Trov and Waymo Continue Mainstreaming Driverless Cars

by Michael Keane

In a move that continues the trend towards mainstreaming driverless cars, Waymo and Trov have partnered up on the insurance side of the business. Waymo has already partnered with Fiat Chrysler on using its vehicles for the test

In an article (link here) written by Darrell Etherington ( @etherington ) and published by TechCrunch, the companies will be partnering to cover passengers lost and managed property. This was first reported by the Wall Street Journal.

On another note, a congratulations goes out to Phoenix AZ leadership for getting these vehicles on the road. A link to the story on that is here.

KeaneVCC continues to see the trend towards driverless cars moving forward. Some previous posts on the subject are below.

Electric/Driverless Cars Part 1

Electric/Driverless Cars Part 2

Electric/Driverless Cars Part 3


 ** This blog is used for opinions and ideas and should not be used as a direction to act without doing your due diligence.**

12/9 Week In Review 12/12 Week Looking Forward

This was an active week for Keane Venture Capital and Consulting. A bullet point list of past and future activities are below for each of the ventures.

KeaneVCC

Last Week
- Received royalty check from Mascot Books for Bullied Comics (link here)

- Announcing new products for sale for Bullied Comics in the next couple of weeks.


KDK Fund

Last Week
- Received Dividend from Ford (link here).
- Wrote article on the rise of stocks and bonds (link here). 

Future

- Expecting another purchase of Ford shares in the coming weeks.


KDK Options

Last Week

- Closed TLT trade at Stop Loss
- Opened new FXY trade (link here).

Future

- Researching new trades for 2018


 ** This blog is used for opinions and ideas and should not be used as a direction to act without doing your due diligence.**

Royalties, Royalties, Comic Book Royalties!

A royalty check from Publisher Mascot Books came in the mail today! Congratulations to our partner Bullied Comics!

A big Thank You to Mascot Books, Bullied Comics publisher. If you want to join the many and download the comic, click on the following link here.

 

60 Minutes Segment on Opiods

by Michael Keane

CBS' 60 Minutes has just done a major story on the Opiod issue in the United States. The story put a particular focus on the political web that has been created by Congressmen, Manufacturing, Distribution, and Health professionals. The story is here and the video of the story is here.

We thought it would be a great addition to our recent blog post (here) about why Methadone is free but Cancer Drugs cost a fortune.  This is an issue that can only get brighter as the country continues to fight itself trying to create an acceptable health care plan.

** This blog is used for opinions and ideas and should not be used as a direction to act without doing your due diligence.**

3rd Quarter Highlights

by Michael Keane

The third quarter was one of growth for KeaneVCC. A breakdown by entity is below.

KeaneVCC

- Consulting
     - We are continuing to work with Bullied Comics. The comic continues to sell as royalty checks from partner Mascot Books keep coming. New promotional items are coming in the fourth quarter.
     - KeaneVCC's charity arm made a donation to Shriner's Hospital Chicago during the quarter.
     - Articles written on this blog page and others continue to gain larger readership.
     - Companies like Acura, Fidelity, and Northeastern Illinois University advertising on our blogs
     - Social media traction (Facebook, Twitter, etc.) continue to grow. 


KDK Fund

- The fund was able to purchase more shares of Ford. The link to the purchase is here.
- A dividend was received with portions reinvested and planned for charity. The link is here.

KDK Options

- Both positive and negative trades have happened during the quarter. See relults at KDK Options.

 ** This blog is used for opinions and ideas and should not be used as a direction to act without doing your due diligence.**

High Cost of Cancer Drugs While Methadone is Free

by Michael Keane

Recently, there was a meme that asked why methadone is able to be provided for free while cancer drugs cost a fortune. With the healthcare debate in full force, situations that involve cost and pricing are more likely to find the spotlight. There are some reasons that are part of why this type of action happens and some actions that can take place in order to assist in this issue.  

