Consumer goods makers poised for the big purge 19 Oct 2017 Nestlé, P&G and their peers are pumped far above their long-term valuations. Collectively, the biggest 10 would lose almost $350 bln of market value if history reasserted itself. A squadron of activists offer support, but Unilever’s earnings wobble hints at brittle share prices.
PayPal’s future rests on striking quadruple whammy 19 Oct 2017 The $80 bln payments firm is worth as much as Amex and has a higher multiple than Visa or MasterCard. Justifying that means renewing its deal with ex-owner eBay, nailing lending and expanding its popular Venmo app to merchants. For now, PayPal looks well-positioned to succeed.
Spare GE jet is symbolic target of Flannery sweep 19 Oct 2017 Scrapping a second plane that followed former boss Immelt around, just in case, is an easy sop for shareholders. The new CEO needs them on side as he mulls possible bigger changes at the $200 bln industrial giant, such as dropping long-held earnings targets or cutting dividends.
Hadas: Time to slay the free market-myth monster 19 Oct 2017 The oft-told story of vibrant private companies as economic heroes isn’t right, and the common tale of the incompetent state is equally wrong. A new group at University College London can help create a more accurate – and more complex – narrative. The economy is a shared project.
ICOs validate old-school “follow the money” mantra 19 Oct 2017 One of the biggest so-called initial coin offerings to date, $230 mln for what are known as tezzies, has led to a spat between its architects and a Swiss foundation that controls the digital cash. Where crowd-funding and crypto-currencies meet IPOs, traditional motivations apply.
Blackstone’s mass gives it gravitational pull 19 Oct 2017 Steve Schwarzman’s investment shop boosted earnings by 23 pct in the latest quarter, driven by management fees on its new $18 bln private-equity fund. With managed assets approaching $400 bln and $92 bln of dry powder, the alternatives firm has powerful momentum.
Verizon stuck in neutral as rivals shift 19 Oct 2017 The U.S. telecoms carrier reported a rise in wireless subscribers. But cable rivals Comcast and Charter are also offering mobile services. AT&T is trying to become a media company, and Sprint and T-Mobile may yet merge. A heavy debt load hobbles Verizon’s ability to quickly change lanes.
Ken Chenault a mediocre but tough act to follow 18 Oct 2017 The Amex boss is to leave after 17 years in charge. He survived a credit bust, an activist and losing the firm’s biggest client, Costco. But total return under his tenure lagged rivals. That may seem an easy target for new CEO Squeri to beat. But fintech will be his bugbear.
Greenhill loss heightens turnaround challenge 18 Oct 2017 The M&A boutique fell into the red last quarter and revenue plummeted as it completed fewer deals, even as most bulge-bracket rivals prospered. CEO Scott Bok is betting on a bumper recapitalization to boost shareholder returns, but that can’t mask the firm’s fundamental weakness.
Tootsie Roll bet could leave return cavity 18 Oct 2017 Hedge fund Spruce Point reckons the secretive confectionary firm may be worth half its $2 bln value. The short seller may have a point. But Tootsie Roll’s future rests on the health of octogenarian CEO and major shareholder Ellen Gordon. Betting against candy in general is safer.
Sexual harassment forces way into the board room 18 Oct 2017 Harvey Weinstein’s movie studio is in tatters. Mighty Amazon is wrestling with the fallout from alleged misbehavior of a top executive. They're not alone. The mistreatment of women has swiftly moved from an HR issue to a serious business risk deserving of attention from the top.
U.S. tax outlook opens M&A pricing divide 18 Oct 2017 Republicans want to cut the corporate rate to 20 pct, but the timing is as uncertain as the outcome. Theoretically, profit – and thereby valuations – could get a 23 pct boost from lower taxes. Sellers want that priced in, but buyers won’t. All-stock deals could be one answer.
TPG’s car-insurance deal comes with a warranty 18 Oct 2017 The buyout group and Uber investor is selling car insurer Warranty to Assurant for $2.5 bln, taking a 23 pct stake and some cash. It looks to have doubled its money. Taking shares as payment isn’t a full exit for TPG, but it leaves both parties assured of respectable returns.
Global watchdogs may curb U.S. deregulatory push 18 Oct 2017 The U.S. Treasury will decide whether to recommend scrapping the post-crisis bank resolution regime, as some Republicans urge. But foreign regulators threaten to impose new limits on American firms if it's ditched. That reduces the chances of a major rollback of financial rules.
Chancellor: 1929 is more apt anniversary than 1987 18 Oct 2017 Today's high stock prices, dollops of leverage and robust profit margins more closely resemble market conditions preceding the Great Crash than the minor blip that took place 30 years ago. Fold in risk parity, ETFs and other trading strategies, and a repeat could be coming.
Qudian IPO feeds debt-hungry Chinese millennials 18 Oct 2017 The online lender backed by e-commerce giant Alibaba’s financial arm has priced its U.S. listing above expectations, says Reuters. It boasts fast growth, low defaults and - shockingly for tech - profitability. As young Chinese shoppers rack up debt, Qudian will keep earning.
Soros punches new $18 bln hole in societal ills 17 Oct 2017 The hedge funder who took on the Bank of England has given most of his fortune to his charity, making it the second-largest in the U.S. behind the Bill and Melinda Gates Foundation. Conservatives may moan, but his causes of human rights, democracy and fairness need support.
China’s iQiyi is like Netflix with extra challenges 17 Oct 2017 The Chinese video-streaming service is eyeing a debut on U.S. markets next year and already inviting comparisons to its American partner. Both are burning cash on new content to lure fans. Fickle consumers and limited appeal abroad stand in the way of a $10 bln-plus valuation.
Morgan Stanley staff have the most to cheer about 17 Oct 2017 Rival Goldman Sachs pays its people more on average, but James Gorman’s firm has boosted comp and benefits by 9 pct this year, almost double the raise of its rival. JPMorgan bankers face a pay cut. Asset-management employees, though, can afford to pop some champagne corks.
Investors choke on generic-drug deal complexity 17 Oct 2017 The merger of Amneal with Impax, worth some $9 bln in combined enterprise value, brings scale, savings and a bigger business for a respected CEO. But the larger firm is private, its owners are selling down, and there’s a wacky tax element. No wonder Impax owners aren’t loving it.