shaw capital management: March 2011

Sunday, March 27, 2011

Shaw Capital Management Newsletter: Japan Submits Budget for 2010

The Democratic Party of Japan (DPJ) government submitted to the Diet the fiscal 2010 budget amounting to ¥92.3 trillion, its first budget since its inauguration in mid-September. The budget was even larger than its counterpart for the current fiscal year — which was already a record if one includes the second supplementary stimulus package, approved last December. This was because of additional spending on child allowances, free senior high school education, cash subsidies to farmers, and higher payments to medical institutions to alleviate the shortage of medical doctors. Particularly noteworthy is the large amount devoted to social security, up to ¥27.3 trillion, which account for 51% of general public spending … the first time that the social security share has exceeded 50%. In marked contrast, public works investment, which has been cut back by almost 20%, amounts to ¥5.8 trillion, a record drop that symbolizes the DPJ’s philosophy of shifting money to people from public works... eightynine dam projects are likely to be frozen.

“The budget bill appears to be overshadowed by concern over a severe revenue shortage and its implications for the future of Japan’spublic finances, which are already debt-laden to a perilous extent.”

“Japan’s economic policy flexibility has diminished as a result of increased fiscal deficits and government debt, persistent deflation and a prospect of continued sluggish economic growth”, analysts at the firm said in a note. “It’s impossible to keep tolerating this massive spending,” said Takeshi Minami , chief economist at Norinchukin Research Institute in Tokyo. “Japan’s fiscal health will continue to be exceedingly severe given revenue won’t grow and a stagnant recovery may require additional economic measures.” A major reason for the squeeze is a plunge in prospective tax revenues due to the economic downturn and the drop in corporate profits. Tax revenues for fiscal 2010 are estimated to fall to ¥37.4 trillion, the same level as 26 years ago, in the mid-1980s — while corporate tax revenues are expected to be half the amount in normal years. As a result, the government has to raise ¥44.3 billion in new government bonds, compared to ¥53.5 trillion in FY2009. This leaves the treasury dependent on debt for 48% of the total budget, up 10 percentage points. At the end of the fiscal year, on March 31, 2011, the outstanding balance of government bond issues will have shot up to ¥637 trillion, the equivalent of 134% of Japan’s GDP while public debt will probably spiral to ¥973 trillion, almost double GDP.

“At the end of the fiscal year, on March 31, 2011, the outstanding balance of government bond issues will have shot up to ¥637 trillion, the equivalent of 134% of Japan’s GDP while public debt will probably spiral to ¥973 trillion, almost double GDP.”

More importantly, given its enormous debt, the government has limited room to offer any incentives without jeopardizing other parts of the economy. However, there was no mention of these painful trade-offs. In addition, while the budget contains some signs of change, there is concern that it may not adequately stimulate the economy. Most private sector economists believe that spending measures in the fiscal 2010 budget (and in the second fiscal 2009 supplementary budget) are expected to provide a limited boost to Japan’s GDP and to kick in no sooner than April. “Most private sector economists believe that spending measures in the fiscal 2010 budget are expected to provide a limited boost to Japan’s GDP and to kick in no sooner than April.”

Overall, the budget appears to be the result of a compromise between an attempt to impose some fiscal discipline and the promises made in last year’s summer election of new direct supports to households, such as child allowance, as well as concern over a double-dip recession. “Harsh financial conditions have prevented the administration from keeping all the promises that the DPJ made during its campaign last summer (for instance it has eliminated highway tolls and the gasoline tax). But the administration has succeeded, to some extent, in realizing the party’s slogan of “shifting weight to people from concrete” and its aim of providing more funds for households, rather than for industry-linked organizations and large-scale public works projects”, asserted in its editorial the Japan Times, one of the main national newspapers.

“Almost every move the government makes over the coming months must be seen against the backdrop of the crucial upper house election, which must be held in July for half of the seats.”

The budget must now be approved by Japan’s parliament before taking effect. Hatoyama’s popularity has dropped to 48% this month from 71% after he took the office in September. Almost every move the government makes over the coming months must be seen against the backdrop of the crucial upper house election, which must be held in July for half of the seats. So in the end the budget and its goals may be more dream than reality.

Shaw Capital Management March Newsletter: Japanese Government Submits Budget for Next Fiscal Year

Shaw Capital Management: Japanese Government Submits Budget for Next Fiscal Year

Japanese Government Submits Budget for Next Fiscal Year: Shaw Capital Management News

At a news conference, Prime Minister Yukio Hatoyama described it as “a budget meant to safeguard the life of the people.” He also claimed that three reforms were incorporated in the architecture of the budget: first, the principle of a shift of priority “from concrete to people”; second, initiatives taken by politicians instead of bureaucrats; and third, securing transparency in the budget formulation process. Some creditable aspects notwithstanding, the budget bill appears to be overshadowed, as media reports made clear, by concern over a severe revenue shortage and its implications for the future of Japan’s public finances, which are already debt-laden to a perilous extent as recently pointed out by credit rating agency Standard & Poor’s which raised the prospect of a downgrade in Japan’s sovereign debt rating. “The budget bill appears to be overshadowed by concern over a severe revenue shortage and its implications for the future of Japan’s public finances, which are already debt-laden to a perilous extent.” “Japan’s economic policy flexibility has diminished as a result of increased fiscal deficits and government debt, persistent deflation and a prospect of continued sluggish economic growth”, analysts at the firm said in a note.

“It’s impossible to keep tolerating this massive spending,” said Takeshi Minami , chief economist at Norinchukin Research Institute in Tokyo. “Japan’s fiscal health will continue to be exceedingly severe given revenue won’t grow and a stagnant recovery may require additional economic measures.” A major reason for the squeeze is a plunge in prospective tax revenues due to the economic downturn and the drop in corporate profits. Tax revenues for fiscal 2010 are estimated to fall to ¥37.4 trillion, the same level as 26 years ago, in the mid-1980s — while corporate tax revenues are expected to be half the amount in normal years. As a result, the government has to raise ¥44.3 billion in new government bonds, compared to ¥53.5 trillion in FY2009. This leaves the treasury dependent on debt for 48% of the total budget, up 10 percentage points.

At the end of the fiscal year, on March 31, 2011, the outstanding balance of government bond issues will have shot up to ¥637 trillion, the equivalent of 134% of Japan’s GDP while public debt will probably spiral to ¥973 trillion, almost double GDP. “At the end of the fiscal year, on March 31, 2011, the outstanding balance of government bond issues will have shot up to ¥637 trillion, the equivalent of 134% of Japan’s GDP while public debt will probably spiral to ¥973 trillion, almost double GDP.”

According to the new government, the economic policies adopted by the previous ruling party, the Liberal Democratic Party (LDP), failed on two fronts: initially boosting demand by increasing public investment, which was effective in the short term but not sustainable until the end of the 1990s. And later enhancing the supply side of the economy by deregulating the labour market and privatizing public entities, which simply widened the income gap within the economy, in the 2000s. However, the new budget was not well received by most observers. The announcement was rather sudden and lacked a comprehensive path to achieve the stated goals, they claim. Also, no reliable, specific incentives were offered, such as tax changes or deregulation that affect private sector behaviour. More importantly, given its enormous debt, the government has limited room to offer any incentives without jeopardizing other parts of the economy. However, there was no mention of these painful trade-offs. In addition, while the budget contains some signs of change, there is concern that it may not adequately stimulate the economy. Most private sector economists believe that spending measures in the fiscal 2010 budget (and in the second fiscal 2009 supplementary budget) are expected to provide a limited boost to Japan’s GDP and to kick in no sooner than April. “Most private sector economists believe that spending measures in the fiscal 2010 budget are expected to provide a limited boost to Japan’s GDP and to kick in no sooner than April.”

