This is Definitely Where Amazon's HQ2 Will Be, Says a Renowned Expert (Oh, the Locals Will Hate This)

Absurdly Driven looks at the world of business with a skeptical eye and a firmly rooted tongue in cheek. 

It’s become a little tired, hasn’t it?

Now, Bert Sperling, a renowned expert whom the New York Times once said “picks the best places,” has declared that he knows where Jeff Bezos will place his latest monument to commerce. 

Well, when I say he knows, Sperling’s words are “we can now confidently say.” We being his Best Places website.

If he’s right, there’ll be protests in the streets. And in the hills and valleys.

For Sperling confidently says that the location will be a particular part of Loudoun County, Virginia.

Should you have never ventured there, it’s 35 miles west of Washington D.C. It’ll be shortly served by the new Silver Line of the Washington Metro.

Oh, but come on, Bezos isn’t going to toss a vast corporate city in the middle of some fields, is he?

Sperling confidently says that “the new Amazon HQ2 will be [in] the unincorporated community of Oatlands, Virginia.”

The renowned expert says — confidently — that this decision isn’t about business. Amazon can stick its headquarters anywhere it likes.

Instead, it needs to be somewhere politically friendly and “near, but not in a mega city.”

Sperling confidently asserts: 

Amazon does not want their HQ2 to dominate a region. Consider this. Those 50,000 new employees Amazon has said will be working at HQ2 will bring an additional 120,000 to 140,000 residents to the area in the form of family members, civil workers, and support businesses such as retail, healthcare, and services.

Sperling explains that a new Amazon HQ will mean an additional 200,000 residents. That’s like dumping Salt Lake City somewhere else. 

You wouldn’t want to do that to a big city, would you? Sperling offers: 

With the major influx of population and infrastructure, Amazon will need to avoid the downtown core and essentially create their own city on the outskirts of a major metropolitan area. There is no need to compete for expensive and crowded downtown space. Amazon can create their own bold vision starting with a blank canvas.

I do hope this bold vision looks a little better than all of Amazon’s ugly physical products.

Actually, talking of those ugly things, Sperling paints a picture of HQ2 as Bezos’s own technological Truman Show: 

With a clean slate, architects and planners can create new communities and neighborhoods which incorporate smart homes and streets which are friendly to alternative transportation. With new homes comes the opportunity to use them as test beds for new Amazon products and services such as drones and autonomous vehicles, cashier-free stores, and in-home package delivery.​

How long before it’s called Amazonville?

How long before someone markets the location as Virginia Is For Drones?

Please spare a thought for the happy residents of rural Loudoun County, near the Maryland border. The biggest city around there is Leesburg, with 53,000 people. 

How will they feel about 200,000 hipsters coming to town? It’ll be like a Zombie Invasion.

Naturally, I contacted Amazon for swift confirmation of this confident news. All I’ve received so far is an Amazon email encouraging me to buy another book.

Want to Work on A.I.? Study Philosophy or Communications, Execs Say

Science, technology, engineering, and mathematics—companies everywhere appear to be fighting for workers in the STEM fields to get a head start in building artificial intelligence capability.

But as companies continue to push into uncharted, albeit promising, territories around A.I., they’re also looking for hires in so-called softer fields to help A.I. mature ethically and free of the unwanted biases that come with their human makers.

In other words, it’s not just about STEM skills. Speaking at Fortune’s Most Powerful Women Summit in Laguna Niguel, Calif. on Tuesday, Fortune 500 and Global 500 executives said they also seek psychologists, philosophers, and interpreters.

Executives from IBM, Guardian Life Insurance, and RBC said soft skills are very much in demand as they confront the unintended consequences of nascent technology.

“We decided to build a whole division around responsible A.I.,” said Anna Sekaran, program lead for AI at IBM.”The types of skills we’re bringing in are psychologists, philosophers, that type of profile, that can solve really complex philosophical problems and think about what’s the best way to address that.”

Consider autonomous cars, for example. What if a self-driving vehicle is confronted with a choice between striking a pedestrian and avoiding her, only to crash and harm the passenger? Workers with skills in the humanities, Sekaran said, may be better equipped to answer those tough ethical questions.

Guardian Life Insurance CEO Deanna Mulligan, meanwhile, said she is grappling with a different problem: How to take the complicated, technical world of A.I. and make it understandable to the layman. Her company is searching for interpreters to make the language around A.I. more accessible to the rest of the organization.

“We have a number of Ph.D scientists, and they are wonderful,” she said. “But they may not understand the problems a call center representative might have on the floor. And who is that person who can be a go between? Those people are going to be very valuable going forward. But I don’t know how to train someone for that. We still have to figure that out.”

