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Coffee Talk
Business Observer Friday, Feb. 9, 2007 12 years ago

Coffee Talk

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Private Capital Management, the Naples-based money management firm that pushed newspaper chain Knight Ridder to sell itself last year, has reduced its stake in newspaper stocks.As a group, the super rich are optimistic about 2007, for both their own financial well-being and that of the national economy.The Chicago-based investment firm's study is relevant for all investors, says John Skjervem, Northern Trust's chief investment officer for its Personal Financial Services division, adding that the wealthy's spending and investment habits usually trickle down. As corporate raiders such as Carl Icahn push for changes at WCI Communities, the board of directors of the Bonita Springs-based homebuilder adopted a poison pill provision to ward off unwanted takeovers.Any investor who acquires 15% or more of the company without the approval of WCI's board will automatically have their shares diluted. Icahn controls 14.57% of WCI's stock, according to the most recent securities filing.The Review is seeking the best and brightest Gulf Coast entrepreneurs for the newspaper's 10th annual Entrepreneur Award. By most major accounts, Florida continues to be a national leader in population increase. It was second to Texas in the number of new residents in 2006, according to the U.S. Census Bureau, and it's the fourth largest state in the country, with 18.1 million residents. And there's the oft-cited number of 1,000 people moving to Florida a day.

Coffee Talk

+ Private Capital drops stake in newspapers

Private Capital Management, the Naples-based money management firm that pushed newspaper chain Knight Ridder to sell itself last year, has reduced its stake in newspaper stocks.

Regulatory filings show that PCM's stake in several newspaper chains has declined substantially over the past year. For example, filings show PCM today owns 9.3% of the shares of New York Times Co., down from 14.4% a year ago. It also no longer owns any shares of Tribune Co.

PCM managed nearly $23 billion at the end of 2006, versus about $28 billion at the end of 2005. PCM's chief executive officer, Bruce Sherman, and its president, Gregg Powers, stated in the past that newspaper stocks were undervalued and investors would eventually recognize their worth. They have a longstanding policy of not speaking publicly about their firm or their investments. Neither executive could be reached.

However, investors routinely follow firms such as PCM because of their lengthy track record of investing success. Most recently, the money management firm acquired a nearly 12% stake in Avid Technology of Tewksbury, Mass. (symbol AVID, recent stock price $33). Avid produces editing hardware and software for filmmakers and broadcast professionals.

+ A peek at the wealthiest

As a group, the super rich - defined by Northern Trust in its Wealth in America 2007 study as deca-millionaires, or those households with investable assets of $10 million and up - are optimistic about 2007, for both their own financial well-being and that of the national economy.

At first glance, Coffee Talk thinks it's easy to be optimistic about making more money when you have a lot of it to start with. But the Chicago-based investment firm's study is relevant for all investors, says John Skjervem, Northern Trust's chief investment officer for its Personal Financial Services division, adding that the wealthy's spending and investment habits usually trickle down.

One of the more important and positive findings of the survey, looking ahead for the entire economy, Skjervem says, is that investors still "embrace risk with remarkable calm and tenacity."

A majority (62%) of the 1,000-plus respondents expect the stock market to gain at least 6% over the next 12 months, predicting strong corporate earnings growth and a continuation of the U.S. economic expansion. A small minority (6%) is bearish on the market, expecting the market to lose value; those respondents cited international events, increasing federal budget and trade deficits and the declining value of the dollar as the reason for their negative outlook.

Within the portfolios themselves, domestic stocks continue to make up the bulk of the respondents' assets, making up 43% of a total portfolio in 2006, up from 41% in 2005, the survey reports. The amount of holdings in international stocks also rose the same amount, from 8% to 10%.

And the rich really aren't much different from others when it comes to real estate, as wealthy investors polled by Northern Trust reduced their exposure to real estate investments from 13% to 8% in 2006. Skjervem tells Coffee Talk that type of hesitation in the real estate market is common now, with the national slowdown.

