AIG Installed A New CEO On Monday, Plus Snapchat Makes A Comeback After Poor Earnings Report

by 7 months ago

morning brew

Today’s Brew for May 16th is most definitely not a hot dog. Now that we’ve cleared that up, here’s what you need to know.

 QUOTE OF THE DAY

“It wouldn’t be The Player’s Tribune if athletes didn’t have a stake in the company.” — Derek Jeter on how over 1,500 professional athletes-turned-writers set The Player’s Tribune apart from traditional media. To date, the site has raised $58 million in funding.

Market Snapshot

AIG’s New Captain

American International Group (+1.34%) one of the country’s largest (and frankly, most infamous) insurers, officially installed a new CEO on Monday.

70-year-old Brian Duperreault, the protegé of insurance legend Maurice “Hank” Greenberg, will rejoin AIG after 21 years in its ranks, two retirement stints, and four years running Bahamas-based Hamilton Insurance Group.

His return comes at a desperate time for the company, but one he is “uniquely qualified” for.

Desperate time? How come?

Let’s take a trip down memory lane

Care to guess the destination?

Here are a few stats that might jog your memory:

  • A $99+ billion loss…in a single year
  • Forfeiture of 80% of AIG’s equity

Bingo…the 2008 financial crisis.

In the early 2000’s, AIG sold “insurance policies” (aka credit default swaps) that guaranteed TONS (TONS = $441 billion) of securities, most notably backed by sh*tty mortgages.

While AIG cashed out big on these policies initially (making up 17.5% of the company’s revenue at one point), you Wolf of Wall Street buffs can guess what happened.

Default. Lots and lots of default.

AIG didn’t have enough insurance to cover the losses, and ultimately, the Feds had to step in with a $185 billion bailout—the largest ever for a private company.

Enter, Carl Icahn

The notorious activist investor and “corporate raider” has been pressuring AIG to stop the bleeding for years.

Back in 2015, Icahn and John Paulson urged CEO Peter Hancock to split up the company in three ways and resign.

Took about two years, a horrific Q4 2016 report and AIG’s largest one-day decline (9%) since 2011, but Icahn (kind of) got his wish.

Duperreault is in. Hancock is out. But, the new head honcho will focus on growth and will keep the company in one, whole, heavily-insured piece.

To coax him back from Bermuda, Duperrault will get a $12 million cash advance, a $1.6 million annual salary, and almost $15 million worth of incentives. That would get us back from just about anywhere.

Two Is Way(mo) Better Than One

Lyft (and its mustache) is officially teaming up with Google’s Waymo, collaborating on autonomous driving pilot programs in the race to beat Uber.

Why now?––probably because this is an industry projected to reach 21 million vehicles by 2035.

Why Lyft and Waymo? Simple––they’re the yin to each other’s yang.

Lyft, No. 2 to Uber (albeit, a distant No. 2) in the ride-sharing space, is looking to make up ground in light of the many scandals at Uber, while expanding into the rapidly growing and potentially lucrative world of autonomy.

At the same time, Waymo is not consumer facing.

The partnership could bring Waymo’s autonomous tech to Lyft’s app, which serves up 22.8 million rides each month.

Snap Strikes Back

After striking out during its first earnings report, Snap (+8.50%) is looking to make up lost ground with three new ad products. Introducing: World Lenses, Audience Lenses and Smart Geofilters.

World and Audience Lenses allow companies to advertise by location with Snap’s augmented reality feature, while Smart Geofilters can serve up ads based on your real-time location, giving the templates a more personalized feel.

All three look to sell investors on the app’s high-levels of daily user engagement. Fast facts: 1 in 3 daily users swipe through lense animations, and Geofilters are typically viewed 1 billion times a day.

Translation? Every time you spend that extra second trying to find the perfect Geofilter for that kale salad you just bought, Snap is using that data to sell more advertising.

The Big Fish Swallows Up Another

Thermo Fisher Scientific (+0.43%) said Monday it will buy Patheon NV (+33.08%) for $5.2 billion.

That’s a lot of money, but what do these companies even do? Good question.

Thermo Fisher is the world’s largest maker of scientific instruments, selling products like lab equipment, cell-imaging, gas analyzers—all that fun stuff.

Its Dutch counterpart is an end-to-end contract manufacturer for biotechs—think project-management tool Trello, but for drugs. With more products winning U.S. approval than any of its peers, Patheon seems to be doing a damn good job of it.

The acquisition-obsessed Thermo Fisher will use Patheon to expand its fast-growing trial manufacturing arm and steal a bigger piece of the $40 billion CDMO market.

What Else Is Happening…

Economic Calendar

  • Monday: Housing Market Index (+)
  • Tuesday: Dick’s Sporting Goods, Home Depot, Jack in the Box, Staples Earnings; Housing Starts; Industrial Production
  • Wednesday: Cisco, SteinMart, Target Earnings
  • Thursday: Wal-Mart, Autodesk, Gap, hhgregg, Perry Ellis, Ralph Lauren, Salesforce Earnings; Weekly Jobless Claims
  • Friday: Campbell Soup, Deere & Co, Foot Locker Earnings

Water Cooler

Pupper and Doggo: From Meme to Merriam-Webster

It’s no secret that the internet loves dogs. Matt Nelson, creator of the WeRateDogs Twitter account, has capitalized more on that love than perhaps anyone else. Nelson’s account has 2 million followers and posts daily pictures of cute dogs and rates them on a scale of 1 to 10 (although most ratings are between 11 and 14).

He gets over 1,200 photo submissions every day, but only posts two, and advertisers are lining up with their tails wagging. Here’s his story:

  • Nelson’s account has popularized lingo like pupper, doggo, boop, bork, and h*ck. One associate editor from Merriam-Webster thinks doggo could possibly be added to the dictionary.
  • Nelson also has a bustling online merchandise shop and even has a book coming out this year filled with more pictures of dogs.
  • And just how big is Nelson’s market? Well, Americans are expected to spend $5.4 billion on pet grooming and boarding in 2017. Straight up, we’re dogsessed (add that one to the dictionary).
  • WeRateDogs doesn’t appear to be slowing down anytime soon. Its most popular tweet, “they’re good dogs Brent” (in response to being accused of overrating dogs), has been seen over 35 million times and was named 2016’s best meme by the Washington Post. They really are good dogs, Brent.

The Breakroom

Interview Question of the Day

In a barn, 100 chicks sit peacefully in a circle. Suddenly, each chick randomly pecks the chick immediately to its left or right. What is the expected number of unpecked chicks?

That was the final question of the Raytheon Mathcounts National Competition yesterday. A correct answer is sending one Texas 13-year-old to space camp (we’re very jealous) and a $20,000 scholarship.

Startup of the Day

2.5 exabytes of data are produced every single day. That’s 90 years worth of HD video. And up to 80% of it is “dark,” or unstructured (like texts and photos). Dark data is hard to search, and even harder for an algorithm to learn.

Lattice Data, a 20-engineer startup determined to put all of this dark data to use, was just snapped up by Apple for a cool $200 million. It says this data can be harnessed to fight human trafficking, in medical and paleontological research, training AI algorithms and more.

Stat of the Day

$5 million — That’s how much an anonymous phone bidder spent on one of the world’s rarest—and now most expensive—Rolexes. The entire bidding war took just 8 minutes between 13 bidders at Phillips auction house in Switzerland. Meanwhile, we’re penny hoarding to phone in a pizza delivery.


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