Levi Strauss 2021 Investor Call

Levi Strauss aka LS&Co. held an investor call on April 21, 2021. Most of the call involved LS&Co. executives pontificating on politics and social issues. We don't need NBA star Michael Jordan to remind us Republicans buy jeans, too, but LS&Co.'s real problem is political hubris.

Levi's, on Georgia's voter ID controversy: "Voting is not a partisan issue. It is an American issue... Democracy only works if every eligible voter votes... Democracy needs to work around free, fair, and equitable access to the polls. More than 350 bills [are being proposed across the country that intend to suppress voting accessibility]... this proposed legislation is racist. By the way, I've never said anything about voter ID." 

[If you're confused, I don't blame you. Why oppose a proposed law without actually mentioning the specific parts you oppose?] 

Levi's, on gun legislation: "Gun violence in America is tearing the country apart... Over 90% of Americans support background check legislation. Business leaders have a responsibility to serve their customers and their communities." 

[His full response included remarkably specific statistics. In other news, according to a poll I just paid someone to do, over 90% of thinking human beings oppose Levi's giving canned, general answers to complex issues.] 

PETA, an organization against animal abuse, asked about Levi's use of leather patches. Levi's said the majority of its patches are non-leather.

As far as political discussions go, this is top shelf, gold tier gibberish. The person answering questions wasn't an elections lawyer but still assumed familiarity with different states' legislation. Worse, his level of statistical specificity would cause a pessimist (or an astute marketing firm) to believe most of the questions were corporate-sponsored plants--except for the parts lacking sense, such as demurring on voter ID. 

Regarding voting, the Levi Strauss Foundation issued 13 million USD in "grants to organizations and individuals working to protect the civil liberties of vulnerable communities, expand voter participation and access and support the well-being of workers in our supply chain." (pp. 4) 13 million USD should get you better legal advice, but as it stands, Levi's has rendered its corporation into a de facto marketing arm of the Democratic Party, thus alienating about half of the country.

I probably don't have to tell you California, home of Levi's HQ, is a de facto one party state, where every single state political office is controlled by the Democratic Party. If there's one way to guarantee biased feedback, it's living in a politically homogeneous state that deems different-minded people racist. (Michael Jordan, who took a more measured approach, lived in North Carolina, which has wavered between Republican and Democratic state control.) 

"It struck me as notably ironic that Southerners could despise blacks so bitterly and yet live comfortably alongside them, while in the North people by and large did not mind blacks, even respected them as humans and wished them every success, just so long as they didn't have to mingle with them too freely." -- Bill Bryson [The Lost Continent, paperback, pp. 63 (1989)] 

The tragedy of Levi's executive team isn't alleged political bias--it's their obliviousness to the fact their comments overshadow the company's truly admirable actions. For example, Levi's is adapting well to e-commerce. It offers "Buy Online Pickup in Store" as well as "Same-Day Delivery and Appointment Scheduling." Its "ship-from-store capability" is operational in USA and has "expanded to Canada, the United Kingdom and Germany." Levi's direct-to-consumer business--basically, direct online sales vs. direct brick-and-mortar sales--"reached 39% of revenues." Levi's also reduced its CEO's salary "by 50% and other executive salaries by 25% for four months as part of [COVID19] cost reductions and cash saving measures." (pp. 33, proxy statement) There's more to praise, including the company's history catering to blue-collar workers, but why bother, unless you're a Democrat? 

Levi's claims its "brand heritage and authenticity is unmatched." I agree. Absolutely no other apparel company is more authentic when it comes to pablum and group-think. When shoveling political manure, be sure to wear Levi's jeans. For everything else, consider 7 for All Mankind (the most comfortable pair of jeans I own), Wrangler (Brett Favre's jeans), or Columbia's Silver Ridge or Royce Range pants (founded by a German refugee). 

© Matthew Rafat (April 2021)

Disclosure: I own an insignificant number of LS&Co. (LEVI) shares. I also worked as a Levi's contractor in HQ's compliance/legal department. One day, Levi's invited police and the FBI to a recruiting event on its ground floor. After one of the FBI recruiters demanded my name after I mentioned Hoover's spying on MLK, I walked away, then returned to give him an extended one-finger salute. Security escorted me out the same day without an investigator bothering to contact me. Maybe Levi's is politically progressive except when it comes to protecting individuals against the FBI?

What about honesty? During the investor call, Levi's falsely claimed there were no further questions, despite the fact I asked a question. See screenshot below, showing submitted question one minute into the meeting. When I allege some or all of the questions Levi's publicized were planted by a marketing firm, I'm not entirely speculating. I left a voice mail for Levi's attorney Seth R. Jaffe after the investor call, and as of April 26, 2021, I've received no response.  

