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Potemkin Dell fight would have optical merits

27 Mar 2013

Even if Blackstone doesn’t buy the PC maker, bidding against Silver Lake at least looks like rivalry in LBO-land, undermining allegations of collusion. Dell’s board also comes off as rejecting the bad J Crew precedent. A phony battle just won’t help shareholders much.

Goldman and Buffett scratch each other’s backs

26 Mar 2013

They’re amending the terms of warrants used in a 2008 rescue investment of the bank. Buffett gets his profit without having to stump up $5 bln in cash. Goldman minimizes dilution, which helps its return on equity - while also easing stock buyback negotiations with the Fed.

Blackstone, Icahn likely to stub toe on Dell

25 Mar 2013

Both are offering more for the computer maker than its eponymous founder. But the new bids rely on existing investors keeping a small public stake. In theory that obviates the need to get Michael Dell’s support. In practice, the downsides of such stub equity make it a long shot.

U.S. oil billionaire’s divorce is no private affair

22 Mar 2013

Investors stripped half a billion from the value of Continental on news that founder and 68 pct owner Harold Hamm is getting divorced. That may not do the threat justice. Splitting the tycoon’s $11 bln fortune leaves Continental exposed to hefty stock sales or a feud at the top.

Next economic "It girl" is about to be discovered

21 Mar 2013

In 2008, the obscure Baltic Dry Index was suddenly the subject of every financial conversation. The TED spread and the ABX also briefly rocketed to fame. Waiting in the wings to shine ahead of rising interest rates are the JOLTS report, forward curves and the overnight index swap.

Optimism over M&A may be deserved – at a discount

20 Mar 2013

Bankers and lawyers telling a PR firm that specializes in deals they expect to see more merger activity makes for sweet echo-chamber music. Even pessimism expressed in the same survey in past years has proven too rosy. Maybe factor a typical premium of 30 pct into the answers.

Besieged boards need updated defender-in-chief

19 Mar 2013

Over a long career, lawyer Martin Lipton has become synonymous on Wall Street with takeover defense. But with shareholder activism ascendant and often on target, his contrarian screeds sound dated. This week’s M&A confab in New Orleans could put them further to the test.

Cure for U.S. housing malaise may sustain disease

18 Mar 2013

A Senate bill seeks to forbid Congress from raising Frannie’s fees to pay for federal spending. It sounds sensible. But in the alternate universe that is Washington, it may kill one of the few ways available to reduce taxpayer support for housing and bring back private capital.

Maybe SAC should forget about other people’s money

15 Mar 2013

Steve Cohen’s $15 bln hedge fund firm is paying $616 mln to settle SEC insider trading charges. It would be an ignominious time to follow legends like Stan Druckenmiller, but he is already losing a quarter of outside investor funds. It could be time to manage only his own cash.

Fed harder to grade than banks on stress tests

15 Mar 2013

Rapped knuckles for Goldman and JPMorgan - and an “F” for Ally and BB&T - suggest the regulator is being tough. A blessing for BofA suggests a rigorous but fair system. Yet keeping both its math and many of the results secret make some of the Fed’s discipline seem more for show.

Who will be the Volvo of the firearms industry?

14 Mar 2013

If the auto industry is an analogue for guns, manufacturers could do worse than emulate the Swedish carmaker’s golden years as the leader in safety innovation. From the launch of the modern seatbelt to its $6.5 bln sale 40 years later in 1999, Volvo led a lucrative revolution.

Orcel bonanza shows how far banks must go on pay

14 Mar 2013

UBS stumped up $26 mln to prise investment-bank head Andrea Orcel from BAML - making a mockery of so-called retention packages. Switzerland may be clamping down on high pay. But it takes only one firm to perpetuate the financial sector’s compensation problem.

Private equity at 4-and-20? Think twice

13 Mar 2013

A new vehicle will open Carlyle’s funds to smaller investors, at a total cost far higher than institutions pay the buyout shop. While the firm’s long-term IRRs, after fees, are nearly 20 pct, today’s reality is less inviting. The structure could be risky for Carlyle, too.

U.S. stocks may soar higher – only to crash-land

12 Mar 2013

The S&P 500 is close to a new record. Simple interest-rate based valuations such as the Fed model suggest the benchmark could more than double again. But when debt costs, earnings and valuations revert to long-term levels, equities could trade a third below the current heights.

Which banker’s services are worth $1 billion?

11 Mar 2013

Apparently, those of Andre Esteves are. When fellow Brazilian billionaire Eike Batista announced he was seeking financial and strategic advice from the BTG Pactual boss for his oil empire, its varied listed arms added over $1 bln in market value. The expectations may be too high.

Fed flunks crucial part of bank stress tests

8 Mar 2013

The watchdog is happy enough saying what might happen to big banks if the economy tanks: they could lose up to $462 bln. But it’s inexplicably shy about revealing the effects of a sharp rise in interest rates. That’s just as real a risk that the Fed should disclose to investors.

Financiers failing own version of Hippocratic Oath

7 Mar 2013

Client money isn’t being kept safe, a Wall Street watchdog warns. It’s a failure as basic as doctors not washing their hands, despite repeated reminders from the likes of Refco and MF Global. The extent and severity of the problem should worry customers and investors alike.

Where did Apple’s missing market value go?

7 Mar 2013

The iPhone maker’s market value has declined by $260 bln in six months. A broad group of global rivals like Google and Samsung picked up less than half that. If Apple is fading, the Android complex could be worth far more. Or maybe it’s just that consumers will grab the spoils.

A brief history of Time: an epic M&A tale

7 Mar 2013

The gold standard of U.S. magazines proved the ultimate currency for building a giant media conglomerate. Spinning off the legacy of Henry Luce’s 1920s vision represents the last step in dismantling the Time Warner empire. Vast value was created and destroyed along the way.

Newtown effect yields bumper crop for gunsmiths

6 Mar 2013

Smith & Wesson’s order backlog hit an all-time high following the Connecticut school shooting. Sales projections were raised again. The prospect of tighter gun restrictions - however remote politically - has buyers in a panic. The NRA has earned its keep for another quarter.