Category Archives: Economy

Helping ALL Californians

Undocumented immigrant workers in California will be the first to receive financial aid.  Those who have not been able to get Pandemic Unemployment Assistance or are not eligible to collect unemployment insurance will be assisted in this way.

The value of this – according to a recent statement by Gov. Newsom – is $125m.  $75m of that will be in the form of state funds for disaster relief assistance.  A further $50m has been committed from charitable entities.  As Newsom said:

 “Even if there’s gaps, we can help begin to fill them.  I’m not here to suggest that $125 million is enough. But I am here to suggest that it’s a good start and I’m very proud it’s starting here in the state of California. We feel a deep sense of gratitude for people that are in a fear of deportation but are still addressing the essential needs of tens of millions of Californians.”

What this means is that $500 will be given to around 150,000 undocumented Californians – $1,500 maximum for each household which is 10 percent of the entire workforce in the region.

Micro Loan Program

A $50 million initiative for LA’s most at-risk businesses was recently announced by Gov. Newsom.  It is hoped that all California firms with up to 750 employees will be able to benefit from the Small business Loan Guarantee Program, funded by the taxpayer.

The endeavor is being undertaken by the California Infrastructure and Economic Development Bank (IBank), in an effort to offer some aid to the smaller firms that are undergoing losses that have resulted from the COVID-19 global pandemic. These are those which will not qualify from the $349 billion that nationwide, the federal government has earmarked for small businesses in “forgivable loans.” This is because the process of getting an SBA loan is not so simple and thus excludes many business owners who need the money.

This micro-loan announced by Newsom is to help those who would otherwise “fall through the cracks.”

Coronavirus Impact on Small Business Supply Chain

This video is a recording of a hearing held by the Senate Small Business Committee examining the impact COVID-19 is having on the small business supply chain.  Featuring Rosemary Gibson, senior advisor at The Hastings Center, Dr. Gerard Anderson, Professor at Hopkins University and Tim Morrison, Senior Fellow at the Hudson Institute, discussions are held on the subject matter.  Wynne Briscoe, acting director of Southern MD Region at the Small Business Development Center also joined the discussion.

Running an LA-Based Business

There are many reasons to conduct business in LA, specifically LA county. Here we have put together a roundup and summation of those. 

With close to 18 million residents amongst the five LA counties, there is a lot of great talent from which to choose.  In addition, many of these employable individuals are well educated and trained, bolstering a wide variety of businesses.

Access to both national and international markets due to two rail carriers, three seaports, freeways, and six commercial airports. The LA Customs District annually reports huge revenue of two-way trades.

There is also the Department of Consumer and Business Affairs (DCBA) – established back in 1976 – which bolsters local entrepreneurs and helps with  networking opportunities  with the ultimate aim of thriving businesses.  As well, the East Los Angeles Chamber of Commerce has for many years provided comprehensive business training to small business leaders.

Above are just some of the many incentives that can help local business owners in LA county.

Thanks to UCLA, LA Employment is Heaving

UCLA is LA County’s fourth largest employer.  Thanks to this public research educational institute in Westwood, LA, there are 72,000+ full-time jobs, generating $11.06 billion in Californian economic activity for the 2016-17 fiscal year.

As well as its employees and economic impact on the county, a report by Beacon Economics found 24 startups using UCLA-developed technology were launched in the 2016-17 fiscal year and 70 inventions from UCLA were licensed for commercial use.

According to Gene Block, Chancellor at UCLA:

 “UCLA’s contributions to our state’s economic vitality are significant and widespread, from discovering life-changing technologies to employing tens of thousands of Californians. Measuring this economic impact allows us to demonstrate how every dollar invested in UCLA pays substantial dividends back to people throughout our state.”

In addition, it was found that UCLA’s expenditure is having a positive impact on licensing, research and technology which is benefiting the overall economy.

California: Women to be on Boards of Directors

Although France and Norway have already made it law, nowhere in America has it been ruled that publicly traded companies have to have women on their boards of directors.

Until last week that was when Governor Jerry Brown signed a law (SB 826) that at least one female director must be on every board of California-based corporations by the end of 2019.  This number will increase to three by the end of 2021.  While there are some potential issues (as recognized by Brown), ultimately, author of the bill Senator Hannah-Beth Jackson believes it will “make companies more successful,” as well as facilitate the reduction in sexual harassment cases in the workplace.

To date, a quarter of publicly-held Californian HQ companies have no women on their boards of directors and are not making enough effort to change that.

 

Pouya David Yadegar: A Long-Term Approach to Investing

Prime Opportunities Investment Group Founder and CIO Pouya David Yadegar transitioned from a successful real estate career to running one of the top performing hedge funds globally. We discussed the change with him in an interview last week and gained some insight into his journey:

What’s your investment background?

Prior to founding Prime Opportunities, I managed our family office wealth in Los Angeles, with a focus on the purchase and development of multifamily and retail real estate assets in high-end areas of Los Angeles County such as Beverly Hills and Brentwood. Our family office invests long-term with a very conservative mindset: I don’t think we’ve sold a property in 40 years, and thankfully this strategy has served us extremely well over the years.

Why did you start Prime Opportunities Investment Group?

 

I love real estate, but I also love studying publicly traded companies. Since I was very young, I’ve been tremendously passionate about it. My first exposure to the field was when I began reading Warren Buffett’s annual letters when I was 12 or 13 years old – I couldn’t put them down, and proceeded to read everything I could on the subject.

