Effectively, the CME is lowering the cost to trade crude oil, gold, silver, copper, and a few other commodities. So far this has had no impact on prices of the SPDR Gold Trust (NYSE: GLD), United States Oil Fund (NYSE: USO), iShares Silver Trust (NYSE: SLV), nor in the iPath DJ-UBS Copper TR Sub-Index ETN (NYSE: JJC).

In the past, margin costs were raised on traders as an effort to curb runaway trading to the upside by making it more expensive for traders and speculators to trade energy and metals.  In short, driving up the cost of poker creates fewer gamblers. So what happens when they make it cheaper to trade?

The full details are here.

JON C. OGG

Jon Marino of PEHub.com noted that P.E. firms are hiring and referenced a follow-up report for BDO USA’s third annual private equity “PErspective” report… 57% of private equity executives increased professional staffing and 62% plan to hire again this year.  This is a complete reversal from the layoff waves of prior years.  Here is more detail from that report.

Whether you like millionaires or billionaires or hate them, the one aspect that is so unfairly portrayed about companies bought by private equity firms is as follows: Most businesses bought by private equity firms need to be turned around or need to be run better.  Sure, they get leveraged up and they scrap inefficient operations.  The dirty secret that private equity firms are not defending enough is that many of these companies would have headed for bankruptcy in the long-term if they had not stepped in.  If that results in a liquidation rather than a pure bankruptcy, guess how many jobs get lost at those companies… all of them, rather than some.

The business sector is not just a one-way street.  Companies hire workers in good times and most fire in bad times.  We even ran our own 2011 Layoff Kings.

JON C. OGG

We want to know what you think below.  Look at how much some banks have paid to settle overdraft charges and then decide in our poll below…. Should banks have overdraft fees???

So here are some recent settlements and other overdraft fee news…

J.P. Morgan Chase & Co. (NYSE: JPM) was asked by the U.S. District Court of Southern Florida in Miami to pay $110 million over a class suit for charging of inappropriate overdraft fees to its customers. Zions Bancorp. (ZION) was accused in late 2011 of improper overdraft fees over its policies in place from 2005 to 2010.

Bank of America Corporation (NYSE: BAC) and Commerce Bancshares Inc. (NASDAQ: CBSH) were ordered to make payments over unfair trade practices in overdraft situations: Commerce Banc paid $18.3 million; Bank of America was asked to pay $410 million to settle unfair overdraft fees charges.

Now go back to 2010. Wells Fargo & Co. (NYSE: WFC) was ordered to pay $203 million by a California court to compensate customers suing over unfair overdraft fees.

JON C. OGG

The prince is a very long-term investor in Citigroup Inc. (NYSE: C).  He is also apparently its largest holder.  This evening he noted that he expects Citi to begin returning capital to shareholders soon.  The stress tests should be finished in March and the prince said is pushing for a dividend hike.  He even noted that he held a conversation with Citigroup CEO Vikram Pandit late last week and his opinion is that the new Citi is doing very well. 

Citi is one of the ‘too big to fail’ banks and it has paid only a one-cent dividend since it has gotten out from the TARP.  After a 1-for-10 reverse stock split, many investors have moved on.  The adjusted dividend back in 2007 was $5.40, but it is going to be quite some time before investors expect that to remain.

Thomson Reuters is predicting that Citi will have normalized earnings at $4.04 EPS in 2012 and $4.70 EPS in 2013.  If the bank is ever allowed to return 40% of its normalized earnings, Citi could pay out $1.60 or so per share in annualized dividends.  That is a big if, but at $33.30 it would generate a dividend yield of 4.8%.

Again, that IF is a really big ‘if’ based on the regulatory climate of today.  The one bank that is expected to be among the very first to raise the common stock dividend is J.P. Morgan Chase & Co. (NYSE: JPM).  Its $0.25 per quarter dividend used to be $0.38 per quarter before the bubble burst.  We also expect a higher dividend coming down the pipe from Wells Fargo & Co. (NYSE: WFC) as its $0.12 per quarter dividend compares to $0.34 before the bubble burst.

JON C. OGG

• Feb 01 traded 125,300 shares and closed at $14.59
• Jan 31 traded 58,300 shares and closed at $14.25
• Jan 30 traded 33,400 shares and closed at $14.28
• Jan 27 traded 16,200 shares and closed at $14.20
• Jan 26 traded 400 shares and closed at $13.50
• Jan 25 traded 1,300 shares and closed at $13.59

We said it before and we will say it again… This ETF owns no shares of Facebook as of yet.  It will have to after the Facebook IPO but it does not now.  Interpublic Group of Companies, Inc. (NYSE: IPG) owns shares but barely rose today.  Affiliates of Goldman Sachs Group Inc. (NYSE: GS) own shares, and Microsoft Corporation (NASDAQ: MSFT) owns shares.  The social media company only has a halo-effect around the theme of social media.

