Encana’s pirouette demands greater fanfare 29 Sep 2014 The Canadian driller’s $7 bln acquisition of Athlon Energy cements a commitment to move from gas to shale oil. It’s paying a full price, especially after the recent fall in crude to $94 a barrel. If Encana can get the transition right, though, its valuation will deserve a lift.
AIG owners’ bailout suit has law and gall on side 29 Sep 2014 Claims Uncle Sam cheated the insurer’s ex-CEO and others while also saving them may actually succeed at trial. Extracting terms like an 80 pct equity stake in exchange for rescuing AIG was legally questionable. Proving damages will be tricky, but never underestimate chutzpah.
Commodity bear market looks entrenched 29 Sep 2014 A rising dollar, the prospect of U.S. rate rises, and moderating Chinese growth are casting long shadows over the asset class. The threats to the bear case are strong supply-side responses, or successful economic stimulation by the ECB. Neither looks very likely.
Bill Gross and Janus Capital made for each other 26 Sep 2014 Both are formerly hot fund managers looking for a fresh start. Investors are exuberant about the possibilities of Gross recapturing some old glory under Janus, the Roman god of new beginnings. It is more likely a case of past performance not being indicative of future results.
Gross exit offers soft reset on Pimco governance 26 Sep 2014 With the investment firm’s domineering ego out the door, owner Allianz can now push for team-based structures less dependent on single individuals. The temptation to resist is an urge to tighten the grip from Munich over a subsidiary that naturally benefits from autonomy.
Yahoo may squeeze out a third activist helping 26 Sep 2014 Starboard’s Jeff Smith is following where Dan Loeb and Carl Icahn have trod before him. Ideas about buying AOL and spinning off Alibaba and Yahoo Japan tax-free aren’t exactly new. Yahoo’s discount valuation, however, might nevertheless benefit from the attention.
Harvard’s new fund boss needs a California lesson 26 Sep 2014 Stephen Blyth is taking over the university’s $36 bln endowment at a time when its investment strategy is faltering. Its 2014 performance was even bested by Ivy rival Yale. Calpers’ decision to ditch fee-heavy hedge funds may give Blyth a useful roadmap for reviving returns.
Wall Street police discover how hard reform can be 26 Sep 2014 The financial crisis has forced financiers to change the way they do business. Bad cultures and behaviors are hard to root out, though. Witness JPMorgan’s whale of a loss. A whistleblower has revealed similar troubles at the New York Fed. Regulators also have toughening up to do.
Wall Street needs sheriff more than toll collector 25 Sep 2014 U.S. Attorney General Eric Holder is stepping down after squeezing multibillion-dollar penalties from banks. He had less success securing convictions, leaving law enforcement just an expensive cost of doing business. Next financial crisis, Uncle Sam should send in a tougher cop.
Apple CEO Tim Cook gets $25 billion warning shot 25 Sep 2014 That’s the value wiped off the stock after a botched system update and reports its new phones can be bent. It’s a small hit for a $600 bln company. But the 2012 Maps fiasco is a reminder that one-off issues may presage more pain. Cook needs to nip this one in the bud.
ValueAct’s Valeant return hints at value trap 25 Sep 2014 The departure of the activist fund led by Jeff Ubben from the drug company’s board in May set off a slide in its stock, the currency critical to its M&A-machine strategy. ValueAct is rejoining, and may buy more. Some good investments are harder to leave than they are to make.
Sam Waksal’s new biotech tests Wall Street amnesia 24 Sep 2014 The former ImClone boss who went to prison for an insider trading scandal that also ensnared Martha Stewart plans to take his latest venture public this year. He follows second-chancers like Donald Trump and LTCM founder John Meriwether. Investors can be astonishingly forgiving.
Tesco chairman should step aside 24 Sep 2014 Richard Broadbent will struggle to restore market confidence in the UK retailer. This week’s accounting scandal compounds existing concerns about his period at the helm. The priority should be an orderly handover to the right successor. But speed matters too.
Uncle Sam gets wires crossed on data privacy 24 Sep 2014 A hacker went to prison for exposing personal information AT&T didn’t protect. Now prosecutors are defending the legality of doing essentially the same thing in the Silk Road drug website case. Online privacy laws are flawed when enforcers can’t decide what’s allowed.
Savings rate is sound goal for central bankers 24 Sep 2014 It certainly looks like monetary policy these days doesn’t have much effect on price changes. Its power over labour markets is also limited. Perhaps central banks should target savings, which have been too low in the United States. Higher interest rates would be a start.
Starbucks avoids froth in $913 mln Japan buyout 24 Sep 2014 The U.S. coffee chain is buying the 60.5 pct of its Japanese business it doesn’t already own at a discount to the unit’s market value. Expiring licenses give Starbucks a chance to take control of a large market on the cheap - as long as minority shareholders don’t resist.
Rob Cox: Is "stranded costs" a euphemism for fat? 23 Sep 2014 The answer to that question may determine the winner in the latest activist battle to captivate Wall Street: Nelson Peltz’s siege of DuPont. The billionaire’s controversial arithmetic suggests the chemicals giant has grown bloated over its 212 years. He’s on to something.
U.S. financial regulation really can be fixed 23 Sep 2014 Four years after the landmark Dodd-Frank proposal went into effect, Congress is finally poised to correct mistakes in it. A wide bipartisan margin in the House approved some reasonable changes. It only goes to show consensus is indeed possible and the law needn’t be dismantled.
Macquarie wrong turns put toll road in bankruptcy 23 Sep 2014 The U.S. route backed in part by the Australian bank went bust because of scant traffic, its operator says. In reality, the buyers created insurmountable potholes by overpaying, loading on debt and losing derivative bets. They need only look in the vanity mirror for blame.
U.S. inversion strike boosts case for real reform 23 Sep 2014 The Treasury is tightening rules to deter U.S. companies from merging with foreign firms to reduce taxes. The changes may have some effect around the edges. For the most part, though, they just lay bare lawmakers’ failure to make broader changes to America’s burdensome regime.