Month: February 2006

SEC boss right to rein in over-zealous underlings

28 Feb 2006

Two US financial journalists were subpoenaed by SEC investigators after writing negative stories on Overstock.com. This behaviour discourages the flow of financial information in markets upon which their efficiency rests.

Fortune smiles on JP Caz’s first year

28 Feb 2006

All its core businesses are booming. The investment bank is beginning to wring benefits from the joint venture. JP Caz s long term success hinges on the firm retaining key people. The upswing may be a mixed blessing here.

Hedge funds have provided some alpha

28 Feb 2006

That s the holy grail of alternative investments outperformance without extra risk. A Barcap study shows an annual average alpha of 5.2%. But there are caveats. The measures flatter the funds, and the future looks less promising than the past. The hedge fund jury is still out.

Gas Natural won’t raise Endesa bid tomorrow – exclusive

28 Feb 2006

Endesa investors expecting it to overtake E.on s bid immediately, as press reports suggest, are likely to be disappointed. Eventually Gas Natural will have to raise its bid. But tactically, it makes more sense to see if E.on can jump through the regulatory hoops.

Agnelli family firm hauled over hot coals

28 Feb 2006

Magistrates and regulators are putting Fiat s main shareholder under pressure following last year s controversial equity swap deal. That s a good show from Italy especially given the Agnelli family s traditional power and influence in the country.

US politicians isolated in Dubai crusade

28 Feb 2006

The US accounts for 15% of P&O s global port capacity, but 100% of the fear about security risk from a Dubai takeover. Since that's a job for Homeland Security, not DPW, the affair risks showcasing racism rather than legitimate concerns about port protection.

Partygaming CEO folds early

28 Feb 2006

Richard Segal is to leave the poker giant less than a year after being given a £50m pay package to lead the IPO. The explanation that he doesn't want to live in Gibraltar doesn't sound convincing. It's hard to see this as a bullish signal for the group.

RBS steps up the charm offensive

28 Feb 2006

The UK bank is raising its dividend and buying back shares for the first time since the NatWest bid. True, the buyback is a modest £1bn. But it still shows that RBS boss, Sir Fred Goodwin, is determined to cut the discount that has made RBS itself a potential target.

Heinz spiced up by raider talk

28 Feb 2006

The ketchupmaker has rallied amid talk billionaire Nelson Peltz is building a stake to launch a proxy battle and management shakeup. Though it may be a dowdy business, as its latest results attest, Heinz s valuation makes it a juicy target but not necessarily for Peltz.

Credit risk rises as US banks compete for C&I lending

27 Feb 2006

A pickup in commercial and industrial lending has been accompanied by a decline in underwriting standards. If the inverted yield curve presages a recession, credit problems could loom large.

Vodafone’s £28bn clear out raises pressure on Sarin

27 Feb 2006

The mobile operator says that its goodwill writeoff will not effect its dividends or buybacks. But that's not the point. Vodafone is getting a reputation for nasty surprises and its CEO is beginning to look as if he is not in control of events.

Pilkington gives in to NSG in £2bn deal

27 Feb 2006

The UK glassmaker will be bought out for cash by its much smaller rival. Initial resistance pushed up the price by 10%. At 15 times earnings, the terms are reasonable. But the deal would have made more sense the other way around.

Berlusconi sends the wrong signal on ethics – again

27 Feb 2006

After last summer s banking scandal, you d expect Italy s PM to be labouring to rebuild Italy s tattered reputation. Not so Berlusconi. He is now insisting BPI s bid for Antonveneta was fine, and magistrates shouldn t have butted in.

Spain makes protectionist noises over Endesa

27 Feb 2006

Having tried and failed to cook up an alldomestic merger, Madrid may be trying to frustrate E.on's bid for Endesa by regulatory means. This may look more subtle than French protectionism over Suez. But it is just as unwelcome.

Suez sells itself to GdF at a discount

27 Feb 2006

True, that's based on current share prices. If you use prespeculation numbers it looks as if Suez is simply selling for no premium. But that's cold comfort for shareholders who have been denied the chance of a premium from a third party.

Was Enel an innocent abroad?

