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Mike Taylor has transformed a military career into a private security profession overseeing high-stakes rescues

As a member of the US Army’s elite Green Berets he was trained to make daring parachute jumps behind enemy lines. As a security contractor he boasted deep experience across the Middle East, particularly in Lebanon, and had overseen high-stakes kidnapping rescues. He had also served time in prison for a bribery scheme involving $54m in US defence department contracts.

In others words, Mike Taylor appeared to have the right skills to help pluck Carlos Ghosn, the former Nissan chief executive, from Japan, where he was embroiled in criminal proceedings, and spirit him to his native Lebanon.

Mr Taylor’s purported handiwork as the orchestrator of Mr Ghosn’s daring escape has emerged in recent days, inspiring a sense of awe and wonder around the world at an episode that played out like a James Bond film.

It began, according to Japanese media reports, with a 300-mile trip aboard the country’s famous bullet train from Tokyo to an airport in Osaka whose security procedures had a soft underbelly. Mr Ghosn was then loaded into a packing case typically used for musical equipment to avoid passport controls. From there he departed on a private jet, arriving in Turkey, where he swiftly climbed aboard another private plane bound for Beirut.

Mr Taylor, 59, who transformed a military career into a series of private security businesses, did not respond to requests for comment.

But he reportedly spoke publicly for the first time about the fugitive businessman in an interview with a news site for US military veterans, published late on Monday.

The site, Connecting Vets, said that Mr Taylor had declined to speak on the record about the extraction of Mr Ghosn from Japan and whether or not he was involved.

It quoted him as saying: “The bottom line is this guy was a damn hostage that’s what it was. If he popped out of North Korea or China it would be a totally different narrative.”

Prior to the Ghosn escape, Mr Taylor had been toiling to rebuild his security career after his criminal conviction while also hustling for cash. He launched a sports performance drink called Vitamin1.

In a recent promotional blitz, Mr Taylor touted Vitamin1 as the official sports drink of the American football camp run by Rob Gronkowski, the former New England Patriots star.

Born in Staten Island, New York, Mr Taylor endured an itinerant childhood. After high school in Massachusetts, he followed his stepfather into the army, quickly moving into special forces.

His cold war-era speciality was known as “special atomic demolition munition”. He and other operatives were trained to jump from planes at high altitudes, deploying their parachutes only at the last instant. Their mission was to detonate portable nuclear weapons in Germany’s Fulda Gap in the event of a Soviet invasion.

A turning point in Mr Taylor’s life came in the early 1980s. He was dispatched to Lebanon to assist Christian militias after the assassination in 1982 of the country’s president-elect, Bachir Gemayel, and the Israeli invasion.

“It was through this work that Mr Taylor would begin a life-long relationship with Lebanon’s Christian community,” his attorney wrote in a memorandum arguing for a lenient prison sentence.

Mr Taylor left the army the next year but returned to Lebanon to work as a private security contractor, helping to train Christian forces. He learnt Arabic, and also courted Lamia Abboud, whom he married in 1985.

Lebanon also appears to be where he met George Zayek, a man who would work for Mr Taylor’s security companies in the Middle East and was, according to authorities, also involved in Mr Ghosn’s escape.

Mr Taylor and his wife returned to America and settled in a four-bedroom house in the rustic town of Harvard, Massachusetts. According to his lawyers, he used his experience to work as an undercover agent helping the US Drug Enforcement Agency, and others, to bust drug and counterfeiting operations back in Lebanon.

In 1994, Mr Taylor finally went into business for himself, founding the American International Security Corporation. It took on a mixture of government and private clients, including ABC, 20th Century Fox and Signature Flight Support, a service provider for private aircraft.

The New York Times Company hired Mr Taylor when one of its reporters, David Rohde, was taken captive in Afghanistan.

“They . . . set up an ‘emergency room’. They had a whiteboard. They were trying to negotiate,” said a person who closely followed the efforts to free the journalist, his fixer and driver. “I don’t think the phone ever rang.”

“They didn’t have a particularly accurate understanding of that particular country [Afghanistan]. But they were obviously pretty respected. For The New York Times to hire them they must have had the pedigree.”