The budget must now be approved by Japan’s parliament before takingeffect. Hatoyama’s popularity has dropped to 48% this month from 71% after he took the office in September. Almost every move the government makes over the coming months must be seen against the backdrop of the crucial upper house election, which must be held in July for half of the seats. So in the end the budget and its goals may be more dream than reality.

Foreign Exchange Markets 2010: Shaw Capital Management

The main feature of the foreign exchange markets over the past month has

been the further sharp fall in the euro. There has been no real change in

the background economic situation in the euro-zone; but there has been

a serious deterioration in the financial background as doubts have increased

about the ability of Greece and some other periphery countries to cope

with their massive fiscal deficits and service their sovereign debts.

This is clearly leading to a withdrawal of international funds from the

European capital markets, and is dramatically illustrated in the widening

of yield spreads in the bond markets of member countries.

There is still a general assumption that the stronger members will provide

support for the weaker members if this proves to be necessary to prevent

a default on sovereign debts.

But the uncertainties have been increased by conflicting statements from

the European Central Bank and some politicians about the willingness to

undertake such operations, and so investors and speculators have taken

evasive action, and the euro has fallen by around 10% from its peak in early-

December.

This fall has provided support for the other major world currencies, including

the dollar; but the background situations in Japan, and in the UK, also

provide reasons for concern, and so the currency markets remain in a very

uncertain state.

It is likely that the uncertainty will continue. The US economy is clearly

recovering from recession; economic conditions in Japan are very weak,

and Japan appears to face the possibility of a credit downgrade if it does

not take steps to reduce its massive fiscal deficit; and there have already

been warnings from Standard and Poor’s that the UK also faces the possibility

of a credit downgrade if there are no convincing measures to reduce its

huge fiscal deficit after the forthcoming general election.

Prospects are therefore very difficult to assess; but our tentative conclusion

is that the dollar will continue to “improve”, helped to a considerable extent

by weaknesses elsewhere; and that this will allow market pressures to

gradually subside as the global economic recovery continues through the

year.

But the possibility of a major currency crisis cannot

be ignored, especially if the debt problems in Greece

and other periphery countries threaten to lead to the

break-up of the single currency system in Europe.

It is fortunate therefore that the available evidence

on the performance of the US economy is more

encouraging. Non-farm payrolls fell again in December

by 85,000, but are expected to have increased in

January; retail sales held up well in the pre-Christmas

period; manufacturing output is improving, according

to the latest report from the Institute of Supply

Management; and even the housing market appears

to be recovering.

This general situation is reflected in the first

preliminary estimate from the Commerce Department

of growth at a seasonally adjusted annualised rate of

5.7% in the final quarter of last year, a higher figure

than the market had been expecting.

Most economists therefore appear to be forecasting

overall growth this year in the 2.5% to 3% range, after

the estimated fall of 2.4% last year.

The Fed is clearly in no hurry to tighten its present

monetary stance. The statement after the latest

meeting of its Open Market Committee was more

upbeat about the prospects for the economy; but shortterm

interest rates were left unchanged and close to

zero, and there was a clear indication that they would

remain at very low levels “for an extended period”.

The bank did state that it will discontinue most of its

emergency lending programmes, and that it would

end its purchases of mortgage securities in March; but

there was no indication that it would be prepared to

implement an “exit strategy” until there was

convincing evidence of a sustainable economic

recovery. It is also unlikely that there will be any early

changes in fiscal policy.

The recent State of the Union message to Congress by

President Obama included a request for the approval

of a further fiscal stimulus package this year amounting

to around $100 billion to help to tackle the

unemployment problem, and he has also presented a

$3.8 trillion budget for fiscal 2011 that is likely to

maintain the overall deficit around the $1.35 trillion

level expected this year.

Much will depend on the attitude of overseas holders,

and especially on the attitude of the Chinese and

Japanese authorities.

For the present they seem to be prepared to maintain

and even increase their dollar exposure; and if this

continues, and the problems of other major currencies

remain unresolved, it should be enough to allow the

dollar to “improve”.

The euro struggled to recover in the early part of

January from the big fall that occurred in December;

but the recovery did not last very long, and it has

subsequently fallen sharply again, to leave it value

against the dollar around 10% below the level in early-

December.

There has been no significant change in the underlying

economic background, although there is some evidence

that the fragile recovery that was developing is losing

some momentum.

But there has been a serious deterioration in the

financial background as the fears have increased that

Greece and some other periphery countries in the

euro-zone may be unable to fund their massive fiscal

deficits, and service their sovereign debts.

There is also considerable uncertainty about the

intentions of the European Central Bank and the

stronger countries if conditions continue to worsen,

and so overseas holders have started to withdraw

funds from the European capital markets to await

developments.

The present lack of urgency at the central bank and

amongst the key politicians suggests that this trend

will continue, and that the euro will fall still further;

but there is still some hope that the seriousness of the

situation will finally produce a support operation that

will ease the situation.

All the available evidence continues to point to a slow,

two-speed recovery in the euro-zone economy.

Germany and France appear to be performing

reasonably well, although there are some signs of

slowdown in Germany; but Greece, Portugal, Spain,

Ireland, and even Italy are struggling to escape from

recession, and are expected to keep overall output in

the euro-zone this year around the 1% level.

There is also considerable uncertainty about the intentions

of the European Central Bank and the stronger countries

if conditions continue to worsen, and so overseas holders

have started to withdraw funds from the European capital

markets to await developments.

Retail sales remain depressed, and fell by 1.2% between October and

November to reflect the continuing caution of consumers; and industrial

orders in Germany rose by much less than expected in November, after a

very disappointing result in October, to indicate some weakness in export

prospects that had been expected to provide significant momentum to the

economy.

Prospects therefore remain disappointing, and are being made worse by

the differences that exist between member countries.

The European Central Bank therefore faces a difficult situation. It continues

to forecast “moderate” growth and “moderate” inflation; but it is being

severely criticised for failing to address the problems of a two-speed

economy, and for its unwillingness so far to face the threat that the

deteriorating situation in Greece could quickly begin to destabilise other

member countries and have serious consequences for the financial stability

and growth prospects of the entire area.

It is not surprising therefore that investors and speculators have started

to reduce their exposure to the euro.

The critical question therefore is whether the fall of the euro is now over.

Since the currency is unlikely to receive any real support from the general

background situation in the euro-zone, everything depends on the

developing debt situation, and particularly on the situation in Greece; and

also on the possibility of support operations from stronger member countries

and from the European Central Bank, and the European Commission.

The situation remains uncertain. The central bank appears to be reluctant

to offer help, and the German government, which might have been expected

to become involved, has also made no response so far.

But the European Commission has endorsed the latest plans by the Greek

government to introduce an across-the-board freeze on public sector wages

and cuts in allowances that are expected to reduce the overall public sector

wage bill by around 4%.

This may encourage support from elsewhere; however the Commission has

warned that it will not tolerate any slippage from the target and will if

necessary demand tougher action from the government to ensure that it

stays on course.

But it is far from clear that the Greek government can obtain the necessary

support in parliament even for the present proposed measures, and so the

uncertainty will continue.

It is therefore likely that there will be further falls in the euro over the

coming weeks.

Sterling has improved slightly over the past month, helped by the weakness

of the euro.

The background situation in the UK remains unattractive, and there have

already been threats that its AAA credit rating is at risk unless there are

credible measures to reduce the massive fiscal deficit after the forthcoming

general election is over.

