While Americans are chomping down on turkey and pie this week, everyone involved in the energy world will be closely watching the Thanksgiving Day meeting of the OPEC in Vienna, Austria.
Oil prices have tumbled dramatically in recent weeks. Oil now trades below $80 a barrel and most Americans can buy gas for their cars for under $3 a gallon.
The question is how OPEC will respond. So far, energy producing nations and companies haven’t scaled back product even though it’s pretty clear there’s an over supply of oil on the world market.
Experts who follow OPEC and the oil market closely are evenly split over in their bets on whether OPEC will vote to cut product. It will almost certainly come down to Saudi Arabia, which has refused to scale back production because it wants to squeeze its regional nemesis Iran, which is reeling from sanctions over its nuclear program.
All of this geopolitics makes it a strange time to be an energy investor. Many oil and gas company stocks have been pummeled as prices drop. But as any good investor knows, when others flee, it can be an ideal time to pick up a bargain buy.
Gas stations: Perhaps the best way to invest in energy despite weak oil prices is to buy shares of gas station retailers. Tom Kloza, an analyst with the Oil Price Information Service, asserted that when drivers see bargain gas prices posted, they usually figure the gas station business is suffering.
But in fact, that couldn’t be farther from the truth, since gas retailers are usually buying fuel at even cheaper wholesale prices, he pointed out.
Even more, when gas prices are low, people drive more.
Investors have taken notice. Gas station companies CST Brands(CST) has soared 20% in the last month and Marathon Petroleum Corporation (MPC)is up 14%.
“I’d imagine fourth quarter results for gasoline retailers are going to be the most spectacular they’ve been in a long time,” said Kloza.
Oil prices to rise soon?: While the OPEC cartel has certainly lost significant clout in recent years thanks to internal squabbling and ramped up energy production in the United States, it could still drive up oil prices if it agrees to cut production.
“They’ve got their work cut out (for) them,” said Kloza of OPEC. “There’s a question of whether they can come up with something that at least stops the hemorrhaging at the moment.”
The world market has also been surprised by the resilience of the energy boom in North America, which has continued to grow even as prices have dropped, explained Lars Eirik Nicolaisen of Rystad Energy.
Hedge funds love energy: If you follow the “smart money,” energy isn’t a bad place to invest. The top 10 largest stock-focused hedge funds plowed $4.4 billion into energy stocks last quarter, according to SP Capital IQ.
While it’s hard to say what their exact thinking was behind the move, they’re likely looking at energy as a good long-term opportunity, since most of these firms tend to hold onto stocks for a solid chunk of time, noted Pavle Sabic, the SP Capital IQ analyst who correlated the hedge fund data.
Prices may remain depressed for another year or two, but that’s unlikely to last forever.
But investors need to be on the right side of those deals. Baker Hughes has soared 25% this month, while Halliburton is off by 8%.
Consumer stocks: Another way to possibly profit off energy right now is to buy retail stocks. The holidays are right around the corner, and low gas prices are seen as an extra stimulus for consumers and the economy.
In 2011, Dean O’Malley walked away from a high-paying job with no plans for the future, other than to escape the world of finance.
His IT job at JPMorgan Chase(JPM) had survived the financial crisis, but he had no desire to stick around for the next one. O’Malley had grown tired of the crazy hours, increasing regulation and negative stigma.
“Banking was one of those industries where we were seen as the root of all evil. I felt like I wasn’t really doing any positive work,” the Southern California native told CNNMoney.
Just two weeks after leaving his Vice President of Technology post, O’Malley ran into a friend who opened up a very different career path.
Even though he thought jetpacks looked crazy at first, O’Malley eventually agreed to run day-to-day operations and invest in the new business, which launched in Newport Beach, California.
Three years later, O’Malley is loving life as president of Jetpack America, a business he’s led to $1 million in annual gross revenue. He’s making just a fraction of what he took home at JPMorgan, but O’Malley said he’s in it for the long haul.
