MOTLEY FOOL
ASK THE FOOL
Secondary Offering
Q: I read that Zoom Video Communications had a secondary offering. What does that mean?
– T.R., Cedar Crest, New Mexico A: It means Zoom sold more of its shares to raise money – in this case, about $2 billion. When a company debuts on the stock market, it usually has an “initial public offering” (IPO), selling shares to the public and collecting money from the sale. (The shares will then trade hands on the market, but the company doesn’t profit directly from that.) If the company later needs a cash boost, perhaps to grow faster, it has choices: It could sell off some assets, borrow money – or sell more shares of stock, via a “secondary offering.”
If a company’s shares have skyrocketed, as Zoom’s have, due to videoconferencing demand during the pandemic, it will collect a lot for each share.
The downside of offering new shares for sale is that doing so dilutes the value of existing shares. Imagine, for example, a company with 100 shares of stock outstanding. If you own 10 of them, you own 10% of the company. If it issues 20 more shares, though, your 10 shares will only be 1/12th of the company, or 8.3%.
FOOL’S SCHOOL Medicare Advantage Plans
Anyone signing up for Medicare gets to choose either “original Medicare” or a Medicare Advantage plan. (They can switch between them at least once a year, too, during the annual enrollment period.) Close to 38 million people were recently enrolled in original Medicare – which consists of Part A (hospital services) and Part B (medical services) – while more than 23 million had chosen a Medicare Advantage plan (sometimes referred to as Part C).
Medicare Advantage plans are well worth considering. Offered by private insurance companies such as Anthem Blue Cross and Unitedhealthcare, they’re regulated by the U.S. government. This is key: They’re required to provide at least as much coverage as original Medicare – and they typically offer much more.
While original Medicare doesn’t cover vision, hearing and/or dental care, many Medicare Advantage plans do; they often include prescription drug coverage, too, which those in original Medicare have to pay extra for. Original Medicare will often charge you 20% of many bills, with no upper limit, while Medicare Advantage plans might charge you a low copayment for each doctor visit or service – and they cap your out-of-pocket spending.
There are some drawbacks, though. While original Medicare lets you see any health care provider who accepts Medicare, Medicare Advantage plans typically limit you to a network of doctors – though these networks can be large. Original Medicare usually won’t cover you outside the U.S., but some Medicare Advantage plans offer limited coverage abroad.
So, what’s best for you? Start by making a list of the prescription drugs you take and the doctors you see. Also list the kinds of health care services you need and use, noting any upcoming surgeries, travel or big-ticket expenses. When reviewing the plans you’re considering, compare how well each will meet your needs – and how much you’ll likely spend out of pocket with each option.
The Medicare.gov website offers a “Medicare Plan Finder” to help you compare and choose.
MY DUMBEST INVESTMENT Penny Stock Burn
Go Solar USA was the first stock I ever owned. As I write this, it trades at $0.006 per share, and it taught me what a lot of experts say about penny stocks: You can’t get rich overnight. – C.S., online
The Fool responds: Many experts consider penny stocks far too volatile and dangerous for investors, and we have long warned against them ourselves. (A penny stock these days is one trading for less than about $5 per share.) But they continue to attract many investors – typically naive ones.
If you have $1,000 to invest, for example, being able to buy, say, 10,000 shares of a $0.10 stock can seem better than buying 10 shares of a $100 stock. It can indeed seem like you can get rich overnight with such seemingly bargainpriced stocks. But even low-priced stocks can fall, and penny stocks often do. Indeed, Go Solar USA’S shares have recently traded as low as $0.001 per share and have been volatile.
If you’d wanted to invest in solar energy, a better move would have been to pick a few established, growing and profitable solar stocks – or a mutual fund or exchange-traded fund (ETF) that focused on solar energy companies or alternative or renewable energy companies. Two ETFS to consider, especially if their prices retract a bit, are the Invesco Wilderhill Clean Energy ETF (PBW) and the ishares Global Clean Energy ETF (ICLN).
FOOLISH TRIVIA Name That Company
I trace my roots back to my 1984 founding by a couple who wanted to connect different kinds of computer systems more easily. In 2000, before the internet bubble burst, I was briefly the world’s most valuable company, with a market capitalization of over $550 billion. (Recently, Apple held that title, with a value of $2.2 trillion.) Today I offer everything from routers and switches to security software, videoconferencing services, cloud solutions, data backup and analytics, and much more. I employed more than 77,000 people as of mid-2020, and have been named a top workplace multiple times. Who am I?
Last Week’s Trivia Answer
I began as a provisions market in Austin, Minnesota, in 1891. I developed the world’s first canned ham in 1926. By the late 1930s, I offered my workers guaranteed annual wages, a joint-earnings plan and an employee profit-sharing trust. During World War II, I shipped hundreds of millions of cans of meat overseas, mostly to the U.S. military. Today, with a market value recently near $26 billion, I oversee brands such as Skippy, Spam, Dinty Moore, Applegate, Justin’s, Austin Blues barbecue, Black Label bacon, Herb-ox, Chi-chi’s, Don Miguel, Jennie-o, House of Tsang, Wholly Guacamole and Vital Cuisine. Who am I? (Answer: Hormel Foods)
The pandemic-related recession has altered many job descriptions. For Haley Jones, a 24-year-old resident of Michigan, the coronavirus changed the needs of her company, and as she adapted to meet them, her responsibilities were no longer confined to her marketing specialist role.
