Being a champion means nothing left to prove

Posted on April 26, 2013 by leannehenderson

It’s official. It’s not over, it’s just beginning for the world’s best asset class Black Caviar, with a portfolio return that already boasts the following:

Wins: 25 from 25!

Australian record holder of the most number of Group 1 wins with 15, surpassing the record she shared with Kingston Town after win #24!

Track record holder of the Black Caviar Lightning, a weight-for-age race over 1,000 metres at Flemington, in a course record time of 55.42, and her third consecutive win in this race.

Ascot Diamond Jubilee 2012 winner.

Inducted into the Australian Racing Hall of Fame, before retirement!

Three-time world champion sprinter.

Brand icon, cover girl for the December 2012 edition of fashion magazine Vogue, winner of the Australian ‘Sportswoman’ of the Year 2012, public property #1, and so much more! :)

Black Caviar retired on 17 April 2013 to focus on becoming a Mum, with an investment objective that may well produce the highest priced yearling in world thoroughbred racing!

Like Pharlap, Black Caviar has nothing left to prove, a true sign of a ‘champion’.

‘Price is what you pay, value is what you get’ for a champion bloodline!

Recently we saw the ‘half-brother’ to world champion Black Caviar sold as a yearling for an Australian record price of A$5 million! And his investment value will just keep rising, whether or not he steps onto a racetrack.

Known as Lot 131 and star of the Inglis Easter Yearling Sales, he is by champion sire Redoute’s Choice out of the broodmare Helsinge, Black Caviar’s Mum. He was purchased by the same BC3 Thoroughbreds syndicate that bought Black Caviar’s half-sister in 2012 for A$2.6 million. Such is the power of the bloodline, ‘the underlying fundamental’, when it comes to assessing investment value! :) Warren Buffett would be happy with BC3′s investment approach!

Black Caviar stampHelsinge is also the dam of All Too Hard, winner of three Group 1 races including the Caulfield Guineas. He was purchased for A$1.025 million in 2011 and sold to Vinery Stud for more than A$25 million. Not bad! Horses like All Too Hard will ensure that the public can still see the Helsinge bloodline in action, with the horse set to resume in the All Aged Stakes at Randwick on 27 April.

(Update 6/5/13: Champion All Too Hard has retired after winning the All Aged Stakes! Vinery Stud’s general manager Peter Orton was quoted as saying “All Too Hard has done all we could have asked for and more. He possesses an outstanding pedigree being out of Helsinge and a half-brother to world champion sprinter Black Caviar but offers the blood of champion sires such as Danehill, Snippets, Last Tycoon, Flying Spur and Vain.” Source: smh.com.au)

Are we happy for Black Caviar?

You bet! And so is Frankel, Americain and Fastnet Rock! We look forward to a new race emerging for Black Caviar and another world’s best asset class being ‘constructed’, with a hedging strategy, of course! :)

Let’s celebrate with some line dancing! Not Gangnam style, but Black Caviar style. Here’s what the line looks like on paper:

1111111111111111111111111 = 25

Thanx for the memories, Nelly….

(Update 11/5/13: Can you imagine the investment value of the Black Caviar stamp in fifty years’ time? Launched on 11 May 2013, see her stamp above right!)

Related articles

Black Caviar farewell tour worth the weight

Iconic brand Black Caviar is world’s best investment

Australian Story tribute

ABC Australian Story 22/4/13 Fade to Black

*****

Leanne Henderson is an Australian financial services executive and PR, marketing and communications specialist and owner of Best of Breed Communications Pty Ltd. Pseudo PR manager for Black Caviar!

Twitter: @HendersonLeanne

 

^ back to top

Comments Off | Posted in Business, Finance and Investment, Sport and Racing | Tagged , , , , , , , , , ,

Black Caviar farewell tour worth the weight!

Posted on March 20, 2013 by leannehenderson

There’s nothing wrong with being ‘overweight’ in the ‘world’s best asset class’!

On 16 February 2013 Black Caviar continued her run of investment outperformance with 23 consecutive wins! In a flash, she put her stamp on the Group 1 race re-named the ‘Black Caviar Lightning’ at Flemington and scorched the turf at weight-for-age, over 1,000 metres, and in a course record time of 55.42! It was her third consecutive win in this race, really proving that lightning can strike thrice!

Black Caviar needs no introduction, with her name, imagery and achievements already firmly embedded in the psyche of Australians and admirers around the world.

The public now understands that she is a once-in-a-lifetime horse and that opportunities to witness her re-write history are finite. To quote VRC chief Dale Monteith in February 2012, ”she is a game changer like no other horse.”

Recently rated the ‘World’s Best Sprinter’ for a third consecutive year, Black Caviar is a phenomenon. Purchased for $210,000, she has become an iconic Australian brand with a breeding value worth millions.

In July 2012, I posted Iconic brand Black Caviar is the world’s best investment, a story about her brand value and the impressive use of social media in her promotion. ‘Consistent’ and ‘accessible’ were the two attributes that immediately came to mind when describing the Black Caviar brand. Transcending borders, she has also added the status of fashionista, having appeared on the December 2012 cover of one of the world’s most respected magazines, Vogue. No weight problem there! :)

Weight stops trains? Not this Nelly!

Despite her ‘weight problem’ over the Australian summer prior to the Caulfield exhibition gallop on 2 February, she was presented fit and ready to resume from her spell. Bart Cummings once said “Weight stops trains.” You can’t underestimate his wisdom, but for now, it is not an issue while contesting races at weight-for-age.

In investment terms, there’s no such weight problem for the investor, for maintaining an ‘overweight’ position in the world’s best asset class has been a very lucrative strategy! :)

Her fans have had a ‘wait problem’, but one that has been surely worth it. With win #23 out of the way, we wish Black Caviar well as she embarks on what we hope may be many more races in her ’farewell tour’?!

Next up, the William Reid Stakes

Black Caviar’s next assignment is the Group 1 weight-for-age William Reid Stakes on 22 March at Moonee Valley over 1,200 metres, aiming for win #24! And who’s William Reid? A prominent Victorian banker and racehorse owner of the early 1900s who has a Group 1 race named after him and expects to add another Black Caviar win to his list!

Once again, the Australian Football League have obliged, recognising this special event in Australian history, by agreeing to Channel 7′s direct coverage of her race during the half time break of the AFL Round 1 season opener. ‘Now that’s gotta be good for footy!’ Yeehah!

