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Secure 2.0, as it’s called, is intended to build on the changes to the U.S. retirement system that were ushered in by the 2019 Secure Act.
If no action is taken before Congress adjourns in mid- to late December, the legislative process would need to start over in the next Congress.
There’s a chance that Secure 2.0 could be attached to a government funding bill — which is how the original Secure Act was passed.

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For supporters of congressional proposals to improve the U.S. retirement system, it’s about to be a nail-biting few weeks.
Lawmakers are heading back to Washington next week to finish out the so-called lame-duck session — the legislative period between the midterm elections and the new Congress, which starts Jan. 3. While no specific agenda has been released yet, supporters of the retirement-change proposals collectively called “Secure 2.0” are hopeful that it will be among the pieces of legislation that make it across the finish line. 

“All signs are pointing to action being taken by Congress before they leave … but the exact date and time, nobody knows,” said Paul Richman, chief government and political affairs officer for the Insured Retirement Institute.
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Secure 2.0 is intended to build on improvements to the retirement system that were ushered in by the 2019 Secure Act. Those changes included giving part-time workers better access to retirement benefits and increasing the age when required minimum distributions, or RMDs, from certain retirement accounts must start — to age 72 from 70½.

Some provisions supported in both House and Senate

This time around, some of the proposals that are supported in both the House and Senate include:

Making it easier for workers to save and access emergency funds.
Increasing access to the so-called saver’s tax credit, which is available to lower- and middle-income workers.
Increasing the extra amounts — so-called catch-up contributions — that individuals age 50 or older can put in their retirement accounts.
Requiring all catch-up amounts to be made as Roth (after-tax) contributions.
Letting part-timers qualify for their company’s 401(k) after they’ve booked at least 500 hours a year for two years instead of three years.
Making it easier for employers to make contributions to 401(k) plans on behalf of employees paying student loans instead of saving for retirement.
Raising when RMDs must start to age 75 from the current age 72.
Reducing the penalty for failing to take RMDs to 25%, and in some cases, 10%, from the current 50%.
Allowing people to put more money in a qualified longevity annuity contract, or QLAC.

Differences between the House-passed bill and the Senate’s proposals would need to be worked out — a process that is underway, Richman said — before a final package could be considered.

This year, the House passed its version of Secure 2.0, the Securing a Strong Retirement Act (H.R.2954), in late March with a bipartisan vote of 414-5. 
In the Senate, committees with jurisdiction over retirement-related provisions have approved proposals that collectively form the basis of that chamber’s Secure 2.0 version: The Health, Education, Labor and Pensions Committee advanced the so-called Rise & Shine Act (S.4353) in June, and the Finance Committee approved a bill in September known as the EARN Act (S.4808).

Secure 2.0 could be attached to a must-pass bill

Assuming that Secure 2.0 wouldn’t get floor time for a vote on its own, supporters are hoping legislators will attach it to a must-pass bill this year. That could include a bill to fund the government.
In September, Congress passed a stopgap measure to fund the government’s 2023 fiscal year, which started Oct. 1, through Dec. 16. Lawmakers would need to either pass a spending bill for the rest of the fiscal year or pass another short-term stopgap measure — or risk a government shutdown.

The original 2019 Secure Act was finalized in December of that year as part of a spending bill. 
There could be other bills that also would be appropriate for Secure 2.0 to be attached to, such as the National Defense Authorization Act, Richman said.
If this round of proposed changes doesn’t make it into law this year, the entire legislative process would need to start over in the next Congress.
“Nobody wants to see that,” Richman said. “You have to get bills reintroduced, go through committees again, get it to the floor to vote — it’s a very long process.”

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The White House believes its student loan forgiveness plan will prevail in the courts, but, for now, the financial future of millions of Americans is uncertain.
Here’s what we know about the legal delays to the policy.

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After applying for student loan forgiveness, some borrowers are receiving what looks like good news from the U.S. Department of Education.
“We reviewed your application and determined that you are eligible for loan relief under the Plan,” according to a letter sent out by Education Secretary Miguel A. Cardona.

Yet the notice goes on to say that “Unfortunately, a number of lawsuits have been filed challenging the program, which have blocked our ability to discharge your debt at present.”
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Not long after President Joe Biden announced his sweeping plan to cancel up to $20,000 in student debt for millions of Americans, a number of conservative groups and Republican-backed states attacked the policy in the courts. Two of these lawsuits have been successful in at least temporarily halting the relief, and the Education Department closed its loan cancellation portal this month.
The Biden administration believes its plan is legal and will prevail in the courts, but for now, the financial future of millions of Americans remains uncertain.
Here’s what we know about the legal delays to the policy.

