Analysts weigh in on Warren Buffett’s Berkshire Hathaway ahead of its meeting

TheStreet 

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Warren Buffett is as famous, and probably as successful, as any investor in U.S. history – from J.P. Morgan to Joseph Kennedy to George Soros.

Buffett’s Berkshire Hathaway  (BRK.B)  conglomerate says it registered a compound annual return of 19.8% from its 1965 inception to 2023.

Such a performance is simply astounding. It’s almost double the 10.2% for the S&P 500 during that period, including dividends. The company’s annual shareholders meeting begins Saturday.

The 93-year-old Oracle of Omaha, as Buffett is affectionately known, started his investing career by looking for “cigarette butts.” That’s fair companies trading at a great price. But then his late partner Charlie Munger convinced him to seek great companies at a fair price instead.

Perhaps Buffett’s most successful investment is auto insurer Geico. Buffett made his first purchase of the discount insurers’ shares in 1951 as a Columbia University business student. Berkshire gained full ownership of Geico in 1995.

Other famous companies owned by Berkshire include BNSF (Burlington Northern Santa Fe) Railway, See’s Candies, and Dairy Queen.

While you can’t buy big companies like Buffett does, you can buy shares in Berkshire Hathaway. One analyst thinks it could be wise to do that now.

Warren Buffett, the “Oracle of Omaha,” is a living investment legend.

Image source: Paul Morigi/Getty Images for Fortune/Time Inc

Buffett and Berkshire are cash magnets

Berkshire’s insurance companies provide a steady stream of cash through premiums. That gives Buffett the firepower to buy stakes in other companies as it did with Apple or the corporations outright as it did with BNSF.

At the end of last year, Berkshire’s cash reserves were $168 billion, giving it plenty of dry powder to do deals.

However, the company is judicious with its horde, even when buying back Berkshire Hathaway’s stock. He only buys Berkshire Hathaway when Buffett considers shares cheap. Berkshire snatched 3,808 Class A shares this year through March 6, paying about $2.2 billion to $2.4 billion.

Related: Top investor: What’s next for stock of Warren Buffett’s Berkshire

Buffett, one of the world’s wealthiest people, is well-known for Berkshire’s stock holdings, which totaled about $869 billion as of Dec. 31. That makes it one of the biggest equity managers in the world.

Its biggest holdings exiting last year were cellphone/computer legend Apple  (AAPL) , followed by Bank of America  (BAC) , credit-card luminary American Express  (AXP) , beverage icon Coca-Cola  (KO) , and oil stalwart Chevron  (CVX) .

Buffett’s investment philosophy is to hold shares as long as fundamentals dictate.

Given his success, thousands, probably millions, of investors and analysts are enamored with and influenced by Buffett. His folksy demeanor has made him basically the financial advisor for the entire country.

Expert words of praise for Buffett and Berkshire

One analyst lauding Warren Buffett and Berkshire Hathaway is Greggory Warren of Morningstar, a pre-eminent investment research firm for individual investors.

Related: Unless you’re Warren Buffett, you’re better off investing in an ETF, top economist says

“Berkshire, owing to its diversification and its lower overall risk profile, offers one of the better risk-adjusted return profiles in the financial services sector,” he wrote in a commentary.

“And it remains a generally solid candidate for downside protection during market selloffs. We remain impressed by Berkshire’s ability in most years to generate high-single- to double-digit growth in book value per share, comfortably above our estimate of its cost of capital.”

The future looks bright, Warren says. “It will take some time before the firm finally succumbs to the impediments created by the sheer size and scale of its operations,” he opined.

“And the departures of Buffett and Munger will have less of an impact on future operating results than many investors believe.”

Warren said Berkshire has broad fundamental strength. “Its decentralized business model, broad business diversification, high cash-generation capabilities, and unmatched balance sheet strength [act] as true differentiators for the firm.”

More Warren Buffett:

Analyst revamps Occidental Petroleum stock price target after oil rallyWhy the S&P 500 is getting 2 new members this weekMorningstar unveils 10 cheap stocks with wide moats

Meanwhile, Catherine Seifert, an analyst at CFRA, says now is a good time to buy Berkshire stock. It’s “undervalued versus historical averages,” she wrote in a commentary.

“We expect improved claim trends at Geico and strong reinsurance results will provide the shares with a catalyst for continued outperformance.”

Her 12-month target price for B shares is $472, compared to Friday’s quote of $402. The estimate assumes shares will trade at 22.6 times her 2025 operating earnings estimate.

Related: Veteran fund manager picks favorite stocks for 2024

The author owns shares of Berkshire Hathaway.

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Hope Hicks broke down in tears on the witness stand during Trump-damaging testimony at hush-money trial

Business Insider 

Hope Hicks, a former longtime advisor to Donald Trump, took the witness stand in his hush-money trial Friday.Just after Trump’s lawyer began cross-examining her, she broke down in tears.Hicks was Trump’s 2016 campaign press secretary and later his White House communications director.

Hope Hicks, an ex-White House aide and longtime advisor to Donald Trump, broke down in tears while on the witness stand Friday in the former president’s hush-money criminal trial.

