Latest news with #BrendanMcDermid
The Star
3 days ago
- Business
- The Star
Tax bill contains 'sledgehammer' for Trump to retaliate against foreign digital taxes
FILE PHOTO: The Amazon logo is seen outside its JFK8 distribution center in Staten Island, New York, U.S. November 25, 2020. REUTERS/Brendan McDermid/File Photo WASHINGTON (Reuters) -U.S. President Donald Trump would have the power to retaliate against countries that impose special digital service taxes on large U.S. technology companies like Amazon and Alphabet, under a provision in the sweeping tax bill that Congress is considering. "If foreign countries want to come in the United States and tax US businesses, then those foreign-based businesses ought to be taxed as well," said Representative Ron Estes, a Kansas Republican who helped craft the provision. Some 17 countries in Europe and others around the world impose or have announced such taxes on U.S. tech products like Meta's Instagram. Germany announced on Thursday it was considering a 10% tax on platforms like Google. The levies have drawn bipartisan ire in Washington. Democrats who oppose much of the tax bill have not spoken out against the retaliatory tax provision, found in Section 899 of the 1,100-page bill. Trump has been pressing foreign countries to lower barriers to U.S. commerce. Under the bill, Congress would empower his administration to impose tax hikes on foreign residents and companies that do business in the U.S. The U.S. Constitution gives Congress, not the president, the power to decide on taxes and spending. The provision could raise $116 billion over the next decade, according to the Joint Committee on Taxation. But some experts warned that an unintended consequence of retaliatory taxes could be less foreign investment in the U.S. "This new Section 899 provision brings a sledgehammer to the idea that the United States will allow itself to be characterized as a tax haven by anyone," said Peter Roskam, former Republican congressman and head of law firm Baker Hostetler's federal policy team. The House of Representatives narrowly passed the bill on May 22, and it now heads to the Senate. Democrats broadly oppose the Republicans' tax and spending bill, which advances many of Trump's top priorities such as an immigration crackdown, extending Trump's 2017 tax cuts and ending some green energy incentives. Section 899 would allow the Treasury Department to label the foreign tech taxes "unfair" and place the country in question on a list of "discriminatory foreign countries." Some other foreign taxes also would be subject to scrutiny. Once on the list, a country's individuals and its companies that operatein the U.S. could face stiffer tax rates that could increase each year, up to 20 percentage points. Joseph Wang, chief investment officer at Monetary Macro, said Section 899 could help Trump reduce trade imbalances because if foreign investment decreases it could depreciate the U.S. dollar. This in turn could spur exports of U.S. products by making them cheaper overseas. Portfolio interest would remain exempt from any tax Trump imposes, but some expertscautioned that taxing foreigners could quell foreign investment in the U.S. "Foreign investors may change their behavior to avoid the taxes in various ways, including potentially by simply investing elsewhere," said Duncan Hardell, an advisor at New York University's Tax Law Center. PUSH BACK TO GLOBAL MINIMUM TAX The new approach follows the 15% minimum global corporate tax deal negotiated by the administration of Democratic former President Joe Biden. Republicans, led by Representative Jason Smith of Missouri, chairman of the House tax committee, opposed that approach, arguing it unfairly benefits Chinese companies. Foreign countries have invoked that global minimum to slap higher taxes on U.S. tech firms, if they concluded that generous U.S. tax credits for research and development pushed their tax burden below that 15% threshold. Trump in February directed his administration to combat foreign digital taxes, but theywere not addressed in the trade deal announced in May between the U.S. and the United Kingdom, which imposes a 2% levy on foreign digital services. It was unclear if the Treasury Department would actually use the new authority if it becomes law,or if the mere threat of action would convince other countries to change course. The department did not share its intended strategy when asked. (Reporting by Bo Erickson; editing by Andy Sullivan and David Gregorio)
The Star
4 days ago
- Business
- The Star
Salesforce raises annual results forecast on strong cloud spending