Delays could drag on for months or more

In a recent filing with the Supreme Court, the Biden administration warned that the legal battles over its forgiveness plan could drag into 2024 if the cases weren’t decided on an expedited basis.
However, such a long delay is unlikely, said higher-education expert Mark Kantrowitz.

He pointed out that the Education Department hopes its loan servicers will apply the relief to people’s accounts within two weeks after it gives it the green light to do so. That means if it’s allowed to continue forgiving student debt, it can act quickly and other legal challenges “will be rendered moot.”
Around 26 million borrowers have already applied for the forgiveness. Those who haven’t done so yet shouldn’t fret, Kantrowitz said. The government will just reopen its application portal again if its plan succeeds in the court.

Loan payment pause may be extended again

The Biden administration is reported to be considering extending the payment pause on student loan bills yet again. That relief policy has been in effect since the start of the coronavirus pandemic.
It would be the eighth time borrowers have been given more time to pause payments, but it may be the White House’s only option with so much still in the air, experts say.
“Restarting repayment now will be messy because the Biden Administration has promised forgiveness to tens of millions of borrowers who will be upset about having to make payments on loans that they expected to be forgiven,” Kantrowitz said.
Indeed, a top official at the Education Department recently said student loan default rates could dramatically spike if its loan forgiveness plan is thwarted, “due to the ongoing confusion about what they owe.”

Borrowers have other aid options

Those unnerved by the possibility of student loan forgiveness falling through may take some comfort in a number of other options that may offer help.
The Biden administration recently announced a new repayment plan for certain struggling borrowers that would cap monthly bills at 5% of their discretionary income. It should go into effect next July, Kantrowitz said. (Use one of the calculators at Studentaid.gov or Freestudentloanadvice.org to find the repayment plan most affordable for you.)
The Public Service Loan Forgiveness program, which allows those who work for the government and certain nonprofits to get their debt cleared after a decade, is also getting a number of improvements.

If you’re unemployed or dealing with another financial hardship, you can put in a request for an economic hardship or unemployment deferment. Those are the ideal ways to postpone your federal student loan payments, because interest doesn’t accrue under them.
If you don’t qualify for either, though, you can use a forbearance to continue suspending your bills. Just keep in mind that interest will rack up and your balance will be larger — possibly much larger — when you resume paying.
And for those in the most difficult situations, it may soon be easier to discharge your student debt in bankruptcy.

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The average investor might think cryptocurrency is similar to a stock or bond, which are overseen by the U.S. Securities and Exchange Commission.
But crypto largely seems to fall in a gray area of the law. It’s unclear which federal regulators have primary oversight over the market for consumers, legal experts said.
A 1946 Supreme Court case about orange groves in Florida figures in the legal morass.

Aldo Pavan | The Image Bank | Getty Images

Cryptocurrency investors with holdings at failed exchange FTX are learning a hard lesson about investor protections, as the fate of their money now lies in bankruptcy proceedings that will likely take years to play out.
Cryptocurrencies like bitcoin, ethereum and others in the digital-asset realm exist in a gray area of regulation, according to legal experts.

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That means they largely escape the same oversight as traditional holdings like stocks and bonds. Further, federal money isn’t available to backstop customers in the same way it would be for those with holdings at a failed brokerage firm or bank.

How orange groves impact crypto protections

The reason why largely hinges on a 1946 Supreme Court case about investors in Florida orange groves.
The justices who heard that case — SEC v. W.J. Howey Co. — established the so-called Howey test to determine what constitutes a security, or “investment contract.” (More on how the Howey test works can be found below.)
Stocks are considered securities, which are regulated by the U.S. Securities and Exchange Commission.
Courts have used the Howey test to lasso some nontraditional investments — animal-breeding programs, railroads, mobile phones and Internet-only enterprises, for example — under the “investment contracts” umbrella, thereby garnering the same protections and oversight as stock investors.

