Gloom overwhelms fickle fund managers 19 Jul 2006 In two months, they ve dropped from mild economic doubt to the worst pessimism in a decade, according to a Merrill Lynch survey. Sentiment has deteriorated much faster than reality. With cash balances high, there could be room for a relief rally.
New LBO record a fading target 19 Jul 2006 Wall Street's hopes for a buyout bigger than RJR now look dubious as financing costs are surging amid heightened risk aversion. Deals already done, like Toys R Us, are struggling to refinance. And an $18bnplus LBO of HCA was scuppered by growing borrowing costs.
Goldman’s Europe reshuffle may strengthen client side 19 Jul 2006 The appointment of Gnodde to run the region alongside Sherwood seemingly indicates a desire to balance the power of the traders. This looks good PR following the appointment of Blankfein, a trader, to run the firm globally and a series of corporate mishaps in Europe.
CMA Global Hedge defies market with $400m IPO 19 Jul 2006 This is by some margin the biggest hedge fund of funds IPO to date and comes on the back of two tough months for the industry. Its success reflects the huge investor demand for uncorrelated assets and the inherent advantages of permanent capital.
JPMorgan heads in the right direction 19 Jul 2006 But JPMorgan is slowly starting to deliver. Its returns are improving, and even showing signs of consistency. True, the bank still doesn t eke out as much money as its peers. That s why it rightly trades as the dog of Wall Street.
Yahoo stock tumbles after disappointing quarter 19 Jul 2006 Yahoo's rising marketing costs pushed ebitda down 11% in the second quarter. But while these shaky results inevitably depressed Yahoo shares, it seemed premature for investors to punish Google shares too.
BSkyB goes for broadband land-grab 18 Jul 2006 The UK payTV group needs to offer free broadband to protect itself from rivals. But it will cost and the returns are uncertain. Even using Sky's own projections, this hardly looks like a financial bonanza in the making.
Break-fees can damage an auction 18 Jul 2006 Take McCarthy & Stone, which has agreed to pay a breakfee only to one bidder. This may choke off rival bids for the UK housebuilder. UK listing regulations are partly to blame. But boards should be wary of being sucked into restrictive fee arrangements.
US government throws the book at BetonSports 18 Jul 2006 The UKlisted online gaming group faces demands for $4.5bn in back taxes, the closure of its US business and the extradition of directors. It s not clear why BetonSports has been singled out. But the US clearly has the industry in its sights.
UK house price split reflects unbalanced economy 18 Jul 2006 Once again, house price growth in London is far outstripping the rest of the nation. Blame big bonuses in the finance industry. But the capital's strength is potentially destabilising. The UK suffers from a new type of the Dutch disease overreliance on one sector.
Morgan Stanley should take heed of BP’s troubles 18 Jul 2006 By buying midstream energy assets, the bank s traders may have a clearer window into how asset prices will change. But as BP s trading scandal illustrates this advantage can become a liability if the byproduct of knowledge is market manipulation.
Merrill’s discount to Citi is unwarranted 18 Jul 2006 Despite the tumult in the stock market, the investment bank reported robust results in equities and M&A, and record overall revenues. Yet its book value trades at a lower multiple than lacklustre Citigroup. That seems undeserved. Yet it undeservedly trades at a lower multiple of book value than lacklustre Citigroup.
Microsoft needs to settle with EU 18 Jul 2006 Microsoft says it can t resolve the antitrust case due to lack of clarity. But failure to make peace damages its recruiting and reputation, aiding Google.
Juventus shows (again) that football and finance don’t mix 17 Jul 2006 The football team may have triumphed on the field, but even before its legal problems it was an investment basket case. It would probably be better as a private company. But many investors won t want to sell at the bottom.
Expensive oil may yet drag global growth 17 Jul 2006 The global economy took the fourfold increase in oil prices in its stride. But that was a time of easy money and petrodollar recycling. But now that interest rates are rising, further oil price rises could prove much trickier. The global economy took the recent increase in oil prices in its stride. But that was in a time of easy money and petrodollar recycling.