“Not a day goes by that I don’t thank myself for walking away from the old job,”said O’Malley, who is 38 years old. “My satisfaction is infinitely higher and I have a passion for what I do.”
Jetpack America eventually expanded to San Diego and more recently Las Vegas. Now it’s looking to open seasonal spots in San Francisco, Seattle and Vancouver.
Up-and-coming water sport: O’Malley describes jetpacks as the “perfect mix between jet skiing, parasailing and even scuba diving.” Riders are propelled by water that is sucked up by a jet ski or a pod and then shot to the jetpack through a hose.
Not only can jetpack riders zoom 30 feet into the sky, but they can dive underwater and then shoot back to the surface.
This extreme experience made the new job lots of fun for O’Malley. Still, he faced a number of obstacles in the beginning.
After 14 years in the regulation-heavy banking industry, the jetpack business felt like the Wild West. He was in the unnatural position of having to invent many of the processes and structures.
O’Malley and his staff also needed to figure out how to make riders feel comfortable doing something foreign and potentially dangerous. They created an extensive training video to show guests and opted to give riders helmets with earpieces that allow them to hear their instructors.
When I ask Jana Rich to work her magic on me, I have the warm yet affirming sensation of being in a nurturing therapist’s office.
She leans forward across the light-wood conference table, clasps her hands together, and asks me: Why did you move across the country for that job? What is it you really wanted to do? And what about that other dream? Occasionally she interrupts, as though testing my storytelling abilities as much as my professional narrative, to clarify, to draw me out.
It makes sense that Rich, in another universe, imagined herself getting a Ph.D. in clinical psychology. Where she has ended up is cushier: She is one of Silicon Valley’s top recruiters, with a hot roster of clients. “Who’s your favorite person to name-drop?” I ask her. “Sheryl Sandberg,” she says with an almost girlish giggle. (Sandberg’s a friend, not a former client, but, y’know … six degrees.) On Rich’s client list, past and present? Jack Dorsey and Dick Costolo of Twitter, Larry Page and Sergey Brin of Google, Dropbox, Uber, Square, Eventbrite.
Still, because those big companies are reluctant to dig too deep into the startup world, says Andreessen Horowitz partner Matt Oberhardt, it’s a pretty open market for someone like Rich. And there are possibly huge payoffs: During the first tech boom, executive search firm Heidrick Struggles bought into Google as part of its agreement to place the company’s new executive chairman (Eric Schmidt). After the company’s initial public offering in 2004, a spokesman said, Heidrick sold its Google shares, netting the company $128 million. No surprise, then, that Rich Talent Group wants equity as part of its fee “whenever possible,” Rich writes over email — which makes her especially hungry for early-stage clients.
Rich is high-flying amid these amazingly fast-growing companies and exorbitant evaluations; she is the insider’s insider, and yet she is obsessed with giving self-defined misfits a way in.
Right smack in the middle of this frenzy is the friendly yet seemingly unremarkable Jana Rich, a 47-year-old headhunter with an uncanny skill for connecting. Her work is “touchy-feely,” as she puts it — she doesn’t hunt down coding whizzes but rather charismatic and public-facing leaders in the C-suite: chiefs of executive, marketing, public relations, people operations. In person, she is professional (duh) and warm, with auburn coiffed hair; but she keeps a long jacket on the whole time we speak, and a young member of her team hangs nearby at all times, as though waiting to jump in if I ask the wrong thing. Rich’s touchy-feely work is an $11 billion industry worldwide, according to the Association of Executive Search Consultants. And Peter Felix, president of the organization, explains that an industry like this one, which is dependent on wealthy clients doing well, has benefited from the tech boom.