Mr Rohde ended up escaping on his own in 2009.

But in another emergency, Mr Taylor played the hero. A North Carolina family hired Mr Taylor in 1999 after a rival security consultant had bungled an attempt to extract their daughter and her three children from Lebanon. The woman, Lucy Kolb Zantout, was trying to flee her Lebanese husband, who had become abusive, she said, and blocked her passport.

The first contractor managed to smuggle them into Syria, according to a legal case later filed by the Kolbs. This only worsened their plight since they were in the country illegally and at risk of being sent back to Lebanon. He could get them no further.

Enter Mr Taylor, who worked his contacts on both sides of the border. He eventually managed to get Lucy Kolb and her children arrested at the Lebanese border by Syrian police, sent back to Damascus for legal proceedings, and then remanded to a third country. They paid a $4 fine and were on a plane the next day to the US. Mr Taylor also rescued the other contractor. His fee: $155,000.

The wars in Iraq and Afghanistan appeared to be a particularly rich source of work for Mr Taylor. AISC’s assignments ranged from training commandos to guarding infrastructure in southern Iraq and even protecting officials investigating mass graves there for possible war crimes. Mr Taylor brought in Lebanese Christians to help, according to a former colleague.

It was an Afghan assignment that led to Mr Taylor’s downfall. According to federal prosecutors in Utah, he was given advance notice by an old friend from the special forces about an urgent contract request to train Afghan soldiers to manage their supplies.

Relying on confidential information, AISC tweaked its submission and ended up winning a relatively small contract that would eventually swell to $54m in billings. Some of the money was kicked back to Mr Taylor’s associates, according to prosecutors. When federal agents caught wind of the scheme, Mr Taylor sought to bribe an FBI agent to thwart their investigation.

At one point, he emailed his accomplices: “I will make you guys more money than you can believe provided they don’t think I’m a bad guy and put me in jail.”

Mr Taylor eventually pleaded guilty to one count of violating procurement laws and one count of wire fraud. He was sentenced to 24 months in prison but was released after 14 months.

Letters written to the court on Mr Taylor’s behalf by friends and colleagues portray a committed family man who coached youth football, looked after his ailing stepfather and cleared snow from neighbours’ drives without ever being asked.

They also give glimpses into his daring work. “In one particular instance we were engaged by armed criminals who sought to take us hostage,” a former colleague, Robert Rubin, wrote of a security assignment in the Middle East. “In that instance, Mr Taylor was smart, decisive and thoughtful in his direction of the team that caused a very dangerous situation to end safely without any loss of life.”

A mother attested to Mr Taylor’s commitment after he helped secure her daughter’s release four-and-a-half years after her father kidnapped her and brought her to Lebanon.

But, in a sentencing hearing, prosecutors pushed back against the narrative of Mr Taylor as an honest patriot. They argued that he had sought to shift the blame on to his accomplices in an effort to save himself. They had — mockingly — begun to refer to him as “Captain America”, one prosecutor, Maria Lerner, noted.

Ms Lerner also pointed to past cases in Massachusetts where Mr Taylor had been indicted on charges of illegal wiretapping and filing a false police report — and found to be paying off a federal agent to avoid possible labour racketeering charges.

“In other words, giving money to federal agents is nothing new to Mr Taylor,” Ms Lerner observed.

Mr Taylor’s finances were crushed by his legal troubles, with AISC’s revenue falling by more than 70 per cent in 2012 to just over $600,000. That, in part, appears to have led him into the sports drink business.

As Mr Ghosn’s escape draws attention to his exploits in Japan and Lebanon, he may have other talents to hawk — particularly for any deep-pocketed executives caught in a legal jam.

Nio, China’s once-vaunted answer to Tesla, had a difficult 2019.

After listing on the New York Stock Exchange in 2018 to much fanfare, raising $1bn in the process, the electric car company has been in a state of seemingly perpetual crisis as it’s staggered, like a newborn giraffe, from one problem to another.