(Update to this post 23/3/13: Win #24 in the William Reid! This is how racecaller Greg Miles described her win as she approached the finish line: ‘But this is brutal power, wrapped in an elegant machine.’)

By the way, have you seen Black Caviar race?

It’s memorable. Just ask Sally Lehnhardt, Black Caviar’s biggest US fan, who flew from the States to see the exhibition gallop at Caulfield, and then flew back to Melbourne for the Black Caviar Lightning. I contacted Sally on her arrival and she said “This is all so exciting!”

(Update to this post 11/4/13: Sally arrived in Australia again today to witness Black Caviar’s win #25 in the TJ Smith Stakes, a Group 1, WFA race over 1,200 metres at Randwick on 13 April. Black Caviar won this race in 2011! Update 13/4/13: Win #25 and now the Australian record holder of the most number of Group 1 wins with 15, surpassing the record she shared with Kingston Town after win #24! Is there anything this mare can’t do?!)

My memories? Will never forget being at Moonee Valley on Cox Plate Day in 2011 to see Black Caviar’s win #15 in the Schweppes Stakes, a Group 2 race over 1,200 metres in a time of 1:10.13. Nelly crossed the finish line to win by her equal longest winning margin of 6.0 lengths. Below is my own photo of that moment, which also appears in my July 2012 post. More yeehah!…

How good is she? Just ask the Racing Hall of Fame!

Black Caviar’s stature in racing has now been recognised with her induction into the Australian Racing Hall of Fame. She is only the second horse to be inducted before retirement, the other being dual Cox Plate winner Sunline. Horses are not normally inducted while they are still racing, however Bob Charley, Chairman of the Australian Racing Board, said Black Caviar ‘was a deserved exception’. Great business decision, Bob!

*****

#BlackCaviarSongs trending on Twitter

How about ’Girl On Fire’ by Alicia Keys?

“You can try but you’ll never forget her name. She’s on top of the world, hottest of the hottest girls, say…..Everybody stares as she goes by, ‘cos they can see the flame that’s in her eyes…..She’s got both feet on the ground, and she’s burnin’ it down…..This girl is on fire!” Here’s Alicia’s video!

****

For Leanne’s latest article on Black Caviar published 18 April 2013 read Being a champion means nothing left to prove!

****

Leanne Henderson is an Australian financial services executive and PR, marketing and communications specialist and owner of Best of Breed Communications Pty Ltd. Pseudo PR manager for Black Caviar!

Twitter: @HendersonLeanne

 

 

^ back to top

2 Comments | Posted in Sport and Racing | Tagged , , , , , , ,

Riding toward the US debt ceiling cliff

Posted on January 17, 2013 by leannehenderson

When US Federal Reserve Chairman Ben Bernanke warns the US Congress to raise the debt ceiling limit, he means it!

After all, his options for applying any further conventional monetary policy to manage the US economy are limited, as evidenced by his recent move to set his own ‘fiscal framework’ tied to the US unemployment rate.

With the US edging towards its second, and more costly cliff, that of the ‘debt ceiling’ cliff, the pressure is mounting on US law makers.

At a recent University of Michigan forum, Mr Bernanke said “It’s very, very important that Congress take the necessary action to raise the debt ceiling to avoid the situation where the government doesn’t pay its bills.”

‘Congress needs to do what it needs to do’ is really the key message from Bernanke. Perhaps devising a real plan for spending and revenue would be a great start.

The current US borrowing limit is US$16.4 trillion and due for review at the end of February. (NB: Update 2/2/13 – deadline now extended to May 2013 – see end of this article).

How does it work? Raising the debt ceiling does not directly impact on the budget deficit. The US government passes a federal budget every year which details projected tax collections and outlays and the amount of borrowing the government needs to do in that fiscal year. A vote to increase the debt ceiling is ‘usually’ a formality in order to continue spending that has already been previously approved by the President and Congress. Source: wikipedia. But in recent US political experience, this process hasn’t gone to plan!

Maybe Bernanke needs to ride into town on a horse?

When Will Ferrell and Kristen Wiig presented their hilarious skit at the 2012 Golden Globe Awards this week, it sparked an idea that perhaps Ben Bernanke could get the attention of US Congress another way…in ‘Hope Springs’, if you can visualise Will and Kristen’s description of the movie! It goes something like this:

“Ben Bernanke. Hope Springs. And he’s… he’s the sassy sheriff… he comes into town on a horse… and that scene, that scene where he looks at the town people… “You get outta here, y’all… You get outta here!” :)

There’s much work that still needs to be done by the ‘town people’ on the US economy and Bernanke has been vocal on this point. It’s possible that the US could go over the debt ceiling cliff, but expect this action to be temporary, just as the US ‘technically’ went over the fiscal cliff on 1 January. A deal was finally reached by Congress only two days after the deadline, addressing some taxation aspects, but not the key spending cuts to be made.

Obama was right when he said “the fiscal cliff is a politically self-inflicted wound”. Watch for ’cliff series 2′ to be screened in February, where the ‘debt jumping’ US deal makers try to artificially jump this next cliff. But the pressure is not only coming from Bernanke…

Fitch ratings has its own warning

The Fitch ratings agency has also issued a warning that the US must effectively manage its debt ceiling policy in order to strengthen the economy or its AAA credit rating is at stake if Congress does not reach agreement on raising the ceiling for the national debt. For full details on the warning, read Fitch’s media release of 15 January 2013.

Fitch are not talking default, the risk of which is extremely low. But they are saying that a failure by the US to raise its debt ceiling limit would lead to a review of its ratings of US debt instruments and sovereign ratings.

However, Fitch also warned that fundamental strengths in the US economy were being undermined by the weight of debt and associated strains.

Fitch warned that even if a crisis over the ceiling were averted in the immediate future, if the solution did not address the debt in a way which supported growth, then it was set to downgrade the US rating later in the year anyway. Read Sky’s article for more information.

Fitch says that having a US debt ceiling is an ineffective way to manage fiscal discipline. Investors and the town people should keep their eye on this bouncing ball for any future downgrade!…

“And Judi Dench, where did she come from?”