For more coverage of Fortune’s Most Powerful Women Summit, click here. And subscribe to the Broadsheet, Fortune’s newsletter on the world’s most powerful women.

‘We’re Not Just Waiting for the Future.’ Verizon Launches 5G With Limited, In-Home Only Service

The drive towards faster next generation wireless networks took a step forward on Monday, as Verizon opened commercial service for a consumer 5G home Internet service in parts of four cities. But the wireless industry still has a long way to go, with nationwide coverage and services for mobile devices and major business uses still a few years away.

Verizon kicked off its new $70 per month high-speed 5G home Internet service by signing up customers in Sacramento, Houston, Los Angeles, and Indianapolis. Customers who already subscribe to Verizon wireless for phones pay only $50 for the service. With promised speeds of 300 megabits per second, and the chance of reaching 1 gigabit per second in some areas, the 5G wireless service is meant to compete with the very fastest wired home Internet offerings from cable and telecom companies. At 1 Gbps, a customer could download a high-definition movie in under a minute.

But to get the service out to customers at this time, Verizon had to use gear that doesn’t meet the newest industry-standards for 5G. Some competitors are waiting for compatible equipment, and Verizon is already promising that it may replace customers’ non-standard routers in the future if necessary. The service also isn’t mobile, as the first 5G compatible smartphones won’t hit the market until next year and Verizon is just at the start of upgrading its wireless networks around the country.

“We’re not just waiting for the future, we’re building it,” Ronan Dunne, Verizon’s head of wireless, explained to Fortune about the decision to move ahead with non-standard gear. By instigating earlier trials, Verizon helped inform and speed up deliberations of the groups that made the standards, he said. “5G is such a big thing, we really should get together and accelerate the momentum to bring 5G to market… Today, globally, the industry is ahead of where it would otherwise have been.”

The wireless industry could use some added momentum. Revenue growth has stalled in recent years, amid a saturation of smartphones and aggressive price-cutting over new data unlimited plans. Verizon and rivals AT&T, T-Mobile and Sprint hope that 5G will offer not just the same old services at higher speeds, but also open up new business opportunities, like the play for home Internet connections. Verizon’s (vz) stock price has risen less than 5% this year and AT&T’s (t) shares have lost 10% while the Standard & Poor’s 500 Index has gained 9%. T-Mobile (tmus), which is trying to merge with Sprint (s) in part to accelerate its 5G efforts, is up 10% and Sprint has gained 11%.

Apple and Samsung and most other major brands have yet to announce when they will offer 5G-compatible phones. Lenovo’s Motorola unit released a new 4G phone in August called the Moto Z3 that will be able to upgrade to 5G with an add-on pack coming next year.

Like AT&T, Verizon is also planning to build a host of smaller cloud computing centers across its network. In combination with 5G, the more geographically dispersed group of data centers will be able to take over some of the computing functions currently included in smartphones. That will allow a new breed of much cheaper phones that rely on the data centers for the calculating power needed to run apps and games.

“The device cost might be one-tenth of what would otherwise be the case,” Dunne said.

Stitch Fix Shares Slide 20% Amid Growing Concerns About Amazon Competition

Stitch Fix stock lost a fifth of its value after the company reported quarterly earnings that beat analyst estimates but revenue that fell slightly short of projections. The results weren’t strong enough to ease investor concerns about the company’s ability to take on Amazon.

Stitch Fix, a subscription-based personal shopping service, initially saw its stock tick up on the earnings beat before plunging 20% to $35.02 a share, its lowest price in more than a month.

The company reported revenue of $318.3 million in its fiscal fourth quarter ended July 28, an increase of 23% from the same quarter a year ago. Analysts had been expecting revenue of $318.6 million. Stitch Fix also said active clients rose 25% to 2.7 million, which was below a forecast of 2.81 million clients from StreetAccount.

While the revenue was slightly below expectations, Stitch Fix indicated revenue in the current quarter could be below analyst forecasts. Stitch Fix sees revenue in its fiscal first quarter coming in between $354 million and $360 million. Analysts had been expecting revenue at the top end of that range, at $359 million.

The selloff reflects what appears to be less of a sense of disappointment over Stitch Fix’s most recent quarter and more of a growing sense of caution about the startup’s ability to compete against Amazon. Last month, Amazon began testing Scout, a personalized shopping recommendation service that is currently focused on home design. Scout could easily expand into fashion, which would offer Stitch Fix a formidable competitor.

