Power Sheet – June 29, 2016

The opportunity goes far beyond the U.K. While we’ve seen umpteen headlines about the rout in British stocks, the damage in European markets has been much worse yet less noticed outside their home countries. Arnott, whose firm oversees investment strategies for $160 billion in investment funds, says, “the danger of Brexit to the eurozone is a lot greater than the threat of Brexit to the U.K.”

Multiplying the opportunity for buyers in certain countries is the currency effect. The dollar, yen, and Swiss franc are much more valuable against the pound and the euro than they were a week ago. It’s even better for U.S. companies because they could also pay for acquisitions with their stock at a time when Arnott believes the U.S. market is badly overvalued.

Most CEOs will cringe at the very thought of buying a U.K. or continental company now – the uncertainty is overwhelming. But of course that’s what separates the great leaders from the rest. It’s the perfect moment to remember Warren Buffett’s advice to be greedy when others are fearful and fearful when others are greedy. Almost everyone is fearful now. We’ll see who has the courage to seize this moment.

-Succession done right. Last week we noted the blown succession at Softbank as Nikesh Arora, CEO Masayoshi Son’s publicly designated successor, resigned. Today we observe what I bet will be the opposite scenario. Honeywell announced that president Darius Adamczyk will succeed CEO David Cote on March 31. Cote will then be executive chairman until the end of April 2018.

With those dates far in the future, isn’t that a lot of time during which this could all go terribly wrong? Of course. But Cote’s outstanding record tells investors that it won’t. He’s one of America’s star CEOs, having run Honeywell for 14 years and delivered stock performance that beats the S&P by miles. He’s done it the hard way, running a diversified conglomerate when that structure is mostly out of favor and making dozens of acquisitions that have paid off for his shareholders, beating the odds on takeovers. In addition, he named Adamczyk president last April, signaling that he was the successor and now has specified exactly when it will happen. No surprises, no drama. Investors love that.

So far, this is the way it’s supposed to be done.

-Another reason for lawyers to get nervous. A Stanford student has created a free online chatbot to get your parking tickets thrown out, and it works surprisingly well. Just go to www.donotpay.co.uk and enter basic information about your ticket; the software does the rest. No need to take photos of the location; the bot gets what it needs from Google Streetview. Joshua Browder, 19, created the chatbot after he got a ticket in London. The bot now handles parking tickets from London and New York and has succeeded in getting 160,000 out of 240,000 thrown out.

Surely this simple software doesn’t threaten real attorneys, some will say. But consider that it was written by a kid in his spare time. Giant companies are investing millions in highly sophisticated software that is already taking over higher level legal work. It’s one reason that thousands of U.S. law school graduates can’t find work, and the trend is accelerating.

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