Tag: business news

Hasbro laying off 1,100 workers as weak toy sales persist into holiday season

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Hasbro is laying off about 1,100 employees as the toy maker struggles with soft sales that have carried into the holiday shopping season, according to a company memo obtained by CNBC.

Hasbro had about 6,300 employees as of earlier this year, according to a company fact sheet.

Shares of the company fell more than 2% Tuesday. Rival Mattel’s stock also slipped.

“We anticipated the first three quarters to be challenging, particularly in Toys, where the market is coming off historic, pandemic-driven highs,” CEO Chris Cocks said in the memo. “While we have made some important progress across our organization, the headwinds we saw through the first nine months of the year have continued into Holiday and are likely to persist into 2024.

Hasbro, which already laid off hundreds of employees earlier this year, had warned in October that trouble was on the horizon. In the company’s most recent quarterly earnings report, Hasbro slashed its already-soft full-year outlook, projecting a 13% to 15% revenue decline for the year.

Popular toy brand sales had dropped significantly, Hasbro also said in the October quarterly report. Popular brands like My Little Pony, Nerf and Transformer had fallen 18% at the time, due to “softer category trends.”

Hasbro’s stock was down nearly 20% through Monday’s close.

Hasbro competitor Mattel had also warned of soft sales. Yet Mattel’s stock is up about 6% through Monday, powered a great deal by the box office success of the film “Barbie.” That’s still behind the 17% gain posted by the S&P 500 so far this year, though.

Retailers overall could be in for a tepid holiday season, and toys saw lower discounts for consumers when compared to discounts a year ago.

Read the full memo from CEO Chris Cocks:

Team,   

A year ago, we laid out our strategy to focus on building fewer, bigger, better brands and began the process of transforming Hasbro. Since then, we’ve had some important wins, like retooling our supply chain, improving our inventory position, lowering costs, and reinvesting over $200M back into the business while growing share across many of our categories. But the market headwinds we anticipated have proven to be stronger and more persistent than planned. While we’re confident in the future of Hasbro, the current environment demands that we do more, even if these choices are some of the hardest we have to make.   

Today we’re announcing additional headcount reductions as part of our previously communicated strategic transformation, affecting approximately 1,100 colleagues globally in addition to the roughly 800 reductions already taken.  

Our leadership team came to this difficult decision after much deliberation. We recognize this is heavy news that affects the livelihoods of our friends and colleagues. Our focus is communicating with each of you transparently and supporting you through this period of change. I want to start by addressing why we are doing this now, and what’s next. 

Why now? 

We entered 2023 expecting a year of change including significant updates to our leadership team, structure, and scope of operations. We anticipated the first three quarters to be challenging, particularly in Toys, where the market is coming off historic, pandemic-driven highs. While we have made some important progress across our organization, the headwinds we saw through the first nine months of the year have continued into Holiday and are likely to persist into 2024.  

To position Hasbro for growth, we must first make sure our foundation is solid and profitable. To do that, we need to modernize our organization and get even leaner. While we see workforce reductions as a last resort, given the state of our business, it’s a lever we must pull to keep Hasbro healthy. 

What happens next? 

While we’re making changes across the entire organization, some functional areas will be affected more than others. Many of those whose roles are affected have been or will be informed in the next 24 hours, although the timings will vary by country, in line with local rules and subject to employee consultations where required. This includes team members who have raised their hands to step down from their roles at the end of the year as part of our Voluntary Early Retirement Program (VRP) in the U.S. We’re immensely grateful to these colleagues for their many years of dedication, and we wish them all the best.   

The majority of the notifications will happen over the next six months, with the balance occurring over the next year as we tackle the remaining work on our organizational model. This includes standardizing processes within Finance, HR, IT and Consumer Care as part of our Global Business Enablement project, but it also means doing more work across the entire business to minimize management layers and create a nimbler organization. 

What else are we doing? 

I know this news is especially difficult during the holiday season. We value each of our team members – they aren’t just employees, they’re friends and colleagues. We decided to communicate now so people have time to plan and process the changes. For those employees affected we are offering comprehensive packages including job placement support to assist in their transition.  

We’ve also done what we can to minimize the scale of impact, like launching the VRP and exploring options to reduce our global real estate footprint. On that note, our Providence, Rhode Island office is currently not being used to its full capacity and we’ve decided to exit the space at the end of the lease term in January 2025. Over the next year, we’ll welcome teams from our Providence office to our headquarters down the road in Pawtucket, Rhode Island. It’s an opportunity to reshape how we work and ensure our workspace is vibrant and productive, while reflecting our more flexible in-person cadence since the pandemic.   

Looking ahead 

As Gina often says, cost-cutting is not a strategy. We know this, and that’s why we’ll continue to grow and invest in several areas in 2024.  

As we uncover more cost savings, we’ll invest in new systems, insights and analytics, product development and digital – all while strengthening our leading franchises and ensuring our brands have the essential marketing they need to thrive well into the future.  

We’ll also tap into unlocked potential across our business, like our new supply chain efficiency, our direct-to-consumer capabilities, and key partnerships to maximize licensing opportunities, scale entertainment, and free up our own content dollars to drive new brand development. 

I know there is no sugar-coating how hard this is, particularly for the employees directly affected. We’re grateful to them for their contributions, and we wish them all the best. In the coming weeks, let’s support each other, and lean in to drive through these necessary changes, so we can return our business to growth and carry out Hasbro’s mission.  

Thanks,    

Chris  

–CNBC’s Claudia Johnson contributed to this report.

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Long Covid is distorting the labor market — and that’s bad for the U.S. economy

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Charlotte Hultquist

Charlotte Hultquist

Weeks after Charlotte Hultquist got Covid-19 in November 2020, she developed a severe pain in her right ear.

“It felt like someone was sticking a knife in [it],” said Hultquist, a single mother of five who lives in Hartford, Vermont.

The 41-year-old is one of millions of Americans who have long Covid. The chronic illness carries a host of potentially debilitating symptoms that can last for months or years, making it impossible for some to work.

For about a year, Hultquist was among those long Covid patients sidelined from the workforce. She would fall constantly, tripping just by stepping over a toy or small object on the floor. She eventually learned that the balance issues and ear pain resulted from a damaged vestibular nerve, a known effect of long Covid. After rigorous testing, a physical therapist told Hultquist she had the “balance of a 1-year-old learning to walk.”

Her body — which she said felt like it weighed 1,000 pounds — couldn’t regulate its temperature, causing dramatic swings from cold to hot.

More from Your Health, Your Money

Here’s a look at more stories on the complexities and implications of long Covid:

Her work on the Dartmouth Hitchcock Medical Center’s information desk required a sharp memory of the hospital’s layout — but long Covid dulled that clarity, too. She had to quit her job as a patient care representative in March 2021.

