TheChek News Flow

Billionaire hedge fund titan Steve Cohen is pursuing the rights to build a casino in Queens with the same zeal with which he has stockpiled the high-priced roster of his Mets, according to a report.

Cohen, whose net worth is valued by Bloomberg at $13.1 billion through his ownership of the Point72 Asset Management hedge fund, has hired an army of lobbyists to persuade local officials to grant him a license to operate one of three casinos planned for the New York City area.

“He has hired the best team that money can buy,” Warren Schreiber, who heads a Queens civic organization opposed to the casino, told Bloomberg News.

Cohen was the largest single donor to Mayor Eric Adams’s 2021 election campaign, pumping $2 million into outside PACs to support Adams in the Democratic primary, Bloomberg reported.

HIs chief of staff at Point72, Michael Sullivan, has contributed to the political campaigns of elected officials who will grant approval for a casino license, including Gov. Kathy Hochul and state lawmakers from Queens, according to Bloomberg News.

The Mets owner, who is vying for the prized license against heavyweight competitors such as the Adelson family-owned Las Vegas Sands, Resorts World, Related Cos. and Wynn Resorts, is reportedly partnering with Seminole Hard Rock on a bid to build a gaming site on land adjacent to Citi Field in Flushing, Queens.

The Seminole Tribe of Florida acquired the Hard Rock brand in 2007.

The company operates dozens of casinos and resorts throughout North America, including the Mirage in Las Vegas.

Cohen and Seminole Hard Rock would build the casino on a parking lot just west of Citi Field.

To win a license, Cohen must first pay a $1 million application fee. If he is chosen, he must then fork over $500 million for the license itself.

Anyone who snags a casino license must then commit to spending an additional $500 million as a minimal investment in the project, according to Bloomberg News.

Judging by his ownership of the Mets, money is no obstacle to Cohen, who has reportedly retained the services of eight lobbying firms who are pressing elected officials in both city and state government.

The Mets this year have the highest payroll in major league history at $353 million.

Last year, a Cohen ally, Vincent Tortorella, formed New Green Willets, a limited liability company that is planning to spend at least $729,000 this year in lobbying fees for licensing, gaming, and land use issues.

Cohen’s wife, Alexandra, donated $117,300 to New York State’s Democratic Committee last year, according to The City.

Sullivan gave some $35,000 total to several state lawmakers who represent the areas in and around Citi Field.

Last month, Queens Assemblyman Jeffrion Aubry introduced legislation that would allow Cohen to redevelop the overflow parking lots around the baseball team’s Citi Field into a casino and entertainment complex.

In addition, Cohen has spent more than $1 million on a public relations blitz including “visioning” sessions with Queens residents as well as social media campaigns and a web site called “Queens Future.”

The “Queens Future” website makes no explicit mention of a casino. Instead, it speaks about an “opportunity” to “re-imagine this space and transform our future.”

A casino in the five boroughs would be a cash cow for whoever owns it as well as for the state, which would get a cut of the profits

An analysis commissioned by the state found that a casino in Queens could potentially generate $1.9 billion per year by 2025.

A casino in Flushing would be particularly advantageous for Cohen given the large Asian immigrant population in Queens — a coveted demographic..

One possible stumbling block to a Cohen-owned casino is the state’s requirement of a background disclosure form where applicants attest to their “integrity, honesty, good character and reputation.”

In 2014, Cohen’s hedge fund SAC Capital was forced to pay a $1.8 billion penalty to the federal government after pleading guilty to wire fraud and securities fraud.

Cohen, who was never charged criminally, was accused of failing to prevent insider trading at the company, which he founded in 1992 and which bears his initials.

The Post has sought comment from Cohen.

• The company has been under investigation by the Securities and Exchange Commission following The Information’s report last year about employee concerns

Abraham Shafi has stepped down as CEO of messaging app IRL following allegations that the company used bots to inflate the users it reported publicly and to investors, according to a person with direct knowledge.

The abrupt change happened after The Information reported a former employee alleged he was fired after expressing concern that a high percentage of IRL’s 20 million claimed users were bots. He researched the matter inside the company, which raised around $200 million from investors including SoftBank Vision Fund and Founders Fund, after The Information’s May 2022 report that other employees had expressed similar concerns. The Securities and Exchange Commission has been investigating whether the company violated securities laws, including in the way the startup described its business performance during talks with investors.

