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The U.S. government wastes billions of taxpayer dollars every year.
The U.S. has lost almost $2.4 trillion in simple payment errors over the last two decades.
Oversight reports claim that billions more dare being wasted every year on needless and duplicative programs
Wasteful spending by the government can have painful consequences to the health of the economy, according to watchdog groups.

The U.S. government wastes billions of taxpayer dollars every year.
Improper payments, which refer to payments that are made incorrectly by the government, cost the U.S. $247 billion in 2022, according to the Government Accountability Office. The U.S. government has lost almost $2.4 trillion in simple payment errors over the last two decades, by GAO estimates.

“The government has just lost, as if you dropped it on the sidewalk, trillions and trillions of dollars over the last few decades,” said Richard Stern, a budget and spending expert from the Heritage Foundation. “That is money that was stolen from hardworking Americans to just simply get wasted.”
But that’s not all. Oversight reports from nonprofits and lawmakers like Sen. Rand Paul, R-Ky., claim billions more are being wasted every year — from spending $1.7 billion maintaining empty government buildings to accidentally investing $28 million on forest camouflage uniforms to be used in the deserts of Afghanistan.
Duplicated programs are another cause for concern.
“The Government Accountability Office every year issues a report on duplicative and overlapping programs and every year they find more and more of these programs,” according to Tom Schatz, president of Citizens Against Government Waste.
The problems mainly stem from the way our government tries to solve an issue, according to critics.

“In the private sector, if somebody is doing something, they see what they’re trying to do or sell and then determine how to do it and how much it will cost,” Schatz said. “In the federal government, everything is ‘Go spend more money’ and if that doesn’t work, it’s ‘Go spend more money.'”
It’s the job of the GAO to audit and report any wasteful spending by the federal government. But experts argue that it doesn’t influence policy changes in the way that it could or should.
“I think they have enough power, but I don’t think they have enough manpower or resources,” said Elaine Karmarck, a senior fellow at the Brookings Institution.
Nevertheless, wasteful spending by the government can have painful consequences to the health of the economy, according to watchdog groups.
“As the government spends it runs up a deficit,” Stern said. “What happens is, it’s sucking all the oxygen out of the room. It’s destroying investment. It’s mortgaging our futures. It’s slowing our growth. Today, the inflation you’re seeing is a large result of that.”
Watch the video to find out more about why taxes feel so high in the U.S. and why so much taxpayer money gets wasted. More

Tech giant Apple may be looking to get “top of wallet status” with the debut of a new savings account, one expert said.
For savers, it’s yet another sign that it’s time to shop around for the best interest rates.

A person walks out of the Apple Store in Annapolis, Maryland, on February 2, 2023.
Jim Watson | AFP | Getty Images

As the Federal Reserve continues to hike interest rates, some online banks have been jockeying to offer the highest yields on savings.
Now, Apple has entered the competition with a new savings account offering a 4.15% interest rate.

The new offering amplifies the tech giant’s suite of other financial offerings, including Apple Pay, Apple Card and the recent debut of a “buy now, pay later” service, said Ted Rossman, senior industry analyst at Bankrate.
“They’re trying to get that ‘top of mind, top of wallet’ status,” Rossman said.
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Savings interest rates of 4% and above were unheard of as recently as one year ago, he noted.
But that was before the Federal Reserve launched a series of interest rate hikes aimed at tamping down historic high inflation. While those increases have brought higher rates for debts on everything from credit cards to mortgages, they have also sweetened incentives for savers who can now earn more on their cash.

How Apple’s savings account yield stacks up

The highest savings yields in the Bankrate database are now more than 5%, according to Rossman. That includes UFB Direct, which is offering 5.02%.
Apple’s 4.15% savings account now lands in 11th place on Bankrate’s rankings, he said.
Still, Apple may have an advantage when it comes to the top offerings for rates due to its brand recognition, Rossman said.
“At Bankrate, we tend to be fans of anything that gets people saving more and getting better returns,” Rossman said. “This is definitely a big, important, popular company entering this space.”
The savings account provides a “seamless factor” for Apple enthusiasts who are already using the company’s phone, credit card, or buy now, pay later service, he said.
The savings account is intended to be a sidecar to the Apple Card, so daily cash back earnings get deposited there, Rossman noted. Outside funds can also be transferred to the savings account.
Importantly, Apple’s savings account is offered through Goldman Sachs, and funds are insured by the FDIC, or Federal Deposit Insurance Corporation. That means its accounts are generally federally insured for up to $250,000 per depositor. Experts have emphasized that FDIC coverage should be high on savers’ wish lists in light of the recent collapses of Silicon Valley Bank and Signature Bank.
Goldman Sachs has its own high-yield accounts through Marcus, which currently offers a 3.9% rate.