27 Feb 2006

The notion in Italy that Enel is the victim of a French stitchup to keep it out of Suez is understandable. But Enel also misjudged the politics, and its own strength. Given that it didn't put a bid on the table, it can't protest too much.

Santander should buy another UK bank

26 Feb 2006

The Spanish giant needs to capitalise on its purchase of Abbey in 2004. But there are only a few deals it can do. It should move before a rival cherrypicks the best opportunities.

Suez pulls off merger with GdF

25 Feb 2006

The deal may deliver some synergies, but Suez shareholders will gain the French state as a powerful minority shareholder. The French government gains a new national champion, but Suez shareholders lose out on the chance of a bid at a premium or a breakup.

Canadian drug company protests too much

24 Feb 2006

Following in the footsteps of Overstock.com, Biovail has accused shortsellers and a research firm of conspiring to tank its stock. However, both companies have themselves to blame for their lousy market performance.

Trade deficit lies behind US ports quarrel

24 Feb 2006

Petrodollars are piling up in the Middle East. Some are being spent on the controversial Dubai purchase of P&O s US ports. The US deficit seemed painless when it was mostly with Asia. The surplus is shifting to Opec countries which should drive a tougher bargain.

Rising inflation should bring TIPS back in favour

24 Feb 2006

US inflationprotected bonds have outperformed conventional bonds and equities over the past five years. Yet they remain attractively priced relative to the 10year US Treasury and UK indexlinked bonds.

Dam holding back trans-European M&A has burst

24 Feb 2006

The current robust takeover scene is spurred by a growing perception that governments can t hold back crossborder deals, even hostile ones. At present, Europe is in the daredevil phase of the wave. Soon it will enter the domino phase, as rivals fear being left out of the game.

Good WPP results take pressure off Sorrell

24 Feb 2006

True, questions about WPP's strategy and dependence on Sorrell remain. But the shares' rating suggests investors aren't over worried. The advertising CEO took a beating over WPP's Italian scandal. But he's handled it well, and results show the group is still in good shape.

Weather uses clever bond to gear up further

24 Feb 2006

The highlyleveraged vehicle which owns Italian mobile group Wind has found a way to raise money relatively cheaply with a convertible. The clever bit? The bond swaps into shares of a hot listed subsidiary. But Weather hopes to redeem it with its own shares if it can float.

Lloyds TSB raises its defences

24 Feb 2006

The UK bank seems to have woken up to the threat of a bid. It looks like cost cuts and Scottish Widows will play key roles in its defence. None of this looks wildly convincing, although it does suggest that Lloyds intends to fight.

Suez-GdF looks like unholy alliance

24 Feb 2006

One can see why Suez management or French politicians might want it to jump into Gaz de France s arms to evade a breakup bid from Enel. But a defensive merger with the French statecontrolled gas group is unlikely to be best way of maximising shareholder value.

National Grid joins utilities spending spree

24 Feb 2006

While Europe s biggest utilities seem hellbent on a valuedestroying bun fight, National Grid is steadily going about its work in the US. Its mooted $11bn offer for KeySpan makes strategic sense and could create value too. Not all utility firms are mad Empire builders. But the UK group isn't making a continental landgrab. It's mooted $11bn bid for KeySpan would build on what it already has in the US. The deal would make strategic sense and could create value too. But the UK group isn't making a Continental landgrab. It's mooted $11bn bid for KeySpan would build on what it already has in the US.

Enel move on Suez tests French power again

24 Feb 2006

Following fast on Mittal s Arcelor bid, Enel s interest in breaking up Suez suggests it's open season for snapping up national champions. Paris will try to block this. Deterring Enel from bidding is one option; blessing a defensive merger between Suez and GdF is another.

It’s a buyer’s market for funds of hedge funds

23 Feb 2006

Exit multiples in recent deals have been lower than those achieved by regular asset management firms. No wonder. Money flows into hedge funds are slowing. Fund of fund managers have already missed the best time to sell.

BAE Systems shares now up to speed

23 Feb 2006

The UK defence group has repaired its battered image, its relationship with Whitehall, and its stock market rating. The result is that BAE s shares have doubled in value over the last year. That s well earned but for now, it should be enough.