Stitch Fix was one of a handful of tech startups that went public late last year, paving the way for a strong year in 2018 for tech IPOs. Stitch Fix’s stock rallied as high as $51.19 a share in September, representing a 240% gain over its offering price, before the news about Amazon Scout caused the stock to tumble.

In a statement, Stitch Fix CEO Katrina Lake described the quarter as “another strong quarter for us” and announced the company is expanding into the U.K. market. “We believe our ability to create a uniquely personalized shopping experience is something that will resonate with consumers and brands outside of the U.S.,” Lake said.

SEC’s focus on U.S. corporate bosses pays off with Musk settlement

NEW YORK/WASHINGTON (Reuters) – A high-profile settlement with Tesla Inc Chief Executive Elon Musk exemplifies a recent push by the U.S. Securities and Exchange Commission to go after executives and not just their companies, securities law experts said.

FILE PHOTO: The seal of the U.S. Securities and Exchange Commission hangs on the wall at SEC headquarters in Washington, U.S., June 24, 2011. REUTERS/Jonathan Ernst/File Photo

In the last week, the SEC announced charges or penalties against eight corporate officials at six companies, including Tesla. The SEC pursued each on different grounds, but securities lawyers said they highlight a shift to an emphasis on personal wrongdoing that has accelerated under Jay Clayton, an appointee of U.S. President Donald Trump who has served as SEC chairman since May 2017.

“Clayton is focused on holding individuals liable and not just corporate entities,” said Mary Hansen, co-chair of the white collar defense and corporate investigations practice at Drinker Biddle, who worked in the SEC’s enforcement division for eight years.

“The public wants to see our law enforcement, whether it be civil or criminal, hold those individuals responsible. That’s what is driving this focus on individual liability.”

The SEC brought action last week against the former president and chief financial officer of LendingClub Asset Management, Renaud Laplanche and Carrie Dolan, and the former CEO and CFO of Walgreens Boots Alliance, Gregory Wasson and Wade Miquelon.

In Tesla’s case, the SEC fined Musk $20 million and forced him to step down as chairman to settle charges he committed securities fraud in tweets saying he was considering taking the electric carmaker private. Tesla itself was also fined $20 million.

“Holding individuals accountable is important and an effective means of deterrence,” Clayton, a former corporate lawyer at law firm Sullivan & Cromwell LLP, said in statement on Saturday. Some Democratic lawmakers had expressed concerns during Clayton’s confirmation process that his ties to Wall Street would create conflicts and weaken oversight.

In 2016, 73 percent of the SEC’s standalone actions involved charges against one or more individuals, according to its own data. That rose to 80 percent in the six months after Clayton took over.


The SEC’s focus on personal culpability has roots in the aftermath of the 2007-2009 financial crisis. Few Wall Street executives were criminally prosecuted for their involvement, triggering calls by lawmakers and the media to hold more individuals accountable for corporate wrongdoing.

Proving individual wrongdoing and malicious intent is more difficult and resource-intensive than identifying compliance lapses at companies, legal experts said, explaining the SEC’s previous reluctance to pursue such cases.

“There is a terrible deterrent effect if you lose because it lets people know you can just fight off the regulators. That’s a bad message to the markets,” said Minor Myers, a professor at Brooklyn Law School and expert on corporate governance.

But political support from both Republicans and Democrats to go after individuals has emboldened the SEC.

FILE PHOTO: Tesla Motors CEO Elon Musk reveals the Tesla Energy Powerwall Home Battery during an event in Hawthorne, California, U.S., April 30, 2015. REUTERS/Patrick T. Fallon/File Photo

Despite their traditional allegiance to the corporate world, Republicans have supported charges against executives, looking to uphold individual accountability and protect big employers and public company shareholders.

And Democrats have been hungry for prosecutions of those who they consider to be the corrupt fat cats of corporate America.

To be sure, pursuing individuals remains a risky legal strategy for the SEC. With more to lose, including large disgorgements, fines and lifetime bans, executives are more likely to fight back in court, sucking up SEC resources.

The SEC suffered a high-profile defeat in the insider trading case of flamboyant billionaire Mark Cuban in 2013 when he was cleared by a Texas jury of using a private tip to avoid a big loss on his 2004 sale of internet company shares.

One of the lawyers Musk tapped to defend himself against the SEC, Latham & Watkins LLP’s Christopher Clark, also advised Cuban on his defense.

But as the SEC scores more legal wins and settlements such as one the with Musk, its enforcement officers feel emboldened to pursue even more cases against individuals, legal experts said.