The European Central Bank therefore faces a

difficult situation. It continues to forecast

“moderate” growth and “moderate” inflation;

but it is being severely criticised for failing

to address the problems of a two-speed

economy, and for its unwillingness so far to

face the threat that the deteriorating situation

in Greece could quickly begin to destabilise

other member countries and have serious

consequences for the financial stability and

growth prospects of the entire area.

But the UK is not constrained by membership of the European single

currency system, and so there is no immediate risk of a default on its

sovereign debts.

It has therefore been able to benefit from the problems affecting some

other European countries.

The latest figures from the Office of National Statistics indicate that the UK

just managed to move out of recession in the final quarter of last year. The

estimate of growth of only 0.1% in the quarter was a considerable

disappointment, and it is expected that it will be revised higher; but clearly

the economy is not performing very well.

Government spending remains strong, and there was a surge in retail sales

in the run-up to Christmas; but the anecdotal evidence suggests that

consumers became much more cautious again in January.

The latest meeting of the Monetary Policy Committee of the Bank of England

was concerned by the poor reaction so far to the dramatic measures that

have been introduced to counter the recession, and reacted to this situation

by leaving UK base rates unchanged once again at 0.5%.

It clearly has no intention of moving to an “exit strategy” until there is

convincing evidence that a sustainable recovery in the economy is underway.

It did announce that purchases of market securities under the quantitative

easing programme would now be discontinued after the £200 billion target

has been reached; but its main priority is to continue to provide support

for the fragile economic recovery.

Fiscal policy is also likely to remain unchanged until after the election,

because the necessary measures to reduce the huge deficit will be unpopular,

and might influence the outcome of that election.

Sterling is therefore receiving no real support from the domestic background

situation, and in other circumstances might have been expected to move

lower.

But the problems affecting the other major global currencies, and particularly

the problems affecting the euro, have at least delayed any further falls.

The yen has improved over the past month, despite a generally unfavourable

domestic background situation, and some attempts by the Japanese

authorities to prevent its appreciation against other currencies.

It has achieved an enhanced “safe haven” status in the current storm in

the currency markets, and on the back of the relative success of its exports.

But conditions in the Japanese economy remain very weak, and there has

even been the threat of a downgrade of its credit rating unless measures

are introduced to reduce its massive fiscal deficit.

However it does not appear that this threat will prevent the new Japanese

government from introducing further measures to stimulate the economy,

and urging the Bank of Japan to intervene in the markets to weaken the

yen, and so its prospects remain very uncertain.

Friday, March 25, 2011

Shaw Capital Management for Small Business Financing with Factoring

http://shaw-capitalmanagement.com
by: shawcapitalman
Financing a small business has always been challenging. Read this article to find out if factoring financing is the right solution for your small business. Learn from experts; refrain from internet offer scams and fraud.
Shaw Capital Management and Financing provide same-day-funding. We can help you meet your cashflow needs immediately without entering into a long term factoring relationship. The money you get for the freight bills we purchase is payment in full.
Small business owners have always had a tough time obtaining financing. Simply, most small businesses just can’t qualify for conventional business loans. The requirements are too onerous – the company must have sizable assets, multiple years of profitability and many times, it’s financial statements must be audited by a 3rd party.
Most business owners consider that a business loan is their only business financing alternative. When they get turned away, they give up any hope of obtaining financing. What most small business owners don’t know is that they do have alternatives – and – many times those alternatives can work better that conventional financing.
Let’s take a common cash flow challenge. Companies that sell products or services to other businesses usually have to wait between 30 and 60 days to get paid for their services. So, they incur the expenses of delivery immediately, but then wait a long time to recoup their investment. While this is fine for companies with adequate banking reserves, it is one of the major challenges that business owners face today. As a matter of fact, few startups plan for the fact that it takes 4 to 8 weeks to get paid, which not only limits their growth opportunities, but challenges their very survival as a business.
Now, most business owners would consider that the only solution to the previous problem is to get a loan or a line of credit. But there is another option – it’s called factoring financing. Few people have heard of it, so not many owners consider it if they fail to get a business loan.
Invoice factoring offers a very simple solution to the slow payments problem. Let’s say that you sold $10,000 worth of consulting services to a company. And let’s say that they’ll pay the $10,000 in about 45 days, which is the industry average. Now, what happens if you can’t wait because you need to meet payroll or make supplier payments? Well, you could sell the invoice to a factoring company. The factoring company would buy it from you in two installments. The first installment would be for 80% of the invoice, or $8000 in the case of our example. This is paid at invoicing.
The second installment, paid to you when your client actually pays the invoice, is the remaining 20%, less a fee. Using our example, it’d be $2000 minus the cost of the factoring service.
So factoring invoices offers you the following proposition: an immediate advance of about 80% at time of invoicing, and a second advance for the reminder (less fees) at the time of actual payment.
As you can see, factoring provides the needed working capital to meet business expenses without worrying about when your client will pay. It provides you with predictable cash flow, positioning your business for growth. And qualifying for factoring tends to be relatively easy. The biggest requirement (though not the only one) is that you must have a good roster of clients. By Marco Terry

Shaw Capital Working Management Tips & Articles: Brookfield Asset Management Inc. (USA) (BAM) is reiterated as a “Outperform” rating by RBC Capital Mkts

Feb 24

http://www.favstocks.com
02/22/2011 – 5:00 am UTC
By FavStocks Staff
Equities research analysts at RBC Capital Mkts Reiterate a “Outperform” rating for shares of Brookfield Asset Management Inc. (USA) (NYSE:BAM) in a research note released to investors today (Tuesday).
Brookfield Asset Management Inc. is an asset manager. Focused on property, power and infrastructure assets, the company has assets under management and is co-listed on the New York and Toronto Stock Exchanges under the symbol BAM. At Brookfield they continually strive to ensure that they have sound corporate governance practices to maintain investor confidence in the way in which they do business. To ensure it communicates with there practices and commitment to strong corporate governance, they are proud to share with its Statement of Corporate Governance, Corporate Disclosure Policy, Code of Business Conduct and Ethics and other related information on its corporate governance initiatives and practices.
Shares of Brookfield Asset Management Inc. (USA) (NYSE:BAM) are trading up 0.53% as of Feb 18, 4:00PM EST, hitting 32.92. Brookfield Asset Management Inc. (USA) has a 52 week low of 21.65 and a 52 week high of 33.84. The companies last released earnings were 0.60 per share. were The company has a market cap of 19.69B and a price-to-earnings ratio of 53.92

Shaw Capital Management Factoring: Teaser loans deny old customers benefit of lower rates

http://www.livemint.com/2011/03/22212857/Teaser-loans-deny-old-customer.html

Posted: Tue, Mar 22 2011. 9:29 PM IST

by: Dinesh Unnikrishnan

When you are teasing, you must tease both the existing and the new customer. Otherwise, it is discrimination between the new and existing customers, says K.C. Chakrabarty, deputy governor, Reserve Bank of India

So you are not satisfied with the way banks are progressing with financial inclusion programmes?

They are making efforts. But banks have to develop a business strategy and understand what is an appropriate delivery model, without which it will be difficult for them to scale up. We have introduced business correspondent (BC) model. But banks are saying they don’t have trained BCs and are not getting enough BCs. Unless banks succeed in creating a suitable delivery model, it will not work. Banks also require support from all stakeholders, including policymakers and government agencies, to make financial inclusion a reality.

To what extent has the ongoing crisis weakened the ability of microfinance institutions (MFIs) to serve the poor?

Mumbai: K.C. Chakrabarty, Reserve Bank of India’s (RBI) deputy governor overseeing banking supervision, rural credit and customer service, said in an interview that banks selling teaser loans—that offer cheaper rates in the initial years—and customers buying them must understand the associated risk. When banks are “teasing”, they must “tease” both existing and new customers, he said, otherwise it’s a discriminatory practice.

