Friday Financial Five – November 15th, 2013
Dan Forbes, GoLocalProv MINDSETTER™
Friday Financial Five – November 15th, 2013
Janet Yellen stood before the Senate Banking Committee yesterday and committed to keeping the status quo due to persistent high unemployment. It wasn’t expected that specific details would emerge regarding the end of Quantitative Easing, the last weapon of the Fed’s economic influence. But if there’s not currently a plan in place regarding limits to the Fed’s ever expanding balance sheet, there needs to be soon. Again, it’s healthier if the Fed makes a calculated determination when enough is enough instead of the marketplace.
Fannie Mae and Freddie Mac are having a very good year
Frank Sinatra would be proud. It’s nice to be a government-sponsored enterprise these days, as Freddie Mac and Fannie Mae recently reported net income of almost $40 billion. Taxpayers rejoice as most of this money will go straight to the Treasury, and the aggregate of payments means both companies are close to full restitution of their government bailouts. Shareholders have benefited from a recent price jump, but they’re also still left wondering what will come of vast outstanding litigation.
Federal, RI and MA estate tax exemptions for 2014
The estate tax exemptions are out for next year. Federally, the estate tax exemption will jump from $5.25 million to $5.34 million, in an attempt to adjust for inflation. Rhode Island residents will see a small increase from roughly $910,000 to just over $921,000. The Massachusetts exemption will remain at $1 million. For RI and MA residents interested in preserving their estate from the great beyond, year end is a good time to calculate estate values and minimize tax payments for beneficiaries.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTWho will inherit your Facebook account?
Speaking of the great beyond, a hot topic in estate planning is the passing of digital accounts upon death. Estate plans should include an inventory of e-mail accounts, user IDs and passwords. Digital assets, like websites, may have value as well. As for social sites, many have user agreements limiting ownership. It’s incumbent on the account user to determine how a beneficiary will access all hundred pictures of Foofie, the Springer Spaniel dressed as the Grinch’s dog, Max.
The Arian Foster IPO never lifts off
Buying stock in an athlete’s brand never seemed like a great idea, but it really doesn’t make sense when that athlete has season ending back surgery. So it goes for the IPO that Fantex hoped to offer later this month on Arian Foster, the likeable Houston Texan running back. While the Foster IPO is delayed, the company still plans to move forward with another player.
Dan Forbes is a regular contributor on financial issues. He is a CFP Board Ambassador. He leads the firm Forbes Financial Planning, Inc in Providence, RI and can be reached at [email protected] .
RI Biz Winners and Flops - November 11
WINNER
Digital City
Gary Glasman is the founder and Directed by Taliesin Gilkes-Bower, Digital City is a shared work space for new economy digital innovators.
Housed at AS220's Mercantile Block, this production and work space will be a hub for digital media artists (television and film producers, animators, video game designers, sound engineers, public relations and design professionals, distributors, software developers, and many others!) to gather, work, and collaborate in an affordable, community-oriented environment.
Like Betaspring, Dgitial City helps to create the launching pad for start-ups and emerging technologists and designers.
WINNER
Cape Commons Brewing
The Providence-based brewery with a mission won $50,000 at the business start-up competition, Mass Challenge.
The company was started by two best friends, Victor Bartash and Lily Ricci, who are working to crowd source the fundraise for $1.5 million to build a full brewery. The company is committed to giving a portion of the revenue to help support clean water around the world.
WINNER
Hasbro and Healthy Workers
Kudos to Hasbro for being selected by Greatist as one of the best companies in the country at promoting good health for its work force.
“We were thrilled to receive Greatist’s top ranking in our category,” said Dolph Johnson, EVP and Chief Human Resources Officer. “The Hasbro Wellness Team, part of our Hasbro Employee Network, takes a strategic approach to wellness, focusing on the whole employee and is always looking for new ways to keep wellness top of mind.”
WINNER
Deepwater Wind Scores Forbes feature
Rhode Island's homegrown wind company Deepwater Wind scored a feature in Forbes. It was good to see Forbes coverage on something other than pension reform and hedge fund fees. Forbes wrote:
Years of investment and planning may be beginning to pay off for Deepwater. Grybowski highlights several reasons for growing optimism, with an emphasis on two projects: the Block Island Wind Farm and the Deepwater Wind Energy Center (DWEC).
The Block Island Wind Farm is a 30 MW installation to be located three miles off of Block Island. It will consist of five turbines, and will generate over 125,000 megawatt hours annually (estimated to be sufficient to power 17,000 homes). The electricity will be delivered to the mainland power grid through the 21 mile Block Island Transmission System.
WINNER
Garden City and The Container Store
WINNER
Providence Equity Group Buys Broadway and West End
Providence Equity Partners, which has put Providence on the map for investments in AT&T Canada, Hulu, and Warner Music is now on buying one of the biggest theater companies in the world - Ambassador Theater Group (ATG).
ATG owns theaters both in London and in New York and is valued at between $300 million and $400 million.
FLOP
Superman Building
It is still dark. The most visually dominant building in the Providence skyline is dark - pitch black dark.
The building that once was a symbol of Providence being a financial hub and an emerging regional/super-regional banking center is empty and the $75 million bailout plan proposed by the developer seems to be the only plan.
Where are the Mayor and the Governor?
FLOP
Essilor Buys Costa (formerly AT Cross)
French eyewear giant Essilor International has agreed to bid $284 million for Costa (formerly AT Cross).
The deal values Rhode Island-based Costa at $21.50 a share, a 9% premium - the deal is functionally the end of the AT Cross company's local ownership legacy in Rhode Island.
For generations, almost every Rhode Islander and much of America was given a Cross pen for high school or college graduation.
In the past few decades, AT Cross had expanded to other products including bags and sunglasses. Earlier this year, AT Cross had sold off its accessories division. At the time the company announced:
"With the completion of the sale of the Cross Accessory Division, we are very excited to enter our next phase as a growth company focused on the continued expansion of our premium sports sunglass business. Since our 2003 acquisition of Costa and subsequent purchase of Native Eyewear in 2008, revenue from our sunglass business has grown more than tenfold to nearly $100 million. In the coming years through our expertise and capital, we will bring Costa and Native to the many more consumers anxious to experience the authenticity and technology that Costa and Native deliver," said David G. Whalen, President and Chief Executive Officer of A.T. Cross.
"The high quality sunglasses and prescription sun lenses segment offers high potential given its low penetration rate," Essilor Chairman and CEO Hubert Sagnieres said in a statement.
