The Update Issue: More Drama at Peloton, Companies Bucking the Trend and Staying in Russia, and an Indirect Effect of Sanctions

Last Thursday, I wrote about Peloton (PTON) co-founder John Foley dumping a mountain of stock... He sold $50 million worth of stock in the home fitness company at $26 per share, which seemed odd to me given that he had sold around $100 million worth in 2021, mostly above $110 per share. It's a head […] Not rendering correctly? View this e-mail as a web page [here](. [Empire Financial Daily] The Update Issue: More Drama at Peloton, Companies Bucking the Trend and Staying in Russia, and an Indirect Effect of Sanctions By Berna Barshay Last Thursday, I wrote about [Peloton (PTON) co-founder John Foley dumping a mountain of stock](... He sold $50 million worth of stock in the home fitness company at $26 per share, which seemed odd to me given that he had sold around $100 million worth in 2021, mostly above $110 per share. It's a head scratcher, and as I commented last week... You have to wonder what kind of financial planning and what pace of personal spending would lead someone to need to go back to the market so soon – and when the stock is so much lower. It would have been better to sell $150 million worth last year, right? Unless he is less bullish about his company at $26 than he was at $110... Or could it just be that Foley is very bad at budgeting... Let's not forget that this a guy who insisted that his company was self-funding and didn't need to raise funds yet was out in the market with a secondary stock offering just two weeks later, with the stock down more than 40% in those intervening weeks. Maybe both were right. Peloton is down almost 15% from that level – just a week later. But I'm going to go with the explanation that Foley is just exceptionally bad at budgeting. Last Thursday, after I wrote my piece, the New York Post reported that Foley has quietly put his $55 million oceanfront compound in East Hampton on the market. Given the travails at Peloton over the past several months, this wouldn't seem to be big news... except that he just closed on the house in December! Very bad at budgeting, indeed. Clearly, Foley feels compelled to raise $100 million in a hurry... Source: Twitter/@Hedge_FundGirl I'm sure I am not the only one curious why the need to liquify so much money and so fast... Peloton watchers – myself included – speculated about margin calls, given the violent moves in the equity markets. Perhaps too many high-flying 20 times revenue tech stocks in Foley's trading account? We may never know the answer to this question, but the wild gyrations in his own personal financial planning led me to raise this question... Source: Twitter/@Hedge_FundGirl Even after the big stock sale, Foley still has voting control at Peloton – so I wouldn't hold my breath waiting for him to step down. --------------------------------------------------------------- Recommended Links: [Pentagon Consultant: Big asset shift is coming]( Man who briefed U.S. Pentagon officials five times in past year says digital tech stocks will get steamrolled by something you've never heard of before. [Click here to learn more](. --------------------------------------------------------------- [The Big Electric Vehicle Story Everyone's Missing]( While investors are obsessed with Tesla's surge, legendary investor Whitney Tilson says an even bigger EV story will provide the highest gains. [Click here to learn more](. --------------------------------------------------------------- Up next, a few updates on Russia from the business perspective... I've written about [all the companies that have abruptly exited the Russian market]( in reaction to its unprovoked invasion of Ukraine. In the last couple of days, two of the highest profile American companies still doing business there – McDonald's (MCD) and Coca-Cola (KO) – announced they are suspending operations in the country. McDonald's pulling out of Russia seems like minor news. But when the first restaurant opened there it prompted huge lines, and the images from that day in 1990, during the dying days of the Soviet Union, are still memorable more than 30 years later... Source: Washington Post The pent-up demand for Western pleasures was high in Soviet Russia. With a return to Soviet-era deprivation likely, the imminent closure of McDonald's prompted a return to long lines, and even led one Russian fan to stuff his fridge full of Big Macs... Source: New York Post With McDonald's and Coke pulling out, it seemed like the cycle was nearly complete... But as it turns out, dozens of high-profile American and Western European companies are still operating in the Russian market. Website Business Insider took a look at who they are... Several of them are food companies. [Mondelez (MDLZ) – makers of Oreo cookies, Ritz crackers, and Cadbury chocolate]( – issued a statement yesterday that it is "scaling back all non-essential activities" but still in the market as it is "helping maintain a continuity of the food supply during the challenging times ahead." Mondelez generates 3.5% of revenue, approximately $1 billion, in Russia. Privately held Mars is also continuing its substantial pet food manufacturing operations in Russia, where it has five plants that make Whiskas, Pedigree, and other pet food brands, as well as KitKat chocolates. Other consumer packaged goods ("CPG") companies continuing their business in the region include paper products manufacturer Kimberly-Clark (KMB) and cosmetics maker Coty (COTY). Kimberly-Clark and Coty each generate 3% of revenues in Russia. Big hotel chains Hilton (HLT), Marriott (MAR), and Hyatt Hotels (H) still have their 45 properties in Russia open. U.K.