On the methadone side of the equation, it is perceptively better for the government to get addicts back to a certain level of health. The drug also was created in the 1930’s and 1940’s and therefore the production cost is quite low. But it is interesting to see how the massive rise in opioid deaths (quadrupled since 1999)1 has caused the government to pay for methadone and other opioid drugs at a much higher level. This rise in cost has been noticed by hospitals and the general public with some starting to wonder if their is a better use of funds for rehab drugs, namely not using what can only be considered a proliferation of opioid treatment drugs.

On the cancer side, there are two big areas (of many) that can be addressed.  The first major comparison is the realization that, unlike methadone, it takes nearly a fortune to get any successful cancer drug to the market. There are also many drugs which fortunes are spent on that never get to the market. To initially recoup these costs, prices are generally set fairly high. But because the public is becoming more and more aware of the pricing, there are efforts within the government and drug manufacturers to work on the time a drug can get to market. This will affect the cost structure for the companies that will hopefully be passed down to the patient.

The second, is that investors like you and me demand a certain return on our capital investment in the company creating the newest and greatest cancer drug. Yes, part of the fault belongs to us.  If you, like me, have a 401k or pension level retirement account, the likelihood that ownership of shares in the drug companies that charge these high prices is very high.  We as investors are either ignorant to or have recognized and demanded through expectation of higher stock prices and dividends that the companies charge high prices for their cancer drugs. If you are a fund manager, please take note. The wild thing is that the unfortunate circumstance of the growth in profits from the increased pricing is in the end hurting our financial value overall. This is due to the fact that the personal cost of the drugs are overwhelming the growth in profits we see in our portfolios. In fact, the majority of the positive effect from the higher prices continues to be given to the executives of these companies. You regularly hear of the millions that the executives make in bonuses while you and I might make an extra few dollars per year in dividends. This process isn’t working.   

One simple way to change to pricing structure is stop owning the shares of the companies charging these higher prices. If this done on a massive scale (aka retirement fund, pension fund), and they no longer have the capital to build their drug database, changes in pricing can occur. Just last year Mylan was discovered to basically fleece customers with EpiPen pricing. Once it was found out and basically only when funds started looking at selling shares, the company moved to better align pricing. Another is to create a list of highest priced drugs. If society made a public list of the most egregiously priced drugs, the companies might pay attention and lower prices. Getting this to work will take work. But if we are truly fighting for our families and friends, this might not be a bad action to take up.

Thank you

1 - NPR Methadone article

2- Wikipedia/methadone

Business Update (KDK Fund, KDK Options, Consulting)

by Michael Keane

Here are some updates on what the company is doing. The year continues to go well. Assets under KDK Fund are growing. Trading operations and strategy for KDK Options continue to evolve and improve. Work with Bullied Comics is developing nicely. Readership on blog posts for all entities continue to grow.  If your company is looking for research to be done or analysis on a current project, let us know at keanevcc@gmail.com and we will get to work!

KDK Fund

More shares of Ford continue to be bought. Purchases were made in June (here) and July (here). There was a shift in management to bring about more value to shareholders. The plan to start the call selling program is still on track to start later this year.  The effect on reinvested dividends on future dividends continues to be strong.

KDK Options

Spread trades have begun to dominate the strategy for KDK Options. Many successes have occurred lately due to the focus on spread trades. In the summer quarter alone, successful spread trades in the Japanese Yen ETF FXY (post here), Ford (post here), and BAC (post here) have occurred. There is a current spread trade with Bank of America (link here) going on now. Not one trade executed this quarter resulted in a loss. But this is not to be the expectation :).  

KeaneVCC

Work with Bullied Comics continues. Areas of work include content development including its YouTube channel (search bullied comics), product development and media communication. Some recent blog posts from KeaneVCC (link here) include topics such as Self Serving Bias, and donations to both Shriners Chicago Hospital and Northeastern Illinois University.

How Self Serving Bias Influences Your Business

by Michael Keane

Biases are everywhere. Like anything else, they can be good and bad for an organization. One important bias needing monitoring is the self serving bias. Psychology Today defines it as attributing positive events to themselves and negative events to others. It is very dangerous for a company or industry when this bias is present in a strong manner. Especially when the marketplace moves forward from the workings of the organization. Having a self serving bias can endanger the business’ value. KeaneVCC regularly uses as much transparency as possible to analyze what were the most truthful and important factors in creating results from its processes and the processes of its partners. How present is the self serving bias is a question regularly asked.Using systems like transparency can limit this bias and provide better decision making and therefore create better results for the company and industry.