Another similarity between wealthy survey respondents and more common folk is in alternative investments: Some like them, some don't. About 45% of those responding to the Northern Trust survey have 10% or more of their portfolio in investments such as hedge funds, private equity groups or commodities, while about 40% of the group has no asset allocation in those groups.

+ WCI adopts poison pill provision on investors

As corporate raiders such as Carl Icahn push for changes at WCI Communities, the board of directors of the Bonita Springs-based homebuilder adopted a poison pill provision to ward off unwanted takeovers.

Any investor who acquires 15% or more of the company without the approval of WCI's board will automatically have their shares diluted. Icahn controls 14.57% of WCI's stock, according to the most recent securities filing.

In addition to the poison pill, the board approved a $200,000 discretionary bonus for David Fry, WCI's senior vice president and chief operating officer for traditional homebuilding and real estate services. It also negotiated a severance agreement with Christopher Hanlon, the senior vice president and chief operating officer for tower homebuilding. Hanlon's agreement provides for compensation in the event of his resignation or a change of control of the company, though a copy of the agreement was not included in a recent securities filing.

Meanwhile, the board shrank the number of directors from 10 to nine after John Dasburg resigned Jan. 30. Dasburg, 63, is the chairman, president and chief executive officer of ASTAR Air Cargo, the Miami-based freight carrier formerly known as DHL Airways.

In search of excellence

The Review is seeking the best and brightest Gulf Coast entrepreneurs for the newspaper's 10th annual Entrepreneur Award.

And for the second consecutive year, the Review will be recognizing the best from its entire coverage area: Tampa Bay south to Naples.

If you know of a worthy candidate, please send us his or her name. We're looking for entrepreneurs whose company's results over the past three years show exceptional performance and growth. Nominees should be visionaries and leaders who have overcome obstacles or demonstrated extraordinary characteristics that have led their companies to exceptional achievements. The entrepreneurs must be owners or part-owners of their companies, and their companies must be based on the Gulf Coast.

Last year's overall winner was Ian MacKechnie, the president and founder of Tampa-based financial services firm Amscot Financial. The Tampa region winner was Mark Swanson, founder of four Bay-area businesses; the Sarasota-Manatee region winner was John Williams, president of Gould & Lamb Healthcare Consultants; and the Fort Myers-Naples winner was Brian Stock, owner of Stock Development.

To nominate an entrepreneur, send his or her name to Mark Gordon at [email protected] or call (941) 362-4848. Please include the person's name, company and a brief description of what distinguishes the candidate.

TRENDS

Where have all the snowbirds gone?

By most major accounts, Florida continues to be a national leader in population increase. It was second to Texas in the number of new residents in 2006, according to the U.S. Census Bureau, and it's the fourth largest state in the country, with 18.1 million residents. And there's the oft-cited number of 1,000 people moving to Florida a day.

But by the accounts of three national moving companies, more shipments left the state than came in last year. It's one of the only times United Van Lines, Atlas Van Lines and Allied Van Lines all reported shipping more stuff out of Florida than it brought in over a year. In total, in 2006, the three companies moved 33,907 shipments out of Florida, while hauling 29,981 in, for a net loss of 3,926.

Despite some naysayers who would point to this as another sign of Sunshine State doom, the surveys aren't necessarily a complete picture: The reports don't include international moves, and what's more, it doesn't involve self-moves with companies such as U-Haul and Ryder.

Comings and Goings

Year In Out net gain/loss

United Van Lines

2006 16,212 17,109 897 (loss)

2005 18,601 15,726 2,875 (gain)

2004 20,455 13,673 6,782 (gain)

Atlas Van Lines

2006 6,716 7,994 1,278 (loss)

2005 8,579 8,256 323 (gain)

2004 9,069 7,180 1,880 (gain)

Allied Van Lines

2006 6,953 8,894 1,941 (loss)

2005 9,385 9,300 85 (gain)

2004 10,722 8,987 1,735 (gain)

Source: Allied Van Lines, Atlas Van Lines, United Van Lines

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