For one of the funniest Golden Globe presentations in years, the real winner is Will and Kristen. Watch their skit here! :)

***

Update 2/2/13 - US Congress has now voted to extend the debt ceiling deadline until 19 May 2013, temporarily removing the risk of a government default from fiscal negotiations. This short term approach, while sensible, still requires a resolution, but the measure at least eliminates any risk of a default in the short term. Read Bloomberg’s update.

***

Want to know the current state of US national debt? Take a peak at the US debt clock in real time by clicking here. It’s mesmerising!

Looking for a related article by Leanne? Read her post “Managing the fiscal cliff to avert a sky fall” published on 1 December 2012!

***

Leanne Henderson is an Australian financial services executive and PR, marketing and communications specialist and owner of Best of Breed Communications Pty Ltd.

Twitter: @HendersonLeanne

^ back to top

Leave a comment | Posted in Business, Finance and Investment | Tagged , , , , , , , , , ,

Managing the fiscal cliff to avert a sky fall

Posted on December 1, 2012 by leannehenderson
“This is the end. Hold your breath and count to ten.”

When Adele sings those opening lyrics in the new James Bond movie Skyfall, some similarities come to mind between the movie’s conclusion and the deadline for the US ‘fiscal cliff’! In both cases, the world has to take a very deep breath!

While Daniel Craig’s mission ended at Skyfall, Barak Obama has his work cut out for him in a real life ‘Thelma and Louse’ cliff drama. In Obama’s case, negotiation is expected to be the winner, with his first deadline due on 31 December 2012.

It’s easy to dismiss the US fiscal cliff as just another economic theory that won’t play out in practice. But there’s enough concern from market watchers to say that the combination of capped borrowings and lower than expected tax income will send the US into recession.

And, there’s nothing more compelling than the comments from US Federal Reserve Chairman Ben Bernanke’s July 2012 paper which states the “Congressional Budget Office has estimated that, if the full range of tax increases and spending cuts were allowed to take effect – a scenario widely referred to as the fiscal cliff – a shallow recession would occur early next year and about 1-1/4 million fewer jobs would be created in 2013.”

Simultaneous tax increases and spending cuts

The timing of certain US laws coming into effect at the end of this year and into early 2013 will place enormous pressure on the growth of the US economy. The major components include the expiration of the Bush tax cuts, the ending of federal unemployment benefits and the 2% social security payroll tax cuts. Military spending and other domestic spending would also be reduced. Some provisions will increase taxes eg. the expiration of the Bush tax cuts, while others will reduce spending eg. expiration of unemployment benefits. Wikipedia has an accurate list of the laws creating the fiscal cliff concerns, but there are many other sources.

The fiscal cliff is a politically driven event that has some of its roots in the US debt ceiling negotiations of 2011. If Congress is unable to agree by the end of 2012, US$607b. in automatic spending cuts and tax increases will take effect in January. As an example, taxes on ordinary income, capital gains, dividends and estates will increase, lifting the top tax rate from 35% to 39.6%.

The outcome required is a compromise between the Republicans and the Democrats to smooth the introduction of these measures so that they have a reduced impact on the economy. Both sides agree the deficit has to be cut, but have differing views on how those cuts should be applied. Click for further explanation on the fiscal cliff and its effects.

Thelma and Louise explanation

If you would like the US fiscal cliff explained ‘Thelma and Louise style’ (with the help of Hollywood) and Paddy Hirsch, here it is video style! :)

The most likely outcome is a set of temporary measures that would delay a more permanent policy solution.

If Congress takes the middle ground, by extending the Bush tax cuts but removing the automatic spending cuts, then the economy may see some modest growth.

Where did the term originate?

Contrary to popular belief, Ben Bernanke didn’t create the term ‘fiscal cliff’ but he sure did popularise it in his speech on 29 February 2012 to the House Committee on Financial Services. He said “Under current law, on January 1st, 2013, there is going to be a massive fiscal cliff of large spending cuts and tax increases. I hope that Congress will look at that and figure out ways to achieve the same long run fiscal improvement without having it all happen at one date.”

For more on the origin of the term, Annalyn Kurtz’s view on CNN Money Blog is a good read.

Social media campaign #My2K

Obama has used Twitter to communicate one of his messages on the fiscal cliff using #My2K as the hashtag. He tweets that most families could save up to US$2,200 if Congress extends middle class tax cuts and he asked followers to describe what an extra US$2K would mean to their families. If the Bush tax cuts are allowed to expire at the end of the year, a family of four would pay US$2,200 more in taxes in 2013. The President wants to extend the tax cuts for the middle class, but eliminate them for the top 2% of Americans who earn more than US$200K p.a.

National Debt Clock

What the fiscal cliff issue really highlights is the fragility of the US economy built on debt. One of the most ’mesmerising’ images I saw while in New York was the ‘debt clock’, a digital billboard display located near W. 44th and Sixth Avenue which shows the level of real time US debt. In September 2009, that debt was US$11 trillion (see the clock image above). This year, US debt surpassed US$16 trillion on 4 September 2012. At the end of FY 2013, the forecast for US total government debt is expected to reach US$20.5 trillion. Source: http://www.usgovernmentdebt.us/

For real time data on US debt, visit usdebtclock.org or click on the clock image above.

Entrepreneur Seymour Durst first erected the debt clock in 1989, albeit in a different location, for the initial purpose of drawing attention to the consequences of Reaganomics. At that time the US national debt was US$2.7 trillion. How long will the clock remain? Durst was quoted as saying “It’ll be up as long as the debt or the city lasts,” adding, “If it bothers people, then it’s working.” I love that line!

The debt clock certainly bothers Ben Bernanke and President Obama. As the US heads toward the fiscal cliff, it should be seen as an opportunity to take some real action to ‘manage down the debt’ as a work in progress, even though the pain involved would cause everyone to be ‘shaken, not stirred’!

Adele ends her song with “Let the sky fall. When it crumbles we will stand together. Face it all together.” As the US faces its fiscal cliff, this is one ending that can be averted at least for the short term, by taking a bi-partisan approach. If not, Daniel Craig as James Bond has his next mission!…

…Here’s the video of the Skyfall song for the avid fans! (source: YouTube) http://www.youtube.com/watch?v=DeumyOzKqgI

***

Politically self-inflicted wound

Update to this post 2/1/13:  Technically, the US went over the fiscal cliff on 1 January, but within two days a deal was finally reached by Congress that addressed some taxation aspects, but not the key spending cuts to be made. A Forbes article provides a useful summary of the agreed measures to date, with so much more work to be done.