The energy industry is going through this to an extent. Recent reports in the news have shown that there are companies and executives within the industry that are unfortunately are just now acknowledging the present and future success of electric vehicles. Recently, there have been story upon that showed executives are understanding the level that electric vehicles will have on their industry. This should have  happened a long time ago. It is pretty clear that the self serving bias was part of the delay.

KeaneVCC clients KDK Fund and KDK Options run into this also. The ability to switch and remove a bad investment comes regularly with a fight with self serving bias not wanting to be wrong. It's very easy in this industry to unload the responsibility onto others and accept the successes as a product of your own genius.

Transparency has been a good way to understand how to overcome this bias. This is a place where the board of a company or industry council can really work its magic. Having a part of the team that analyzes possible scenarios that go against can have a long term positive benefit for any organization.   

There are some questions you can ask to find out how influential (there is some self serving bias in most decisions) this bias is and how appropriate that level is to your company or industry's risk is. Is the successes and issues with the company or industry self driven or outside driven? If the answer is one way for the successes and the other for the issues, there is probably a wonderful opportunity for change.   

Thank you!

Is there someone you know that might benefit from this? Be sure to pass it on. Would you like to be on our mailing list?  Click on this link (here) to register.

 ** This blog is used for opinions and ideas and should not be used as a direction to act without doing your due diligence.**

New Donation Made to Shriners

Hello

KeaneVCC has made another donation to Shriners Chicago! KDK Options made some wonderful trades in the Japanese Yen and Ford over the last month to make this happen.

Donating a portion of revenue instead of profit is a different way of running the business and continues to build overall wealth, not just financial wealth. Donations to charity also will not get recorded on its tax form. KeaneVCC wants to make sure that its commitment to charity is complete and the benefit is received solely by understanding others are being helped.


** This blog is used for opinions and ideas and should not be used as a direction to act without doing your due diligence.**

New Donations Made to Shriners' and NEIU

Because of the hard work of KDK Fund (dividends), KDK Options (option trades), and Bullied Comics (1st edition customer purchases), KeaneVCC has been able to make donations to both Shriners Hospital of Chicago and Northeastern Illinois University's College of Business and Management. The donation to NEIU was made through the Goodwin Challenge (see here).

Being able to contribute to the areas of health care and education is very important to KeaneVCC.

** This blog is used for opinions and ideas and should not be used as a direction to act without doing your due diligence.**

Week of June 18-24 (Bullied Comics, KDK Fund, KDK Options, more)

The following items happened with KeaneVCC and its partners.

KeaneVCC

- Increased exposure to idea that war is prevailing option for oil price rise including CNBC and John Kilduff. The story link is here.

KDK Fund

- Ford shares end the week at $11.08. Expectation is to be adding to position in the next 3 weeks.Visit kdkfund.blogspot.com or www.facebook.com/kdkfund for more.

KDK Options

- BAC straddle is still going ton. Another stress test result is due next Wednesday. Currently looking for another trade.Visit kdkoptions.blogspot.com or www.facebook.com/kdkoptions for more.

Bullied Comics

- New pic sent out on facebook (link here). Don't forget to go to this link (here) to purchase your copy of Book 1! Proceeds go to help anti-bullying campaigns.

Philanthropy Idea

by Michael Keane

There are many reasons to give and be philanthropic. Maybe it is ingrained in you as a personal habit. Maybe you don't have access to being philanthropic during your work days. Maybe there is a cause close to you as a person because of family and friends.

Recently, Jeff Bezos sent a tweet requesting ideas on how to improve philanthropy. My thinking is that a shift in how value is shown to donors could be improved. This post is my response to his request. 

Way back when, a researcher named Dr. John Landers was able to garner some funding to fight ALS through the Water Bucket Challenge (Washington Post story here). He was able to find a gene breakthrough and received some major news coverage and extra funding for it. The link to our blog post about is here. There is also the X Prize series where there is a monetary and other material value prizes awarded to winners of challenges. It seems that this is an area where philanthropy could benefit. It needs to happen more.