Every day, Rich, the sole partner of Rich Talent Group, based in San Francisco, uses those psychoanalyst-style questions not just on ambitious individuals hankering for a new corner office but on the growing companies themselves. “Sometimes founders don’t know what they really want, or they think they know but it isn’t really what they need,” she tells me. A case study is when top dogs at Twitter, including Costolo and Dorsey, she says (and Twitter confirms), came to her undecided about what they wanted in a marketing hire — a product marketer? A PR whiz? It was up to her to get it, to figure out not only what the three of them wanted and what a potential hire wanted but also what the company itself, breathing entity that it is, needed. Warby Parker’s Blumenthal adds that while she searches, Rich is a kind of behind-the-scenes executive coach, which, for young founders like Blumenthal, is a nice security blanket.
And though being a startup adds a nice sheen of cool to the operation, it isn’t scrappy. Rich is already profitable and is certainly well-paid for the touchy-feely. Recruiting experts say Rich’s fees could be cheaper than the hundreds of thousands most search firms charge per placement; her group is small and should have low overhead. Generally, recruiters are paid a retainer and may also take a third or more of the future hire’s first year salary (a strategy some, like Blumenthal, say is awkward, because headhunters are also involved in salary negotiations). Rich says she follows the retainer model and won’t tell me how much she’s taken in or talk specifics — but says the group is already profitable.
The risk could explode in her face. Executive search is one of many peripheral industries in the Valley; if the tech boom continues, Rich and others will keep raking it in. If it doesn’t, it could blow up; lower-level human resources professionals struggled after the first bust and the financial crisis. “Many search firms consider high-tech very risky and don’t put all their eggs in one basket,” Felix said. That said, there are some competitors, like Daversa Partners (which made some high level placements at companies like Uber); then there are companies with storied corporate histories like Russell Reynolds, Rich’s old stomping ground, or Spencer Stuart.
Entrepreneurs are snobbish about working only with other entrepreneurs.Luckily, San Francisco is mecca for former weirdos, geeks and nerds turned powerful. The latest outsider-turned-insider is Jonathan Mildenhall, the new chief marketing officer of Airbnb, whom Rich calls the placement she is most excited to have made — “if it works out” (he started in May). Mildenhall, externally, like Rich, is no outsider. He came to Airbnb from Coca-Cola, a marketing machine if ever there were one. But on closer inspection, he too seems like an unconventional fit. He jumped from the corporate world to the startup one, from Atlanta to San Francisco. He’s a gay black man in an interracial partnership who knew he wanted to head to the left coast; and Rich more than understands that itch. (Airbnb’s press team declined multiple requests for comment.)
Rich’s own itch to strike out alone might be more aptly described as persistent pebble-in-shoe syndrome, borne out of her sense of her own pariah status. “Everyone wants to find their unicorn — and she’s sort of the ideal unicorn hunter,” says Neil Blumenthal, co-founder and co-CEO of the eyeglass startup Warby Parker, who’s retaining Rich to hire a VP of human resources. He adds: “And the other thing is, she just knows every single person.”
“Sometimes founders don’t know what they really want …”
That’s kind of important these days, in the land of money and opportunity. Perhaps no stretch of town is as red hot — economically speaking — as Silicon Valley, from San Francisco to Oakland to San Jose. Remember that crazy startup activity that launched the greatest tech boom (and don’t forget bust) in history? According to job growth figures from Santa Clara and San Francisco counties, the Valley is right back where it was back then, and even surpassing the first time around. Plus, there’s some $17 billion in venture capital funding out here — compared with $3.9 billion in New York, according to data from the National Venture Capital Association.
At Russell Reynolds, being an outsider meant loving startups more than big corporations. At Stanford Business School, it meant being part of the group that called themselves “the poets”; they cried after math exams together in the middle of campus. And before all that, it was being gay in the “backwoods” Maine town of Norway where she grew up. Adopted by a 45-year-old bank teller mother and a machinist father who passed away when Rich was 6, she said she “always knew I was different.”
Today, Rich is married — has been for five years; they’ve been partners for 18 — to Jill Nash, a communications exec whom Rich met on one of her first search jobs ever, as a junior recruiter working on a placement for Charles Schwab. “At first, when I met her, I thought: country club, conservative Republican,” she laughs. An ironic lapse in judgment for someone whose job it is to judge personality.