“I couldn’t work when my memory just kept failing,” Hultquist said.

There remain many unknowns about long Covid, including causes, cures, even how to define it. But this much is clear: The illness is disabling thousands, perhaps millions, of workers to such an extent that they must throttle back hours or leave the workforce altogether.

In other words, at a time when job openings are near an all-time high, long Covid is reducing the supply of people able to fill those positions. The dynamic may have large and adverse effects on the U.S. economy.

Long Covid “is certainly wind blowing in the other direction” of economic growth, said Betsey Stevenson, a professor of public policy and economics at the University of Michigan who served as chief economist for the U.S. Department of Labor in the Obama administration.

Up to 4 million people are out of work

Estimating the labor impact of long Covid — also known as long-haul Covid, post-Covid or post-acute Covid syndrome — is a somewhat fraught mathematical exercise; it’s complicated by the nebulous nature of the fledgling illness and a dearth of data tracking how people with long-haul symptoms flow in and out of work.

Economic models suggest that hundreds of thousands of people and potentially millions are out of work because of long-haul symptoms after a Covid infection.

“At a minimum, long Covid is adding a lot of uncertainty to an already very uncertain economic picture,” Paige Ouimet, an economist and finance professor at the University of North Carolina, wrote in September.

Mild symptoms, employer accommodations or significant financial need can all keep people with long Covid employed. But in many cases, long Covid impacts work.

Katie Bach

nonresident senior fellow at the Brookings Institution

Katie Bach, a nonresident senior fellow at the Brookings Institution, has published one of the higher estimates to date. She found that 2 million to 4 million full-time workers are out of the labor force due to long Covid. (To be counted in the labor force, an individual must have a job or be actively looking for work.)

The midpoint of her estimate — 3 million workers — accounts for 1.8% of the entire U.S. civilian labor force. The figure may “sound unbelievably high” but is consistent with the impact in other major economies like the United Kingdom, Bach wrote in an August report. The figures are also likely conservative, since they exclude workers over age 65, she said.

“Mild symptoms, employer accommodations or significant financial need can all keep people with long Covid employed,” Bach said. “But in many cases, long Covid impacts work.”

Impact akin to extra year of baby boomers retiring

Other studies have also found a sizable, though more muted, impact.

Economists Gopi Shah Goda and Evan Soltas estimated 500,000 Americans had left the labor force through this June due to Covid.

That led the labor force participation rate to fall by 0.2 percentage points — which may sound small but amounts to about the same share as baby boomers retiring each year, according to the duo, respectively of the Stanford Institute for Economic Policy Research and the Massachusetts Institute of Technology.

Put another way: Long Covid’s labor impact translates to an extra year of population aging, Goda said.

For the average person, the work absence from long Covid translates to $9,000 in foregone earnings over a 14-month period — representing an 18% reduction in pay during that time, Goda and Soltas said. In aggregate, the lost labor supply amounts to $62 billion a year — equivalent to half the lost earnings attributable to illnesses like cancer or diabetes.

What’s more, foregone pay may complicate a person’s ability to afford medical care, especially if coupled with the loss of health insurance through the workplace.

A separate Brookings paper published in October estimated about 420,000 workers aged 16 to 64 years old had likely left the labor force because of long Covid. The authors — Louise Sheiner and Nasiha Salwati — cite a “reasonable” range of 281,000 to 683,000 people, or 0.2% to 0.4% of the U.S. labor force.

About 26% of long-haulers said their illness negatively affected employment or work hours, according to a July report published by the Federal Reserve Bank of Minneapolis. Those with long Covid were 10 percentage points less likely to be employed than individuals without a prior Covid infection, and worked 50% fewer hours, on average, according to Dasom Ham, the report’s author.

Return to work can be ‘a really frustrating experience’

Outside of these economic models, the labor impact was borne out in numerous CNBC interviews with long Covid patients and doctors who specialize in treating the illness.

Just half of the patients who visit the Mayo Clinic’s Covid Activity Rehabilitation Program can work a full-time schedule, said Dr. Greg Vanichkachorn, the program’s medical director.

“Because of the brain fog issues in addition to physical symptoms, many patients have had a really frustrating experience trying to get back to work,” Vanichkachorn said.

Those able to return, even part-time, sometimes face hostility from employers and co-workers, he added.

For one, many of the hundreds of potential long Covid symptoms are invisible to others, even if disabling for the afflicted. Difficulty meeting a work deadline due to brain fog or extreme fatigue, for example, may not be met kindly by their colleagues.

Long Covid is so different for so many different people.

Alice Burns

associate director of the Program on Medicaid and the Uninsured at health-care nonprofit The Henry J. Kaiser Family Foundation

“There are some people out there who don’t even think Covid exists,” Vanichkachorn said.

Meanwhile, long Covid can put even accommodating employers in a tricky situation. It can take several months for a patient to make progress in treatment and therapy — meaning some businesses may need to make tough retention, hiring and personnel decisions, Vanichkachorn said. Lengthy recovery times mean a patient’s job might be filled in the interim, he said.

And patients’ symptoms can relapse if they push themselves too rigorously, experts said.

“You can bring a [long Covid] diagnosis to your employer, but it doesn’t allow you to say, ‘I need to be part time for X number of months,” said Alice Burns, associate director of the Program on Medicaid and the Uninsured at health care nonprofit the Henry J. Kaiser Family Foundation. “It may be more months or fewer months; it may mean you can return 10% or 80%.

“That’s just because long Covid is so different for so many different people.”

Why the long Covid labor gap matters

Jerome Powell, chair of the Federal Reserve, mentioned Sheiner and Salwati’s long Covid research in a recent speech about inflation and the labor market.

Millions of people left the labor force in the early days of the pandemic, due to factors like illness, caregiving and fear of infection. But workers haven’t returned as quickly as imagined, particularly those outside their prime working years, Powell said. About 3.5 million workers are still missing, he said.

While most of that shortfall is due to “excess” (i.e., early) retirements, “some of the participation gap” is attributable to long Covid, Powell said. Other big contributors to the shortfall include a plunge in net immigration to the U.S. and a surge in deaths during the pandemic, he added.

“Looking back, we can see that a significant and persistent labor supply shortfall opened up during the pandemic — a shortfall that appears unlikely to fully close anytime soon,” the Fed chair said.

That shortfall has broad economic repercussions.

When the U.S. economy started to reopen in early 2021 from its pandemic-era hibernation — around the time Covid vaccines became widely available to Americans — demand for labor catapulted to historic highs.

Job openings peaked near 12 million in March 2022 and remain well above the pre-pandemic high. There are currently 1.7 job openings per unemployed American — meaning the available jobs are almost double the number of people looking for work, though the ratio has declined in recent months.  