Some issues with this include the unspoken secrecy that goes on with philanthropy. Organizations are regularly very protective of their funding and bypass certain opportunities in order to keep that funding stable. This seems to be short sighted. Also, patience in terms of success in finding cures or alleviating issues is required and sometimes tough to digest in the short term. There is a lot of little failures before the big success and that can take a toll on those who give.

That is why promotion of successful processes within the philanthropic community is so important. It will keep the focus going and create new opportunities when that success in funding a philanthropic adventure is created.

So the idea is this. Promote successes through action. Actions include social media posts, news media, etc. Drive down in the promotion to include as many as possible who spent time and resources contributing to the success (donors, organizers, researchers, etc.). The more the merrier. Focus the messaging on unsuccessful research should be formulated as learning experiences, not failure. Sometimes learning that something doesn't works saves resources and time in the end.

More promotions should equal more success.

Thank you! 

Good luck to all!

CNBC Interview Supporting Oil War Thesis

The following CNBC Closing Bell interview between John Kilduff of Again Capital and Kelly Evans shows that the thesis on tensions being the only major catalyst for a rise in oil prices is growing in popularity.

The link to our story is here.

The link to the CNBC interview is here.

** Please due your due diligence. These are opinions and should not be acted on without your own research.**

Oil's Coming Transition from Autos

by Michael Keane

It seems as if the car industry is moving off of oil, thereby creating a great question. What are the plans for the major companies? One guess is that they (the major ones) just squeeze out the smaller companies through market capitalization moves and let the next generation deal with the issue in a more head on way. Another way is to create a global situation where war hurts supply while driving up demand in the short term and let the next generation deal with the issue in a more head on way once peace is around again. A third option is to be pivot to the coming rocket industry while still supplying the current need in the car industry.

The first two options are classic and will end in general failure for the company and their investors (who is probably anyone holding a retirement account of any kind). We have seen both options used in the past. We can even see them being used right now in different industries. In terms of the war choice, the Iraqi war can be considered such a war. It brought oil prices up around $100 per barrel, for the price to crash back into the 30’s and 40’s when peace has a greater global hold.

The rocket industry is growing at a very high rate. New companies and new technologies at existing rocket companies are driving this industry forward. SpaceX continues to innovate and increase the number of flights to space. International flights are becoming more common.

There was shift in the oil refining industry 100 years ago that is important to look back on. Most oil was refined into kerosene back then for lighting purposes. That was the key revenue driver. But when electricity came to be found as an alternative, what were oil companies to do? The ones that were led by innovators like Rockefeller did not whine and cry. They did not put all their productive energy into trying to inhibit the electric industry’s ability to innovate the lighting space (although some energy was placed there). No, they researched and found autos to be their next big client. The oil industry today needs to take the same approach when it comes to electric vehicles. They are not going away. Move on to the next opportunity. It looks like rockets.

The oil industry is at a pivot point. The transition from autos being the heavy client to another entity being the heavy client looks more likely each day. The question is will the transition be peaceful or bloody.

WAR (and nothing short of it) Will Raise Oil

Six months ago, OPEC and some non-OPEC oil producing countries agreed to cut production in order to raise the price of a barrel of oil. The main reason for this is that in just 8 short years, the price of oil has fallen from $130 per barrel to now just under $50 per barrel . But six months into the process, oil producing countries and companies are starting to figure out just how tough this endeavor will be. Countries and companies alike have shut down production to their economic limits and have found that this has not raised the price of oil enough to their satisfaction. The continued pressure on the price of oil is both a supply and demand issue. Some of the problem can be attributed to more oil having access to get to the market. Also, the demand algorithm around the world for oil is changing with sustainable sources grabbing an increasing larger part of the market.  