Her voice cracked as she began answering questions in the afternoon from defense lawyer Emil Bove, who had asked her whether the Trump Organization created the position of communications director to persuade her to join the company in October 2014.

After answering “yes,” Hicks grabbed a tissue and turned to her left while sitting on the witness stand. She turned her face and body away from the courtroom audience.

“Ms. Hicks, do you need a break?” the trial judge, Juan Merchan, asked.

“Yes, please,” she responded in a cracked voice, while facing away from the judge.

After the judge announced a break just before 3 p.m., Hicks walked across the courtroom, passing by Trump without looking at him.

Hicks is a key witness in the trial, potentially linking Trump directly to what prosecutors call an election-influencing scheme to purchase a porn star’s silence in the days before the 2016 presidential election.

On the stand in the chilly 15th-floor downtown Manhattan courtroom, she said she was testifying pursuant to a subpoena in the historic case.

Prosecutors in the Manhattan District Attorney’s Office allege Trump falsified 34 business records in order to cover up an illegal $130,000 hush-money payment to porn star Stormy Daniels.

The payment, delivered by Trump’s ex-personal attorney and former fixer Michael Cohen, was wired to Daniels 11 days before the 2016 presidential election to buy her silence over a 2006 sexual encounter with Trump, according to records shown as evidence in the trial.

Trump’s lawyers have claimed the payment was not an illegal campaign contradiction, and it was made to avoid personal embarrassment.

But Hicks — Trump’s 2016 campaign press secretary — testified about working with Trump and Cohen as the campaign responded to media inquiries about the scandal.

In their opening statements last week, prosecutors said the campaign was particularly vulnerable to the perceptions of female voters following the publication of the “Access Hollywood” tape. And so Trump sprung into action to block Daniels from going public about an affair she says she had with him, they said.

“I was definitely concerned this was going to be a massive story and make the news cycle for the next couple of days — at least,” Hicks said on the witness stand earlier Friday, describing her reaction to learning of the tape.

In her testimony, Hicks hurt Trump by showing how deeply he — and the campaign — worried about infidelity stories going public in the weeks before the election.

Hicks became emotional as prosecutors wrapped up their direct examination of her.

Her final answer helped bolster the district attorney’s case. She said Trump was happy that news of the hush-money arrangement with Daniels had become public in 2018.

“I think it was Mr. Trump’s feeling that it was better to be dealing with it now,” she said, “rather than just before the election.”

Hicks took the witness stand again after a five-minute break, looking flushed but calmer.

On cross-examination, she helped the defense by distancing the campaign from Cohen and his hush-money machinations.

“He was not looped in on the day-to-day” of the campaign, though he appeared to want to be, Hicks told jurors.

“He went rogue at times, it was fair to say?” Bove asked her.

“Yes,” Hicks answered, smiling. “I used to say that he likes to call himself a fixer or Mr. Fixit. But it was only because he first broke it that he was Mr. Fixit.”

Also during cross-examination, Hicks described Trump as a loving husband who genuinely cared about protecting his family from stories of infidelity.

“I don’t think he wanted anyone in his family to be hurt or embarrassed by anything that happened on the campaign,” she said.

“He wanted them to be proud of him,” she added of “Mrs. Trump” and the rest of Trump’s family.

Speaking to reporters in the hallway after the court day, Trump declined to answer Business Insider’s question about his reaction to Hicks’s testimony, saying he was bound by the gag order that New York Supreme Court Justice Juan Merchan imposed, preventing him from talking about witnesses.

He pivoted to attacking the Manhattan district attorney’s office, which he said has “absolutely ruined and destroyed” the lives of “a lot of great people.”

“They’ve destroyed people’s lives. They’ve gone out, hired lawyers, they’ve been with lawyers for years. They suck dry,” he said. “And it’s a shame. It’s a shame what they’ve done.

Hicks described the Trump campaign’s frenzied reactions to the ‘Access Hollywood’ tape

Hicks was one of Trump’s most trusted advisors in his 2016 climb to the presidency. Federal prosecutors have previously said in court papers from the 2019 prosecution of Michael Cohen that she could directly tie Trump to the so-called “catch-and-kill” scheme.

She formally joined the Trump Organization in October 2014 after working with the public relations firm Hiltzik Strategies. As Trump began running for president, in 2015, she switched to a campaign role and traveled with him across the country, she testified.

On October 7, 2016 — less than a month before the election — Hicks received an email from Washington Post reporter David Fareholdt, informing her he had obtained the video, sending a transcript of Trump’s remarks about grabbing women “by the pussy,” and requesting a response from Trump.

She forwarded it to other campaign leaders: Jason Miller, David Bossie, Kellyanne Conway, and Steve Bannon.

“Deny, deny, deny,” Hicks wrote in an email, suggesting one possible response.

Hicks then went to the 25th floor of Trump Tower, she testified, where she said Trump was preparing for a presidential debate with Miller, Conway, Bannon, Jared Kushner, and Chris Christie.

“We weren’t sure how to respond yet,” she testified Friday. “We were trying to obtain the information and were processing the shock internally.”