Shafi told The Information at the time of the May 2022 report that external measures of the app’s popularity, which showed much lower usage compared to the company’s user claims, didn’t account for teenagers and web visitors. Shafi couldn't immediately be reached for comment on Friday.

IRL’s app—whose name stands for “in real life”—allows users to chat about shared interests and plan real-world events. The seven-year-old startup raised capital from investors including SoftBank, Floodgate Fund, Goodwater Capital and Founders Fund, most recently in 2021, when it was valued at $1.2 billion after an investment. Kleiner Perkins and Dragoneer Investment Group also invested in the company, according to PitchBook

Schedules and emails detail meetings in the years after he was a convicted sex offender; visitors cite his wealth and connections

Training exercise points to larger difficulties as U.S. pivots toward China

The 31st Marine Expeditionary Unit is meant to be a rapid-response force, designed for quick deployment to handle crises anywhere in the Asia-Pacific region.

At times, it doesn’t have the ships to leave its bases in Japan.

The unit was supposed to be on board the amphibious warship USS Rushmore earlier this year for a training exercise intended to help maintain readiness. Then the Rushmore had maintenance problems, and the mission was scrubbed, defense officials said.

While the immediate impact was limited to a training exercise and temporary after another ship was brought in weeks later, the Marine unit’s grounded status illustrates the larger obstacles the U.S. is facing as it tries to pivot its military to handle challenges from China.

The Rushmore is large enough for helicopters to land and take off, and the lack of such warships, defense officials said, might prevent Marine units from deploying on time. In a crisis, the officials said, the Marines could make do with other types of ships, but going without the aircraft supported by the larger amphibious assault ships means no air cover, hampering troop landings and limiting operations.

Overall, the defense officials said, the Navy doesn’t have enough amphibious ships to transport troops—a central part of the Marines’ strategy to hop from island to island in the Asia-Pacific and harry Chinese forces in the event of conflict.

The bigger amphibious assault ships, known as big-deck ships, are in particularly short supply. Of the 31 such ships in service, roughly a third have undergone sufficient maintenance and training to deploy, according to Marines statistics. If one of those amphibious assault ships has maintenance issues, it can delay a mission, defense officials said.

“We are at the point where any little problem with one of the amphibious ships throws the schedule for the whole fleet and affects the Marines’ ability to deploy,” said Bryan Clark, a senior fellow at the Washington-based Hudson Institute. “If the pivot toward Asia really was a priority, we would ensure that the Pacific-facing amphibious ships were maintained ready.”

A Pentagon spokesman, asked for comment, referred to Defense Secretary Lloyd Austin’s remarks in March pointing to increased investment in forces and training exercises in the Indo-Pacific region. The spokesman declined to address the Marine unit’s deployment.

The Navy and Marine Corps referred requests for comment to the U.S. Pacific Fleet, which said in a statement that the Marine unit will soon deploy with other amphibious ships, though it didn’t say when.

Defense strategy documents, starting five years ago, identified China as a primary competitor for the U.S., setting in motion a shift of resources and plans to counter the Chinese military. Adjusting to the new priorities is running into difficulties after decades of fighting insurgents and dealing with threats from countries such as Iran.

The U.S. Air Force is reducing the number of F-15 jet fighters stationed in the Asia-Pacific region, though new replacements won’t be fully in place for two years, leaving what some military specialists say is a vulnerable gap. The Army has set up task forces to study its role in any future conflict in the Asia-Pacific but remains centered on Europe and other parts of the world. Other than adding a submarine in Guam, a front-line base, the Navy has yet to increase its presence, defense officials have said.

The limited number of amphibious ships affects a range of operations, defense officials and military specialists said. Gen. David Berger, the Marine Corps commandant, said earlier this year that the Marines couldn’t support earthquake relief in Turkey because there were no ships to transport the troops.

That shortage could become critical if China were to move against Taiwan, a longtime U.S. partner that Beijing has vowed to take control of, by force if necessary. If Taiwan faces a China threat, “time matters,” Gen. Berger said in recent congressional testimony.

“Most of the cases, you need a seaborne force,” Gen. Berger told the Senate Armed Services Committee. “And you need Marines that can project power ashore.”

Based in Okinawa, the 31st Marine Expeditionary Unit is made of roughly 2,200 Marines. On its website, the unit describes itself as “positioned to respond to crisis anywhere in the world.”