There was the recall of 5,000 cars. The resignation of its chief financial officer. The negative gross margins on its vehicles. The cancelled, then restated, second-quarter conference call. And the $200m convertible bond deal that was announced in September, but never confirmed as closed.

But the biggest problem of all, as Alphaville wrote in early December, was Nio’s cash balance.

After reporting $491m in cash and cash equivalents on June 30, little was heard about the state of its coffers since. A particularly acute issue as Nio burned through $619m in the second quarter alone.

Imagine the relief for its largely international investors then, when Nio announced it was going to hold its annual general meeting on the convenient date of New Year’s Eve, in the even more convenient location of Shanghai.

For those too lazy to attend the festivities, Nio did also provide its third quarter figures on the day after a torturous three month wait and surprise, surprise, they weren’t good.

Here they are in full:

Just the negative 12.1 per cent gross margin on its vehicles this time around. Perfectly normal.

All eyes, however, were on its cash balance which came in at just $274m as of September 30 -- down $217m from the second quarter. The question, though, was whether this included the $200m convertible bond, financed by Tencent and founder William Li, which was announced in September but never confirmed as closed?

Well, we finally got an answer, Nio’s chief financial officer revealed on the ensuing conference call [transcript via Sentieo]:

As everyone knows, Tencent and William has signed contract with NIO to -- for USD 200 million CB [convertible bond], in third quarter. Tencent's CB has already been closed so the USD 100 million from Tencent is already in our Q3 report. And also, USD 90.5 million were received from William, the rest, USD 9.5 million are being processed, and the transactions will close soon. Perhaps, as a reminder, the key CB terms, investor could be equipped to find them an announcement on September 5.

So absent that extra $100m from Tencent, Nio would have had just $174m in the bank at the end of September, and that also means its quarterly cash burn was $317m.

These calculations are Alphaville’s own as Nio did not provide a cash flow statement in its letter (as an ADR, it is under no obligation to do so in its quarterly figures) but it is fair to say that $274m, plus the extra $90.5m from Mr Li, is just over three months worth of cash and, in case you weren’t aware, it’s now been three months since September.

There are some mitigating factors, however. Alongside some positive momentum in car sales, which should improve its cash position, Nio did reveal on the call that they’ve been taking several cost saving measures -- including layoffs and slashing its research and development budget -- and are also actively exploring new financing options. But in the week since the results (yes, it’s been that long since New Years Eve), there’s been no news of fresh capital.

Despite how precarious the results looked, however, it’s also been bad news for the short-sellers betting against Nio’s tradeable securities. The shares are up 65.8 per cent in the last month, as the results were better than expected (yes, you read that correctly), whilst the $750m convertible bond has traded up 21 points to 49.50, and is now offering a yield of 24.9 per cent, according to Bloomberg.

But that doesn’t mean concerns over Nio’s cash pile have gone away, and a financial deadline looms. In just under four weeks, on Feb 3, its due to pay a $16.9m coupon to the holders of its distressed convertible bond.

That may not sound like a lot to a company with a market capitalisation of $3.9bn, but absent news of financing in the interim, it may prove to be a more critical juncture than it should be.

An outright war, a major attack, or any sharp escalation of what has been mainly an exchange of threats following the drone attack that killed a top Iranian general, would likely prompt investors all over the world to panic and rush to buy VIX calls to hedge or trade the conflict. The increased trading volumes would benefit Cboe (ticker: CBOE), which exclusively lists and trades VIX options and futures.

When stock prices decline, the VIX tends to increase. The relationship is so well known that investors who are worried about declines, or want to short stocks, often buy VIX calls to profit from rising volatility.

We have mentioned in the past month that investors were starting to place defensive trades, centered around January, given the potential for tumult from the presidential campaign. The trades also provide protection from Iran-related market swings, but the possibility of war with Iran was never part of the mainstream narrative.

Now, war is a market factor and investors must decide if they want to ignore the risk, or try to get ahead of it. The latter is likely better—especially because you can do so with little expense.

Consider Cboe as a stock proxy for the current geopolitical and market risk. The company is well positioned to profit from war. Aside from VIX, the exchange also exclusively lists options on the S&P 500 Index. The two financial products are key tools that institutional investors use to manage portfolio risks.