Trump responded “that that didn’t sound like something he would say,” Hicks said.

Hicks said she was “a little stunned” at the time and struggled to get her bearings.

“I was definitely concerned this was going to be a massive story and make the news cycle for the next couple of days, at least,” she said.

“There was consensus amongst us all that the tape was damaging,” she added. “This was a crisis.”

Donald Trump poses for members of the media with then-White House Communications Director Hope Hicks on her last day in the role.

After a while, Trump presented a more dismissive attitude, Hicks said.

“It was just two guys talking, locker room talk. It was something that we shouldn’t get too concerned over,” Hicks said, relaying Trump’s attitude. “He didn’t want to offend anybody but he felt it was pretty standard for two guys talking about somebody.”

Hicks said media coverage of the “Access Hollywood” tape was so all-consuming that no one had paid attention to the Category 4 hurricane that was expected to hit the East Coast at the time.

“It dominated media coverage,” she said. “I would say the 36 hours leading up to the debate.”

Then came the Stormy

The Trump campaign realized it had a potential problem with female voters in the wake of the tape’s release, Hicks said.

Prosecutors suggested that dynamic colored the reaction to another inquiry from a journalist — Michael Rothfeld at The Wall Street Journal — on November 4, just four days before the 2016 election.

The email came when Trump’s private jet had landed in Ohio for a “hanger rally” with the plane in the background. Rothfeld had asked about a secret $150,000 arrangement between American Media Inc., the publisher of the National Enquirer, and Karen McDougal. In the agreement, AMI bought the exclusive rights to McDougal’s story about an affair the former Playboy bunny said she had with Trump in 2006, when he was married to Melania Trump — but never published any articles about it.

Hicks had a phone call with Rothfeld, where he also mentioned Stormy Daniels, she testified.

Hicks tried to control the story, reaching out to Jared Kushner, who she said was friendly with the Journal’s owner Rupert Murdoch.

“He had a very good relationship with Rupert Murdoch and I wanted to see if we could buy a little extra time to deal with this,” she testified.

Kushner said he “wasn’t going to be able to reach Rupert,” she said.

Hicks also said she reached out to Michael Cohen, knowing he had a relationship with American Media Inc. owner David Pecker. And she reached out to Pecker’s office as well.

Pecker “explained that Karen McDougal was paid for magazine covers and fitness columns, and it was all very legitimate,” Hicks said. “And that was what the contract was for.”

After relaying that to Trump, Hicks said that Trump wanted to speak to Pecker himself and “have an understanding of what was going on.” On another phone call, with Trump, Pecker assured him the payment to McDougal was for fitness columns, Hicks testified.

Trump then personally crafted a campaign statement denying the accusations from McDougal, and any knowledge of the deal.

The published Journal article made mention of a possible affair and similar deal with Stormy Daniels, but focused on McDougal.

When the Journal published another article, in 2018, focused on the $130,000 Daniels, Hicks was at that point the White House communications director.

Trump told her Cohen had paid the $130,000 in hush-money “out of the kindness of his own heart” to protect him.

Hicks testified she found Trump’s explanation hard to believe.

“I’d say that would be out of character for Michael,” she said, to laughter in the court’s overflow room. “I didn’t know Michael to be an especially charitable person. Or selfless person. He’s the kind of person who seeks credit.”

This story has been updated with additional details.

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Russia is displaying its war ‘trophies’ — an array of captured Western hardware like Abrams and Leopard tanks — saying ‘victory is inevitable’

Business Insider 

A US Abrams tank was put on display for Moscow residents to see in an open-air exhibition featuring equipment from nearly a dozen NATO countries.

Russia is using an open-air exhibition to boast about its “trophies” from the war in Ukraine.The exhibition featured more than 30 NATO vehicles taken from Ukrainian forces, like an Abrams tank.Russia has sought to portray NATO’s supplying of Ukraine with arms as an act of war.

Russia launched an open-air exhibition on Monday showing off more than 30 North Atlantic Treaty Organization vehicles that it captured from Ukraine.

Among the seized assets on display were a US-made Abrams tank, a German Leopard tank, a British Husky support vehicle, and dozens of vehicles from countries like France, Sweden, and Australia.

Photos of the opening showed visitors snapping selfies with an M1A1 Abrams main battle tank, its nose gun pointed toward the ground, and armor visibly burned and cracked.

“Our victory is inevitable. No Western military equipment will change the situation on the battlefield,” the Russian Defense Ministry wrote in a Telegram post announcing the exhibition.

Reuters reported that state media placed special emphasis on the captured Abrams tank, which TV hosts said wasn’t the “wonder weapon” touted by the US.

“But that was all nonsense — look at this — all of its reputation has been destroyed,” a state reporter said, per Reuters’ translation.

Visitors look at a M1A1 Abrams main battle tank, made in the USA, and captured in Ukraine, at the Trophies of Russian Army exhibition, while celebrating the International Worker’s Day, at the Poklonnaya Hill, May 1, 2024, in Moscow, Russia.

