M&A targets can get stiffed when they "go shop" 22 May 2014 The tactic of seeking bids after signing up a buyer is meant to ensure top dollar. More often, it leads to low offers and sale prices, new research shows. Deals like Media General’s buyout of Lin Media suggest sellers are wising up, though, portending better value for investors.
Valeant’s slashing could trigger FDA lashing 20 May 2014 The Canadian pharma M&A machine buys rivals and strips costs to the bone. It promises to cut Allergan’s R&D spending from $1 bln to $200 mln and still develop drugs. That doesn’t look sustainable. It may not be enough to even finish studies on existing drugs that regulators require.
Take hedge fund exuberance with grain of SALT 16 May 2014 Amid moans about conference fatigue, a near-unanimous confidence emerged at SkyBridge’s annual Las Vegas confab. Long-awaited opportunities in M&A, bargains in Europe and collapsing correlations have finally arrived all at once. The consensus itself, however, is reason for pause.
Red Lobster sale leaves fishy smell at Darden 16 May 2014 The restaurant conglomerate is selling its floundering seafood chain for $2.1 bln, pre-empting a non-binding vote on the separation forced by activists. Engaging with agitators doesn’t always bring harmony – ask Sotheby’s – but Darden’s siege mentality exposes its board and CEO.
Hedge fund customers’ yachts washing further away 13 May 2014 The flood of money – now $2.7 trln – in hedge funds has squashed returns below public stock markets. Private equity doesn’t seem to be doing much better. Both investing styles intuitively offer finite opportunity, yet fees encourage managers to hoard assets. Investors beware.
Interpreting Apple/Beats using Andreessenomics 12 May 2014 Venture capitalist Marc Andreessen partly justifies high tech valuations with the idea that huge companies can “attach” the products of smaller ones, rendering traditional analysis pointless. The idea can resonate - perhaps for Apple with Beats headphones - but it’s flawed.
Sotheby’s case for poison pill tough to swallow 28 Apr 2014 The auction firm has blocked uppity investors like Dan Loeb from owning 10 pct or more of its stock. The hedge fund boss has sued for being singled out and portrayed as a takeover threat. Legal precedent supports the company, but may stifle activism that benefits shareholders.
Valeant will need even more fancy legal footwork 23 Apr 2014 The pharmaceuticals company and hedge fund boss Bill Ackman built their Allergan stake by deftly tiptoeing around disclosure and insider trading rules. But a poison pill, antitrust issues and other pitfalls remain for the many law firms in the deal to navigate.
Argentina tests Elliott’s cunning at Supreme Court 17 Apr 2014 Two cases challenge the hedge fund’s ability to work around U.S. laws that shield the country’s assets. The court is hearing one of them as it mulls another on paying debt-swap holdouts. Upcoming arguments in the first may reveal how creative collection plans fare in the second.
Trendy new buyout clubs may let down eager patrons 7 Apr 2014 Blackstone is enlisting some of its fund investors to help buy auto-parts maker Gates for $5.4 bln. Such collectives are increasingly displacing teams of private equity firms in bigger deals. Disappointing returns from so-called co-investing, though, could make it a passing fad.
Dimon deputy epitomizes succession of all sorts 25 Mar 2014 Mike Cavanagh gave up a shot at following his mentor atop JPMorgan for one helping run Carlyle. Being CEO of a bank holds less appeal thanks to shrinking returns and growing regulation. The move shakes up leadership plans for two firms and underscores a bigger shift in finance.
Itaú schools investors on minority rights in Chile 12 Mar 2014 The Brazilian bank’s $3.7 bln deal to take control of CorpBanca shafted public shareholders, including the Bank of Chile and the World Bank’s IFC. A U.S. fund is making a stink. But the best it’s likely to come away with is a useful, if painful, lesson in governance.
Man starts to crawl out of the wilderness 27 Feb 2014 The hedge fund manager’s stock soared after it smashed forecasts. After years of falling assets and dependence on an ailing quant business, it is becoming a leaner, more profitable group. To close the share-price discount to peers, Man has to show it can sustain the performance.
BlackRock may fancy revisiting Blackstone heritage 23 Jan 2014 Larry Fink’s firm manages $4.3 trln while Steve Schwarzman’s, with only 6 pct of the assets, now earns just as much. For BlackRock, a chip off Blackstone 20 years ago, private equity must be tempting. It dumped a plan to build such a business but could buy one like, say, TPG.
Wealth Addicts Anonymous? It misses the point 20 Jan 2014 Ex-trader Sam Polk says that money-sucking finance types should meet up to get a grip on their bonus addiction. If such support groups are needed, meetings should start with a firm lecture on why greed is not good. But there’s a better way – common-sense pay regimes.
Equity optimists may fast create a crowded trade 20 Nov 2013 Many large fund managers expect developed stock markets to rise next year. They reckon that companies will ramp up capital expenditure while fiscal policies become less restrictive. The reasoning may be sound. The risk is that there’s too much money chasing the same idea.
Wall Street watchdogs push luck in SAC trader case 18 Nov 2013 A manager at Steven Cohen’s hedge fund goes on trial for using dodgy fifth-hand tips to sell shares of Dell and Nvidia. That’s a legal stretch, even for NY’s esteemed federal prosecutors. The judge seems sympathetic, but their streak of insider trading convictions is in jeopardy.
Steve Cohen gives efficient market theory a boost 5 Nov 2013 For years, the tremendous performance of the hedge fund mogul appeared to discredit the hypothesis that stock markets digest all public information instantaneously. SAC has now admitted that its recipe included illegal insider knowledge. Legit investors find markets hard to fool.
Foreign exchange offers few trends to befriend 16 Oct 2013 Currency markets have grown in size but the usual strategies for making money in them aren’t working so well. A dearth of clear and persistent trends, low interest rates in developed countries, and declining volatility are to blame. The tough times aren’t yet over for FX funds.
UK fund king chooses good time to discover value 15 Oct 2013 Neil Woodford is one of the few fund managers with the brand and long-term record to set up solo. He also has enough career left to make something of it. His departure from Invesco is a reminder to financial firms of the need to be always prepared for the loss of talent.