Dick DeVos Gives Away A Fortune

Once upon a time a business owner in Grand Rapids met with Dick Devos who complimented him on that occasion. Dick Devos is the owner of the Orlando Magic basketball team and also a billionaire who hails from Grand Rapids Michigan. He told her that she looked like a million dollars on that day because he wanted her to donate that amount of money to a charity that he favored and she did because she shared his belief in giving back to people.

In Dick Devos’s social circle a person is measured by how much money you give to worthy causes. Dick Devos and his friends avoid the pompous attitude that is all too common nowadays where we measure people by the clothes the wear or the cars they drive because they are good people with strong values. Devos’s habit of giving has made him a great social influence amongst the wealthy people in the West Michigan area.

Dick DeVos began giving to charity decades ago when he was a young man. He recently totalled the amount that he has given and it impressively amounted to $1.2 billion. In the year 2014, the Devos family gave $94 million alone and this put them in Forbes Magazine’s list of Top 50 givers in America at 20th place. Dick Devos is not one to brag about his generosity and for years nobody knew exactly how much he has given. However, he decided to break with protocol this time because he hoped it would encourage others to find it in their hearts to be charitable as well.

Back in 2013, the Devos family gave away $90 million. 12 percent of that money went to arts and culture, 13 percent went to religious institutions, 27 percent went to health organizations, and 48 percent went to fund education. In total, the Devos family has five foundations through which it gives back to the world. There is one foundation for each of Dick Devos’s children and then a fifth one that he shares with his wife Helen.

DeVos knows that he cannot accomplish his mission of making the world a better place alone. He actively campaigns amongst his social circle to convince them to give charitably as well. To further this aim he also gives counseling to the heads of charitable organizations on how to attract more funding from the community. Through his efforts, Dick Devos has become a light to the Michigan community that continues to inspire others.

SEC Investigating FiatChrysler

FiatChrysler is being investigated by the Securities and Exchange Commission (SEC) over its financial reporting, claims BBC News post. In addition, Department of Justice (DoJ) is taking a look into carmaker’s quarterly and annual reports.

According to the company, revenues are based on shipments to the car dealers instead of actual sales to buyers. And this has raised concerns of the Federal regulators in the United States.

In 2015, FiatChrysler had sold more than two million cars, and last June the company reported the best sales in a decade. But, some of its sales practices have begun to be questioned early this year after one of the dealers filed a lawsuit accusing the company of racketeering and fraud.

The dealer claims that this Italian-American automaker encouraged them to report inflated sales by offering the manager $20,000 to report some fake car transactions. FiatChrysler pledged to defend itself from this lawsuit, while cooperating with the regulators in solving the apparent accounting discrepancies.

The company’s stock currently trades at around $6.50 per share, closer to its 52-week low. The market cap stands at only $8.5 billion. The reported net income in 2015 was $410 million on sales of $120 billion.

In the past, Chrysler had merged with Daimler, but that didn’t work out. Now, it has combined forces with Fiat, making it an important player in the automotive industry, but without significant results for its shareholders.

Mutual Funds Are Losing Clients

In June alone, investors had withdrawn nearly $22 billion from actively-managed mutual funds in the United States. This is the biggest withdrawal since October 2008, which was the period in the middle of financial markets collapse. Meanwhile, the municipal bond funds were the exception as they attracted over $6 billion.

This money is flowing to passively-managed Exchange-Traded Funds (EFTs). With these investment vehicles, the managers seek to mimic specific indices rather than pick stocks. The benefit of ETFs is due to their much lower costs than those of mutual funds.

Per Bloomberg, the shift to these passive funds will continue and the investment management industry is likely to suffer because of lower fees. Not only profit margins are decreasing, but the very survival of many of these asset managers is threatened.

Larry Fink, BlackRock’s CEO, thinks this shift will lead to consolidation in the industry. Blackrock is one of the leaders when it comes to index-based funds. Its iShares ETFs continue to attract investors’ money. The other leader, Vanguard, is also doing well.

Over many years, the active investment management industry has failed to deliver results. After accounting for various fees and charges, many of these mutual funds have underperformed the markets. As a result, investors began to transfer their money to ETFs. These funds trade like stocks on the exchanges and are highly liquid. There’s also a wide range of ETFs, covering various asset classes and countries. So the options to invest are many.

Possible Fed Rate Hike Sinks Precious Metals

The increased likelihood of Federal Reserve officials hiking interest rates has caused the dollar to rally and precious metal prices to sink.

