pacific has made over the past decade have included distributed power, in which additional locomotives are scattered throughout the train for better milage per gallon, along with “stop-start technology” to help conserve fuel when a locomotive is idle. Since 2000, Union Pacific has notched a 19% improvement in fuel efficiency. “There’s no silver bullet,” said Lange, “it’s a lot of small things that add up.”
Operating large locomotives burns huge amounts of fuel and creates a great deal of pollution. In 2012, Union Pacific’s locomotives produced more than 11 million metric tons of greenhouse gas, according to the company’s sustainability report. The goal going forward is to reduce emissions by 1% annually until 2015. The American Railroad Association seems to agree. While freight volume is double what it was in 1980, railroads consume the same amount of fuel. How? “Through technological innovations, new investments, improved operating practices, and a lot of hard work,” a railroad association report said.
Arrowedge could help reduce fuel in the company’s freight trains, at a time when adverse weather circumstances increasingly drive up costs. For Union Pacific, an increase in the number or intensity of extreme weather events represents a big worry. When such weather strikes, Union Pacific’s freight business can feel the impact from lower agricultural production, for example. Corn shipments fell 12% in 2012 because of drought. Despite weather-related troubles, the company’s shares have performed well, climbing to $190 from around $150 last year.
“The railroad industry is in some respects more vulnerable to these events than in the past,” said Larry Gross, a rail expert with FTR Transportation Intelligence. Climate change, however, remains a potential problem on the horizon. Gross added that while “cutting greenhouse gas is a worthy goal, the primary driver is to save fuel, which looms very large in their cost structure. Railroads buy a lot of diesel.”
Darden Casts Red Lobster Adrift
Red Lobster is headed into a private equity turnaround. Darden Restaurants said it would sell the seafood chain for $2.1 billion, jettisoning a troubled brand that was beset by high costs and an early-bird special demographic—not the kind of casual diners who eat out often and spend heavily on cocktails.
Darden has spent the past six months trying to sell or spin-off Red Lobster to shareholders after company executives concluded last year that the chain was a financial albatross dragging down its more successful Olive Garden, LongHorn Steakhouse, and Bahama Breeze restaurants. Red Lobster sales have been far more volatile than those of its corporate siblings. The seafood chain has higher food expenses than Darden’s flagship Olive Garden, which accounts for more than 40% of revenue.
Darden has been working furiously to revive sales at Olive Garden, which has more than 800 stores and made its name on all-you-can-eat salad and breadsticks served beside enormous plates of pasta-based dishes, most of them large enough to feed two diners.
The company has been experimenting with new menu options and smaller portions, both of which could boost financial results. With the $1.6 billion it will clear by selling Red Lobster to Golden Gate Capital, Darden plans to pay off $1 billion in debt and use the rest to fund a share repurchase program of as much as $700 million.
Red Lobster is not alone in feeling the pinch of rising prices. Seafood sellers have been hit hard over the past year by the surging cost of shrimp due to an outbreak of acute hepatopancreatic necrosis syndrome. Billions of young shrimp have died from the disease, which was first detected in farm-raised populations in Asia. Shrimp prices hit a 14-year high earlier this year. Red Lobster was widely known for its $15.99 “Endless Shrimp” promotions designed to get people into the restaurant.
Beyond the expenses of procuring shrimp, Red Lobster also attracts an oversize share of older diners who do not eat out frequently, while younger patrons eat their fish at more upscale restaurants, which can better cover rising costs. Casual Dining chains like Red Lobster also have been hurt by the massive growth of Fast Casual Dining options such as Chipotle Mexican Grill and Potbelly.
Two activist funds, Starboard Value and Barington Capital Group, had pressed Darden to keep Red Lobster and monetize its real estate, and both expressed outrage over the proposed deal. In an e-mail statement, Starboard CEO Jeffrey Smith said the sale “…woefully undervalues Red Lobster and its real estate assets.” Barington’s chairman and CEO, James Mitarotonda, agreed that Darden’s transaction “…amounts to a ‘fire sale’ price after shareholders clearly indicated that they did not want the company to enter into any transaction unless it was subject to their approval.”
Golden Gate has already made plans to sell 500 Red Lobster locations for $1.5 billion and lease back the stores. The fund also owns California Pizza Kitchen, Eddie Bauer Holdings, and the parent of Payless ShoeSource.
Sources:
1. http://bit.ly/1jVoyp1 – Fortune
2. http://buswk.co/1p287XW – BusinessWeek
The Good News Is . . .
