Seeking Alpha

VogelHood Research's  Instablog

VogelHood Research
Send Message
VogelHood Research is a Washington, D.C.-based policy analytics and research firm built specifically to serve the investment and corporate world. We provide analysis to hedge funds, private equity, institutional investors, and corporate stakeholders. Using proprietary, data-driven models, we... More
My company:
VogelHood Research
View VogelHood Research's Instablogs on:
  • Election 2014: The Republican Race For The Senate

    Broad Consensus

    VogelHood Election Coverage

    The Republican Race for the Senate
    When voters head to the polls on November 4th, control of the Senate is at stake. Currently, Democrats hold 55 seats (including two independents who caucus with them) and Republicans hold 45 seats. For Republicans to take control of the Senate, they need to pick up six seats on election day. Currently, Republicans have three projected 'safe' seats that they will pick-up: Montana, West Virginia and South Dakota.

    Ten seats are currently considered "toss-up" races. Based on with the latest average of polls, Republicans are on track to pick-up five seats, but lose one. Kansas, a seat currently held by Republican Sen. Pat Roberts, has emerged as a toss-up race. Roberts, a three-term Senator, is under attack for losing touch with constituents back home and is currently down in the polls.

    Also note, Louisiana and Georgia require a run-off if no one candidate gets more than 50 percent of votes cast. In the event that a runoff is needed, Louisiana is scheduled to to hold it's runoff election on December 6, 2014 and Georgia is scheduled for January 6, 2015. Therefore it is possible that control of the Senate may not be decided until the results of the run-off are complete.

    (click to enlarge)Poll of Polls

    Toss-Up Races
    These are the most competitive races; either party has a good chance of winning. Senators with names in parentheses currently hold the seat in contest. If no Senator is listed, the seat is an open race.

    (click to enlarge)Toss-Ups

    Oct 10 12:19 PM | Link | Comment!
  • The Zillow/Trulia Regulatory Roadblock

    Online Realty Market Expands

    On July 28, 2014, Zillow, Inc. (NASDAQ:Z) announced that an agreement was made to acquire Trulia, Inc. (TRLA) for $3.5 billion in a stock-for-stock transaction. Both companies have agreed to the terms of the transaction and, pending regulatory approval, the transaction should be complete in 2015. Both Zillow and Trulia generate a majority of their revenue from advertising sales to real estate professionals. Both of these companies have limited end user overlap, despite Zillow's reported 83 million unique mobile and web users, and Trulia's reported 54 million monthly users across its own sites and mobile apps. The merger of these two online-based companies will encompass a total of 61 percent of internet users for online real estate search websites.

    On July 28, 2014 the National Association of Realtors (Realtors) issued a public statement in response to the merger announcement. The Realtors' President Steve Brown stated, "This proposed merger doesn't change anything. This is just one of many online resources available to consumers. The Realtors remains central to the real estate transaction, and is committed to making sure that remains the case, regardless of the moves of the two websites, the realtors themselves remain integral to the process of buying and selling a home."

    On August 15, 2014, The New York Post reported that the Realtors want the Federal Trade Commission to block the merger of Zillow and Trulia. Should the Realtors decide to formally oppose the merger, they are well-positioned to influence regulators and gain support of members of Congress.

    On September 9, 2014, The Wall Street Journal reported the companies announced last week that the FTC made a "second request" for information about the merger. Traditionally, a "second request" is an indication that a more detailed examination of the merger is required to ensure that it meets antitrust requirements. This process could take several months.

    For any investor, it's important to understand that the review period provides a critical window for Washington influencers to tip the scale for or against the merger. A look at Washington engagement can be helpful in determing potential regulatory outcomes ahead.