“There is a huge appetite for going after people at the top of the pyramid. Those are the people you want to deter. Also, going after CEOs who have engaged in wrongdoing is a way for the SEC to generate a lot of political capital,” said Myers.

Reporting by Liana B. Baker in New York and Michelle Price in Washington, D.C.; Editing by Greg Roumeliotis and Meredith Mazzilli

Cyber Saturday—Facebook Hack, Spotify Data Prying, China Election Meddling

Facebook revealed Friday that it had been subject to a breach it discovered three days prior. An unknown hacker compromised 50 million accounts by stringing together a chain of software bugs that ultimately enabled the culprit to steal people’s so-called app access tokens. These tokens allow users to remain logged in, skipping the hassle of repeated password re-entry. Anyone in possession of another person’s token gains the ability to hijack that person’s profile.

In other words, Facebook faced, by its own estimation, 50 million potential account takeovers. What makes the situation worse is that these tokens can provide access to other linked services: Instagram, news sites, games, etc. Anything to which people have connected via a Facebook login could have been vulnerable. Contagion, networked.

The exploit was ironic. Facebook’s “view as” feature, a tool ostensibly designed for privacy purposes—that is, to let users check how their profile appears to other people—accidentally acted as a data sieve. While viewing one’s profile “as someone else,” an attacker could trigger a buggy video uploader through a mechanism intended to let people wish one another “happy birthday.” Accessed this way, the video uploader—containing flawed code since July 2017—served up a log-in token for that “someone else,” rather than for the true viewer. By impersonating targets through “view as,” an attacker could reap tokens galore.

Here’s a rule I live by: Never—or mostly never—use a social media login to access other online services. (I make a few exceptions for news aggregators connected to Twitter.) At the time of writing this column, only one service had access to my Facebook profile. I have since revoked its permission. (Sorry, Scribd.)

To review which services are connected to your Facebook account, take the following steps. Visit “Settings,” then click “Apps and Websites.” You can manage permissions here. If you’re worried about having to remember myriad passwords, use password management software.

Remember: every linkage is a potential point of vulnerability. Cybersecurity professionals call this concept network segmentation, and it is one of their fundamental principles.


A number of readers alerted me that a link I included in my last essay about credit freezes was broken. I regret the error. Here are the correct links: Equifax (phone number: 1-800-685-1111), Experian (1-888-397-3742), TransUnion (1-888-909-8872). Happy freezing.

Have a great weekend.

Robert Hackett


[email protected]

Welcome to the Cyber Saturday edition of Data Sheet, Fortune’s daily tech newsletter. Fortune reporter Robert Hackett here. You may reach Robert Hackett via Twitter, Cryptocat, Jabber (see OTR fingerprint on my, PGP encrypted email (see public key on my, Wickr, Signal, or however you (securely) prefer. Feedback welcome.

Spotify Ends Controversial GPS Validation for Family Plan

After asking some Premium for Family customers in the United States and Germany to verify their address via GPS, Spotify has reportedly stopped using the verification method.

Spotify’s Premium for Family plan allows up six people living at the same address to use a single premium plan for $14.99, as opposed to its single person premium plan for $9.99. The method was criticized by some Spotify users, especially for its language as a “family” plan, despite not requiring any familial relation, as long as all users live at the same address and even though not all family members live together.

The GPS validation also raised privacy and data concerns and received pushback after users were told their service could be discontinued if they did not prove their location matched with other users.

Spotify told Quartz the test ended Friday, a day after reports on it first surfaced.

The new requirement was likely an effort to boost average revenue per user, which dropped 12% for the company this quarter compared to the same point last year.

Gadget Lab Podcast: Oculus Quest, Elon Musk and the SEC, and More

If it seems like all of the news has been centered around this week’s Senate Judiciary Committee hearing and you’re wondering what tech news you might have missed, then this is the podcast episode for you. On this week’s Gadget Lab we discuss the abrupt departure of Instagram’s co-founders from Facebook; Twitter’s ban on dehumanizing language; and the SEC’s suit against Elon Musk.

Also, WIRED editor and author Peter Rubin joins us for an interview about the Oculus Quest VR headset, which he demoed first-hand at this week’s Oculus Connect conference. Is this the thing that will bring VR to the mainstream, or is it just more of the same face computers?

Show notes: You can read about the Oculus Quest here, along with stories on the departure of the Instagram co-founders; the suit against Elon Musk; and Twitter’s attempt to curb dehumanizing language.

Recommendations this week: Arielle recommends the WeCroak podcast. Lauren recommends the interactive story app Florence. Mike recommends watching “Won’t You Be My Neighbor”.