The exhibition, named “Trophies of the Russian Army,” is being held for a month at Victory Park, a memorial dedicated to the Soviet Union’s defeat of Nazi Germany during World War II.

A range of other military assets was present, including a Ukrainian T-72A tank, a US Bradley fighting vehicle, a French AMX-10 RC fighting vehicle, and an M777 Howitzer.

Smaller arms, such as American mortars, German mines, and an Israeli launcher, were also flaunted.

The BBC’s Russia editor, Steve Rosenberg, wrote that he saw a “long line of German armor” when visiting the exhibition, including a sign saying: “History is repeating itself.”

Russia has sought to cast its invasion of Ukraine as a defense of its sovereignty against NATO. It repeatedly says that Western equipment sent to Ukraine means that nations like the US are already at war with Russia.

The exhibition also comes as the Pentagon withdraws its Abrams tanks from the front lines in Ukraine due to concerns about Russian drone attacks. The US has given 31 Abrams tanks to Ukraine, and five have been reported lost in combat.

Each costs around $10 million, and the US tanks were once seen as a key tool for Kyiv’s attempted retaking of its invaded lands. However, the widespread use of drones on the battlefield has undermined the Abrams’ effectiveness because the tanks are more easily detected and attacked.

The US has recently confirmed another $61 billion in aid for Ukraine, resupplying its forces with vital ammunition and arms to resist a grinding but advancing Russian push on the eastern front.

In response, Russia’s representatives have said that the Kremlin has already gained the upper hand in the war and that the new tranche of aid “will not change this dynamic.”

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Maya Rudolph says she got too burnt out from running her production company, so she left: ‘I like working, but I don’t like killing myself’

Business Insider 

Maya Rudolph says she left her production company because of burnout.

Maya Rudolph says she was burned out from running a production company she cofounded.”I like working, but I don’t like killing myself,” Rudolph told Town and Country Magazine.The burnout crisis in the US can cost the economy $1.9 trillion in lost productivity.

Maya Rudolph says she overworked herself while trying to run the production company she cofounded in 2018.

In an interview with Town and Country Magazine about her career, Rudolph shared why she chose to step back from Animal Pictures, the company she cofounded with Natasha Lyonne and Danielle Renfrew Behrens.

In between running the company and starring in different shows, the workload caught up to her.

“But more and more I was starting to feel like there weren’t enough hours in the day,” Rudolph told Town and Country Magazine. “It takes a lot to create a show, and it’s great to be able to create it, but then to actually show up and be on the set every day, it’s, ‘All right, then I don’t have time for this, this, and this…'”

She added that she didn’t use to “have a choice” when she was younger, but things have changed.

“I used to not have a choice, and so I did it, because that’s what you did. You exhausted yourself. You ended up in bed, comatose, because you left it all on the dance floor or whatever. But when you’re taking care of children, that’s not really an option,” Rudolph said.

Rudolph shares four children with her partner, filmmaker Paul Thomas Anderson.

Although she still enjoyed what she did at work, the pace was too much for her to handle, she added: “I like working, but I don’t like killing myself.”

Animal Pictures is behind shows such as Netflix’s “Russian Doll” — starring Lyonne — and Apple TV+ comedy “Loot,” which stars Rudolph.

Rudolph left Animal Pictures as a partner last year, per The Wrap. “Moving forward, Natasha will operate under the name Animal Pictures while Maya will produce independently,” a statement obtained by the outlet read.

A representative for Rudolph did not immediately respond to a request for comment sent outside regular business hours.

Burnout can affect anyone. A Gallup survey found that US employees felt more detached from their employers in 2023 than four years ago.

Additionally, employees who aren’t engaged at work can cost the economy $1.9 trillion in lost productivity.

The World Health Organization defines burnout as “a syndrome conceptualized as resulting from chronic workplace stress that has not been successfully managed.” It includes feelings of exhaustion or cynicism about one’s job, as well as reduced professional efficacy.

Some ways to manage burnout include setting boundaries, prioritizing tasks effectively as well as communicating your needs to your manager.

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How Envoy Medical is disrupting the hearing loss industry

TheStreet 

More than 1.5 billion will experience some kind of hearing loss in their lifetime, and about a third of them will suffer from disabling hearing loss that requires intervention.

Brent Lucas, CEO of Envoy Medical, joined TheStreet to discuss how his company is disrupting an industry that has become complacent when it comes to how we care for those suffering from hearing loss.

Related: Stock Market Today: Stocks mixed as Fed rate cut bets fade; Amazon leaps

Full Video Transcript Below:

BRENT LUCAS: Envoy Medical is a hearing health company and really what separates us from everything else that’s currently on the market, is that we have devices that are fully implanted and we use the ear to pick up sound. We don’t use an artificial microphone. So when you think about Envoy, you really can break us down and differentiate us from the rest of the market in that fully implanted devices. So nothing on the outside of your head whatsoever, nothing on the side of your head or in your ear behind your ear. And we use the ear to pick up sound versus an artificial microphone.