Here’s why this is important for crypto: It’s unclear in many cases if digital assets are an “investment contract” under the 76-year-old Howey test.
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Regulatory oversight is therefore somewhat ambiguous, said Richard Painter, a securities law professor at the University of Minnesota.
Experts have questioned whether it may be more appropriate to consider crypto a currency or a commodity, for example, governed by different federal regulators.
“It doesn’t make any sense to have all this turn on the Howey test in the 1940s-era case,” said Painter, a former chief White House ethics lawyer under President George W. Bush.
“It’s an invitation to disaster,” he said. “Somebody’s got to cover this.
“We know what happens with unregulated markets — ever since the 1637 tulip bulbs [mania] in Holland,” added Painter, referring to the 17th century event widely regarded as the first documented case of a major financial bubble that bankrupted many investors.

Why the ‘security’ distinction matters

The Howey test has four parts to determine if something like bitcoin is an “investment contract.” A contract exists if each is true:

There’s an investment of money;
in a common enterprise;
in which the investor expects a profit; and
the profit is derived solely from the efforts of others.

Think of an investor who holds publicly traded stock, for example. The investor doesn’t do the work to generate the company’s profit, rather it is done by company employees and managers. For their part, the investor might reap profit in the form of dividends and/or a higher stock share price.
But crypto is different. It’s decentralized in many cases, meaning it may not be considered a “common enterprise,” said Daniel Gwen, business restructuring counsel at law firm Ropes & Gray. It’s also unclear if its intent is always to generate a profit, since some use it to transfer funds across borders or as a “store of value,” for example, Gwen added.
The 1946 Supreme Court case centered on the Howey Company, which cultivated orange groves and solicited investment from tourists staying at an adjoining hotel. An affiliate managed the grove on the tourists’ behalf. After the orange harvest, Howey allocated a share of net profits to each buyer. The transactions “clearly involve” investment contracts, the court ruled.  

It’s an invitation to disaster.

Richard Painter
securities law professor at the University of Minnesota

If crypto were also a clearly defined security, the SEC would be able to police companies not complying with securities laws, said Micah Hauptman, director of investor protection at the Consumer Federation of America, an advocacy group. Those enforcements may also have a deterrent effect on would-be bad actors, he said. There would be additional disclosures required for investors, among other protections.
“It shouldn’t make a difference to investors how these assets are regulated, but it does in reality,” Hauptman said of crypto.
The SEC has tried to assert its regulatory oversight in some cases. For example, the agency sued Ripple Labs and its officers in 2020 for failing to register the cryptocurrency XRP as a security offering. That case is ongoing.
“I don’t think you can fault regulators” for what happened at FTX, Sheila Bair, former chair of the Federal Deposit Insurance Corporation, told CNBC. “They’ve been wanting Congress to act because there’s not a lot of clarity, complete clarity, about what’s a security, what’s a commodity, what should be with the banking regulators.”

‘The law is all over the place’

Customers holding their crypto assets at FTX also don’t appear to get the financial protection afforded to defunct brokerage firms that sell stocks, bonds and other securities.
The Securities Investor Protection Corporation insures investors for up to $500,000 in the event a brokerage firm liquidates and their holdings are tied up in the insolvent firm. Let’s say a Lehman Brothers customer had owned shares of a publicly traded corporate stock when the firm went bankrupt. It would be SIPC’s aim to get shares back in investors’ hands as quickly as possible, Gwen said.
There’s a similar mechanism for bank customers, who are insured for up to $250,000 by the FDIC if a bank fails.
However, FTX customers likely don’t have SIPC protection, Gwen said.

For one, that protection applies to securities, meaning crypto’s ambiguity as a security or non-security may be a hindrance. FTX itself may not be classified as a brokerage, which deals with securities products. What’s more, the company is based outside the U.S., in the Bahamas, which SIPC doesn’t cover, Painter said.
“It does things similar to a broker-dealer,” Gwen said of FTX. “But the law is all over the place when it comes to [crypto].”
FTX, once valued at $32 billion, filed for Chapter 11 bankruptcy protection on Nov. 11. Customers with crypto holdings must hope they can recover some — if any — money in bankruptcy court.
That may be a difficult and lengthy process.
“Chapter 11 is not really designed to protect this circumstance, where you have an unclear digital asset being administered almost security-like, without the same framework,” Gwen said. “It doesn’t mean investors don’t have protections; they have different protections.”

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If you’re retired and giving to charity this holiday season, experts say qualified charitable distributions, or QCDs, may trim your 2022 tax bill.
QCDs are direct gifts from an individual retirement account to an eligible charity, and may reduce your adjusted gross income.
Donors age 70½ or older may use qualified charitable distributions, or QCDs, to donate up to $100,000 per year.

