Groupon’s gaffes give fair warning to investors 30 Aug 2011 The run-up to the web coupon company’s IPO has been a string of embarrassments. Promised profits disappeared in filings, the chairman put his foot in his mouth and now the CEO has made comments that appear to skirt SEC rules. Forget valuations, this company should be avoided.
South Korean equities offer bargains for optimists 30 Aug 2011 Its stocks dived 21 percent this month as leveraged bets soured. Now they look cheap. Big names such as Samsung Electronics trade below 10 times projected earnings. High debt will keep things volatile, but investors sanguine about global growth may want to revisit Seoul.
Market crash compounds Russia’s lack of appeal 30 Aug 2011 Russia’s stock market has been one of the biggest casualties of the global turmoil, again illustrating its extreme sensitivity to risk. Although investors should be poised for an eventual rebound, the latest crash underscores the diminishing allure of Russian stocks.
Apple wouldn’t be first to weather succession 26 Aug 2011 IBM, Wal-Mart and General Motors show how an obsessive focus on design, customer needs and tight control over supply chains can be ingrained in a company by a visionary creator. But these examples also provide some warning signals about how the post-Steve Jobs era could go wrong.
Demand Media takes cake with galling stock buyback 26 Aug 2011 The content farm’s shares have halved since Goldman and Morgan Stanley took it public in January. Now it’s spending a third of the cash it raised to repurchase stock. That contravenes the promised use of proceeds in its prospectus - and does nothing to fix its damaged business.
Goldman chips away at fixed cost problem 26 Aug 2011 The bank is trimming base pay for some senior UK bankers. The 2009 shift from bonuses to higher fixed comp was a bit slippery, but the move back rightly reinstates pre-crisis flexibility. Rivals should follow but may struggle unless they, too, foresaw the need in the small print.
EU bank stress tests look soft on funding 26 Aug 2011 The European Banking Authority’s stress test of bank solvency last month included various assumptions about funding costs in adverse markets. But judging by the wholesale rates implied by current bank CDS levels, the EBA test may not have been bearish enough.
Take Chinese bank earnings with a pinch of salt 26 Aug 2011 Bad loans are falling, capital buffers look healthy and earnings are shooting ahead - so why have China’s bank valuations fallen so far? Look deeper and there are signs that a slowing economy is hurting, potential problems lurk off the books, and small banks are struggling.
Abu Dhabi’s Aabar sticks out for the wrong reasons 25 Aug 2011 The state-owned investor has carried on spending as others have been told to cut back. But multi-billion dollar bets on Glencore and Malaysia’s RHB are under water. Aabar’s turn of fortune underscores the fund’s lack of a focused strategy.
Now investors can focus on just how good Apple is 25 Aug 2011 No CEO is as indelibly linked to a company as Steve Jobs. But his unfortunate health issues have been a distraction for yearsll-seeded orchard. Handing over day-to-day operations is still a blow. After the initial shock, though, investors should see more clearly the powerhouse Jobs built.
Diving bond yields mask investor ambivalence 25 Aug 2011 Fear still trumps greed in the minds of most investors. It allowed the German government to sell 10-year bunds at super-punchy prices on Aug. 24. There may well be enough buyers to push real yields negative. But the investment appetite is far from overwhelming.
Glencore share price recovery depends on M&A 25 Aug 2011 The commodity trader’s performance sagged slightly between Q1 and Q2. The business is coasting along, and the latest numbers were free of nasty surprises. But without an opportunistic acquisition, a recovery in the shares - still 25 pct below their issue price - will be a slog.
UK/Swiss deal good for taxpayers, banks and crooks 25 Aug 2011 Two years ago UK investors with untaxed assets in Swiss bank accounts looked like they would lose their anonymity. Instead, they will now pay almost the full tax rate to the UK, helping it cut its deficit. The Swiss banking model is protected - but dodgy money will remain shielded.
BofA blues is bottling up U.S. credit 24 Aug 2011 The Fed still wants to keep credit as easy as it can. But worries, rational or not, over Bank of America’s stability are getting in the way. If credit investors continue to fear for the nation’s largest bank by assets, that will outweigh any policy options Ben Bernanke might try.
Aging population another headwind for U.S. stocks 24 Aug 2011 Meager economic growth is one thing. But share valuations could also suffer for a decade or more as retiring baby boomers sell off their equities. It’s one more reason for pension funds, younger savers and investors at large to make sure they aren’t expecting too much.
Man U’s mooted IPO valuation in league of its own 24 Aug 2011 The Glazers bought the soccer club for a hefty 16 times EBITDA in 2005. Now a $1 bln Asian IPO could raise the bar again. Man Utd boasts global cachet and wage discipline by soccer’s crazy standards. But it looks like buyers will have to be fans first and investors second.
Big oil faces big unknowns in Libya 24 Aug 2011 With Brent crude at more than $100 per barrel, foreign entities have a strong incentive to restart production as soon as security is ensured. But Libya’s new rulers may want to reshuffle the cards. Even once the fighting stops, oil companies should expect a bumpy ride.
America’s too big to fail just keep getting bigger 23 Aug 2011 The FDIC’s latest quarterly roundup suggests, in aggregate, that the U.S. banking industry is recovering. But dig into the details, and it’s pretty clear that massive institutions are continuing to thrive at the expense of the small fry. That’s not necessarily healthy.
BofA shareholders resigned to life on skid row 23 Aug 2011 Fears of a dilutive capital hike may prove overblown. Even so, BofA’s long-running mortgage saga has moved a seemingly endless list of litigants ahead of equity investors in the pecking order. Until the claims are resolved, the stock price looks set to stay in the gutter.
Companies should resist buyback temptation 23 Aug 2011 Share repurchases are creeping back into fashion, and are easier to like when markets are on their knees. But boards have often sanctioned buying programmes that have destroyed value. Share buybacks make more sense in a bear market, but the investment case remains unconvincing.