“Some of us have a strong apprehension that the motivation for introducing teaser loan was not product innovation, but to deprive existing floating rate home loan borrowers the full benefit of declining interest rates based on market realities,” he said.

Edited excerpts:

Financial inclusion has been at the top of RBI’s agenda for many years, but 60% of India’s population is still out of the banking fold. What is the most critical challenge before the regulator?

The key challenge is the business strategy to be adopted by banks and an appropriate delivery model. Effective technology-based delivery model is not there even today. Also, banks don’t have a definite business strategy.

The first thing that we should understand is that microfinance does not mean financial inclusion. Our definition of financial inclusion is not microfinance. In fact, we say that financial inclusion will come only through mainstream financial institutions. The MFIs may facilitate the financial inclusion process at this stage of our development, but cannot bring financial inclusion. We, however, recognize that microfinance is important at this stage of our society where access to credit is extremely poor at present.

RBI is set to come with new regulations to govern the sector based on the Malegam panel recommendations, of which you are a member. Will the norms solve the crisis?

If the recommendations are implemented properly, they are supposed to solve the problems. All MFIs having a net worth of Rs15 crore will be designated as NBFC (non-banking financial company)-MFIs and will have to get registered with RBI. Still, there may be others who will be left out. How do we regulate them is a different issue. The committee has recommended the broad principles for them in the report. It may take some time, but the report will definitely have to be implemented if things are to improve.

MFIs argue that it’s difficult to cap the margins at 10-12% when the price of the money they raise from banks keeps fluctuating.

If your funding cost is higher, you have to improve your operating efficiency. The committee is not saying that they must have 12% margin in all cases; it’s only a cap. One can work with even a 6% margin. The committee has studied and found that majority of the MFIs are able to work within the range indicated in the report. If one or two players say their cost is higher and cannot accept this, they have to increase their efficiency to bring down cost. We cannot create a system based on the premise that the least efficient institutions should be the benchmark.

Are you hinting that MFIs should enhance efficiency and reduce operational cost through consolidation?

Those who want to function within our regulatory framework will come for registration with RBI. Those who cannot will not come. Our understanding is that today majority of the MFIs which work efficiently are able to function within this framework. If someone can demonstrate that majority of the players are not able to function within this framework, we are ready to examine it. We should be clear that we are not rigid and dogmatic about it.

Once the RBI regulations come into play, will Andhra Pradesh regulation cease to exist?

You must understand that the state is sovereign. The state and the RBI are two different things. What we have said is that certain areas come under the regulation of the RBI and the state need not enter there. To be very frank, in many areas, even the Andhra Pradesh government has not entered into the domain of RBI. The state has a big role in creating a conducive ecosystem for microfinance. For example, the issue of coercive recovery. If someone comes and complains that somebody has threatened him, we will write to the state government, which will take action as per law. RBI has no machinery to do that.

So both the Andhra Pradesh law and RBI regulations can coexist?

Our recommendations are very clear. We believe all concerns (in Andhra Pradesh Microfinance Act) have been addressed in the report. We believe that after this there is no need for the AP type Act. But still, if the state governments feel differently, they are sovereign, and we cannot interfere in their area.

Raghuram Rajan has made a case for smaller banks, saying such banks can understand and cater to the needs of rural customers. Is there any scope for MFIs to become banks?

Our discussion paper has given pros and cons of their becoming banks. As and when the guidelines come out, we will get the answer.

Banks have almost stopped lending to MFIs following the crisis, saying they are waiting for the implementation of the Malegam proposals, despite RBI asking banks to resume lending.

Have the MFIs paid back the money? When you are in a crisis, you have to scale down your business a little bit. If you are able to pay back the money, you can ask the banks to be less harsh. Banks will not lend to MFIs if they feel that they will not get back their money. The onus is on the MFIs to give that comfort and confidence to banks that they will be in a position to give back the money. Then only banks will lend. Can we ask banks to continue to lend even if they are not comfortable about repayment? Anyhow, the restructuring package is supposed to sort out many problems.

After the Citibank fraud case, there is a view that there is need to further beef up the supervision mechanism and scrutiny of banks’ operations more closely.

Yes. I agree. But the RBI does not do risk management for banks. It is in banks’ interest and it is the banks which have to do their own risk management. We tell the banks that they must continuously look at their systems and processes of risk management. But that does not mean that there will be no failure. Some accidents will always happen and all of us have to learn from such incidents.

Under investment advisory channels, banks offer different investment products to customers that come under various regulators. How can the regulator ensure the customer is receiving investment advice from a qualified adviser?

Customers who avail of such products should understand them. Banks which are doing such business should create some basic guidelines on how should they do the business and select people to act as advisers. The cardinal principle is that if you are doing investment advisory, you must understand what is the risk to the customer in a particular product and service, and make sure that the customer also understands it.

If it involves various regulatory turfs, we have to address them collectively in a coordinated manner. But that issue is not paramount as of today. We have not taken any particular stand on this issue as of now. People who sell such products and services must understand the risk-return framework of those products and services, and also explain the same to customers.

Some banks are still continuing with so-called teaser loan products even after opposition from RBI.

We have not banned the product. Teaser loan is a globally accepted product. But it is a riskier product than the normal floating rate housing loans. Banks which are selling that product, and customers who buy that, must understand the associated risk. Our regulatory stance is very clear: it is a riskier product for the customer as well as the banks. That is why we have imposed some extra provisions for that. Whether that provisioning is too high or too low is a matter of judgement.

But banks still continue to favour new customers with lower rates; and when rates fall, they do not pass it on to the old customers.

That’s another issue and you should appreciate when you are teasing, you must tease both the existing and the new customer. Otherwise, it is discrimination between the new and existing customers.

This aspect of teaser loan and associated systemic risks, in fact, has avoided public scrutiny. Some of us have a strong apprehension that the motivation for introducing teaser loan was not product innovation, but to deprive existing floating rate home loan borrowers the full benefit of declining interest rates based on market realities.

Banks have a huge burden of infrastructure funding. The rising asset-liability mismatch lessens their ability to do this.

Nowhere in the world such huge requirements of infrastructure is funded by the banks alone. It requires different types of specialized institutions, which mobilize long-term resources such as pension funds and insurance funds. But that doesn’t mean that banks are avoiding infrastructure funding. Whatever is our requirement in the short term, the banking system will be able to meet that. But, in the longer term, you cannot depend only on banks to create world-class infrastructure. Our problem in infrastructure development is not only of finance. There are many other issues associated with project implementation.

How can banks tackle the issue of rising asset-liability mismatches?

Those who cannot manage their asset-liability mismatch should not be in the business of banking. If banks feel they cannot manage the risk, they should take less risk. If this is the reason that could create problem for banks to fund infrastructure, how have they been funding the sector so far? Their funding to the sector has gone up from 5% to 15%. We, however, don’t see any reason why banks cannot address these issues within our framework.

A section of banks feel deregulation of savings deposits may not be good for the banking system.

We had mandated interest rates, both on asset and liability sides, some 25 years ago. Now, on the assets side, we have deregulated interest rates on all items; but on the liability side, we have deregulated all rates except one. Why shouldn’t we deregulate the remaining one which covers around 20% of the banks’ liabilities? You cannot say that deregulation is not good only for one product and service. At the same time, we need not do anything in a hurry.

RBI has expressed concern over the abnormal credit to deposit ratio of certain banks and said it will engage with banks, if necessary, to address the issue.