Facebook is and was one of our Top 17 IPOs For 2012, but so was Twitter, Living Social and Yelp.

LinkedIn Corporation (NYSE: LNKD) closed up 6.4% at $76.98 solely on being a rival and Zynga Inc. (NASDAQ: ZNGA) rose 16% to $12.39 due to its being north of 10% of Facebook’s revenues.

What is so funny is that even FriendFinder Networks Inc. (NASDAQ: FFN), the adult-themed social networking site and one of the worst IPOs of modern time, rose solely because of the social media halo.  That gain was 16% to $1.33 against a 52-week range (actually under a year) of $0.51 to $10.01.

The one business development company which does own Facebook shares is GSV Capital Corporation (NASDAQ: GSVC).  Its shares have risen since the impending filing was telegraphed last Friday and the stock rose by over 7% to $18.51 today.

This is called the Halo-effect if there ever was one.

Facebook’s full IPO details are here.

JON C. OGG

While Facebook has said that it is choosing the “FB” stock ticker, it did not specify whether or not the NYSE or NASDAQ would get the listing.  Keep in mind that Mark Zuckerberg is where the buck stops if you evaluate the share structure.

Be advised that there is a dual-class of stock with A shares and B shares.  Each share of Class A common stock is entitled to one vote per share. Each share of Class B common stock is entitled to ten votes per share and is convertible at any time into one share of Class A common stock.

The underwriting group is as follows: lead book-runners are Morgan Stanley, J.P. Morgan, and Goldman Sachs; co-managers are BofA/Merrill Lynch, Barclays Capital, and Allen & Company.

BASIC STATS:

• 845 million monthly active users,
• 2.7 billion likes and comments per day,
• 250 million photos uploaded per day,
• and 100 billion friendships.
• The company also has 483 million daily active users.
• It also had roughly 3200 employees as of December 31.

Microsoft Corporation (NASDAQ: MSFT) is listed as a competitor and it is an owner, while Google Inc. (NASDAQ: GOOG) is not an owner and is listed as a key competitor.  Twitter is competitor.  As a reminder, GSV Capital Corporation (NASDAQ: GSVC) is an owner of stock as well.  Interpublic Group of Companies, Inc. (NYSE: IPG) still owns a small stake as well.

We are now finally getting to see at least some of the preliminary figures from Facebook to use for financial analysis:

• 2009 revenues $777M, $122M net income for shareholders;
• 2010 revenues $1.974B, $372M net income for shareholders;
• 2011 revenues $3.711B, $668M net income for shareholders.
• The company’s cash and marketable securities at the end of 2011 was $3.908 billion.

Zynga Inc. (NASDAQ: ZNGA) accounted for about 12% of 2011 total revenues for Facebook.

Mark Zuckerberg owns 28.4% of the total voting power, but he has a proxy over insider shares that gives him 56.9% of the total voting power.  Other big holders are James Breyer at 11.4% and Peter A. Thiel at 2.5%.  Large Class B share holders (1 million or more shares) are Sheryl Sandberg, David Ebersman, Mike Schroepfer. Theodore Ullyor, Marc Andreesson…

T. Rowe Price Associates, Inc. (NASDAQ: TROW) owns over 6 million class A shares and affiliates of Goldman Sachs Group Inc. (NYSE: GS) own over 65.9 million Class A shares.

As of December 31, 2011 there were outstanding:

• 117,097,143 shares of our Class A common stock held by approximately 110 stockholders;
• 1,758,902,390 shares of our Class B common stock held by approximately 1,070 stockholders;
• 258,539,434 shares issuable upon exercise of outstanding stock options;
• 378,772,184 shares subject to outstanding restricted stock units (RSUs).

