Ken Moelis engineers the deal of his lifetime 4 Mar 2014 The investment banker is taking his eponymous 7-year-old firm public. It may be worth some $2 bln. By stretching the limits of corporate governance, Moelis will wield exceptional control. For potential investors this is a chance to grab onto his coattails – and not much more.
Freeport-McMoRan shows pay votes have some bite 4 Mar 2014 The copper miner is slashing base salaries for top execs including Chairman James Moffett after shareholders opposed pay practices twice in three years. Freeport needs to do more to put governance on a sound footing. But the changes show say-on-pay isn’t a toothless tiger.
Apple CFO handover shows off big company mettle 4 Mar 2014 Peter Oppenheimer’s exit and move to Goldman’s board look well orchestrated, especially for tech-land. Investors want that from a $470 bln company with $159 bln in cash. The trick is to not let an establishment mindset take hold. Apple’s success is based on disruptive products.
Wall Street sings from same dismal FICC sheet 4 Mar 2014 Jefferies has joined Citigroup and JPMorgan saying trading revenue is down by at least 15 pct this year. Some pain was expected. What’s odd is that banks seem to be suffering equally. It’s a potentially worrying sign if even having a distinctive business model doesn’t help.
Tobacco deal may work if survives regulatory fire 4 Mar 2014 Reynolds American might be mulling a bid for rival Lorillard. Similar deals suggest the Camel cigarette maker could sensibly stretch to offer a 30 pct premium. The strategic benefits are also fairly clear. But antitrust and other watchdogs may send any transaction up in smoke.
Mexican oil cash cow could go dry absent tax fixes 3 Mar 2014 Pemex’s quarterly pre-tax profit dropped 30 pct to $10 bln, but the energy giant had to pay $16 bln in government levies. Investment and production predictably suffered. President Peña Nieto’s revenue-raising reforms and plans to let in foreign cash can’t be enacted too soon.
Soaring corporate legal eagles on precarious perch 3 Mar 2014 Credit Suisse and others are eschewing costly outside counsel in matters ranging from big cases to CEO advice at U.S. Senate hearings. But as the ex-law chiefs at Pfizer and Wellpoint can attest, that puts pressure on in-house attorneys. They’re easy targets if things go awry.
Inverses Buffett and Icahn correlate many ways too 3 Mar 2014 The billionaires are touting their respective returns and investment approaches in shareholder letters. While time horizons and styles distinguish them, both outperform the market by playing hardball and trading on personal brands. Neither can be easily replicated either.
U.S. is minimum-wage laggard given its prosperity 3 Mar 2014 With Washington considering a higher pay floor and Peru’s prime minister losing his job over the issue, a Breakingviews analysis shows global minimum wages as a percentage of per-capita GDP vary widely. By this measure, the U.S. and, say, Mexico have plenty of space to lift pay.
Slicing the cake better can make it bigger 3 Mar 2014 A new IMF study finds inequality makes economies smaller. Efforts to redistribute income may make growth higher and more sustainable. That looks right. But the challenges are huge. Governments must be honest and get the policies right. The study’s lessons could be misapplied.
West can hurt Russia – if there’s a will 3 Mar 2014 The U.S. and Europe say Russia will pay a cost for its actions in Crimea. Markets contributed by sending Moscow exchanges down 10 pct. But Putin won’t be impressed until Europe reviews the two pillars of its relationship with Russia – finance and gas. That won’t happen overnight.
Citi’s Mexico fraud besmirches industry further 28 Feb 2014 The mega-bank has been cheated out of $400 mln by an oil services firm in one of the most basic businesses in banking – accounts receivable. Citi’s Banamex didn’t even spot it – Mexico’s government did. Missing such simple fraud is something that should worry Citi’s rivals, too.
Big Oil could use some venture capital mojo 28 Feb 2014 An unwillingness to tackle small wells meant oil majors missed out on the lucrative U.S. shale oil boom. Exxon and its ilk were too focused on mega-projects. Seeding a new generation of nimbler upstarts, a strategy that worked for Big Pharma, might renew verve and boost output.
Review: GDP and its discontents 28 Feb 2014 Diane Coyle’s new book discusses the many weaknesses of GDP, the standard measure of economic success. Why do policymakers still rely on it? Her answer is that the alternatives are no better. That’s fair, but her analysis leads to a more aggressive, and compelling, conclusion.
Blackstone bets Versace can go up a few sizes 28 Feb 2014 The U.S. group is buying 20 pct of the Italian fashion house. The 1 bln euro, all-equity minority deal shows that buyout firms are lacking classic takeover opportunities. This is also a bet that Versace’s lightweight business can one day match the power of its extra-large brand.
Tesla customizes hot new convertible for hedgies 27 Feb 2014 A $1.6 bln bond that becomes equity is a cheap way for Elon Musk’s electric carmaker to raise cash for its new Gigafactory. Hedge funds love such securities, which provide unique trading opportunities on volatile stocks. And lately they’ve been almost as hard to buy as a Tesla.
Dan Loeb bids against himself at Sotheby’s 27 Feb 2014 The hedge fund activist surprised the auctioneer by nominating three directors, after the firm offered him one uncontested board seat and listened to, and even acted on, some of his gripes. Loeb must have reasons, but it may discourage other targets from engaging with activists.
TXU’s carcass scavenged for tax meat 27 Feb 2014 The Texas utility renamed Energy Future is nearly bust six-plus years after the $45 bln takeover led by KKR and TPG. A flock of buyout firms and hedge funds, including Apollo and Avenue, are clawing at each other for the scraps. This odd beast has juicy bits buried in its books.
PayPal has outgrown eBay’s warm embrace 27 Feb 2014 The online merchant’s ownership provided rich soil for the payments system to thrive. But PayPal is now mature enough to grow faster on its own. Separating the two businesses could send eBay’s stock up 15 percent or more.
Credit Suisse boss gets easy ride in Senate 27 Feb 2014 Brady Dougan was only lightly chastised about his firm helping Americans dodge taxes. Senator Carl Levin was at least as angry with Swiss and U.S. authorities. And investors don’t expect much more pain. To execs at Goldman and elsewhere, it must have looked like a cakewalk.