Bonus: Voting is not as straightforward as it seems. Can someone moving from California to North Carolina vote in an election to be held in one week? Can someone who has had months to register as a voter--allowing the state to verify his or her state residence--just show up to the polls on election day, show ID, and vote? If so, how do poll workers know if the ID is fake? What prevents a non-registered voter from showing state ID and voting multiple times at different voting booths? If registration is required, how many times does a voter need to register? Once or annually? How many months in advance is reasonable to allow a voter to register? What documents does the voter need to prove state residence? Is a utility bill too much? What if the voter rents a private room and does not pay for utilities directly? Does a voter need to prove a substantial impediment before being able to vote by mail? If anyone can register as an "absentee" voter, then does the voter need to mail the ballot individually or can s/he have someone else do it? Is a signature enough to prevent fraud on a vote-by-mail ballot? If so, what prevents community organizers from gathering ballots of local people they assist and doing the voting and mailing for them? Finally, why should the voting procedures of a de facto one-party state like California be anyone's preferred model?

Bonus: civil rights hero Michael Schwerner was wearing blue Wrangler jeans when he was murdered by the KKK. (See MIBURN files, Part 5 of 9, pp. 283) 

Chauvin and Floyd: Two Men America Failed

Today, former Minneapolis police officer Derek Chauvin was convicted of three counts of unintentional homicide against George Floyd. That such a tragic event occurred in a city with a black police chief and a black federal Representative indicates racism may not be the most culpable co-conspirator. Already, most Americans have forgotten the other three officers at the scene, only one of whom was white: J. Alexander Kueng, Thomas Lane, and Tou Thao. (Thao was sued in federal court in 2017 for unreasonable force, causing a 25,000 dollars taxpayer-funded settlement.) All officers involved in Floyd's homicide were low-level patrolmen--not detectives, not sergeants, and not lieutenants. After 19 years on the job, Chauvin was doing the same police work as someone hired one week prior. Had I less education, I would say Chauvin was a sh*thead working a sh*t job in a sh*t area. 

Floyd was no role model, either. To minimize prejudice, the jury could not hear Floyd's prior convictions, including a guilty plea for aggravated robbery with a deadly weapon. Such imposed ignorance was reasonable given the lack of nexus between Floyd's death and his prior conduct, and I highlight Floyd's criminal record to show both men have more in common than one might assume. Chauvin, too, has a record: eighteen complaints, two reprimands. Chauvin is the product of a divorced home; Floyd was raised by a single mother. Chauvin is now divorced; Floyd was never married. Both men attended community colleges, then third-tier public universities. Both were in their mid-forties the day their paths crossed. Incredibly, they once had security jobs at the same nightclub, though no reason to interact, as one worked inside and the other worked outside. ("You had the house Negro and the field Negro.") If Floyd's death was tragic, then so was Chauvin's life: "'Nineteen years on the street is a long time, period,' said former MPD Chief Janeé Harteau. And 19 years in mostly the same place on the same shift is too long.'" Regardless of creed or color, we should be able to agree: no one, given a choice, would want the lives of these two men, which conveys a failure broader and more encompassing than race. 

On the contrary, who doesn't admire Joe Elsby Martin of LMPD or Ferdinand Alcindor, Sr. of NYPD? It was Officer Martin, a white man in segregated Louisville, who introduced Cassius Clay to boxing, and then presumably to the white lawyers who would represent Muhammad Ali. It was Officer Alcindor who fathered and helped raise the boy who would become UCLA graduate, NBA Hall-of-Famer, and author Kareem Abdul-Jabbar. Who invented Spock and the Vulcan philosophy of "infinite diversity in infinite combinations"? That would be Gene Roddenberry, former LAPD officer, whose father worked for LAPD. 

Sadly, despite past luminaries, NYPD and LAPD are now recognized as two of America's most corrupt police departments. Multiple DOJ consent decrees, including one mentioned in Christopher Dorner's "manifesto," have been entered against them. As for Louisville Metro PD, it became infamous last year when officers shot and killed a sleeping (and innocent) Breonna Taylor in her bed. How did police departments morph from admiration to contempt on the same timeline that removed de jure segregation while subjecting police to greater oversight? Logically, the only explanation is that segregation, on a fundamental level, never changed, and judicial oversight failed to counter police unions' political influence. 