Things are improving. Liquidity in the system is improving. We did not want things to deteriorate. That is why we cautioned the banks. We hope that they will rectify the situation. We have to give them some time.

Rising interest rates have started hurting industries, particularly small and medium units, and the common man. Is it posing a threat to overall growth?

Why only manufacturing? Prices of rice and vegetables have also gone up. What RBI is advocating is that we must have low inflation. Whatever measures needed to control the inflation, we must take.

People forget that the saver is the greatest beneficiary of rising interest rates. When rates go up, the saver gets the benefit and the borrower’s cost of funding goes up. When the interest rates come down, the borrower gets an incentive, but savers suffer. The RBI maintains that balance. That balance is based on the inflation rate. If inflation rate rises, the saver has to be given a rate higher than inflation and the borrower has to borrow money at a rate higher than inflation. Also, interest cost is not the only factor in raising cost of manufacturing. Today, on an average, interest cost is only 6-7% of the total cost of manufacturing.

dinesh.n@livemint.com

Shaw Capital Working Management Tips & Articles: ExxonMobil among Top Equity Holdings of Investment Management of Virginia – cbl

Feb 24

http://dallas.citybizlist.com
Posted February 22, 2011
By Richard Rabicoff
IRVING, Texas — In an SEC filing,Investment Management of Virginia, LLC reported that its equity holdings total $331.31 million, as of December 31, 2010.
The firm is led by Chairman Robert B. Arthur, who was previously a partner at Cooke & Bieler, a Philadelphia-based investment management firm. John H. Bocock, MBA, a founder of the firm and a former managing director at Scott & Stringfellow Capital Management, signed the filing.
Of the 263 equity holdings in the portfolio, the five largest (with percentage of total portfolio) are the following:
• Rock Hill, S.C.-based 3D Systems Corp. (NasdaqGS: TDSC) – $23.12 million (7.02 percent)
• Luxembourg-based Altisource Portfolio Solutions (NasdaqGS: ASPS)- $8.9 million (2.7 percent)
• Atlanta-based Ocwen Financial Corp. (NYSE:OCN) – $8.9 million (2.7 percent)
• Irving, Texas-based Exxon Mobil Corp. (NYSE:XOM)–$7.78 million (2.4 percent)
• Oklahoma City-based Sandridge Energy Inc. (NYSE:SD) - $6.89 million (2.1 percent)
Originally established in 1982 as a subsidiary of Scott & Stringfellow, Inc., the firm became independent in July of 2000, following a management-led buyout. Investment Management of Virginia, retained its clients, staff, portfolio managers, management team, and investment philosophy.

Shaw Capital Guide to Business Loans from Family & Friends

http://shaw-capitalmanagement.com
by: shawcapitalman
Shaw Capital Management and Financing – The key to successful financing is structuring loans right. Avoid Debt Management Scams.
An estimated half of all small businesses depend on private investments from family and friends for startup or expansion. Shipping giant UPS was launched when 19-year-old entrepreneur Jim Casey borrowed $100 from a friend to start the company nearly 100 years ago in Seattle. And when teenager Fred DeLuca opens a sandwich shop in 1965 with a $1,000 check from a family friend, Subway (now 25,000 restaurants) was born. Friends and family is the single most important outside funding source for small business in America. But there are risks, and “F&F” money must be approached carefully.
Shaw Capital Guide to Business Loans from Family & Friends – Action Steps. The best contacts and resources to help you get it done.
Put a financing facilitator to work. Small business loans from friends and family often go awry because they haven’t been properly structured and administered. Sign up a service that will prepare documents, create repayment schedules, bill, collect payments and provide year-end tax statements.
I recommend: Virgin Money (formerly CircleLending) has been a pioneer in private loan administration. The firm helps manage transactions such as small business loans between private parties — especially family and friends.
Shaw Capital Management and Financing – The key to successful financing is structuring loans right. Avoid Debt Management Scams – Offer equity in your business. If your business is a corporation or LLC, your funding source can become an equity investor, buying shares in your business.
I recommend: At Intuit’s MyCorporation.com web site, you can incorporate a business or form an LLC online for as little as $149, plus state filing fees.
Put your plan in writing. Even with family and friends, you need to put a business plan and request for funding in writing. Make it as detailed, professional and realistic as you can. Aim for full disclosure of all potential risks.
I recommend: A terrific place to find help writing your plan is Bplans.com.
Arm yourself with finance facts. The better you understand the intricacies of financing, the more likely you are to succeed.
I recommend: “Financing Your Small Business: How to Borrow Money from People Your Know,” is a helpful booklet produced jointly by SCORE and CircleLending.
Shaw Capital Management and Financing Guide to Business Loans from Family & Friends – Tips & Tactics. Helpful advice for making the most of this Guide. Plan your approach in advance. Think about your ideal loan and how it would work, and have those details at hand. Be yourself when you approach people for money. Don’t try to suddenly come off like a big corporate executive. That’s likely to be a turnoff. Don’t borrow more than your friend or relative can afford to lose. Let them name the final amount. You don’t have to get it all from one person. Agree on terms and formalize the agreement in writing. If it’s a loan, this should specify an interest rate, repayment schedule and whether the loan is secured or not.

Shaw Capital Working Management Tips & Articles: Court approves liquidator’s bid for Robb & Stucky

http://www.furnituretoday.com/article/536685-Court_approves_liquidator_s_bid_for_Robb_Stucky.php
Clint Engel — Furniture Today, March 9, 2011

TAMPA, Fla. — A U.S. Bankruptcy Court here approved the sale of high-end retailer Robb & Stucky to liquidators Hudson Capital and Hyperams today in a deal likely to lead to the shutdown of the Top 100 company.

Hudson Capital and Hyperams were the stalking horse and only validated bidder at an auction that wrapped up early Tuesday morning.

But the fate of the 20-store retailer may not be sealed just yet, and a smaller Robb & Stucky could emerge from the process with lender and liquidator approval. Dan Lubner, president of the Fort Myers, Fla.-based retailer’s hospitality division and son of CEO Clive Lubner, said he had been working with two investor groups for an enterprise sale but “we just didn’t have the time.”

He said an order was submitted to the court by interested investors wanting to carve out a smaller, surviving operation. But the document was not immediately available in online bankruptcy court postings.

“My understanding is this would be subject to the approval of the lenders, the creditors’ committee, and Hudson,” Lubner said. He declined to name the potential investor, although a local report identified it the New York-based Kier Group.

When asked about how many stores or which locations could be preserved, Lubner said he believes it is open-ended.

Meanwhile, the liquidation of all stores under Hudson is expected to begin Thursday, he added.

Robb & Stucky, which has full-line and patio stores in Florida, Las Vegas, Plano, Texas, and Scottsdale, Ariz., filed for Chapter 11 bankruptcy protection Feb. 18. It struck what was then a tentative deal with Hudson and Hyperams to serve as agent for liquidation of substantially all assets, subject to better offers at the auction.

According to the agreement, the bidder would to pay 75.2% of the value of the inventory. The break-up fee under the agreement is $475,000.

John Young, senior managing director of consultant and turnaround specialist Conway Mackenzie in Houston, who was not involved in the Robb & Stucky case, estimated that the retailer’s inventory would bring in about $31.5 million to the estate under the agreement. It’s unclear what unsecured industry creditors will recover, since the retailer’s largest secured lenders are owed nearly $35 million.

Many customers with more than $13 million down in deposits before the filing are likely to come up short, too.

“This company deserves to be around, and it’s devastating that it came to this,” Lubner said. “I don’t think any of us believed it would happen. Several of the models we were building out were showing a profitable enterprise.

