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Board of directors

THE MOTLEY FOOL
Ask the Fool

Published: July 9, 2020

Q: Where can I see a list of a company's board of directors? -- J.L., Tacoma, Washington
A: Go to the company's website and look around for a link or tab that says "About" or "Company." There you'll often find photos and brief descriptions of the board. You can also just call the company to inquire -- ask for the investor relations department when you call.
Another source is the company's annual report. The 10-K reports and proxy ("DEF 14A") statements that public companies file with the Securities and Exchange Commission (SEC) also typically include board members, along with their compensation and stock ownership. Visit SEC.gov and search under "Filings."
Q: I see that Hertz has filed for bankruptcy protection and its stock has crashed. Does that make it a good buy now? -- H.W., Detroit
A: Absolutely not.
When a company files for bankruptcy protection, it typically gets a chance to reorganize itself and try to pay off its creditors as much as possible. Hertz might sell some of its fleet to pay off holders of its secured debt. It might negotiate to pay holders of its unsecured debt a lesser sum, perhaps also offering them shares of newly minted stock.
Shareholders of its common stock won't be that lucky, though. In most bankruptcies, these folks typically end up with little or nothing, with their shares of stock essentially discontinued. When companies emerge from bankruptcy, as many of them do, they may still have shares of stock you can buy -- but those will be newly minted shares, leaving the old ones worthless (or near-worthless).
Companies in or facing bankruptcy are in trouble, and are best avoided.
Fool's School
The Best Places for Your Investments
There are different kinds of investment accounts -- such as Roth and traditional IRAs and 401(k)s, as well as regular taxable accounts -- and some are better suited for certain kinds of investments than others.
Traditional IRAs and 401(k)s accept pretax money, giving you an upfront tax break and taxing withdrawals in retirement at your ordinary income rate. Meanwhile, dividends from real estate investment trusts (REITs) and interest from most bonds are also generally taxed at your ordinary income tax rate, which could top 30%. So if you think you'll be in a lower tax bracket in retirement, you might park investments with such tax rates in traditional retirement accounts. Or you could aim to avoid taxation on your gains completely by parking those investments in Roth accounts, which accept post-tax contributions and offer tax-free withdrawals (if you follow the rules).
The tax rate on most dividends from dividend-paying stocks is currently 15% for most of us and 20% for high earners. Thus, you might invest in such stocks -- especially ones that pay fat dividends -- in Roth IRAs to eliminate taxation on them, or in traditional IRAs if you expect a low future tax rate.
If you expect any stocks, including dividend payers, to appreciate significantly over a long period, consider putting them in Roth accounts. If a stock soars in value over some years, you'll be happy if you don't have to pay any taxes on those gains. Roth accounts can also be good for investments that generate short-term gains, which would face generally higher tax rates elsewhere.
Investments that might be made in your regular brokerage account include slower-growing stocks, as well as municipal bonds, which reward you with tax-free interest. Any gains from stocks held for more than a year in those accounts will face the long-term capital gains tax rate, which is currently 15% for most investors.
You probably can't follow these guidelines completely in your investing life, but do keep tax implications in mind as you invest, and try to be strategic when deciding what investments to hold in various accounts.
My Dumbest Investment
Not-Good-Enough Reasoning
My dumbest investment was buying shares of InvenSense, maker of motion-sensing chips, for around $25 each because -- and this is the entirety of my reasoning -- it was a supplier for Apple, which sells a lot of phones. I did no other research. It dropped, and I immediately sold.
Then I bought into GT Advanced Technologies for the same reason at $20, doubled down at $10, and eventually sold my shares for pennies. I learned to do my own research. It's worked out nicely. -- Steven M.W., online
The Fool responds: Your reasoning was great -- as a starting point. Apple has sold over 2 billion phones, and that has driven profits for many of its suppliers. But it's just a starting point. When a company has one or two main customers, it has less bargaining power with them -- and Apple accounted for the majority of InvenSense's business. Also, InvenSense was hoping to get its chips into the Apple Watch, but that didn't happen. InvenSense ended up being acquired by the Japanese company TDK in 2017.
Meanwhile, GT Advanced Technologies, a maker of sapphire glass, had been struggling financially when it inked a deal with Apple that was very favorable to Apple. It hoped to have its offerings included in the iPhone 6, but that didn't happen; it ended up filing for bankruptcy protection in 2014. Tread carefully if your portfolio prospects have few customers or shaky finances.
Foolish Trivia
Name That Company
I began in 1919, when my founder bought a hotel in Cisco, Texas, instead of the bank he'd planned to buy. In 1943, I already had hotels in California; buying New York's Roosevelt and Plaza hotels, I became the country's first coast-to-coast hotel chain. Today, with brands including Conrad, DoubleTree, Embassy Suites, Hampton Inn, Homewood Suites and Waldorf Astoria, I encompass more than 6,100 properties with more than 971,000 rooms in 119 countries and territories. Brownies were invented, in 1893, at a Chicago hotel that later became one of my properties. I pioneered the airport hotel concept, too. Who am I?
Last Week's Trivia Answer
I trace my roots back to Rochester, New York, in 1971, when I was founded with $3,000 and the goal to offer affordable payroll services to small businesses. I went public in 1983, and my stock has split 10 times since then. Today, with a market value recently near $27 billion, I rake in close to $4 billion annually. I serve more than 650,000 small and medium-sized businesses across the U.S. and Europe, offering help with recruiting and hiring, onboarding, performance management and benefits. I pay 1 out of every 12 Americans who work in the private sector. Who am I? (Answer: Paychex)
The Motley Fool Take
Gushing About Oil
ExxonMobil (NYSE: XOM) is suffering through a disrupted oil market, and it's going to be some time before supply and demand are brought back into some form of harmony. This makes profitability virtually impossible in the near term for most oil stocks.
Yet over the longer run, ExxonMobil is well-positioned to thrive. Remember that this is an integrated oil giant that's not solely dependent on drilling and exploration. Yes, drilling is what offers the company its greatest growth prospects. But this is a company with plenty of cash flow potential from its downstream operations, such as refining and petrochemical operations. For the foreseeable future, ExxonMobil is expected to lean on its downstream segment, which should benefit from weaker crude oil prices.
ExxonMobil has the size and scale to optimize its production costs -- and the luxury of cutting back on capital expenditures to control cash outflows during a period of unprecedented demand weakness. Recently, the company cut $10 billion from its capital spending forecast for 2020. Management plans to keep the company's dividend intact for now, but that could change. Still, even if the dividend were reduced to a third of its recent level, it would offer a reasonable payout -- its dividend recently yielded 7.7%.
ExxonMobil's balance sheet is solid, too, with a debt-to-capital ratio better than most of its peers. The company is likely to emerge from the pandemic economy in good shape.
COPYRIGHT 2020 THE MOTLEY FOOL, DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION, 1130 Walnut, Kansas City, MO 64106; 816-581-7500.


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