That demand has led businesses to raise wages to compete for talent, helping fuel the fastest wage growth in 25 years, according to Federal Reserve Bank of Atlanta data.

While strong wage growth “is a good thing” for workers, its current level is unsustainably high, Powell said, serving to stoke inflation, which is running near its highest level since the early 1980s. (There are many tentacles feeding into inflation, and the extent to which wage growth is contributing is the subject of debate, however.)

A worker shortage — exacerbated by long Covid — is helping underpin dynamics that have fueled fast-rising prices for household goods and services.

But the labor gap is just the “tip of the iceberg,” said Stevenson at the University of Michigan. There are all sorts of unknowns relative to the economic impact of long Covid, such as effects on worker productivity, the types of jobs they can do, and how long the illness persists, she said.

“When you’re sick, you’re not productive, and that’s not good for you or for anybody around you,” Stevenson said of the economic impact.

For example, lost pay might weigh on consumer spending, the lifeblood of the U.S. economy. The sick may need to lean more on public aid programs, like Medicaid, disability insurance or nutrition assistance (i.e., food stamps) funded by taxpayer dollars.

Economic drag will rise if recovery rates don’t improve

In all, long Covid is a $3.7 trillion drain on the U.S. economy, an aggregate cost rivaling that of the Great Recession, estimated David Cutler, an economist at Harvard University. Prior to the pandemic, the Great Recession had been the worst economic downturn since the Great Depression. His estimate is conservative, based on known Covid cases at the time of his analysis.

Americans would forgo $168 billion in lost earnings — about 1% of all U.S. economic output — if 3 million were out of work due to long Covid, said Bach of the Brookings Institution. That burden will continue to rise if long Covid patients don’t start recovering at greater rates, she said.

“To give a sense of the magnitude: If the long Covid population increases by just 10% each year, in 10 years, the annual cost of lost wages will be half a trillion dollars,” Bach wrote.

Charlotte Hultquist

Charlotte Hultquist

Hultquist was able to return to the workforce part time in March, after a yearlong absence.

The Vermont resident sometimes had to reduce her typical workweek of about 20 hours, due partly to ongoing health issues, as well as multiple doctor appointments for both her and her daughter, who also has long Covid. Meanwhile, Hultquist nearly emptied her savings.

Hultquist has benefited from different treatments, including physical therapy to restore muscle strength, therapy to “tone” the vagus nerve (which controls certain involuntary bodily functions) and occupational therapy to help overcome cognitive challenges, she said.

“All my [health] providers keep saying, ‘We don’t know what the future looks like. We don’t know if you’ll get better like you were before Covid,'” Hultquist said.

The therapy and adaptations eventually led her to seek full-time employment. She recently accepted a full-time job offer from the New Hampshire Department of Health & Human Services, where she’ll serve as a case aide for economic services.

“It feels amazing to be recovered enough to work full time,” Hultquist said. “I’m very far from pre-Covid functioning but I found a way to keep moving forward.”

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The top 10 things to watch in the stock market Monday

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The top 10 things to watch Monday, Dec. 11

1. U.S. stocks are muted Monday following last week’s push to a new 52-week high in the S&P 500, helped by a stronger-than-expected jobs report Friday. Good economic news is good news for the stock market, for now, with investors looking ahead to Tuesday’s consumer price index report. But we’ll learn what the Federal Reserve makes of the state of the labor market and inflation when the central bank convenes this week for its final meeting of the year.

2. Bank stocks like Club name Wells Fargo became “extraordinary performers” last week, according to Jim Cramer’s Sunday column. “The percentage gains for bank shares and the pretty stock charts, all wondrous, look like they are in their infancy,” he writes.

3. Health insurer Cigna abandons its pursuit to acquire Club holding Humana — a deal that was misguided from the start because it never would have received regulatory approval. Cigna announces a new $10 billion stock buyback. And shares of Humana rally roughly 2% in premarket trading.

4. Occidental Petroleum announces plans to buy privately held CrownRock for $12 billion in cash and stock, while raising its quarterly dividend by 4 cents, to 22 cents per share. Before the deal announcement, Morgan Stanley had upgraded Occidental to overweight from equal weight, with an unchanged price target of $68 a share.

5. More analysts are warming up to energy stocks after last week’s carnage. Citi upgrades Club holding Coterra Energy, along with EQT and Southwestern Energy, to a buy. Coterra is the firm’s top large cap pick, with a $30-per-share price target based on capital-efficiency improvements.

6. Goldman Sachs upgrades Abbvie to buy from neutral, with a $173-per-share price target. The firm cites revenue that has proved more resilient than expected, along with the drug maker’s recent deployment of capital to build out its pipeline. Over the past two weeks, Abbvie has shelled out nearly $20 billion in cash to acquire ImmunoGen and Cerevel Therapeutics.

7. JPMorgan raises its price targets on a handful of cybersecurity stocks, including CrowdStrike (to $269 a share from $230), Club name Palo Alto Networks ($326 from $272) and Zscaler ($212 from $200).

8. Citi upgrades Nike to buy from neutral, while raising its price target on the stock to $135 a share, up from $100. The firm sees margin recovery beginning in the second quarter of next year through 2025, helped by easing freight costs, leaner inventories and a shift to direct-to-consumer.

9. Jefferies upgrades Best Buy to buy from hold, while raising its price target to $89 a share, up from $69. Analysts at the bank think this call won’t take much to work, with expectations low and the stock cheap and yielding a 5% dividend.

10. Citi resumes coverage of Club holding Broadcom with a buy rating and $1,100-a-share price target. The firm sees the chipmaker’s artificial-intelligence business offsetting the cyclical downturn in the semiconductor business, along with strong accretion from its recent acquisition of VMware. We thought the company reported a better quarter last Thursday than what the market gave it credit for. 

(See here for a full list of the stocks at Jim Cramer’s Charitable Trust.)

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Why automakers are turning to hybrids in the middle of the industry’s EV transition

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2023 Prius Prime on display, April 6, 2023.

Scott Mlyn | CNBC

DETROIT — As sales of all-electric vehicles grow more slowly than expected, major automakers are increasingly meeting their customers in the middle.

More and more companies are reconsidering the viability of hybrid cars and trucks to appease consumer demand and avoid costly penalties related to federal fuel economy and emissions standards.

The shifting strategies run counterintuitively to industrywide EV messaging of recent years. Many auto companies have begun to invest billions of dollars in all-electric vehicles, and the Biden administration has made a push to get more EVs on U.S. roadways as quickly as possible.

But hybrid vehicles — those with traditional internal combustion engines combined with EV battery technologies — could help the automotive industry lower fuel consumption and emissions in the short-term, while easing consumers into vehicle electrification.