And we have two devices. We have one that is called the Esteem. That is a fully implanted, active middle ear device. That one received FDA approval and is currently on the market. And then we have an investigational device, which is the Acclaim. That device is what I believe will be the first fully implanted cochlear implant to use the ear to pick up sound and the benefits of using your ear to pick up sound are sort of self-evident in that our ears were designed or evolved in a certain way to allow us to hear human speech differently. It allows us to localize sound, reduce background noise and things of that nature.

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CONWAY GITTENS: So I’ve seen in my research that some people are calling you a disrupter. I’m wondering, do you consider yourself a medical device company or a medical tech company?

BRENT LUCAS: That’s a great question, and I absolutely think we’re going to disrupt the hearing industry, specifically the hearing implant industry, which I believe has been rather complacent for quite a period of time. I’m not making a lot of friends in the industry by saying we are going to disrupt the current cochlear implant space for sure with our fully implanted cochlear implant. We are changing the game. So I think we’re probably both. We are a technology company. Hearing is different than your traditional medical devices in that there’s a lot of direct to consumer considerations. It’s not just you’re not just selling to the physician, you’re selling to the patient, to the patient’s family. So in that regard, we’re probably a little bit more of a technology company than we are a traditional medical device company. But we definitely cross both categories.

CONWAY GITTENS: So when we talk about this industry and implanted hearing devices, how are you disrupting the price?

BRENT LUCAS: Yeah, that’s an interesting question because if you compare us to hearing aids, which I would not do, we are not a hearing aid. We are not a hearing aid company. In fact, we have there’s a bill being introduced in Congress right now that’s trying to make that very clear, that fully implanted, active middle ear implants are not hearing aids. And so we are not competing with hearing aids on the price factor. That is something that Apple and Google and Samsung, I expect to be doing in the future as over-the-counter becomes much more accessible to more people.

For the Esteem device, which is the fully implanted, active middle ear device that’s currently on the market. That device all in. So we’re talking about the surgery and the device is about $25,000 to $30,000 depending on where you get the surgery in the United States. So while that might seem like a big number at first, I would suggest that there are hearing aids as well, set of hearing aids might cost you 6, $7,000. Right and those are something that are external that they can break and over time will need to be changed. 

If you look at cochlear implants on the other side, Medicare pays on average about for the device and the surgery about $42,000 to $45,000 for a cochlear implant. And then the externals for a cochlear implant need to be replaced at a tune of about $7,000 to $10,000 about every four to five years. So if you look at the lifetime of a person’s hearing loss, again, we think the Esteem provides an opportunity for people to save costs if they’re willing to invest in that upfront. 

Related: Veteran fund manager picks favorite stocks for 2024

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The US needs allies to help build a naval coalition if it wants to stand a fighting chance against China’s massive fleet, retired admiral says

Business Insider 

Chinese warships in Qingdao, Shandong.

The US needs to assemble its own naval coalition, retired US Navy Adm. James Stavridis said.This, he said, is necessary if the US wants to match up to China’s growing naval fleet.Stavridis said the US could bring in its treaty allies like Japan, South Korea, and the Philippines.

The US needs to build a coalition of allies if it hopes to stand a chance against China’s fast-growing navy, says retired US Navy Adm. James Stavridis.

“Today, China’s fleet of at least 350 warships outnumbers America’s of 290,” Stavridis, a former NATO commander, wrote in a Bloomberg op-ed on Wednesday.

“Given the global demands on the US fleet and the fact that any combat in the South China Sea would take place in the shadow of the Chinese mainland — in effect, a massive and unsinkable aircraft carrier — the US must pursue a coalition strategy to balance the numbers,” he added.

In his op-ed, Stavridis said the US could start by corralling its treaty allies — Japan, South Korea, the Philippines, Australia, and New Zealand. The US, Stavridis wrote, could also partner with friendly nations like Singapore, Vietnam, and India.

The coalition could “come together for major maritime exercises in the South China Sea,” Stavridis suggested in his op-ed.

China has claimed sovereignty over the hotly contested South China Sea. The country has ignored competing claims by the Philippines, Malaysia, Brunei, and Vietnam, violating international law.

“The Chinese, when operating in their figurative backyard, pose a formidable naval challenge to the US and its Pacific allies, partners, and friends,” Stavridis wrote. “Standing up to them and deterring further aggression is a team sport.”

This op-ed isn’t the first time Stavridis has offered his assessment of the US’s naval capabilities. Back in January, Stavridis told radio host John Catsimatidis in an interview that the US needed to expand its naval forces if it wanted to stand up to China.

“We have a lot more experience, but quantity has a quality on its own. We need to build more warships. We need to think about a US Navy that approaches 350 ships,” Stavridis said.

The US Naval Institute said in a report in 2021 that China has the world’s largest navy, with over 355 vessels in its fleet. In comparison, the US only has 296 ships, according to a 2021 report from the Center for Strategic and International Studies.

Then, in July, leaked US Navy intelligence revealed that China’s shipbuilding capacity was 232 times greater than the US’s.

The US expects China to grow its fleet to 400 ships by 2025 and 440 ships by 2030, per the Pentagon’s 2022 annual report on China’s military development.

The growing gap between the US’s and China’s respective naval fleets underscores the extent to which US shipbuilding capacity has lagged behind China’s.

