Year: 2009

Pritzkers choose odd time to take Hyatt public

10 Aug 2009

The hotelier controlled by the Chicago family filed for a $1.15bn IPO. At first glance, that looks gutsy given the lodging sector s woes. But Hyatt may need the cash and insiders the liquidity. Plus hotel stocks have been on a tear.

Bulging bank fees reveal multiple shortcomings

10 Aug 2009

US banks could collect some $38bn in overdraft fees from customers this year, double the amount in 2000. That reflects banks desperation, but also low savings and overconsumption. It shows the need for codes of conduct, marketing curbs and interest rates that reward savers.

Wicked whispers don’t help Rio Tinto – or China

10 Aug 2009

A spurious editorial on a quasistate website alleged Rio had ripped China off to the tune of $100bn. The aim may be to discredit the AngloAustralian miner. But misinformation and confusion over where the state starts and ends do nothing for China s economic relations overseas.

Barnes & Noble sidesteps related-party landmines

10 Aug 2009

The US bookseller s purchase of its chairman s college bookstore chain had even more potential for abuse than typical relatedparty transactions. But in this case, Barnes & Noble s shareholders have got more than a fair shake.

Lloyds mega-cash-call riskier than it sounds

10 Aug 2009

A £10bnplus rights issue could help the UK bank reduce its need for the government s asset insurance and fend off state control. It s a cheaper option if doomsday losses don t occur. But that s a big if. And Lloyds should still be made to pay for the cover it has enjoyed so far.

Friends to mull £1.9bn Resolution offer

9 Aug 2009

The UK insurer is to review its robust opposition to a takeover by Resolution after its suitor mooted a higher price. But Resolution is budging only slightly on other issues behind Friends earlier rejection. Investors should be glad that both sides are open to compromise.

Optimism over US unemployment drop is premature

7 Aug 2009

The stock market s minirally after the report of a 0.1point drop in July unemployment was misguided. The fall was caused by a decline in the labour force, which is not a sign of revival. The fiscal and monetary mess could lead to a halting recovery with ongoing job losses.

UK house-price bulls should keep champagne on ice

7 Aug 2009

The end of a buyers strike has pushed the average price up slightly. The good news could continue for a few months. But the recovery relies on extraordinary and temporary banking conditions. The most likely outcome remains flat prices with substantial downside risk.

RBS overvalued, management rightly watchful

7 Aug 2009

Shares in the statebacked UK bank still look pricy even after tumbling on jumbo bad debts in H1 and caution from the CEO. Detailed targets and useful disclosure make it easier to see what RBS is turning into. But meeting its new profitability goals will be a tough job.

Deutsche Bank spy scandal may elude tidy closure

7 Aug 2009

The German bank says it has cleaned up its house. But the detectives it hired and two middle managers dismissed for alleged snooping are protesting, and regulators haven t yet given the allclear. When companies behave badly, the buck often stops higher than top brass would like.

AIG’s Q2 a sunny spot but forecast remains gloomy

7 Aug 2009

The troubled insurer made a quarterly profit as markets rallied strongly. But it is unlikely to repeat this performance very often. The tarnish on the firm s reputation makes it hard for AIG to underwrite new business at attractive prices.

Murdoch end to free-for-all bold but risky

6 Aug 2009

The media mogul vows to do what most of his rivals dream of charge for all online news content. The flagging industry needs a powerful player to move first, but it is a tricky endeavour. Readers will still have plenty of alternative free and easy sources for nonniche news.

Morgan Stanley leaves smaller tip for Geithner

6 Aug 2009

Than Goldman, that is. Morgan Stanley has bought back its Tarp warrants for $950m, against Goldman s $1.1bn. John Mack s firm could afford to negotiate a bit harder with the US Treasury after all, it hasn t made quite so much money out of the crisis.

Hedgie fees actually aren’t going down

6 Aug 2009

Average management fees have long hovered around 1.5%, not the 2% of lore. Some battered funds have made concessions to hold on to clients, but the overall picture hasn t changed. Even so, it s possible that investors are now better placed to get more for their money.

Private equity’s stay of execution is no pardon

6 Aug 2009

The rallying stock market helped Blackstone post betterthanexpected earnings and let KKR list its portfolio company Avago. That looks encouraging. But those highly leveraged companies that buyout shops can t float will face significant refinancing risk in a few years.