    Stakeholder Washington Engagement Analysis

    Thus far in 2014, Zillow has spent $60,000 lobbying members of Congress. The company retains Monument Policy Group as their primary lobbying firm representing them on issues including: advertising, housing, real estate/land use, and copyright/patent and trademark areas. Trulia has not filed any lobbying disclosures in 2014. The Realtors have spent $23,644,253 on lobbying members of Congress and the executive branch so far in 2014. This expenditure was directed predominantly towards their in-house lobbying operation. The Realtors also retain QGA Public Affairs, RR&G LLC, PricewaterhouseCoopers, and Holland & Knight, to lobby on real estate, housing, taxes, housing, insurance, federal budget and appropriations, and copyright/patent and trademark issues. The Realtors have been a lobbying powerhouse in Washington for over a decade.

    MERGERANX™Analysis on Potential Zillow/Trulia Merger

    Based on a MERGERANX™ analysis of the announced deal between Zillow, Inc. and Trulia, comparative advantage ratios indicate that the merger stands to face significant scrutiny from regulators.Should the Realtors decide to take action against this merger, Zillow and Trulia will likely face antitrust regulation issues.

    In-Depth Analysis: Zillow's Lobbying Operation

    Since 2007, Zillow has retained Monument Policy Group as their primary lobbying firm, spending an average of $50,000 per year. In the 113th Congress, Monument Policy Group has lobbied on four bills on behalf of Zillow, including the Innovation Act (H.R. 3309), the Housing Finance Reform and Taxpayer Protection Act of 2013 (S.1217), the Patent Transparency and Improvements Act of 2013 (S.1720), and the Jumpstart GSE Reform Act (S.563). Zillow does not have a Political Action Committee.

    At Monument Policy Group, 10 individuals handle the Zillow account, 9 of whom have previous government experience. This firm's focus is largely on homeland security, rather than housing issues or antitrust.

    • Jane Alonso has experience as a former Congressional Staffer for Sen. Susan Collins (R-ME). Alonso's focus is on natural resources, energy, green building, defense, global health, emergency, communications, information technology, and homeland security issues.
    • Kimberly Ellis was a Legislative Director under Rep. Kevin Brady(R-TX), where she covered tax, trade, and economic policy, especially on issues related to innovation and job creation. Ellis also has previously worked on health care, aviation, and energy and natural resource issue.
    • Jessica Herrera-Flanigan, a former Federal Prosecutor and a Congressional Advisor of the House Committee on Homeland Security, under Chairman Bennie G. Thompson (D-MS). Herrera-Flanigan covers technology, security, and sports/fitness policy.
    • Andrew Howell has no previous government experience, but works on issues of homeland security and international trade. Howell has served as a congressional witness on topics such as cargo security and has overseen the implementation of liability protection programs at the Department of Homeland Security.
    • Ashley Hoy previously served as Director of Coalitions for Sen. Lisa Murkowski (R-AK) on the Senate Republican Conference, as well as Rep. Roy Blunt (R-MO) in the House Republican Whip's Office.
    • Katharine Lister has experience working on Capitol Hill working on topics including trade, tax, health care, intellectual property, energy, and technology. Lister served as Chief of Staff to Sen. Maria Cantwell (D-WA) and she was the Department of Commerce's Deputy Chief of Staff.
    • John P. Mulligan worked on Capitol Hill, serving as Legislative Director and Chief of Staff to Rep. Adam Smith (D-WA), where he managed the Congressman's HASC technology and telecommunications and House New Dem Coalition activities.
    • Ryan Spangler was on Vice President Joseph Biden's staff during his tenure in the Senate, where he served on the Senate Judiciary and Foreign Relations Committee. Spangler covers transportation, public lands, travel, housing, financial services, and sports.
    • Rich Thomas formally worked for Sen. Bill Pascrell, Jr. (D-NJ). Thomas covers international trade, intellectual property, customs, taxation, and homeland security.
    • C Stewart Verdery, Jr. focus is on technology and telecommunications, homeland security and law enforcement, international trade and commerce, and intellectual property issues. While on Capitol Hill, Verdery served as General Counsel to Sen. Don Nickles (R-OK), Counsel to Senate Judiciary Committee Chairman Orrin Hatch (R-UT), and Committee Counsel for Chairman John Warner (R-VA). Verdery also served as Assistant Secretary for Homeland Security during the Bush Administration.