Obama was right when he recently said “the fiscal cliff is a politically self-inflicted wound”. It sure is, and if wounds are not treated properly, they linger and worsen, and in this case what we have is a bandaid solution to a much wider problem. My twitter comment of 2 January sums up a bigger problem looming: ”In the upcoming fiscal cliff series 2, watch US deal makers artificially jump the next debt hurdle in two months time. #DebtCeilingCliff”!

***

Leanne Henderson is an Australian financial services executive and PR, marketing and communications specialist and owner of Best of Breed Communications Pty Ltd.

Twitter: @HendersonLeanne

 

^ back to top

Leave a comment | Posted in Business, Finance and Investment | Tagged , , , , , , , , , ,

Facebook growing in global brand value

Posted on October 11, 2012 by leannehenderson

 

 

 

Any business that can build a social media platform of one billion monthly active users must be doing something right. Last month Mark Zuckerberg did just that!

After carefully managing the growth of his Facebook company since 2004, the biggest database in the world has so far generated 1.13 trillion ‘likes’, 140 billion friend connections and the uploading of 219 billion photos. Whew!

In October 2007, Facebook hit 50 million users. Back then, the median age of the user signing up was 26 years old, with an average of 321 friends. The top five countries using the platform were the US, UK, Australia, Canada and Turkey.

Five years on, and the median age of the user signing up has dropped to 22 as at September 2012, and the mix of the top five countries now includes the US, Brazil, India, Indonesia and Mexico. Along the way, Facebook has gathered 600 million mobile users, up from 543 million at the end of June. Source: Facebook.

Facebook gains in global brand value attention

Last week major global brand consultancy Interbrand released its Best Global Brands 2012 Report. The big news? Facebook has now entered Interbrand’s Top 100 list of the Best Global Brands, coming in at number 69. Interbrand commented that “despite its rocky start as a publicly listed stock and lingering uncertainty about its business model, Facebook’s growth as a brand, especially in developing markets, earns it a position in this year’s report.”

Coca-Cola retained its number one spot, and Apple jumped to number two with its sales in both developed and emerging markets. Google came in at number four after experiencing a 26% increase in brand value over the last year, exceeding Microsoft’s brand value for the first time since Interbrand has been publishing its report.

In terms of brand value, Interbrand says Facebook still has a long way to go to catch up to number one ranked Coca Cola. Their article ‘Moving Beyond Utility’ written by Lauryn Bennett said “Coca-Cola not only surpasses Facebook astronomically when it comes to financial performance with revenues of US$35 billion (Facebook’s revenue is estimated at US$4 billion this year) but also earns about half of its value from the role the brand itself plays at the time of conversion. For now, not only does Facebook fall short when it comes to revenue, but it also could benefit from more focus on its brand.”

Interbrand’s methodology analyses how a brand touches and benefits an organisation, from driving bottom-line business results to delivering on customer expectations. To develop its report, Interbrand looks at the three key aspects that contribute to a brand’s value: “The financial performance of the branded products or service, the role the brand plays in influencing consumer choice, and the strength the brand has to command a premium price, or secure earnings for the company.” Read Interbrand’s report for more information on its methodology and approach.

What does Facebook’s positioning mean for investors?

At the moment, the elevation in its global brand value and positioning would provide little comfort to those investors feeling some pain.

There’s no doubt that the challenge for Facebook is to improve its current share price for investors. Since Facebook’s IPO in May this year, the main issue for the business has been the monetisation of its users. Investors will want a return and monetising will help fund the development of a sustainable business model going forward.

Having passed the one billion active user mark on 14 September 2012, Facebook has acknowledged that a slowdown in new-user acquisition is inevitable as its worldwide reach expands.

Zuckerberg went on the front foot last month to help ease investors’ minds, making his first public appearance since the launch of the ‘IPO of the century’ in May. Talking up the company’s mobile prospects, he hinted at new initiatives in search and e-commerce. His words helped to arrest the slide, after Facebook hit an all-time low of US$17.55 on 4 September, well below its IPO price of $38. The share price currently sits at US$19.64 at the time of posting, but in the meantime those losses to date continue to hurt the investor. For the latest price, visit investor.fb.com.

The next important date for the market is 23 October 2012 when Facebook, Inc. (NASDAQ: FB) will announce the company’s third quarter 2012 financial results. Can’t wait for that! (Update to this post: 23/10/12 Facebook’s 3Q earnings results show revenue up 32%, and 14% of ad revenue now coming from mobile, a step in the right direction!)

A New York article by Sandler, Womack and McMillan says there are more than 40 lawsuits related to Facebook’s offering with some investors blaming their losses on Nasdaq trading errors. Others claim company managers did not disclose revised revenue forecasts before the stock started to trade publicly, nor did it warn that a rise in mobile users would cut revenue. Facebook says the lawsuits lack merit.

‘The things that connect us’

Facebook has rolled out some initiatives to help generate more growth, including a new advertising platform and measurement methods to help marketers. They have also developed a feature that lets US users buy and send gifts such as gift cards, glasses and pastries to friends as it seeks to become more involved in e-commerce.

Zuckerberg said his company’s new mobile ads were delivering better results for advertisers than its traditional ads on personal computers. The market will be looking for the proof on this going forward.

How does Facebook describe its own business?

“Facebook Inc. operates a social networking website. The Company’s website allows people to communicate with their family, friends, and coworkers. Facebook develops technologies that facilitate the sharing of information, photographs, website links, and videos. Facebook users have the ability to share and restrict information based on their own specific criteria.” Source: Facebook.

“Helping a billion people connect is amazing, humbling and by far the thing I am most proud of in my life,” Mark Zuckerberg said in his official blog post.

There’s no doubt he’s done an amazing job and his social media platform has been revolutionary. But ultimately, the market, made up of investors, will determine its fate!

***

Interested in the brand? Leanne has an archive article on this topic which includes Interbrand’s list for 2011. Read It’s all about the brand published on 26 February 2012.

Leanne Henderson is an Australian financial services executive and PR, marketing and communications specialist and owner of Best of Breed Communications Pty Ltd.

Twitter: @HendersonLeanne

 

^ back to top

Leave a comment | Posted in Business, Finance and Investment, Marketing and Communications | Tagged , , , , , , ,

Managing the monetary policy message

Posted on September 2, 2012 by leannehenderson

Mario Draghi has developed his own brand identity but has some way to go when compared with the professionalism of his US counterpart, Ben Bernanke.