Aviva finds low-pain ways to raise capital

6 Aug 2009

Only five months ago, the UK insurer boasted that it was maintaining the dividend. Now capital strength is paramount. So the payout is being cut and Aviva s Dutch business is to be floated. The uturn is embarrassing, but shareholders may be glad not to see a rights issue.

Bank of England keeps worrying – and printing

6 Aug 2009

The UK central bank surprised, and unsettled sterling, by adding £50bn to its existing £125bn quantitative easing programme. The BoE is right to be worried about the economic prospects. Unfortunately, it s not clear still more moneyprinting will bring about a recovery.

Korea-India trade deal has big long-term potential

6 Aug 2009

The free trade agreement between Korea and India represents only a partial market opening. But it may bring major trade growth between the complementary economies. It shows Korea has options beyond its stalled deal with the US and that India remains open to trade expansion.

Excess liquidity pumps up markets amid deflation

5 Aug 2009

Economies are struggling with recession and falling prices. But many financial markets are bubbling. The reason may be too rapid money growth. Fresh financial bubbles could well follow. If central banks don t act, a new wave of capital destruction is possible, says Ian Campbell.

Banks: don’t pay mega compensation

5 Aug 2009

Instead, stash away your bumper profits and some of those accrued bonuses to strengthen capital and prepare for a tougher regulatory regime. That s the message of an imaginary email from the world s top banking regulators to their charges, intercepted by Breakingviews.com.

Porsche families will struggle to keep majority of future VW group

5 Aug 2009

The Porsche and Piëch families, who control the German sports car maker, want to maintain a 50% lock on an ultimate merged VWPorsche. But even with nifty financial engineering, they ll be hardpressed to get up to 40%, say Pierre Briançon and Hugo Dixon.

Lloyds’ bull case not yet compelling

5 Aug 2009

The UK bank thinks bad debts have peaked and is less bearish on house prices. The market has cheered Lloyds reduced pessimism. But before buying the shares, investors must satisfy themselves that the lender's perceived green shoots are genuine and that regulators will lay off.

Resecuritisations highlight capital rule loophole

5 Aug 2009

Brisk business reworking troubled mortgage bonds is driven in part by financial firms desire to minimise capital charges. But the underlying assets and potential losses stay the same they just get shifted around. It's another case of regulators relying too much on ratings.

Personal view: Baltic economies may bounce quicker than most

5 Aug 2009

Lithuania, Latvia and Estonia have the world s worst recessions, but all three are taking nasty medicine: cutting private and government costs sharply. Martin Hutchinson argues that this avoidance of Keynesian selfindulgence can bring them a quicker recovery.

UBS Q2 overdoes losses but not challenges

4 Aug 2009

Sure, the SFr1.4bn of red ink turns black after stripping out quirky owndebt and goodwill charges. The Swiss bank has largely stabilised, as its share price reflects. But tighter capital and leverage, plus continuing outflows and weaker market share, point to a slow recovery.

Xstrata puts little extra pressure on Anglo

4 Aug 2009

The Swiss miner is using its decent H1 results to reassert its credentials as a merger partner for Anglo American. Cost discipline and safety improvements suggest that anything Anglo can do, Xstrata can do better. But Xstrata will still need to pay a premium if it wants a deal.

Pepsi bottlers’ $7.8bn deal looks reasonable

4 Aug 2009

PepsiCo boosted its cashandstock offer for the parts of the two bottling companies it doesn t already own by nearly $2bn. That may still undervalue synergies, but the bottlers get the chance to benefit from any upside. It s not a bad outcome for targets with little leverage.

BHP’s new chairman may need new style

4 Aug 2009

Jac Nasser would be an obvious choice to supervise a company in trouble. Ford s former boss likes to shake things up. But at BHP, he may need to be emollient. Happy investors don t need drama, while governments concerned about commodity prices will test his diplomatic skills.

Trump resurrection no bellwether for buyouts

4 Aug 2009

The Donald convinced a bank to bail out his Atlantic City casinos again. But that doesn t necessarily mean financing will start to flow for private equity restructurings, too. And buyout firms are less likely to invest the effort to resuscitate their cratered companies.

Commodity witch-hunt searches for wrong demons

4 Aug 2009

It s enough to excite any conspiracy theorist: commodity prices are up while the economy is still down. The UK s FSA is the latest to investigate. But new rules on transparency won t alleviate market volatility. The only durable cure is to stop relying so much on spot prices.