Posts Tagged ‘Bain’
Frontrunning: May 17
Friday, 17 May 2013 06:31
No Comments
  • Mine union threatens to bring South Africa to ‘standstill’ (Reuters)
  • Russia Raises Stakes in Syria (WSJ) – as reported here yesterday 
  • Japan buys into US shale gas boom (FT)
  • Bill Gates Retakes World’s Richest Title From Carlos Slim (BBG) – so he can afford a Tesla now?

    • (Read more…)

  • China Wages Rose Sharply in 2012 (WSJ)
  • Regulators Target Exchanges As They Ready Record Fine (WSJ)
  • Citi Takes Some Traders Off Bloomberg Chat Tool (WSJ)
  • After Google, Amazon to be grilled on UK tax presence (Reuters)
  • Apple CEO Cook to Propose Tax Reform for Offshore Cash (BBG)
  • French, German politicians to pressure Google on tax (Reuters)
  • Gold Bears Revived as Rout Resumes After Coin Rush (BBG)
  • A stretched Samsung chases rival Apple’s suppliers (Reuters)

 

Overnight Media Digest

WSJ

* Financial regulators are taking a harder line on exchanges amid concerns over their ability to police the markets they operate, as the SEC prepares to hit one with a record penalty. The deeper scrutiny has prompted some exchange officials to push back against a new regulatory stance that they say leaves them more vulnerable to potential penalties and sanctions.

* A so-so first quarter earnings season hasn’t dented investors’ enthusiasm for stocks. Profit at large U.S. companies modestly exceeded Wall Street analysts’ expectations, while revenue was weak and many companies ratcheted down growth projections. However stock prices have been rising, with the Dow Jones industrial average up 16 percent for the year and 4.2 percent since earnings season began April 8.

* The booming market for commercial-mortgage-backed securities (CMBS) is on the verge of passing a dubious milestone – losses on a class of bonds that have been popular with investors for the big returns they promised.

The securities, dubbed “AJ” have found favor with investors because they combine high payouts, or yield, and greater relative protection against losses than some other high-yielding securities. But now, the potential sale of a troubled Atlantic City luxury mall, named the Pier Shops at Caesars, could saddle investors with the first losses on AJ securities created during the U.S. housing boom. The property is on the block after an earlier sale fell through.

* The ousted chief executive of Tuesday Morning Corp , Kathleen Mason, is suing her former employer, alleging she was discriminated against after developing breast cancer.

* Eight members of Congress on Thursday asked Google Inc Chief Executive Larry Page to give assurances about privacy safeguards for the company’s high-profile Google Glass wearable-computing device.

The demands come as Google holds its annual developer conference in San Francisco, where it is coaching hundreds of developers on how to write programs for the device.

* Foreign-exchange traders at Citigroup Inc will soon move from Bloomberg LP’s chat tool to their own internal system, as part of a push to reduce data costs and migrate more people onto its own proprietary technology, people familiar with the bank’s plans said.

FT

George Osborne’s attempts to cut public spending by 11.5 billion pounds in election year has caused tensions in the cabinet as some ministers failed to provide the list of 10 percent departmental cuts he had ordered and another said he was “asking too much”.

Alternative asset manager Blackstone Group LP, is readying to launch a “super” hedge-fund, which will invite the numerous third-party hedge funds it invests with to submit their best trades in return for a fee.

Newly merged commodities group Glencore Xtrata Plc ousted its chairman on Thursday, replacing him with Tony Howard, the former BP Plc chief executive who was once known as the United States’ most hated man for his role in the Gulf of Mexico oil spill.

Dell Inc, which has been the subject of a takeover war between its founder Michael Dell and activist investor Carl Ichan, reported a 79 percent slide in first-quarter profit on Thursday, well below Wall Street expectations.

Citigroup Inc has stopped its foreign exchange traders from using chat rooms on their Bloomberg terminals but said that the decision was not related to the recent complaints regarding the access of private data by Bloomberg’s journalists.

ANA Holdings Inc, the world’s biggest operator of Boeing Co’s 787 Dreamliner, reported a problem with one of its test flights involving damage to an electrical distribution panel but said that it was not related to the newly modified battery system.

 

NYT

* Fred Eckert was once a star at Goldman Sachs, with a mansion and a collection of vintage cars; but by 2011, he was bankrupt, divorced and had spent two months in a coma. Today, he is planning a return to the arena.

* Google announced seven new apps for its Internet connected glasses, including ones from Facebook, Twitter, Tumblr, CNN, Elle and Evernote.

* Vast databases of patient and doctor information being used by drug makers let them know which medications physicians are prescribing and how they compare to colleagues.

* Two separate groups sent letters to Wal-Mart, Target, Sears and Gap, urging them to sign on to the factory safety plan that over 30 European retailers embraced this week.

* Foxconn Technology has made progress toward better safety conditions, but employees are still working longer than Chinese law allows.