Remember Draghi’s famous statement made at a London investment conference on 26 July 2012 that the European Central Bank (ECB) would “do whatever it takes to preserve the euro”? Whilst the statement elevated his profile as head of the ECB, the cost of his inaction has been in reputation management more than anything else, as the world continues to await the development of his message and policy execution to address the Eurozone crisis.

When Draghi added “believe me, it will be enough”, at least the strength of his words has been enough to ‘numb’ global markets into waiting for that clarity. The good news is that ‘some’ information is coming and is expected after the ECB meeting on 6 September. Investors are hoping he can deliver a plan that will restore confidence and set the region on a path towards resolving some of the key issues on sovereign debt. But will it happen? It’s certainly not a task for the faint-hearted! (NB: Draghi has since announced his next move! For the update, read “The euro is irreversible” below).

Jackson Hole symposium

With Draghi carrying such a heavy workload, it was no surprise that he cancelled plans to attend the US Federal Reserve Bank of Kansas City Economic Symposium in Jackson Hole, Wyoming on 30 August. He’s been working overtime on his policy which is expected to include a new bond-buying plan to help lower the borrowing costs of countries such as Italy and Spain.

In any event, if Draghi had travelled to Jackson Hole, he would have been upstaged by US Federal Reserve Chairman Ben Bernanke, who delivered a monetary policy history lesson for the ages! And buried among his speech? Market watchers hoping for any sign of further quantitative easing! :)

Effective lower bound

Ben Bernanke always thinks very deeply about every word when communicating his message to market, so I was keen to read his Jackson Hole speech for any sign of a change in policy direction.

At the height of the global financial crisis, his Federal Open Market Committee (FOMC) had lowered the target for the federal funds rate to almost zero with a target range of 0 to 25 basis points, effectively its lower bound. That target range remains in place today. The FOMC has been very consistent in its communication that rates would remain low and holds the view that this level will continue through to late 2014.

As Mr Bernanke says, we are “entering the unfamiliar territory of having to conduct monetary policy with the policy interest rate at its effective lower bound.”

His statement made me wonder just how monetary policy could remain an effective tool operating in such a low range and to question whether monetary policy-makers on both sides of the Atlantic had run out of ammunition. The answer? You need to look beyond just monetary policy according to Bernanke. He says “monetary policy cannot achieve by itself what a broader and more balanced set of economic policies might achieve. In particular, it cannot neutralise the fiscal and financial risks that the US faces. It certainly cannot fine-tune economic outcomes.”

Bernanke says that the lower bound of such policies has been effective, believing that, in their absence, the 2007-09 recession would have been deeper and the current recovery would have been slower than has actually occurred.

While there are positive signs that manufacturing has strengthened and conditions in financial and credit markets have improved, Bernanke is concerned there has been no net improvement in the US unemployment rate since January.

One of the Fed’s biggest concerns is the persistently high level of US unemployment that will wreak structural damage on the economy and this is weighing on Bernanke and any further moves in quantitative easing. “Taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labour market conditions in a context of price stability.” Hmm, the conditions for stimulus? (NB: The Fed has since announced QE3! For the update, read “QE3 now a reality” below).

Managing the message

Market watchers eagerly await any decision on a third round of quantitative easing (QE3) arising from the Fed’s next policy meeting in mid-September. And in this US election year, the extent of any dramatic easing would require another level of communication, timing and management. But one step at a time. Let’s just see what the policy makers have up their sleeve and when. In the meantime, all eyes are on the ECB and 6 September as the first key date to follow through on its commitment to “do whatever it takes’’…or face more than reputation management issues!

Update 6/9/12 Draghi says ‘The euro is irreversible’

Mario Draghi has announced an agreement to an unlimited bond-buying program as the ECB seeks to manage interest rates in the euro area. Draghi says the ’euro is irreversible’ meaning his policy programs are designed to keep the region together and its currency. The ECB will target government bonds with maturities of one to three years and these will include longer-dated debt that has a residual maturity of that length. Purchases will be fully sterilised. This means the overall impact on money supply will be neutral. The ECB will not have seniority. Still with me? Read Bloomberg’s assessment.

And, it’s not OMG, but OMT according to Draghi. In technical terms, underlying his announcement is an ‘Outright Monetary Transactions’ program in secondary sovereign bond markets to replace the Securities Markets Program (SMP). Want to know more? Refer to the ECB’s very technical press release for the detail!

The ECB expects the program to provide ‘a fully effective backstop’ against market volatility. Initial global market reaction? Markets rose immediately on the strength of Draghi’s announcement, however, as there’s no such thing as a free lunch, we need to wait for the market to fully digest.

Update 14/9/12 QE3 now a reality!

US Federal Reserve chairman Ben Bernanke has finally announced a third round of quantitative easing, QE3. To help manage inflation and support economic recovery, the FOMC has agreed to increase policy accommodation by purchasing additional agency mortgage-backed securities of US$40b per month.

That’s a lot of money washing into the system on a monthly basis, and, it’s ongoing!

The Fed’s program to extend the average maturity of its holdings of securities as announced in June will continue to the end of the year and it will also maintain its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. Their response should put some downward pressure on longer-term interest rates, help support mortgage markets and make broader financial conditions more accommodative, which is their goal. For more information, refer to the Fed’s press release.

 

Leanne Henderson is an Australian financial services executive and PR, marketing and communications specialist and owner of Best of Breed Communications Pty Ltd. 

^ back to top

Leave a comment | Posted in Business, Finance and Investment | Tagged , , , , , , , , , , ,

Iconic brand Black Caviar is world’s best investment

Posted on July 19, 2012 by leannehenderson

In investment terms, performance is everything!

Black Caviar has proved her outperformance as the ‘world’s best asset class’, a phrase I branded for her on Australia Day 2012, just prior to her 17th consecutive win. On that day, it was obvious she was emerging as a truly iconic Australian brand.

When Brand Finance released their May 2012 report on the top 30 most valuable Australian brands, CEO David Haigh said “Brands are the most valuable intangible assets in business today. They drive demand, motivate staff, secure business partners and reassure financial markets.” If you compare Black Caviar’s achievements, this is exactly what she has done! :)

Her investment returns haven’t been able to solve the Eurozone debt crisis as yet, however her racing career has certainly reassured (betting) markets, driven demand, and secured great business partners! You only need to look at Moonee Valley’s betting screen below to see her power in shaping a market!