So, if Iran attacks America, as it has threatened, investors would likely buy VIX calls and index puts to protect portfolios and trade the war. Cboe should see an increase in trading volumes, which would increase revenue, and the stock should respond favorably.

We realize that all of this sounds cold, given that it involves the loss of human life, but the potential moves are simply the reality of markets.

If the war theme seems attractive, investors can buy Cboe’s March $125 call for $2.40 and sell the March $115 put for $2.55, assuming the stock is around $120.

This risk reversal—that is, selling a put and buying a call with the same expiration but different strike prices—essentially pays investors for agreeing to buy Cboe stock at $115, while profiting from rallies above $125. If the stock was at $130 at expiration, the calls would be worth $5.

The key risk is if the stock sinks far below the put strike price, but that seems unlikely for as long as investors are concerned about war and what happens to the stock market.

It may be time for Apple to boost its dividend and scale back its mammoth stock-repurchase program.

The company has favored its buyback program in recent years, but Apple shares are no longer a bargain after doubling in the past year.

During its latest fiscal year that ended in September, Apple bought back $67 billion in stock and paid out $14 billion in dividends. The shares, which rose $2.37, or 0.8%, to $299.80 on Monday, trade just below the record high of $300 set on Jan. 2.

Apple now trades for almost 23 times projected earnings of $13.10 a share in its current fiscal year, considerably above its average forward price-to-earnings ratio of 14 in the past five years. Its shares now yield 1%.

Apple could take a more-balanced approach and double its dividend while cutting back the annual buyback program by $15 billion to around $52 billion. That would result in a 2% dividend yield, in line with that of the S&P 500 index. At $52 billion, Apple could buy back about 4% of its stock annually. The company now has the world’s largest market value at $1.3 trillion.

Investors may get a better idea about the iPhone maker’s capital-allocation priorities when it reports results for the quarter ended in December on Jan. 28 and holds its quarterly earnings conference call.

Apple declined to comment about its buyback and dividend outlook. On the company’s conference call a year ago, Apple Chief Financial Officer Luca Maestri said the company would execute the repurchase program in a “disciplined manner.”

Wall Street appears to be banking on a continuation of aggressive buybacks, with J.P. Morgan analyst Samik Chatterjee projecting $70 billion of stock buybacks in the current fiscal, based on a client note published Monday.

The company has the largest stock-repurchase program in the world, and that has been a smart use of capital in recent years given the run-up in the stock in recent months.

The program has provided meaningful support to the company’s shares, accounting for an estimated 4% of all shares traded in some quarters, according to one analyst.

Analysts have been warming to the stock in recent months based on optimism about the launch of 5G phones expected this fall and the growth in the company’s wearables business.

The company has funded its capital returns to shareholders through earnings and a steady drawdown of its large cash position in the past two years. Net cash stood at $98 billion at the end of September, compared with $163 billion in early 2018 when Apple said it aimed to get net cash down to zero. Maestri said on Apple’s latest earnings conference call on Oct. 30 that the company would “continue on our path to reaching a net cash neutral position over time.”

Wall Street has assumed that would be accomplished through large stock buybacks, given that the company hasn’t made any major acquisitions and likely would face strong antitrust scrutiny if it attempted to execute one.

Apple has about $79 billion remaining on its current buyback authorization program, but the plan doesn’t obligate it to acquire any specific number of shares.

Berkshire Hathaway CEO Warren Buffett likes share repurchases, but at reasonable prices. And he had some thoughts on Apple’s buyback program nearly a year ago, when the stock was languishing around $175.

As one of Apple’s largest holders and given his long-term perspective, Buffett was rooting for a lower stock price because it would enable Apple to repurchase more stock. Berkshire is Apple’s third-largest holder, behind BlackRock and Vanguard with a stake of almost 255 million shares now worth about $76 billion.

In a CNBC interview last February, Buffett noted that he paid an average price of about $141 a share for Apple stock and didn’t buy any above $200.

