Trevor Milton, the founder of Nikola, a EV manufacturer lied “nearly about all aspects of the business” acording to the U.S. Attorney’s Office in Manhattan. Did the SPAC that took Nikola public drop the ball and cause this debacle? Would the traditional vetting process have eliminated this quagmire? Prosecutors say, “To make it appear the truck prototype was driving, it was towed to the top of a hill and then rolled down to the bottom.” Click the images below and read on….
Category: CEO
Can options trading influence valuation? Looks so, just as we discussed in PE class
Remember our discussion on how call and put volumes are used by some investors to measure sentiments? Investors who buy ‘out-of-the-money’ call options anticipate the underlying stock price to spike. Recenly Softbank bought $4B worth call options on its holdings AMZN and MSFT. Many investor interpret this move as a buy signal on these equities and this may have led to spike in prices. This ends up escalating the valuation of these companies even though the underlying business models don’t justify these levels of valuation. Click on the image below to read an interesting article on this topic.
Negative oil prices? Anticipate Loan Calling and …….Name Calling!
Something bizarre happened on April 20th! Yes, some oil futures contracts went negative and it has never happened.
What does a negative oil price mean? Drillers have extracted oil from the ground and they are out of storage capacity. So they would pay wholesale buyers money to take the oil off their hands. Imagine that! We discussed negative interest rates in the class and I explained that it’s like charging you storage/safe-keeping for your money. This is a similar scenario. This can lead to another problem. In our PE and CEO 2030 classes we discussed how when the underlying price of the collateralized assets crash may lead lenders ‘calling the loans’. The Loan Calling is an industry jargon that describes a demand by the lender for loan repayment even though it’s not due. Those companies that used their oil in the ground as a collateral may be receiving Loan Calls since the collateral has lost value due to crash in oil prices. Click the following article and send me your views to my Stanford email ID.
Remember our discussion on Hostile Takeovers in the PE, CEO classes and on how countries are vulnerable?
The heading in one of my slides was ‘How to take over a country peacefully?’. My answer was ‘by taking over the vital companies in that country’. I hope you remember that discussion in the PE/CEO 2030 class. The COVID situation may make scuh scenarios a reality. India is addressing this issue. Please read on. As usual send your views to my Stanford email ID.
Remember our discussion on how important timing is for funding? Here is an invaluable example.
In our Entrepreneurship class, we discussed how long one can wait to obtain funding and the factors influencing the timing. In the following piece, a founder is discussing how his decision not to prioritize funding cost him heavily. Please read the part about what to and what not to outsource especially. Click on the image below. As usual please send your comments to my Stanford email ID.
Now Private Equity Wants In on the Bailout? Spare Me – Bloomberg.com
Remember our discussion on how low interest rates are PE friendly and PEs use them? This bloomberg opinion piece concluded “Using cheap debt to pay themselves dividends isn’t such a savvy investment model after all”. Please click the image below to read the full article. It addresses so many points we discussed in the class.
Make hay when it rains! Companies that save cash for a rainy day can. Warren Buffett’s Berkshire Hathaway has the cash.
Remember in the CEO-2030 class I discussed how companies that save cash for a rainy day can make go bargain hunting? I also discussed why ‘resource allocation and deployment’ must be taught as an elective. Here is an example of how cash comes handy. Click on the URL below.
M & A galore in the horizon? PE funds have been hoarding cash and waiting for this moment!
Private Equity firms have more than 1$ Trillion in cash! This could be the beginning of a once in a lifetime investment opportunity for those in waiting. Remember the discussion in the CEO-2030 class how the 2007 financial crisis opened up opportunities for acquistions and thus a spike in demand for new CEOs? CNBC had an intetresting article on this topic. Please click the image below. Should companies take PE’s money or not? Do they even have an option? What if the PE firms go hostile? I’m interested in what you have to say on this.
Corporations run out of cash! Blame the buybacks? Remember our discussion in the class!
Should large corporations assume that governments have their back? I said in the class that when interest rates are low, companies take on debt and often put it to good use. Remember our discussion on overdoing it? Some aspects of what we discussed are addressed in this CNBC article. Click the image below to read further.
Our discussion on share buyback in the CEO-2030 and PE classes – Timely articles in Bloomberg and CNN
These articles in Bloomberg and CNN discuss how the airlines in the US spent their free cash flow to buy back their shares. It raises so many points we discussed in the class. But, did the money really disappear? Where did all the money go? CNN reports “The Big Four Airlines, according to Baldwin’s office, spent $42.5 billion on buybacks between 2014 and 2019. That nearly matches $50 billion the industry is now asking for”. What a coicidence! I Would like to hear from those who disagreed with me. Click on the images below.
PE’s role in the financialization of healthcare
In PE class we discussed how PEs can play both a positive and potentially negative role. I couldn’t play this video in full. Please click on the link below to watch it in full.
Best Business Schools for 2021 announced!
The US News released its Best Graduate Schools list. Please click on the link below.
CEO 2030 Course in Amity Univeristy Business School
The slides I used in this presentation can be downloaded from the links below. Please credit appropriate authors when you reuse the content. As usual, if you have questions, please contact me through my Stanford email id.
Women and Private Equity/Venture Capital Jobs
I have addressed this in detail in the CEO-2030 lecture. Read on!
Women Make Small Inroads in Getting Private Equity and Venture Capital Jobs
A conversation about Fintech
While at Mumbai recently, I had a conversation with IIM-A alum about Fintech, CEO-2030, Entrepreneurship, and B-school pedagogy.
Silicon Valley Investors Call Summit to Disrupt IPO Business – Bloomberg
Wall street’s stronghold on IPO market is being questioned finally! I have been writing for years about how Wall street’s monopoly is not good for both the listing companies and investors. Looks like Wework’s IPO fiasco is waking up VC firms to consider alternatives.
“Powerful figures are gathering 2,500 miles from Wall Street to redesign one of its oldest and most lucrative businesses — but few from the industry will have a seat at the table. Attendees plan to discuss alternative strategies including direct listings, which replace financial underwriters with cutting-edge computer code.”
Read the Bloomberg article below.
Silicon Valley Investors Call Summit to Disrupt IPO Business
CEO 2030 for IIM Indore – CEO 2030
The slides I used in this course and the reports I referred to in the class can be downloaded from the links below. Please credit appropriate authors when you reuse the content. Comments.