‘Best incentive in years to shop around’

Even as interest rates on savings have kicked up, savers are largely not taking advantage of the higher yields that are now available, Bankrate’s research has found.
A recent survey conducted by the website found just 22% of savers are earning interest rates of 3% or more on their cash.
Savers with accounts at big brick-and-mortar banks are probably earning “next to nothing,” Rossman said. Many people can probably earn a much better return by switching banks, he said.
“There’s definitely the best incentive in years to shop around,” Rossman said.
Many people may find it difficult, however, to find extra cash to sock away when rising rates have made paying debts more expensive and inflation has pushed up prices for everyday items.

For those who are struggling to save, personal finance expert Suze Orman recently told CNBC that it helps to automate your savings. By setting aside money before you see it in your paycheck, “you will find that you do not miss it,” Orman said.
Of note, today’s high rates are not guaranteed to stick around, Rossman noted.
The yields on savings accounts may go down if the Federal Reserve decides to lower interest rates at some point. Other products, including certificates of deposit, or CDs, may allow savers to lock in interest rates for longer time periods, such as one to five years, he said. More

Smart Tax Planning

The deadline for first-quarter estimated tax payments is also April 18, applying to income from self-employment, gig economy work, investments and more.
You may avoid late payment penalties by covering 90% of 2023 taxes or 100% of 2022 levies if your adjusted gross income is $150,000 or less.

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If you’re scrambling to file your taxes, it’s easy to miss another key deadline on April 18: the due date for 2023 first-quarter estimated tax payments.
Income taxes are pay-as-you-go, meaning you must remit taxes throughout the year. While employees contribute through paycheck withholdings, others must pay the IRS quarterly. 

The first estimated tax deadline is April 18, which applies to self-employed or gig economy workers, investors and other filers who expect to owe $1,000 or more in 2023.  

More from Smart Tax Planning:

Here’s a look at more tax-planning news.

“Many taxpayers don’t realize that first quarter payments are due at the same time as their tax return for the prior year,” said Kathy Pickering, chief tax officer for H&R Block.
You may also owe quarterly taxes for retirement income, interest, dividends, capital gains, alimony and rental income to reduce or avoid penalties, according to the IRS.

Many taxpayers don’t realize that first quarter payments are due at the same time as their tax return for the prior year.

Kathy Pickering
Chief tax officer for H&R Block

“Paying quarterly estimated taxes will usually lessen and may even eliminate any penalties,” the IRS said in a news release last week.
However, some filers affected by natural disasters have more time for estimated tax payments, such as eligible filers in Alabama, California and Georgia, according to the agency. You can find a full list of tax relief by location here.

The ‘quick and dirty’ way to avoid late fees

There’s a “quick and dirty” way to bypass late payment penalties, known as the “safe harbor rule,” says Mark Jaeger, vice president of tax operations at TaxAct.
You can avoid late fees by covering 90% of your 2023 taxes or paying 100% of your 2022 bill if your adjusted gross income is $150,000 or less. However, you’ll need 110% of your 2022 bill if you earn more than $150,000.
The late payment penalty is 0.5% of your unpaid balance per month, up to 25%, plus interest. And with higher interest rates, “you definitely don’t want to pay that underpayment penalty,” Jaeger said.
If you’re expecting similar income to last year, you can check your 2022 return for last year’s tax liability and divide that number (or 110% of that number, for high earners) into four quarterly payments. Of course, it’s still possible you’ll have a 2023 tax bill by following this method, depending on your earnings for the year.