“You think about the imposition of Jim Crow laws,” [Kirsten] Delegard said, referring to laws and customs in the post-Civil War South that separated black people from white. “It’s not just in the South, it’s everywhere.” -- from MinnPost article by Greta Paul (2019) 

In the 1993-94 school year, less than 1% of Black students in the Minneapolis region attended highly segregated public schools--where 90% or more of the student body was not white, according to an NBC News analysis of data from the National Center for Education Statistics. Almost three decades later, in 2018, 25% of the region's Black students were attending such schools. -- NBCNews report (2020)

"Historian and author Richard Rothstein has studied segregation in education and housing in the United States for over 50 years, and in his book, The Color of Law, he shows that our segregated society is not the result of private activity or individual bigotry, but rather is a product of explicit government policies at the local, state, and federal levels..." -- Jeffrey Sachs

Indeed, an online search for "Minneapolis segregation" generates numerous links, each more disconcerting than the last. According to professor Myron Orfield's research, in 2015, low-income black residents in Minneapolis were 10 times more likely as Portland's black residents and over 5 times more likely as Seattle's black residents to live in high-poverty tracts. Read that again: we are referencing differences of 1,000% and 500+%. Oh, that black Representative I mentioned earlier? She's one of eight Minnesotan Representatives, and all seven of her colleagues are white.

America has a segregation problem resulting from the majority's desire to manage slaves after the Civil War. Racism is the effect, not the cause, of policies put in place by real estate agents, lawyers, judges, mayors, and police chiefs in response to free black movement. As long as America talks about race without fixing segregation, there will be other George Floyds and more Derek Chauvins. Both men are playing the same parts their ancestors played, a poor slave and a working slave, neither of whom was ever in control of his destiny. There is more than one tragedy here, but to see it, you must first admit every American is a part of it. 

© Matthew Rafat (April 2021)

Bonus: "Historically, the Chinese Exclusion Act of 1882 banned Chinese laborers from coming to the United States. Although the act was repealed in 1943, Chinese immigrants were restricted until 1965, when the National Origins Formula was abolished. Japanese Americans were interned in camps during World War II. Ms. Owyoung’s grandmother was not allowed to live outside Chinatown in San Francisco, and when the family moved to Oakland, it was prohibited from buying property in certain areas." -- Christian Science Monitor, by Francine Kiefer (April 20, 2021)

Review of Ault Global's 2021 Investor Call

If I didn't know any better, I'd guess Ault Global Holdings (DPW) was a money laundering operation hiding in plain sight. With a portfolio of businesses tied partly to Bitcoin mining; the military industrial complex; and assets in the United Kingdom, USA, and Israel, the set-up appears ripe for accounting shenanigans. 

On an April 15, 2021 investor call, executives sounded upbeat and aboveboard, focusing on the company's strong balance sheet and Bitcoin mining operations. At one point, a speaker compared Ault Global to Riot Blockchain (RIOT), indicating Ault's aspirations. Though Ault had issues when it first began mining Bitcoin, it has since bought a datacenter space where it owns a 17,000 square foot facility on 34.5 acres. Ault is not selling Bitcoin mined in Michigan, a different strategy than its Indiana operations. (No explanation was given for the different approaches.) In addition to the businesses already mentioned, Ault is also involved in electric vehicle chargers and New Zealand's Naked Brands Group Ltd.  (Interestingly, NAKD also touts its financial strength: "Naked currently is in a very strong financial position due to capital raised from shareholders in readiness to deploy its new strategy of developing a world class e-commerce lingerie and intimates retail platform.") 

During the Q&A session, the company provided mostly generalities. For example, it would not comment on EV charger sales or its pipeline. It did not answer a question regarding how its EV chargers differed from competitors. It had no comment on questions relating to its NAKD investment, saying it was a "passive investor." 

As a value investor, I know Amazon and Bezos changed everything by showing profits matter less than attaining a dominant technological standard. It appears the Bitcoin, Coinbase (COIN), and blockchain aficionados believe they are on the verge of attaining a new dominant technological standard. I have my doubts. Then again, as a value investor, I have been on the outside looking in for at least a decade. 

© Matthew Rafat (April 2021) 

Disclosure: I own insignificant amounts of DPW and NAKD but my positions may change at any time. 

Update, June 2021: from Ault's "definitive proxy statement," page 8: 

"Coolisys' innovative charging solution can produce a full charge for an EV with a 150-mile range battery in just 30 minutes... Coolisys EVSE series can charge virtually any type of electrical vehicles..." 

From page 63: "On December 31, 2020, we had cash and cash equivalents of $18,679,848."