Coming Changes to Investment Banks

by Michael Keane

A few things happened in the last couple of weeks in the IPO arena that strengthens the desire to having  decentralized value more prominent. The not so wonderful feelings of fear and greed were (and are) currently present in the WeWork, Peloton, and Saudi Aramco IPO process and it hurt all three companies.

The closely guarded and deeply centralized IPO process did not work well. Conversations in the media like Sonali Basak from Bloomberg are picking up on this topic. First, the IPO of We Work was pulled with the drama of its financials and the CEO. The IPO of Peloton fell flat on its face. Some feel it got taken on the idea that the valuation is for a tech company. The government of Saudi Arabia is doing more than a few things not in its normal behavior in order to get the IPO of Saudi Aramco done. They seem to be rushing through to the IPO, ignoring the security issues as well as the stagnation and possible downward momentum in the price of oil.

One improvement may be the idea of the Dutch auction model that Google used. It just seems that there is a better deal out there for investors when it comes to IPO's. Firms not associated with the company going public like Morningstar and other analyst firms can and likely should be the driver behind how an IPO should be analyzed and sized up for investors. 

Possible investors in all three companies would be served better in its goals of investment with a more visible and transparent IPO process. Sometimes, it can be a bad combination when you have private company investors looking to profit from their investment by having an IPO and investment bankers hungry for that fee. Taken separately, both are fine. But together, the above mentioned issues show up on a regular basis. If a less biased look at the company can happen, new investors, the company, and the market will be better served.

Good luck in all your trading and investing matters! 


**All posts on this blog are information and opinions only. They are not to be considered recommendations to buy or sell any security. Please do your due diligence first before trading and investing. Please direct all questions and comments to the blog, kdkfund@gmail.com, or on twitter @kdkfund.

Rate Cuts Are For Buybacks

by Michael Keane

In an earlier story (link here), our partner KeaneVCC  documented how corporations used the tax cut to buyback their shares. The biggest beneficiaries of this process were the executives as bonuses are regularly tied to stock prices. We like to call this process the executive bonus protection plan based on the idea of higher stock prices equal higher bonuses.

 Now that it is shown that the tax cuts didn't do enough for those outside the executive area, they are gunning for rate cuts.The lower cost of borrowing is needed to continue to buyback shares at a profitable level for corporations.

A cnbc.com article (here) on the topic from Jeff Cox addresses this exact issue.   Bloomberg TV also spoke about this topic with David Levovitz from JP Morgan Asset Management.

This is a warning sign for the economy. Be careful out there. 


**All posts on this blog are information and opinions only. They are not to be considered recommendations to buy or sell any security. Please do your due diligence first before trading and investing. Please direct all questions and comments to the blog, kdkfund@gmail.com, or on twitter @kdkfund.

Invest in Blockchain Now

by Michael Keane

There are many reasons to investigate an investment into the cryptocurrency area. The testimony by Federal Reserve Chairman Powell to Congress over the last 2 days is another strong indicator. Normally, these hearings are regularly noise. But in this case, the testimony related to cryptocurrency was likely a signal.

Together with arguably every member of Congress, Chairman Powell expressed worry and a strong desire get ahead of cryptocurrency and to limit its effect on the global monetary system. You can find the unfiltered testimony here.  Every member of government was in agreement. They even mentioned Facebook multiple times during the testimony. That rarely happens. This should tell you that there is recognition that cryptocurrency is being recognized in a serious manner.

This testimony also should bring back the "fraud" comment from JP Morgan CEO Jamie Dimon about cryptocurrency 18 months ago. But 6 months ago, JP Morgan released news that they have built their own coin and have a large development team doing work. The fraud comment was clearly a stall tactic. I believe Congress and Central Banks around the world are in the same delay "fraud" moment and that they are busy building their teams to handle their responsibilities in the crypto arena. It is interesting that during the testimony, JP Morgan's coin rarely if ever came up. That was not a mistake or oversight.

Some say this testimony is troublesome for cryptocurrency. It actually is the exact opposite. Legitimacy continues to strengthen. Regulation is needed. Now it is up to the cryptocurrency group to assist in helping to build the infrastructure that answers governmental questions and shows its promise to the community.  A recent comment from author and blockchain investor Don Tapscott, related the development of blockchain to the development of the internet around 1995.

Some areas to investigate are chips, platform companies, and software. Per disclosure, KDK Fund does not currently have an investment in the space. Our partner, KDK Options, has an order for Nvidia call options that is not yet filled.


**All posts on this blog are information and opinions only. They are not to be considered recommendations to buy or sell any security. Please do your due diligence first before trading and investing. Please direct all questions and comments to the blog, kdkfund@gmail.com, or on twitter @kdkfund.

Pay Your Price, Not Someone Else's

One of the most important parts of setting up a trade is paying your price for the trade. There are times where the price is right there for the taking right away. Other times, you have to be patient and the price shows up later. But sometimes, the price never shows up. The reaction to the third case will be a great indicator of a trader/investor's level of discipline on trade entry.