FILE PHOTO: The company logo for is displayed on the Salesforce Tower in New York City, U.S., March 7, 2019. REUTERS/Brendan McDermid/File photo (Reuters) - Salesforce raised its revenue and adjusted profit forecast for fiscal 2026 on Wednesday, as the enterprise software provider benefits from strong cloud spending while ramping up monetization of its artificial intelligence agents. Shares of the company rose around 3% in extended trading. Cloud spending from major enterprises has remained resilient even amid global macroeconomic uncertainty over the past few months, as companies invest heavily in artificial intelligence to modernize their digital infrastructure. For Salesforce, higher cloud spending bodes well for its efforts to ramp up monetization for its AI agent platform, Agentforce, as it bets big on the rise of agentic technology to spur adoption of its software offerings. The company has been investing heavily in expanding both its Agentforce platform and its footprint across the globe in an attempt to tap into newer markets with high demand for automation and cloud services. Salesforce bought data management platform Informatica for about $8 billion on Tuesday, looking to bolster its prominent data tools and tighten management of how data is processed and deployed across its portfolio. The company's re-entry into big-ticket M&A after years on the sidelines sparks concerns about Salesforce's ability to return to double-digit growth without relying on acquisitions. The company expects fiscal 2026 revenue to be between $41 billion and $41.3 billion, compared with its prior forecast range of $40.5 billion to $40.9 billion. It raised its full-year forecast for adjusted earnings per share to a range of $11.27 to $11.33, compared to its previous forecast of $11.09 to $11.17 per share. The company reported first-quarter revenue of $9.83 billion, beating estimates of $9.75 billion, according to data compiled by LSEG. (Reporting by Zaheer Kachwala in Bengaluru; Editing by Alan Barona)
The Star
6 days ago
- Business
- The Star
Olympics-LA28 brings on Snowflake as data collaboration provider
FILE PHOTO: The company logo for Snowflake Inc. is displayed on a banner to celebrate the company's IPO at the New York Stock Exchange (NYSE) in New York, U.S., September 16, 2020. REUTERS/Brendan McDermid/File Photo (Reuters) -Data cloud analytics company Snowflake has been appointed the official data collaboration provider for the 2028 Olympic and Paralympic Games in Los Angeles as well as Team USA, the American company said on Tuesday. The Bozeman, Montana-based company said the partnership will enable data collaboration across Olympic and Paralympic Games for critical functions, which include athletes training data and fan engagement. "Snowflake's fully managed platform lets Team USA centralize critical information for sharing and collaboration such as athlete training data, health records, nutrition sources and more, ensuring every competitor has the knowledge and support required to win," it added in a statement. "Team USA can use Snowflake's flexible software architecture to connect and enrich fan data in order to build a complete profile of each fan and then engage with them in a personalized way. "This helps Team USA bring fans closer to the action by delivering interactions that resonate with their interests—whether watching from home, following on social channels or attending events." The Games will take place from July 14-30, 2028, and the Paralympic Games from August 15-27, 2028. "As we progress toward 2028, our capabilities will continue to evolve and the opportunities to collaborate with Snowflake on data collaboration enhancements are paramount," said John Usher, CEO of the U.S. Olympic and Paralympic Properties. "This partnership enables us to scale efficiently and achieve our innovation goals for LA28 and Team USA." (Reporting by Aadi Nair in Bengaluru. Editing by Mark Potter)
The Star
26-05-2025
- Business
- The Star
Asian hedge funds regain lost ground in May, increasing leverage
