Another debt bomb drops on investors 26 Feb 2007 Credit Suisse is launching an exotically named synthetic CFO. That s not a finance director constructed of plastic and fibre. Rather, it s a fundoffunds leveraged up four times. Backtested, the equity tranche returns 30% a year. Looking forward is another matter.
Atticus rattles the Deutsche Boerse piggy bank 23 Feb 2007 This should enable the Germans to gear up and buy back stock. It might also lead to pressure for a breakup of Deutsche Boerse itself. The hedge fund isn't impressed with the capital the Germans are handing back. It's suggesting Deutsche Boerse separate its settlement unit.
EU delivers expensive smack to lift cartel 23 Feb 2007 Brussels is certainly making errant lift makers pay for past crimes. The E992m penalty for bidrigging is part of a trend to higher fines. But that this wasn't even a very profitable cartel. Given the waferthin margins, consolidation or subtler cheating look the only options.
PT shareholders should squeeze Sonaecom for more 23 Feb 2007 It won't be easy to get a higher offer given that Sonaecom has made its final offer and the Portuguese regulator won't let it put it up. But here's a gambit that might just work.
Failing hedge funds should return fees 23 Feb 2007 The conventional incentive arrangement is unfair. Managers earn a windfall in good years but keep the fees even if they lose money later. Some investment firms have found a better way. In bad years, they refund past performance fees to their investors.
Alcatel’s $1.5bn award provides a welcome respite 23 Feb 2007 Microsoft said it will appeal. And the close collaboration between the two on internet TV may prompt them to agree to a smaller settlement. But AlcatelLucent s victory ups the pressure on other companies to pay it royalties welcome news for the cashstrapped company.
Geopolitical risk is out of fashion 22 Feb 2007 Markets haven t even blinked at hot Russian rhetoric on US plans to put missiles in Central Europe. Iranian nukes don t scare them either. There are two good reasons to be calm: recent history and ample liquidity. But history isn t over and investor fashions can change.
Google Apps pose a distant threat to Microsoft 22 Feb 2007 Microsoft's edge in security and its large base of satisfied users means its place atop the corporate IT pantheon remains unchallenged. But on the internet, where the coin of the realm is innovation, Google s brand is chipping away at the Seattle behemoth.
Buyout deal fees can’t be justified 22 Feb 2007 Blackstone earned $100m for advising on its $39bn acquisition of EOP. Almost three times what Wall Street firms charge for similar deals. Limited partners may complain about the charges. However, they dare not go public for fear of being excluded from the exclusive buyout club.
Google’s obstinacy is spawning YouTube rivals 22 Feb 2007 Remember Napster? The contentsharing site was crushed by copyright litigation. And its flameout guided development of rivals like iTunes. Google's YouTube is repeating many of Napster's mistakes. It too may end up as an object lesson for successful online video rivals.
Myners wary of pension funds’ love of private equity 22 Feb 2007 That may seem to contradict Myners' governmentcommissioned report on pensions in 2001, which accused UK funds of ignoring private equity. But it's unfair to accuse Myners of flipflopping. Six years ago he worried about herding by pension trustees. That's still a worry today.
Rexel looks like a banner ad for private-equity 22 Feb 2007 The electricalparts distributor is planning an IPO two years after being taken out by three funds, who will make a killing. But Rexel also shows how real value can be created when sponsors not only leverage and restructure, but help a company grow and expand.
Feds’ new hedge fund guidelines fall short 22 Feb 2007 Regulators are leaving hedge fund oversight in the market s hands. It s true that lenders and counterparties know more than bureaucrats. But market discipline can be trumped by a desire to attract hedge fund business. The Feds shouldn t leave the field altogether.
Vonage’s final call approaches 22 Feb 2007 The internet telecom company has about 3.5 years of cash worth at its current burn rate. But declining telecom prices and increasing costs mean the squeeze is likely to come sooner. The internet telecom company has about 3.5 years worth of cash at its current burn rate.
Chinese investors shun foreign investments 22 Feb 2007 Individuals have not flocked to the government s approved scheme. Why should they? It s better at home for both growth and speculation. The failure teaches a lesson about the causes of the cheap renminbi not a popular savings glut but a government policy.
Italy needs post-Prodi crisis 21 Feb 2007 The Italian PM has resigned after an undistinguished nine months in power. At least he was better than his predecessor, Berlusconi. This doesn t look like a big enough crisis to push Italy into rootandbranch change. Sadly, it's likely to stay stuck in the mud.