David Jakle | Image Source | Getty Images

If you’re retired and giving to charity this holiday season, experts say there’s a way to trim your 2022 tax bill while supporting your favorite cause.
Despite economic uncertainty, the majority of American adults plan to donate similar amounts this year as they did last year, a recent Edward Jones study found.

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While tax breaks aren’t typically the prime reason for giving, retirees may consider using qualified charitable distributions, or QCDs, which are direct gifts from an individual retirement account to an eligible charity.
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“For most people, most of the time, you’re going to be better off doing this as your first source of charitable giving,” said certified financial planner David Foster, founder of Gateway Wealth Management in St. Louis.
If you’re age 70½ or older, you may donate up to $100,000 per year, and it may count as a required minimum distribution if you transfer the money at age 72. While the maneuver doesn’t provide a charitable deduction, you may see other significant tax benefits, financial experts say.

The primary benefit of a QCD is that the transfer doesn’t count as taxable income, Foster said.

Since fewer Americans itemize deductions, it can be difficult to claim a write-off for charitable gifts. However, retirees taking the standard deduction may still benefit from a QCD because it won’t be part of their adjusted gross income, he said.
What’s more, a QCD reduces their IRA balance, cutting the size of future required minimum distributions, he said. “That’s a relatively small benefit for most people but still relevant,” Foster added.

Higher adjusted gross income triggers other ‘tax ramifications’

While most people don’t make charitable donations solely because of the tax breaks, QCDs may offer a big one: reducing adjusted gross income.
“That’s important because [higher] adjusted gross income often triggers a lot of other tax ramifications,” said JoAnn May, a CFP and CPA who founded Forest Asset Management in Berwyn, Illinois.
For example, more adjusted gross income may cause a hike in monthly premiums for Medicare Part B and Part D, she said.

IRMAA is a big issue with my retired clients. They don’t like paying it.

founder of Forest Asset Management

The surcharge, known as the Income-Related Monthly Adjustment Amount, or IRMAA, adds an extra fee for a year once income exceeds a certain level.
“IRMAA is a big issue with my retired clients,” May said. “They don’t like paying it.”
Another example is the medical expense write-off. If you itemized deductions, you may claim a tax break for qualified expenses that exceed 7.5% of adjusted gross income. However, higher income creates a steeper hurdle to claim the deduction, she said. 

Avoid these QCD mistakes

One of the biggest issues with QCDs is the transfers aren’t separated on Form 1099-R, which reports retirement plan distributions to the IRS. 
For example, if you withdraw $50,000 in a year and $20,000 is for a QCD, the form will still report $50,000 in total distributions, even though only $30,000 is taxable income, Foster said. 

“It’s up to you to keep track of how much of that money went directly to charity,” he said.   
Additionally, the payment from the IRA must be made out to the charity. If you write a check from your IRA to a charity at the end of December, it must clear from your IRA by Dec. 31 to count for the year, May said.
Retirees, however, may bypass the issue by having their custodian cut the check.

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There are key lessons for digital currency investors after the downfall of cryptocurrency exchange FTX, financial experts say.
“The FTX collapse provides harsh reminders that ‘there is no such thing as a free lunch’ when trying to make a quick buck in a still fairly new, unregulated financial industry,” said Jon Ulin, CEO of Ulin & Co. Wealth Management.

Bahamas-based crypto exchange FTX filed for bankruptcy in the U.S. on Nov. 11, 2022, seeking court protection as it looks for a way to return money to users.
Nurphoto | Nurphoto | Getty Images

After a difficult year for digital assets, many investors were blindsided by the recent collapse of cryptocurrency exchange FTX, as customers wait for answers about an estimated $1 billion to $2 billion of missing funds.
While the future of the company — and investigations into the vanishing assets — are in limbo as FTX enters bankruptcy protection, experts say there are key lessons for crypto investors.

“The FTX collapse provides harsh reminders that ‘there is no such thing as a free lunch’ when trying to make a quick buck in a still fairly new, unregulated financial industry,” said certified financial planner Jon Ulin, CEO of Ulin & Co. Wealth Management in Boca Raton, Florida.
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You should invest “what you are willing to lose 100%, like in Vegas,” and “discretion and skepticism” should be exercised when weighing assets and related products pitched by “pro-athletes, celebrities and media personalities,” Ulin said.
Here are four other lessons for investors from FTX’s downfall.

1. Know the risks of where you’re holding cryptocurrency

Kevin Lum, a CFP and founder of Foundry Financial in Los Angeles, works with younger investors and said about 50% of his clients hold crypto in some form. 