Send the Gadget Lab hosts feedback on their personal Twitter feeds. Arielle Pardes is @pardesoteric. Lauren Goode is @laurengoode. Michael Calore can be found at @snackfight. Bling the main hotline at @GadgetLab. Our theme song is by Solar Keys.

How to Listen

You can always listen to this week’s podcast through the audio player on this page, but if you want to subscribe for free to get every episode, here’s how:

If you’re on an iPhone or iPad, open the app called Podcasts, or just tap this link. You can also download an app like Overcast or Pocket Casts, and search for Gadget Lab. And in case you really need it, here’s the RSS feed.

If you use Android, you can find us in the Google Play Music app just by tapping here. You can also download an app like Pocket Casts or Radio Public, and search for Gadget Lab. And in case you really need it, here’s the RSS feed.

We’re also on Soundcloud, and every episode gets posted to as soon as it’s released. If you still can’t figure it out, or there’s another platform you use that we’re not on, let us know.

UK regulator to enquire if Facebook data breach has affected UK citizens

(Reuters) – The UK’s Information Commissioner’s Office said on Friday it will make enquiries with Facebook Inc (FB.O) and other overseas regulators to find out if British citizens were affected by a security breach announced by the company earlier in the day.

FILE PHOTO: Silhouettes of mobile users are seen next to a screen projection of Facebook logo in this picture illustration taken March 28, 2018. REUTERS/Dado Ruvic/Illustration/File Photo

Facebook said it discovered a security breach affecting about 50 million user accounts after attackers stole Facebook access tokens through its “view as” feature which they used to take over people’s accounts.

“It’s always the company’s responsibility to identify when UK citizens have been affected as part of a data breach and take steps to reduce any harm to consumers,” ICO Deputy Commissioner of operations, James Dipple-Johnstone said

Reporting by Philip George in Bengaluru; Emelia Sithole-Matarise

Tilray's Flash Crash Is An Ominous Sign For The Cannabis Sector

Image result for tilray logo

Tilray’s (TLRY) share price just gave out its biggest warning sign to investors last week when its share price surged after the CEO, Brendan Kennedy appeared on Cramer’s Mad Money and touted the potential for medical marijuana. Speculators loved it and piled in on Wednesday, driving its share price up more than 100% at one point. The stock was halted five times due to triggers of too much gain and ended the day up “only” 38%. Despite being a great cannabis company, we are certain that Tilray’s current share price is unsustainable, irrational and doomed to fall. More importantly, the volatility exhibited on Wednesday is an ominous sign for the entire cannabis sector. We still vividly remember that in the weeks before the bitcoin bubble burst, people on the subway and in coffee shops started talking about it. As a result, we also fear that Tilray has done the cannabis market more bad than good.

(Source: CNBC)

Irrational Exuberance

Being one of the longest-standing contributors on SA entirely dedicated to providing the best cannabis coverage, we strongly believe in the potential of cannabis in both recreational, medical and other potential fields. However, the development of an industry takes time and anything that rises too fast and too much will only lead to a crash that might take a long time to recover.

Below is the share price chart for Tilray on Wednesday. The stock closed around $155 the day before and at some point, it reached $300 during the day, almost doubling in just one day. However, after one of the halts was lifted, the stock crashed down to below $155, essentially wiping out the entire gain in a matter of minutes. The trading of this stock is so volatile that every share price tick on the screen between seconds is a movement of 3-5%.

When is the last time that we saw this type of trading in the public markets? We cannot help but think back to the crypto bubble that has been slowly bursting during 2018. We don’t believe cannabis is bitcoin because the market is real and tangible, and there is a clear path to reach that market through legalization. However, we believe the Tilray stock has become a tool for speculators and manipulators which is ultimately harmful to the sector as a whole. If a stock could move 200% (up and down 100%) in a single trading day, you know there is absolutely nothing normal about this stock.

Tilray is Good, But Not $300 Good

We liked Tilray very much when we first covered the stock after its IPO in “Tilray: The IPO That Checks All The Boxes“. Back then, we thought the stock was likely overbought given the share structure and enthusiasm around the first-ever cannabis stock to IPO on the Nasdaq. However, the stock has since risen to over 10x the IPO price of $17.00 which is totally beyond our comprehension. We think there are a couple of things we should look at to see that Tilray is trading on hype rather than any fundamental factors.