So, how hard is it to assess her value as an Australian icon?

Put the calculator away! It’s all about enjoying her success and what she has done for Australian racing and Australia. Surely winning 22 consecutive races and defeating the best in the world is enough. Isn’t it? No. Black Caviar has produced much more than that…

Winning hearts and minds, she’s created a tipping point in marketing terms, generated minute by minute PR, trended worldwide on Twitter with 25,000+ followers, gathered 30,000+ followers on Facebook, produced countless YouTube videos of her wins, and developed a real personality behind her brand. (We even found out via Twitter that she was smitten with Frankel at Ascot. #horseflirt!)

And then of course, there’s the fashion range. The highlight? The parading of her lycra compression suit, custom designed for elite athletes only!

Why all the hype?

A human interest story combined with a strong strategic business vision that has come true. Business owners with a single-minded proposition that was crystallised eighteen months ago that Black Caviar would be prepared for Ascot 2012, supported by a CEO (Peter Moody) of a high performing team (Moody Racing) carrying out the vision, with preparation, communication and engagement second to none.

Consistent and accessible are two immediate attributes that come to mind when describing the Black Caviar brand – a brand that is very carefully managed and fully integrated across the traditional offline channels, as well as online channels, through the clever use of digital mediums. The perfect campaign that targets every Australian!

A presence in the social media channels has given Black Caviar’s team an opportunity to listen, engage and respond, and to hear instantly what people are saying about the Black Caviar brand. Strategy wise, it’s all about getting into the conversation, and to consistently broadcast, communicate, educate and demonstrate. Black Caviar’s promoters do this brilliantly!

Remember Sunline? She was the first to have her own website during her reign, which in those days was considered ground-breaking. Could you imagine the hype back then if Sunline had those digital marketing channels available to her that exist now?

Tipping point

And what about the special edition Black Caviar Rose and merchandise sales that exceed AFL Clubs?! When Black Caviar was sitting on 19 straight wins, we reached a tipping point. Her connections were swamped with requests for photos and memorabilia – even her horseshoes and orders for 10,000 caps in the famous salmon with black spots had ‘flown off the shelves’! People started to believe that the ‘brand promise’ was real.

On 16 February 2012, Stephen Silk said “Since Black Caviar and her colours were trademarked 12 months ago, we’ve had some 200 pieces donated to various charities to auction, including signed whips and horseshoes, which have raised more than $50,000″. And Part-owner Gary Wilkie said he’d been completely overwhelmed by the huge level of interest in the horse. “It’s extraordinary. We’ve been really humbled, actually. People seem to be getting totally engrossed in seeing how she’s doing.” Source: news.com.au 16 Feb 2012.

The public now understands that Black Caviar is a once-in-a-lifetime horse and that opportunities to witness her rewrite history are finite. To quote VRC chief Dale Monteith from the same news.com.au article, “She is a game changer like no other horse.”

Her best wins: Diamond Jubilee Stakes, back-to-back Lightning Stakes, and the Schweppes Stakes at Moonee Valley on Cox Plate Day 2011. Will never forget being there for that race! Here’s my very own special photo of that day, below, when Black Caviar crossed the finish line, winning by her equal longest winning margin.

What hasn’t been written or said about Black Caviar? A thirty minute television documentary that captures the origin and spirit of her story was screened on the ABC’s Australian Story. The program, called ‘To Set Before a Queen’, aired on 18 June 2012. See transcript.

But there are many other stories of interest, including her upcoming biography to be written by Gerard Whateley and released in October 2012. Can’t wait for that! (Update: Since released and is an amazing read!)

Black Caviar’s ability to pull a crowd is set to continue, whether she races into the future or not. A phenomenon, bought for $210,000, and now an iconic Australian brand with a breeding value worth millions.

Investors always look for a brand’s ability to generate current and future earnings. Quantifying Black Caviar’s iconic brand value should be ‘all in a day’s work’ for consultants such as Brand Finance! :)  What do you think she’s worth?

****

Updates to this post

7/9/12 – Black Caviar is now set to become the first ‘best of breed’ cover girl on the December edition of Vogue magazine! Now that’s a revenue generating activity! Is there anything that this Australian brand icon cannot do? Can’t wait for the edition! :) (Since published and she looked a treat!).

Farewell tour 2013

22/1/13 – Black Caviar’s Australian ‘farewell’ tour commences on 2 February 2013 when she has an exhibition gallop between races at Caulfield! Her program is still to be confirmed, but can you just imagine the hype when she steps out?! We can expect to see her weighted ‘to the maximum’ given she was recently rated the ’World’s Best Sprinter’ for a third consecutive year!

Bart Cummings once said “Weight stops trains.” Not this Nelly!

****

Related articles

For Leanne’s latest article on Black Caviar’s retirement published on 18 April 2013 read Being a champion means nothing left to prove!

Farewell tour article Black Caviar farewell tour worth the weight

****

Leanne Henderson is an Australian financial services executive and PR, marketing and communications specialist and owner of Best of Breed Communications Pty Ltd. Pseudo PR manager for Black Caviar!

 

^ back to top

1 Comment | Posted in Marketing and Communications, Sport and Racing | Tagged , , , , , , , , , , , , , , , , , ,

Cannes Lions sets the creative benchmark

Posted on May 6, 2012 by leannehenderson

Cannes Lions is the world’s biggest event in the creative communications industry. Each June, around 10,000 professionals go to Cannes to learn, debate and be inspired! It’s also the event where the most prestigious global advertising and communications awards are handed out.

The awards cover the spectrum of ‘creative Film, Print, Outdoor, Interactive, Radio, Design, Promo & Activation, Film Craft, Mobile, Branded Entertainment and Integrated advertising, as well as the best Media, Direct, PR, Titanium and Creative Effectiveness ideas’.

What does a company need to do to win a Cannes Lions award? Look no further than my Australian financial services industry to see why the National Australia Bank (NAB) and creative agency Clemenger won the 2011 PR Lions award!

NAB ‘Break up’ campaign

‘Break up’ was a brilliant execution of a multi-faceted campaign combining online and offline channels to produce a very ‘public’ relations push. Most will remember it! But what was critical about this campaign was the successful integration of digital channels to help launch and drive immediate interest, quickly reaching its target audience and generating measurable results.