Sales of traditional hybrid electric vehicles, or HEVs, such as the Toyota Prius, are outpacing those of all-electric vehicles in 2023, according to Edmunds. HEVs accounted for 8.3% of U.S. car sales, about 1.2 million vehicles sold, through November of this year. That share is up 2.8 percentage points compared with total sales last year.

EVs made up 6.9% of sales heading into December, or roughly 976,560 units, up 1.7 percentage points compared with total sales last year. Sales of plug-in hybrid electric vehicles, or PHEVs, accounted for only 1% of U.S. sales through November.

“There’s been so much talk over the past few years about the move toward electrification and sort of forgoing hybrids, but … hybrids are not dead,” said Jessica Caldwell, Edmunds executive director of insights. “There’s a lot of consumers out there that are interested in electrification, maybe not ready to go fully electric.”

Hybrids can also cost less and relieve many concerns typically associated with EVs such as range anxiety and lack of charging infrastructure. The average hybrid this year cost $42,381, according to Edmunds. That’s below the roughly $59,400 average for an EV; $60,700 for a PHEV; and $44,800 for a traditional vehicle.

Morgan Stanley earlier this month said Toyota Motor, Honda Motor and Hyundai Motor, including Kia, account for 9 out of 10 hybrid sales in the U.S. Representatives for those automakers said they are actively attempting to increase production and sales of hybrid vehicles in the U.S.

“While the transition to full battery electric transportation will take time, hybrids and plug-in hybrids will play an equally important role in Kia America’s near and mid-term goals,” Eric Watson, vice president of Kia America sales, said in a statement to CNBC.

And other companies, such as the Detroit automakers, are following suit.

Detroit Three automakers

The Detroit automakers have varying strategies for hybrid vehicles.

Ford Motor offers PHEVs but is leaning into HEVs, announcing plans in September to double sales of the V-6 hybrid model during the 2024 model year to roughly 20% in the U.S. It’s part of Ford CEO Jim Farley’s plans to quadruple the company’s production of gas-electric hybrids.

Ford’s hybrid sales through November of this year are up 23% over the same period in 2022 to more than 121,000 units, or 6.8% of its total sales through that point. In comparison, Ford’s EV sales are up 16.2% to roughly 62,500 units, accounting for 3.5% of its total sales.

Battery breakdown

Both hybrids and plug-in hybrids have a traditional engine combined with EV technologies. A traditional hybrid such as the Toyota Prius has electrified parts, including a small battery, to provide better fuel economy to assist the engine. PHEVs typically have a larger battery to provide for all-electric driving for a certain number of miles until an engine is needed to power the vehicle or electric motors.

Chrysler parent Stellantis, for its part, is leaning on PHEVs for its electrification strategy, before introducing a host of EVs starting next year. The company is the top seller of plug-in hybrid electric vehicles in the U.S., and the vehicles accounted for about 10% of the company’s third-quarter sales, led by Jeep Wrangler and Grand Cherokee SUVs.

But General Motors isn’t ready just yet to alter its EV plans, which include a goal to exclusively offer all-electric vehicles by 2035.

GM led the way for plug-in electric vehicles with the Chevrolet Volt during the 2010s. The company discontinued the vehicle in early 2019, citing demand and cost concerns.

Since then, the automaker has not offered another hybrid vehicle in the U.S. other than the recently launched Chevrolet Corvette E-Ray, a hybrid version of the famed sports car. GM does offer hybrids, including PHEVs, in China.

2024 Chevrolet Corvette E-Ray hybrid sports car

GM

“We still have a plan in place that allows us to be all light-duty vehicles EV by 2035,” GM CEO Mary Barra said Monday during an Automotive Press Association meeting in Detroit. “We’ll adjust based on where the customer is and where demand is. It’s not going to be ‘if we build it they will come.’ We’re going to be led by the customer.”

Her comments come after GM President Mark Reuss told CNBC in August that he was “flexible” regarding hybrids as a way of meeting federal regulations.

“If it means we have to do that by law, then we have to do that by law,” he said. “If there’s regulations that get dealt on us, then we’re going to look at everything in our toolbox to meet them.”

Federal regulations

Major auto companies, including the Detroit automakers, were counting on EVs to assist in offsetting the emissions and low fuel economies of larger SUVs and trucks that can cost them hundreds of millions of dollars in fines by the federal government.

GM and Stellantis were forced to pay a combined $363.8 million in penalties for failing to meet federal fuel-economy standards for cars and trucks they produced in previous years, according to information published by the National Highway Traffic Safety Administration in June.

Such fines would significantly increase under current proposals by the Biden administration to improve fuel efficiency of vehicles and move toward EVs, according to automaker lobbying groups.

The American Automotive Policy Council, a group representing the Detroit Three, earlier this year said the automakers would face more than $14 billion in noncompliance penalties between 2027 and 2032 barring significant changes to their fleets’ overall fuel efficiency. U.S. automakers have separately warned the fines would cost $6.5 billion for GM, $3 billion at Stellantis and $1 billion at Ford, according to Reuters.

NHTSA in July proposed boosting fuel efficiency requirements by 2% per year for passenger cars and 4% per year for pickup trucks and SUVs from 2027 through 2032, resulting in a fleetwide average fuel efficiency of 58 mpg.

With EVs playing a lesser role than anticipated to boost those fleetwide averages, hybrids could save automakers millions.

“Even without electric vehicles, there’s an expectation that electrification of an internal combustion engine is going to be necessary to meet regulations anyway,” said Stephanie Brinley, principal automotive analyst at S&P Global Mobility.

Industry leader

The resurgence of hybrids is especially important for Toyota. The world’s largest automaker is considered the pioneer of traditional hybrids, with the Prius.

The company ironically became a target of environmental groups last year for its strategy to move forward with a mix of hybrids, PHEVs and EVs, which critics viewed as a lack of commitment to an all-electric future.

Toyota’s argument at the time, and still, is that it’s meeting consumer needs and planning for a more gradual global adoption that will naturally include some markets shifting to EVs sooner than others.

The company further says it takes into account the entire environmental impact of producing EVs compared with hybrid electrified vehicles, arguing it can produce eight 40-mile plug-in hybrids for every one 320-mile battery electric vehicle and save up to eight times the carbon emitted into the atmosphere.

“People are finally seeing reality,” Toyota Chairman and former CEO Akio Toyoda, who has been heavily criticized for the slower approach on EVs, said in October regarding EVs, according to The Wall Street Journal.

Toyota CEO Akio Toyoda speaks during a small media roundtable on Sept. 29, 2022 in Las Vegas.