Units such as the 31st are likely to take a leading role if China moves against Taiwan or tries to seize other islands it claims, from the South China Sea to Japan’s outlying islands.

To deploy, those expeditionary units rely on a group of three ships known as an amphibious ready group, led by an amphibious assault ship, with a deck from which aircraft can take off. The ships are known as the Marines’ “ship-to-shore connector.”

After the Rushmore broke down, the Navy sent the USS Ashland, which also can launch helicopters, as a replacement, according to the Pacific Fleet, which is responsible for U.S. naval operations in the Asia Pacific region. It wouldn’t say how long the 31st waited for the replacement and how long the Ashland stayed in the region.

The 31st’s deployment problem is part of a debate over the size and shape of the future Navy. The Navy has said that it is meeting a congressionally mandated number of 31 amphibious assault ships and that it doesn’t have the funds to build more of the vessels, which cost as much as $2 billion a piece.

The Navy’s $255.8 billion budget request for fiscal year 2024 proposes decommissioning several amphibious warfare ships to save money and determine which kinds of ships are needed to deter China, Adm. Mike Gilday, the chief of naval operations, said at a recent congressional hearing.

Earlier this year Navy Secretary Carlos Del Toro said that there was a “strategic pause” on buying amphibious ships while the Pentagon conducts a classified study on the cost- effectiveness of building future ships.

While testifying before the Senate Armed Services Committee recently, Mr. Del Toro faced criticism from legislators who said the budget doesn’t address short-term needs.

“Let me be clear: this budget request has failed—yet again—to build a U.S. Navy fleet that is capable of meeting even basic tasks, to say nothing of growing strong enough to deter near-term threats,” Sen. Roger Wicker (R., Miss.) told Mr. Del Toro.

The sanctions net around Russia is tightening — but there is scope to do more

Too many countries are at best ambivalent and at worst profiting from helping the Kremlin evade sanctions

In February 2022, I compared the UK’s first round of sanctions against Russia and the Putin regime to taking a peashooter to a gunfight. The threat of sanctions failed to deter Vladimir Putin’s full-scale invasion of Ukraine and their early imposition was slow and lacked bite. Western leaders were initially poor at articulating their ambitions — which ranged from “degrading and disrupting” Russia’s supply chains to “shaking” the foundations of its economy. But they are now restricting Moscow’s access to the international financial system and applying ever-greater trade restrictions. 

While the tempo of sanctions designations has remained high, and the targets have broadened, the coalition of countries implementing sanctions has not. The holes in the net are significant and manifold. Too many countries are at best ambivalent and at worst profiting from providing sanctions circumvention opportunities for the Kremlin and its proxies. 

The recent US warning that Russia is trying to repair its degraded military industrial supply chains by getting around western export controls was a welcome one. The Financial Action Task Force (FATF), the global watchdog on financial crime, has also drawn attention to the risks posed to the financial system by Russia’s activity, such as its reported arms trades with other sanctioned jurisdictions. But this signalling presupposes that countries ignoring allied sanctions are inclined to agree with the view of the FATF (or the US). The UK and the EU do, but those countries providing circumvention opportunities for Russia are far less diligent, and indeed some rail against the FATF, seeing it as hypocritical.

Far better than relying on uninterested states to react to a process or guidance they already disregard, is to pressure their companies. While the UAE, Turkey and South Africa may choose to ignore sanctions decisions made in Washington, London and Brussels, the interconnected nature of global trade means their companies and financial institutions cannot: they need connections to international partners and are thus sensitive to the signals they receive.

For example, a bank in a non-compliant country that continues to offer financial services to designated companies or individuals will almost certainly require access to the international financial system. This access is most often provided by large, globally-operating banks located in the US, Europe or the UK that are required to implement sanctions to the letter. These correspondent banks must at the very least increase their scrutiny of these client banks, and if necessary sever their relationships altogether to avoid facilitating circumvention. Harnessing influence to coerce sanctions compliance in this way may seem distasteful, but so too is facilitating the funding and resourcing of Moscow’s war machine.

Beyond their direct connections with third country financial institutions, these global banks also facilitate trade finance payments and should be alert to changes in their corporate clients’ activities since the Ukraine invasion. In particular, they should interrogate companies which have increased business with the countries — such as Armenia, Kazakhstan and Turkey — that are acting as trade “cut-outs”, in effect helping Russia to evade sanctions.