In June, traders believed there was a 60% probability that short-term rates would rise a quarter percentage point by September. However, a weak May jobs report and Britain’s vote to leave the European Union dropped the likelihood of a hike to as low as 12%.

But subsequent data has buoyed the confidence of Fed officials, and traders now believe that a September hike is back on the table.

June’s job report was much better than many expected. In addition, global markets have recovered after initially plunging on news of the Brexit vote. U.S. stock markets closed at all-time highs on Monday.

The renewed confidence in a September hike has prompted investors to sell precious metals. Gold, which often trades inversely to the dollar, fell by $14, to $1,318 an ounce. Silver is now trading at $19.57 an ounce, down 45 cents from its previous closing price.

Atlanta Fed President Dennis Lockhart believes a rate hike this year is very likely, telling reporters that he would not rule as many as two increases in 2016.

The Fed will have an opportunity to signal which direction it is leaning when officials meet July 26-27. The biggest obstacle standing in the way of an interest-rate increase could be the uncertainty surrounding the affect of Brexit.

While markets have been orderly since the vote, officials are still attempting to assess what repercussions may lie ahead.

Netflix Shares Plunge After Earnings Miss

Shares of Netflix fell by 13% on Tuesday after the company reported disappointing earnings for the second quarter of 2016.

The most concerning statistic for investors was subscription growth. Analysts were expecting Netflix to add 2.5 million new subscribers, representing a 24% decline from the prior year. Instead, the internet television network delivered just 1.7 million new members.

Netflix CEO Reed Hastings chalked up the nearly fifty percent year-over-year decrease in subscribers to several factors. At the top of the list was a recent price increase, which Mr. Reed believes had a disproportionate affect on the company’s earliest subscribers.

In addition, Mr. Reed mentioned increased competition for Olympic viewers and challenges associated with expanding into international markets as issues that affected subscriber growth.

Mr. Reed believes the recent subscriber trend is a temporary blip and says that the opportunity in front of the company is as big as ever.

Netflix’s 47 million U.S. subscribers is more than any other domestic cable provider. Because of this, the company must rely on international markets to drive growth. It has introduced its service to 130 new markets, but has yet to penetrate the world’s most populous country—China.

Netflix reiterated its interest in entering the massive market, but acknowledged that it faces a problematic regulatory climate.

Nonetheless, the company is in the early stages of creating local content for other highly populated countries such as India and Brazil. Analysts who are bullish on the company are far more focused on Netflix’s execution in these markets than they are on a single quarterly earnings report.

IBM beats street consensus in Q2 earnings

Against the popular expectations, IBM has managed to pull of a surprising winning streak in it’s second quarter. On Monday the 18th, IBM reported earnings of $2.95 per share and a revenue of $20.2 billion for 2016’s second quarter.

Though the estimates for IBM were $2.89, Big Blue managed to clear the estimates with both its top and bottom line numbers, giving the company its third consecutive expectation-surpassing quarter.

Recently, IBM has been notably focusing more on the cloud computing aspect of the business. IBM reported that the growth of cloud revenue was 30% overall, alongside a 12% grown in the company’s analytics, social, Watson, cloud, security and mobile analytics.

CEO Ginni Rometty has flagged several business as being the “future” of IBM’s overall business as a whole, and currently, those flagged by Rometty now constitute 38% Big Blue’s overall earnings; in the first quarter, these companies only constituted 37% of the company’s overall revenue. The expected value of IBM’s non-GAAP annual earnings per share is $13.50.

The previous report in April differed from the Q2 report in one distinctive way; unlike the Q1 report, the Q2 report showed that a great deal of the boosts in IBM’s latest earnings occurred in early after-hours trading. By 4:30 ET, shares had risen up by 3% to $4.63.

If this trend in appreciating earnings continues, then IBM certainly won’t be relinquishing its position as the leader in cloud platform and cognitive solutions any time soon.

U.S. Launch of Pokemon Go Sends Nintendo Shares Soaring

Shares of Japanese company Nintendo have more than doubled over the past seven trading days. The dramatic rise comes on the heels of its launch of Pokémon Go in the United States.

The wild success of the mobile game, which is now available in 35 countries, has prompted investors to buy up shares of the consumer electronics and software company. On Friday, trading activity in shares of Nintendo accounted for a quarter of all trading on the Tokyo Stock Exchange main board.

The surge in market capitalization has caught investors by surprise, with some wondering if the run-up is justified.