Paying online is ‘easiest’ for most filers

While there are several ways to remit quarterly taxes, “paying online is the easiest method for most taxpayers,” Pickering said.
You can use IRS DirectPay or make a payment through your IRS online account, which shows your payment history and other tax details. You can see the full list of payment options here. More

The U.S. Department of Education can proceed in delivering $6 billion in student loan forgiveness to defrauded students, after the Supreme Court’s decision.
Eligible borrowers include those who filed a borrower defense application before June 22, 2022, and attended one of 151 schools.

Daniel De La Hoz | Istock | Getty Images

The Supreme Court last week declined to block the settlement of a class-action lawsuit brought by student loan borrowers who say they’ve been defrauded by their schools. Now, the U.S. Department of Education will be able to continue delivering on the $6 billion loan forgiveness settlement.
More than 150 schools, mostly for-profit institutions, were involved in the settlement.

Three of those institutions — Lincoln Educational Services Corp., American National University and Everglades College Inc. — had petitioned the highest court. They’ve argued that they were denied due process with the settlement and that it harms their reputation.
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Consumer advocates applauded the justices’ decision.
“Today’s swift and decisive action from the highest court should end, once and for all, any ongoing debate about the legitimacy of this settlement,” said Eileen Connor, president and director of the Project on Predatory Student Lending.
Career Education Colleges and Universities, a trade association representing for-profit colleges, did not immediately respond to a request for comment.

Here’s what borrowers need to know about the settlement.

Relief is a result of class-action lawsuit by borrowers

Starting around 2015, the U.S. Department of Education was flooded with requests for loan forgiveness from students who said their school had misled them. The government has the authority to cancel federal student loan debt when a borrower’s school is found to have engaged in misconduct.
A large backlog of applications led a group of borrowers to file a class-action lawsuit against the department in 2019, demanding speedier relief.
The litigation played out over years, with the Trump administration at one point issuing notices denying the requested relief to some 128,000 borrowers.

By June 2022, however, borrowers and the government reached a settlement. Under its terms, tens of thousands of borrowers were entitled to debt relief. These students attended one of 151 schools accused of misconduct.
The government also agreed to consider and make a decision on the applications of thousands of other borrowers within a set time frame.
The justices’ decision last week means that settlement will now stay in effect.

Eligible borrowers will get refunds, debt erased

In the settlement, you can find a list of the schools involved under “Exhibit C.” The Project on Predatory Lending also has a list of all included institutions, which are mostly for-profit schools. The project represented borrowers in the suit.
If a borrower attended one of these colleges and applied for a borrower defense loan discharge on or before June 22, 2022, they should be entitled to automatic relief, said higher education expert Mark Kantrowitz.
Even if their application was previously denied, Kantrowitz added, they should now qualify.
Borrowers eligible for automatic relief will likely get the cancellation no later than Jan. 28, 2024.
In addition to the debt wiped from their record, some borrowers may see some cash as part of the agreement.
“This will include a refund of all payments previously made,” Kantrowitz said.
Other borrowers who attended schools not on that list but who’ve filed a borrower defense application should benefit from a streamlined and quicker review of their request as part of the settlement.

Case unrelated to Biden’s student loan forgiveness

The Biden administration’s sweeping plan to cancel up to $400 billion in student debt is currently being considered by the Supreme Court and a decision is expected by June.
That policy has nothing to do with the class-action lawsuit by allegedly defrauded borrowers. More

Domino’s will roll out 800 custom-branded 2023 Chevy Bolt electric vehicles at locations across the U.S. in the coming months.

Wall Street analysts are focusing on companies that are well-positioned to navigate the ongoing economic turmoil and emerge stronger.
Here are five stocks chosen by Wall Street’s top pros, according to TipRanks, a platform that ranks analysts based on their past performance.