Here is what he said of the buyback program. “Apple will probably—they may not, but they have said they’re going down to cash neutral. They could do it either by acquisitions, or dividends, or repurchases. And my guess is it’ll be mostly repurchases. They are about $130 billion away from cash neutral now. If the stock were at $200, it would buy 650 million shares. If it’s at, you know $150, you buy close to 900 million shares. We’re way better off, you know, if it’s at a lower price when they’re repurchasing shares. Our partners are selling out to us, and they’re selling out cheaper than otherwise. The worst thing that can happen from our standpoint with Apple is that it sells at $230 or something like that because we don’t like buying as well at that sort of price.”

With Apple’s stock at record levels, it may be time for a big increase in the company’s dividend and a reduction in its buyback program.

Once-feted fund manager in the process of winding up his company with a skeleton staff

Neil Woodford and his business partner shared £13.8m in dividends in his company’s final full financial year, even as investors deserted its funds due to chronic underperformance.

Mr Woodford, who is in the process of winding up his company with a skeleton staff, received two-thirds of the final dividend payment, which brings the total personally reaped by Mr Woodford and Craig Newman to £112m since 2014.

At least 300,000 investors are still trapped in Mr Woodford’s flagship Equity Income fund, which was suspended in June.

The pair recently travelled to China in an attempt to court interest for a new business, having seen UK investors desert the once-feted fund manager in droves.

Mr Woodford’s company once managed £15bn, but suffered heavy investor withdrawals in its final two years and was forced to suspend the Equity Income fund last summer, causing Europe’s biggest investment scandal for a decade.

The company’s annual report for the financial year ending in March 2019 was published on Companies House on Tuesday morning.

Between March 2018 and March 2019, the company made £18.3m in operating profit, compared to £41.7m a year earlier. The company blamed “underperformance in the Woodford Equity Income Fund combined with a period of sustained and negative press coverage” for the suspension of the fund in June.

The FT earlier calculated a higher final dividend payment, which was based on higher fee income and did not account for a £2m purchase of intangible fixed assets.

* BAE Raised to Overweight at JPMorgan

* Clariant Raised to Buy at Bank Vontobel (+)

* Coface Raised to Overweight at JPMorgan; PT 12.70 euros

* Engie Raised to Buy at HSBC; PT 17.40 euros

* GBK Beteiligungen Raised to Buy at M.M. Warburg (+)

* Marks & Spencer Raised to Buy at Berenberg

Luxury automaker to draw down $100m of debt as it cautions over deterioration in trading

Aston Martin has warned on profits again and will draw down $100m of debt as it weighs options to raise further finance to steady the crisis-stricken luxury carmaker.

Its earnings margin for 2019 will be 12.5-13.5 per cent, below the already-lowered 20 per cent it said last summer, while adjusted earnings before interest tax depreciation and amortisation will be £130-140m, below analyst expectations of £200m.

“The challenging trading conditions highlighted in November continued through the peak delivery period of December resulting in lower sales, higher selling costs and lower margins,” said chief executive Andy Palmer.

Aston blamed higher marketing costs, lower than expected sales and a drop in its average selling price, as well as foreign exchange headwinds, for the latest deterioration in its trading. Car sales fell 7 per cent to 5,809.

The company has struggled since its initial public offering in late 2018, with shares losing three quarters of their value.

On Tuesday, Aston said it plans to draw down $100m in high-interest debt over the next four weeks, in addition to the $150m it raised in a September bond sale.

The debt, which attracts 15 per cent interest, was attached to the first raise and was conditional on the group booking 1,400 orders for its DBX sport utility vehicle.

Orders since the vehicle was unveiled in November have reached 1,800, Aston said.

In late December the FT reported that Aston is in talks with several investors about raising additional financing, including a potential equity injection. The company subsequently confirmed the reports, and on Tuesday said it is still “in discussions with potential strategic investors which may or may not involve an equity investment into the company”.

Mr Palmer added: “Whilst we are disappointed with trading performance in 2019, our focus is now on revitalising the business, launching DBX and ensuring profitable growth in the medium-term.”