Toyota

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Jim Cramer’s top 10 things to watch in the stock market Friday

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My top 10 things to watch Friday, Dec. 8

1. U.S. stocks are lower in midmorning trading, with S&P 500 futures down 0.3% and on track to break a five-week winning streak. But the Nasdaq Composite, down 0.55% in early trading, looks set to post a sixth-consecutive week of gains. Bond yields tick up slightly, with that of the 10-year Treasury hovering just below 4.2%.

2. Oil prices pare some of their recent losses, climbing by more than 2% Thursday morning. West Texas Intermediate crude, the U.S. oil benchmark, is now back above $70 a barrel but is still down for seven-straight weeks.

3. Club holding Honeywell International reaches a deal to buy Carrier Global‘s security business for $4.95 billion. Carrier will reportedly use the money from Honeywell to accelerate its debt paydown. The companies expect the all-cash transaction to close before the end of the third quarter of 2024.

4. Club holding Broadcom reports mixed fiscal fourth-quarter results, missing on revenue but delivering strong profits. And tailwinds from artificial intelligence and the company’s acquisition of VMware should keep profits growing and more than offset some of the cyclical parts of the semiconductor business.

5. Mizuho raises its price target on Broadcom to $1,000 a share, up from $960, while maintaining a buy rating on the stock. The firm cites the semiconductor firm’s strong guidance, along with its industry-leading margins and free cash flow.

6. India’s Tata Group plans to build one of the country’s biggest iPhone assembly plants, with roughly 20 assembly lines and 50,000 workers, Bloomberg reports. The new factory would help Club holding Apple in its efforts to diversify its supply chain and expand its presence in India.

7. Morgan Stanley raises its price target on Apple to $220 a share, up from $210, while reiterating an overweight rating on the stock. The firm says the macroeconomic backdrop is still a challenge for Apple, but argues that excitement around Edge AI, services, and gross margin strength “reignites the bull case.”

8. Bernstein calls Tesla a “best idea,” outlining the short case for the electric-vehicle maker in 2024. “In our view, Tesla’s key challenge is that it has a demand problem due to its narrow (and expensive) product family of essentially two vehicles,” Bernstein analysts write. The firm has an underperform rating on Tesla stock, with a price target on $150 a share.

9. Mizuho raises its price target on DoorDash to $120 a share, up from $105, while reiterating a buy rating on the stock. The firm expects continued margin expansion, as the food-delivery platform continues to gain market share.

10. Lululemon Athletica delivers strong third-quarter results, while reporting a positive start to the holiday shopping season. The athletic-apparel retailer receives a slew of price-target raises Friday from Wall Street firms — including Barclays, which goes to $530 a share, up from $480, with a buy rating on the stock.

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Falling oil prices is hurting energy names. But plenty of others stocks stand to gain

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An oil rig in front of a sunset

Andrey Rudakov | Bloomberg | Getty Images

U.S. crude prices continued to fall Wednesday, settling below $70 per barrel for the first time since early July and at their lowest levels since June. That’s good news for the Federal Reserve in its battle against inflation. While the impact on oil and natural gas stocks has not been as cheery, companies across many other industries stand to gain.

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The top 10 things to watch in the stock market Wednesday

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The 10 things to watch Wednesday, Dec. 6

1. U.S. stocks are higher in premarket trading Wednesday, with S&P 500 futures up 0.45% after back-to-back days of losses. The move comes amid increasing signs the labor market is loosening, suggesting the Federal Reserve’s interest-rate hikes are succeeding in cooling the economy. U.S. private payrolls rose by 103,000 last month, according to the ADP National Employment Report, well below forecasts for a 130,000 increase.

2. Home builder Toll Brothers (TOL) delivers better-than-expected quarterly results, with revenue of $3.02 billion and earnings-per-share of $4.11 on stronger margins. The company also provides upbeat commentary around 2024, with mortgage rates expected to come down.

3. Bank of America downgrades PayPal (PYPL) to neutral from buy, while lowering its price target to $66 a share, down from $77. The firm doesn’t think PayPal is “broken” but needs time to fix things, calling 2024 a transition year.

4. JPMorgan shuffles around its oil ratings, upgrading Devon Energy (DVN) to overweight from neutral, while downgrading EOG Resources (EOG) to neutral from overweight. The firm also lowers its price target slightly on Club name Coterra Energy (CTRA) to $29 a share, from $30, while reiterating an overweight rating and keeping the stock as a “top pick.”

5. Morgan Stanley downgrades Plug Power (PLUG) to underweight from equal weight, while lowering its price target to $3 a share, down from $3.50. If you want a hydrogen play with less of the risk, stick with Club holding Linde (LIN). It’s the largest supplier of liquid hydrogen in the U.S. and doing a lot for clean hydrogen, too.

6. Morgan Stanley resumes coverage on JM Smucker (SJM) with an equal-weight rating and $122-per-share price target. The firm liked Smucker’s quarterly results but cites “several concerns,” including the company’s acquisition of Hostess Brands and the risk posed by GLP-1 drugs.

7. Bank of America calls semiconductor company Qualcomm (QCOM) a “top pick” amid the end of the global smartphone downturn. The firm expects global smartphone shipments to rise by 5% in 2024.

8. Citi upgrades Signet Jewelers to buy from neutral, while raising its price target to $119 a share, up from $93. You can hear the full story from CEO Gina Drosos on Tuesday’s “Mad Money“. 

 9. Can Club holding Starbucks (SBUX) break a 12-day losing streak now that the bad news is out? CEO Laxman Narasimhan said Tuesday at a Morgan Stanley conference that the recovery in China is “perhaps half the rate of what you would expect it to be given what you saw in the fourth quarter last year.” Shares of the coffeemaker were up 0.5% in early trading, at $96 apiece.

10. Exxon Mobil (XOM) says it plans to repurchase $20 billion worth of stock annually through 2025 after its acquisition of Pioneer Natural Resources (PXD) closes. The oil major is buying back $17.5 billion of stock this year.

(See here for a full list of the stocks at Jim Cramer’s Charitable Trust.)

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As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade.

THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH OUR DISCLAIMER.  NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB.  NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

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The ultimate work perk? This company provides a free place to stay in Spain

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Some workers go to great lengths to hide hush trips from their bosses.

But employees of the Polish company PhotoAid needn’t bother.

The company, which helps travelers take their own passport photos at home, allows its employees to stay at an apartment in Spain for free — provided they work while they’re there.

The apartment is in Tenerife, the largest of Spain’s Canary Islands, an archipelago west of Morocco. Employees can stay up to three weeks at a time and can visit as many times in year as they like, depending on demand from other employees.

The company reimburses half of employees’ airfare too, up to 1,000 Polish zlotys ($246), once a year. Flights from Warsaw to Tenerife can start at around $150 for a six-hour direct flight.

Employees can stay up to three weeks at a time at the Tenerife apartment and can visit as many times as they like.