CrowdStrike

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2 hours ago

Rapid digitization has helped enterprises enhance their productivity. However, it has also made them more vulnerable to cyberattacks. This scenario is driving more demand for cybersecurity companies, including CrowdStrike (CRWD).
Following a recent virtual investor briefing with CrowdStrike’s management, Mizuho analyst Gregg Moskowitz reaffirmed a buy rating on the stock with a price target of $175 and said that CRWD remains a top pick.
The analyst noted that management expects solid growth opportunities for endpoint security and emerging use cases, fueled by Falcon, CrowdStrike’s “truly extensible cloud platform.” The company continues to see a potential total addressable market of $158 billion by 2026, a huge increase compared to $25 billion at the time of its initial public offering in 2019.
The analyst highlighted management’s claim that enterprise customers choose CrowdStrike over Microsoft 80% of the time for several reasons, including its next-generation platform that leverages artificial intelligence compared with the rival’s signature-based approach.
“Despite a more challenging macro backdrop, we continue to believe CRWD’s cloud platform remains highly differentiated, its GTM [go-to-market] is unrivaled, the co. is demonstrating clear success extending beyond traditional endpoint security markets, and FCF [free cash flow] margins remain ~30%,” said Moskowitz.

Moskowitz holds the 237th position among more than 8,300 analysts followed by TipRanks. His ratings have been profitable 57% of the time, with each rating delivering an average return of 12.6%. (See CrowdStrike Stock Chart on TipRanks)

Costco

Membership-only warehouse chain Costco (COST) is known to be one of the most consistent players in the retail space, thanks to its resilient business model and impressive membership renewal rates that are generally above 90%.   
Costco recently reported 0.5% growth in its March sales to $21.71 billion, with its comparable sales declining 1.1% year-over-year. (See Costco Insider Trading Activity on TipRanks)
Baird analyst Peter Benedict noted that core comparable sales (which exclude the impact of changes in gasoline prices and foreign exchange) growth slowed to 2.6% in March from 5% in February due to weaker performance in the U.S. and a slackening in non-food categories. Additionally, weakness in e-commerce persisted.
Benedict acknowledged that Costco is “clearly not immune” to a slowdown in general merchandise sales. The analyst said that downward revisions to fiscal third-quarter estimates appear likely following the March sales update. With COST’s forward valuation slightly below its five-year average, he prefers to “opportunistically accumulate shares on pullbacks.”
Benedict reiterated a buy rating on Costco with a price target of $535, as he thinks that the company is well-positioned to handle uneven consumer spending.
Benedict is ranked No. 84 among the more than 8,300 analysts tracked by TipRanks. His ratings have been profitable 69% of the time, with each rating delivering an average return of 14.2%.  

Caesars Entertainment

There is another analyst on this week’s list who was positive about his stock pick following a meeting with the company’s management. Deutsche Bank’s Carlo Santarelli recently hosted investor meetings with casino operator Caesars Entertainment’s (CZR) management. 
Santarelli noted that the company’s strategic priorities are focused on bringing down its debt levels, “operational prudence,” and the growth of its digital business. The company reduced its debt by $1.2 billion in 2022. (See Caesars Hedge Fund Trading Activity on TipRanks) 
The analyst said that he remains “favorably inclined” toward the company, given its stable operations and positive movement in its digital business.
Santarelli reaffirmed a buy rating on Caesars with a price target of $70. He ranks No. 25 among the more than 8,300 analysts followed on TipRanks. Additionally, 66% of his ratings have been successful, with each generating a return of 21.1%, on average.

Domino’s Pizza

Fast-food restaurant chain Domino’s Pizza (DPZ) reported lower-than-anticipated sales for the fourth quarter of 2022. Its U.S. delivery business faced significant pressure last year. Meanwhile, the carryout business saw strong momentum in the U.S. market.
Based on a survey of over 1,000 Domino’s customers, BTIG analyst Peter Saleh noted that carryout-only guests are very loyal to the brand, with only a few indicating that they purchase from other large pizza chains, independents or aggregators.
While carryout sales have been strong recently, the analyst pointed out that the channel is seeing a considerably lower average check compared to delivery. He said that if Domino’s increases the price of the carryout deal by $1, “reclaiming the historical pricing gap with Mix and Match,” it would translate into same-store sales growth of 300 to 350 basis points.
Saleh also feels that Domino’s could drive customers to the carryout segment by migrating its rewards program to a spend-based model. The analyst discussed certain other potential catalysts for the company, including the possibility of a third-party delivery partnership.
Saleh reiterated a buy rating on Domino’s with a price target of $400. He sees potential for the company, even though other analysts have downgraded it.  
The analyst is ranked No. 376 among the more than 8,300 analysts followed by TipRanks. His ratings have been profitable 63% of the time, with each rating delivering an average return of 11.4%. (See Domino’s Blogger Opinions & Sentiment on TipRanks)