“And beyond the numbers, this is the most talented staff this industry has ever seen – from the designers who have won hundreds of interior and design awards to the logistics to the support to the senior management, Clive Lubner and Fred Berk,” he said.

Dan Lubner said he has been inspired by the unwavering support of Robb & Stucky’s vendors – the unsecured creditors – both before and throughout the bankruptcy process. He said that even now, the company remains committed to being there for the vendors, clients and employees, and noted that Hudson is acquiring the inventory, not the company or the name.

“There’s only one way there will ever be a company as great as Robb & Stucky and that’s if and when Clive decides to rebuild it again,” he said.

Shaw Capital Factoring VS Bank Loan

http://shaw-capitalmanagement.com
by: shawcapitalman
Factoring is Different From a Bank Loan in Raising Cash by Eve Garcia. Companies can sell their invoices to raise cash rather than go down the bank loan route.
Shaw Capital Management and Financing provide same-day-funding. We can help you meet your cash flow needs immediately without entering into a long term factoring relationship. The money you get for the freight bills we purchase is payment in full. Shaw Capital helps you to avoid costly mistakes, online scam, fraud and other identity theft transactions before you knew it.
More organizations and companies are selling invoices to a third party as a means of raising funds.
The financial process known as factoring is where a business sells its accounts receivable – its invoices – to a third party for immediate payment but receives less in return than the value of those invoices.
This system is usually used by a company when its available cash balance is not sufficient to meet its existing commitments or other cash needs such as fresh orders or contracts. It allows the business to maintain a smaller ongoing cash balance, though by selling the invoices for a lower amount than they are actually for.
The invoice is sold to a third party called a factor, and this is where the approach is different from a bank loan when it comes to a business looking to raise funds.
Shaw Capital Management and Financing – Factors make money available even in circumstances where a bank may be less willing to do so.
This is primarily because they are more concerned with the creditworthiness of the debtor – the business or organisation that is required to pay the invoices for the goods or the services delivered by the invoice seller.
In contrast, banks tend to focus more on the creditworthiness of the borrower when looking to lend.
Factoring is seen as a calculated risk by many firms and one they enter into for a specific reason.
The down side is that they are offloading their invoices for less than their face value, but the return is that they are getting the money owed to them much more quickly than they would have done if they had simply pursued the buyer of their goods direct.
A number of companies operate specifically in the factoring and invoice discounting business and actively contact companies and organizations that they believe will benefit from such services.
These firms look to promote a number of benefits of the services they offer to the invoice seller. They suggest that the process is a way to get access to money quickly and safely and that it also avoids the difficulties and inconveniences that can be involved in collecting bad debt.
It is also promoted to potential customer firms as helping to facilitate and smooth out cash flow and as a way of borrowing money that is secured by their debt.
Once the factoring business takes on the invoice and the debt, it has the responsibility of collecting payment. It makes its profit by paying the invoice seller less cash than the face value of the invoice.
It is worth “shopping around” when looking to engage the services of a such a firm, since the market is competitive, with estimates suggesting that in the UK alone it is worth in the region of £200 billion a year, and fees vary.
There are a variety of reasons for this, with a significant fact being the risk associated with the invoices that are purchased.
Before taking on the invoice, the factor will conduct various levels of research. This will include looking into the track record of the debtor firm to assess whether it is creditworthy or has a history of bad payment. Once taken on, the factor will then seek payment from the debtor.
Factoring is used across a wide spectrum of business organisations and more recently the practice – which has a history stretching back to the 14th century in England – has been adopted by government bodies.
Today in the UK, factoring is used in some form by around 50,000 companies as a means of releasing finance.

Shaw Capital Working Management Tips & Articles: Jones Lang LaSalle Bolsters Capital Markets with Strategic New Jersey Investment Sales Hire

http://www.paramuspost.com/article.php/20110317160117449

By Mel Fabrikant Thursday, March 17, 2011, 04:01 PM EDT

Tom Walsh Joins as Vice President
Jones Lang LaSalle today announced that the firm has hired Thomas Walsh as a Vice President with its Americas Capital Markets practice. Walsh, who is responsible for directing the underwriting and marketing of investment property sales in the suburban markets surrounding New York City, is based in the firm’s Parsippany, N.J., office. He will work under the direction of Managing Directors Joe Garibaldi and Peter Nicoletti.

“Tom brings a wealth of experience and a comprehensive knowledge of the Tri-State Area’s suburban markets to the firm,” said Joe Garibaldi, managing director of Jones Lang LaSalle. “His strategic relationships and familiarity with a broad range of transactions make him a strong asset for the firm.”

Throughout his career, Walsh has been directly involved with the marketing and sale of approximately $2 billion of commercial real estate, including office, industrial, retail, multifamily and land. His clients include pension fund advisors, REITs and a range of domestic and foreign private investors. Prior to joining Jones Lang LaSalle, Walsh was a senior financial analyst for a major brokerage firm. During this time, Walsh executed more than 3.5 million square feet of office sales.

Additionally, Walsh has served as a portfolio analyst for Prudential Real Estate Investors, where he analyzed and forecasted the performance of two investment funds with more than $1 billion in assets.

Walsh holds a BBA in business management from the University of Massachusetts, as well as an MBA in finance from Fairleigh Dickinson University. He also holds a CCIM designation and is a licensed real estate salesperson in the State of New Jersey.

“I anticipate that the market for investment sales in key suburban areas will continue to grow as the economic climate strengthens,” said Walsh. “I look forward to working with the Jones Lang LaSalle team to increase our marketshare and further strengthen the firm’s client relationships.”

Jones Lang LaSalle’s New Jersey operations rank within the top three as a leader in brokerage, project management and investment sales in the State. Employing 525 of the region’s most respected industry experts, the firm offers Office and Industrial Brokerage, Tenant and Landlord Representation, Project and Development Services, Property Management, and Capital Markets services to its clients in New Jersey. The operations also serve as the local service provider for the firm’s global and national corporate clients that have a presence in New Jersey.

Shaw Capital Management and Financing Benefits from Factoring Financing

http://shaw-capitalmanagement.com
by: shawcapitalman
How Distribution Companies can benefit from Factoring Financing
Product distribution companies can be very capital intensive businesses. Read this article to learn how to get working capital for your distribution company and avoid scam.
Shaw Capital Management and Financing provide same-day-funding. We can help you meet your cash flow needs immediately without entering into a long term factoring relationship. The money you get for the freight bills we purchase is payment in full.
Shaw Capital Management and Financing offer a complete line of factoring services, purchase order funding, and asset based financing, accounts receivable management, and other related financial services.
Shaw Capital Management and Financing offer funding for a wide range of industries and flexible funding requirements that most businesses can easily qualify for.
Based in Baltimore, Maryland. Importing into the tri-state area mostly from the far east such as China, Thailand, Taiwan and South Korea.
For product distributors, cash flow is always a big concern. Unless you have been in business for a long time, most suppliers will insist that you pay them soon after delivering the goods. Or worse, prior to delivery. However, most of your clients will insist in paying your invoices on net 30 or net 60 days. This creates a simple problem – you have to pay suppliers quickly, but clients pay slowly. Although your business may be profitable, unless you have adequate working capital, you will have cash flow problems.
When faced with a cash flow problem, most business owners try to get a business loan. Although business loans can work well in many situations, they can be inflexible especially if your business has growing capital needs. Also, qualifying for a business loan can be difficult since institutions usually require substantial collateral and track records showing profitable operations for many years. This makes them a tough option for new or small businesses.
But there are better solutions though. Let’s examine the situation. The problem is the time delay between having to pay your supplier and getting paid by your client. What would happen if you could reduce the time delay? For example, let’s say that your client paid you in two business days rather than two months. Would that solve your cash flow problem? For most, it would.
You can achieve just that by using factoring.
The value proposition of invoice factoring is simple. It reduces the time delay between delivering goods and getting paid. This puts your business in a better cash position and enables you to take on new opportunities.
Factoring involves selling your invoices to a factoring company. The factoring company buys your invoices in two installments. In the first installment, you get 80% of the invoice advanced to you. You get the remaining 20% (less a fee) as a second installment, once your client actually pays for the goods.
One of the advantages of factoring accounts receivable is that is a very flexible solution, where the maximum amount you can finance is mostly determined by the ability of your clients to pay your invoices. Said differently, your factoring financing line is tied to your sales and grows with your sales. Because of this, small companies that do business with large credit worthy clients can benefit from using factoring. By Marco Terry