“One of China’s largest shipyards has more capacity than all US shipyards combined,” David Sacks, fellow for Asia studies at the Council on Foreign Relations, told BI last month. “We have to maintain ships as well as, obviously, build new platforms, and we don’t have the workers or the facilities to do that.”

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Tesla revoked internships weeks before start date, students say

Business Insider 

Tesla is revoking summer internships.

Tesla interns say their offers were revoked less than a month before they were set to start.Two would-be interns posted on LinkedIn on Wednesday saying they had internships rescinded.The move comes as Tesla continues to make further cuts after slashing 10% of its staff last month. 

Tesla revoked summer internships less than a month before the new interns were set to start, leaving ambitious college kids scrambling for new professional plans, students say.

Two students who said they were would-be Tesla interns posted on LinkedIn on Wednesday saying they had offers rescinded just three weeks before they were set to join the EV company. It is not clear how many offers have been rescinded.

Bloomberg was the first to report that Tesla is reneging on summer internships following the company’s layoffs earlier this year. The automaker cut more than 10% of its workforce last month, and CEO Elon Musk has signaled he isn’t done making cuts.

The billionaire announced in a Monday email that two senior executives were leaving and their divisions were being dissolved. Business Insider reported last month that some Tesla employees feel stuck in limbo, worried they are next. 

Joshua Schreiber, a student at Miami University, said in a LinkedIn post that he received an email from Tesla about flight information, but less than three hours later, his internship was “gone.”

“Yes, it sucks my start date was 3 weeks away. Yes, it sucks I spent thousands on housing,” he wrote. “Yes, it sucks to experience this in college.”

“Still, my favorite quote continues to be ‘We’re not the product of our circumstance, but a product of our response,'” Schreiber wrote, saying he was “optimistic” and open to new roles.

Meanwhile, Brook Gura, a communications student at the University of Texas at Austin, shared a similar story, saying she received a call on Tuesday telling her the internship offer had been rescinded. Gura chalked it up to Tesla’s recent layoffs.

Diana Rosenberg, a technical lead at Tesla, also blamed the layoffs in a LinkedIn post, saying she was “deeply sad” to lose a prospective intern on her team and was asking her professional network to help.

“Please make our loss your gain,” Rosenberg said.

Business Insider reached out to Tesla, Schreiber, Gura, and Rosenberg for comment.

Tesla hires more than 3,000 college students each year for internships, the company said in a 2022 impact report.

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Another popular fast-food chain closes after filing bankruptcy

TheStreet 

The fast-food restaurant segment has struggled to recover from the fallout from the the Covid-19 pandemic, leading several restaurant chains to file for bankruptcy.

Taco Bell and Chipotle rival Tijuana Flats Restaurants on April 19 filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Middle District of Florida, sold the company to a new ownership group and closed 11 of its locations.

Related: Another popular gin and vodka company files Chapter 11 bankruptcy

The chain’s new owners, Flatheads LLC, purchased the restaurant chain from TJF USA LLC with plans to revitalize its restaurants and reinvigorate the customer experience, the company said in a statement.

Another chain, New York-based chicken fingers fast-food chain Sticky’s, filed for Chapter 11 bankruptcy on April 25 to reorganize its business after suffering financial distress from reduced traffic following the Covid pandemic, rising commodity prices, and lawsuits.

In some cases, a restaurant chain reaches the end of the line without much notice, as the owners of Foxtrot and Dom’s Kitchen & Market, Outfox Hospitality, on April 23 filed for Chapter 7 bankruptcy liquidation and shut down all 33 of its locations across the country.

Finally, we have a situation where a chain filed bankruptcy to reorganize, but had to shut down locations when it’s restructuring didn’t work out.

Popular ramen chain shutters in bankruptcy

Boxer, a popular Portland, Ore., ramen chain, shut down all four of its locations on April 29 almost three months after filing for Chapter 11 protection seeking to reorganize.

The debtor filed bankruptcy after it was not able to recover from the devastating financial distress from the Covid-19 pandemic. A January 2023 ice storm, which froze business in Portland for about five days, was reportedly the last straw for the debtor. 

A Nashville, Tenn., restaurant investor Angelo Lombardi of Comfort Food Group had provided a $300,000 loan to the debtor in 2023 and hopes to be involved in the restructuring to turn around the company and help it thrive, Willamette Week reported.

Boxer’s owners posted a farewell message to customers on its website after it shut down operations:

“It is with a heavy heart we announce that after 11 years of serving you our unique brand of Ramen, we have sadly closed our doors for good.

“The heavy challenges that we all faced as a community during the pandemic, compounded with inflated costs of goods and services, has not only profoundly affected our restaurant, but all of us and our community as a whole. Despite the tireless efforts and dedication of our incredible team, and the unwavering support from all of you, it has become impossible to continue operating.

“We thank all of you that took this journey with us. You truly are our family and we will miss each and every one of you dearly.”

