Above the Fold

Where Is All the Cash Going?

The pandemic has triggered meteoric shifts in how companies do business, allocate resources and think about fiscal strategy. Government loans, cancelled deals and divestitures have not only become more common, they are generating loads of capital. According to Dealogic, more than $28 billion in U.S.-traded stock has been sold across eight large secondary transactions to date in 2020 — the most on record for the period. 

Boards are also rethinking minority stakes in other companies as the most effective use of capital, while others are rushing to raise money via the capital markets. Since March, $148 billion has been raised in the equity-capital markets, also a record quarter, according to Dealogic. For some businesses, the divesting strategy may be to get hyper-focused on a core competency or to cut losses and investments in other companies or industries hit hard by COVID-19, or those that may have a tough time adapting to the future of commerce.

Ironically, marketing seems to be one area actually accumulating capital during the pandemic. According to the latest CMO Survey from Duke University’s Fuqua School of Business, marketing spend rose to 12.6% of overall budgets in May from 11.3% in January and, as a percentage of revenue, leapt nearly 33% during the same period. In a fast, digital world, where visibility, messaging and relevance is key, executives may be finally starting to see the value and merit of these often hard-to-justify expenditures. 

Three Things 

1. Ma’s Keeping the “Ant,” Dumping Finance – Chinese financial technology giant, Ant Financial Services Group, is removing “finance” from its name. While there’s nothing wrong with finance per se, more than 60% of its employees are focused on technology solutions. The company wants to appeal to broader, more tech-related customers and be known as “Ant Group Co.” Ant Group is an affiliate of Alibaba Group Holdings Ltd., founded by billionaire Jack Ma.
2. Apple May Set Social Distancing Tone for Many – For more than 30 years, Apple has hosted its Worldwide Developers Conference (WWDC) in large gathering areas. It was a way to bring “smart strangers” together to help solve problems and create great things. The WWDC has been a model for many tech conventions to follow and will be completely virtual this week. Experts believe that Apple’s decision to go virtual, and the techniques it and others use to engage, will spawn new, creative ways for people to interact virtually and save time and money on travel, setup, etc. 
3. Some Retailers Still Bet on “The Old School Way” – In a world where everything seems to have gone “virtual,” T.J. Maxx, owned by TJX Cos., isn’t changing their strategy one bit. CEO Ernie Herrman told analysts that ecommerce will not be a major leverage point for them moving forward and that he sees eager shoppers flooding the more than 4,500 stores across its different brands. Apparently it’s working, as sales are up year over year. 

Did You Know?

The Latest (Fact-Checked) COVID-19 Positives

• A large study of more than 20,000 patients showed “robust evidence” that convalescent plasma is not only a safe treatment, but is associated with improved survival among very ill patients.
• Some patients who recover from COVID-19 are testing positive again. While that sounds like bad news, guidance from the Centers for Disease Control and Prevention suggests that many of these “recurring positives” are likely due to how patients may test positive in the first place. Several types of tests look for the virus’ RNA (genetic code), but some tests can’t decipher whether that RNA is a complete, active virus or simply RNA remnants that may stay in the body long after a patient has recovered and is non-contagious.