“I graduated with a marketing degree, no medical experience at all, and I ended up having to scrub in at our surgery center and help patients get prepped for anesthesia,” Jones says.
After adding those kinds of new hats, Jones felt that her responsibilities had outgrown her entry-level salary and position, so she requested more compensation.
Your role may also merit a salary discussion, even in uncertain times. Here are some strategies to help you achieve the ideal salary.
Research the market
Understanding the market for your job is critical, according to Lindsey Pollak, author of the upcoming book “Recalculating: Navigate Your Career Through the Changing World of Work.”
These websites offer a minimum and maximum salary range that you can reference to give your boss a realistic request. Pollak also suggests networking with professional associations in your industry and asking about the appropriate salary range for the job in your particular city.
Tally up your contributions
If you're working remotely, Pollak suggests being more self-promotional about big wins. With many distractions in the pandemic, your boss may not know the extent of your contributions.
Jones created a slideshow presentation with links to her work, a list of tasks completed and her overall impact on the company.
“If you want someone to do something for you, make it as easy as you can for them to say yes,” Jones says.
Lay the groundwork for the conversation
Be strategic as you plan the conversation. Gauge your level of confidence at every step.
h Put it on your supervisor's radar. Give your boss a general but serious reason for the meeting.
h Time it right. Don't plan such a conversation after the company announces a terrible quarter or when your boss is in a bad mood.
h Practice until you're confident. Jones built confidence by rehearsing in front of her mirror and loved ones.
h Be intentional with your environment. If it's a video call, use sticky notes to remember key points. In an office environment, Jones leaned on slides and hard copies to move the conversation along.
Maintain control of the conversation
Don't allow emotions or nerves to steer the conversation away from your goal. Remember three key points for your discussion:
h Lead with gratitude. Jones began by thanking her employer for many learning opportunities, then pivoted to her excitement about the company's future and her role in it.
h Know when to stop talking. Get comfortable with silence. “Say the amount you want and then stop talking,” Pollak says.
h Focus on the value for your employer. Don't phrase your request around reasons why you need a raise or promotion. Keep the focus on how you're saving the company money or contributing to its bottom line.
Be prepared for the response
If your employer can't meet your request this time, all isn't lost. You have promoted your work and carved out the path for the next conversation. You can also consider negotiating for non-monetary benefits.
If your employer is willing to offer a pay increase or an alternative, get it in writing. Send a thankful email to your boss summarizing the conversation and alert him or her that you'll be following up on the next steps.
After unusual icy weather left millions of Texans without power, some are facing another crisis: sky-high electricity bills.
The surge in pricing is hitting people who have chosen to pay wholesale prices for their power, which is typically cheaper than paying fixed rates during good weather, but can spike when there’s high demand for electricity. Many of those who have reported receiving large bills are customers of electricity provider Griddy, which only operates in Texas.
Among them is Susan Hosford of Denison, Texas. On a typical February day, she pays Griddy less than $2.50 for power. But the one-day cost spiked to hundreds of dollars after the storm. In all, she was automatically charged $1,346.17 for the first two weeks of February, which was more than she had in her checking account, causing her bank to charge her overdraft fees and affect other bills.
“This whole thing has been a nightmare,” she said.
Here’s more on the soaring electricity bills:
What are wholesale prices?
Wholesale electricity prices fluctuate based on demand. Because natural gas pipelines and wind turbines froze up in Texas, there was less power available, but high demand for electricity, causing wholesale prices to shoot up, said Joshua Rhodes, an energy research associate at the University of Texas.
Wholesale prices are typically as low as a couple of cents per kilowatt-hour but spiked to $9 per kilowatt-hour after the storm. Fixed rate customers pay a set amount that doesn’t rise as much. Typically, they pay around 12 cents per electricity
kilowatt-hour. But Rhodes said fixed rate customers could see their price rise by a few cents later this year as companies hit by the icy conditions look to recoup their costs – but their bills won’t be in the thousands.
People are able to pay wholesale prices in Texas because it’s one of the only states that let people pick which company it buys power from, Rhodes said.
What is Griddy?
Griddy, which launched in 2017, charges $10 a month to give people a way to pay wholesale prices for electricity
instead of a fixed rate. It warned customers of raising prices and urged them to switch providers. The company said wholesale prices returned to normal as of Feb. 20.
How many people are affected? Griddy said it has 29,000 members. It’s unclear how many other Texans also pay wholesale prices from other companies.
“We won’t get the full picture on the financial devastation for maybe 30 to 90 days,” said Ed Hirs, an energy fellow at the University of Houston.
