ING split makes good use of crisis 26 Oct 2009 The Dutch group is finally separating insurance from banking, and restructuring further by selling its US online arm. A E7.5bn rights issue will repay half the state s capital and secure loanloss insurance. These are radical shifts. Tough times have set ING on the right path.
Investors should be wary of Argentina’s debt deal 25 Oct 2009 A proposed offer to the $23bn of holdouts from the 2005 forced renegotiation is ungenerous but should get the benchmarked 60% acceptances. With a plausible finance minister and liquid markets, Argentina may then get a new debt deal done. Investors have been here before.
Dole IPO poor omen for LBO re-equitisations 23 Oct 2009 The food company priced its offering below the anticipated range. Investors appeared worried about Dole s debt, among other things. Its performance may serve as a warning to private equity funds hoping to unload assets still lumpy with leverage.
ECB reveals ambitions with hedge-fund intervention 23 Oct 2009 The European Central Bank is urging the EU to soften its proposed hedgefund directive and ensure that it is harmonised with US reforms. The proposals sound sensible. But by sticking its oar in, the central bank is also staking a claim to be Europe s top financial regulator.
Bank regulator’s scalpel may lack needed precision 23 Oct 2009 BoE deputy Paul Tucker is keener on micro regulation of banks as a way to stop a future crisis than his boss, Mervyn King, who wants to break banks up. Tucker s ideas have merit. But the finetuning required to make them work may be more than regulators can actually deliver.
Surprise 0.4% UK GDP fall points to troubled 2010 23 Oct 2009 A small increase was expected, but GDP fell for the sixth consecutive quarter. The UK government and central bank might want to fight back with more fiscal and monetary stimulus, but the already weak pound means there s not much they can do. The UK s pain is set to continue.
Amazon stock knock becomes badge of honour 23 Oct 2009 The internet retailer reported sparkling earnings. Sceptics always derided Amazon as a retailer in fancy tech clothing. With its stock now trading at an alltime high, and former tech darlings at fractions of theirs, the critique looks like a compliment.
Gartmore IPO looks opportunistic 23 Oct 2009 The UK asset manager is enjoying a boost from rising markets and revitalised retail investors. Staff and its privateequity backers missed out on 2007 s buoyant IPO market, and took solace in a hefty dividend instead. This time, they will want to get a deal done quickly.
Ancestry.com could have trouble reaching posterity 23 Oct 2009 The genealogy website wants to raise $100m in an IPO valuing its current subscribers at about $555 a head and its shares well above recent internal estimates. While retiring baby boomers searching for their ancestors may flock to the site, the valuation seems too high.
BSkyB must maintain financial discipline 23 Oct 2009 The UK payTV operator has demonstrated surprising resilience through the recession, while continuing to invest. The balance sheet is strong, with debt at less than twice its ebitda. Sky should weigh carefully the balance between continued investment and shareholder dividends.
Credit Suisse adjusts well to new reality 22 Oct 2009 The Swiss bank smashed expectations with dazzling Q3 figures. Risk fell, return on equity rose to an industryleading 25% and pay was cut in response to lower fixedincome revenue. But the shares have reacted warily for a reason: the valuation holds little margin for error.
Meriwether asks investors to forgive – again 22 Oct 2009 John Meriwether, the legendary bond trader and cofounder of the notorious LTCM hedge fund, is to start a third fund only months after closing his second. The veteran had better make sure his latest venture is weatherproofed against stormy markets.
KNOC faces tougher oil quest than CNOOC 22 Oct 2009 The Korean state oil company s purchase of Canadian Harvest Energy secures future oil supplies, like recent Chinese deals. With energy security a hot issue everywhere, that makes sense. But Korea can t play as rough as China so KNOC needs to stick mostly to countries it trusts.
UK bank reform: it’s FSA 1, Bank of England 0 22 Oct 2009 Days after the BoE s governor said breakups were the only way to make banks safe, the FSA has set out an intelligent alternative based on capital and liquidity reforms. If only the regulator was pushing its agenda as aggressively and provocatively as Mervyn King.
China’s 9% growth comes with inflationary threat 22 Oct 2009 Beijing has pumped up the economy with spending and lending. It has worked, but now the government needs to find a strategy to tackle mounting inflation. Rate increases could harm the recovery. That leaves awkward restrictions on lending and antispeculative curbs on markets.