-based InterContinental Hotels Group (IHG) and French hotel company Accor (AC.PA) still have their hotels operating as well. Some big industrial companies are also still running business as usual in Russia, including tire makers Bridgestone (5108.T) and Pirelli (PIRC.MI), which both manufacture in Russia. Agriculture equipment companies Caterpillar (CAT) and Deere (DE) are still operating there as well. Both companies are likely to see a boom from the geopolitical disruption, as evidenced by soaring wheat prices. Ag giant Cargill is also maintaining its Russian operations. Other industrial companies still active in Russia include engine and power systems maker Cummins (CMI), flooring company Mohawk Industries (MHK), elevator-maker Otis (OTIS), and appliance maker Whirlpool (WHR). Another sector in which Russian operations persist is health care, with medical device company Abbott Laboratories (ABT), pharmaceutical company AbbVie (ABBV), and drug distributor AmerisourceBergen (ABC) still operating in the region. While many may blame these companies for corporate greed, most of them only make a few percent of sales in the region. The businesses selling drugs, food, and other products for health care or consumer consumption have made the argument that they are supplying essential goods that support Russian families (who few would point to as the enemies here). One under-the-radar threat from the financial and corporate sanctions on Russia is brain drain... Many Russians are hurrying to leave the country before the window closes. They of course have limited options on where they can fly to, with flights to the U.S. and most of Europe being canceled. Flights to Turkey are still operating, but they're sold out... as well as the flights to Georgia. Many people are flying to Armenia or Azerbaijan because that is all that's available, and they hope to travel on from there. But with the ruble crushed and currency exchange suspended, most Russians have no choice but to stay. The people leaving are the ones with family, friends, or money stashed abroad... and the people who have portable, in-demand skills that will allow them to quickly find an income abroad. Among those leaving are people with hard tech skills, as Russia has a great reputation in coding, engineering, and other IT training... Source: Twitter/@kamilkazani Of course, Russia doesn't want these highly skilled workers to leave and is trying to keep them in... Source: Twitter/@kamilkazani While hoping financial hardship will prompt Putin's people to rise up against him may prove to be a pipe dream, there's no doubt that the internal chaos wreaked by the financial sanctions could impact Russian competitiveness in the longer term... if these people who leave now never return. How much different might the world – or at least the corporate landscape – look had Google (GOOGL) co-founder Sergey Brin not left Moscow and come to America as a child in the late 1970s? In the mailbag, more reactions to the situation in Ukraine... Do you think how an executive or board member manages their personal finances or other aspects of their personal life should have any bearing on their suitability to retain their position? Does bad judgment in personal matters potentially predict bad judgment in professional matters? Turning to Russia, do you think companies that make essentials like food and drugs should be able to continue operations in Russia without getting a lot of flak for it... or does that dilute our united front in financial sanctions? Share your thoughts in an e-mail by clicking [here](. "Berna – I enjoy your comments and insights, but I think you have overlooked a very ominous side of this economic warfare. If countries can effectively shut off Russia's ability to use global monetary transactions, what is to stop any of them from using this power on their own people? The USA still has cash, at least for now. A Central Bank Digital Currency ('CBDC') world is coming, and probably sooner that we expect. And that is not a good thing." – Anonymous "Hey, Berna, I would love it if wars would be fought only with money, but I doubt that will ever happen. Russia, China, and many other parts of the world do not value human life. Dictators prioritize their own power, ego, and envy, regardless of the needs of their people. (Many people also do, but most lack the power and money to have as bad an effect.) "I think we humans should have learned long ago to compromise and get along. Wars are a horrific waste of lives and resources. I hope sanctions are enough and wish they had started earlier as a deterrent before Russian troops were ordered into Ukraine. We had intelligence that an invasion was imminent. I'm not military, and maybe we're doing more than I know, but I'm appalled that we're not helping Ukraine take out the miles of convoys. Putin's intent is clear. Why wait until they get to more densely populated areas? How many people have to die? "Yes, I know Putin has threatened a nuclear strike. He's a very scary guy, he might well do it. But if he wins as he has before because we didn't do anything more, then he's emboldened, China is emboldened, and every dictator (and would-be dictator) is as well. I know people don't want the US to be the policeman of the world and we have ceded the role quite a bit, but since China and Russia are the ones stepping up to the plate, I don't think the world is a better place. "I hope Biden and all the EU and GB leaders are listening to their military advisors. I don't want the war to escalate. But playing politics with it will only get more people killed. Wars are ugly. If we have to fight one, let's fight it hard and fast, fight to win, and get it over with. Right now, we're letting Russia just waltz right in, and losing tactical advantages. We can probably do more, without having boots on the ground and aircraft in the skies near the front lines. We can't waffle, back up, or ignore what Putin's doing anymore. He's crossed the line too many times and needs to be stopped. If not now, when, and where? He won't stop; why would he? "I hope I'm wrong, I'd love to be wrong. I hope sanctions are enough, and Ukraine succeeds in expelling the Russians without more loss of life and damage, and we don't end up in another war. I pray for the people of Ukraine, those fighting to keep their country, those fleeing seeking safety, and those who fear for their loved ones there. Godspeed to all." – Kathy P. "You can fight wars with money instead of people (and weapons) only when you have the advantage in both. Finesse works best when you have a force option. One of Sun Tzu quotes is 'Build your opponent a golden bridge to retreat across.' If we create a situation where Putin feels he has nothing to lose, a significant escalation of weaponry being used is possible." – Kenneth L. Regards, Berna Barshay March 10, 2022 If someone forwarded you this e-mail and you would like to be added to my e-mail list to receive e-mails like this every weekday, simply [sign up here](. © 2022 Empire Financial Research. All rights reserved. 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