    In-Depth Analysis: The Realtors Lobbying Operation

    The Realtors retain a substantial in-house lobbying team of 21 lobbyist, 5 of whom have previously held government positions.Since 2001, the Realtors have retained QGA Public Affairs as their outside lobbying representation in Washington, spending an average of $380,000 per year. The Realtors also retain PricewaterhouseCoopers, Holland & Knight, and RR&G LLC. Collectively, these lobbying firms include 16 lobbyists, 12 of whom held previous government positions.

    In the 113th Congress, on the behalf of The Realtors, these retained lobbying firms have collaboratively lobbied on 126 bills. Compared to the engagement of other major companies and trade associations in Washington, this number is extremely high.

    Thus far in 2014, the Realtors PAC has contributed $3,298,336, of which $2,178,955 went directly to federal candidates.

    The Realtors spend the second largest amount lobbying Congress, behind only the US Chamber of Commerce. The association has spent $38,584,580 in 2013, $41,464,580 in 2012, and $22,355,463 in 2011. Other associations that are also top lobbying spenders, compared to the Realtors, include the US Chamber of Commerce (USCoC), National Cable & Telecommunications Association (NCTA), American Hospital Association (AHA), American Medical Association (AMA), and the National Association of Broadcasters (NAB).

    (click to enlarge)

    While the Realtors may be the second ranked lobbying spender in Washington, they do have challenges in Congress. On August 21, 2014, Rep. Paul Ryan (R-WI) endorsed Ways and Means Committee Chairman Rep. Dave Camp's (D-MI) proposal to scale back the popular mortgage interest deduction. This proposal would reduce the amount of deductible mortgage debt from $1 million to $500,000, which Rep. Ryan stated, "made a lot of sense." Rep. Ryan's endorsement of this proposal will be influential because he is likely to become the next Chairman of the House Ways and Means Committee. The fact that Ryan is considering such a proposal indicates that the Realtors are not the lobbying powerhouse they once were. However, they still have clout among many members of Congress.

    Looking Ahead

    Investors should watch during the next 90 days for any push back on the merger. The Realtors are planning to have their annual series of Realtors Governance Meetings on November 5-10, 2014. The conference could serve as a potential window for further comments or official statements regarding Zillow and Trulia and their potential merger agreement. It's also important to keep in mind congressional catalysts. Comments made by Senate Judiciary Chairman Patrick Leahy (D-VT) and Antitrust Subcommittee Chair Amy Klobuchar (D-MN) should be taken seriously.

    Tags: Z, Z
    Sep 15 10:13 AM | Link | Comment!
  • A 'Welcome Back To Congress' For Wall Street

    Congressional Agenda: September 2014

    • Context: Congress returns to work in Washington on September 8th following a five week congressional recess. The House and Senate are expected to be in session for two or three weeks to address remaining must-do legislation prior to the November 4th midterm election. Must-do items include 1) Fiscal Year (FY) 2015 stop-gap spending bill, 2) reauthorization of the Export-Import Bank, and 3) stop-gap extension of Internet access tax moratorium.
    • Duration Collar: Both the House and Senate are scheduled to return on September 8th. Adjournment could be as soon as September 19th.
    • Congressional Catalysts: Look for additional comments from Senate Majority Leader Harry Reid (D-NV), Speaker of the House John Boehner (R-OH) or House Majority Leader Kevin McCarthy (R-CA) for further scheduling announcements.

    (click to enlarge)Welcome Back to Congress

    Congress expected to address "must do" legislation
    Eager to avoid tough votes prior to the November election, both the House and Senate are expected to devote a bulk of their respective chamber's floor debate time in September to passage of must-do legislation.