She looks at home in casual attire at her office, located in a white cabinlike building inside San Francisco’s impossibly beautiful Presidio Park; a deck looks out toward the Golden Gate Bridge and a pen of horses — yes, horses. (Rich tells me: “It’s so nice, if you’re having a bad day or something, you just go talk to the horses a little!”) The office is entirely well-coiffed women (all white, on the day I’m there) puttering away in front of Mac screens and big windows. It looks like a chic, wealthy summer camp.
Rich’s real advantage, though, isn’t her years of experience or her Rolodex or her fashionable “outsider” label. It’s that entrepreneurs are snobbish about working only with other entrepreneurs. They want fewer lawyers in the way, quicker movements, all the stuff of the “move-fast-and-break-things” economy. Which means she had almost no choice in the matter: To work with startups, you’ve gotta be a startup.
This article originally appeared in Ozy. CNNMoney and Ozy are partnering to tell stories from the “Real Economy.”
When he was at Goldman Sachs, emerging market strategist and author Jim O’Neill had Iran on his list of “Next 11″ countries — those offering the best opportunities for sustainable growth.
Oil and gas reserves
Iran’s energy sector has been starved of technological know how. A return to the fold could change all that, and the potential is enormous. “The Iranian gas production can explode,” said Fereidun Fesharaki, chairman of FACTS Global Energy. “It can supply huge amounts of gas and that gas has not been developed.”
Iran sits on 33 trillion cubic meters of natural gas, or 18% of global reserves, according to the 2014 BP(BP) World Energy Report. With its giant South Pars field, Iran ranks number one in the world ahead of Russia and Qatar.
There’s plenty of oil too. Iran has the second largest proven reserves in the Middle East, behind only Saudi Arabia. At 157 billion barrels, those reserves account for more than 9% of the global total.
Playing catch up
Sanctions have done major damage. Iran’s gross domestic product has shrunk by a quarter over the past three years. But at $1.2 trillion, it’s still the world’s 18th largest economy.
Investment strategists say allowing Iran’s banks to trade in dollars again would give the economy a huge shot in the arm.
“The growth potential is enormous because you have had an economy which, to a great extent for the past 35 years, has been cut off from the world,” said Eddie Kerman, board member at Turquoise Partners, an investment firm based in Tehran.
“That’s been particularly the case for the past seven years [in banking],” he said.
A hot stock market
Iran’s mature stock market is often overlooked. It is the second biggest in the region by market capitalization (behind Saudi Arabia), and gained 130% last year on hope that sanctions would be lifted following a change of government.
Foreign investors looking to jump on the bandwagon will find established companies, particularly in manufacturing.
Unlike economies such as Myanmar and Zimbabwe, which have seen their industrial sectors crumble due to a lack investment, Iran sustains a large manufacturing base.
Iran is the 15th largest steel producer in the world, and its auto industry accounts for 10% of GDP, making twice as many cars each year as Turkey.
If your closet is bursting at the seams and putting together an outfit is a daily treasure hunt, it’s time to get your wardrobe organized.
“If you can’t get dressed in a smooth and easy manner in the morning, that can throw your entire day off,” said professional organizer Stacey Agin Murray.
The first step to establishing an efficient closet is taking stock and clearing out unworn inventory. Here’s the reality: Most of us only wear 20% of our closet.
Don’t dump your entire closet on your bed. “Do it section by section to avoid getting overwhelmed,” Murray advised. Create three piles: keep, donate and try on. Once you have everything sorted, go through the try on pile to see what stays.
Bruce Weinstein is the public speaker known as The Ethics Guy. His forthcoming book is, “The Good Ones: Ten Crucial Qualities of High-Character Employees,” and he maintains the website, TheEthicsGuy.com.