Also, although we experienced great success in real estate investing, I was consistently finding stocks that I believed were worth 3 to 5 times more than what they were trading for. What some people perhaps view as a drawback of the public markets – volatility – I saw as an opportunity for profitable long-term growth, when done right.

What were some of your best investments to date?

We invested in Amazon about 8 years ago, in Chipotle around the time of its inception (exiting the position several years ago, and re-entering recently), and in Tesla 5 years ago – all of which have increased around 10x since we bought them. Thankfully, many of our stocks have done exceedingly well as we’ve also been in FedEx, T-Mobile, Activision, Virgin America (before they were acquired) and many of the best performing companies – but those three stand out as the top performers.

A common thread, and one of the main themes in our strategy is the need for businesses to be “China Proof” – a term we coined several years ago. Our view is that China has many competitive advantages: a population of almost 1.4 billion people that work for 10 cents on the dollar – relative to the United States and other industrial nations – as well as the fact that they are hard-working, very smart, and have the support of their government behind them… and now the consumer has moved into their backyard. We find companies that are either immune to these competitive forces, or can actually capitalize on them by selling into the Chinese market on a sustainable basis. To have the performance we’ve been able to put up, you have to find investments that have huge competitive advantages, and can grow substantially in the future.

What is the single most important thing you look for in a company?

The biggest thing to look at is how big the company can grow. If you extrapolate out the business potential, and you align that with unbelievably good management, the numbers scream off the page. The ability to conceptualize business factors, combined with the mindset to see exactly how large a market, or an opportunity, can grow, is the backbone of amazing returns.

Our thesis was different for each company, but they all shared the fact that we believed the market was vastly underestimating their value. We believe successful investing takes hard work. For every company we look at – Amazon, Chipotle, and Tesla included – we spend countless hours reading and analyzing their operations and future prospects, before making an investment.

Your long-only fund has returned an average of 30.5% per year, over the last 9+ years, before fees. The S&P 500 has returned 15.5% per year during the same time period. You’ve outperformed the market by a very large margin, and you’ve done this with no leverage or options – simply pure stock-picking. To what do you attribute your outperformance?

Ultimately, I believe the most important thing is your ability to accurately assess the long-term prospects of companies. In order to figure that out, we have a simple (but difficult) process: We read. A lot.

Among the numerous factors we analyze when evaluating a company, we assess the strength and durability of its competitive advantages, the talent and ability of management, the growth potential, and the return-on-capital profile of the business. In the end, your performance is tied to your ability to accurately assess the variables that matter.

Do you see this type of performance continuing? What is your current outlook?

Every day, we work diligently to study companies as thoroughly as we can, seeking new opportunities – and re-assessing our current positions. I am pleased to see that – as we continue to research companies – we are finding opportunities that are just as undervalued as when we first started. Over the short term, the market is predictably unpredictable. Our approach is to take a long-term view of the businesses we invest in – and through that lens, I am optimistic as to the potential our investments hold.

LA 2018: Economy: Real Estate

Agility seems to be the word on the street when it comes to LA’s economic outlook this year. According to Spencer Levy, Americas Head of Research for CBRE and a senior member of the company’s global research team, “Agility is more important than ever for investors and occupiers.” Here, he discusses the corporation’s recently-released US Real Estate Market Outlook.

LA: Economy is Thriving

When it comes to working in LA or finding a job, 2018 is looking very good.  In fact, even when looking at the figures for last year, job growth was much higher than expected.  In January 2018 there were an additional 33,500 jobs created.  According to statistics from LA’s Employment Development Department  (EDD) this resulted in a record low for state unemployment to 4.4 percent.  What’s even more positive is that these figures were even better than those for 2018.

Historically this is impressive.  According to former director at the EDD Michael S. Bernick, these figures show that LA is approaching its “longest employment expansion since World War II.  Each time it looks like the expansion might end it continues going.”

So where are all these jobs coming from?  Which industry is growing most?  The highest growth came in construction and trade with an additional 11,100 jobs being created in the building sector between December 2017 and January 2018 and 10,800 jobs in trade, transportation and utilities. Other increases occurred in education, health, hospitality, leisure and manufacturing services.

And it seems this isn’t the end either.  It looks like jobs through LA are going to increase even more and this is partly to do with the $1.5 trillion federal tax cut package in the first quarter of this year.

Los Amazon?

Various cities are hoping Amazon will pick them to be its second quarters.  Los Angeles is one of them.  This of course would be excellent for business, generating a huge economic boost.

Los Angeles would perhaps appreciate winning the bid even more than other cities, or at least, at this time understand the implications of such a move, given the recent mass exodus of corporate headquarters over the last 20 years or so.  Excessive business taxes and housing costs have made it more of a challenge for individuals and customers to thrive in the area.

The Mayor of LA is particular supportive of the move saying that he “welcome[s] the opportunity to compete for this remarkable investment, and the tens of thousands of good-paying jobs it is sure to bring with it. L.A. is the perfect place for a company like Amazon to find talented workers, and an environment that nurtures growth and innovation.”

But LA is going to have to prove itself.  Amazon is anticipating many perks from the city that wins the bid.  The proposal request mentions state and local incentives, tax credits, utility incentives, and more.