Related: Historic grocery chain files for Chapter 11 bankruptcy

Burger chain SuperDeluxe, which operates three locations in Oregon, was included in the Feb. 8 bankruptcy filing. SuperDeluxe and Boxer’s parent company MMMco., which is owned by Micah Camden, closed two of the burger chain’s restaurants because they did not have drive-thru service, according to Willamette Week, but SuperDeluxe’s locations in Southeast Portland, Sherwood and Bend, Ore., are listed on its website as open.

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SuperDeluxe serves both beef and vegan burgers, chicken sandwiches and chicken nuggets, fries, breakfast egg and cheese sandwiches with avocado, bacon and sausage options, hash browns and a variety of soft drinks and shakes.  

The two restaurant chains reportedly employed about 240 workers before the bankruptcy filing. MMMco. also operates restaurant brands Kinnamons and Baes Chicken, which are not included in the bankruptcy.

Related: Veteran fund manager picks favorite stocks for 2024

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The Fed’s new interest-rate outlook may roil markets

TheStreet 

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The good news from the Federal Reserve’s meeting on May 1 was that the central bank isn’t raising rates. 

Fed Chairman Jerome Powell even said as much at his news conference on Wednesday: “It is unlikely the next move will be a hike.” 

The bad news is that it is not cutting rates, at least for a while, and probably not until the fourth quarter of 2024. Powell conceded that inflation is still too strong—and stronger than the Fed expected. 

But Powell said the Fed really wants to cut rates. 

A delay to the timeline for rate cuts curbed a stock-market rally that erupted following Powell’s “unlikely” remark. How investors react next isn’t clear.

Related: Fed holds rates steady, hints when interest rate cuts will happen

The extra time it’s taking to get to the Fed’s long-standing 2% target rate is “painful and inconvenient,” Powell said at his news conference after the Fed announced its rate decision. Especially for lower-income families living from paycheck to paycheck. 

He said, however, that he remains confident the Fed will get to the target. “Everyone will benefit” when it occurs, he said. 

Some observers are not sure the Fed will cut rates much because they believe some forces at work in the economy won’t react to rate cuts. An example, noted Jeffrey Gundlach, CEO of DoubleLine Capital, during a CNBC interview, is rising insurance rates. 

Stocks go up — and then take a dive

It took the stock market a little while to appreciate what Powell was really saying. At 3 p.m. ET, the Standard & Poor’s 500 Index was up as much as 60 points. The Dow Jones industrials were up some 500 points.

But then worries about how long inflation would persist weighed in. 

The S&P 500 ended the day down 17 points to 5,018. The Nasdaq, up as much as 268 points, slid to a 52-point loss at 15,605. 

The Dow managed an 87-point gain, largely because of gains for Amazon.com  (AMZN) , Microsoft  (MSFT) , and Johnson & Johnson  (JNJ)

Mortgage and consumer rates will stay high

As important, the yield on the 10-year Treasury bond had fallen to 4.585% after Powell predicted no rate hikes. But it jumped back up to 4.639% at the close of trading. 

This is not good news for people interested in mortgages, car loans, and long-term business financing. 

Home sales have been stagnant since the Fed started raising its key rate, the federal funds rate, in early 2022. It was nearly at 0% then. It’s been at 5.25% to 5.5% since July 2023, and all lending rates went up with the fed funds rate.

On May 1, mortgage rates fell on the Fed news from 7.51% on a 30-year fixed-rate mortgage to 7.46%. That’s not much of a change, though. If you’re buying a $350,000 house with a $280,000 loan, the difference in monthly payment is roughly $18.

At the same time, the rate on a 30-yield loan has been above 7% for at least two weeks. 

More Economic Analysis:

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If you had closed on a mortgage loan in early February, when the 30-year rate hit 6.6%, the payment would have been $1,246, compared with $1,485. 

This reality hit real-estate-related stocks. PulteGroup  (PHM) , parent of one the biggest U.S. home builders was up to $114.88, a gain of nearly 3% after the Fed announcement, but closed at $111.82, up only 0.4%.

It also means businesses looking for new capital to expand or acquire a company will still face relatively high financing rates.

Home sales and new construction depend on lower interest rates. 

Shutterstock

Economy not experiencing stagflation. 

Powell bristled at the idea that the U.S. economy was entering a period of stagflation. 

He remembered when inflation topped 10% in the 1980s, with unemployment surging to 9%. Inflation now is around 3%, with unemployment at 3.8%. 

“I don’t see the ‘Stag’ or the ‘flation,” he said. 

A quiet easing move

While the Fed left the Fed Funds Rate unchanged, it actually did a little bit of easing. 

It has been selling securities it bought during the pandemic, a process called quantitative tightening, to slow inflation.

Until now, it has been selling those bonds at a pace of about $60 billion a month, pressuring rates higher.

However, beginning in June, it will cut its sales to $25 billion a month, easing upward pressure on rates.

Related: Veteran fund manager picks favorite stocks for 2024

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Analysts revise SuperMicro stock price target after earnings

TheStreet 

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The famous shipping magnate Aristotle Onassis once said, “We must learn to sail in high winds.”

That’s a piece of advice that can be applied far beyond the seven seas and the ocean blue. 

