Companies & Funds

Investors in Motown see nothing but recession

4 Aug 2011

GM posted its best earnings in years and Ford’s looking solid even with subdued U.S. sales. Both are sitting on piles of cash. Yet shareholders have wiped a combined $49 bln off their value since January amid economic worries. They’re right to be cautious. But it looks overdone.

Lloyds’ battering may have silver lining

4 Aug 2011

Huge one-off charges, higher funding costs and moribund markets made a mess of the UK lender’s first half. But Lloyds is weaning itself off state funding. And its depressed share price may prompt politicians to back away from plans to force the bank to sell more branches.

Rio shareholders get an extra thank you

4 Aug 2011

The miner needed a $15 bln cash call in the crisis. Now it’s raised its share buyback target by $2 bln to $7 bln. Given slightly disappointing H1 numbers and a global slowdown, that may seem imprudent. But the numbers add up. Rio can afford to repay investors their 2009 favour.

StanChart investors should not get carried away

3 Aug 2011

The lender’s income is growing at a double-digit clip and it is hiring, not firing. Even better, costs are under control. But StanChart’s premium valuation leaves little room for error. A first-half hiccup in India is a reminder that emerging market growth is seldom linear.

SocGen back to earth with profit warning shocker

3 Aug 2011

The French bank has admitted it probably won’t make its optimistic 6 bln euro net profit target next year. This may reflect slowing revenue rather than its exposure to euro zone contagion. But with markets already jittery, the warning could hardly have come at a worse time.

Petrobras’ bargain barrels pricier than they look

3 Aug 2011

The boss of the $210 bln Brazilian energy giant reckons its shares are the cheapest way to bet on oil. With production growth expected to leave multinational rivals in the dust, Petrobras shares might seem low-priced. But Brasilia’s grip on the firm justifies a big discount.

Voting equality could bring big payoff for Murdoch

3 Aug 2011

Change is needed at News Corp. Scrapping the dual share structure would signal a fresh start and could create a big slug of value. Reform could also reward the Murdochs handsomely for ceding control. A rejig would dilute today’s non-voters, but even they might end up ahead.

Italy draws banks into dangerous embrace

3 Aug 2011

As investors shy away from sovereign debt, Italy will rely on banks and insurers to help it through the turmoil. The country’s lenders are well-funded and can always borrow more from the European Central Bank. But until Rome restores confidence, banks will only get weaker.

Corzine covenant smacks more of PR than protection

3 Aug 2011

Bondholder activism is a good thing. But investors in MF Global’s $300 mln offering have only $3 mln a year to gain and little to obviously lose if the former Goldman Sachs boss and New Jersey governor heads to Washington. This key-man clause benefits Corzine more than creditors.

Bank of Moscow’s debacle is profitable for some

2 Aug 2011

Russia’s $14 bln banking fiasco has proved costly for both the Russian state and its major shareholder, VTB Bank. But Vitaly Yusufov, the son of former Kremlin official Igor Yusufov, looks set to profit from the imbroglio. That raises questions about the handling of the affair.

Pandora ordeal shows IPO charms can wear off fast

2 Aug 2011

The Danish jeweller’s debut avoided several sins investors link with private-equity IPOs. But 10 months later, Pandora has unleashed all manner of horrors on shareholders. Europe’s shaky new-issues market hardly needed reminding how risky it can be to back newly public outfits.

Kuwait Airways sale may not be a runway success

2 Aug 2011

The state of Kuwait wants to offload a 35 pct stake in its national carrier to a strategic partner. But the airline has been in the red for two decades, the asking price is lofty and bidders risk political pitfalls. Plans for a regional rail link don’t help the business case.

Barclays’ targets still look a stretch

2 Aug 2011

Falling bad debts helped the UK bank meet forecasts for H1, and underlying return on equity has jumped to 9 pct. But to achieve its 13 pct goal in 2013, Barclays will need strong top-line growth as well. That’s challenging given euro zone woes and regulatory uncertainty.

Pemex scandal highlights need for restructuring

1 Aug 2011

Long treated as a cash machine by the Mexican government, the national oil group also now appears to have been milked by criminal gangs to the tune of $600 mln just last year. Though imperfect, Latin rivals like Petrobras and Ecopetrol offer models Mexico should emulate.

HSBC supertanker will take time to turn around

1 Aug 2011

CEO Stuart Gulliver wants to make the bank more efficient, but emerging market wage inflation means costs are still rising. Factor in new capital rules, and HSBC’s return on equity is also well below target. It’s no surprise the bank is planning to slash another 25,000 jobs.

How much is Comcast on the hook for with NBC?

16 Dec 2009

Brian Roberts, the cable group’s boss, said buying control of GE’s media business made him “strategically complete.” But if NBC Universal keeps growing, GE’s remaining stake could be worth some $20 bln in a few years. Thankfully, however, the deal could end up paying for itself.

Bankers need to learn from bakers

27 Nov 2008

The baking business runs very smoothly. Bread is delivered in the desired quantities, technology advances (sliced bread was not the last word) and consumer tastes are satisfied. But add an “n” and the picture changes. As a business, banking is much less healthy.

Why isn’t every bank like Goldman?

18 Jan 2008

Ironically, it’s because they tried to copy Wall Street’s most successful firm. The banks most scarred by the subprime debacle - like Citi, Merrill and UBS - were infected by what could be called “Goldman envy”. Those that emerged unscathed were relatively immune to the disease.

Inefficient Market: Blackstone Letter

14 Jun 2007