Defiant hedge funds dig deep for charity 6 Jun 2008 London s hedge funds raised £25m at last night s ARK dinner only a tad below last year s total. Not bad for an industry under pressure. The top lot was a Damien Hirst painting appropriately titled All Things Must Pass a statement that could be read two ways.
Apple’s new iPhone faces high expectations 6 Jun 2008 Steve Jobs is reportedly set to unveil Apple s secondgeneration iPhone next week. Will it capture the electronic zeitgeist yet again? That would require Apple to roll out something truly shiny and new and not just make incremental improvements.
ECB shocks market with plan to follow rules 6 Jun 2008 The European Central Bank s only target is low inflation. It s missing badly, so the bank s president made clear on Thursday that a July rate increase is almost certain. Investors were surprised, but they should understand that the ECB cares more than the Fed about inflation.
Brazil’s monetary policy beats America’s 5 Jun 2008 Real interest rates of around 7% have produced a sound Brazilian economy. Savings are double the US, the payments deficit is lower, growth is much faster and inflation is comparable. Brazil s post2002 experience offers monetary policy lessons to Ben Bernanke.
Hedge funds should not sub-underwrite rights issues 5 Jun 2008 That s one of the key lessons from the RBS and B&B rights issues. Once the share price starts to fall, subunderwriters have a strong incentive to hedge their position by shorting the stock. Only a determined rescue effort saved the RBS issue from disaster.
Agricole issue discount shows self-confidence crisis 5 Jun 2008 The French mutual bank is pricing its E5.9bn rights issue at an unexpectedly high 37% discount. It looks as if the bank s managers don't believe in their own turnaround plan, which also includes E5bn of asset sales. No wonder the stock has fallen below its 2001 IPO price.
Telia rejection kills France Tel’s value hopes 5 Jun 2008 The Scandinavian telecom group has rejected an E30bn takeover proposal from its French counterpart. At the price, value creation is elusive, especially as FT only sees 1% revenue synergies after six years. A bid high enough to please Telia would be even worse.
Vodafone caught out by Verizon Wireless-Alltel deal 5 Jun 2008 The mobile operator s US joint venture is splashing out $28bn to buy regional rival Alltel. Yet despite owning 45% of Verizon Wireless, Vodafone gets no say and is forced to watch as its dividend plans go awry. That might not be as bad as it sounds.
Credit rating reform may reinforce oligopoly 5 Jun 2008 US regulators have been agitating for more competition in the credit rating game. But the deal the New York attorney general just hammered out with Moody s, Standard & Poor s and Fitch may actually reinforce their market dominance.
El Corte Inglés doesn’t need an IPO 5 Jun 2008 Some familyowned dynasties are forced to go public when younger generations want to cash out. The iconic Spanish department is stuck in such a conflict. But it could afford to buy them out if need be. It is a cash cow and doesn t have global ambitions.
Alltel’s $28bn flip creates winners – and losers 5 Jun 2008 Verizon is getting a good deal and can squeeze $1bn of synergies from the mobile operator. TPG and Goldman made out sweetly in seven months. But their lenders may have reason to grumble, along with Vodafone.
Short-sellers still aren’t villains 5 Jun 2008 The spat between hedge fund manager David Einhorn and Erin Callan, Lehman s CFO, has again turned the spotlight on short sellers. Investors benefit from having negative investment views to consider as well as positive ones. Einhorn et al shouldn t be vilified.
B&B provides more questions than answers 4 Jun 2008 It s still not clear why the UK mortgage lender allowed UBS and Citi to wriggle out of their commitment to underwrite a £300m rights issue. The official version of events is full of holes. B&B shareholders deserve more information before they invite in TPG and more dilution.
Gulf honey pot turns sour for Three Delta 4 Jun 2008 Qatar s £1.4bn buyout of Four Seasons has hit problems, driving a wedge between the state fund and its adviser, Three Delta. Neither side comes out of this smelling sweet but Three Delta s founder Taylor has more to lose.
Biofuels aren’t the main cause of food inflation 4 Jun 2008 Schemes like the US cornbased ethanol programme are a convenient scapegoat for higher world food prices. However, protectionism in both rich and poor countries and excessive global money creation are more important factors.