Texas Roadhouse

Saleh is also bullish on the casual-dining restaurant chain Texas Roadhouse (TXRH) and reaffirmed a buy rating on TXRH. He increased the price target to $120 from $110 following several investor meetings hosted by his firm with the company’s key executives. 
The analyst highlighted management’s commentary about how Texas Roadhouse is gaining market share due to the decision by some diners to scale up from fast casual restaurants, and by other diners to scale down from fine dining.  He added that over the past two years, the value gap between fast casual operators and Texas Roadhouse has “narrowed considerably,” as restaurant chains like Chipotle have increased menu prices by more than 20%, while Texas Roadhouse has raised prices by only about 10%.
“We continue to believe that Texas Roadhouse is leveraging its value leadership, especially on the kid’s menu, to take market share, as evidenced by record average weekly sales,” said Saleh. (See Texas Roadhouse Financial Statements on TipRanks) 
Despite higher commodity costs, the analyst expects Texas Roadhouse to stick to its strategy of setting lower prices than other restaurants in its category, with its pricing focused on offsetting higher wages only. Overall, Saleh finds TXRH to be one of the “most compelling casual dining concepts,” backed by its consistent industry-leading top line, better unit economics and substantial long-term unit potential. More

Changes may be coming to fix Social Security’s trust funds, which are projected to be able to pay full benefits only until the 2030s.
While uncertainty may tempt many to claim retirement benefits early, experts say that’s usually a mistake.

Fertnig | E+ | Getty Images

Negative headlines about Social Security’s future may be affecting how prepared people feel when it comes to their own retirement.
Almost three-quarters, 74%, of people say they cannot count on Social Security benefits when it comes to the money they will have in retirement, according to a new survey from Allianz Life Insurance Company of North America.

The firm included questions on Social Security for the first time in its quarterly market perceptions study, in response to increased focus on the program in the news. The survey, which was conducted in March, included more than 1,000 respondents.
In late March, the Social Security Administration trustees issued a new annual report with a more imminent prognosis for the program’s two trust funds, one of which pays retirement benefits and the other disability benefits. In 2034 — one year earlier than previously projected — the program may be able to pay just 80% of the combined funds’ benefits.
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Notably, the insolvency date only for the fund used to pay retirement benefits is even sooner — 2033, or one decade away. At that point, 77% of those benefits will be payable, the trustees project.
“Although the program has been a great success, steps must be taken to ensure its solvency for the long term,” AARP CEO Jo Ann Jenkins wrote in an op-ed Thursday.

And while most leaders and experts agree action needs to be taken, it remains uncertain as to what changes exactly may happen.
For many, that adds more uncertainty to planning for retirement. Worries about being able to count on Social Security in retirement were most prevalent with Gen Xers, with 84%; followed by millennials, 80%; and baby boomers, 63%, according to Allianz’s survey.

Moreover, the survey also found most respondents — 88% — say it’s critical to have another source of guaranteed income in retirement aside from Social Security in order to live comfortably.
Yet not everyone is so lucky to have other resources to fall back on. Social Security represents the largest source of income for most people over retirement age, Jenkins noted. Meanwhile, for 14% of those people, it is their only source of income.
“Unfortunately, it’s one of the things that makes people make the mistake of claiming their benefits too early,” Kelly LaVigne, vice president of consumer insights at Allianz Life, said of the outlook for the program.
They think, “‘I’m going to get mine before it goes broke,’ when in reality, that is not helping at all,” he said.

‘Still a big advantage to waiting’

To see just how a 23% benefit cut (based on the latest projections for Social Security’s retirement fund) would affect you, experts say it’s best to turn to a calculator or other such online tool for maximizing benefits.
Larry Kotlikoff — an economics professor at Boston University and creator of Maximize My Social Security, a claiming software tool — ran the numbers and said there is “still a big advantage to waiting.”
“The benefit cut is going to happen even if you take benefits early,” Kotlikoff said.
“So the advantage of taking them early is smaller than one might expect,” he said.

