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Battered U.S. oil ETF to diversify investment in later-dated oil contracts – Financial Post

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The United States Oil Fund LP, the largest oil-focused exchange-traded product (ETP) in the country, is moving to spread out its investments in oil futures in response to extreme market turbulence, it said in a filing https://bit.ly/2XWrj3L%E2%80%8B%E2%80%8B%E2%80%8B%E2%80%8B%E2%80%8B%E2%80%8B%E2%80%8B on Wednesday.

USO said it may invest about 20% of its portfolio in crude oil futures contracts on the NYMEX and ICE platforms for June , about 50% in July, 20% in August and 10% in September contracts. The fund previously invested mainly in front-month contracts.

The fund is adjusting its portfolio in response to “extraordinary market conditions,” it said in the filing.

The move is the latest effort by USO to mitigate the blow of a historic sell-off in oil, as crude markets reel from oversupply and diminished demand stemming from the coronavirus-led slowdown in global economic activity.

By diversifying its holdings in a wider range of contracts, the fund could potentially allay pressure on its shares. Later-dated oil contracts are trading at higher prices than nearer term ones.

“What that’s designed to do is dampen the downside exposure and volatility,” said Greg Trinks, head of Americas fund investment solutions at UBS Global Wealth Management.

USO ended 10.7% lower at $2.51 on Wednesday despite front-month U.S. crude futures’ settling 19.1% higher, at $13.78 a barrel. The fund traded at a steep premium to its net asset value on Tuesday after it suspended the creation of new shares.

With Wednesday’s losses, USO has fallen for nine straight sessions and plummeted nearly 50% over the past month.

Despite the declines, the fund has continued garnering inflows from investors seeking to position for a possible rebound in oil prices. The ETP had $538 million in net deposits on Tuesday, according to Refinitiv.

Exchange-traded products are a popular way for individual investors to bet on moves in crude prices, as trading commodity futures can be difficult for retail market participants.

The turbulence in oil markets has caught some investors wrongfooted. Those holding May U.S. crude futures, for instance, saw steep losses as the contracts fell below zero on Monday. Interactive Brokers Group Inc said on Tuesday it had incurred an $88 million provisionary loss, as customer accounts with positions in the May futures triggered margin calls.

USO did not hold May futures at the time. But a persistent shortage of oil storage capacity could push down prices of oil futures again, as well as the ETPs that hold them.

“There’s a good argument to say at some point oil prices should be negative,” said David Miller, chief investment officer at Catalyst Funds. “There’s nothing ETPs can really do about that if that turns out to be the case.” (Reporting by Shariq Khan in Bengaluru and April Joyner in New York; Additional reporting by Tim McLaughlin; Editing by Shounak Dasgupta, Leslie Adler, Ira Iosebashvili and Tom Brown)

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Volkswagen closes $2.6 billion investment in self-driving startup Argo AI – Yahoo Canada Finance

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Volkswagen closes $2.6 billion investment in self-driving startup Argo AI
Signage at a Volkswagen dealership is seen in London, Britain

(Reuters) – German automaker Volkswagen AG <VOWG_p.DE> has closed its $2.6 billion investment in Argo AI, the Pittsburgh-based self-driving startup disclosed in a blog post on Tuesday.

Argo, founded in 2016 by Bryan Salesky and Peter Rander, is now jointly controlled by VW and Ford Motor Co, which made an initial investment in Argo shortly after it was founded.

Details of the VW investment, which does not include an agreement to purchase $500 million worth of Argo stock from Ford, was announced last July.

VW’s agreement includes the transfer to Argo of its Munich-based Autonomous Intelligent Driving unit, which boosts Argo’s employment to more than 1,000, according to Salesky.

Last week, VW disclosed that its supervisory board had approved several projects in a multibillion-dollar alliance with Ford that also was announced last July.

Ford created Ford Autonomous Vehicles LLC in 2018, pledging to invest $4 billion until 2023 and had sought outside investors to help share the spiraling cost of developing autonomous vehicles.

