Apollo forces itself into harsh public market 9 Apr 2008 Leon Black agreed to a deadline for going public when he listed on Goldman s private exchange last summer. That might have seemed a smart way to entice investors. But now Apollo must wade into an unfriendly public market. And it will lose the advantage of limited disclosure.
Hedge funds pick good time to ratchet up PR effort 9 Apr 2008 Different industry groups have been busy banding together. With talk of tighter financial regulation on everyone s lips, hedge funds are easy targets for lawmakers. But they re looking relatively blameless for the credit crunch, so it could be a good time for a charm offensive.
Mid-market buyout binge may yield slim pickings 8 Apr 2008 Midmarket buyout firm Advent has just raised a $10bn fund, one of the biggest for deals of any size. With the market for megadeals stalled, investors are pinning their hopes on this smaller pocket. But more competition and less debt could make high returns hard to duplicate.
Fed should wean Wall Street off its funding 8 Apr 2008 High yield markets rallied and interbank lending thawed slightly in the past week. But banks and brokerages are still elbowing for a place at the Federal Reserve s punch bowl. With its resources shrinking, the central bank should consider when to wind up the party.
Sunshine could help regulate Wall Street 8 Apr 2008 Forcing investment banks to disgorge more information could help stop them running excessive risks. They d know that smart market operators could use such information to trade against them and would therefore be more conservative in the first place.
Could Discover follow Diners Club’s path? 7 Apr 2008 The credit card company is buying Diners Club, the passé pioneer of corporate credit cards. The goal is to expand its footprint outside the US. But Diners Club's storied past and fall from grace may also foreshadow Discover s future.
Semerci hops back on the gravy train 7 Apr 2008 The exMerrill man may have helped lose his old employer an eyewatering $27bn, but that s proved no bar to a new job running a London hedge fund. Semerci is living proof of Keynes s dictum, that in finance, it doesn t matter if you fail, so long as you fail conventionally.
Lehman borrows tarnished structure to offload hung loans 4 Apr 2008 The firm s Freedom CLO uses the same technology that ignited the buyout debt boom. But now, it s being used to clean up the rubble. It may limit Lehman s losses and, if defaults in the portfolio are modest, it could give the firm a windfall.
Liquidity risk can’t be regulated away 3 Apr 2008 The SEC s boss supports tweaking capital rules to cover liquidity risk. But Bear Stearns collapse shows how lightningfast a liquidity crisis can strike. It s unlikely a bank could act fast enough to raise capital when its counterparties are running for the exits.
Stock picking may come back in fashion 3 Apr 2008 In a panicstricken market, there's little to be gained by looking at the fundamentals. But correlations among individual stocks appear to be falling from their peak levels. That's hardly a cure for the market's woes, but it's good news for stock pickers.
Hedge fund woes will get worse 3 Apr 2008 Polygon, Plexus and Russell are the latest hedge funds to suffer mass redemptions but they won t be the last. Runs on funds are a rational response to poor performance, illiquidity, investor risk aversion and a fear of being last out the door. There will be more casualties.
Iceland will find bear trap hard to set 2 Apr 2008 The precedent is Hong Kong in 1998. Then, a small country s government unexpectedly bought shares in the open market. Speculators were crushed. Iceland s prime minister has threatened its own predators with a similar fate. But Iceland s position is much weaker.
Financial history books 2 Apr 2008 Last month we argued that financiers should be made to study history. The current crisis might have been less severe if bankers knew something about past bubbles. Many readers asked which books they should read. Here are our picks.
Bernanke’s Bear bailout backing reveals Fed’s bind 2 Apr 2008 Of course the Fed chairman doesn t see it as a bailout. But he says the investment bank s problem was liquidity, not capital, and that in less fragile markets the US central bank might have let Bear go under. Such nuances highlight the challenges faced by regulators.
Feds shouldn’t pull all US state watchdogs’ teeth 1 Apr 2008 That may seem counterintuitive, given the states' mixed record overseeing small banks and insurers. It does make sense to centralise most regulation. But state regulators and politicians typically favour consumers over Wall Street. They can provide a useful measure of restraint.
Tactics aren’t everything for activists 1 Apr 2008 Carl Icahn s campaign against Motorola has been masterfully executed. The tech group has now essentially given in to all of his demands by backing two dissident board nominees. Too bad the investment has been a disaster where it counts.
Would the Paulson plan have made a difference? 1 Apr 2008 The US Treasury secretary s regulatory revamp would give watchdogs more sensible beats and a clearer view into financial markets. But the proposals mostly skate over how regulators would be mandated to act differently. Without that, much the same credit crunch could happen again.
Blackstone’s $10.9bn property fund will test its creativity 1 Apr 2008 The buyout firm just closed its biggest property fund ever. That seems brave when real estate debt is at least as scarce as LBO debt. Still, the fund might have some tricks up its sleeve. Distressed assets including those sold by Blackstone last year could be a start.
Fed needs right incentives to play supercop 31 Mar 2008 Paulson's plan assigns a broad role to the Fed. Having responsibility for monetary policy, financial stability and any rescues in one place makes good sense provided the Fed is always required to think of bailout funds as real money, not free subsidies from taxpayers.
AIG’s $20bn executive nest egg hatches discord 31 Mar 2008 The insurer s massive incentive plan surely motivated employees. It also created conflicts of interest. Intertwining the fortunes of AIG and its executives may have created wealth, but it ensured an acrimonious split.