US stock option scandal set to trigger more defaults 3 Oct 2006 Accountants are gearing up for a large rise in companies delaying financial filings early next year due to options accounting difficulties. Postponed filings can trigger technical bond defaults and generate returns for wellpositioned investors.
Exxon takes the right step for investor democracy 3 Oct 2006 The oil giant is joining Home Depot in the charge to give shareholders a stronger voice in board elections. Both companies have been accused of executive pay excesses. But the move to majority voting will make directors more accountable.
SEC should confront suspicious derivatives trading 3 Oct 2006 Credit default swap prices in several deals, including those of casino operator Harrah s, have moved before buyouts were announced. The law may not have been broken. But the SEC needs to clarify its stance.
Kinder buyout sets a poor example 3 Oct 2006 That's why they should inform the board promptly of MBO plans. Kinder Morgan seems to have been tardy on this score. Executives contemplating a buyout may find themselves torn between maximising shareholder value and snapping up their company on the cheap.
Belgium is another monkey on Suez’s back 3 Oct 2006 Before approving Suez's merger with GdF, the country wants a golden share. That's on top of France's golden share. Having two countries potentially meddling in its affairs could turn Suez into the energy equivalent of Airbus.
Airbus infected by Eads’ governance virus 3 Oct 2006 Airbus CEO Christian Streiff wants to push through his restructuring plans. But the board of Eads is split and the plan could be diluted. Airbus problems can t be sorted out without reforming its parent. Airbus must be folded into Eads, and Eads must have only one CEO.
Tesco’s expansion machine still undervalued 3 Oct 2006 The UK supermarket group's H1 profits have powered through the £1bn barrier on the back of effective growth both abroad and at home. One day UK consumers may rebel against Tesco s sheer size. But for now, the market still doesn t give it enough credit.
Bond market balance of power shifts to investors 3 Oct 2006 The week that news broke of Europe s largestever Pik financing may be an odd time to question the strength of the credit markets. But the last few months has seen investors push for the return of a form of bondholder protection last seen after the dotcom crash.
Xstrata pleases with $5.5bn rights issue 3 Oct 2006 The miner s shares are up because the deal was smaller than expected and the $19bn Falconbridge merger is going well. Mick Davis, Xstrata s ambitious chief, seems to be winning his bet that metal prices will stay high long enough to make this deal work.
Cohen cashes in on alternatives boom 3 Oct 2006 A year after retiring from Apax to focus on his philanthropic activities Ronald Cohen is back in business with an alternative fund of funds. It looks smart, given the tide of cash earmarked for alternatives. But investors will need to know what are the fees and target returns.
Credit derivative market isn’t nearly as big as it seems 3 Oct 2006 The headline $26tn figure roughly half global GDP is a good excuse for lots of teeth gnashing over what people fear is increasing risk. But there s an extraordinary amount of double and triple counting. It s hard to figure out the actual risk, but it s nowhere near $26tn.
Russian bear-hug threatens Georgian renaissance 3 Oct 2006 Since Georgia s Rose revolution in 2004, the Caucasian state has prospered by aligning itself with western Europe. But Putin's attempt to put the squeeze on his neighbour throws everything up in the air.
Brussels won’t save security firms from Microsoft 3 Oct 2006 Security software companies McAfee and Symantec fear that the software goliath is trying to Netscape them with its new operating system. They are fighting back by taking their case to the European Commission. But any changes are likely to be too little, and too late.
Another hedge fund suffers growing pains 2 Oct 2006 Highprofile activist investor Pirate Capital is closing its funds to new money amid a regulatory probe and disappointing returns. Pirate s woes highlight a common problem for rapidly growing funds. Faced with a huge increase in assets, managers can easily lose focus.
Refinery stocks look cracked 2 Oct 2006 The recent decline in oil and petrol prices has hit shares of refiners like Valero and Tesoro hard. Yet despite a slight recent recovery, crack spreads suggest refinery stocks have yet to hit bottom.
Falling oil prices could silence Chavez 2 Oct 2006 The populist Venezuelan president has used his oil wealth to bait the US, calling President Bush the devil. However, a drop in the oil price could threaten a fiscal crisis in Venezuela. That would likely blunt his bluster.
Lomax leaves Misys in the lurch 2 Oct 2006 This was the worst possible outcome for the UK software group. Having put Misys in play, chief executive Lomax failed to muster a bid. If the board made a mistake, it was not firing Lomax ages ago. With no breakup on the agenda, a new boss must now pick up the pieces.
Morgan Stanley gambles on banker’s bonuses 2 Oct 2006 The investment bank s new incentive scheme lets employees put bonuses into alternative investments. It s even topping them up with loans. But when the credit cycle turns, the bankers stakes could disappear. That would leave them with little reason to stay
Will bidders fight for AWG? 2 Oct 2006 A group of infrastructure funds are forking over £2.2bn for the UK water company, which is nearly a 30% premium to RAV. Even so, investors still expect a dogfight to break out over AWG. But it s hard to see how a counter bidder could go much higher.
Casino buyers double down 2 Oct 2006 Apollo and TPG ante up for casino operator Harrah s. But this is a risky bet on a firm that s already highly leveraged. While casino operators are no strangers to debt, the Harrah s buyout is worthy of Trump.
Permira tries to forget its bad weekend 2 Oct 2006 The buyout group walked away from bids for Misys and Britvic, just as it did from HMV and Kesa earlier this year. Permira is fastbecoming the bane of the merger arbs. But its string of misses highlights the increasing difficulty of doing UK deals.
Stork should listen to investors 2 Oct 2006 The Dutch group is under proxy attack from hedge funds that want to break it up. It's hinting it might ignore any vote calling for breakup. Dutch law oddly allows Stork to do this. But it would mean ignoring the corporate governance code, which the group s chairman cowrote.
Elections won’t solve Brazil’s economic problems 2 Oct 2006 Lula looks sure to win a runoff later this month. Yet despite his fine record the country s growth remains sluggish. Freemarket reforms are desirable in theory, but politically impractical.
Game over for online gambling 2 Oct 2006 Partygaming, 888 and other online gaming groups are closing down their US operations after Congress voted effectively to ban internet bets. Sure, they still have their smaller European and Asian operations. But the big bet has spectacularly failed.
Has Wall Street placed a bad November bet? 2 Oct 2006 Financial titans like Goldman s Blankfein and Morgan s Mack have shifted their loyalties via donations to the Democrats from Republicans. But the trading of futures contracts on the outcome of midterm Congressional elections suggests they may have backed the wrong horses.