(Reporting by Paul Lienert in Detroit; Editing by Nick Zieminski)

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Volkswagen closes $2.6 billion investment in self-driving startup Argo AI – TheChronicleHerald.ca

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(Reuters) – German automaker Volkswagen AG has closed its $2.6 billion investment in Argo AI, the Pittsburgh-based self-driving startup disclosed in a blog post on Tuesday.

Argo, founded in 2016 by Bryan Salesky and Peter Rander, is now jointly controlled by VW and Ford Motor Co, which made an initial investment in Argo shortly after it was founded.

Details of the VW investment, which does not include an agreement to purchase $500 million worth of Argo stock from Ford, was announced last July.

VW’s agreement includes the transfer to Argo of its Munich-based Autonomous Intelligent Driving unit, which boosts Argo’s employment to more than 1,000, according to Salesky.

Last week, VW disclosed that its supervisory board had approved several projects in a multibillion-dollar alliance with Ford that also was announced last July.

Ford created Ford Autonomous Vehicles LLC in 2018, pledging to invest $4 billion until 2023 and had sought outside investors to help share the spiraling cost of developing autonomous vehicles.

(Reporting by Paul Lienert in Detroit; Editing by Nick Zieminski)

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Estoppels are critical in a CRE investment purchase – Real Estate News EXchange

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If you’ve purchased a commercial or residential condo, you would have encountered an estoppel certificate.

There are many reasons for obtaining a condominium estoppel (the information I discuss here is applicable only to single- and multi-tenant investments, excluding multifamily rentals):

* they provide insight into the project’s reserve fund;

* illustrate if there are any unpaid contributions or arrears;

* and determine if its bylaws and policies are in good standing.

Estoppels are just one of many due diligence items I encourage buyers to ask for.

Let’s look at the importance of obtaining estoppel certificate(s) during your investigation of an investment property.

A recent example

A landlord and tenant negotiated a tenant improvement allowance which was to be paid to the tenant once they had completed their improvements. The tenant was a national company with a few different departments handling various elements of the lease administration.

The tenant did complete the work but somehow forgot to thereafter ask for the agreed-upon amount of cash. The property was subsequently sold to another investor.

The investor did not obtain an estoppel certificate from the tenant during its due diligence period.

Sometime after the sale, the tenant realized they had failed to request the tenant improvement amount at the appropriate time.

Had the buyer requested an estoppel certificate from the tenant at the time of purchase, they would have insulated themselves from this problem.

How open do you think the previous owner is to paying this significant sum of money after the sale?

The tenant improvement allowance was amortized into the lease, which increased the tenant’s lease payment.

The buyer does not feel obligated to pay it, because they paid more for the property due to the cap rate applied to that increased rent.

Elements of an investment property estoppel certificate

The certificate must be executed by the tenant and may include, but is not limited to, the following declarations:

* the lease constitutes the entire agreement between both parties;

* the amount of security deposit held;

* any additional signage rent;

* there is no litigation outstanding between the two parties;

* there are no existing lease defaults by either party;

*  any improvements required to made by the landlord have been completed;

*  any amount agreed to be paid by the landlord for tenant improvements has been paid.

We use estoppel certificates that can be one or several pages long.  It typically depends on the complexity of the transaction, number of tenants involved and the sophistication of the buyer.

Getting an estoppel in place

A landlord typically does not want to go through the work and disturb the tenants until the buyer has removed all conditions.

A buyer doesn’t typically want to remove conditions until the estoppels have been provided.

A remedy can be to provide the certificates after the buyer has removed conditions, provided there is a process agreed to if something surfaces within the estoppel that requires a resolution prior to completion of the deal.

There are many issues that can surface if estoppels are not included within a commercial real estate investment sale.

If a seller is reluctant to allow this requirement to be written into the purchase agreement, treat this as a red flag.

It could be in your best interests to walk away before investing your time and money.

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