Valeant CEO gets called on $100 mln excess 6 Nov 2015 Paying bosses in equity nudges them to serve shareholder interests. The pharma giant went to extremes, allowing chief Michael Pearson to borrow heavily against his shares. The tumbling stock forced him to repay the debt - an example of how skewed incentives have rocked Valeant.
Brazil dam disaster tests BHP’s mega-mining model 6 Nov 2015 Investors ditched BHP Billiton shares after a jointly owned dam failed in Brazil. While mining is much safer than it used to be, such catastrophes are an inherent risk. A big balance sheet and diverse income streams mean it can absorb the financial consequences better than most.
Bill Ackman pushes limits of activism at Valeant 5 Nov 2015 The hedge fund boss hinted the drugmaker’s CEO may need to go and was invited into the boardroom mid-crisis, according to a newspaper report. Ackman also seems to have usurped Valeant’s defense. The $55 bln of quickly lost market value suggests his involvement isn’t helping much.
Shale drillers can do little more with any less 5 Nov 2015 Apache joined a handful of U.S. companies that have raised production forecasts in recent days, despite sharp reductions in investment. Improved efficiency and lower costs are keeping volumes buoyant. Another big drop in the price of oil, however, would test their resolve.
Barclays, not HSBC, should mull quitting the UK 5 Nov 2015 HSBC caused a scene by suggesting it might move its HQ to Hong Kong. But it makes more sense for UK-based peer Barclays to move to New York. Its new CEO is American, the U.S. is better able to house a systemically important bank, and Barclays might dodge UK bank and bonus rules.
BTG Pactual earnings flatter its performance 5 Nov 2015 The Brazilian investment bank’s lower costs and 28 pct ROE put its U.S. rivals to shame. The country’s interest-rate hikes and the firm’s increasing diversity help. But Pactual often pays little or no tax – or gets a benefit. Strip that out and its returns are more pedestrian.
Facebook a master at hooking users on mobile habit 4 Nov 2015 The social network reported more than 1 bln active daily visitors, a testament to its success in persuading people to check in on smartphones and tablets. Its reward was a 40 pct rise in ad revenue. Future growth may depend on pushing this kind of digital addiction.
Expedia finds back door to Airbnb’s market 4 Nov 2015 The travel site is paying $3.9 bln for HomeAway. Though the vacation-rental firm lacks the urban clout of its better-known rival, moving in with its new parent will help. Cost cuts are low, but HomeAway’s cash pile will ease the blow to Expedia of shelling out a 28 pct premium.
Rainbow-chasing unicorns get Groupon reality check 4 Nov 2015 The daily-deal company’s stock cratered on cut forecasts and a CEO change. It’s now worth about $2 bln, a third of Google’s offer price in 2010. Tech startups may favor tales of takeover refuseniks like Facebook and Twitter, but it’s easy to get lost in valuation fantasyland.
Financial tech has as much to gain as fear from D.C. 4 Nov 2015 A new lobbying group of five big Silicon Valley firms reflects concerns that Washington may not understand the benefits of booming fintech. Banks have long made similar complaints about Uncle Sam. Like them, the industry needs to realize that regulation can help rein in excess.
Trader’s conviction vindicates juror cyber smarts 4 Nov 2015 Prosecutors won the first U.S. trial for manipulating prices by placing and cancelling orders, known as spoofing. Algorithms did the actual transactions, making criminal intent tough to prove. Yet a lightning-fast verdict shows juries are up to nailing high-speed market cheats.
Time Warner leaving gate ajar for Fox return 4 Nov 2015 Boss Jeff Bewkes thwarted Rupert Murdoch’s $80 bln takeover bid with some bold stand-alone projections. A year later, the HBO owner’s results are failing to impress. Its stock trades below Fox’s offer price and at a discount to peers, making it vulnerable to a fresh approach.
Elon Musk turns Tesla rounding error into $2.5 bln 4 Nov 2015 That’s the jolt to the carmaker’s worth after its CEO said it delivered 23 more vehicles in Q3 than thought. It’s classic irrational shareholder exuberance to value a sliver of good news above an earnings miss. As Tesla expands, though, that may prove harder to do.
Investors top courts as judges of banker conflicts 3 Nov 2015 A jurist tossed claims BofA played both sides of Signet Jewelers’ bid for Zale, reversing himself after a higher tribunal said shareholder approval of a deal can override such charges. A crackdown on skewed loyalties is overdue, but owners deserve a say on when it goes too far.
U.S. election complicates Puerto Rico repair job 3 Nov 2015 President Obama wants Congress to help the island out of a $72 bln hole. His calls for debt restructuring, better oversight, tax and healthcare tweaks make sense, but risk falling prey to candidate posturing. It may take a full financial meltdown for D.C. to roll up its sleeves.
Dismal AIG earnings add fuel to Carl Icahn’s ire 3 Nov 2015 The activist wants the insurer to break up and cut costs. AIG boss Peter Hancock is pledging to do the latter. But a $231 mln Q3 loss emphasizes just how much work the company still has to do to get shareholders on board. A carve-up may be painful, but it’s not off the table yet.
Candy Crush bid relies on hope over experience 3 Nov 2015 The London-based maker of the sweet-matching mobile game is selling to Activision for $5.9 bln. It’s just a 20 pct premium, which leaves investors in last year’s IPO with a loss. With few synergies, this looks as much an excuse to use excess cash as a sound bet on future hits.
VW skids further into the emissions scandal ditch 3 Nov 2015 U.S. regulators accuse the carmaker of putting devices that fool pollution tests on even more autos, including Porsches and a wider array of Audis. If true, the claims would contradict VW’s defense, expose the company’s internal probe as hapless and drag its new CEO into the mire.
Halliburton’s Baker Hughes bid looks less refined 2 Nov 2015 The gap between the offer and market prices is a yawning 15.4 pct, implying there are serious doubts about the $27 bln oil services merger. Aussie trustbusters have raised fresh concerns. A blocked deal would cost Halliburton $3.5 bln, nearly triple this year’s expected profit.
Wall Street has its 2016 White House empty vessel 2 Nov 2015 U.S. presidential hopeful Marco Rubio’s tax-cut ideas have broad appeal, but his math is off. Hedgie and Republican Party donor Paul Singer, though, has just offered his support. That means he and other finance-industry backers may soon fill in Rubio’s hollow economic policies.