While he doesn’t necessarily think clients need to reduce their exposure, he said they need to understand where digital currency is held and the possible risks of keeping assets there.  
“I think the collapse of FTX will end up being good for traditional finance companies like Fidelity who are entering the crypto space, because they come with a certain level of trust,” Lum said.
Earlier this month, Fidelity Investments announced plans to launch a commission-free crypto product, allowing investors to buy and sell bitcoin and ether.
The FTX collapse has also renewed interest in cold storage, or taking digital currency offline, making it less susceptible to hacks. However, the move makes assets less liquid and harder to trade quickly.

2. Diversification is ‘always important’

Whether you’re investing in stocks, cryptocurrency or other assets, experts say a large percentage of a single holding can be risky.
“Diversification is always important,” said George Gagliardi, a CFP and founder of Coromandel Wealth Management in Lexington, Massachusetts.  
“For individuals who had a very high allocation to cryptocurrencies, whether in FTX or not, the crypto price crashes this year were a painful lesson in the importance of diversifying one’s investment classes,” he said.

The [FTX] collapse should be a lesson that any individual company — be it a crypto exchange or more traditional business — can go bankrupt in times of distress.

Kevin Brady
Vice president of Wealthspire Advisors

Since topping an all-time high of $68,000 in November 2021, the price of bitcoin has plummeted by more than three-quarters, dropping below $17,000 as of Nov. 17. 
“The [FTX] collapse should be a lesson that any individual company — be it a crypto exchange or more traditional business — can go bankrupt in times of distress,” said Kevin Brady, a CFP and vice president of Wealthspire Advisors in New York.
When weighing portfolio allocations, he said, 5% of a single asset “starts to be material” and 10% is “very concentrated.” Of course, there may be mitigating circumstances for some investors. 
“Even if a financial asset is speculative in nature, it can still play a role in a well-diversified portfolio, albeit in small amounts,” said Ulin of Ulin & Co.

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3. Expect more crypto regulation

There’s been an ongoing debate about how cryptocurrency should be classified and regulated and it has intensified amid the FTX fallout.
Sens. Cynthia Lummis, R-Wyo., and Kirsten Gillibrand, D-N.Y., in June introduced a bill to create a regulatory structure for digital currency, defining the majority of assets as commodities, such as gold or oil, which are overseen by the Commodity Futures Trading Commission.  
Experts say the FTX meltdown may accelerate these discussions — and speed up the timeline for future guidelines. “I think we’re going to see regulations,” said Ivory Johnson, a CFP and founder of Delancey Wealth Management in Washington. “And I think these bad business models will go away.”

House Financial Services Committee Chairwoman Maxine Waters, D-Calif., and the ranking Republican, Rep. Patrick McHenry, of North Carolina, on Wednesday announced plans for a bipartisan hearing in December to investigate FTX’s collapse. 
While Congress will ultimately decide how government agencies may regulate cryptocurrency, Securities and Exchange Commission Chair Gary Gensler has been pushing for tighter rules. “Investors need better protection in this space,” he told CNBC’s “Squawk Box” on Nov. 10.

4. Back up your crypto transaction records

Regardless of where you’re holding digital currency, experts suggest downloading your transaction history periodically.
Gathering reporting documents is one of the most difficult parts of crypto taxes, said Andrew Gordon, tax attorney, CPA and president of Gordon Law Group. And if an exchange closes down, you’ll still need records to file your return, he said.
“Two weeks ago, very few people suspected FTX would be facing this,” Gordon said.
Plus, you’ll have a better feel for your profits and losses by tracking throughout the year, he said, making it easier to trim your bill with strategies such as tax-loss harvesting. “It will put you in a much better position when tax time comes,” he said.

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VMware at the NYSE, Dec. 14, 2021.
Source: NYSE

The market is set to begin what should be a quiet holiday week, but key catalysts are on the horizon.
The stock market is closed on Thursday for Thanksgiving Day, and it’s set to close at 1 p.m. on Friday. Investors are on guard for December: The Federal Reserve meets once more, and a blast of economic data, including November payrolls, is on the way.

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‘Compelling’ and ‘attractive’: These stocks are firing on all cylinders, JPMorgan says

More volatility may be ahead, which is more reason for investors to take a long-term perspective and select stocks that can withstand the tumult.
Here are five stocks chosen by Wall Street’s top pros, according to TipRanks, a platform that ranks analysts based on their past performance.