Gala Coral bets on just-enough restructuring 22 Oct 2009 Candover, Cinven and Permira piled leverage onto the UK betting firm when they became its third set of privateequity owners after the 2003 buyout. Gala now faces a complex restructuring; but the mooted plan will leave it with heavy debts and betting on an earnings turnaround.
US pay tsar plays with fire 22 Oct 2009 Ken Feinberg will soon unveil his plan to limit pay at Tarpdependent firms. With the best intentions, there could be damaging unintended consequences, like skewed incentives and mass defections potentially creating a mess. Let's hope Feinberg has asked the right questions.
UK commercial property has hit the bottom 22 Oct 2009 The market fell a long way very quickly. But UK commercial realestate prices probably won t drop any further. A wall of money chasing yield in a low interestrate environment should underpin valuations. Still, don t expect the market to bounce back as fast as it corrected.
King’s call for bank break-ups unnecessary 21 Oct 2009 The Bank of England governor thinks breaking banks into utilities and casinos may be needed to solve the too important to fail problem. But such separation would be tricky and have adverse sideeffects. Although the problem is real, there are better solutions.
US petrol tax makes sense – even to Big Oil 21 Oct 2009 John B Hess s call for a $1 per gallon petrol tax is profitseeking. He s a big Hess stockholder and fears the political obloquy from a near$150 oil price. A tax helps by reducing oil consumption and cuts $120bn from the US budget deficit, deflating money market bubbleblowing.
China shouldn’t sweep bad loans under the rug 21 Oct 2009 Amid a $1.3 trillion lending spree, the banking regulator says lenders might avoid bad debts by rolling them over or securitising them. Either could work and the first may already be happening. But such sleight of hand only creates bigger problems later. It should be avoided.
Galleon wind-down at least shows market at work 21 Oct 2009 Unlike their bailedout brethren in the banking world, hedge funds live and die on their performance and reputation. Founder Raj Rajaratnam s indictment on insidertrading charges is an extreme case. But at least Galleon isn t too big to fail, and investors can move on.
Altria could be cigar butt – in a good way 21 Oct 2009 Warren Buffett reckons some dogeared stocks can deliver more puff than expected. USfocused Altria's cigarette volumes are falling and healthcare reforms could further burden smokers and manufacturers. But investors could be underestimating the Marlboro Man's resilience.
Deutsche’s October surprise gets cool reception 21 Oct 2009 The German bank has preannounced Q3 figures that look impressive but which are flattered by unexpected tax gains. The market has frowned, perhaps anticipating a capital hike ahead of two deals. Given Deutsche's previous reluctance to tap markets, the fears may be unfounded.
Gucci fails to carry PPR through slump 21 Oct 2009 PPR and LVMH are archrival French luxury conglomerates. The recession has treated them quite differently. PPR has just posted lacklustre quarterly revenues. Its Gucci subsidiary's sales have been dropping. But larger LVMH s reliance on emerging markets has proven a shield.
Morgan Stanley chooses long haul to profitability 21 Oct 2009 The Wall Street firm made money for the first time in a year and beat consensus. But the firm oozes caution, holding a third of its capital on the sidelines. And increasing leverage hasn t added much juice. That, along with integrating Smith Barney, is keeping returns low.
Cadbury’s Q3 puts little new pressure on Kraft 21 Oct 2009 The UK confectioner has lifted revenue and margin guidance. Anything less would have been a big setback in its defence against Kraft s unwanted £10bn approach. Kraft now has a convenient excuse to raise its lowball offer but shouldn t stretch itself.
Ferrovial’s loss on Gatwick is price of past excess 21 Oct 2009 The Spanish construction group will take a E142m hit selling the London airport to infrastructure rival GIP at below regulated asset value. The deal is the cost of Ferrovial being allowed to keep flagship airport Heathrow. And it's a reminder of the crazy prices paid in the boom.
MGM Mirage investment would be risky bet 21 Oct 2009 Kirk Kerkorian may sell part of his 37% stake in the casino company. He could be looking for a little valuation validation. But the investor would have to believe in MGM's unfinished Las Vegas shopping centre or count on a rebound in gambling revenues. Both are chancy.
Pritzkers’ Hyatt IPO priced to sell 20 Oct 2009 The Chicago family is selling around $1bn of stock in a deal that puts a $4bnplus valuation on the hotel group. That's a big discount to Marriott. But given internal family squabbles and a stock overhang, that's probably warranted.