General Motors starts to pull ahead of itself 1 Oct 2014 The car maker seems to have avoided the potholes Ford hit in Russia and Latin America. Now CEO Mary Barra is promising bumper margins. Trouble is, these rely on sales or pricing power GM has yet to demonstrate – and on the lack of geopolitical risk, which it cannot control.
Good Fannie-Freddie verdict bad for housing reform 1 Oct 2014 A federal judge rightly tossed out a shareholder suit to recoup $72 bln of profit from the bailed-out mortgage firms. That means Fannie and Freddie earnings will keep flowing into Uncle Sam’s coffers. For as long as that continues, revamping housing finance looks a non-starter.
Coke challenge goes beyond revising pay plan 1 Oct 2014 The beverage giant has backed off its controversial executive compensation scheme. That’s a win for Warren Buffett, investor David Winters and the company’s other shareholders. But the quibbles with Coke don’t end with excessive pay. Costs loom as the next activist target.
Ebola sets clock ticking on West African economy 1 Oct 2014 Growth may yet survive the deadly epidemic. The last four years’ 28 pct pace isn’t realistic, but controlling the outbreak soon should at least preserve investment. That won’t be easy, given the virus has now spread to the U.S. In saving lives and the economy, every day counts.
Goldman’s new conflict rules raise bigger question 30 Sep 2014 Bankers there face fresh limits on investing in stocks, bonds and hedge funds. Goldman knows how easy it is to cross a line when treading close to it. Why Wall Street dealmakers can own individual securities at all is the real mystery that speaks to a culture loath to change.
Rob Cox: Flurry of ski M&A aims to control weather 30 Sep 2014 CEOs and corporate financiers revel in the power of the deal. One company, Vail Resorts, is taking the idea to extremes. By acquiring clusters of snowy U.S. retreats in different climates and selling “Epic” season passes, it is trying to smooth bumps caused by Mother Nature.
Bankrupt toll road leaves taxpayer sitting pretty 30 Sep 2014 Private investors in a 157-mile Indiana toll road are set to be wiped out in bankruptcy court – but only after they sunk millions into new lanes and tolling technology. It’s a rare example of a boom-era deal successfully transferring risk from the public to the private sector.
Governments are real targets in Apple’s tax case 30 Sep 2014 The European Commission thinks that the iPhone maker has received preferential treatment from the Irish government. Both Apple and Dublin beg to differ. At least Brussels has put member governments on notice that tax leniency could amount to state aid.
PayPal forced to rev after eBay’s belated U-turn 30 Sep 2014 The $70 bln online auction company has for years resisted setting free its payments business. Apple and Alibaba created more urgency than Carl Icahn and other investors could. EBay squandered a big early advantage, but independence may yet give PayPal a chance to play catch-up.
Repel Bramson’s Electra boarding party 30 Sep 2014 The New York raider wants seats on the board of the London-listed private equity trust. He also reckons he can double Electra’s value. But if Edward Bramson really can whistle up an extra 1 bln stg, he can afford to pay a premium for full control.
Ford honks horn loudly for global investors 30 Sep 2014 The U.S. automaker’s shares tumbled 7.5 pct after it warned that turmoil in Latin America and Russia would hit 2014 profit. Recalls hurt, too, but even that potential cost was flagged by GM. Ford exposes the complacency that has settled into markets about geopolitics and beyond.
Wal-Mart’s Instagram moment lacks certain filter 29 Sep 2014 The retail colossus appointed photo app co-founder Kevin Systrom to its board. He brings fresh eyes to a company lurching into the modern age. Infusing Wal-Mart’s online efforts with tech chic will be tough, though. And Silicon Valley’s governance style isn’t a welcome addition.
Chanos may inspire hedgies to go long silence 29 Sep 2014 The short-seller renowned for spotting Enron early is being sued for slander by casino mogul Steve Wynn. The line between betting against, or for, a company and besmirching or advocating too much is a fine one. Investments can and should sometimes speak for themselves.
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.