Source: PhotoAid

The company started renting the apartment in Tenerife’s capital, Santa Cruz de Tenerife, in the summer of 2022 as a way to create relationships and build morale among its employees, all of whom work remotely, said co-founder Rafal Mlodzki.

Plus, Mlodzki said he and the other co-founders, Marcin and Tomasz Mlodzki — who are also his brothers — wanted to offer a company perk that would stand out.  

How the ‘workcations’ work

PhotoAid is a small company with a young workforce, so most employees don’t have children, said Mlodzki. But those who do tend to group together and use the benefit in the summer months when schools are closed.

Employees can request to bring their partners too, which the company reviews on a case-by-case basis, he said.  

Employees must abide by several rules, he said, such as the check-in and check-out protocol. Employees must upload a photo of the apartment on arrival, then do the same on departure to show the next group of employees how they left it.

Workcation time spent in Tenerife doesn’t count as employee vacation time, which is up to 26 days a year, said PhotoAid co-founder Rafal Mlodzki.

Source: PhotoAid

On arrival, employees are assigned a cleaning task too, but the company hires a professional cleaner for deep cleans, he said. While drinking wine on the balcony and chatting into the night are regular occurrences, employees are not allowed to drink during work hours, he said.   

Mlodzki told CNBC Travel that employees like to visit Tenerife with coworkers with shared interests. For example, a recent group played sports in their free time, while another group went to music concerts.

‘The best onboarding in the world’

Around 50 of PhotoAid’s 143 employees have now stayed at the Tenerife apartment, many meeting their teammates in person for the first time during their stays. Around 10 were onboarded as new starters there too, said Mlodzki.

“One of the reasons we decided to open this office was the possibility of offering the best onboarding in the world for senior team members. Those onboarded are not only thrilled but also deeply understand the company and their role in it,” said Mlodzki.

Coworkers with shared interests — such as sports and music — travel to Tenerife together.

Source: PhotoAid

“Often, spontaneous moments occur. For example, after a series of 45-minute sets with 10-minute breaks, we might go on a mini mountain trip and continue onboarding informally. It might even transition into an evening on the terrace.

“We just onboarded our new chief operating officer during a workation in Tenerife, and he was deeply impressed. He had never experienced an onboarding like this before.”

Two senior leaders have scheduled a strategic planning and brainstorming session at the apartment this winter, where average temperatures in January are 68 degrees Fahrenheit, higher than 34 F in the Polish capital of Warsaw.

The apartment

The 3,200-square-foot apartment overlooks the port of Santa Cruz de Tenerife. It has three bedrooms, a spacious lounge with board games, two balconies and a small gym. There are also eight workspaces with high-speed internet, computer monitors and ergonomic chairs.

The apartment has eight workspaces with high-speed internet, computer monitors and ergonomic chairs.

Source: PhotoAid

There’s a bakery next door for fresh bread, with restaurants, bars, wineries, and vermuterias (bars specializing in Spanish vermouth) nearby.

Workation as a ‘wow’ factor

When she was interviewing, Aleksandra Staromiejska said the Tenerife benefit made PhotoAid stand out. Now a company digital public relations specialist, she stayed in the apartment for two weeks in May, along with a colleague from her team. 

Aleksandra Staromiejska started her work days early to maximize her time at the beach, she said.

Source: Aleksandra Staromiejska

She started and finished her work early, she said, to spend as much time as possible at the beach, a 20-minute bus ride away. Over the weekend, she and her colleague went hiking in Macizo de Anaga (Anaga mountains).

“I noticed my productivity levels were higher,” said Staromiejska. “I really wanted to do my job quickly so I could finish my work day and have time to go to the beach.”

Vacations to Spain’s Canary Islands are popular with employees of PhotoAid, a company based in the much colder city of Warsaw, Poland.

Source: PhotoAid

“It was actually a very relaxing trip. Just being in nature is something else. My batteries were just charged up,” she said.

The Spanish apartment is often mentioned in employee satisfaction surveys, said Mlodzki.

“When we recruit, it’s an attractive benefit that candidates always react positively to.”

A vacay with the boss?

Enamored by the culture and scenery, Mlodzki said he spends half his time in Warsaw and half his time in Tenerife, staying in the master bedroom at PhotoAid’s apartment. 

Mlodzki acknowledged that some people might feel nervous about spending so much time with their boss. (Indeed, Staromiejska admitted she did before her workation.) But he said it’s great for rapport.

“It’s super interesting for me to get to know more people. To give and get feedback is very enriching for me,” he said.

Rafal Mlodzki, Aleksandra Staromiejska and Michel Jonca. “It’s super interesting for me to get to know more people,” said co-founder Mlodzki.

Source: PhotoAid

From leasing the apartment to paying for employees’ flights, Mlodzki said the investment has been worth it.

 “We think about the Tenerife office as the ‘company charger’ with the goal of reenergizing employees and boosting team spirits that can get depleted by remote work.”

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Top Wall Street analysts are upbeat about these dividend stocks

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A Starbucks store is seen inside the Tom Bradley terminal at LAX airport in Los Angeles, California.

Lucy Nicholson | Reuters

Earnings season has a way of revealing which companies can thrive despite near-term headwinds and enhance shareholder returns in the long run.

With dividend-paying stocks, investors will want companies that have the strong balance sheets and cash flows needed to provide steady payments to shareholders. Analysts can dig through these details and identify stocks that could boost returns through dividends and price appreciation.  

Keeping that in mind, here are five attractive dividend stocks, according to Wall Street’s top experts on TipRanks, a platform that ranks analysts based on their past performance.

EOG Resources

Crude oil and natural gas exploration and production company EOG Resources (EOG) is first on this week’s list. On Nov. 2, EOG reported market-beating third-quarter results. It also announced a 10% increase in its regular quarterly dividend to 91 cents per share and a special dividend of $1.50 per share.

Additionally, EOG increased its cash return commitment from 2024 onwards to a minimum of 70% of annual free cash flow from the previous target of at least 60%. Considering just the regular dividends, EOG’s dividend yield stands at 2.9%.

Following the print, Siebert Williams Shank analyst Gabriele Sorbara reiterated a buy rating on EOG with a price target of $172, citing the company’s “blowout quarter” that exceeded expectations across all metrics. Commenting on the subdued Q4 2023 guidance, the analyst reminded investors that EOG has a long track record of beating its guidance on production, capital expenditure and costs.

The analyst noted the hike in EOG’s cash returns commitment and also pointed out that this year’s total cash returns (dividends plus share buybacks) are tracking at $4.1 billion, representing about 75% of its estimated FCF of $5.5 billion.      

“We maintain our Buy rating on its track record of execution and shareholder returns with its cash rich balance sheet (~$5.33 billion) providing differentiation and optionality,” said Sorbara.