Finally, those companies in countries that facilitate sanctions circumvention — such as the Iranian provision of drones to Russia — must themselves be added to the designation lists, to restrict their access to western markets. This has the added benefit of signalling to companies in compliant countries that dealing with these less scrupulous actors poses significant risks.

It was encouraging to see some efforts in this direction as part of the renewed western sanctions imposed on the first anniversary of Russia’s invasion. But there is still more that could be done — starting with better domestic implementation of sanctions in allied countries and more robust diplomatic engagement to reverse the progress Russia has made in blunting international support for sanctions.

There is no doubt that Ukraine’s allies have learnt lessons from their lacklustre sanctions response to Russia’s annexation of Crimea in 2014 and have come a long way from their tentative start last year. But as the Kremlin adapts and disguises its supply chains and financial connections, the west will need to assess and adjust its activities accordingly. On second thoughts, maybe there is no shame in taking a peashooter to a gunfight — as long as it is suitably nimble.

The writer is head of the centre for financial crime and security studies at the Royal United Services Institute think-tank

Berkshire Hathaway vice-chair foresees pain in FT interview — but it will not be as severe as 2008

Charlie Munger has warned of a brewing storm in the US commercial property market, with American banks “full of” what he said were “bad loans” as property prices fall.

The comments from the 99-year-old investor and sidekick to billionaire Warren Buffett come as turmoil ripples through the country’s financial system, which is reckoning with a potential commercial property crash following a handful of bank failures.

“It’s not nearly as bad as it was in 2008,” the Berkshire Hathaway vice-chair told the Financial Times in an interview. “But trouble happens to banking just like trouble happens everywhere else. In the good times you get into bad habits . . . When bad times come they lose too much.”

Munger was speaking on the veranda of his home in Greater Wilshire, a leafy neighbourhood of Los Angeles where he has lived for 60 years since he designed the property himself.

Dressed in a plaid shirt, Munger held court from his wheelchair as the travails of ailing California-based bank First Republic were playing out in real time on a television screen airing CNBC in the background.

Berkshire has a long history of supporting US banks through periods of financial instability. The sprawling industrials-to-insurance behemoth invested $5bn in Goldman Sachs during the 2007-08 financial crisis and a similar sum in Bank of America in 2011.

But the company has so far stayed on the sidelines of the current bout of turmoil, during which Silicon Valley Bank and Signature Bank collapsed. “Berkshire has made some bank investments that worked out very well for us,” said Munger. “We’ve had some disappointment in banks, too. It’s not that damned easy to run a bank intelligently, there are a lot of temptations to do the wrong thing.”

Their reticence stems in part from lurking risks in banks’ vast portfolios of commercial property loans. “A lot of real estate isn’t so good any more,” Munger said. “We have a lot of troubled office buildings, a lot of troubled shopping centres, a lot of troubled other properties. There’s a lot of agony out there.”

He noted that banks were already pulling back from lending to commercial developers. “Every bank in the country is way tighter on real estate loans today than they were six months ago,” he said. “They all seem [to be] too much trouble.”

Munger grew up in Omaha, Nebraska, a few hundred feet from where Buffett now lives. The two met in 1959, when Buffett was 28 and Munger 35. Munger, who at one point worked in a grocery store owned by Buffett’s grandfather, trained as a lawyer before being coaxed into investment by his soon-to-be partner.

Berkshire Hathaway chair Warren Buffett, left, and vice-chair Charlie Munger have known each other since 1959 © Scott Morgan/Reuters

Buffett has credited Munger with encouraging him to move on from the “cigar-butt strategy” espoused by his mentor Benjamin Graham, which involved buying cheap stocks akin to a discarded cigar where just a single puff of value remained.

In 2015, Buffett wrote in the conglomerate’s 50th annual letter: “The blueprint he [Munger] gave me was simple: Forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices.”

This approach has served them well. Berkshire has generated compounded annual returns of nearly 20 per cent, twice the rate of the benchmark S&P 500 stock index, since 1965.

“We were a creature of a particular time and a perfect set of opportunities,” said Munger, adding he had lived during “a perfect period to be a common stock investor”.

He and Buffett had benefited “by and large [from] low interest rates, low equity values, ample opportunities”, he said.

Munger said he had made most of his money from just four investments: Berkshire, retailer Costco, his investment in a fund managed by Li Lu’s Himalaya Capital and Afton Properties, a real estate venture that owns apartment buildings in California and New Jersey. Forbes estimates his wealth at $2.4bn.