RISK FACTORS AS FOLLOWS:

• “If we fail to retain existing users or add new users, or if our users decrease their level of engagement with Facebook, our revenue, financial results, and business may be significantly harmed;”
• “We generate a substantial majority of our revenue from advertising. The loss of advertisers, or reduction in spending by advertisers with Facebook, could seriously harm our business;”
• “Growth in use of Facebook through our mobile products, where we do not currently display ads, as a substitute for use on personal computers may negatively affect our revenue and financial results;”
• “Facebook user growth and engagement on mobile devices depend upon effective operation with mobile operating systems, networks, and standards that we do not control;”
• “We may not be successful in our efforts to grow and further monetize the Facebook Platform;”
• “Our business is highly competitive, and competition presents an ongoing threat to the success of our business;”
• “Improper access to or disclosure of our users’ information could harm our reputation and adversely affect our business;”
• “Our business is subject to complex and evolving U.S. and foreign laws and regulations regarding privacy, data protection, and other matters. Many of these laws and regulations are subject to change and uncertain interpretation, and could harm our business;”
• “Our CEO has control over key decision making as a result of his control of a majority of our voting stock;”
• “The loss of Mark Zuckerberg, Sheryl K. Sandberg, or other key personnel could harm our business;”
• “We anticipate that we will expend substantial funds in connection with tax withholding and remittance obligations related to the initial settlement of our restricted stock units (RSUs) approximately six months following our initial public offering;”
• “The market price of our Class A common stock may be volatile or may decline, and you may not be able to resell your shares at or above the initial public offering price;”
• “Substantial blocks of our total outstanding shares may be sold into the market as “lock-up” periods end, as further described in “Shares Eligible for Future Sale.” If there are substantial sales of shares of our common stock, the price of our Class A common stock could decline.”

Again, the Top 17 IPOs to Watch in 2012 is here.

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JON C. OGG

The full S-1 SEC FILING is here.  PS… The traffic to the SEC.gov website was severely limited for almost an hour due to excessive traffic flooding the site due to readers wanting to read the Facebook S-1.

Keating has been a Director of the Group Finance.  The strategy change is to effect a split in the Irish and U.K. Retail Division into separate units for each country.  Each unit will be led by separate chiefs and both chiefs will be members of the group executive committee.  U.K. Retail will be led by Des Crowley; Ireland Retail will be led by Liam McLoughlin. The new structure’s implementation date is expected to be in mid-March of 2012.

Shares at the local level in Dublin were up 5.2% on last look, but the ADRs in New York were up 3.1% at $6.46 against an adjusted 52-week range of $3.99 to $27.00 if you account for the reverse split.

Our take: This could lead to more of a break-up or allow asset sales more easily down the road.  It certainly is not growth ambitions, but whatever adds to survival chances right now is what matters the most.

JON C. OGG

FULL PRESS RELEASE FROM THE P.R. DEPT. BELOW:

The Governor and Company of the Bank of Ireland (the “Bank of Ireland”)
1 February 2012

Bank of Ireland Announces Board and Executive Management Changes

Bank of Ireland has today announced changes to its Group Structure and to its Senior Executive Team.

Board Change
Andrew Keating has been appointed an Executive Director of Bank of Ireland and Group Chief Financial Officer with immediate effect, replacing John O’Donovan who has retired from that role.  Andrew was formerly Director of Group Finance where he spearheaded a major transformation of the Finance Division in the Bank of Ireland Group.  He joined Bank of Ireland in 2004, prior to which he held a number of senior finance roles with Ulster Bank having qualified as a chartered accountant with Arthur Andersen.

Andrew is also a Director of Bristol & West plc, which is a wholly owned subsidiary of Bank of Ireland.

There are no details requiring disclosure for Andrew under paragraph 6.6.7 (2) to (6) of the Listing Rules.

Changes to Group Structure
Having embedded considerable benefits from the sharing of best practice and synergies in areas such as segment/product propositions, operational management and infrastructure the Group is enhancing the visibility of and focus on two of our most significant businesses.  Accordingly, for strategic management purposes we will split our Retail (Ireland & UK) Division into Retail Ireland Division and Retail UK Division.  Each will be headed up by separate Divisional Chief Executives who will be members of the Group Executive Committee.

Changes to Group Executive Committee
Des Crowley will be Chief Executive of the Retail UK Division where he will be responsible for the various UK based retail businesses within our subsidiary Bank of Ireland (UK) plc and outside the subsidiary.  Prior to this he held a number of positions on the Group Executive Committee since 2000, including Chief Executive, Retail Financial Services and Chief Executive UK Financial Services, having joined Bank of Ireland from Arthur Andersen.  As we work through the revised structure we will need FSA regulatory approval for key changes/appointments which we make during the course of transition.

Liam McLoughlin will be Chief Executive of the Retail Ireland Division, where he will be responsible for the Branch Network, Business Banking, Mortgages, Personal Lending, Debit & Credit Cards and Wealth Management.  Liam has been Head of Group Manufacturing since July 2009.  Prior to that he held a number of senior positions in the Capital Markets and Finance Divisions.  He joined Bank of Ireland in 2004 from Ulster Bank Group prior to which he had been Financial Controller with the National Treasury Management Agency.  Qualifying with PricewaterhouseCoopers he is a fellow of Chartered Accountants Ireland.

