Credit Suisse bonus cuts are a necessary gamble 13 Apr 2021 Losses from the Archegos blowup forced the Swiss bank to set aside less for payouts. The risk is that rainmakers and star traders leave. CEO Thomas Gottstein might welcome a smaller investment bank given low historic returns. It’s an overdue test of the market for banking talent.
Chancellor: Hwang has company in Keynes and Graham 6 Apr 2021 Long before the failed Archegos manager was even born, Benjamin Graham, tutor to Warren Buffett, and J.M. Keynes were teaching the perils of speculating on stocks with oodles of debt. It’s worth remembering their stories as Credit Suisse, Nomura and others count their losses.
Credit Suisse’s spring clean has barely started 6 Apr 2021 Risk chief Lara Warner and investment bank boss Brian Chin are leaving after the Swiss bank unveiled a $4.7 bln hit from Archegos’ collapse. New board investigations should include deeper soul-searching over recent scandals. Restructuring and business disposals may be necessary.
Capital Calls: Icahn’s new CEO, Google vs. Oracle 1 Apr 2021 Concise views on global finance in the Covid-19 era: Activist investor Carl Icahn takes on a GE veteran adept at building businesses up and breaking them down; why Google’s win in the U.S. Supreme Court ought to benefit startups too.
Viewsroom: Everything we know about Archegos 1 Apr 2021 The extraordinary unwinding of Bill Hwang’s family office was one of those rare stories that connected Breakingviews columnists from Hong Kong, New York, Zurich, London, Melbourne and Washington into one big, hard-working family. Here are some of the lessons they learned.
Credit Suisse is overdue for new chairman’s axe 31 Mar 2021 The Swiss bank’s shares are down 23% in a month after Archegos and Greensill collapsed. Though losses are unclear, investors assign no worth to the investment bank. By shrinking that unit, and hiving off the fund and local divisions, António Horta-Osório could rescue some value.
Archegos takes shine off family office freebies 30 Mar 2021 By deeming itself a family office rather than an investment adviser, Bill Hwang’s hedge fund sidestepped many disclosure requirements. That might not have mattered to the culprit of its demise: opaque equity swaps. Still, it raises questions about bigwigs managing for themselves.
Hedge funds take third strike vs. U.S. watchdogs 29 Mar 2021 So far Archegos’ default hasn’t matched the systemic impact of other crises. But last year short-term funding stresses forced a U.S. government backstop. Then there was the GameStop roller coaster. The industry can only sustain so many misses before regulators say enough.
SpongeBob emerges from market chaos mostly intact 29 Mar 2021 ViacomCBS pocketed $3 bln by raising equity after a meteoric share-price rise, only to find itself at the center of a selloff triggered by hedge fund Archegos. The broadcaster’s shares are still up over 20% this year, but its next capital raising may not be so easy.
Banks’ prime broking blowup reveals lurking danger 29 Mar 2021 Credit Suisse and Nomura could lose up to $6 bln on the default of Archegos Capital. Neither have been forthcoming yet about how a single client cost them so much. But such glaring control failures raise questions about what other risks are hidden in banks’ trading books.
SoftBank financial innovation fails at Greensill 12 Mar 2021 The Japanese investor’s Vision Fund seems to love byzantine funding structures as much as disruptive technology. Its involvement with the supply-chain lender, which supported other investees, has backfired. It’s another cautionary tale for the ex-bankers in the fund’s ranks.
Capital Calls: Petrobras CEO, Kohl’s 22 Feb 2021 Concise views on global finance in the Covid-19 era: Brazilian President Jair Bolsonaro nominates a former general to replace the oil group's market-friendly boss, tanking the shares; and U.S. department store Kohl’s has some unhappy shareholders.
Capital Calls: Super Bowl, Poison pills, Experian 8 Feb 2021 Concise views on global finance in the Covid-19 era: America’s game doesn’t benefit from scarcity value; Cubic’s poison pill serves a purpose; And Brazil’s cyberattack has a price for Experian.
Hedge funds will evade short-squeeze enthusiasts 2 Feb 2021 Melvin Capital suffered huge losses after retail traders pushed up the share prices of companies against which it had bet. Such traps can be avoided by using derivatives. And small investors will struggle to boost the value of larger companies in the way they did with GameStop.
Short squeezers could end up strangling themselves 27 Jan 2021 Heavily shorted European stocks like Pearson, Cineworld and Ambu surged on Wednesday morning. The craze of trying to force hedge funds and market makers to cover their bearish positions has spread beyond the U.S. It increases the risk of the squeezers ending up with a dud.
Hedge fund backers must pick winners twice over 25 Jan 2021 Equity-heavy hedge funds did well in 2020. Industry-wide, though, the top 20 managers made half the $127 bln of gains in the 8,000-strong industry. Stock pickers may thrive again this year, but there is no guarantee. Investors’ double bet is choosing both the game and the player.
Corona Capital: Icahn, Productivity, Natixis 4 Jan 2021 Concise views on the pandemic’s corporate and financial fallout: Carl Icahn sells half his Herbalife Nutrition stake; an ECB survey suggests Covid-19 will make big firms more productive, but that may not be all good news; and Natixis fast-tracks its overhaul.
Loeb injects paranoia into Intel a bit too late 30 Dec 2020 Activist investment fund Third Point correctly diagnoses the $200 bln chipmaker's main woe as a loss of its manufacturing edge. Separating chip design and production would help both, perhaps with a little boost from Uncle Sam. Regaining a lost tech lead, however, is hard.
Vodafone finds better German M&A pain threshold 22 Dec 2020 Seven years after its Kabel Deutschland deal, the UK telco is paying $2.6 bln to buy out minorities like Elliott. That’s better than the 18 years taken to settle a similar saga with Mannesmann. But as with other “domination agreements”, holdouts are unlikely to have done badly.
Corona Capital: Chevron, Boeing, OPEC, Orange 3 Dec 2020 Concise views on the pandemic’s corporate and financial fallout: Chevron cuts spending, prudently; Boeing orders are a solid step; OPEC makes up its mind; and Orange’s Belgian deal has some juice.