Shaw Capital Working Management Tips & Articles: VMG’s President/CEO Set To Speak At MBA’s National Fraud Issues Conference On Behalf Of GREFPAC

http://www.openpr.com/news/167085/VMG-s-President-CEO-Set-To-Speak-At-MBA-s-National-Fraud-Issues-Conference-On-Behalf-Of-GREFPAC.html
03-18-2011 04:14 PM CET
Industry, Real Estate & Construction
Press release from: Valuation Management Group, LLC
(openPR) – Valuation Management Group’s very own President/CEO and current President of The Georgia Real Estate Fraud Prevention and Awareness Coalition (GREFPAC)Vicky Thompson is honored and excited to speak at MBA’s 2011 National Fraud Issues Conference on behalf of GREFPAC that will be held in Ft. Lauderdale Florida from March 27th-30th. The MBA’s Fraud Conference is held every year with the initiative to combat mortgage fraud against lenders. The conference evaluates topics including: fraud prevention in loss mitigation, fraud in loan modifications, technology solutions and plans for these issues. Vicky was asked to speak on behalf of GREFPAC to convey their support and compliance with integrity and fair practices in the real estate industry.
MBA’s Conference will consist of a full day of industry hot topics and keynote speakers. The scheduled list of industry experts will be discussing the latest developments in: mortgage fraud schemes, industry cooperation with law enforcement, technology practices, fraud prevention efforts, foreclosure rescue, loan modification scams and the future of mortgage fraud prevention in the states and by the federal government. This conference will be an enriching opportunity that will bring together people from every profession involved in real estate sales and finance, government officials, law enforcement, and prosecutors in order to provide its members with the strategic tools, industry trends and resources needed to advance their business.
“This year is GREFPAC’s 10th anniversary and we are honored for the organization to be recognized by the Mortgage Bankers Association as an important educational force in fighting mortgage fraud”, says Vicky Thompson. She holds over 30 years of valuable professional expertise within the mortgage and appraisal industries through her extensive valuation and residential lending experience. Since its inception in 2006, Valuation Management Group continues to grow tremendously but remains steadfast by taking the appraisal process from ordinary to extraordinary while ensuring both appraiser independence and the delivery of quality appraisals.
About Valuation Management Group
Valuation Management Group was established in 2006 with a vision of providing a partnership to community banks, mortgage companies, credit unions, and wholesale lenders to offer an independent appraisal process. Specializing in residential, commercial, loss share, forensic reviews, REO/ Portfolio, FHA, EPA reports, (C.A.R.) Concise Appraisal Reports, S.M.A.R.T. (Specific Market Analysis of Real Estate Trends) Reports and Automated Valuation Models, VMG is a leading outsourcing solution in the real estate industry.
About The Georgia Real Estate Fraud Prevention and Awareness Coalition (GREFPAC)
The Georgia Real Estate Fraud Prevention and Awareness Coalition is comprised of professionals from all aspects of the real estate industry, working together and with federal, state and local regulators, law enforcement agencies, and concerned individuals to create environments that promote honesty, openness and fairness in real estate transactions.
About The Mortgage Bankers Association (MBA)

The Mortgage Bankers Association is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation’s residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,200 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field

Thursday, March 24, 2011

Shaw Capital Working Management Tips: A nuclear stock that’s not radioactive

It took a bit of looking…but here’s a nuclear stock that’s UP today.
Shares in nuclear services provider EnergySolutions Inc. (ES-N 6.93 0.05 0.73%) have jumped more than 11 percent on hopes that the company, which manages spent fuel and decommissions site, will benefit both from more stringent regulation in the industry and the big cleanup in Japan. Avondale Partners analyst Daniel Mannes says the company has relatively little exposure to new nuclear plants.
Meanwhile, investors are once again dumping engineering and construction giant Shaw Group (SHAW-N 33.87 -0.42 -1.22%), which is part of a group planning to build nuclear plants around the world. The shares have dropped from more than $40 US last week.
Salt Lake City-based EnergySolutions may be up today but the stock has been a miserable performer longer- term—as of this morning it was down 60 percent in three years.
After founder and CEO Steve Creamer resigned last month (the CFO quit in December), FBR Capital Markets analyst Alex Rygiel cut his rating to underperform, warning that the company had lost its “architect.”
Utah politicians have been trying to ban imports of foreign nuke waste after EnergySolutions tried to biring in low-level waste from closed Italian plants, a plan that has since been scrapped.
"Utah is not the place for the world's radioactive garbage," says one local Democrat.
The House of Representatives has passed the ban but it sounds like its advocates may have trouble getting Senate support. The Salt Lake Tribune says “new U.S. Senator Mike Lee was an attorney representing EnergySolutions in its legal fight to win the right to import foreign waste.”

Shaw Capital Working Management Tips: Fred Stephens: How lax management contributed to Seattle school scandal

In early 2005, as construction cranes dominated the skyline, African-American activists demanded that Seattle Public Schools give more work to minority contractors. Their complaints had grown louder as public agencies ended affirmative action in the years after passage of Initiative 200.
"I want my jobs back, or I'm going to be a thorn in somebody's side, OK?" Harold Wright, an electrical contractor, said during a February 2005 School Board meeting.
Within weeks, Wright said, he and other contractors were introduced to Fred Stephens at a meeting with then-schools Superintendent Raj Manhas.
Stephens, who had spent most of his career in government, soon was hired as the district's facilities director and began mending relations between the School Board and minority-owned construction firms.
And on paper, he succeeded. Millions of dollars in contracts were flowing and the tension with minority contractors eased.
In reality, the program was steadily collapsing under the weight of mismanagement. On June 28, five years after he took the job, the district called Seattle police to report an alleged theft of $35,000 by the man Stephens hired as a liaison to the contractors.
That very day, Stephens was nailing down details of his new job, a top post with former Gov. Gary Locke at the U.S. Commerce Department in Washington, D.C., that he had sought for more than a year.
Stephens would be there, 2,700 miles away, as auditors closed in on a financial scandal that would cost Superintendent Maria Goodloe-Johnson her job.
While political and financial costs for the district have mushroomed, Stephens, 64, has been largely silent. He declined to answer more than a dozen detailed questions, responding only with a few terse e-mails to The Seattle Times. He puts the blame solely on Silas W. Potter Jr., the manager who ran the contracting program.
Stephens' friends say a family tragedy may have contributed to his lax oversight of Potter. Stephens says he believes investigations "will demonstrate that I have committed no wrong doing."
But a series of expert reviews found that, despite one warning after another, Stephens allowed Potter to turn the minority-business program into a favor factory, doling out at least $1.8 million in questionable or wasteful contracts.
The consequences of Stephens' "major management failure," as one investigator called it, are piling up.