When 50p may be better than 65p 21 Feb 2007 Normally shareholders should prefer a higher price in a deal. But not with Monstermob, the crisisridden UK mobile group. Shareholders should take a cash injection from LaNetro valued at 50p not an allshare putative offer from China s Linktone valued at 65p.
China’s Year of the Pig could prove a dog 21 Feb 2007 At least for investors. Equity valuations in Shanghai are excessive, profits vulnerable, and the authorities intent on pricking the bubble. Anyone plunging into Chinese stocks should heed Wall Street s old adage: bulls and bears make money, but pigs get slaughtered.
Sberbank’s $8.8bn issue attracts heavy demand 21 Feb 2007 Russia s largest bank priced its rights issue at a slender 4% discount. And the stock isn't cheap. So why the stampede? Foreign investors felt they just had to be in it. Domestic buyers including a smattering of billionaires stepped up to the plate too.
Hohn goes after ABN Amro 21 Feb 2007 The maverick fund manager, who pulverised Deutsche Boerse CEO Werner Seifert two years ago, has now turned his guns on the Dutch bank. It s certainly a tempting target. ABN boss Rijkman Groenink is probably better shielded than Seifert. But he d be well advised to listen.
Panmure’s US buy may spark more transatlantic deals 21 Feb 2007 It s easy to see why Panmure is buying USbased bank ThinkEquity. It s to capitalise on the growth in US companies listing in London. The logic is understandable. But small financial firms don t have a great record of integrating rivals, and US listings could be choked off.
Morgan Stanley takes a risky bet on Argentina 21 Feb 2007 The Wall Street bank hopes that defaulted Argentine debt may get a new buyout offer from the government. Argentina may do this so it can borrow some more. But President Kirchner s government remains dangerous to foreign investors.
Rake’s plans for BT have feel of Groundhog Day 21 Feb 2007 The UK telecoms group s new chairman is talking of acquisitions and gearing up. That s the kind of talk which got it into trouble before. Rake needs to avoid BT regressing to the bad old days. One way to reassure investors would be to tighten the group s acquisition hurdles. Rake needs to avoid BT regressing to the bad old days. One way to reassure investors would be for BT to specify its acquisition criteria.
Arcelor Mittal not yet reaping merger benefits 21 Feb 2007 The steel giant s 2006 results weren t bad a 4% decline in profits in the face of US market weakness. But there should be more to come. Mittal only purchased the Arcelor shares in August. So the synergies, and full market power, have just started to kick in. The steel giant s 2006 results weren t bad a 4% decline in profits in the face of US market weakness. But better news should be coming.
Japanese monetary policy hurts savers 21 Feb 2007 Since the deputy governor voted against it, Japan s rate hike should be the last for some time. That will keep hedge funds happy with a weak yen and a profitable carry trade. But Japanese savers would benefit from higher rates.
LBO lenders court subprime-style meltdown 21 Feb 2007 Both types of lenders have chased every last dollar of business in the belief that the business cycle will never turn. Univision s LBO package is the latest to push the envelope. Its new debt multiple may set a record. But lenders may live to regret it.
XM-Sirius a boon for investors, bane for broadcasters 20 Feb 2007 XMSirius deal approval is likely. Their shareholders are the obvious winners. Contrary to popular wisdom, listeners will also benefit. But the merger will hurt radio broadcasters, pitting them against a stronger rival whose national reach will greatly appeal to advertisers.
Polygon bets on a Sainsbury bid 20 Feb 2007 The appearance of the hedge fund on J Sainsbury s share register suggests its confident a buyout of the UK supermarket group will work out. But how much upside is there? A private equity bid at 550p stacks up; any more looks a stretch. But that s not a bad return for a risk arb.
Fed shouldn’t adopt inflation target 20 Feb 2007 Bernanke is keen to follow the central bank fashion with a single numerical goal. That would make his life easier. But a simple life isn t good for bankers. They should worry about liquidity, crises and financial imbalances.
Icahn’s Lear deal drives no shareholder boon 20 Feb 2007 His $5.3bn bid looks like the only game in town. But some Lear shareholders are still betting that another bidder will emerge. So far no other buyers have kicked its tyres. Investors should sell while the car part maker's stock remains above the price Icahn offers.