BrewDog’s Golden Ticket Idea is Looking Tarnished
Three "misjudged" tweets have cost BrewDog’s CEO, James Watt £470,000. Watt has personally compensated customers after admitting he got “carried away” with one of the firm’s sales promotions. The craft brewer had, Willy Wonka-style, hidden 50 gold-coloured cans in its crates of beers, but Watt described these as "solid gold cans" — leading to a media frenzy to find them. Winners were a bit underwhelmed to discover they were gold-plated, and worth considerably less. After the Advertising Standards Authority got involved, Watt revealed he had offered a "cash equivalent" to winners instead. Most have taken this option, with Watts now owning 40 of the gold-plated versions. Perhaps he’s hoping publicity around the case might make them a collector’s item on eBay one day.
Vanguard is Still on Top
US investor Vanguard, best known for its passive investment funds, is pulling in punters with its no-frills, low-cost investment platforms. In the UK, it signed up more new customers last year than Hargreaves Lansdown and AJ Bell combined. The platform, which offers Isas, personal pensions, and general investment accounts, only offers access to Vanguard funds, although many of its trackers have been awarded Morningstar Analyst Ratings of Gold. Vanguard said most of these new customers invested in passive tracker and ETF funds, but it does also offer some managed fund options.
Apple CEO Suffers Salary Bite…
Most people are clamouring for pay rises to help cope with rising living costs, but Tim Cook, chief executive of Apple, is bucking the trend. This week, he told investors that he is taking a pay cut and reducing his remuneration package by 40% in 2023, compared to the year before. Apple has previously been criticised for its executive pay, but the company says Cook requested this change. Whether other highly paid bosses will follow in their footsteps remains to be seen, but issues of CEO pay, particularly in relation to average wages, have become an ESG issue in recent years – and most chief execs can presumably afford to make such swingeing cuts, even in times of rising inflation. After all, a 40% pay cut might sound dramatic but it still leaves Cook with a “target compensation” of $49 million for 2023.
… But Jack Ma Sets Ant Free
China’s richest man, Jack Ma, has given up control of Ant Group, two years after his company failed to float on the stock market in what was expected to be the biggest company listing ever. At the time, tech billionaire Ma was critical of the Chinese regulators, and his step back is being seen by many as a way of appeasing the authorities. Analysts also believe this shows the determination of the Chinese ruling party to reduce the influence of large private investors. Ma first made his fortune with the launch of Alibaba, widely known as the Chinese eBay, and Ant Group runs a number of businesses including Alipay. Ma’s shareholding in Ant is now just 6.2%, down from 53%.
Branson’s Satellite Hopes Crash to Earth
Clearly, it’s not been a good week for tech billionaires. For the UK’s own Richard Branson, Virgin Orbit saw its plans to launch the UK’s first satellites fizzle out when his rocket failed to get its cargo into er, orbit. The US-based company says it plans to return to the spaceport in Cornwall with another attempt later this year, once it understands why the mission failed. This news has been seen as a damaging setback for the UK, which is looking to grab a slice of the growing commercial satellite market.
It is also clearly a blow for Branson, who like Jeff Bezos and Elon Musk has long been involved in the billionaire space race. This week’s attempt means Branson is now lagging his rivals when it comes to launching rockets into orbit – but only just. In total, Branson launches have been successful 91% of the time, Bezos can claim a 95% success rate, while Musk can brag that 97% of his SpaceX launches have gone as planned. Perhaps it is no surprise Musk is the only one planning spaceflights to Mars.
HSBC’s Green Credentials Go Up in Smoke
HSBC’s assertions that it will “phase down” its fossil fuel financing look a little premature, after it emerged this week that the bank was funding a new coal mine in Germany. If that doesn’t look bad enough, a local village will be bulldozed for the site to go ahead, and according to the report by the Bureau of Investigative Journalism, senior figures at the bank recommended that HSBC’s involvement with the multi-million loan to energy giant RWE should not be publicised. But don’t worry, though, the company is still boasting about planting 2 million trees in the UK. It’s not hard to see why it was slammed by the Advertising Standards Authority last year for trying to "greenwash" its reputation.
FCA Admits Errors in Non-Apology Apology
The Financial Conduct Authority stopped short of a full apology when admitting it made errors in the Blackmore mini-bond scandal, which saw investors lose around £46 million in these unregulated investments. Writing to the Commons treasury select committee, chief executive Nikhil Rathi said “regrettable human error” meant it had not passed on “the full suite of information” it had gathered to the police before the collapse in of Blackmore Bond and London Capital & Finance – which flogged many of these products to ordinary investors. He also said the suggestion that the FCA has taken “no action in relation to Blackmore would not be correct”.
However, it is hard to see how the action it did take made any material difference to affected investors. This non-apology apology, where something is regretted rather than saying sorry and making amends, seems at odds with the independent review into the FCA’s handling of the affair. The review concluded the watchdog was “wholly deficient” in its handling of information supplied by third parties, and missed a number of red flags about London Capital & Finance before it collapsed. We're still waiting on the FCA's report on LC&F.
Cold Snap Freezes Insurance Dividends
Direct Line might be skating on thin ice with its investors after cancelling its dividend payment and issuing a profit warning. The insurer blamed the cold snap in December, which it said resulted in soaring weather-related claims, including burst pipes and flooded homes. Investors, however, might point out that now and freezing temperatures are not uncommon during the winter months. Direct Line says inflation has also pushed up claims costs, particularly for car repairs. Investors may now be eyeing how other insurers have fared in the recent cold snap.
The Cozzy Livs Didn’t Cancel Christmas After All
The doom-mongers seem to have been wrong. People might be cutting back on many things, but company results published this week indicate that even in straitened times we still want to celebrate Christmas. Tesco and Sainsbury’s both reported buoyant sales of food and drink over the past quarter, with sales of champagne and Prosecco helping boost returns at Sainsburys. Meanwhile, M&S has seen both food and clothing sales rise. All these retailers stressed a focus on value had been key to their success, with Sainsbury’s crediting prominent price matching labels with Aldi and Lidl. Tesco said it had seen customers “trade down” price ranges. This has boosted sales of its value ranges but also meant it had picked up sales for its premium ranges from shoppers switching from other stores.
Terry Smith on Meta and the Metaverse
Terry Smith's annual letter to investors is always worth reading. The Fundsmith fund manager was critical on the volume of money that Meta has funnelled into the metaverse, which, to date at least, has failed to attract users or revenue in meaningful numbers. Smith says that without this the fund would own “a leading communications and digital advertising business on a single-figure price/earnings ratio”.
Meta wasn’t the only large holding criticised by the fund manager, with Unilever, again, in the frame. However, the manager said he would be sticking to his stated policy of buying good companies, not overpaying, and then "doing nothing".
