Japan faces a reckoning with its zombie companies 5 Mar 2024 Big firms are ready for the onset of higher wages and the end of negative rates. Smaller rivals, which employ 60% of workers, risk being crushed. One in six already struggles to cover interest payments. If too many fail, they can derail confidence and the economic recovery.
Overdraft fee reform has a big, small-bank flaw 19 Jan 2024 The US consumer watchdog’s assault against charges levied when accounts go into the red is a win for customers – but only those of the biggest banks. Small lenders are exempt, partly because of their political clout. Trouble is, they often bank the neediest bunch.
Blackstone partly cracks new private equity code 9 Jan 2024 Buyouts have been a drag on big asset managers whose investors now prize steadier income. The firm led by Steve Schwarzman wants to square the circle by raising capital with no expiry date from rich individuals. A risky outcome is that it perversely incentivizes a spending spree.
Convertibles will be 2024’s hot financial model 2 Jan 2024 Hybrid bonds, which fueled hedge fund billionaire Ken Griffin’s rise, sputtered after a $370 bln Covid-era boom. Refinancing needs are revving them back up as interest-cost savings lure new issuers like Duke Energy. New features should tempt investors to ride off with them again.
Altice’s best hope will be a Middle East lifeline 18 Dec 2023 Telecoms tycoon Patrick Drahi is dismantling his empire to cope with a $60 bln debt wall. Attracting new investors may be tricky given low growth and a corruption scandal. Luckily Gulf states like the UAE and Saudi Arabia are flush with cash and keen to grab Western assets.
Occidental ratchets up race to tame the shale boom 11 Dec 2023 The oil giant’s $12 bln CrownRock deal further consolidates the Permian, where rich finds have helped increase US oil production by a fifth since 2020. A focus on returns will restrain growth in the driller’s output. As more buyers crowd in, the shale explosion will be tempered.
Muddy Waters sticks a pin in Blackstone’s rump 8 Dec 2023 The short-seller says a mortgage fund run by Steve Schwarzman’s firm is doomed by struggling office properties. The reality may be more nuanced. But Muddy Waters is challenging a fundamental Blackstone selling-point: its ability to outrun the market, in real estate or elsewhere.
Capital Calls: Roche, Brookfield/Origin 4 Dec 2023 Concise views on global finance: The $224 bln Swiss drugmaker is splurging $2.7 bln on obesity drug developer Carmot; the Canadian investment firm’s joint $13 bln bid for Origin Energy has failed. The trick now is to show what lessons it’s learned from its 16-month-plus campaign.
Google antitrust trial crystallizes Apple’s risk 15 Nov 2023 Court testimony revealed that Alphabet’s search giant gives the iPhone maker 36% of ad revenue generated through its devices. The cost allows Google to argue it’s in a pay-to-play market. It also suggests that Apple and its shareholders have more to lose from the deal unwinding.
Palantir’s mythology is far too precious 13 Nov 2023 The $40 bln data analysis company trades at 14 times revenue, a big premium to most peers despite generating only modest growth. It also has failed to demonstrate operating leverage to justify the AI exuberance. Moreover, some odd capital allocation choices warrant a discount.
Lina Khan’s spirit haunts T-Mobile deal ghost 10 Nov 2023 Consumers are suing the $170 bln telecom company for its deal with Sprint. Given government watchdogs can’t bust up big tech, it seems ambitious. But recent jury verdicts illustrate rising movements against companies. Plus the hassle creates yet another deal impediment.
WeWork’s big splash ends as a drop in the bucket 7 Nov 2023 The shared-office company once valued at $47 bln has collapsed, with lenders taking over in bankruptcy. SoftBank and its fund backers will be licking $16 bln of wounds, but communal workspaces are here to stay. And commercial real estate investors have far bigger worries.
Vanke’s safety net models new face of China Inc 7 Nov 2023 The $18 bln property developer’s shares jumped after its owner Shenzhen Metro pledged unreserved support and a $1.4 bln tool kit should it need a rescue. As the state takes a bigger role in business, Vanke illustrates how that could reduce both returns and risks for investors.
Vans owner VF is due a wardrobe refresh 6 Nov 2023 The $6 bln apparel empire’s debt soared as shares sank 40% under its ex-CEO, whose costly deal for Supreme ran counter to its modus operandi. New boss Bracken Darrell’s cost-cutting plan has promise. Selling the streetwear brand and investing in known hits is the best next step.
Telecom Italia rival plan has too many pitfalls 3 Nov 2023 An ex-executive and a fund say the telco could raise 16 bln euros by offloading a Brazilian unit and other assets to slash its debt pile. That would spare it from selling its prized network to KKR. Yet bagging such valuations while executing a multi-step project looks tricky.
Tough dealmaking conditions dull Waystar’s shine 31 Oct 2023 The healthcare technology firm is angling for a stock-market listing on the back of rapid, acquisition-fueled growth. With a sale looking difficult and heavy debt bearing down, an IPO may be its private equity backers’ best option, but a mooted $8 bln valuation looks steep.
The case for a career in bond investing 27 Oct 2023 Rising rates and volatile markets have hammered the conventional case for buying fixed income securities. But higher yields, pockets of value in credit and a possible weakening of the strong US dollar mean there are still opportunities in bonds for budding portfolio managers.
Cooled auto hotheads give labor disputes hope 26 Oct 2023 Ford Motor’s new union agreement could cost $2 bln in pay rises. That stings, but is well short of earlier asks while also recompensing workers. Much about the agreement seems reasonable. As labor pressures continue, the agreement suggests sensible outcomes are possible.
Blackstone’s business is lumpy and that’s OK 19 Oct 2023 The asset manager regularly touts its steady, rising fund fees as a cushion against the stop-start business of buying and selling assets. The problem is that choppy markets have dampened both. They’ll no doubt return – it’s just a reminder that there’s no escaping the cycle.
David Solomon’s Goldman remix is audibly off-key 17 Oct 2023 The Wall Street firm is well short of a 15% return on equity goal, even absent consumer-bank snafus and property writedowns. Its CEO gave up DJ-ing, but promises Goldman can spin a new tune focused on more stable income. It will take much more to prove that’s attainable.