Sorbara holds the 434th position among more than 8,600 analysts on TipRanks. The analyst’s ratings have been successful 46% of the time, with each rating delivering an average return of 10.9%. (See EOG Resources Financial Statements on TipRanks). 

Coterra Energy

Another energy player, Coterra Energy (CTRA), recently announced better-than-anticipated third-quarter earnings. The company raised its 2023 production guidance, driven by faster cycle times and strong well productivity.

In Q3 2023, Coterra returned $211 million to shareholders, including $151 million via dividends and $60 million through share repurchases. Overall, the company’s year-to-date shareholder return of $839 million represents 91% of its free cash flow.

Management reiterated its commitment to return over 50% of its annual free cash flow to shareholders through its annual regular dividend of 80 cents per share and share repurchases. Based on just the regular dividend, CTRA offers a dividend yield of about 3%.  

Mizuho analyst Nitin Kumar, who ranks No. 124 out of more than 8,600 analysts on TipRanks, thinks that in a quarter where several exploration and production companies have attributed their strong volumes to improving operating efficiencies, CTRA still stands out in his opinion as its beat-and-raise performance was driven by both well timing and productivity.

Further, he highlighted that the company raised its 2023 oil production outlook by 3% compared to peers who increased their guidance by about zero to 1%, on average.

Kumar reiterated a buy rating on CTRA stock with a price target of $42 and designated it a top pick, noting, “CTRA returned ~84% of 3Q23 FCF via its dividend and buybacks, and is on track to return ~80% of 2023 FCF (vs. target of 50%+).”

Kumar’s ratings have been profitable 63% of the time, with each delivering an average return of 17%. (See CTRA Technical Analysis on TipRanks)

Crescent Energy

Kumar is also bullish on another dividend stock: Crescent Energy (CRGY), an independent energy company that develops and operates oil and natural gas properties. On Nov. 6, the company announced its third-quarter results and declared a quarterly dividend of 12 cents per share, payable on Dec. 4. CRGY offers a dividend yield of 4.6%.  

Commenting on the third-quarter results, Kumar said that CRGY reported an oil-driven production and EBITDAX (earnings before interest, taxes, depreciation, amortization and exploration expense) beat, with lower capital expenditure.

Kumar noted that following Crescent’s two Western Eagle Ford acquisitions, the company is already displaying impressive capital efficiency improvements, realizing about 20% drilling and completions well cost savings compared to the prior operator. This suggests an incrementally better 2024 outlook compared to the company’s preliminary soft forecast, the analyst said.  

“Moreover, the company is further demonstrating it can deliver on its acquisition-driven model in the public market arena, which should give investors additional confidence in the strategy,” said Kumar.

In line with his bullish stance, Kumar reiterated a buy rating on CRGY with a price target of $19. (See CRGY Insider Trading Activity on TipRanks)

Diamondback Energy

Diamondback Energy (FANG) is an oil and natural gas company focused on assets in the Permian Basin in West Texas. On Nov. 6, it delivered better-than-projected third-quarter results. Also, the company announced a base dividend of 84 cents per share and a variable cash dividend of $2.53 per share, both payable on Nov. 24.

Diamondback said that the base and variable dividends combined indicate an annualized yield of more than 8%. It is worth noting that FANG also enhanced shareholder returns through share repurchases worth $56 million in Q3 2023.  

In reaction to the results and dividend announcement, RBC Capital analyst Scott Hanold said that Diamondback’s execution remains strong. He added that the company’s shareholder return strategy is differentiated, noting, “FANG quickly pivoted to higher levels of dividends, but was still able to execute buybacks and among the lowest relative points during the last quarter.”

The analyst noted that the company repurchased shares worth $1.9 billion at an average 6% discount to market prices since the start of 2022. He pointed out FANG’s discipline to purchase shares only during periods of significant price disconnects from the stock’s intrinsic value.

Hanold maintained a buy rating on FANG stock and raised the price target to $175 from $170 to reflect stronger free cash flow and stock buybacks executed at accretive value point. He ranks No. 16 among more than 8,600 analysts on TipRanks. His ratings have been successful 64% of the time, with each rating delivering an average return of 24.4%. (See Diamondback Hedge Fund Trading Activity on TipRanks)

Starbucks

Finally, there is coffee chain Starbucks (SBUX), which impressed investors with its fiscal fourth-quarter beats earlier this month. The demand for the company’s pricier beverages and higher traffic in the domestic market boosted its quarterly performance.  

The company also announced its long-term strategy called “Triple Shot Reinvention with Two Pumps,” which will focus on elevating the brand, bolstering and scaling digital presence, and expanding globally, while unlocking efficiency and reinvigorating partner culture.

Coming to shareholder returns, in September, Starbucks announced a 7.5% rise in its quarterly dividend to 57 cents per share, payable on Nov. 24. Starbucks initiated its dividend payments in 2010 and has increased its dividend for 13 straight years at a compound annual growth rate of about 20%. SBUX offers a dividend yield of 2.2%.

Following the fiscal Q4 results and updates on the long-term strategy, BTIG analyst Peter Saleh reiterated a buy rating on SBUX with a price target of $125. The analyst highlighted the company’s better-than-anticipated global same-store sales growth of 8% in fiscal Q4 and noted that traffic gains and solid operating margin fueled the earnings beat.

“We believe Starbucks has a compelling return profile as its unfolding sales and economic recovery is matched by continued global unit development and stronger shareholder return targets,” said Saleh.  

Saleh ranks No. 504 among more than 8,600 analysts tracked by TipRanks. His ratings have been profitable 58% of the time, with each delivering an average return of 9.10%. (See Starbucks’ Stock Charts on TipRanks)

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Treasury Department’s hunt for Russian oil sanction violators on the seas is intensifying

Post By Oil and Gas , , , , , , , , , , , , ,

A Russian-chartered oil tanker in the sea off Morocco in an area identified by maritime technology company Windward as a hub for smuggling oil.

Europa Press | Getty Images

The U.S. Department of the Treasury’s Office of Foreign Assets Control announced three vessels and shipping companies being sanctioned for violating the Russian oil sanctions on Thursday, only a few days after Treasury began a separate, larger probe of approximately 30 ship management companies covering 100 vessels suspected of violating a price cap on Russian oil.

“Shipping companies and vessels participating in the Russian oil trade while using Price Cap Coalition service providers should fully understand that we will hold them accountable for compliance,” said Deputy Secretary of the Treasury Wally Adeyemo in a statement on Thursday. “We are committed to maintaining market stability in spite of Russia’s war against Ukraine, while cutting into the profits the Kremlin is using to fund its illegal war and remaining unyielding in our pursuit of those facilitating evasion of the price cap.”

