Man boss may be right about hedge fund closures 21 Nov 2007 Pete Clarke reckons the hedge fund failure rate may double over the next year. That looks plausible. But the problem isn t the markets so much as the changing economics of the industry. In future, new funds are more likely to be launched under the umbrella of existing brands.
Bid-drunk brewers slur their numbers 21 Nov 2007 Carlsberg and reluctant bid target S&N have each used different versions of the same numbers. The effect is that Carlsberg looks like it s paying less than it really is, while S&N looks like it's getting less. Such mischief is bad for both sides' credibility.
DP World’s $22bn IPO should fly 21 Nov 2007 As western markets jitter, money is still bubbling up in the east. That plus the recent successful flotation of the Hamburg port has allowed the Dubaibased port operator to price at the top of its range making it the Middle East s largest IPO.
Flowers bets on another new life for Shinsei 21 Nov 2007 Chris Flowers made a fortune in the wake of Japan's banking crisis. Now he's doubling down on his investment in Shinsei Bank. The shortterm outlook for Shinsei and other Japanese lenders isn't rosy, but the Flowers group could get a bargain.
Rock hedge funds should put money where their mouths are 21 Nov 2007 SRM and RAB say Northern Rock shouldn't be sold on the cheap. If existing shareholders are prepared to inject £1bn of new equity, independence might work. The stricken bank should test whether they are for real by getting them to sign underwriting commitments.
Fed’s lower growth forecast may stabilise markets 21 Nov 2007 The Fed s belief that the US economy had moved onto a higher long term growth track encouraged it after 1997 to keep real interest rates low. Now the Fed has reversed, and lowered its long term output forecast. That should result in higher rates and fewer destructive bubbles.
Equities finally start to catch credit woes 20 Nov 2007 Just over a month ago, the S&P 500 hit an alltime record. It has fallen 10% since then, as investors realised that wider spreads and much higher loan losses were likely to hurt growth and profits. But stock markets probably still have more bad credit news to digest.
Paragon adds alarming US touch to UK house party 20 Nov 2007 The difficulties of the buytolet lender are a clear sign that that the UK house price party is over. Will Britain follow the US model house price falls and slowing growth feeding off each other? Rate cuts may hold off the worst, but the UK economic outlook is dark.
How could same deal both create and destroy masses of value? 20 Nov 2007 Look at ABN Amro. Santander has made a pot from the deal. Its partners, RBS and Fortis, have lost their shirts. Santander's Botin was lucky to buy assets not exposed to the credit crunch. But he also outsmarted his partners, paying the lowest price for the best businesses.
Aussie prosperity at risk if commodities drop 20 Nov 2007 John Howard s election campaign boasts of the twelve years of prosperity he has brought. Yet Australia s is a commoditydriven economy with a payments deficit in spite of high commodity prices. If commodity prices fall, the readjustment will be severe whoever wins the election.
Why is Darling like Nick Leeson? 20 Nov 2007 Like the infamous Barings rogue trader, the UK treasury secretary doesn't want to recognise his losses over Northern Rock. As each week passes, the state's exposure gets bigger. But Darling keeps prolonging the agony in the desperate hope that things will turn around.
Freddie Mac mess is bad news for everyone 20 Nov 2007 The mortgage giant was created to help stabilise volatile mortgage markets. But after losing $2bn last quarter it needs to raise capital, which will be tough and expensive. If that doesn t shore it up, Freddie might have to slash its mortgage book. That would roil US housing even further.
Sarkozy is Sanofi-Aventis’ best poison pill 20 Nov 2007 The French pharmaceutical group will have no major shareholder once L Oreal and Total have sold their stakes. And its shares have been battered the last two years. But the company is under Sarko s protection and it won t be taken over any time soon.
Hedging sub-prime exposure is almost impossible 20 Nov 2007 Swiss Re has paid a $1.4bn price for providing protection against mortgage losses to an unnamed institution via two credit default swaps. But such disasters are likely to be rare. Few took advantage of these hedging strategies when they were on offer. Now they're no longer available.
S&N defence gets off on wrong foot 20 Nov 2007 In arguing why rivals Carlsberg and Heineken are underbidding, the UK brewer has shown that things aren't great in its core European markets. The bidders may still need to pay more than 750p a share but the bar has probably come down.