“It’s the nature of things that a very intelligent man working hard maybe gets three, four, five really good long-term opportunities of buying great companies at a cheap price,” he said. “It happens rarely.”

Ahead of the company’s annual meeting on Saturday, tens of thousands of Berkshire shareholders will descend on Omaha to hear from the two nonagenarian investors as they attend something akin to a festival of capitalism.

But Munger warned that the golden age for investing was over and investors would need to contend with a period of lower returns.

“It’s gotten very tough to have anything like the returns that were obtained in the past,” he said, pointing to higher interest rates and a crowded field of investors chasing bargains and looking for companies with inefficiencies.

“[At] the exact time that the game is getting tougher we’ve got more and more people trying to play it,” he said.

Berkshire has struggled to find worthwhile investments at times over the past decade, a fact epitomised by a cash balance that often sits in excess of $100bn and the choice by the company to buy back tens of billions of dollars of its own shares.

Munger also took aim at his own industry, hitting out at a “glut of investment managers that’s bad for the country”. Many of them are little more than “fortune tellers or astrologers who are dragging money out of their clients’ accounts, which [is] not being earned by any useful service”.

He had harsh words for buyout groups as well. “There’s too much private equity, too many buyers of all kinds . . it’s making it a very tough game for everybody.”

“The people getting the fees are still doing well,” he said of private equity fund managers. But he warned: “People that aren’t being served very well by paying all those fees may eventually be unwilling to pay them.”

Where Buffett has emphatically told Berkshire shareholders to “never bet against America”, Munger is more cautious. “I do not think that we can take it as a given that American democracy will prosper and flourish forever,” he said. “But I think we’ll stumble through pretty well for quite a while yet.”

On his own imprint on the world, Munger said: “I would like my legacy to be a more relentless determination to develop and use what I call an uncommon sense.”

With the prices of flour, butter, and eggs skyrocketing, the headwinds facing boulangeries in France’s capital highlight why the European Central Bank is facing a tougher struggle than the Federal Reserve.

A short march from the Gare du Nord station in Paris’s 9th Arrondissement, Charles Ye and Maeva Manchon wake early to follow their passion—baking baguettes, croissants, and cakes at the boulangerie they started three years ago.

Sipping shots of searing-hot espresso, they say the problem is that runaway inflation means they are no longer able to pay themselves with the bakery’s earnings. Since Russia invaded Ukraine last year, the cost of electricity has jumped almost four times. Flour, butter, and eggs are all about 50% more expensive, according to the bakers.

“Prices for everything went up, and they’re still going up,” says Ye from the office of his Union Boulangerie. “When it all started, we thought, OK—it’s temporary, Ukraine, we accept it. But now it’s becoming normal.”

There are plenty of complaints about rising prices in the U.S. But for Parisian baguette bakers, it has become an existential crisis. Input costs are rising much faster than Manchon and Ye can raise prices for their goods. It’s a squeeze that is hitting France’s 33,000 bakeries particularly hard.

Inflation in the euro zone—the 20 countries in the European Union that share the currency—looks to be harder to tackle than it is in the U.S. The biggest reason: The European Central Bank started raising interest rates later than the Federal Reserve, fueling expectations that inflation will last for longer—which could become a self-fulfilling prophecy.

It’s the expectation that prices will probably keep rising that is most dangerous for central bankers, whose job it is to keep the inflation rate at about 2%. While rates are retreating now, there’s reason to believe it will take ECB President Christine Lagarde longer to win the battle against price rises than it will for Federal Reserve Chairman Jerome Powell.

Both were caught a bit off guard by inflation’s return after more than a decade of weak price gains. The emergence from the Covid-19 pandemic provided the spark, but it was Russia’s invasion of its neighbor in February 2022 that poured fuel on the fire. The euro zone’s inflation rate peaked at 10.6% in October and is now at about 7%, compared with about 5% in the U.S.

The problem for central banks is they don’t have direct control over the cost of all the things that go in the basket of goods and services measured to calculate inflation. In the short term, there is absolutely nothing the central bank can do to lower the price of electricity or flour.

Broadly speaking, when the central bank wants to rein in price increases, it raises interest rates to limit the amount of money in the economy. With less money around to spend, companies can’t charge as much, thus inflation cools.

That’s the theory. In practice, there are multiple channels through which monetary policy works. The key point is that the central bank has influence on inflation only at a very early stage in its pipeline. Academics reckon it takes a year or two for rate hikes to do their job.