Not 10-15 years ago, the world was of the opinion that the oil supply would likely be used up in a couple of generations. Prices were over $100 per barrel for more than a few years. Is anyone familiar with Hubbert’s theory of “Peak Oil”? This first gained major traction in the 1970’s and again in the 2000’s as the price of oil reached over $100 per barrel. The main issue that constricted the supply of oil were the wars in Iraq and Afghanistan. It removed them from the marketplace. Also restrictions on Iran also left their oil generally off the market. Now that both Iraq’s and Iran’s oil is back on the market, prices are falling. Also, when the market was riding $100 per barrel, the US market has increased production with the Dakota Bakken fields now reaching the market. Now, without conflict removing oil from the market, and increased oil production capabilities with shale in the US and around the world, oil will likely continue to have a high supply.

While demand has still increased, it has increased at a slower rate than expected. The reason is mainly that the demand has been stunted by the growth of renewable sources of energy. It is getting hit with vehicles on a growing macro level. I touched on this in an earlier post (here). This success has spawned new technologies in other industries to find out new non-oil ways of manufacturing.  

This all leads to the reason behind the post. The only likely action that will successfully bring back the price of oil to higher than $50-60 per barrel is war. War between countries creates a situation that restricts supply and kicks up demand. It is not a coincidence that the price of oil dropped considerably as military operations in the country slowed down starting in 2008. Supply increased and demand from the US military declined. Most of the big oil producing countries (Russia, Saudi Arabia, Iraq, Iran, Kuwait, etc.). are dependant on oil for their GDP growth. While there are areas of the United States that are dependant on oil, the country as a whole is diversified enough to handle the downturn in prices. These countries should be watched carefully over their behaviors in order to raise the price of oil. One important lens that needs to be used when analyzing certain countries actions is the “price of oil” lens. If these production cuts don’t raise the price, watch out for the bombs.  

Why Tech Will Buy an Automaker

by Michael Keane

As the struggle and innovations continue to develop in the driverless car industry, the idea that a tech company will buy an automaker is becoming more and more real.  A few things come to mind in forming this idea. The first one that comes to mind is company valuation and cash balances. Many tech companies that are involved in the automotive space are sitting on a lot of cash.  The second area that indicates the probability of this idea is that there are already partnerships and smaller deals between the tech companies and the automotive companies. Another area that brings this idea to fruition is finding the answer to the question of “What does the future look like in the space and who is best capable to lead this move into the future.

If you look at the tech sector and the automotive sector in terms of valuation, you will see that it is entirely possible for a deal to happen. The following chart gives a quick snapshot of valuations of different tech companies involved in the auto space as well as a few automakers. You can see the cash balances and valuations of the tech companies actually put them in a favorable spot to make a bid. Tesla’s market cap and Ford’s is now basically equal.

Company	Valuation	Cash on Hand	Amount Invested in Auto
Alphabet	$600 Billion	$86 Billion	New Company named Waymo
Intel	$167 Billion	$5.5 Billion	Just made a bid for Mobileye
Apple	$753 Billion	$21 Billion	Undisclosed Amount in Software
Tesla	$45 Billion	$3.5 Billion	Full Electric Car Company
Ford	$47 Billion	$16 Billion	Auto Company
Fiat Chrysler	$21 Billion	$18 Billion	Auto Company
GM	$51 Billion	$14.5 Billion	Auto Company

Large partnerships are starting to abound between the two industries. Recently, Intel made a bid for Mobileye. Ford has been in partnerships with Alphabet. GM purchased Cruise Automation for more than $1 Billion dollars last year and has a partnership with Lyft. Mercedes Benz recently reached an agreement with Uber with regards to a driverless car. With all this smoke around, the likelihood of a purchase continues to get stronger and stronger.  

While in the past, someone might not associate tech with cars, today you just can’t get away from the connection. Driverless eco friendly vehicles are the future. Big companies are putting large fortunes in play to make this happens. There will be some hiccups and disasters for sure. But don’t be surprised if you wake up one morning, pick up your phone (instead of the tv), and find that a car company has been purchased by a tech company.

**Disclosure - KDK Fund, a client of KeaneVCC, owns shares of Ford. KDK Options, another client of KeaneVCC, owns an April spread options trade on Microsoft. **

Is Your Company Integrated Enough

Value of Integration

By Michael Keane

Is your company capturing enough value from integration opportunities within its industry? Does your mission allow for an integration policy to be executed? Integrating the company with a vertical, horizontal or mixed strategy provides an opportunity to bring a higher level of value to your company, a larger customer base, and more influential position for the company within its industry.