    • FY 2015 Continuing Resolution: The federal government's fiscal year comes to a close on September 30th. In order to avoid a shut-down of the federal government, Congress must pass legislation to keep the government's operations running past this date. Under the regular process, Congress is supposed to pass 12 individual year-long spending bills to fund agencies and their programs. However, Congress rarely meets this deadline. Instead, Congress is expected to pass a stop-gap measure, known as a Continuing Resolution, or "CR," which will keep the government up and running though December. Buying them more time to hash out the details of comprehensive FY 2015 spending legislation to be considered during the lame duck session after the midterm November election.
    • Ex-Im Bank Reauthorization: The Export-Import Bank's charter also expires September 30th. Legislation is needed to keep the bank operating in order for Boeing, Lockheed Martin, Honeywell, Caterpillar, and others to continuing benefiting from the bank's services. Some, including conservative Republicans, have targeted the Ex-Im Bank as an agency of corporate welfare. While a lapse in reauthorization will not have the wide ranging impact of a government-wide shutdown, it would impact operations of major U.S. exporters. A full reauthorization in September is unlikely, but a short-term extension has a good chance of making its way to the President's desk. $BA, $GE, $AMAT, $CAT, $F, $UTX, $ORB, $ABB, $DAL, $MDR
    • Internet Tax Freedom Act: On November 1, the long-standing moratorium against Internet access taxes expires. In order not to be seen as enabling tax increases prior to an election, a majority of members in both parties support a permanent extension of the ban. The House has already passed a bill to do this, but a coalition of Senators wanting to use the legislation as a vehicle for more the controversial remote sales tax bill, known as the Marketplace Fairness Act, have bogged down progress in the Senate. Senate Majority Leader Harry Reid (D-NV) announced in July that a short-term extension of the access tax ban will be considered in September to allow more time to work out details on the remote sales tax issue. $T, $VZ, $CMCSA, $AMZN, $CHTR, $EBAY, $TWX, $HPQ, $FTR, $CTL, $TMUS

    House and Senate committees to address hot-button election issues
    While unlikely to result in passage of legislation by the full House or Senate this fall, congressional committees are expected to have a full schedule for the short time that Congress is in session.

    • Inversions: The slew of companies seeking corporate inversions has prompted Democrats to call for both legislative and executive action to curb the practice. Senate Finance Committee Chairman Ron Wyden (D-OR) has announced a bipartisan working group to draft an inversions fix separate from comprehensive corporate tax reform, which will not be underway until 2015. The Senate Finance Committee will most certainly hold a committee mark-up to vote on Wyden's proposed short-term plan. Sen. Chuck Schumer (D-NY), a member of the committee, is also anticipated to be active in the mark-up. $WCRX, $MDT, $COV, $BKW, $THU, $ABT, $MYL, $ABBV, $SHPG
    • Drug Pricing: The Senate Finance Committee may hold an oversight hearing as a follow-up to its July bipartisan letter to Gilead, requesting documents related to its acquisition of Pharmassett. Outrage by patients, insurance, and government officials over the $84,000 price tag of the Hepatitis C treatment could reach an apex in September. The deadline for the documents to be turned over is September 9th, and the Finance Committee will not want to pass up an opportunity to publicly examine the findings of the documents prior to the midterm election. $GILD, $ESRX, $UNH

    Individual chambers will also consider election messaging legislation

    • Energy: In addition to must-pass items, the House has announced its intention to vote on a comprehensive package of energy-related bills, including Keystone XL legislation and bills to curb EPA regulations. $ENB, $SU, CNQ, $MEG, $BTE, $CVE, $IMO, $XOM, $
    • Inversions: Following the expected successful passage of inversions legislation from the Senate Finance Committee, the full Senate may vote on the legislative package. However, with limited days in town, must-pass items will take priority. As a result, the inversions messaging bill could be limited to a committee vote. Even if the full Senate does debate inversions, legislation is unlikely to move forward without the 60 votes needed to end debate.
    • Iraq / Syria: Increasing U.S. military presence in Iraq could lead to congressional votes on authorization of troops in Iraq. Furthermore, the use of force against ISIS in Syria would likely require congressional authorization.
    Sep 05 11:39 AM | Link | Comment!
Full index of posts »
Latest Followers


More »
Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.