The report understandably sparked outrage. But even before that, this wildly popular car-sharing service had raised several disturbing ethical issues:
1. Multitasking Drivers. Uber’s main selling point — that nearby drivers are notified immediately of your desire to get a ride — is also its chief drawback, at least from a safety perspective. After all, how does a driver learn about your need in the first place? By checking a mobile device in the car. But doing so dramatically increases the rate of having an accident.
Uber has not addressed this issue, as far as I can determine, but perhaps that’s not surprising. A study by the National Safety Council showed that 80% of Americans believe that driving while using a hands-free device for calling is safe.
Still, there is no such thing as a free lunch. Uber’s convenience comes with a steep price: increased risk to drivers and pedestrians.
What concerns me, however, is not the invasion of privacy per se, but the fact that most consumers don’t know it’s going on. Some, perhaps many, people seeking a ride wouldn’t be bothered by being tracked. In our post-9/11 world, city governments have cameras in an increasing number of public places.
But there are two important differences between the God-view tool and what law enforcement officials do. First, most of us recognize that the police force’s policy is an attempt to protect the public from harm. Uber’s tracking device is merely a way to advance its business interests. Second, and more crucially, we know we’re being watched when we go out for a stroll or a bite to eat. Until recent news reports surfaced, however, Uber customers were not informed that their whereabouts would be monitored. That’s a moral difference that matters.
4. Leadership. It was upsetting enough when Michael made his crack about digging up dirt on journalists who dared to criticize the company. But CEO Kalanick’s response suggested lax leadership. “Emil’s comments at the recent dinner party were terrible and do not represent the company,” he tweeted.
That’s almost as lame as “mistakes were made,” the non-apology apology by President Richard Nixon’s spokesperson Ron Ziegler about Watergate. Castigation without consequences is meaningless. As Andrew Keen suggested Thursday on CNN.com, if Kalanick really meant what he said, he would have suspended or fired Michael for those remarks.
Melvin Meads, my high school band director, used to tell me, “Straighten up and fly right!,” after I acted up. Recently, when a group I was with used Uber to summon a ride, I was impressed by how quickly a car appeared, and how easy the service is to use, since no money exchanges hands. But such convenience isn’t enough to negate the above concerns.
Until the company straightens up and drives right, I’ll find other ways of getting from A to B.
Super Mario’s on the case: Not to be outdone, ECB President Mario Draghi sparked a rally in European stocks by suggesting more aggressive action is coming to fight off deflation.
Draghi spoke about an “increasingly challenging” inflation outlook for the eurozone and promised the ECB will do “what we must to raise inflation and inflation expectations as fast as possible.”
The comments raised hopes among investors that the ECB will start to buy government bonds, an escalation of the central bank’s emergency efforts. It’s not clear how much that will help the economy though because European bonds are already trading at historically low levels.
Now what? Friday’s market action highlights the bizarre twist that a struggling economy can sometimes be good for the stock market.
Central bankers in China and Europe are only acting in response to lackluster growth numbers, but the aid is welcome on Wall Street.
By contrast, the U.S. continues to chug along. That’s why the Federal Reserve has halted its bond-buying exercise and is preparing to raise interest rates sometime next year for the first time since June 2006.
Where’s the beef? You might want to check the stock market.
Shares of West Coast-based burger chain Habit Restaurants(HABT) surged nearly 120% in their market debut Thursday! Why all the fuss for a hamburger joint? This isn’t some sexy tech stock like GoPro(GPRO).
Habit is relatively small, with just 113 Habit Burger Grill restaurants. The majority of them are in California.
But it is growing rapidly. Sales were up nearly 50% in the first three quarters of the year compared to the same period of 2013. It’s also profitable. Net income soared more than 60%.
And apparently it makes a ridiculously good burger.
McDonald’s(MCD) had the worst. Burger King(BKW) and Wendy’s(WEN) fared poorly as well. So the strong performance for Habit could be bad news for the big chains. Consumers don’t just want cheap burgers. They want them to taste good too.