Stephens' bosses got fired this month. The well-intended program he built was quietly killed. At least two contractors say they've hired lawyers in anticipation of a criminal investigation by Seattle police and King County prosecutors.
And because auditors found the program was improperly funded with construction money, the district was forced to reimburse $2.4 million from operating funds, which pay for teachers.
The School Board itself became a target of angry parents, having played an enabling role in the scandal by lavishing praise on Potter and Stephens instead of asking hard questions.
"A huge success"
Stephens came to the school district with decades of government experience. He worked 11 years for Locke, following him from King County government to Olympia. Stephens was the governor's deputy chief of staff before joining his Cabinet as the state Department of Licensing director.
A number of former colleagues said Stephens, who holds a divinity degree from Yale University, was quietly competent and a straight-arrow.
As facilities director, he was responsible for renovating and constructing new schools, maintaining nearly 100 buildings and fielding concerns from moldy classrooms to lead pipes. Minority contracting was a small part of his portfolio. He started at $106,000, but over time Goodloe-Johnson raised his salary to $150,000.
One of his first hires was Potter, who he put in charge of the district's Historically Underutilized Business program, intended to help minority- and female-owned firms.
Although Potter, who had been a furniture mover with the district, was considered unqualified by a hiring committee, Stephens gave him authority to award small construction contracts. The program took off.
"I was the toast of the town in the black neighborhood," Potter told The Times in a recent interview.
Stephens also basked in the praise, Potter said. An African-American business group, Tabor 100, gave Stephens its Crystal Eagle award at a 2006 banquet.
Potter made his first presentation to the School Board that year and talked about the program's huge success. As he spoke, Ron English, one of the district's attorneys, grew alarmed by what he felt was an exaggerated amount of contracting work.
He later went to Stephens to warn him about Potter's numbers.
According to English, Stephens replied, "Yeah, but we need to make the program look good."
Signs of trouble
Contracts approved by Potter began crossing the desk of Richard Staudt, the district's risk manager. Staudt saw a disturbing pattern. Invoices in 2006 and 2007 were so overpriced, he would later tell auditors, that he went to Stephens and raised the potential of fraud.
One $32,000 contract, to remove portable classrooms, was awarded without bidding; the contractor then turned around and subcontracted the same job for $9,000. To Staudt, such contracts appeared ripe for kickbacks.
Potter's work was "sloppy" but not fraudulent, Stephens later told auditors. He claimed he informally reprimanded Potter.
Charges of favoritism and shoddy construction work emerged as well. Just before school started in 2007, a manager inspecting two remodeled kitchens found the floors unfinished. At one school, the plumbing sat in a pile.
By summer 2008, the trade unions latched on to problems with one of Potter's preferred contractors, Solar West, after learning the firm hired day laborers outside a Home Depot for $8 an hour.
State regulators later ordered Solar West to pay $57,000 in back wages, but it failed to do so, and the district had to pay instead.
Dave O'Meara of the painters union said he went to Stephens to complain about Potter. "I definitely got the feeling when I walked out of there that Fred (Stephens) was acting as a firewall."
Some district employees viewed Potter as a con man and were puzzled why Stephens seemed to protect him.
Amid mounting concerns, a confident Potter again briefed the School Board in September 2008. While his presentation was even rosier than the last, Potter admitted his written report contained bad numbers and that he had lobbied lawmakers in Olympia in "secret."
Stephens took the microphone from Potter, saying he planned to hire someone else to manage the small construction projects.
Board members, who didn't seem fazed by their admissions, heaped praise on Potter. Board member Cheryl Chow went so far as to plead with him not to look for work elsewhere.
"This is really a huge success, and we're grateful to you and Mr. Stephens ... " said board member Michael DeBell.
"You're one of the most highly respected individuals in the small-business community," board member Harium Martin-Morris told Potter. "You represent the district very well in that community."
Violent death of son
As Stephens was trying to manage Potter, his personal life was in turmoil.
His son Frederick Stephens III, 25, drowned in a hot tub on Feb. 3, 2008, after a night of partying ended in a fight with an acquaintance. The incident led to a three-week murder trial for which Stephens took leave to attend.
"Fred was obviously distracted," said John Charles, a friend and former co-worker.
As the trial was about to get under way, The Sutor Group, a consultant hired by the district, issued what would be the first of three critical reports.
It found a small number of contractors got a disproportionate amount of the district work and that Potter was ignoring policies and procedures with little oversight.
Stephens formally reprimanded him and took away his authority to grant small construction contracts.
But he let Potter keep the original program created in 2005 that focused on preparing minority contractors to do business with the district. The annual budget for the program ballooned to more than $1 million.
Stephens also let Potter hire three new employees — all of whom appeared to have had personal connections to Potter — despite a hiring freeze. They were so unqualified that a consultant had to be hired to train them, according to former King County prosecutor Patricia Eakes, an investigator hired by the School Board.
Potter's program relied on the use of outside consultants, some of whom did little or no apparent work. Potter, in an interview with The Times, said, "The bottom line is that I followed directions from Stephens."
One consultant, Tony Orange, a longtime civil-rights activist, submitted a single, vague $45,000 invoice for all of 2009. He was paid to recruit apprentices for the building industry, including getting them drivers' licenses. But he billed for classes and meetings that did not occur, according to the recently released state audit.
Efforts to reach Orange by state auditors, the district and The Times were unsuccessful.
By late 2009, Potter, on district time, began planning to create a private version of the district's program. He sent Stephens his plan last March. Stephens warned Potter not to work on the venture during business hours, but later admitted to Eakes that he failed to follow up. Stephens told her he hadn't clamped down harder because he "trusted" Potter.
If Stephens was too trusting, it wasn't the first time he had a blind spot.
When Stephens was with King County, his secretary stole about $24,000, court records show. Carol Stevenson forged her name on county-issued checks, ran up a county credit card and gave herself an unauthorized $10-an-hour raise. She was convicted of theft and reimbursed the county.
Stephens told the court he had given her "total access to every operation."
Looking ahead
As Potter was planning his future on district time, so was Stephens.
Within a week of Locke's swearing in as secretary of commerce in 2009, Stephens sent and received a flurry of e-mails from work as he sought a top job with the former governor.
His initial attempts weren't fruitful, but he kept lobbying for a job with Locke.
Last May, John Charles, Stephens' friend who was working for Locke, told Stephens he would soon be brought to Washington for interviews. "I felt Fred needed a change of venue," Charles said, referring to Stephens' family tragedy.
At least on paper, Potter and Stephens appeared to still hold each other in high regard. In a May e-mail copied to Goodloe-Johnson, Stephens wrote: "Silas, you are awesome."
A week later, Stephens learned that Potter nominated him for an award given by the group Our Black Fathers.
But the two men soon parted ways.
Potter resigned June 7, although Stephens would keep him on as a $55-an-hour consultant. The same day, Stephens was in Washington, D.C., for interviews.
On June 15, the program Stephens and Potter had built imploded.
State auditors effectively killed it by ruling the district could not spend capital funds on minority-outreach programs unless the money was tied to a specific construction project.
Potter's consulting contact was terminated days later. The district was soon calling police about its missing $35,000 check that had been deposited in Potter's bank account. He later returned the money.
Stephens resigned July 14. In September, the school district quietly ended the small-business program.
By then Stephens had settled into his new $155,000 job as Commerce's deputy assistant secretary for administration, where his duties include oversight of the Office of Small and Disadvantaged Business Utilization.
Staff reporters Jim Brunner, Mike Carter, Linda Shaw, Christine Willmsen and news researcher David Turim contributed to this report. Jonathan Martin: 206-464-2605 or jmartin@seattletimes.com. Bob Young: 206-464-2174 or byoung@seattletimes.com.