Americas

Misbehaving CEOs can get off far too easily

21 September 2017

That's a lesson to draw from the case of KB Home boss Jeffrey Mezger, whose crass rant with neighbor Kathy Griffin went viral. Cutting his bonus might hurt if he received one in recent years. A more fitting penalty would be to axe his haul of stock awards worth some $2.4 mln.

Viewsroom: German election all about runners-up

21 September 2017

Chancellor Angela Merkel and her Christian Democrats should win more votes than rivals. But they’ll need coalition partners to form a government. Choosing among them promises to be a nail-biter. Also: the Toys R Us bankruptcy won’t be a total loss for its private-equity owners.

Bloated U.S. healthcare spending has silver lining

21 September 2017

The first drug that works by silencing targeted genes by Alnylam is heading for FDA approval. It’s hot on the heels of another that treats cancer by using modified immune cells. New therapies are proliferating, thanks in part to America’s unsustainably large healthcare budget.

Anadarko signals its future is out of its hands

21 September 2017

The oil firm is spending $2.5 bln to repurchase stock. Yet it’s unlikely to make money until 2020 and has $15 bln of debt. The buyback plan is an admission it can’t find profitable investments. It also implies CEO Al Walker is hoping for the oil price to rise or a takeover.

Siemens-Alstom train-deal economics trump politics

21 September 2017

The German firm may merge its train unit with the French peer Alstom, rather than Bombardier. That would create a global player in high-speed rail, but leave Siemens in an awkward embrace with joint-owner French government. It’s a price worth paying to create a European champion.

SEC failure puts U.S. cyber security on back foot

21 September 2017

Unlike the Equifax hack, the breach into the watchdog’s systems doesn’t put people’s data at risk. But the SEC buried its belated disclosure of the attack in a broader statement on cyber issues. It sets a terrible example on transparency for the publicly traded firms it oversees.

Hadas: Crypto-currencies presage new monetary era

21 September 2017

No, bitcoin and its peers won’t become an electronic version of the gold standard. Rather, the speculation surrounding them indicates a financial system out of control. If the frenzy ends in a crash, it’s a chance to revive the old idea of a centrally controlled money supply.

What Carney can learn from Yellen

21 September 2017

Fed Chair Janet Yellen showed rate-setters can shock markets even when they stick to the script. That’s a lesson for the Bank of England’s Mark Carney, who has talked up a rate rise this year. Like her, he may have to hike without having solved a host of economic puzzles.

CRH deal cements its U.S. infrastructure bet

21 September 2017

The building materials company is buying Kansas-based Ash Grove for $3.5 bln including debt. It’s a full price for a group which likes to buy cheap. Despite doubts over President Trump’s pledge to rebuild highways and bridges, pushing into its key market makes sense for CRH.

HTC tethers itself to a new virtual reality

21 September 2017

The ailing Taiwanese firm will sell part of its handset unit to Google for $1 billion. This will free up HTC to focus more on its risky but promising VR business, where it is winning market share. Deeper ties with the U.S giant might also help fend off rivals Sony and Facebook.

Fed balance-sheet runoff could rock fiscal boat

20 September 2017

The U.S. central bank will start shrinking its $4.5 trln bond portfolio next month. The timing is risky, with lawmakers set to spar over government funding and the debt ceiling. Fed downsizing will also cut the $92 bln it sent to Treasury last year, adding to budget pressures.

Harvard endowment risks wasting its big advantage

20 September 2017

An 8.1 pct gain in the year to June was far from Ivy League. Newish boss Narv Narvekar says it will take years to fix performance. But worrying about short-term returns misses a Harvard strength. Its $37 bln pot is ideally suited for the ups and downs of very long-term investing.

Options hurt Bill Ackman’s cause at ADP

20 September 2017

The pushy hedge-fund boss owns most of his 8.3 pct stake in the $50 bln payroll processor with derivatives. It's a common ploy, but Ackman's plan is lackluster and investors can pick from plenty of activist campaigns. His choice of securities only makes it harder to gain support.

Uber hops in driving seat to serve ad firms notice

20 September 2017

The ride-sharing firm sued a digital advertising agency claiming fraud and seeking some $40 mln in damages. Clients rarely, if ever, take Madison Avenue to court. Already under pressure to prove their value, the case is another sign ad middlemen need to clean up their act.

Toys R Us equity owners aren’t exactly wiped out

19 September 2017

KKR, Bain and Vornado privatized the retailer for $6.6 bln more than 12 years ago. Now their stock is worthless. Even without dividends, though, they’ve collected some $600 mln in fees, interest and other payments. It shows how buyout firms play the game in multiple ways.

China “Belt and Road” waves red flag for investors

18 September 2017

Beijing’s vision of infrastructure connecting some 70 countries already has fund firms rushing to create vehicles to lure investment. But broad index ETFs miss that many projects make little commercial sense. Skeptical punters should focus on a narrower set of potential winners.

Post serves unappetizing $1.5 bln breakfast combo

19 September 2017

The Grape-Nuts-to-Weetabix maker has ordered up a side of sausage and home fries by agreeing to buy Bob Evans. Post shares have been on a roll, but it's paying a hefty 15 times EBITDA, before trimming any fat. An estimated return of 5 pct is no way to start an investor's day.

Jefferies signals a tighter squeeze on Wall Street

19 September 2017

Sharp rises in underwriting and deal revenue helped the investment bank double profit in the latest quarter. While bond trading was depressed, the firm led by Richard Handler seems to be picking up market share in the advice business. These are bad omens for bigger rivals.

Heineken tries its hand at conscious uncoupling

19 September 2017

The brewer’s second-largest investor, Femsa, has sold a stake worth 2.5 billion euros. A spat over Brazilian distribution was a hiccup in an otherwise successful relationship. Co-dependence in the lucrative Mexican market is a good reason for both sides to keep things friendly.

Market returns Best’s IPO plans to sender

19 September 2017

The Alibaba-backed logistics firm has cut the price of its New York flotation, and slashed the deal’s size to $495 mln, IFR reports. Best has belatedly recognised it was asking too much of investors, given the poor performance of rival ZTO, and its own evolving business model.