Traditional print and outdoor mediums were used to help create ‘events’ in those channels, and became the source of immediate online content, streamed through a specially branded ’Break up blog’.

The big idea? Position NAB as standing for ‘fairer banking’, something it had been trying to do, but needed to find a way to change public perception that the major banks ‘were all the same’ and ‘in collusion’. The idea was to embrace the perception of being ‘together’ and then have a very ‘public’ break up, while educating on those fairer banking changes.

NAB saying “we’re breaking up” was the perfect key message designed for maximum effect on Valentine’s Day 2011. Timing is everything! The objective: switch accounts to the NAB.

Key channels

Launched through Twitter as a ‘leaked’ tweet, YouTube was used to support the launch with the uploading of 60 videos, ‘to be found’ online, including the first video: ‘The break up letter that explains it all’. NAB’s ‘Break up’ blog streamed live content, with call to action links.

On the print side, full page national press ads published the ‘Break up’ letter, and outdoor activity included aerial banner messaging and ambush marketing and PR stunts.

Why did the concept work?

It was fun, humorous and emotive - key game changers in consumer behaviour, and exactly what was needed for this message to ‘break through’ a long held public mindset that ‘all banks are the same’. It produced the highest ranking Twitter topic in a single day. The first tweet also generated 189 blog mentions and 330 comments in other online forums in the first 24 hours, sparking consumer engagement through various social media platforms.

Channel integration worked. The tweet, the ‘Break up’ letter to the other banks in newspapers, the videos online, and the ‘public ambushing’ of other banks with outdoor events and break up messages produced newsworthy and shareable content, streamed to NAB’s blog. 100,000+ visits to the blog were received in a single day. Their call to action showed customers ‘how’ to break up with their bank, and the PR was gold, with $5 million worth of free media exposure in a single day.

And…the campaign delivered strong results! View NAB: Break up Cannes Lions 2011 results video. Results include a 79% increase in home loan enquiries, 50% increase in credit card applications, 20% increase in transaction account openings week-on-week, and, in the first three months of the campaign, 175,000 customers had switched.

‘Break up’ also won the pinnacle ADMA Awards Grand Prix for 2011.

What continues to impress is that the big idea is still being leveraged today, with derivative themes such as The other banks will never change. But you can. The video has generated 63,000 video views on the YouTube NAB Channel since March 2012!

Want to know all Cannes Lions 2011 winners? Click here. My standout? Old Spice! Hmmm. ‘Look right’ and click on the image!

(For the list of 2012 winners just announced over the weekend 23-24 June 2012, see ‘Update to this post’ below!)

The future of communication

Known as The International Festival of Creativity, Cannes Lions is almost sixty years old. Mathilde Delhoume-Debreu, Director for Brand Building Integrated Communications in EMEA & Asia for Procter & Gamble, summed it up when she said “Cannes is a good predictor of the future of communication”. No surprises there! Cannes is the annual pilgrimage for all great communicators! Were you there?

Update to this post 25 June 2012:

Cannes Lions winners 2012

With all eyes on Cannes in June, the international judging panel had their work cut out for them, processing the 28,000+ entries for 2012!

Delighted to add that the winner of the Cannes Lions 2012 PR Lions award has just been announced - another bank! Banco Popular De Puerto Rico, for their campaign ‘The Most Popular Song’. The Grand Prix award went to Chipotle Fast Food for their ‘Cultivate’ campaign in the Branded Content & Entertainment award category.

For a full list of all Cannes Lions 2012 winners in each category, with the campaign background on each of the award winners, click here!

Leanne Henderson is an Australian financial services executive and PR, marketing and communications specialist and the owner of Best of Breed Communications Pty Ltd. 

^ back to top

Leave a comment | Posted in Marketing and Communications | Tagged , , , , , , , , , , , ,

Margin Call makes a call on leveraged debt

Posted on April 3, 2012 by leannehenderson

“Be careful.” It took some time for the movie Margin Call to be released in Australia, but its arrival is a powerful reminder of the global financial crisis (GFC) and lessons to be learned.

Authentic and sophisticated in its portrayal of Manhattan in 2008, it follows US investment bank employees over a 24 hour period during the onset of the GFC.

If you thought you were ‘over’ the topic, this movie will make you think again! A financial thriller, it’s brilliant in what it says, and doesn’t say, about the morality, management and use of complicated debt structures and market trading instruments – particularly mortgage-backed securities (MBS).

A bundle of trouble

An example of a MBS involves investments secured by a mortgage or underlying bundle of mortgages. They are created when an investment firm buys the bundled mortgages from the lender who initially issued the mortgage loans to its customers, and then uses their monthly payments as revenue to pay investors who have bought into the offering.

Buyers of MBS effectively take on the collective creditworthiness of a group of borrowers and can trade MBS. If the housing market falls or interest rates rise, borrowers can default, affecting the payment stream to MBS holders. If a firm borrows heavily to finance its MBS, any movement in value impacts risk. Tricky? For an example, click here.

Margin Call draws on the experiences of Lehman Brothers, Bear Stearns and other investment firms of that period to base its script using a fictitious investment bank. In the lead-up to the GFC, the bank ramps up its bundling of MBS products that combine several different tranches of rating classification in one tradable security.

The bundling was highly profitable, but in practice, could take the bank a month or more to ‘layer’ the products correctly, thereby creating a risk management challenge for their modelling, especially in a falling housing market. Their aim was to hold the securities as assets for as long as possible. If the value of those assets were to fall by 25% and remain on their books, the losses could be catastrophic and counterparty relationships severely affected. This is where the movie picks up pace!

History repeats

John Tuld (Jeremy Irons) is Chairman of the investment bank. Tuld summed up his bank’s philosophy when he said “It’s just money, it’s made up; a piece of paper with some pictures on it so we don’t all kill each other trying to get something to eat. But it’s not wrong and it’s certainly not any different today than it’s ever been. Ever. 1637, 1797, 1819, ‘37, ‘57, ‘84, 1901, ‘07, 1929, ‘37, ‘73, and 1987…’92, ‘97, 2000, and whatever this is gonna be called.”

It was called the ‘GFC’, and having studied economic history and market cycles, and a follower of ’all things Wall Street’, one thing’s for certain – there’ll be more dates to come!