VMware

Software company VMware (VMW) is awaiting antitrust approval before it is acquired by Broadcom (AVGO). After the deal is closed, VMware shareholders can choose to receive $142.50 per share in cash or 0.2520 shares of Broadcom for each VMware share. This is why Monness Crespi Hardt analyst Brian White reiterated his buy rating and $136 price target on the stock ahead of VMware’s quarterly results.
White believes that VMware’s price-to-earnings ratio of 19x is modest for a software company, and combined with the benefit of the deal with Broadcom, the company has been able to mostly remain above the carnage in the technology sector this year. (See VMware Stock Price & Analysis on TipRanks)
“In our view, VMware offers a unique value proposition in the cloud and the attractive economics of its business model are self-evident,” said White. For the upcoming quarterly results, the analyst expects the company to be on track to meet his top- and bottom-line estimates.

White ranks at the 657th position among a roster of more than 8,000 analysts on TipRanks. He has been successful with 56% of his ratings, with each rating garnering an average return of 8.9% over the past year.

Lattice Semiconductor

Chip company Lattice Semiconductor (LSCC) is looking forward to making the most of the untapped opportunities in the FPGA (Field Programmable Gate Arrays) market, a niche semiconductor market that allows customers to reconfigure the hardware after manufacturing.
After a discussion with the company’s new management, Susquehanna analyst Christopher Rolland noted that the company’s new FPGA platform, Avant, is gathering early traction among testing customers. Management expects this platform, which is due to be launched in December, to add about $3 billion to the company’s total addressable market, taking it to $6 billion. (See Lattice Semiconductor Financial Statements on TipRanks)
Although Rolland has spotlighted Lattice’s technology, he seemed encouraged by the new management team’s vision of pulling the company out of a growth rut. The analyst notes that the team has “revamped their entire roadmap, bolstered their supply chain, and expanded into new markets.”
With these observations, Rolland reiterated a buy rating on LSCC stock with a price target of $75. He holds the 31st position among more than 8,000 analysts tracked on TipRanks. Notably, 68% of his ratings have been profitable, and each rating has generated 21.6% average returns.

Dentsply Sirona 

Dentsply Sirona (XRAY), the professional dental products and technologies manufacturer, is grappling with underperformance in both the U.S. and China as well as currency headwinds. The latest quarterly results reflected these challenges, with the company falling short of earnings and revenue expectations.
Nonetheless, Barrington Research analyst Michael Petusky reiterated a buy rating on the stock, albeit with a lower price target of $40 versus the $51 expected earlier. “We had anticipated reduced guidance for the past couple of months as macro conditions have become more challenging,” he said. (See Dentsply Sirona Dividend Date & History on TipRanks)
Ranked No. 956 among more than 8,000 analysts followed on TipRanks, Petusky has a success rate of 50% with his ratings. Additionally, each of his ratings has brought in an average return of 7%.

ICF International

ICF International (ICFI) is a global consulting services company that caters to major clients in the federal government, international governments and energy markets. The company’s marketing services segment was severely affected during the pandemic and is still undergoing a slow recovery.
However, Barrington analyst Kevin Steinke is optimistic about the company’s roadmap to fix this issue. ICF plans to “focus on the core commercial marketing service lines of business transformation, loyalty, and innovative communications.” ICF is focused on expanding its commercial businesses, solidifying its technology-based offerings and pursuing large contract opportunities. These are its long-term strategies to grow revenue and increase shareholder value.
Steinke raised his 2022 adjusted earnings per share estimate to $5.77, representing 20% year-over-year growth, up from $5.59 “to reflect the increased guidance driven by the one-time tax benefit.” (See ICF International Hedge Fund Trading Activity on TipRanks)
Steinke stands at the 417th position among over 8,000 analysts ranked on TipRanks currently, having a 54% success rate and 11.7% average returns per rating.

GlobalFoundries

Semiconductor foundry GlobalFoundries (GFS) is one of Deutsche Bank analyst Ross Seymore’s favorite stocks. The company’s latest quarterly report made Seymore all the more bullish.
It is no surprise that investor attention is currently fixed on the headwinds that await the economy in the coming months. GlobalFoundries acknowledged these obstacles and even reduced its utilization expectations for the fourth quarter, which would impact the gross margin. Nonetheless, the company still expects to be able to grow revenue in 2023. (See GlobalFoundries Inc Stock Chart on TipRanks)
Seymore reiterated a buy rating on the stock with a price target of $67. “Overall, even with our below guided 2023 estimates, we continue to believe GFS’s share price can remain resilient as co-specific drivers (unique processes, share gains via LTAs & geopolitically driven redistribution of future fabless manufacturing plans, costs cuts, etc.) offset macro headwinds,” the analyst said.
Seymore is ranked 18th among more than 8,000 analysts on TipRanks. His ratings have a 74% success rate, with each generating average returns of 22.4%.