A trader works on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., April 8, 2025. REUTERS/Brendan McDermid/File Photo HONG KONG: Asian equity-focused hedge funds have risen in May, erasing April's tariff-driven losses and returning to year-to-date highs on the back of broad market gains. Asia-focused fundamental long-short hedge funds have posted a gain of 1.6% so far this month, bringing year-to-date performance back to the first-quarter high of 6.1%, according to a Goldman Sachs note citing data as of May 22. A strong stock market rebound, fueled by the U.S.-China agreement to temporarily slash tariffs, helped regional managers recover from early April losses, the bank said. By country, China-focused fundamental managers have returned 1.3% in May, while Japan-focused peers are up 0.8%, Goldman Sachs estimated. However, the gains lag major benchmarks, as many funds had aggressively cut positions amid extreme volatility in early April. The MSCI Asia-Pacific Index has advanced more than 4% this month. "The V-shaped recovery was hard to trade for some," said Patrick Ghali, managing partner of hedge fund advisory firm Sussex Partners. Depending on positioning, Asian hedge funds' performance has diverged since April and "we will see a lot more dispersion of returns", he added. Goldman Sachs noted dispersion is particularly high in hedge funds trading Japanese shares. Despite ongoing tariff and geopolitical uncertainties, most hedge funds appear more willing to take on risk. Net exposure among Asian equity hedge funds jumped to 50.8% as of May 22, up from 46% at the end of April, Goldman Sachs says. - Reuters
Business Mayor
24-05-2025
- Business
- Business Mayor
ValueAct takes a stake in Rocket Cos. Here's how the activist may help lift the share price
FILE PHOTO: A banner celebrating Rocket Companies Inc., the parent company of U.S. mortgage lender Quicken Loans, IPO is seen on the front facade of the New York Stock Exchange in New York City, U.S., August 6, 2020. Brendan McDermid | Reuters Business: Rocket Companies is a financial technology company consisting of mortgage, real estate and personal finance businesses. Its segments include Direct-to-Consumer and Partner Network. In the Direct-to-Consumer segment, clients can interact with Rocket Mortgage online, as well as with the company's mortgage bankers. Rocket markets various brand campaigns and performance marketing channels to clients through its Direct-to-Consumer segment. It also includes title insurance, appraisals, and settlement services. Partner Network segment leverages its client service and brands to grow marketing and influencer relationships, and its mortgage broker partnerships through Rocket Pro third-party origination (TPO). The company's personal finance and consumer technology brands include Rocket Mortgage, Rocket Homes, Amrock, Rocket Money, Rocket Loans, Rocket Mortgage Canada, Lendesk, Core Digital Media and Rocket Connections. Stock Market Value: $25.4B ($12.68 per share) Stock chart icon Rocket Companies in 2025 Ownership: 9.99% Average Cost: $12.37 Activist Commentary: ValueAct has been a premier corporate governance investor for over 20 years. ValueAct principals are generally on the boards of half of ValueAct's core portfolio positions and have had 56 public company board seats over 23 years. Additionally, the firm is a long-term, thoughtful and diligent investor known for creating value behind the scenes. ValueAct has previously commenced 106 activist campaigns and has an average return of 52.60% versus 21.27% for the Russell 2000. What's happening ValueAct has taken a position in Rocket Companies (RKT). Behind the scenes Rocket Companies is a financial technology company consisting of mortgage, real estate, and personal finance businesses. In a highly fragmented industry, Rocket has steadily gained market share and is now the No. 1 originator of mortgages in the United States. This position has primarily been driven by a technology-first, assembly-line approach to mortgage processing. Unlike industry legacy methods where people and technologies are stretched over the entire process, Rocket has broken down the workflow into distinct stages and has dedicated people and technologies at each step. As a result, the company can originate a loan at about one third of the cost of peers and close loans in an average of 21 days versus 45 days for its competitors. However, the company's share price has yet to reflect this clear competitive advantage, as shares are down over 29% since its initial public offering in August 2020. While Rocket is a great company, it is not a great stock. The primary reasons for this are its small float, controlled ownership and unnecessarily convoluted share class structure. Rocket's founder Dan Gilbert retains over 80% of voting power through a preferred share class. The current public float of the company is only about 7% of the total voting power. Further complicating matters is that Rocket's ownership has been spread across four different share classes – though in March, the company said it would reduce its share classes to two. These factors made the stock difficult to buy, leaving its investor base absent of many long-only institutional investors that are typically sought after