P&G gins up stock price without caffeine 4 Jun 2008 The consumer goods giant is selling its Folgers coffee brand to JM Smucker for $3.3bn. The anticipated sale may sound like a yawn. But the deal s taxefficient structure encouraged investors to add some $3bn of value to P&G s market cap.
Why was Lehman buying back stock? 4 Jun 2008 It may have only been a few million shares, but the Wall Street firm is pondering raising $4bn of new capital. As reckless as this might sound and Lehman may be thumbing its nose at shorts snapping up some of its own stock might not be so odd.
Credit rating reform deal falls short 4 Jun 2008 The New York attorney general and three big raters are near an agreement to change the way the firms are compensated to evaluate complex deals. But it s a half measure that doesn t eliminate their financial incentive to provide rosy ratings.
Lehman could try to improve on WaMu 4 Jun 2008 The investment bank may need more cash. To raise some quickly, it might tap a financial investor for a big slug and its largest shareholders for the remainder, as Washington Mutual did. That might make sense provided, unlike WaMu, Lehman doesn't give away too much discount.
Watchdogs should crack down on stealth takeovers 4 Jun 2008 UK regulators and US courts may force investors to disclose more about nonvoting economic stakes that they amass using derivatives. It s a good idea. When it is unclear who holds power over companies, shareholders suffer.
TNS investors should side with WPP 4 Jun 2008 The UK market research firm has agreed an allshare deal with GfK. Yet its German rival comes with big execution risk and a potential poison pill. If WPP even marginally improves its offer to compensate for part payment in its own more volatile paper, TNS should change its tune.
Alltel’s banks may lose money, but may not care 4 Jun 2008 The US telecom giant was bought by Goldman and TPG for $27.5bn seven months ago. Verizon may now buy it for the same price. This only makes sense if the debt holders still the original underwriters are willing to take a haircut. They may already have.
Why was Yahoo dead set on $37 a share? 3 Jun 2008 A judge, by unsealing documents from a lawsuit, may have revealed one reason. Yahoo issued hordes of stock options to directors in 2005. The exercise price: $36.75. Even ignoring the financial incentive, that might have set a floor in directors' minds.
India: A status symbol for foreign companies 3 Jun 2008 ArcelorMittal and Standard Chartered are reportedly mulling listings in India. The global giants are attracted by easier Indian regulations. While these were expected to pull in firms from countries with inferior capital markets, India may appeal more to the Western cashrich.
Lehman cash call plans make bottom harder to see 3 Jun 2008 The US bank is reportedly weighing up raising another $4bn. The capital hike in April was meant to end problems of perception. Lehman's CEO then said the worst in the financial markets was over. Such banker optimism has proven premature. There looks to be further to fall.
Bernanke shouldn’t pump up the dollar 3 Jun 2008 The Fed chairman is decrying the weak dollar as a cause of inflation. But excess money creation is more likely the culprit. And the weak dollar is propping up the US economy. Pumping it up could strangle economic growth.
Staples will remain acquisitive beyond Corporate Express 3 Jun 2008 The US stationer has the edge over Lyreco, a French office supplier, in the contest for Corporate Express, its Dutch rival. Staples is likely to make further acquisitions in a fragmented market ripe for consolidation, and Lyreco itself could become a takeover target.
Lehman stock fall isn’t a Bear Stearns death knell 3 Jun 2008 With a more robust balance sheet than its defunct rival and access to the Fed s discount window, the risk of counterparties pushing Lehman into meltdown is low. Shareholders, though, are right to worry about dilution and earnings power.
BAA bondholders can still squeeze Ferrovial 3 Jun 2008 The Spanish construction group s £7.65bn debt refinancing depends on convincing bondholders to migrate to a new financing structure. Hedge funds might try and squeeze BAA for more. But the airports group may not have to offer too much of a carrot to get them to bite.
Mvelaphanda interest in Telkom looks opportunistic 3 Jun 2008 South Africa s incumbent telecom operator has caught the eye of a consortium of investors led by politicianturnedentrepreneur Tokyo Sexwale. While Telkom s fixedline business is in decline, the shares look undervalued. Vodafone could be the ultimate winner.