Verizon raises firepower with directories spin 17 Jul 2006 Carving out its yellowpages business to shareholders would reduce the telecoms company s net debt by a fifth. That would give it more ammunition to go after Vodafone s 44% stake in Verizon Wireless. But Verizon shouldn t rush a deal.
Why is Vivendi looking at Pages Jaunes? 17 Jul 2006 It s not obvious why the media and telecoms group should own the yellow pages company, even if the numbers might stack up. That might make it a pretty lowrisk acquisition. But the worry is that Vivendi s conglomerate discount will widen further.
Eurotunnel management hides behind courts 17 Jul 2006 It s a clever tactic for Eurotunnel to ask the French courts for help by filing for safeguard bankruptcy protection. It takes the pressure off management to hammer out a deal. If negotiations fail, at least Eurotunnel can say it wasn t entirely its fault.
Do shareholder activists make good directors? 17 Jul 2006 That s a question Heinz shareholders are pondering as Nelson Peltz urges them to elect his five nominees for board seats. The record suggests that even if Peltz wins next month s proxy fight, it s no guarantee of longterm success for investors.
Citi fails diversification test 17 Jul 2006 One argument for retaining the conglomerate is to provide steady growth by smoothing out the peaks and valleys. But as Q2 earnings showed, this is not the case in practice. The structure isn't working.
Ritblat exit could close British Land discount 16 Jul 2006 The property tycoon started out with £6m of assets, but leaves behind a company with £18bn of assets and excellent growth prospects. But his record is marred by British Land s persistent valuation discount relative to its peers. That is no longer justified.
Easyjet’s recovery may herald end of Stelios era 16 Jul 2006 After a wobble two years ago, the low cost airline s share price has more than tripled. New management are doing a good job. Stelios has often said he s a seller at the right price thought to be at or above 500p. That s only 20% above the current share price.
S&N should break itself up 16 Jul 2006 The UK orthopaedic company s shares trade at a discount to its overseas peers. They should arguably trade at a premium. It should sell off its wound business and focus on the attractive orthopaedics business. That would release value.
Middle East conflict gives volatility another jolt 14 Jul 2006 This is the latest in a sequence of events that are making investors question their own high tolerance of risk. Volatility has snapped back. But while investors are more jittery, they remain quite complacent in historic terms.
Rosneft prices at a chunky premium to Lukoil 14 Jul 2006 At the top of the range, the Russian oil firm is valued at a 20% premium to its privatelyowned peer, on a per barrel basis. Investors squeezed out by strategic and Russian buyers should ensure a healthy aftermarket too.
Ebay should buy back stock 14 Jul 2006 The shares have been hammered by declining growth rates, rising competition and confusion over strategy. Announcing a major stock buyback when eBay discloses earnings next week would begin the difficult process of restoring investor confidence.
Valassis highlights weakness with $1.3bn deal 14 Jul 2006 Its $1.3bn cash offer for bigger rival Advo smacks of desperation about declines in Valassis' core business. The offer came just days after a profit warning and the planned synergies barely cover half of the premium paid.
General Motors and Ford should merge 14 Jul 2006 That may sound wacky. But the Big One s bargaining power with unions, suppliers, dealers and governments would bring giant synergies. It s also not hard to justify on antitrust grounds, especially as market share declines continue.
Emerging markets threatened by Japanese rate hike 14 Jul 2006 While the Japanese economy is well primed for the 0.25% increase in the Bank of Japan's overnight call rate, the rest of the world isn't. This move continues to drain the international liquidity pool, threatening emerging markets and overvalued assets everywhere.
Tech slump has further to run 14 Jul 2006 Now tech s saviour consumer demand is showing signs of strain. Hopes that spending by companies would pick up this year have been dashed, hitting tech valuations.