But as the Treasury seeks to cut off the Kremlin’s access to oil profits, its hunt for crude tankers and shippers violating OFAC guidelines is revealing complexities in its own guidelines and a murky marine industry.

The shipping entities identified on Thursday were United Arab Emirates-based. The vessels were Kazan Shipping Incorporated’s Kazan, Progress Shipping Company Limited’s Ligovsky Prospect, and Gallion Navigation Incorporated’s NS Century. But while those ships are now UAE-based, Matthew Wright, lead analyst of freight at marine intelligence firm Kpler, tells CNBC the location of where the company is based may be different from the location of the beneficial owner. In this case, Wright says the beneficial owner is likely still Russian-based.

“Based on the history of these fleets, these vessels were all owned and operated by Sovcomflot,” Wright said. “Management of all the Sovcomflot ships was transferred to Sun Ship Management in March/April 2022 when their offices in Europe were closed. Those three companies are now managed by a new manager called Oil Tankers SCF Management but it’s just another name. Ownership hasn’t changed since 2006. They’re not part of either the dark or grey fleet really as I consider them still Russian-owned.” 

30 ship owners targeted in new Treasury probe

This is just one example of the murkiness within the Russian oil trade. The probe against 30 shipowners begun earlier this week reveals how identifying and finding proof of vessels traversing the oceans with sanctioned oil is not as straightforward as suggested by initial headlines covering the Treasury allegations. These companies received warning letters from the government about activity deemed suspicious and requests for documentation. There are grey areas in the U.S. government’s Russian oil guidelines, though the efforts can ultimately lead maritime investigators to the truth.

In the U.S. Treasury’s “Preliminary Guidance on Implementation of a Maritime Services Policy and Related Price Exception for Seaborne Russian Oil,” ship owners are under a Tier 2 category. According to the Treasury, this group within the maritime industry are “actors who are sometimes able to request and receive price information from their customers in the ordinary course of business.”

If a ship owner is unable to obtain such pricing information, according to the Treasury’s guidelines, the Tier 2 actors (ship owners) need to request “customer attestations” where their charter customers pledge in a document they will not purchase seaborn Russian oil above the price cap.

This document could provide a “safe harbor” for ship owners who are relying on that customer’s “attestation” to comply with sanctions. This safe harbor is also extended to the ship insurance companies.

“Ship owners rely on the charterer to provide ample proof that the Russian oil on board the vessel has been sold below the price cap,” said Andy Lipow, president of Lipow Oil Associates. “The sanctions can easily be circumvented if a dishonest charterer presents documents that falsify the true cost of the oil.”

Lipow said one clue to suspicious paperwork is a price of oil that is well below the market, selling Russian crude oil in Asia today at $50 per barrel when Brent is trading at $80.

“That is a red flag,” Lipow said.  

Based on the safe harbor, if the ship owner or management company can be absolved of wrongdoing, the documents can still lead Treasury to the charterer.

The U.S. Treasury told CNBC it does not comment on current investigations.

Tracking Russian oil

A breakout of the Russian oil trade by Kpler shows around 30% of Russian exports from Western ports are still using commercial shipping with beneficial ownership within the European Union.

Wright said this “dark fleet” is comprised of vessels typically 20 years and older which have loaded or predominantly loaded Venezuelan or Iranian cargoes in the last few years.

“There is often some evidence that they have been disguising their activities by turning off their AIS, but not in all cases,” said Wright, referring to the automatic identification system used by marine vessels to track location. “Ownership is often opaque and the operator does not engage in standard commercial shipping outside of operating these vessels.”

There are also “grey fleet” vessels sold since the Russian invasion of Ukraine with the aim of transporting Russian exports and avoiding sanctions. These vessels, according to Wright, have had EU ownership.

“Most vessels have been sold by owners based in Europe to owners who were not previously active in the tanker market,” he said. “The owners are based mainly in Hong Kong, China, India, and the UAE.”

The price cap rules state that exports of Russian crude or refined products on EU-owned, insured, or serviced tonnage must be below the relevant price cap.

Since July, Wright says most exports from Russia are assumed to be above the caps, yet a large number of ships from within the EU continue to trade. This is because of the way Russian crude is traded.

“It is very likely vessels loading Russian cargoes that are EU-owned will have documentation showing a crude trade below the price cap, even if the cargo was actually traded above the price cap,” Wright said. “This is because a charterer or middleman will have traded it at a price that can be shown to the owner as part of a wider trade with the final buyer. The (vessel) owner is unlikely to have any evidence to the contrary.”

Vessel owners do not produce these documents, he said, but are provided with these documents by the charterer.

“The vessel owners are merely the custodians of information provided to them,” Wright said.

Beks Shipmanagement & Trading confirmed to CNBC it is among the companies that received warning letters from the Treasury this week and is sending documents to the government. The company had been identified in earlier press reports, though Treasury declined to specify companies to receive letters.

In an email to CNBC, the company rejected the Treasury’s allegations. “Despite the fact that the U.S. Treasury Department requested voyage details from 30 different ship management including 100 vessels, it is an obvious bad faith and reputation damaging purpose that only our management company was mentioned in the news recently circulated in the media,” a Beks spokesperson wrote.

The company, based in Turkey, announced in October the deployment of SpaceX’s Starlink satellite connectivity system across its fleet of 40 bulkers and tankers for enhanced vessel tracking.

“Our vessels are traded worldwide with their tracking system always switched to the on position. We employ our vessels by abiding (by) all international laws and regulations without breaching any sanction regime,” the company wrote in the email.

Beks said it has been conducting due diligence procedures on all of its voyages as well as carrying out the necessary sanction checks with its London-based lawyers.

According to Kpler, Beks Shipmanagement’s fleet had numerous tanker port calls to Russia since the start of sanctions on February 24, 2022. One example is the oil products tanker Bek Aqua.

Kpler was able to track the travel of the tanker using the tanker’s satellite beacons through the AIS short-range coastal tracking system currently used on ships.

The tanker Beks Aqua arrived at the Russian Port of Nakhodka on Oct 26 and was loaded with either diesel or Naptha on November 1. The vessel then arrived at the Port of Singapore on November 10 and departed empty on November 14.

But following the satellite data doesn’t allow for understanding of contract prices.

“While we can track the vessel’s journey from Russia to Singapore, unless we have the sales contract, we do not know the price the oil product was purchased for,” Lipow said. “The only fact we have is companies like Beks Shipping are employed to move Russian oil. It is possible that someone filed false paperwork with the shipowner. This is why tracking the Russian oil sanctions is not straightforward,” he said.

Beks Shipmanagement said the requested voyage details will be provided to the U.S. Treasury with full transparency.

We're using sanctions to deny Russians the weapons they need, Deputy Treasury Sec. Wally Adeyemo

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