The other key thing is that monetary policy really only affects the demand side of the economy—how much people can buy. It’s powerless to change the supply side—how much is available for sale.

These constraints create a challenge for central banks. When the prices of things such as energy go up suddenly (supply-side issues that policy makers can’t control), workers respond by asking for higher pay to maintain their standard of living. Higher pay lifts the demand side of the economy, strengthening inflation for the longer term, ultimately forcing central banks to raise interest rates higher than they would otherwise in an effort to get inflation back under control.

The case of Union Boulangerie makes the point. As well as having higher costs for power and ingredients, Ye and Manchon are raising wages for their employees by about 10% and expect to have to do so again next year and the year after, in no small part because everyone expects inflation to stick around. Before, wages were going up only 4% to 5% a year.

The same thing has played out on a larger scale. Wage growth has picked up substantially on both sides of the Atlantic, but might be more likely to stay stronger in Europe than in the U.S. That’s down to labor unions, more powerful across the pond, bargaining on workers’ behalf.

The Boulangerie Castellane, an artisan bakery that handmakes pastries, cakes, and tarts using traditional techniques, can be found close to the famous Palais Garnier opera house.

Wiping away the crumbs of meringue and mille-feuille from the display case, Castellane’s Jonathan Coscas tells Barron’s: “If prices are going up, we have to pay more if I want to keep my employees. But the bigger worry is that I’ll lose my customers.”

There are other reasons why inflation may prove stickier in Europe. The war in Ukraine is on its doorstep and is still limiting gas supplies, keeping energy prices higher for longer. Governments in France and elsewhere are supporting companies and consumers with subsidies to get through the price spike, but that can also add to inflation pressures by giving people more money to spend.

Across the Seine from Boulangerie Castellane—in the shadow of the Eiffel Tower—is Boulangerie Patisserie Coudrier Geffroy, run by Freddy Coudrier.

“Energy is the big problem,” he says as he prepares lunchtime wine for guests at the bustling cafe attached to his bakery. “I’ve raised my prices by a few cents on some products, but not yet on the baguette. The competition is tough.”

Erik Norland, senior economist at CME Group in London, points out another factor in Europe—countries there are hugely increasing military spending in a way the U.S. isn’t. Defense spending is particularly inflationary because the goods produced aren’t directly consumed in the economy.

What’s more, the ECB started raising rates later than the Fed, waiting until July last year before starting its campaign, compared with last March for the Fed. While both started with rates around zero, the Fed has also moved them up much further. Given the lags between higher rates and the impact on inflation, it’s reasonable to think it will take longer for European hikes to kick in.

Moreover, the ECB may not be able to hike as much as the Fed because of how the euro area is set up. The ECB sets interest rates for 20 nations, all with different economic situations and needs. One reason it started so late might be because the last time it lifted rates, it caused huge problems for some countries that had trouble rolling over their bonds at higher rates. The ECB has introduced new tools to prevent similar issues from happening again, though it is well aware that there is always a risk of surprises.

“Central banks tend to raise interest rates until something goes wrong,” says CME’s Norland. “But it’s very possible that here in Europe, they haven’t yet done anywhere near enough to contain inflation.”

The good news is that, eventually, higher interest rates will conquer inflation. It’s painful and takes time, but the track record from the 1970s and early ’80s is the evidence. It just might take a little longer to get there in Europe than in the U.S.

Didier Boudy, president of Mademoiselle Desserts, which supplies cakes to bakeries in France, the Netherlands, and the United Kingdom, said his company is still raising prices as a matter of survival for the business. But he is hopeful that things will change.

“It has been a tsunami of inflation,” he says. “If we were not passing along price increases, we would have gone bankrupt very quickly. Long term, we hope it will ease off and we can reduce prices for some things. But it’s far too early to do it today.”

Meanwhile, bakers in Paris will feel poorer. Manchon and Ye say they’re still happy they are able to make a living from the work that is akin to a vocation, even though inflation is eating up most of their earnings.

“We can be like this for one or two years,” Manchon says. “But maybe at some point I won’t like working for almost nothing.”

Pop quiz: Name a company that doubled its earnings during the pandemic but now trades more cheaply than it did at the start of 2020, even as sales hit new records.