Share Structure

After the IPO there are 16.6 million class 1 shares and 75.1 million class 2 shares outstanding. Besides the 9 million shares that were sold as part of the IPO, all other shares are locked up as they are held by the insiders and affiliates. Privateer owns 82% of the economic interest and 93% of the voting rights in Tilray after the IPO. On Wednesday, the stock traded 32 million shares! That means the entire float of Tilray was traded more than 3 times in a matter of 24 hours. Imagine the entire block of Tilray shares that are available for public trading was exchanged hands three times. One could only imagine who the buyers or sellers are and whether there was anyone looking for anything but a quick profit. The tight share structure won’t change until the company does equity offering or insiders start selling shares.

Tilray Financials

We have long been preaching the concept that valuation is inherently useless and inaccurate for cannabis companies given that the market is not yet open for business. However, it does not mean that we should not check the numbers to get a sense of how much growth has been priced into the current share price. At Tilray’s closing share price on Wednesday of $214 and 91.7 million shares, Tiraly’s market capitalization reached $19.6 billion. For the year of 2017, the company generated revenue of $20 million and incurred a net loss of $7.8 million. We know better than anyone else the potential for cannabis market and we have been an advocate for the sector, however, a $20 billion market capitalization means that a very large chunk of the future growth has been priced into it. There is not that many $20 billion companies out there and it takes most of them years and years of work to get there. Put it another way, Tilray needs to generate billions of revenue just to maintain its share price, not to mention any upside at the current market cap.

(S-1 filing)

Implications for the Cannabis Sector

The biggest concern for us as an observer of the cannabis sector is that when Tilray finally comes crashing down, it will drag down the entire sector. Wednesday is a good example (chart below) as most cannabis stocks traded up significantly during the day only to end up losing most of the gains after Tilray faltered in the final hour of trading. Canopy (CGC), Aurora (OTCQX:ACBFF), and Aphria (OTCQB:APHQF) all ended Wednesday in the red. Cronos (CRON), benefiting from its Nasdaq listing similar to Tilray, saw its share price up more than 30% at one point during Wednesday before settling to a 10% gain.

There is so much media exposure on Tilray that the average investors are starting to piling in, which is an incredibly useful sign for predicting when the peak might be near. We are not calling an exact date for the correction to happen, but when the TV programs are talking about Tilray every 5 minutes and your friends and families started asking whether they should buy this stock, you know the end is near. We have seen a similar pattern play for the cryptocurrencies during the last few months of 2017 when bitcoin became the anchor topics for most business websites and TV programs and everyone had a friend or family that invested in bitcoin. At the time people thought the digital coins could only go up and $100,000 is the price target for bitcoin. Now that bitcoin is gone and no one talks about it anymore, the speculators had found their new toy and cannabis is the hottest sector on the main street now.

For companies that have less pronounced public profiles, they have not benefited as much from the Tilray’s meteoric rise. However, when the Tilray bubble bursts, investors will likely punish all stocks and more importantly, capital flow into the sector could be temporarily impacted. Companies like Hexo (OTCPK:HYYDF) and CannTrust (OTC:CNTTF) could be seriously damaged if the sector becomes tainted with words like “bubble” and “hype”. We think the Tilray saga needs to end and the sooner the better. A healthy appreciation of share prices is more helpful to the long-term growth of the cannabis sector rather than the speculative movements we are seeing out of Tilray right now. The wild swings is an ominous sign that the sector has reached the level of mania that was last seen in crypto and a correction is long overdue at this point. For more details about our views of the cannabis market and a potential correction, see our recent article “Are We Heading Into Another Meltdown For Pot Stocks?


Author’s Note: “Follow us” to receive our latest publications in the sector. We also publish a widely read Weekly Cannabis Report, which is your best way to stay informed on the cannabis sector.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

Intel Corporation: Why I'd Rather Bet On Goliath Than David

The recent euphoria over AMD (NASDAQ:AMD) has been interesting to watch. For long-time bulls, it represents a very profitable victory over the naysayers. I’m always happy to see increased market competition, as consumers stand to benefit from these developments. However, on the stock side of things, I think the love for AMD has gone too far and that Intel (NASDAQ:INTC) represents a much better investment both now and in the future.

Image from

Image from

From the charts above, you’d think that Intel was going out of business or that AMD was being acquired! The P/E for Intel is 11, and 69 for AMD. Yikes. Instead of buying at the top of this 300% gain, consider the following:

AMD’s Q2 revenue of 1.76B is rather embarrassing compared to Intel’s 17B Q2 revenue. They chose to only state their gross margins of 37% on their earnings slides presentation because I’m guessing that they didn’t want investors to see that operating margin was only 8.7% (author calculated) for the quarter. Intel, on the other hand, sports a gross margin of 61.4% and an operating margin of 32.5%.