People make the mistake of claiming their benefits too early … ‘I’m going to get mine before it goes broke,’ when in reality, that is not helping at all.

Kelly LaVigne
vice president of consumer insights at Allianz Life

Changes were enacted in 1983 to shore up Social Security. One key reform — raising the full retirement age, when beneficiaries stand to get 100% of the retirement benefits they’ve earned — is still getting phased in today. For people born in 1960 or later, the retirement age will be 67, not 66, as it was for older cohorts.
Lawmakers may follow the same strategy again, and raise the full retirement age to 70, according to Kotlikoff. Indeed, some leaders in Washington are already discussing this idea.
Under current rules, claimants stand to get a big boost — up to 8% per year — for waiting beyond full retirement age up to age 70 to start benefits.
Particularly for people who are single, who do not have a spouse or children who may qualify for benefits based on their record, it still makes sense to wait, according to Kotlikoff.

However, for other situations — a lower life expectancy, disabled children who cannot collect until you collect, a spouse who might also be able to collect benefits for taking care of them — the software will typically recommend starting at an earlier age, according to Kotlikoff.
If the retirement age is raised, that will be a benefit cut. However, it is unlikely such a change would affect current or near retirees, both Kotlikoff and LaVigne said.

Why you shouldn’t claim just to get 8.7% COLA

There is yet another reason people may be tempted to claim retirement benefits early — an 8.7% cost-of-living adjustment, or COLA, that went into effect for this year to compensate for high inflation. It is the highest increase in about 40 years.
“If you are 62 or older, whether you are claiming your benefit or whether you are waiting, that [COLA] was increased to your Social Security amount,” LaVigne said.
In other words, either way you stand to benefit, whether it increased the future amount you receive or the amount you are taking right now, he said.
Rather than focusing on the COLA, it’s important for prospective beneficiaries to focus on putting a plan together so they will know how to minimize their tax bills and what to do if inflation spikes again during their retirement years.
“If you don’t have a plan in place, how do you know what to do when the unexpected happens?” LaVigne said. More

Adene Sanchez | E+ | Getty Images

Company: Exelixis (EXEL)

Business: Exelixis, an oncology-focused biotechnology company, focuses on the discovery, development, and commercialization of new medicines to treat cancers in the United States. They have produced four marketed pharmaceutical products, including their flagship molecule, cabozantinib.
Stock Market Value: $6.3B ($19.46 per share)

Activist: Farallon Capital Management

Percentage Ownership:  7.5%
Average Cost: $17.47
Activist Commentary: Farallon Capital is a $36 billion multi-strategy hedge fund founded in 1986. Farallon’s investment strategies include credit investments, long/short equity, merger arbitrage, risk arbitrage, real estate investments and direct investments. Farallon is not an activist investor but will pursue an activist agenda when it feels forced to do so. The firm does not seek a fight but will not back down from one, either.

What’s Happening?

On April 5, Farallon sent a letter to the company announcing its nomination of the following director nominees for election to the board at the company’s 2023 annual meeting: (i) Tomas Heyman, interim CEO at Interlaken Therapeutics and former president of Johnson & Johnson’s corporate venture capital group, (ii) David Johnson, managing partner of Caligan Partners, and (iii) Robert Oliver, the former CEO of Otsuka America Pharmaceutical and an executive advisor. Farallon also expressed its belief that Exelixis should focus its research and development efforts and spending, communicate a differentiated and coherent strategy, as well as commit to ongoing distributions of excess capital to shareholders.

Behind the Scenes

As the strategy of shareholder activism has become more mainstream, it has been utilized by a larger breadth of investors. For the average investor it is hard to distinguish between shareholders using activism as a short term and opportunistic tool and real long-term investors using shareholder activism because the company is in desperate need of change and the shareholder has exhausted all other amicable options. This situation is the latter. Farallon did not buy the majority of its shares in the last 60 days like we often see from opportunistic investors filing 13Ds. The firm has been a shareholder of Exelixis since 2018 and is just now going public with their concerns. It has given management more than enough time to create shareholder value. Further, Farallon is not using an activist template like we see from novice activists where they criticize everything from board share ownership to executive compensation. Rather, the firm is focusing on glaring company issues and opportunities.  

