Month: November 2006

Keefe Bruyette rockets on debut

9 Nov 2006

The boutique surged 30% after pricing at the top of its IPO range. It s now valued in line with Wall Street s biggest cheeses. Any future upside comes from its value as a hedge on the credit cycle. Trouble in the banking sector may spell opportunity for KBW.

Deutsche bungles Hertz IPO role

9 Nov 2006

Emailing IPO information to prospective investors early was dumb, and cost the bank its lucrative role in the carrental firm s deal. True, the US s quietperiod rules are often more unhelpful to than protective of investors. But Deutsche should have known better.

Democratic Congress to focus on executive pay

8 Nov 2006

The next chair of the House financial services panel, Barney Frank, has promised to give shareholders a vote on bosses pay. Unlike enhanced hedge fund regulation and redtape, this kind of reform should be welcomed by investors.

Minimum wage hike won’t hurt US economy

8 Nov 2006

An increase is a big part of the victorious Democrats economic agenda. The idea makes freemarket economists apoplectic. But they aren t taking immigration and enforcement into account. Illegal immigrants would be the only big losers from a higher minimum.

US election victory puts spotlight on Democrats

8 Nov 2006

The party looks set to gain control of Congress on the back of a huge antiBush, antiIraq vote. But what will it do now it has won? Democrats now face an internal battle. If the populists win, markets will suffer. This one could go either way.

Scottish Power gets mystery bid approach

8 Nov 2006

It wasn t RWE or E.on. Other names suggested include Scottish and Southern, EDF and even Gazprom. Don t rule out an infrastructure fund. But at the current share price of 750p, Scottish Power isn t cheap, considering E.on walked away from a 570p bid only a year ago.

Deutsche Boerse’s European merger hopes fading

8 Nov 2006

Without Borsa Italiana, Deutsche Boerse s claim it s offering Euronext a panEuropean alternative to NYSE isn t as convincing. Efforts to woo LSE also failed. Frankfurt must show greater willingness to compromise, or risk being sidelined in exchange consolidation.

Rumsfeld’s exit no panacea for Iraq woes

8 Nov 2006

Anyone expecting this will accelerate an American withdrawal or even reduce involvement in Iraq could be seriously mistaken. Rather it may have two consequences: binding the Democrats to the Iraq mess and repudiating Rumsfeld s waronthecheap strategy.

Severstal’s $13bn listing fails to set London alight

8 Nov 2006

But Alexey Mordashov, who still owns 80% of the company, gets what he wanted the currency to make more deals. The Russian steelmaker s GDR offering wasn t a knockout. It was smaller than first hoped, and the price was fair, not ambitious.

JC Decaux could triple in size with Clear Channel deal

8 Nov 2006

The deal would catapult the outdoor advertising company from a midcap French company to a global media musthave. But financing the deal would be a real stretch. And the Decaux family may have to give up control of the company.

Telefonica’s Alierta tests his deal handcuffs

8 Nov 2006

The Spanish telecoms operator s boss is out shopping again. He is in talks to invest in Hong Kong s PCCW and may buy in Brazil too. Alierta may look to be risking trouble with his dealwary investors. But he could do the current deals without breaking his E1.5bn deal cap.

Wallenbergs get tough over MAN-Scania

7 Nov 2006

By building an effective veto in the Swedish truckmaker, the family is showing it s against Scania being swallowed by its German rival. If Volkswagen, as kingmaker, insists on a friendly deal, it will now have to make some serious concessions to the Swedes.

Pischetsrieder’s ouster bad for VW shareholders

7 Nov 2006

The carmaker's chairman, Ferdinand Piech, has won the longrunning power struggle with the man he anointed as CEO five years ago. Piech's will to retain power stymied Pischetsrieder s revitalisation attempts. His departure leaves investorunfriendly managers in control.

Pirelli write down: too little, too late

7 Nov 2006

In writing down its TI stake to E3 a share, not market value, Pirelli effectively claims the 18% shareholding merits a full control premium. The snag is that Pirelli's control of Telecom is slipping.

UK retail space race is risky

7 Nov 2006

M&S, Next and Debenhams are opening new stores faster than customers can fill them. For some, sales in existing stores are declining. Why? They need scale, and reckon they can stimulate demand before their margins get squeezed. But not all will come out unscathed.