At least one expert sees a tremendous opportunity to harvest profits from the Pokemon franchise. To Gerhard Fasol, CEO of Eurotechnology Japan, the true risk lies in Nintendo’s ability to capitalize on the intellectual property rights of its famous characters.

Others would approach buying shares of the company with caution. Neil Wilson, an analyst with ETX Capital, believes the shares are in bubble territory and could be in for a nasty fall on the first sign of weakness.

There is also a concern that other mobile gaming companies will duplicate Nintendo’s success in the augmented-reality segment, making it difficult for the company to meet frothy expectations.

The last time profits in Nintendo soared, it was on the back of the company’s Wii console. Its success lasted for a few years, but was eventually quelled by competitors Sony and Microsoft.

Visa Seeks to Teach Financial Literacy Through Comic Books

Contrary to popular belief, Visa does not want consumers who spend well beyond their means. To prove it, Visa’s literacy program Practical Money Skills for Life has partnered with Marvel Custom Solutions to create comic books that teach young people how to budget, save, and spend wisely.

According to Visa, only 17 states require students in high school to pass a course in personal finance, leaving a large percentage of adults without a basic level of financial understanding. To combat this phenomenon, Visa sought a strategy to educate kids on the importance of financial literacy.

Its first issue, “Avengers: Saving the Day,” was printed in 2012. Visa distributed nearly half a million copies of the comic, which was translated into eight languages.

Four years later, the two companies have come together to create its second comic. The latest issue, “Guardians of the Galaxy: Rocket’s Powerful Plan,” is now being translated into 16 languages.

While superheroes fight, readers are educated on terms such as emergency fund, living within your means, and investments.

Visa also partnered with the Public Library Association in effort to grow the program and get its material in the hands of the people who need it most. The PLA plans to distribute copies of the latest issue through its public libraries nationwide.

Visa says it is a myth to believe that ill-informed consumers are better for business. In the long run, well-informed customers are not only better for its business, but also better for the entire economy.

Goldman Sachs surpasses Q2 earnings expectations

In its second quarter of the year, Goldman Sachs reported earnings that surpassed expectations. The earnings expectations were beaten on expense cuts and an upsurge in bond trading.

Goldman Sachs group was popularly assumed to be destined for a down quarter due to the increased risk perceived by investors. In addition to the perception of increased risks, other factors in the belief that Goldman would be down included the slowed down corporate merger, dwindling acquisition activity, and a stalled public offering market. The low expectations for Goldman’s Q2 earnings were deepened further by an ongoing aura of uncertainty created by Brexit.

Against the writing on the wall, Goldman Sachs Group has undertaken a strategy of shrinking down and building its foundation from the bottom-up. The shrinking strategy worked in the investment bank’s favor, as on Tuesday morning, the second quarter report showed far higher earnings than many had initially anticipated.

Goldman Sachs’ revenue reports were $7.93 billion and $1.82 billion profit, at $3.72 a share; by contrast, the expectations were for $7.5 billion in revenue at $3.72 per share.

While the earnings are still 13% lower than the revenues reported at the same time last year, the rise in profitability still took many investors by surprise. Goldman Sachs CEO Lloyd C. Blankfein credited the investment bank’s successful Q2 earnings to a strategy focused on serving clients across a “diversified franchise”.

IBM Posts Good Q2 Earnings

The technology giant, IBM, has just posted its second quarter earnings and they’re better than expected. According to TheStreet.com, while the analysts expected $2.89 a share, the actual earnings were $2.95.

Although the revenue has fallen 3% from a year ago to $20.24 billion, it’s better than $20.04 billion the analysts expected. However, the concerns remain as now IBM has had 17 consecutive quarters of declining revenues.

Deutsche Bank has raised its price target from $135 to $145 per share, and maintained a “hold” rating. The stock currently trades at around $160 per share, so the target isn’t upbeat at all.

“On the surface, results appear to be improving, but digging deeper, we continue to see areas of concern,” claimed bank’s analyst.

On the other hand, when it comes to a rating by TheStreet.com, it is a “buy” with a score of “B-.” The strengths seen in IBM include good cash flows, better profit margins, and good returns on equity.

When it comes to strategy, Martin Schroeter, IBM’s CFO, stated that his company is well on the way to execute its strategic imperatives plan. In the past, IBM was able to adopt to a changing industry by focusing less on hardware and more on consulting and infrastructure services.

Currently, IBM employs nearly 380,000 people and has a market cap of $150 billion, placing it among the biggest companies in the world. Known as the Big Blue, IBM has been among the leaders in the high-tech industry for decades.