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In the runup to the midterm elections, Democrats emphasized that Social Security and Medicare were at stake.
Even as many candidates in favor of preserving the programs won, Democrats and advocates for the programs are worried about upcoming debt ceiling negotiations.

Tom Brenner | Reuters

The midterm elections made two key federal programs seniors rely on — Social Security and Medicare — a topic of national conversation.
Now, as the final vote tally comes in — with a Democratic majority in the Senate and a Republican majority in the House of Representatives — advocates for the programs are also calling the results of the ballots a win.

The National Committee to Preserve Social Security and Medicare saw more than 70 of the nearly 100 candidates it had endorsed win, according to its president and CEO, Max Richtman.
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“Overall, I think it was a good Election Day and election week,” Richtman said. “It was positive for seniors and the programs that we care so much about.”
Some key wins, according to Richtman, included Democratic Sen. Mark Kelly in Arizona over Republican candidate Blake Masters, as well as Democratic Sen. Maggie Hassan in New Hampshire against Republican Donald Bolduc.
Both Masters and Bolduc had mentioned privatizing Medicare or Social Security during their campaigns, according to Richtman. However, both candidates walked back those comments.

Yet even as champions for preserving Social Security have been reelected or newly elected, other leaders have called for rethinking how those programs are approached.
Democrats are hoping to address the issue on their terms during the lame duck session, while the party still has control of Congress.

Democrats push back on GOP proposals

Democratic candidate for U.S. Senate Mandela Barnes is introduced at a Fish Fry to Save Social Security event on Wednesday, Oct. 19, 2022 in Milwaukee. Barnes lost the election to incumbent Republican Sen. Ron Johnson.
Kent Nishimura | Los Angeles Times | Getty Images

Republican Sen. Rick Scott of Florida has called for sunsetting federal programs every five years so Congress can reevaluate them. Republican Sen. Ron Johnson of Wisconsin has called for moving Social Security to the federal discretionary budget, which would require reauthorizing the program’s spending every year.
The Republican Study Committee’s 2023 budget also calls for some big changes, such as raising the retirement age to 70 and requiring 40 years of work. “For most people, that will lower their benefits,” said Nancy Altman, president of Social Security Works.
Even as President Joe Biden called the election a “good day for democracy,” he vowed to fight changes to the programs.
“Under no circumstances will I support the proposal put forward by Sen. Johnson and the senator from down in Florida to cut or make fundamental changes in Social Security and Medicare,” Biden said during a Nov. 9 press conference.

“That’s not on the table,” Biden said. “I will not do that.”
Nevertheless, some worry the program could be susceptible to changes amid debt ceiling negotiations.
“They have been very clear,” House Speaker Nancy Pelosi said during an election night interview with PBS NewsHour. “They’re going to use the debt ceiling vote as a way to cut Social Security.”
“They call them entitlements,” she said. “We call them insurance programs that people have paid into.”

‘No question’ today’s problems due to yesterday’s deals

President Joe Biden delivers remarks on protecting Social Security and Medicare and lowering prescription drug costs in Hallandale Beach, Florida, on Nov. 1, 2022.
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The fears that Social Security and Medicare could be at risk in those debt ceiling negotiations are partly based on past compromises, according to Richtman.
“We’ve seen this before, in 2011 and 2012, when that need to raise the debt ceiling was used to extort some pretty horrible concessions from Democrats on Social Security and Medicare,” Richtman said.
“It didn’t turn out as bad as we thought, but it did result in spending caps that hurt these programs,” he said.
Today, Social Security beneficiaries and others who seek the agency’s services notice long wait times at its field offices, through its 1-800 telephone number or via postal mail. There’s “no question” that is a result of the spending decisions made a decade ago, Richtman said.
As Democrats push to address the debt ceiling during the lame duck session, Altman said “it’s the best thing that can be done” to ensure Social Security is protected.

