Mark Cuban on net neutrality: FCC can’t protect competition

Gigaom

As someone who takes her cues on net neutrality from Gigaom’s resident expert Stacey Higginbotham or, failing that, John Oliver, this is hard to admit: Mark Cuban may have a point on why the proposed net neutrality regulations may be a cure that’s worse than the disease.

If adopted, he maintained, these regs will open the door to more confusion, more litigation and more overall turmoil, none of which will serve consumers well. Before you throw your device at the wall, just give him a listen. Cuban, the serial entrepreneur who started out as a VAR before founding Broadcast.com which sold to [company]Yahoo[/company] in a $5.7 billion stock deal in 1999. He is now owner of the Dallas Mavericks, co-star of Shark Tank and CEO of of AXS TV  and interestingly a star of new AT&T commercials. The hyphens just keep coming.

Here’s his gist on net neutrality. He doesn’t think the big…

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MLPs

Upstream management teams wasted no time in 2015 setting investor expectations for lower distributions in light of weakening energy prices, sending units higher on the new year’s first day of trading. The announcements from Linn Energy and Breitburn Energy both reinforced the assumption that higher production will continue through 2015 while hedges roll off the books, adding more supply to a market still searching for an equilibrium. Natural gas hit a 27 month low as the northeast has yet to have much more than a dusting of snow and a few days below freezing. All in all, a challenging time for growth initiatives across the energy value chain, including LNG projects, which are struggling to find committed buyers. MLP growth rates beyond the latter half of 2016 will be highly speculative and largely dependent upon higher prices. Those units which can financially engineer distribution growth by dropping down solid EBITDA assets will continue to be of greatest demand by total return investors.

The Alerian MLP Index (AMZ) closed out the year with a third straight negative month and the worst month (-5.6%) since May 2012 (-7.5%). AMZ finished down 12.3% for the fourth quarter, its worst quarter since Q4:08 and the third worst quarter ever recorded by AMZ. MLPs rebounded a bit in the last 2 weeks of the year, averting what could have been a much worse month. That late burst gave AMZ a positive total return for 2014 overall, but a much lower return than the S&P500 or utilities in 2014.

2014-Review

The Department of Commerce released an FAQ to help the markets understand the current conditions for crude exports, a little nudge by the Government to perhaps encourage more light condensate exports. Some estimates suggest exports could increase by 1MM bpd, helping Eagle Ford producers realize a higher price and provide an outlet for excessive supply. The EIA charts below are a visual reminder of the tremendous increase in US production and exports since 2010:

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Unit Movers
The new year brought more demand for Sponsor drop down growth units MPLX and Shell Midstream, both of which are yielding below 2% with 25% CAGR growth rates and the expectation that drop downs will occur more rapidly in 2015.

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Index Uncertainty
The Alerian MLP Index requires that existing constituents maintain or grow their distributions, otherwise they will be discarded on the next the quarterly rebalancing, next scheduled for a March 6th calculation. With approximately 4% of index weighted allocated to upstream producers, two of which have already reduced their distributions, there is the potential for up to 5 units to be replaced, as illustrated in the below table. The impact of such a change will likely reduce volatility in the index and linked packaged products, and provide limited upside if and when energy prices recover. It is certainly an interesting time for Alerian to be for sale along with the ETF’s and ETN’s which track their indices.

Online Banks Fill Funding Needs for Small Business

Banks are the principal source of outside capital for small businesses, but there have always been alternative forms of loan capital available, including credit unions, Community Development Financial Institutions (CDFIs), merchant cash advances, equipment leasing and factoring products.

Historically, this segment of the market has been small compared to the $700 billion in small business bank credit assets. But since the onset of the financial crisis, and particularly during the economic recovery, there has been significant growth in innovative, online alternative funding for small businesses. The outstanding portfolio balance of online lenders has grown about 175 percent a year, compared to a decline of about 3 percent in the traditional banking sector. However, it still only represents less than $10 billion in outstanding loan capital.
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The first wave of tech-based alternative lenders included companies like OnDeck Capital and Kabbage and can be referred to as online balance sheet lenders. Their loans typically are short-term, less than nine months, and fund working capital and inventory purchases. Many of these loan products operate similarly to a merchant cash advance, with a fixed amount or percent of sales deducted daily from the borrower’s bank account over several months.

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Clearly new online entrants present a challenge to established players in the small business lending marketplace. They have been on the scene since 2007, but momentum has increased significantly in the last 12 to18 months. Lending Club recently filed for an IPO with a valuation of approximately $4 billion, and OnDeck is preparing an IPO later this year that has been valued at $1.5 billion.

While the online market is in the earliest stages of transformation, it is clear that the traditional small business bank lending model has left gaps that, with the help of technology, challengers are finding promising and profitable. This should benefit small businesses who, despite having to deal with higher interest rates in some cases, could find more transparency in product and pricing options, lower search costs, and better speed and customer service.
Online Banks Fill Funding Needs for Small Business .