The firm takes issue with the level of R&D and the lack of discipline and communication with respect to an R&D plan. Every company that spends a material amount on R&D should have a disciplined plan articulated to the market, but that is even more crucial for a company like Exelixis that spends over 50% of its revenue on R&D. In 2022, the company had $1.6 billion in revenue with an R&D budget of nearly $900 million, leading to earnings before interest, taxes, depreciation and amortization of $222 million. This R&D budget is expected to increase to more than $1 billion in 2023. To make matters worse, the company is investing in many projects in scientific and clinical areas where it lacks differentiation and a competitive advantage. Instead of becoming more focused and disciplined, Exelixis is doing the opposite: pursuing 27 indications across 79 trials using at least three very different therapeutic modalities, a total that is much higher than any of their peers. Investors want to see a reasoned, disciplined R&D plan that explains the differentiated approach and competitive advantage the company is exploiting so that they can assess the likelihood of success.
Farallon estimates that the net present value of the company’s cabozantinib cash flows alone (with a modest R&D program) is worth in excess of $33 per share. Farallon would also like to see Exelixis commit to a much larger share repurchase program than the $550 million it has announced. The company has over $2 billion in cash and investments versus virtually no long-term debt and using a portion of this cash to buy back shares ahead of any R&D restructuring would not only create shareholder value but will help add discipline to management by forcing them to run a leaner operation without a cash stockpile on the balance sheet.
While improving margins and buying back stock may seem to be a typical activist play, it is not Farallon’s typical play. In the firm’s 2021 engagement with health-care company Acceleron Pharma, the firm suggested the opposite plan. At Acceleron, Farallon was in favor of increased R&D and opposed Merck’s acquisition of the company, lobbying for a standalone company which had significant prospects following the positive results of the Phase 2 trials of its pulmonary drug. Ultimately, Merck acquired Acceleron in the face of Farallon’s opposition, and the pulmonary drug’s Phase 3 trials have been a success. It’s expected to hit the market later this year, and Merck is slated to make an oversized return on this acquisition.
Farallon is making a very reasonable request to add three board members to Exelixis’s 11-person board. We believe this is reasonable just based on the company’s lack of discipline with respect to R&D and its serial underperformance compared to the market and its peers. However, other than three female directors added to the otherwise all-male board since 2016, the company has not added a new director since 2010. Eight of the 11 directors have been on the board between 13 and 29 years, for an average of over 20 years each. What is worse is that the board dismissed Farallon’s overtures; the firm said it was told that “the Board does its own refreshing.” Three new directors in the past 13 years is the company’s idea of board refreshing. It is one thing to have bad corporate governance; it is quite another to not even recognize bad corporate governance when you see it.
Farallon is nominating only three directors to this board, and it befuddles us as to how Exelixis does not see this as a gift. Assuming Farallon is targeting the three directors who have been on the board for 26 years, 22 years and 19 years, the firm is sparing three directors who have been on the board for 19 years, 18 years and 16 years, not to mention the chair and CEO, who have been on the board for 29 years and 13 years, respectively. All five of them are male. We do not see how Institutional Shareholder Services and the large institutional stockholders who own 25% of the company’s common stock could support these long-tenured directors if presented with a competing slate of qualified, fresh, diverse directors. In our opinion, Farallon could have won six seats on this board and should take three seats in a cake walk. Farallon has nominated three very qualified directors. Tomas Heyman is a venture investor formerly of Johnson & Johnson; Robert Oliver is the former CEO of a pharmaceutical business; and David Johnson is an experienced shareholder investor who is well versed in corporate governance and shareholder activism. Johnson, formerly a Carlyle Group managing director, is the founder of Caligan Partners, a fund that uses activism as a tool to unlock value.
This seems like the type of situation that should settle. Less than a week ago, that was the case when the parties had reached a near-final agreement which included the appointment of two Farallon nominees (Heyman and Oliver), the retirement of two long-standing existing directors and the formation of a new Capital Allocation Committee. However, Exelixis claims that the deal was derailed when Farallon requested too much confidential information related to their R&D strategy, their pipeline, people and clinical trial data.
On April 13, the company announced that two incumbent directors were resigning from the board and it was recommending that shareholders vote for Heyman and Oliver to replace them. This was not done as part of a settlement with Farallon but likely to effectively implement a settlement offer that Farallon had previously rejected. The company may be hoping that this will prevent shareholders from voting for Farallon’s third nominee, David Johnson. This is a tactical move that was made much easier by the implementation of the universal proxy card. The unfortunate part of this is that often the nominee the company resists the most is the one who is most needed. That is true in this case. As a sophisticated shareholder investor with activist experience, we believe David Johnson was the candidate most capable of reining in management’s R&D spending and further refreshing a board that still needs many newer directors. However, if Farallon gets tactical, the firm can orchestrate it so any two of its three nominees who they select will be elected to the board with a free option for the third.
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments. More