I know that companies are not required to post certain data on earnings slides, and that the information can be fairly easily calculated from the SEC-filed 10-Q, but I always like to look at what companies choose to highlight. I find companies that choose to report weird, non-standard, financial metrics tend to do so because they want to paint a rosier picture than what is really going on with the business.

Image from AMD earnings slides presentation 7/25/18

Intel has always enjoyed an advantage over AMD due to its size and financial strength. That advantage is not going away overnight like some analysts would have you believe. AMD may be putting out some good products right now, but it still doesn’t materially shake up the market share landscape. In fact, the market share advantage that Intel enjoys has actually appeared to get bigger in the past 6 years, not smaller.

Image from

AMD launched the popular Ryzen line of processors beginning in the summer of 2017. AMD enjoyed a market share gain of ~4% with the product, but has since lost most of that gain in the quarters following, despite new iterations being released.

Intel’s quarterly R&D spending is $3.4B, which is twice AMD’s quarterly revenues. With this type of discrepancy in funding, AMD can’t afford to stumble on developing competing products.

We will see what effect other products like Epyc will have on market share of data centers, but I’d rather invest my money with the much more successful incumbent in this area.

Dividends And Buybacks

While it’s always painful to see companies buy back shares and then have the share price decline further, at least management is implementing a source of capital return to shareholders. Share reduction of 117M shares YTD will help reduce dividend payout and improve earnings growth.

Image from INTC earnings slides presentation 7/25/18

While INTC’s 2.64% dividend is not burning a hole in your pocket, it does help fight inflation and offers you some solace in share price slumps such as these. INTC has also shown a consistent history of dividend growth, and we are due for another increase soon. Payout ratio sits at just 29%, so there is plenty of room on the balance sheet for such a move.

Image from Seeking Alpha dividends tab for INTC

Will AMD’s Gain Cause INTC Pain?

Image from INTC earnings slides presentation 7/25/18

Nope. Intel has actually RAISED its guidance for FY18 despite AMD product launches, global trade war, 10 nm product delays (always expected to be 2019, but still widely touted) and a CEO departure. I’m having a hard time coming up with ways that Intel will see decreased financial performance short of a prolonged recession or physical disaster. Even Qualcomm (NASDAQ:QCOM) fighting with Apple (NASDAQ:AAPL) for the millionth time over stealing trade secrets shouldn’t actually affect Intel, as it is not a direct defendant in the litigation.

I’m also not scared for Intel’s future prospects when its main competitor has to resort to saying that FCF will be “positive” in guidance statements.

Image from AMD earnings slides presentation 7/25/18


When you can’t come up with a convincing bear case for your hypothetical investment in a stock, that usually signals you that it’s time to buy. We don’t know what the future will bring for Intel and AMD and their ongoing battle, but we can see that Intel appears undervalued and AMD appears overvalued at this time. I’m not trying to say that money cannot be made with AMD, just that it seems like more of a sure bet to invest in the market leader.

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in INTC over the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Ashford Hospitality Trust: Why I Bought More On The Big Pullback

Who knew that furniture could be so profitable? I’m not talking about selling furniture, I’m talking about being able to use furniture for free. The recent deal between Ashford Inc. (NYSEMKT:AINC) and Ashford Hospitality Trust (AHT) allows AHT to do just that. It is so compelling I almost feel like driving around the night before bulk trash pick-up and hoarding as much furniture as I can. Obviously, I’m exaggerating, but the recently signed Enhanced Return Funding Program Agreement between the two companies makes you wonder if there are other ‘out of the box’ ways to juice returns.

The stock price for Ashford Hospitality dropped 18% after the company reported 2Q results.

I poured over the earnings release and couldn’t figure out why the stock declined so dramatically. Yes, the revenue numbers were lower than the same period last year but to drop 18% in one day? Something didn’t make sense. I thought it might be this new agreement and that it was probably to the benefit of Ashford Inc. at the expense of Ashford Hospitality. Nope. The deal is a good one for both parties.

The ERFP Agreement

The agreement is a commitment from Ashford Inc. to invest $50M and up to $100M for properties acquired by AHT. The investments will equal 10% of the property acquisition price and will be made, either at the time of the acquisition or at any time in the following two years. Here’s the interesting part: in exchange for furniture, fixtures, and equipment (FF&E) for use at the acquired property or any other property owned by the partnership, Ashford Inc. basically gives AHT the right to use the FF&E at any hotel leased by the REIT.