Senan Murphy joins Bank of Ireland to become Head of Group Manufacturing.  Senan , a chartered accountant , was most recently Chief Operating Officer and Finance Director at Ulster Bank whom he joined in 2008 having previously been Finance Director at Airtricity. Before that Senan worked in a number of senior roles in General Electric in both the US and Ireland.  In his role with Bank of Ireland, Senan will be responsible for managing and enhancing the Group’s infrastructure (including its technology), customer service and contact centres, collection activities, its customer payment activities and cash distribution.  Senan will be a member of the Group Executive Committee.

Mr Murphy will join the Bank shortly and will transition into his new role for the implementation date of the new Group Structure at which time Mr Crowley and Mr McLoughlin will formally take on their new roles.

The new Group Structure will have an implementation date of mid March 2012.

1 February 2012
 
Enquiries:
Dan Loughrey, Head of Group Corporate Communications Ph: 00-353-623-4770
Helen Nolan, Group Secretary Ph: 00-353-76-623-4710

The guidance on January 5 was victim of soft sales in the first two months of the quarter generating slightly negative same-store sales for its fourth quarter with non-GAAP earnings coming in a range of $0.65 to $0.70 earnings per share.

Our thesis was simple” For new investors, this is not a fourth quarter story.  This is not a story of guidance for the current quarter, and it may not even be a story of strong results in 2012… Ron Johnson is set to transform the look and feel of this company entirely.”

Penney’s shares at the time of our call were down over 6% on that day at $32.75.  The problem now, if there is a problem, is that the new concept unveiling and the leaner retail worker structure has met a guidance presentation all in one week.

A gain of 15% to $39.48 on Thursday now has shares up 20%.  Why is this a problem?  The consensus analyst target is down under $34.00 and the 52-week trading range is $23.44 to $41.00.  It was known that Ron Johnson was going to use his Apple magic to transform the company.  It was known that he was going to have the presentations.

A 20% gain in three weeks is generally a gift no matter how you cut it.  Even if analysts raise their price target objectives substantially, at a minimum we would only look to enter on a pullback now.  Taking at least some profit at this point would not hurt anyone even if it is only on part of the position.

JON C. OGG

Silver Wheaton Corporation (NYSE: SLW) is up 6.7% at $34.07, and the 52-week trading range is $25.84 to $47.60.

Pan American Silver Corp. (NASDAQ: PAAS) is still only flat at $21.85 but it was lower before the FOMC comments today. The 52-week trading range is $19.93 to $43.06.

Goldcorp Incorporated (NYSE: GG) is up 5.2% at $46.70, and the 52-week trading range is $39.93 to $56.31.

Newmont Mining Corporation (NYSE: NEM) is up 3.4% at $59.43, and the 52-week trading range is $50.05 to $72.42.

Kinross Gold Corporation (NYSE: KGC) up over 6% at $11.23, and the 52-week trading range is $9.96 to $18.25.

Agnico-Eagle Mines Limited (NYSE: AEM) up 8% at $37.23, and the 52-week trading range is $34.36 to $76.49.

ETFs are rocking as well.  The Market Vectors Gold Miners ETF (NYSE: GDX) is up 5.3% at $54.58 against a 52-week range of $49.22 to $66.98.  Market Vectors Junior Gold Miners (NYSE: GDXJ) is up 6.5% at $28.66 against a 52-week range of $22.58 to $42.97.  The Global X Silver Miners ETF (NYSE: SIL) is up 3.9% at $23.69 and the 52-week range is $19.05 to $31.34.

The logic is simple enough… This signals extremely low interest rates and low costs of borrowing.  It also signals that investors will have to look elsewhere yet again to seek higher returns than short-term and intermediate-term Treasuries.  As this means that rates will be low in the U.S. for longer than expected, that is going to drive a weak dollar policy as long as things remain static in Europe and in other major economic zones.  That is the perfect storm for gold and silver as they are often inversely correlated to the dollar.

JON C. OGG

In today’s annual outlook speech, Ben Bernanke has said that the FOMC is prepared to look at other actions to support the economy.  More importantly, Bernanke telegraphed that another round of easing is on the table but no formal decision has been made as of yet.

Is that QE3 or QE4?  Either way, Bernanke and friends are already introducing the United States to the same rate structure as Japan.  Now we just have to see what more forms of Utopia Juice they can cook up to serve the masses.  Hopefully it is not what they drank in Jonestown.

JON C. OGG