• In a $4.3 billion cash-and-stock deal, Hillshire Brands announced that it will purchase Pinnacle Foods, with stockholders receiving $18 in cash for each share held, along with 0.50 Hillshire shares for each Pinnacle share. After the deal is completed, Pinnacle shareholders will own about 33% of the combined company. The deal will combine Pinnacle, which owns brands including Duncan Hines and Log Cabin syrup, with Hillshire, which has brands including Jimmy Dean and Sara Lee. Together, the companies will have annual revenue of about $6.6 billion.
• Pfizer Group, a leading manufacturer of pharmaceuticals and consumer health care products, reported earnings of $0.57 per share, an increase of 11.8% over year-ago earnings of $0.51. The firm’s earnings topped the consensus estimate of analysts by $0.02. The company reported that revenues were $11.3 billion. Management attributed the company’s improved earnings to increases in its vaccine and oncology business segments, operational efficiencies, and the effects of its share repurchase programs.
• The Commerce Department reported that U.S. housing starts jumped in April and building permits hit their highest level in nearly six years, offering hope that the troubled housing market could be stabilizing. The agency said housing starts increased 13.2 % to a seasonally adjusted annual pace of 1.07 million units, the highest level since November 2013. Starts rose by a revised 2.0% in March. Many economists had forecast housing starts rising to a 980,000-unit rate last month.
Sources:
1. http://nyti.ms/1vmt2cX – NY Times Dealbook
2. http://www.cnbc.com/id/18080780/ – CNBC
3. http://on.pfizer.com/1o2yzks – Pfizer Group
4. http://www.cnbc.com/id/101679715 – CNBC
Planning Tips
Tips for Evaluating Real Estate Investment Trusts
For most Americans, the extent of their real estate investment goes only as far as purchasing their own home. However, there are strategies for investing in real estate that do not directly involve purchasing or managing properties. The most common vehicle for this is the Real Estate Investment Trust (REIT).
Understand what a REIT is – A REIT is a security that sells like a stock on the major exchanges and invests in real estate, either through buying properties or mortgages. REITs receive special tax considerations and typically offer investors high yields, as well as a highly liquid method of investing in real estate. REITs invest in shopping malls, office buildings, apartments, warehouses, and hotels. Some REITs will invest specifically in one type of real estate, shopping malls for example, or in one specific region, state, or country.
Know the different types of REITs – There are basically three types of REITs: equity REITs, mortgage REITs, and hybrid REITs.
- Equity REITs: Equity REITs invest in and own properties (thus they are responsible for the equity or value of their real estate assets). Their revenues come principally from the rents on their properties.
- Mortgage REITs: Mortgage REITs deal in investment and ownership of property mortgages. These REITs loan money for mortgages to owners of real estate, or purchase existing mortgages or mortgage-backed securities. Their revenues are generated primarily by the interest that they earn on the mortgage loans.
- Hybrid REITs: Hybrid REITs combine the investment strategies of Equity REITs and Mortgage REITs by investing in both properties and mortgages.
Consider the tax implications – Most Real Estate Investment Trusts offer sizable dividends since REITs must distribute at least 90% of their taxable income to shareholders each year. You will have to pay at your ordinary income tax rate on most of those payouts. That is why it often makes sense to hold REITs in a tax-advantaged account such as a 401(k) or an IRA.
Diversify to reduce risk – Investing in individual REITs gives you the opportunity to focus on a specific location or a particular sector of the commercial market. But that kind of concentration can be risky. A safer way to add real estate to your portfolio is to buy shares in a mutual fund that invests in many different REITs and perhaps some real estate operating companies too. That way you spread your investments among different geographical areas and property types.
Do your research and determine whether REITs are right for you – As with any investment, you should take into account your own financial situation, consult your financial adviser, and perform thorough research before making any investment decisions concerning REITs. You can review a REIT’s disclosure filings, including annual and quarterly reports, and any offering prospectus at sec.gov.
Sources:
1. http://1.usa.gov/1n9u8mD – investor.gov
2. http://1.usa.gov/RLNW5j – Securities & Exchange Commission
3. http://bit.ly/1gCPrPb – Ivestopedia
4. http://cnnmon.ie/1jVoNR5 – CNN Money
5. http://fxn.ws/1jVoUfh – Fox Business
6. http://abt.cm/S5UTi4 – About.com
