Daily Archives: March 5, 2016

Opinion: Donald Trump’s business disaster is worse than you think

Marketwatch:

Donald Trump ran his public company into the ground, but pocketed millions for himself

For 10 years between 1995 and 2005, Donald Trump ran Trump Hotels & Casino Resorts — and he did it so badly and incompetently that it collapsed into Chapter 11 bankruptcy. His stockholders were almost entirely wiped out, losing a staggering 89% of their money. The company actually lost money every single year. In total it racked up more than $600 million in net losses over that period.

Trump was chairman of the board throughout the entire time, and CEO as well for about half of it.

This is the sort of record usually associated with an Enron or a WorldCom or a Pets.com.

Meanwhile, over the same period, all his competitors were enjoying an enormous boom. Take a look at our chart.

While Trump was running Trump Hotels & Casino Resorts into the ground, the Dow Jones index of gambling stocks — the index that Trump himself cited in public filings as his best benchmark — soared 160%. Investors in Harrah’s saw their stake go up by nearly 150%. MGM MGM, -2.56%  quintupled. These people were making out like bandits.

Donald Trump ran the worst performing casino company on the stock market. This isn’t a matter of “opinion.” This isn’t speculation or politics. It’s a matter of plain fact.

However, one person associated with Trump Hotels & Casino Resorts did make money:

Donald J. Trump.

A review of the company’s public filings show that over that period, while his ordinary investors were getting hosed, Trump himself was siphoning millions out of Trump Hotels & Casino Resorts through salary, “bonuses” — yes, really — and cozy “service agreements” or side deals with his private corporations.

Check out the relevant page from the 2003 public filing, for example:

SEC/SECinfo.com

Detail from Trump Hotels & Casino Resorts 2003 proxy statement showing Trump’s salary and “other compensation.”

In total, Donald Trump pocketed $32 million over nine years, while his public stockholders lost more than $100 million.

Follow the money. It really isn’t that complex.

Now his supporters want to put him in charge of the federal government. They actually hope he will do for America what he’s already done for his business.

Heaven help us all.

On a side note: To be fair, some career politicians too have ran this country into the ground thanks to those voters that them in charge of the federal government. Let’s not forget the politicians in office locally, statewide, and citywide.

SEC says Bank of America can omit shareholder’s break-up proposal

The Securities and Exchange Commission says Bank of America can omit from its upcoming proxy a shareholder’s proposal for the Charlotte-based bank to be broken up.

The shareholder, Bart Naylor, wanted investors to vote on having the bank examine the idea of divesting all of its non-core banking business segments. Bank of America, though, opposed having the item appear on its proxy for its annual shareholders meeting this spring.

In a letter to Bank of America, the SEC ruled in favor of the bank, which argued that Naylor failed to show he met eligibility requirements to submit his proposal.

Under federal rules, a shareholder cannot submit a proposal unless they have continuously held at least $2,000, or 1 percent, of the company shares that are eligible to vote. Those shares must have been held for at least one year at the time the proposal is submitted.

Homeowner accuses JPMorgan Chase of unconscionable conduct

Putnam Circuit Court Case number 16-C-49

West Virginia Record:

WINFIELD – A Putnam County man says that when he defaulted on his mortgage, his bank foreclosed on the house instead of working out a repayment plan.

Kyle E. Chapman filed a lawsuit Feb. 24 in Putnam Circuit Court against JPMorgan Chase Bank NA, alleging negligence, unconscionable conduct and tortuous interference with a contract.

According to the complaint, in 2011 Chapman received a mortgage loan for $123,216 under a U.S. Department of Agriculture program for low-income home buyers, serviced by JPMorgan Chase. The suit says that Chapman, who works two jobs as a lab technician, applied for a loan modification to help him afford the mortgage after the birth of his second child in 2013.

After Chase allegedlu denied the loan modification, Chapman says they offered him a repayment plan for $1,553 a month, nearly double the original monthly mortgage payment amount. Chapman says that Chase was unwilling to work out an affordable repayment plan, and instead foreclosed on his home on Jan. 5.

 

“It’s A Depression” – The Disturbing Email A Houston CEO Sent His Soon To Be Laid Off Employees

Zerohedge:

This is the email that David Little, Chairman and CEO of Houston-based DXP Enterprises sent to his employees to explain why, “due to bank obligations and to continue a positive cash flow profile” the company has to freeze 401(k), why it is cutting pay in some cases as much as 60% and  why many employees are about to lose their jobs in the middle of what is an “oil and gas depression.” It is a disturbing read.

Dear DXPeople,

 

As you well know, these are very challenging times for everyone in the oil & gas industry and other industrial markets. We are working hard to navigate both the challenges in oil & gas and an industrial recession plus what appears to be continuing softening. Normally, when upstream oil and gas is down the rest of the industrial market is booming, not this time!

This past Friday, we announced our fourth quarter and year-end results. Our revenues were down 17% from a year ago and 27% from the fourth quarter of 2015 versus the fourth quarter of 2014. Fiscal year 2016 has started off even weaker than we anticipated with January sales down an additional 12% from December. Oil and gas related companies across the country have reported sales declines as high as 50% – 60%. All of this in the midst of declining industrial confidence and performance. Furthermore, the forecast by experts suggests the oil & gas economy will get worse before it gets better. We are currently 20 months into this oil & gas down cycle which is also unusually long for a correction.

 

It goes without saying but over the past twelve months, we have all made efforts to contain costs and improve operations where possible. All, while focusing on growth. For this, we thank all of you for the sacrifices, discipline and effort you are making each and every day. But I am sorry to say that because of bank obligations and to continue our positive cash flow profile, we have to do more.The leadership team and I have been reviewing line-by-line every location, budget and expense, on how we can reduce costs while considering every decision through the prism of our values, culture and priorities. While we fulfilled a $2.9 million company match to our U.S. 401 (K) savings plan for 2015, we have determined it should be frozen immediately for the remainder of 2016. The Board of Directors, senior management and leaders in management positions will participate in a 10% reduction in base pay effective March 14th. Additionally, DXP as a whole company will require that we right size the company for our expected sales volume. This is in an effort to reduce labor costs while preserving as many DXPeople as possible in this uncertain economic environment.

 

We have all taken pay reductions over the last year with some of us taking reductions as high as 50% – 60% (via commission or bonus declines) including senior management. It is unfortunate, but the prolonged oil and gas depression and industrial recession has left us with no other choice but to make these difficult and unwanted moves and decisions.

 

The fastest and biggest cure to the health of DXP is more sales. Your expectations and mine are that the sales management, sales professionals and everyone else that touches our customers is working smart and diligently as we are all counting on you! DXP has given you some great weapons to be successful with and we are supporting and counting on your efforts to win each order. I am not going to list all the tools you have to win with, you should know what they are and understand how to use them already, but to use the “Hunter” and “Farmer” label you have to do both. “Farm” existing accounts to capture more of each customer wallet/spend and “Hunt” for new customers. We have the customer value propositions to sell and you have the selling skills to succeed.

 

Over the last several months, we have seen countless companies announce layoffs and in isolated incidents even bankruptcies. I point this out to try and put in context that the oil and gas depression is affecting more than DXP and is further reaching than many would have initially thought when this started over 2 years ago. The decisions we make are about preserving the future of DXP. DXP is a great company that is accustom to winning and we will win again. I can promise you that the leadership team will do all that we can to put us in a position to emerge stronger on the other side while staying true to our values and culture. Thank you for your understanding.

 

Respectfully,

 

David Little
Chairman & CEO
DXP Enterprises, Inc