by companies of this size and stature. The valuation gap that has resulted from this is clear, while Rocket trades at a single digit price-earnings multiple, comparable businesses like Schwab trade closer to 20 times. The float issue is in the process of being remedied, however. Rocket's public float is set to increase to 35% from 7%, because of the company's pending acquisitions of Redfin and Mr. Cooper. Additionally, the company will be collapsing its share structure from four to two. This will still leave it a controlled company with Dan Gilbert owning approximately 65%, but controlled companies do not scare ValueAct. On the contrary, the firm has delivered strong returns investing in many controlled companies such as Liberty Live Group, Meta Platforms, Martha Stewart Living, The New York Times, 21st Century Fox, Spotify and KKR. In these situations, ValueAct has delivered an average return of 96.15% vs. 21.12% for the relevant benchmark. While the significantly increased float and simpler capital structure should attract the broader base of long-term institutional investors who have thus far been sidelined, this is just a tailwind for stockholders, not a value-creator. Likewise, declining interest rates are a tailwind for Rocket as it accelerates mortgage refinancing. But the real value creator is for Rocket to continue its technological leadership which could be greatly accelerated with the assistance of artificial intelligence. There are two kinds of AI beneficiaries – the technology enablers (such as Nvidia, Amazon and Salesforce) and consumer class companies with business models that can be fundamentally improved through AI integration. As the market and technological leader in a highly fragmented industry, Rocket is well positioned to supercharge its already best-in-class mortgage assembly-line process by integrating AI to boost operational efficiency, profitability, and further expand its current pricing and timeline advantages over peers. Traditional banks should also have an easier time using AI to close the gap, as they have vastly more room for improvement than Rocket. However, AI is much more likely to be quickly adopted by companies like Rocket – companies that have embraced technology and the digital age – as opposed to older institutions that have historically been reluctant to adopt any sort of technological innovation. Throughout the AI revolution, we have observed across other consumer-based industries that the businesses that are already tech native (such as Tesla, Amazon and Spotify) are far better equipped to integrate AI in ways that meaningfully transform their businesses, and Rocket is in the driver's seat to be this player in the mortgage industry. Moreover, Rocket has a relatively new CEO who wants to dominate the mortgage industry and is not afraid of technology, previously working at Intuit, PayPal, Groupon and Microsoft. If these value levers are properly executed, Rocket's high single-digit share of the mortgage market should be able to grow to 15% to 20% organically and potentially higher if coupled with some accretive mergers and acquisitions. In the longer term, there's no reason why this industry should remain so fragmented. Most digital consumer business markets eventually consolidate to a few major players with the winners commanding 30%-plus market share, and Rocket has a clear path to victory. This is not ValueAct taking a 'flyer' on AI. First, ValueAct is a very thoughtful and diligent investor and doesn't take 'flyers.' Second, ValueAct has extensive experience from both sides of AI. The firm has been in the boardroom at companies like Microsoft and Salesforce, two of the largest developers of AI. And ValueAct has been active shareholders at companies like Spotify, The New York Times, Expedia and Recruit ( – some of the largest users and beneficiaries of AI. So, when ValueAct invests in AI, it isn't just spitballing. Rather, the firm thoroughly understands AI and how its customers can use it. ValueAct makes investments like this because it likes the company for all of the reasons stated above. The firm takes board seats in approximately half of its core positions but does not go into an investment 'needing a board seat' or even necessarily wanting a board seat. Moreover, as a sub $200 million investment, this is very small for ValueAct. But as the float increases and it grows its position – and as management gets to know the company better – we think with ValueAct's financial expertise and AI experience, it would be natural for the firm to be invited on to Rocket's board. Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments.