As cash flow flattens, major energy companies increase debt, sell assets

Cash from operations for major energy companies has flattened in line with flat crude oil prices, which have had the lowest price volatility in years. Based on data compiled from quarterly reports, for the year ending March 31, 2014, cash from operations for 127 major oil and natural gas companies totaled $568 billion, and major uses of cash totaled $677 billion, a difference of almost $110 billion. mainThis shortfall was filled through a $106 billion net increase in debt and $73 billion from sales of assets, which increased the overall cash balance. The gap between cash from operations and major uses of cash has widened in recent years from a low of $18 billion in 2010 to $100 billion to $120 billion during the past three years.

Average cash from operations from 2012 through first quarter 2014 increased $59 billion, or 12%, compared to its 2010-11 average. At the same time, major uses of cash increased by $136 billion, from an average of $548 billion in 2010-11 to $684 billion in the 2012-14 period. While capital expenditures, typically the largest use of cash, accounted for most of the increase, cash spent on share repurchases increased $39 billion on average. In fact, net share repurchases was a source of cash for the 2010-11 average, changing to a net use of cash in mid-2011.chart3
To meet spending with relatively flat growth in cash from operations, companies increased their borrowing. When comparing the major sources of cash for the first quarter only, the net increase in debt has made up at least 20% of cash since 2012.

via – U.S. Energy Information Administration EIA.

Love is … an equity rally?

“There’s no euphoria,” the hedgie moaned. “This is the most unloved equity rally that I can remember. And of course, equity markets tend to fall off a cliff every seven years. Think 2000 and 2007!”20140803_BAMLVOL1_0 As geopolitical uncertainty swells, it does appear that investors are overly complacent. There has not been a 10% retracement in the US indices during the last two years, yet US 10-year Treasury yields hover around the surreal level of 2.5%. And then there’s Europe, with it’s over-valued currency and treacherously low government bond yields. For how much longer can the key central bankers – garden gnome Janet Yellen, and matinée idols Mario Draghi and Mark Carney – continue to keep all the balls in the air? economic-policyOne balloon that has certainly been punctured over the last seven years has been that of the freewheeling, self-satisfied, banking industry. By some metrics, the industry has been squashed, like an unfortunate ant, under the heel of overweening regulators. But if you turn the glass the other way up, the industry has not suffered as much as some imagined, when capitalism trembled on the edge of the precipice in October 2008.

Full article: http://www.euromoney.com/Article/3367954/Category/204/ChannelPage/8949/Abigail-with-attitude-Love-isan-equity-rally.html?copyrightInfo=true

Buy Google Cardboard – Experience Virtual Reality for Yourself

We believe virtual reality will be the next major entertainment platform, with Facebook uniquely positioned as we discussed in our 7/23 blog post (click here). While we expect consumers to be able to buy Oculus headsets by the end of 2015, we believe it will be far easier and cheaper for the masses to enjoy virtual reality experiences using their pre-existing smartphones. Consumers will simply need to purchase some form of head gear device that carries your phone. The screen quality on most high-end smartphones today is already good enough to create high-quality VR environments, especially on Android phones with larger screens.

Thankfully, a team at Google has made it so anyone with an Android phone (running Jellybean 4.1 and above) can experience virtual reality today, by creating Google Cardboard. Google Cardboard was announced during the 2014 Google IO event keynote on June 26, 2014. The following day, the team that created Cardboard gave an in-depth presentation (the more detailed Cardboard presentation is embedded to the right and is a very interesting watch to understand how and why Google Cardboard came to life).

Google Cardboard Developer website with FAQ: click here http://https://developers.google.com/cardboard/
The simplest and fastest way we found to buy Google Cardboard is via Unofficial Cardboard’s website, where you can buy a pre-assembled, fully-functional Cardboard kit with NFC for $21.95.

BTIG Research » Blog Archive » Buy Google Cardboard – Market.

CrunchBase Weekly Market Momentum

This week venture investment in healthcare made the biggest jump, led by venture rounds from Sancilio, Neograft and DICOM Grid. The eight venture rounds totalling $38.45M far surpassed the $5.35M raised over three rounds last week. Software startups recorded the most funding rounds over the last seven days, including a $70M round for AppDynamics. The 33 total rounds this week is up from the 29 during the week prior.
screenshot 3Travel startups cooled down after seven companies (from six different countries) were funded last week including a notable $80M Series B for FXTrip, based in China. Just three travel startups were funded this week, for a total of only $3.37M.

Enterprise Investments Surge To Over $5.4 Billion

The amount of capital invested in these startups has already surged to over $5.4 billion in the first half of 2014. That’s roughly the same amount that enterprise-facing companies raised in the entire year for 2013.

The surge in investment dollars is actually accompanied by a slowdown in commitments to new technology companies, indicating that investors’ confidence in the sector’s strength is matched by a belief that this current crop of business technology companies is maturing. In the second quarter of 2013, investors backed 328 startups in the enterprise software category, by the second quarter of 2014 that number had declined to 205.

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While the numbers indicate a slowdown in the commitments going to business-focused technologies, some investors insist this is only the beginning. The idea of selling software as a hosted online service has been around for nearly a decade, beginning with the Salesforce.com customer relationship management revolution, but the technologies that are moving to the cloud were never part of core business operations, they argue. Now, these hosted software businesses are everywhere, and taking over core functions that used to be the purview of internal information technology departments.