In terms of vertical integration, a company could find higher value by owning more than one aspect from idea to sale of finished product. Large multinational companies regularly look to vertical integration for cost savings and market share dominance. A great example of a company that is vertically integrated is Apple. They have full control over their supply chain processes that give them freedom in their product markets. Even a partial vertical integration policy can affect value for a company.

In terms of horizontal integration, companies can be looking for other companies related to their industry in order to expand market share and create more value for itself and its customers. An example of a company that has a horizontal integration is Facebook. Facebook has recently purchased companies such as Instagram and Oculus Rift. Proctor and Gamble is another company that has many different products under its roof.

With new companies sprouting up with the growing entrepreneurship industry, integration might be one way for the companies to not just grow, but also for the brand to survive. Combining resources could ensure that a company outlasts any downturn in its industry or the economy as a whole. It is important for the company to educate itself on what is out there vertically and horizontally in its industry.

Forever Forward...

First Donation (Shriner's Chicago) of 2017

We have made our first donation of 2017. The recipient of the donation was Shriner's Chicago hospital (link here). We would like to thank our partners KDK Fund, KDK Options, and Bullied Comics for their help in making this happen. This is the shortest time period between donations and the trend looks good to continue.

KeaneVCC is dedicated and determined to give a percentage of revenue, NOT PROFITS, to charity. It forces doing high margin business. But the benefits have been great. To be clear, charity is a pillar of the business. We believe in our mission to use the business to find funding for deserving charities. Shriner's Chicago Hospitals is one of these charities.

KeaneVCC is working on a project looking to highlight and promote doctors, administrators, and researchers within charitable organizations (aka Shriners, American Cancer Society, etc.). Please feel free to forward information on anyone you know doing special work. 

Retail and Car Land Opportunity Going On Now

by Michael Keane 1/5/2017

Large Scale Real Estate Opportunity

There is a shift in consumer behavior that is providing for one of the largest real estate opportunities in a long time. There are two industries that currently take up a lot of real estate. Because of the behavioral shift in consumer behavior, these industries are seeing more and more dependance on line and less and less dependence with the on site areas of these businesses. Both are experiencing a tipping point right now. The industries are retail stores and car lots.  This movement should be seen as a great opportunity for developers, business executives, and urban planners.

Just today, Sears announced that they are closing an additional stores (Bloomberg link here). Macy’s also announced today that earnings are going lower. This is not a blip anymore. Consumers have spoken. They are needing stores less and less. This doesn’t mean consumers need the products any less and therefore is not a story on the companies themselves. But their need for paying for the massive real estate that they control is becoming less and less.

Car dealerships are another area that land usage will likely decrease as consumer behavior continues to be leaning more and more to online shopping. This is something that carmakers will ultimately enjoy as they can remove their costs from owning/leasing the land needed to sell these vehicles. Granted, some if not most of the cost is down to the dealership owner, but removing that cost could drive costs down for them without necessarily driving down revenue. Who knows, maybe buying a car will be similar to buying insurance.  

This has to be looked on as a major opportunity. One way Google was able to get to scale was to use the downturn in 1999-2000 and find cheap space for its servers. Are there any companies out there now looking for large scale space? Municipalities should be looking this as an opportunity to use the land for new schools, parks, and other public uses. Residential real estate will always be an option as long as jobs are present in the area. Oh, and what about that start up company that is being created new this space? When 1871 (link here) was created, it received a fantastic opportunity to use space in Chicago’s Merchandise Mart. Now, the building is in the process of being transformed into a tech juggernaut. Health care is also an area that should look to capitalize on this space becoming available. Research facilities should be able to be quickly set up.

There are some changes happening within the retail and vehicle sectors that will almost certainly be providing for the sale of buildings and land. Will there be another Google, 1871, or local developer out there ready to take the opportunity and grow their business? We certainly hope so.

If you or someone you know finds this article helpful, reply back to keanevcc@gmail.com and let us know how. We are always looking to promote and develop businesses.