Much has been said about leveraged debt since the GFC. In fact, what hasn’t been said? There are many forms of leverage, and some debt can be good for a business. But Gordon Gekko finally nailed it in his lecture to students in the movie Wall Street: Money Never Sleeps when he said “The mother of all evil is speculation – leveraged debt”!

Bernanke’s College Lecture Series on the GFC

For students wanting to understand the GFC and its aftermath from a monetary policy perspective, refer to last week’s fantastic lecture series delivered by Ben Bernanke, Chairman of the US Federal Reserve. Packaged into four one hour videos with Q&As, it was great PR for the Fed! His fourth lecture in the series best summarises where we’re at today. To view the video: The Federal Reserve and the Financial Crisis, Part 4.

US recovery longer and sluggish

Bernanke says that whilst the US labour market has shown improvement, factors still weigh on the housing market, credit is still difficult to obtain, and concerns over European fiscal and banking conditions and sovereign solvency issues continue to affect recovery. The US housing market continues to experience a high foreclosure rate, amid an overhang of unsold homes and falling house prices. Tight lending standards on mortgages have blunted some of the effects of mortgage rates.

Bernanke makes the point that “monetary policy by itself can’t solve important structural, fiscal and other problems that affect the economy.”

Margin Call reminds you of those factors and so much more, including who has ultimate responsibility for decisions that can stabilise, manipulate or create market turmoil and volatility.

By the way, Kevin Spacey is brilliant in Margin Call as an investment banker with ‘some’ principles. And his last scene? He really ‘digs deep’ to deliver a powerhouse performance!

Margin Call official movie trailer source: YouTube http://www.youtube.com/watch?v=uj4QrAcwVi0

Leanne Henderson is an Australian financial services executive and PR, marketing and communications specialist and the owner of Best of Breed Communications Pty Ltd.

^ back to top

Leave a comment | Posted in Business, Finance and Investment, Movies | Tagged , , , , , , , , , , , ,

It’s all about the brand

Posted on February 26, 2012 by leannehenderson

Everyone has an opinion on the brand.

Just ask some high powered global Chief Marketing Officers entrusted to manage and develop a company’s brand!

In a recent LinkedIn discussion group there was spirited debate among the CMOs on the best brand in the US today. One argued that ‘Barbie’ was the best (which averages over 80% market share in fashion dolls worldwide), while others suggested Nike, Disney, or one of the usual suspects – Apple, Google, IBM, Coca-Cola and McDonalds.

Although the CMOs understood the power of the brand, they clearly disagreed on what measures define being the ‘best’ or most valuable. Variables such as share price value, the percentage of market share dominance, and even percentage recall on visual logo recognition were mentioned, but most agreed there were multiple factors involved in determining brand value.

Keen to apply science to their thoughts, I deferred to one of the world’s most comprehensive sources, Interbrand’s annual ranking of the Top 100 Best Global Brands.

Coca-Cola's logoIn 2011, Coca-Cola was ranked number one, with a brand value of US$71b. This may not be a major surprise to those who drink Coke, but if you are an Apple lover, or eat McDonalds, or ‘just do it’ for Nike, you will disagree.

In fact, Coca-Cola has held the number one position since Interbrand commenced its rankings in 2001 – now that’s consistency! How did Coke maintain its position in 2011? Through the addition of world-changing creativity and innovation, developing the PlantBottle and Coca-Cola Freestyle, as noted in Interbrand’s Best Global Brands 2011 report.

Interestingly, Apple moved into the top ten for the first time, with its annual value rising 58% to US$33b. Apple replaced Nokia, which fell to number 14. In the financial services category, American Express ranked highest at number 23, up one place from the previous year.

Measuring brand value

Interbrand’s method of brand measurement looks at the ongoing investment and management of the brand as a business asset. It applies a dollar value to each brand, based on factors such as the financial performance of the company’s products and services, the role of the brand in the purchase process, and the strength of the brand. For example, financial performance is analysed as economic profit, similar to Economic Value Added (EVA) with some adjustments, including for tax. For their full methodology and formula see page 68 of their report Best Global Brands 2011.

Millward Brown, another respected authority, produces the BrandZ Top 100 global brands list and has a different methodology. Its 2011 list saw Apple overtake Google to become the world’s most valuable brand, with Apple ranked number one! And where was Coca-Cola? Sixth!

Millward Brown’s methodology includes looking at the intangible earnings based on company and analyst reports, the proportion of intangible earnings attributed to the brand itself, and the market valuations, growth potential and customer loyalty data, which make up the brand multiple. These three figures are then multiplied together to produce an annual brand valuation. In summary, brand value  =  the branded intangible earnings  x  the brand contribution  x  the brand multiple. Still with me?

And where’s ‘Barbie’? Finding Mattel on either list was difficult. As I said, everyone has an opinion, even respected brand agencies. But one thing all great marketers can’t be faulted on is their passion for the brand!

A brand close to the heart

Richmond Football Club new logo 2012Brands exist at any level – personal, business, professional, and in sport. A great example is the Richmond Football Club, my Australian Rules football team. Although you won’t find Richmond on any global top 100 list, it produces passionate followers! Recently, a like-minded colleague asked “what inspires people to join our club?” Answer: it’s all about the brand…

Richmond is a ‘brand tribe’, a network of believers, promoters and connectors, with a shared belief in its brand. Success lies in this group interacting and engaging with the brand and having a sense of belonging.

Targeted marketing initiatives have helped to cement the members’ interest and commitment ‘to be part of something bigger’. In fact, the brand continues to remain strong, even without achieving its key performance indicator of reaching the finals each year, such is its collective power! How does this happen? Every facet of Richmond’s business has a consistent and common purpose and intent, with the ‘tribe’ at the core of engagement and respect. Supporters want and demand to be heard, and are given multiple platforms for their voice.

In Melbourne’s Herald Sun Footy Fans Survey 2010, 45% of all football supporters said Richmond has the best theme song in the league. Not bad for a song that’s only played at the end of a ‘winning’ match, such is the brand recognition and recall! If brand value was only measured on this aspect, we’d be number one forever!

What really inspired me to join? Call it ‘generational’ marketing which started when I was born!

Leanne Henderson is an Australian financial services executive and PR, marketing and communications specialist and the owner of Best of Breed Communications Pty Ltd.

^ back to top

2 Comments | Posted in Business, Finance and Investment, Marketing and Communications | Tagged , , , , , , , , ,