As the cost of living rises, Americans are leaning more on credit cards.
However, that type of debt is costlier than ever with credit card interest rates at an all-time high.
Here are the three best ways to pay down expensive credit card debt once and for all.

Collectively, Americans owe more on credit cards than ever before. And they’re paying a higher price for it, as well.
The average annual interest rate for credit cards is now near 21%, according to data from the Federal Reserve — marking the highest rate since the Fed began tracking this figure nearly three decades ago.

With rates at record highs, households carrying credit card debt will pay an average of $1,380 in interest alone this year — up from $1,029 last year, a NerdWallet study found.
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As the Fed raises rates to cool inflation, it’s becoming even costlier to borrow. With another possible hike on the horizon, average credit card annual percentage rates, or APRs, could still move higher in the months ahead, according to Greg McBride, chief financial analyst at Bankrate.com.
Sky-high APRs make credit cards one of the most expensive ways to borrow money from month to month. However, there are some tools and tricks to help pay down that balance.
Here are the three steps experts most often recommend.

1. Avail yourself of balance transfer cards

Cards offering 15, 18 and even 21 months with no interest on transferred balances “can be your best friend on the path to getting out of credit card debt,” McBride said.
“The 0% will shield you from interest charges and further rate hikes, but you’ll still have to do the dirty work of actually paying down the debt.”

Making the best use of a balance transfer boils down to making those payments on time and aggressively paying down the balance during the introductory period.
If you don’t pay the balance off, the remaining balance will have a higher APR applied to it, which is generally about 23%, on average, in line with the rates for new credit.
Further, there can be limits on how much you can transfer, as well as fees attached. Most cards have a one-time balance transfer fee, usually around 3% to 5% of the tab. And one late payment can negate your no-interest offer.

2. Consider a personal loan

Otherwise, consider a debt consolidation loan, which is a type of personal loan that allows you to combine interest from multiple credit cards into one low-interest fixed payment, advised Sara Rathner, a credit cards expert at NerdWallet.
“The interest rate will depend on your credit, but it may be worth it if the cost of interest and fees are significantly lower than what you’re currently paying on your credit cards,” Rathner said.

Currently, those rates are around 10%, on average, still well below what you may have on your credit card.
Further, borrowers may find it simpler to budget for a fixed monthly payment until the debt is paid off, Rathner added. “That can be easier to wrap your head around.”

3. Employ a debt-payoff method

Most experts also recommend coming up with a strategy to stay motivated. The two most common are the avalanche method and the snowball method.
The avalanche method lists your debts from highest to lowest by interest rate. That way you pay off the debts that rack up the most in interest first.
Alternatively, the snowball method prioritizes your smallest debts first, regardless of interest rate. The idea is that you’ll gain momentum as the debts are paid off and that will motivate you to keep going.
With either strategy, you’ll make the minimum payments each month on all your debts, and put any extra cash toward accelerating repayment on one debt of your choice.
“Avalanche will save you more on interest over time, but if your priority is knocking out the first couple of debts really fast to stay motivated, that’s where snowball comes in handy,” Rathner said.
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