Will those who got large bills get financial
help?
That’s unclear. Texas Governor Greg Abbott said Sunday that he is working with members of the legislature to address skyrocketing energy bills and “find ways that the state can help reduce this burden.” But he didn’t give specifics on what that may be. For the time being, the state has stopped companies from cutting off power for not paying.
Rhodes said bailing out customers may be a hard sell since they opted to pay wholesale prices and may have paid a much lower price than others for some time.
NASHVILLE, Tenn. – Seven-year-old Carpenter Adoo has earned the nickname “Tiny but Mighty” in short order.
He underwent his first surgery at a week old and spent four months in the neonatal intensive care unit. He’s powered through more than a dozen procedures to keep the excess fluid draining from his brain safely, routinely greeting nurses with hugs and handshakes.
“He handles it all with a grace that I don’t know that I would ever be able to handle it,” Carpenter’s mother, Leah Williamson, said from Memphis.
Carpenter’s medical condition makes him particularly vulnerable to COVID-19, putting him in a population that states are wrestling with how to prioritize as vaccine supplies fall short of demand. Tennessee last month joined a handful of states in moving the families of medically frail children like Carpenter up the vaccine priority list. State officials bumped them above critical infrastructure workers, grocery store employees and inmates, landing in the phase that follows teachers and child care staff.
Williamson was encouraged but still hasn’t gotten answers about when she’ll get her turn.
As the disease’s U.S. death toll climbs to nearly half a million people, the threat to those with chronic health conditions remains high, especially for those younger than 16 who aren’t approved for the shots yet. Williamson hopes that lends urgency to the state of Tennessee’s willingness to give her a vaccine.
She just knows that day can’t come soon enough.
Before the pandemic, flu season terrified her. If Carpenter, who has hydrocephalus and chronic lung disease, were to catch COVID-19, the damage could be severe.
The upcoming vaccine priority group in Tennessee includes people who live with or care for children younger than 16 who have any number of medical frailties, ranging from those receiving chemotherapy to children who use a wheelchair because of high-risk conditions.
They might have to wait more than a month and a half to be eligible, under state Health Commissioner Lisa Piercey’s recent conservative timeline. But the national vaccine landscape is constantly shifting, with President Joe Biden saying there will be enough doses for 300 million Americans by the end of July.
Barbara Saunders, a physician who heads the University of Mississippi Medical Center’s child development division,
said medically frail children have a tough enough time staying healthy without the threat of a pandemic. She said anything to keep them as healthy as possible, including vaccinating the people around them, is crucial.
“We know that children with medical complexity and who are medically fragile are at much higher risk of contracting COVID-19 than their typically developing peers,” Saunders said. “They’re also at a higher risk of having severe illness and requiring hospitalization compared to other children.”
Other states extending eligibility to caregivers of medically frail children include California, Oregon, Illinois, South Carolina and New Hampshire. Few make it as explicit as Tennessee, which prioritizes anyone in the household; however, other states are addressing those caregivers more quickly, with some getting shots already.
Some states have categorized those family members as home health providers or caregivers, making them eligible. Many states don’t address them.
Late last month, Ohio Gov. Mike Dewine called vaccine prioritization “gutwrenching”
when asked why parents of immunocompromised children had not yet been bumped up in line there.
“It’s not ‘yes’ or ‘no,’ ” the Republican said at a news conference. “It’s, ‘Yes, if we do you, somebody else is going to get shoved back or another group is going to get shoved back.’ ”
Although research into whether the vaccine can stop someone from spreading the virus still isn’t comprehensive, early indications are positive. Astrazeneca, whose COVID-19 vaccine isn’t available yet in the U.S., has found evidence that its shots may reduce virus transmission. A recent study in Israel relayed similar early findings about Pfizer’s vaccine.
From Williamson’s perspective, the vaccine would add to what she’s already doing. She’s limiting outside trips and working from home for a group that supports families of children with special health care needs, chronic illness or disabilities. It’s shoes off before you get in the house, no exceptions. She leaves packages in the backyard for a day or two and wipes down groceries.
“It’s like a decon(tamination) when I
get home, spraying myself down, hand sanitizer – ‘Nobody touch mom!’ – because you just don’t know,” Williamson said. “We still have to do things, like go to follow-ups and go to doctor’s appointments.”
At one point, she was told after a visit to the doctor that someone tested positive there. She wore masks around the kids for 10 days, trying to stay in one room and limit their interactions.
Sending any of her four children – two teenagers, one of whom has profound hearing loss and speaks in sign language, and Carpenter’s twin sister – back to in-person school is out of the question because of what they could bring back.
Williamson said she’s aware of the role race has played in the pandemic, with fewer people of color being vaccinated. But she says her son’s care is too important to waver.
“We’re a Black family and so the question I get asked, ‘Are you really going to get the vaccine?’ ‘Yes, I’m really going to get the vaccine,’ ” Williamson said. “It’s just that thing of trusting medicine.”