If you didn’t say Thermo Fisher Scientific (ticker: TMO), it may be because you forgot about this Covid beneficiary. Or because you never knew its name at all, even though its products help researchers create new drugs and tests that save lives. In either case, it’s worth getting to know now.

The Waltham, Mass., firm is the global leader in laboratory equipment, analytical instruments and technologies, and specialty diagnostics tools that are used across the healthcare, pharmaceutical and biotech industries. That positioned Thermo Fisher to reap huge benefits from Covid-19 testing, allowing earnings per share to jump from $12.35 in 2019 to more than $25 in 2021.

As the pandemic fades, earnings have dipped, taking the stock with them. But the slump shouldn’t last long.

“A lot of investors are too focused on what Thermo Fisher did during Covid and that it’s now slowing down, but that’s a minute part of the business,” says Craig Sarembock, principal at Bartlett Wealth Management, which owns the stock. “It’s unimportant to me, given that the company already provided really good guidance.”

In early February, Thermo Fisher offered full-year guidance when it reported better-than-expected fourth-quarter results, saying it expects to earn $23.70 a share in 2023 on revenue of $45.3 billion. That was ahead of the average analyst estimates for earnings of $23.07 a share and revenue of $43.8 billion. Still, the projected per-share profit is below 2021’s record $25.13.

The analysts’ consensus calls for Thermo Fisher to surpass that all-time high again in 2024, with earnings per share of $26.70. But the two-year decline has spooked investors, with the shares falling 14% since the end of 2021 as the company has faced difficult comparisons to the pandemic boom.

The upshot: The stock now trades at 24 times forward earnings, about its five-year average and below its pandemic high of 26.6 in December of 2021. Yet consensus estimates call for earnings to keep jumping–reaching more than $30 a share in 2025–while metrics like free cash flow and return on equity remain well above prepandemic levels. The average analyst price target is above $650, nearly 15% higher than Monday’s close of around $574.

“This is a stock to own for the long-term, and in terms of valuation, it certainly looks attractive for new purchasers now,” says Sarembock.

The shares also look appealing in the light of recent market turmoil: Although Thermo Fisher is often classified as a growth stock, it enjoys steady recurring revenue among loyal customers that often are doing intricate research and development.

“It’s exposed to the attractive dynamics in healthcare, where the process for creating drugs is more complex, tool intensive and tool sensitive,” says Sarah Kanwal, director and equity analyst at Crestwood Advisors, citing newer products like biologics and larger molecule drugs that are produced differently. “Thermo Fisher is the picks and shovels behind that trend. It’s agnostic to specific drugs or who the winners and losers are.” Crestwood owns the stock.

Or as Sarembock puts it: “No matter what [healthcare] companies are doing, they need Thermo Fisher for their labs.”

The confidence that comes with supplying a number of growing healthcare end markets—thanks to an aging population and increasing treatment options—was on display in the company’s most recent results. Chief Executive Marc Casper used phrases like “crushed it” and “phenomenal performance.” The company also boosted its dividend by nearly 17%, and its guidance implies 7% core organic revenue growth, excluding acquisitions.

Of course, it’s hard to talk about Thermo Fisher without talking about its acquisition strategy, which has helped it expand and diversify its revenue in terms of customers, geographies, and new products and business segments.

“Ten years ago, this was a different business, and much more instrument focused. If we had a recession then, it could have been a much bigger [problem],” says Douglas Kelly, partner and portfolio manager at Williams Jones Wealth Management, which owns the stock. “Today it’s not that cyclical of a business unless we get into a really nasty downturn.”

Thermo Fisher pulled off all the dealmaking without running up its debt ratios. In fact, net debt to earnings before interest, taxes, depreciation and amortization, or Ebitda, stood at 2.2 times at the end of last year, its second lowest level since 2013. Total debt to Ebitda, at 2.9 times, is well below the prepandemic period dating back to 2013.

Moreover, free cash flow is expected to reach $7.2 billion this year, nearly double where it stood in 2018. That gives the company flexibility to potentially pursue other acquisitions, and to increasingly return more cash to shareholders in the form of dividends and share buybacks, as it has been doing in recent years.

“This is the kind of business in our sweet spot,” says Kelly. “Good returns and a management team that does the right things with that cash. That’s the formula.”

Sounds simple enough, just like being diligent about diet and exercise. Though of course both are easier said than done. Until more of us learn to take that advice, and overcome numerous other healthcare hurdles, Thermo Fisher will have plenty of room to grow.