Morgan Stanley aims for record $8bn real estate fund

7 Nov 2006

The bank's megafund is the latest initiative to build its alternative assets unit, following acquistions of stakes in three hedge funds. Morgan Stanley isn't alone in noticing that megafunds earn fat fees, private equity and infrastructure funds have done so too.

Morgan Stanley sees dollars in pig manure

7 Nov 2006

The brokerage is investing $3bn in assets that create carbon emission credits. This will support their already robust carbon trading group. Investing directly in projects could give its traders an advantage over the competition. It could also create a conflict of interest.

Overstock understocked with capital

7 Nov 2006

The internet retailer s CEO, Patrick Byrne, has spent more time fighting critics allegedly led by a Sith Lord than running the business. His efforts have been entertaining, if misplaced. The group may need to raise more cash next year. That will be very difficult.

Eads shareholders should cut their losses

7 Nov 2006

Delays in the A380 have finally cost Airbus a customer FedEx. While it s only ten planes, it may be a sign of worse things to come. The A380 may eventually prove to be a big winner. But Eads shareholders should cut their losses while they can.

Brazil sale shouldn’t stop TI reviewing its dividend

7 Nov 2006

Selling its Brazil mobile unit might bring in enough to cover the cost of TI s Italian fibre network. And make a dividend cut seem needless. But after selling Brazil, TI's payout ratio would still be very high and a cut to its generous dividend might still make sense.

EU right to fight Italy over Autostrade

7 Nov 2006

Italy s latest move effectively blocks the E25bn AutostradeAbertis merger, and is similar to Russia s bullying of foreign oil firms. Even though it is hard to prove that Italy violated single market rules, it's good Brussels is confronting this outrageous protectionism.

Taiwan still worthy of investors’ faith

7 Nov 2006

President Chen Shuibian faces corruption allegations and may be overthrown, but Taiwan is not very corrupt. It s got where China wants to get to, and its productivity is still growing fast. Also, it s a functioning twoparty democracy.

Bain back in the kitchen with $3bn LBO

7 Nov 2006

The private equity firm s investment in restaurants has paid off in the past. But the buyout of OSI Restaurants won t be quite as seamless. The restaurant company s Outback Steakhouse chain is struggling. The buyout requires something Bain s avoided of late hard work.

UK banks say borrow away – forget that rainy day

7 Nov 2006

The 125%ofvalue mortgage is about to get a big push. And the inheritadebt mortgage has already reared its ugly head. What happened to the savings culture? In the UK and US, it has been drowned in a flood of liquidity. The loss will be regretted some day.

German meddling will handicap Eads

7 Nov 2006

The German government has rounded up banks to take a stake in the aerospace company. This will handicap the aircraft maker s turnaround. Troubled Airbus restructuring will only succeed if it is freed from politicking. Investors will come back if governments go out.

Ahold restructuring does only half the job

6 Nov 2006

Hounded by hedge funds, the Dutchlisted food retailer is selling its US Foodservice arm and returning E2bn to investors. That's a start. But in taking the easy option, Ahold hasn't addressed concerns that its US and European retail businesses don't really belong together.

Dominion deal puzzles the market

6 Nov 2006

The $50bn US energy company s decision to sell its exploration and production unit to focus on its utility business makes sense. But the way it s doing it, though an allcash deal, may wind up destroying value. Even if it fetches a high price, taxes will bite.

Ladbrokes bet on 888 could pay off

6 Nov 2006

The UK leisure group is hunting for bargains and unlike rival suitor Partygaming, its shares still make for an attractive currency. 888 is hardly cheap, at around £3000 per punter. But with big cost savings and technology to play for, the logic of a deal stacks up.

Mittal asserts control at Arcelor Mittal

6 Nov 2006

But it makes the carefully negotiated agreement with Arcelor at the time of the merger look hollow. The moral winners win. Lakshmi Mittal didn't wait long to install himself as CEO of the steelmaker, as was his right as biggest shareholder and guiding spirit.

Hollywood should be wary of Borat’s success

6 Nov 2006

The mockumentary starring the offensive fictional Kazakh journalist beat established franchises to take top billing at the US box office. But cult films often have limited appeal. GE s Universal, which is shelling out $42m on Borat s creator s next gig, might not be so lucky.