Agricole doesn’t fear rain in Spain 19 Nov 2007 The French mutual bank has paid a top price to enlarge its minority stake in Spain's Bankinter. The E800m price is high for a deal without synergies. The latest evidence of Agricole s buyatallcosts strategy will do little to restore shaken shareholder confidence.
Pressure on dollar grows, for good reasons 19 Nov 2007 Some Opec members are trying to wriggle out of their dependence on the US currency. The motivation is partly political, but the investment case against the greenback is sound. The US has big debts, low interest rates and the ingredients for an inflation problem.
China’s brute force approach to loan bubble won’t work 19 Nov 2007 The country s new lending restrictions might be effective though inefficient in a free market. But with foreign reserves used to prop up banks, China s lending bubble may have moved beyond control. Bad debt recognition is the key to restoring its financial system s health.
Biotechs’ premium makes them dealmaking force 19 Nov 2007 Celgene could have found $3bn to buy smaller rival Pharmion from cash on hand. But it had a more valuable currency its richly valued stock. Biotech groups high multiples and their growing ambitions could derail big pharma s acquisition plans.
Chinese pursuit sends reminder to StanChart 19 Nov 2007 The global bank should keep its biggest shareholder, Temasek, in mind. The Singapore fund has reportedly rejected approaches from China's three biggest banks. That s spared Standard Chartered some controversial shareholders. But Temasek might not always be so reluctant to cash in its capital gain.
Northern Rock investors play chicken with UK 19 Nov 2007 The shares would be worth nothing without the government's lifesupport system. Even the recent submarket bids depended on continued state funding. But the shares may still have nuisance value given that the government seems unwilling to nationalise the bank or declare it bust.
Richemont kicks the nicotine habit 19 Nov 2007 The luxury empire may divest its E15bn stake in British American Tobacco. With demand for its trinkets on the ascent, Richemont doesn't need to lean on BAT for earnings growth so long as the global addiction to luxury continues.
SatNav war produces only winners – for now 16 Nov 2007 TomTom s bid for Tele Atlas in July set off a wild and short skirmish for digital mapmakers by companies that sell GPS devices. Predictably, both Tele Atlas and rival Navteq have lost their independence. The fact that all five companies involved gained significant value makes little sense. Losers will emerge.
Pac-Man fantasy enlivens Rio-BHP fight 16 Nov 2007 For some bankers, the idea of target turning predator may be intrinsically appealing. But idle rumours to the contrary, there s no sign that Rio would consider a counterbid for its bigger mining rival. Even an admission that the idea was considered would jeopardise the defence.
Buyout loan market’s new investors bide their time 16 Nov 2007 The mutual funds, distressed debt investors and credit hedge funds that snapped up TXU, First Data and other buyout debt in the last two months are now sitting on the sidelines. For some, that makes sense. They re betting the credit market s swoon will lead to better terms.
Can the euro replace the dollar? 16 Nov 2007 Warren Buffett, Hugo Chavez and JayZ have one thing in common: a shortage of respect for the US dollar. The greenback is on a weakening trend. While the dollar won't disappear as a reserve currency, the euro is the most realistic alternative in decades.
Delta-United merger is second-best solution 15 Nov 2007 The cost savings from such a deal would be far less than from individual mergers with airlines with overlapping routes. But given regulators allergy to regional industry concentration, this mediocre matchup may be the best shareholders can hope for.
S&N predators can’t stretch much further 15 Nov 2007 The UK brewer swiftly rebuffed an increased offer from Carlsberg and Heineken. Rightly so it was a mere 4% above the last one. But it s not clear the two brewers can go much further. That leaves them in a tough spot.
Kraft dodges tax hit with smart $2.6bn Post cereal deal 15 Nov 2007 The food giant looks to have sold the Grape Nuts maker at a pittance relative to rivals like Kellogg. But the reverse Morris Trust structure in which Kraft spins off Post and then merges it with Ralcorp saves $1.4bn in taxes.
Global growth should be marked down to market 15 Nov 2007 The IMF says the world economy grew by 5.4% in 2006. But it relies on a model of purchasing power parity. Investors should be using market values of currencies. That gives a growth rate of 3.8%. The IMF s model also uses bad assumptions. China s PPPGDP is about to be cut in half.