The top of the Consumer Reports list was dominated by smaller companies that make so-called “better” or “gourmet” burgers, including California cult favorite In-N-Out Burger, Smashburger and Five Guys Burgers Fries.
Cheeseburgers in paradise. So don’t be surprised if Habit’s success leads to a wave of burger initial public offerings in 2015. Smashburger has been rumored to be considering an IPO for some time. There are also reports that drive-in chain Checkers is mulling one. And Shake Shack, the chain started by New York restaurant legend Danny Meyer, has reportedly already picked bankers for an offering,
These three companies, like Habit, all have backing from prominent private equity firms. That increases the chances that they may one day go public.
Aaron Allen, a global restaurant consultant, added that there is a lot of appeal for many of these burger chains in international markets. Shake Shack already has locations in London, Dubai, Istanbul and Moscow. So an IPO could be one way to help fund international expansion.
It also helps that investors seem to have an insatiable appetite for “fast casual” restaurant stocks these days. Mediterranean restaurant chain Zoe’s Kitchen(ZOES) and grilled chicken franchise El Pollo Loco(LOCO) are two of the hottest IPOs of 2014.
Still, we are just talking burgers and fries here. There’s tons of buns out there. A saturated market can be as unhealthy to an investor as saturated fat is to your body.
In addition to all the companies I’ve mentioned, consumers and investors have many other burger options on their menu.
Jack in The Box(JACK) has been a hit on Wall Street this year … but that’s more due to the success of its Chipotle(CMG) competitor Qdoba. Its burger business is reporting much slower growth. And it finished second-to-last in the Consumer Reports rankings.
Three other burger stocks, Steak n Shake owner Biglari(BH), Fuddruckers parent Luby’s(LUB) and Red Robin Gourmet Burgers(RRGB), are all down this year.
“Americans are always going to eat hamburgers. But there needs to be shakeout,” Allen said. “Everyone on the field is chasing the same ball. There are too many companies in the burger market competing for the same consumer.”
So should investors break their bad “Habit” of buying restaurant IPOs? Probably. It’s very risky. Just like fashion. What’s trendy in the food business now may no longer be hot in a few years .
Look at Krispy Kreme Doughnuts(KKD). It’s the poster child of food fads. The stock had an amazing run for a few years after it went public in 2000. But the stock is now 60% below its all-time high from 2003.
That’s not a tasty return on your investment.
Speaking as a child of the nineties… A quick Name that Tune reader shout-out. While getting ready to write this story, I decided to tweet the following song lyric and asked for the band and album the song was on. “Never thought you’d habit.”
At the box office this weekend, the odds are ever in favor of “The Hunger Games.”
Lionsgate’s “The Hunger Games: Mockingjay – Part 1,” the first act of the final installment of the “Hunger Games” series, opens this weekend along with big expectations.
The film is projected to have a huge box office weekend – somewhere between $130 million and $150 million. That would make it the biggest opening weekend ofany film this year.
The film is also targeting the top overall box office of 2014.
In fact, if “Mockingjay – Part 1″ follows the same box office trajectory as last year’s “Catching Fire,” which reportedly took in $380 million in a month, it will top 2014′s current top film, “Guardians of the Galaxy,” which has grossed $330 million.
“‘Mockingjay – Part 1′is a part of a franchise that seems to have a never ending supply of audience,” said Paul Dergarabedian, a box office analyst for Rentrak.
If the movie is the biggest of 2014, it speaks to not only the popularity of the series, but just how lackluster the year has been for the film industry.
While the fall season has rebounded somewhat with a steady string of hits, like Fox’s “Gone Girl” and Disney’s “Big Hero 6,” the rest of the year shouldn’t be much competition for the heroic Katniss Everdeen.
The holidays are traditionally slated with critically acclaimed but not blockbuster films. The only potential blockbuster is Warner Bros.’s final “Hobbit” film which wraps up on December 17th, but the top film in that series only made $303 million domestically.
The film’s production company, Lionsgate(LGF), should also be watching “The Hunger Games’” performance closely this weekend.