Eye of the Financier, my rocky comic

As any day goes by, a mind tends to wonder. Whether it be about what the plans are for the evening, the cadre of things you forgot to do at work, or in my case, what to blog about next. Writing an article about every good and bad thing that happens in an industry can become monotonous, tiring, and blatantly bland. With this thought in my mind, how do we change up a seemingly bland industry? My artistic side kicked me in the shin and said, 'hey, let's make popular cliche' movie lines into comics.' Thus my new blogging idea has sprouted; to take the most famous movie quotes, and turn them into cheesy, corny, and humorous one still frame comics.

So in the next couple of weeks, try to enjoy the dry humor I have, and if you're in the industry, maybe some of the themes will ring true. Make sure to drop a line, tell me what you think, and I'll be more than glad to comment back.

To start off, my homage to Sylvester Stallone in Rocky, with his famous line: "Yo Adrian, I did it!"

Earlier this year, as part of my bucket list tour, and since I am from Pennsylvania, I took a trip down to Philadelphia with my running buddy, and we did a 7 mile trek to the Philadelphia Art Museum, and climbed the legendary steps. It was a gorgeous October Sunday, the air was crisp, the streets were not overly crowded, and we had a plan. After scouring running blogs, and checking for signs of the route that Sly ran in the movie, I came across a remote map that wasn't completely accurate, but a good start. Panning through the training scene I found a couple of more roads. We started on the south side of Philly, 16th Street I believe, ran through the capital building, past the Rodin exhibit, through the Czech parade that was going past the museum. A perfect run, a great time, and an experience, I care to never forget. One of those cheesy moments in your life that will always make you smile.

With that being said, enjoy.

Another one bites the dust

As anyone knows in sales, losing a sale is hard.

There was a client I had been corresponding with over the last month about getting some financing for his software company. Things seemed to be going well, but communication wasn't there. After weeks of slow correspondence, my skepticism was increasing.

Ready to close the deal after a few positive emails, a conference call was arranged for today. After discussing terms, and explaining how things would work with financing his business, the clouds parted, and it poured down on the Macy's Day Parade.

Our concepts of the deal were in different countries, and we ended the call with a hope to touch bases soon and get something that will fit his needs in the near future.

Well, where do you go from here? Your head may be in the gutter, but one has to remember that it is only one deal.

On average, for every five deals, four are bound to fall through. Keep your head up, and things will persevere. When trying to find deals, or make sales, you have to stay hungry, and stay fresh. The book outliers talks about becoming the best at something takes 10,000 hours, so keep trying.


So the deal of the day fell through, and I changed my heading for today. My day then went to contacting my brokers and contacts, trying to probe for new business. By the end of the day, I had spoken to three new potential clients, and am arranging for conference calls this coming week.

Just another example of persevering through tough times.


During the day a quote came to to mind:

"The Flurries of Defeat are Transcended by the Warmth of Success"

It came to mind, because I made it :)


Anyways, have a great weekend readers.

Live Long and Factor

Cheap Debt Investment

A great article pulled from CEO.com


Although the subject matter below is based on real-world experience, all characters, figures, and settings are fictitious and are not based on the financial situation or strategy of any specific company.
From: CFO, Any U.S. Investment-Grade Company
To: Treasurer
Priority: High
Subject: Anything we can do to take advantage of such low borrowing costs?
From: Treasurer
To: CFO
Priority: High
Subject: Re: Anything we can do to take advantage of such low borrowing costs?
Good Morning, Boss:
I am almost certain that borrowing costs for investment-grade companies have NEVER been lower. I have maxed out the most reliable data sources and cannot find a time when U.S. corporations could issue debt at lower interest rates. Thedriving force behind this low-rate environment is investor demand for both yield and safety.
Investment-grade debt has become the best game in town for investors, as it offers reasonable safety and return at a time when the stock market is one bad headline away from a crash and U.S. Treasuries offer paltry yields. This high demand for quality corporate paper, combined with such low Treasury rates, has greatly compressed corporate credit spreads, pushing all-in bond coupons to unprecedented levels (bond coupons = reference Treasury rate + corporate credit spread).
So, without further delay, I give you five great ways to take advantage of cheap debt:
Capital expenditures. It may seem like the global economy is doomed forever but we should be optimistic. Now is the time to open that new plant, purchase that new fleet, and develop that new product. We can borrow at 2%, 3%, or 5% for 5, 10, or 30 years, respectively. Let’s reinvest in the business in anticipation of better times; when demand returns, we will be thanking ourselves for recognizing and seizing a great opportunity.
Acquisitions. Another great way to invest in our business is via acquisition. Let’s go after those targets we have been eyeballing the past few years. We can justify paying a full valuation with the low hurdle rate set by borrowing costs. While other companies sit on the sidelines and wait for Congress to save the economy, or destroy it, we can be proactive in growing our business.
Pension contributions.Defined-benefit pension plans remain grossly underfunded. Falling discount rates and government regulation have created the perfect storm, inflating pension liabilities so much that pension asset returns have no chance of closing the gap. By issuing low-cost debt and contributing the proceeds to pension assets, we can finally catch up and get our funded status closer to 100%. As an added bonus, a debt-financed pension contribution is both tax deductible and leverage neutral (rating agencies treat unfunded pension liabilities as debt).
Share repurchases. With very low leverage and anxious shareholders, now would be a great time to send a bullish signal by issuing debt to repurchase shares. First, a debt-financed share buyback is accretive to stock price and earnings. Using debt costing 2% after tax to take out equity costing more than 10% (required return + dividend), we can reduce our cost of capital, potentially increasing the value of the company. Also, fewer shares outstanding means an earnings-per-share boost at the end of the year. Second, such a bold move of using debt to repurchase shares sends a very strong message to the market that our shares are undervalued. Third, with looming tax increases on capital gains, now would be a good time to offer shareholders a way out at a 15% capital-gains tax rate. That rate can only go higher next year.
Prepaying future cash dividends. Tax increases on dividends are also looming, with the upcoming expiration of the Bush Tax Cuts at the end of this year. Congress’s failure to act, a high probability, will result in the tax on dividends moving from 15% to more than 40% in some cases.
We can do our shareholders a big financial favor now by borrowing to prepay the dividend for the next two years, helping them avoid a much higher potential tax bill. So instead of paying our shareholders the annual dividend of $2.00 per share, we would pay a $6.00 dividend this year. The incremental $4.00 today would be taxed at 15% and net the shareholder $3.40 per share. Paying the $2.00 dividend the next two years would net the shareholder only $2.40 per share should the dividend tax go up to 40%.
It is important to mention that this environment will not last forever and we will regret not taking advantage of this opportunity someday soon. Interest rates will reverse course, and when they do, the moves will be quick and significant.
The Treasurer
Patrick Guido is vice president and treasurer of publicly held VF Corp., a $10 billion global apparel and footwear company with brands that include The North Face®, Vans®, and Timberland®. Patrick has more than 17 years of experience in corporate finance. He earned an undergraduate degree from Georgetown University and an MBA from Vanderbilt University.
CFO.com (http://s.tt/1r5DS)


Business Line of Credit for Entrepreneurs