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Despite Key Departures at Tesla, Loyalist Investor Expands Stake

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A major institutional investor in Tesla increased its stake in the company, according to filing data. Tesla’s second largest institutional shareholder is Edinburgh-based Baillie Gifford & Co., just behind T. Rowe Price. Baillie Gifford purchased 108,931 of the company’s shares during the fourth quarter of 2018 – giving the asset manager over 13.2 million shares, or 7.64% equity ownership of Tesla. Baillie Gifford is also a major investor in NIO, another listed electric car company.

Tesla’s CFO Deepak Ahuja has stepped down from the firm. Zack Kirkhorn, a first-time public company CFO, will replace him, amid investor fears that he does not have the experience to manage the US$ 53 billion enterprise. The departure of Ahuja sent shares down briefly, but they ultimately recovered. Unfortunately for Tesla, the brain drain adds to what many are recognizing as a pattern at the company. Tesla had already recently lost Chief Accounting Officer Dave Morton, former CFO for Seagate Technology. Gabrielle Toledano, director of human resources, chose not to return to Tesla during her leave of absence. The electric car maker’s ongoing struggle to retain leadership, going back several years, is a concern for investors and employees alike. Other key leaders with high-profile exits include Eric Branderiz, Susan Repo, and Jason Wheeler. Bearish investors have raised several other items of concern to investors, including Tesla’s upcoming convertible bond debt payment. It will mature in March 2019. Tesla responded through a letter that there was “sufficient cash on hand to comfortably settle in cash our convertible bond.” In sum, Tesla has US$ 1.5 billion in convertible debt maturing this year, with a balloon payment of US$ 920 million of that amount due next month. There has also been a round of layoffs, representing 7 % of the workforce.

Tesla is also facing heat from New York State Senator Tim Kennedy after former Tesla employees racked up complaints against the car manufacturer’s Buffalo plant. The complaints include slow production of Tesla’s solar roof panels and lack of urgency and supervision at the facility. The solar power plant in Buffalo was hooked up with US$ 750 million in New York state taxpayer funds, a cornerstone part of New York Governor Andrew Cuomo’s economic development program.

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China’s Central Bank Creates Macro-Prudential Management Bureau

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The People’s Bank of China (PBOC) created a new department to oversee and attempt to eliminate financial risks to the system. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Like its U.S. Peers, Legg Mason Seeks to Trim Costs

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Legg Mason Inc., a Baltimore-based asset manager, has announced a reduction in workforce as is prepares to streamline operations and save money. Legg Mason’s leadership commented that assets under management fell 5 % year-on-year. Legg Mason currently manages US$ 727.2 billion (as of December 31, 2018), which is down from the previous US$ 767.2 billion. CEO Joseph A. Sullivan noted that a global operating platform will centralize fund administration, IT, and other departments that work with affiliates. Sullivan did not discuss the number of layoffs expected, or specify which areas would be impacted. Legg Mason disclosed they planned to close a quarter of its exchange-traded funds in March 2019. These three ETFs include a U.S. strategy, emerging markets, and a developed markets strategy outside the U.S. However, these funds run around US$ 28 million in assets under management.

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Monetary Authority of Singapore Establishes Corporate Governance Advisory Committee

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On February 12, 2019, the Monetary Authority of Singapore (MAS) revealed the creation of a Corporate Governance Advisory Committee (CGAC). CGAC was formed to advocate for good corporate governance practices among listed companies in Singapore. Bobby Chin, Director of Singapore Telecommunications Limited, will be the Chair of CGAC. According to a MAS press release, “CGAC will identify current and potential risks to the quality of corporate governance in Singapore.”

MAS formed the Corporate Governance Council (Council) in February 2017. The Council was dissolved after it pushed out a publication of its final recommendations on August 6, 2018.

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