Disciplined traders will look at a trade price as not to their liking and walk away ready to find the next trade. They know that the market has a plethora of trade opportunities. Those with faith who continue to improve their learning and execution abilities find moving on from not being able to enter a trade very easy, knowing the next one is right around the corner.

The undisciplined trader will compromise and sacrifice in order to make the trade. They feel a need to make the trade work, even if it means less profit. Those with fear of the market, react more often and do not participate in the market's revenue generating process as well. Generally, ego driven trading will drive the trader investor to make the trade anyway.


Remember that sticking to the calculated entry price is more of a reflection of the trader and their plan than the actual success probability of the trade at that entry price. Letting go of trades that don't go your way should be a regular occurrence. That is ok. Continue to implement your plan. Continue to search for improvements and test those adjustments to verify that they improve your plan.
Faith in the market and one's abilities to learn as they trade are important factors that drive these decisions.

PS - Today's market should provide plenty of opportunity regardless of which side you trade.  Happy trading!

Why Divestment (Selling) Is Important

Have you ever looked at a company that might be in the news for a negative reason and think "How could anyone invest their hard earned money into a company like that?" only to find out that the mutual and retirement funds you invest in purchase shares and end up promoting those exact activities you deplore? If the answer to this question is no, you are probably self made through a business you created. If the answer is yes, as it probably is for 99% of us, there is some work to do to get this issue resolved. Sometimes, either by happen circumstance, or by design, your ability to divest is purposely taken away from you. This book will explore the whys, hows, and derivative results of divestment. 

The basic definition of divestment or divestiture is the act of selling all or a part of an ownership ownership stake in an asset. As with any action, divesting has both positive and negative results,  depending on the motivation behind the sale.

This series will explore the whys, hows, and derivative results of divestment putting a focus on three different areas. The first two areas of importance will focus on the definition of divestment and its role in the investment community. The second part will focus on  the different influences on divestment. and what positive and negative results divesting can create on a company or market. The third part will look at how to bring a more transparent process to divesting for the every day retail investor and how that process will improve the market as a whole.  

There are many different reasons to divest and sell a security or asset. It might not be providing enough profit. The investment may no longer fit into a particular ethos of an investment plan. The investment's management and or the focus of the company may have changed. We will go more in depth with examples into each of these areas and explore how divesting can influence investors returns and success.

The ability to divest from an investment ranges from easy to difficult and depends largely on the level of control that you or your institution has over its portfolio. On the one end, investments into single assets directly by the investor or organization provide the easiest in being able to sell and divest if desired. On the other end, if the investment is part of a mutual, retirement, or pension fund, divesting is actually quite difficult for an individual that has money invested in those funds. There are regular penalties from the fund and sometimes even from the government. As a quick reminder, it is generally best as an investor to have the highest level of control possible. Divestment processes should be part of the investor's checklist before committing capital. You will find that most of the great investors have a high level of understanding what the divestment rules of each of their investments.    

Divestment has many positive and negative effects for investors, the companies or assets being sold, and the overall community at large. The previous sentence should alert you to how integrated ownership of a company or asset is within society. The perspective of the entity analyzing the situation is very important. On the positive side for the investor, divestment provides the opportunity to be cut loose from an under performing asset and an opportunity for making a better investment. Doing so also brings awareness to other owners of that investment. On the positive side for the company or asset, it is an opportunity to analyze why someone is selling their ownership stake in the investment and take action. Sometimes, a large divestment can also bring attention from the larger community, which can bring about positive changes from the community in regards to the asset. On the negative side, the investor may not have another investment making the same return ready to replace the one being sold. For the company, the immediate results are rarely positive in terms of return. For the community, issues of the company being able to continue providing value to the community can become an issue.  More detailed examples of the results are in the book.

Having a greater understanding of the importance of selling an investment is critical not just for the investor, but for the company, the market, and society as a whole. Allowing for a more transparent lens when looking at divestment will bring the market closer to balance and parity. Be sure to check on your investments and take a look to see if there are any that you would not like your hard earned capital promoting. Selling might create an opportunity for your capital to be invested in something that you not only hold dear, but can also bring profits. 

Financials In Correction Mode

This week, financial stocks have entered a correction mode. They are now more than 10% off of their highs. The below chart of Financial ETF XLF shows the decent. The chart is weekly to show the decent easier.  The 20 day and 50 day moving averages confirm the downtrend.

Ford Dividend Received

A dividend was received by Ford. Portions of the dividend have been used for charity, payments to investors, and back into the account.

Dividend reinvestment is very important to KDK Fund. Over 15% of the dividend received was from reinvesting previous dividends.

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 **All posts on this blog are information and opinions only. They are not to be considered recommendations to buy or sell any security. Please do your due diligence first before trading and investing. Please direct all questions and comments to the blog or to kdkfund@gmail.com or on twitter @kdkfund.