“I think it should be their highest priority to raise the debt limit enough so it doesn’t come up again until 2025,” Altman said.
Not everyone sees the looming debt ceiling negotiations as a vulnerable moment for the program.
“I think it’s unlikely that Social Security gets put on the chopping block in the context of the debt limit,” said Shai Akabas, director of economic policy at the Bipartisan Policy Center.
While substantive discussions around Social Security reform were missing from the political campaigns in the runup to the election, Akabas is optimistic there is opportunity for both parties to collaborate.
“There are ongoing conversations that could develop into a true bipartisan plausible reform in the near future,” Akabas said.

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Company: Envestnet (ENV)

Business: Envestnet provides wealth management services and software to the investment community. It has an excellent product with 90% retention and secular tailwinds. Envestnet was founded in 1999 by Jud Bergman and Bill Crager. Bergman was chairman and CEO of the company from 1999 through October 2019 when he was tragically killed in a car accident. Bill Crager took over as interim CEO and in March 2020 became permanent CEO.
Stock Market Value: $3.1B ($56.14 per share)

Activist: Impactive Capital

Percentage Ownership: 7.20%
Average Cost: $72.65
Activist Commentary: Impactive Capital is an activist hedge fund founded in 2018 by Lauren Taylor Wolfe and Christian Alejandro Asmar. Impactive Capital is an active ESG (AESG™) investor that launched with a $250 million investment from CalSTRS and now has over $2 billion. In just three years, they have made quite a name for themselves as AESG™ investors. Wolfe and Asmar realized that there was an opportunity to use tools, notably on the social and environmental side, to drive returns. Impactive focuses on positive systemic change to help build more competitive, sustainable businesses for the long run. Impactive will use all of the traditional operational, financial and strategic tools that activists use, but will also implement ESG change that they believe is material to the business and drives profitability of the company and shareholder value.

What’s Happening?

On Nov. 15, Impactive sent a letter to Envestnet expressing their disappointment in the company’s performance. Additionally, Impactive noted that they will consider nominating a slate of directors for the company’s next annual meeting if Lauren Taylor Wolfe, Impactive’s co-founder and managing partner, is not immediately appointed to the board.

Behind the Scenes

In many activist campaigns, it is difficult to determine who is wearing the black hat and who is wearing the white hat. Often the burden is on the activist to prove they are wearing the white hat. In this situation it is very clear that Impactive is wearing the white hat and shareholders should be putting the burden on the incumbent board to prove otherwise.

Impactive:

Owns 7.2% of common stock
Has been a shareholder for 18 months
Engaged privately with the company about a board seat five months ago before going public
Asked for only one seat on the seven-person board
Written its first public letter in its history — a long, detailed thoughtful letter
Has a strong reputation as an amicable, respected and value-creating activist

Envestnet’s board:

Owns less than 1% of common stock
Underperformed the S&P 500 by 124% during the chairman’s seven-year tenure on the board
Underperformed proxy peers by 243.5% during the same time frame
Has not added a new board member in seven years (as of the 2023 annual meeting) — except for the new CEO
Is a staggered board at a time when most companies are gravitating to good corporate governance
Paid the seven-director board $19 million over the past five years, during which time they underperformed the S&P500 by 65.5% and their proxy peers by 113.5%

Now, Impactive is in a position they do not like to be in and likely did not expect to be in – engaging in a proxy fight for board seats. They are justifiably going for a full slate of three directors on the staggered board. Two of the incumbent directors who will be targeted are a 22-year tenured director and the chairman of the company. Impactive wants board representation to get Envestnet to better align pay for performance, refocus on capital allocation and bolster long-term shareholder value.
This is one of the worst activist defense campaigns I have ever seen. Anyone with any understanding of Impactive, Envestnet’s performance and the incumbent board would know that Impactive is sure to get at least one board seat in a proxy fight. And that is one of seven — it could be the chairman who is voted off the board. Impactive offered one of eight with no incumbent losing a board seat. Moreover, Impactive is likely to get two board seats at a company like this, maybe even three.
My guess is that Envestnet’s advisors advised the board that Impactive has never commenced a proxy fight before and is not likely to do that here. Well, they could not have been more wrong. I also expect that as the company hears from its large shareholders, they will see the writing on the wall and come back to Impactive with an offer for board representation and this will ultimately settle. Taking this all the way to a vote would be a tremendous waste of shareholder money and management time to get to an outcome that is somewhat predestined under these facts and circumstances. The longer the company prolongs this fight, the more the shareholders are going to side with Impactive.  
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and he is the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments. Squire is also the creator of the AESG™ investment category, an activist investment style focused on improving ESG practices of portfolio companies. 

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