Related: Analysts revise AMD stock price targets after earnings shock

To survive, companies must learn to navigate some extremely unforgiving waters, as they look to make a profit and dodge treacherous waves of red ink.

Okay, that’s enough of the salty sea dog talk. Let’s get down to business. 

It’s earnings season, and the world, as we know, is currently being overhauled by artificial intelligence.  

Companies have been spending a lot of money to get a seat at the AI table and Super Micro Computer  (SMCI) , which makes high-end servers used in artificial intelligence, has benefited big-time from that spending.

The San Jose, Calif.-based company has a long history of building top-shelf rack servers, storage systems, and other similar solutions for data centers.

The company, whose shares have soared with the AI explosion, reported third-quarter earnings on April 30. CEO Charles Liang, who co-founded Super Micro with his wife in 1993, expressed confidence about the future.

“Super Micro is at the forefront of the current AI revolution,” Liang told analysts during the company’s earnings call. “These strong results reflect the continued demand for our rack-scale plug-and-play total AI solutions.”

Charles Liang, chief executive officer of Super Micro Computer Inc., said his company is ‘at the forefront of the current AI revolution.’. Photographer: David Paul Morris/Bloomberg via Getty Images

Bloomberg/Getty Images

Super Micro Computer faces supply chain challenges

Liang said that SuperMicro continued to face supply chain challenges due to new products that require new key components, especially DLC or Direct Liquid Cooling-related components, and he believes this situation will gradually improve in the coming quarters.

“To sustain this rapid growth, we are making significant investments in production, operation, management software, cloud features, and customer service to further increase our customer base and bring more value to them,” he said.

Related: Analyst revamps Nvidia stock price target ahead of earnings

Super Micro earned $6.65 per share, up from $1.63 per share in the year-ago quarter, beating the FactSet consensus of $5.74 per share.

Revenue totaled $3.85 billion, up from $1.28 billion a year ago, but it fell short of FactSet’s call for $3.95 billion.

Looking ahead, SuperMicro expects to earn $7.62 to $8.42 per share in the fourth quarter on revenue of S5.1 billion to $5.5 billion. FactSet is forecasting earnings of $7.94 per share on $5.2 billion in sales.

The computer hardware company also raised its 2024 revenue guidance to $14.7 billion to $15.1 billion from $14.3 billion to $14.7 billion. FactSet’s consensus calls for $14.81 billion in sales.

However, investors apparently were not pleased with what they heard, and Super Micro’s shares finished down some 14% to $738.30 on May 1.

TheStreet Pro’s Bruce Kamich, who warned investors to “keep your powder dry” several weeks ago, said, “The broad market averages are in a ‘risk off’ mode and I suspect that will impact stocks like SMCI. Avoid the long side of SMCI as further declines are likely.”

Analysts who cover Super Micro adjusted their price targets after the earnings announcement.

Barclay’s analyst George Wang boosted his price target on Supermicro to $1,000 from $961, while keeping an overweight rating on the shares. 

He told investors that the company reported a strong June quarter revenue guide. The next two quarters are expected to grow sequentially due to improving supply and artificial intelligence tailwinds.

Analyst cites ‘strongest moat’

“We continue to highlight time to market as the strongest moat for SMCI,” said Wang, who made a similar observation back in March. “We think the AI strength is still in the early innings, and it’s too early to take a cautious view at this point.”

The analyst said that as Nvidia  (NVDA)  increases the new product launch cadence, to once a year right now compared with once every other year in the past, “it should structurally increase Super Micro’s advantage, as it will have a list of matching products ready immediately and offer design assistance after Nvidia, Advanced Micro Devices  (AMD) , and Intel  (INTC)  announce a new silicon product, compared with a much longer development cycle for competitors.”

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Wedbush analyst Matt Bryson raised the firm’s price target on Supermicro to $800 from $530 and kept a neutral rating on the shares. 

Bryson noted that Supermicro guided revenues for the year meaningfully higher, suggesting sales momentum is only accelerating into the fourth quarter. 

At the same time, he said the midpoint of management’s guidance implicitly suggests gross margin deterioration of about 200 basis points and an operating margin decline of about 100 bps.

Bryson also pointed out that the expected margin dip, in turn, necessarily ref concerns about how competition might weigh on Super Micro’s ability to translate AI-related server growth into profit, both in the current quarter and moving forward.

Bank of America Securities analysts cut their price target on Super Micro to $1,090 from $1,280 while reiterating their buy rating. The company “remains a pure play AI server vendor, and we expect continued positive estimate revisions in the long term.”

Super Micro gave a strong revenue guidance for the fourth quarter, BofA said, but the guidance implies gross margin lower than the long-term range.

“While cash burn in the quarter was high, we note that a significant part of this was driven by increased inventory, which we view as transitory,” the firm said.

Wells Fargo analysts also lowered the firm’s price target on Supermicro to $890 from $960 while keeping an equal weight rating on the shares. 

The firm sees the selloff as reflective of increased valuation sensitivity as gross margin percentage scrutiny comes into focus.

Related: Veteran fund manager picks favorite stocks for 2024

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