The way it helps AHT is by enabling it to put up less equity when making acquisitions and in some cases, make better offers that are more likely to win the bid. There is the danger that this could lead to overpaying of properties but management made a point on the press release that the agreement is to help make ‘good deals great,’ not overpaying for the sake of it.

The $50M 2-year commitment enables AHT to acquire up to $500M of “furnished’ hotels and is expected to add anywhere from 700 to 1200 basis points to potential returns. Here is how that works:

Using the full potential $50M potential investment, Ashford is able to acquire $500M of properties with just $100M of its own capital. The balance of $400M will be sourced with mortgage debt and corporate preferreds as well as the $50M from Ashford. That’s a 33% reduction in the amount of equity required and certainly a competitive advantage in the bidding process.

Hilton Alexandria

The Hilton acquisition is a great example of how the program will work. Out of an acquisition price of $111M, Ashford is providing $11.1M from the ERFP funding agreement. The effect on the NOI cap rate for the acquisition is compelling, with an increase from 7.5% to 8.3%, resulting in a 62% increase in the 5-year IRR, from 18.2% to 29.5%. There are certain assumptions built into these figures such as the timing of the Ashford investment. The sooner the investment is made the higher the impact on ROI and IRR. The NOI increase assumes funding at the close of the transaction. The IRR calculation assumes funding one year later.

Either way, the agreement is compelling enough to give the stock considerable upside – if invested correctly. There are benefits to Ashford Inc. too, of course – namely, an increase in fees as a result of incremental hotel acquisitions.


So even though the stock was cheap before, it is really cheap now. I think analysts have been slow to add any growth in revenues from what potentially could be a ramp-up in acquisitions. At a current P/AFFO multiple of just 7.1, AHT is arguably the best value play in the Lodging REIT sub-sector.

It also has the second-highest dividend yield among peers, which when combined with a payout ratio of just 51%, is likely to persist. Maybe, just maybe, we might even get a dividend boost too.

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Disclosure: I am/we are long AHT.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

U.S. Justice Department meeting with state officials focused on data privacy

WASHINGTON (Reuters) – A U.S. Justice Department “listening session” with state attorneys general on Tuesday focused on how tech companies handle user data and whether privacy issues can be addressed using antitrust law, California Attorney General Xavier Becerra said.

FILE PHOTO: The Department of Justice (DOJ) logo is pictured on a wall after a news conference in New York December 5, 2013. REUTERS/Carlo Allegri/File Photo

The group made no immediate plans to file any case or open any investigation, Becerra said after the meeting, which lasted about an hour.

“The conversation really zeroed in on privacy,” he said. “We talked about having some more conversation… The principle conversation revolved around privacy and antitrust.”

Reporting by Jan Wolfe and Sarah Lynch; Writing by Diane Bartz; Editing by Bill Rigby

5G will bring cloud computing to everyone

I gave a cloud computing talk in a rural Midwest town a few years ago. I went on and on about the benefits of using the cloud. During my talk, I noticed a lot of folded arms and concerned faces. The reason? They did not have high-speed internet available to their businesses, so using a public cloud was not an option for them.

I learned that day that you can’t assume everyone has high-speed internet access. Most rural areas don’t, unless they pay for high-latency and high-cost satellite.

5G is the fifth generation of cellular mobile communications, preceded by 4G (LTE/WiMax), 3G (UMTS), and 2G (GSM) systems. 5G advantages include high data-throughput rates, reduced latency, energy savings, cost reduction, greater system capacity, and massive simultaneous device connectivity, at a practical cost.

It’ll be a while before 5G comes to a tower near you, but it promises low-cost, low-latency high-speed internet for all, no matter where you live or have a business. This is the missing link for many people and businesses, when it comes to using cloud computing.

What’s different about 5G is that its purpose-built for homes and businesses. It is not the use of a cellular network that can only support a few devices tethered via a Wi-Fi hotspot. Instead you can run a good-sized business over a 5G network, and do so with no T1, DSL, cable, or other wired broadband connection on premises.

5G is the functional equivalent to businesses getting electricity for the first time. Access to cellular broadband means that they can use cloud-based systems to begin to automate things that should have been automated years ago, but that they had to defer due to availability and affordability. This means connectivity for IoT devices (whether outside or on factory floors), the ability for staff to use analytics to understand where their business stands, and the ability to train employees online on the latest processes and technologies wherever they happen to be.

Those of us who log onto our 200Mbps networks at home or at work often take connectivity for granted. However, those who don’t have broadband will discover the whole new world of cloud computing with 5G that can take their businesses to the next level. It’s about time.