* J C Penney’s former Chief Executive Myron Ullman, who is now its new chief executive, is reinstating old pricing and promotion policies to lure alienated customers back through its doors.

* The Bayonne Medical Center charged Medicare the highest amounts for about a quarter of the most common treatments, a Times analysis of 2011 data shows.

 

Canada

THE GLOBE AND MAIL

* Paul Godfrey has been ousted as chairman of Ontario’s lottery corporation, leaving his vision for a downtown Toronto casino in tatters and plans to overhaul the province’s gambling operations in disarray. The entire board of directors at the Ontario Lottery and Gaming Corp resigned in protest on Thursday evening, with six of them penning a letter to the Finance Minister saying they are shocked by Godfrey’s dismissal.

* Senator Mike Duffy is stepping down from the Conservative caucus, saying the ongoing controversy over his expenses has become a significant distraction to his colleagues and the government. Just days after being praised by the Conservative government for his “leadership” in paying back more than C$90,000 ($88,600) in expenses, Duffy will now sit as an independent as he faces various potential ethics probes.

Reports in the business section:

* Telus Corp’s C$380 million ($374.07 million)agreement to buy faltering carrier Mobilicity presents the federal government with a stark choice – admit failure in its years-long push to create more competition in the wireless business or try to salvage the goal of having at least four players in every regional market.

NATIONAL POST

* It is said that the way to a man’s heart is through his stomach, and Parti Québécois Premier Pauline Marois is hoping the same holds true for a nation. The polls have relegated her party’s dream of independence to the distant future, but that did not stop Marois from making a unilateral declaration of “food sovereignty” on Thursday. Fulfilling a promise from last summer’s election campaign, she announced a government policy aimed at achieving a 50 percent increase in the amount of locally produced food Quebecers eat.

* The fallout from Quebec’s corruption scandals has reached the epicentre of Canada’s Parliament, with the federal Opposition leader revealing on Thursday he once spoke to police about someone trying to pass him a suspicious-looking envelope. NDP Leader Tom Mulcair said he spoke to investigators two years ago about a 1994 meeting with the then mayor of Laval, Quebec, who has since resigned in scandal and been slapped with criminal charges.

FINANCIAL POST

* Prime Minister Stephen Harper is seeking to counter opposition to TransCanada Corp’s Keystone XL pipeline, a project crucial for boosting Canada’s economy and Harper’s plans to make the country an energy superpower to rival Saudi Arabia. Harper, at an event on Thursday moderated by former U.S. Treasury Secretary Robert Rubin for the Council on Foreign Relations in New York, said there is a strong case for the U.S. government to approve the pipeline, citing the prospects for job creation and North American energy independence.

China

CHINA SECURITIES JOURNAL

– New loans by China’s Shanghai Pudong Development Bank Co Ltd are expected to hit 190 billion yuan ($30.90 billion), while bad loans will remain above 0.75 percent in 2013, said Liu Xinyi, vice president of the bank.

– China’s government has allocated 58 billion yuan ($9.43 billion) for public rental housing projects in 2013.

SHANGHAI SECURITIES NEWS

– China will remove or reduce requirements for official approval for 117 “items”, according to a list published by the State Council on Thursday. The official China Daily added that 16 further items are pending decision. The items range from foreigners touring in their own vehicles to companies investing in large oil and gas fields.

SHANGHAI DAILY

– Shanghai authorities are considering reopening some of the city’s live poultry markets next month, after they were shut down in April and thousands of birds culled due to an outbreak of a bird flu virus. The move suggests that fears over the deadly outbreak are waning in China.

– Gold demand in China rose 20 percent in the first quarter of 2013 from a year ago to 294.3 tonnes, according to a report from the World Gold Council.

CHINA DAILY

– Sales of consumer goods in China will grow 13 percent in 2013, slower than previous years, according to a report released on Thursday by a department of China’s Ministry of Commerce. Zhao Ping, deputy director of the department, said the slowdown was linked to private spending rather than public funds becoming the main driver of consumption.

CHINANEWS.COM

– Thirty-three people have died and 12 are missing after storms battered southern China, the country’s civil affairs and disaster reduction authorities said on Thursday. Official news agency Xinhua also reported late Thursday night that some areas of Guangdong province had suffered the worst flooding in a century with close to 3,000 homes destroyed and 650,000 people affected in the region.

Corporate Finance

* Dish Network Corp has lined up four banks to finance its $25.5 billion bid for Sprint Nextel Corp, escalating the bidding war against Japanese telecom company SoftBank Corp, according to two people familiar with the matter.

* RP Martin Holdings Ltd, the British interdealer broker that became involved in the Libor fixing investigation when two of its employees were arrested in December, suspended its chief executive and a director on Wednesday, a source familiar with the matter told Reuters.

* The consortium of investors seeking to take over Severn Trent Plc offered just under 20 pounds per share for the British water company, valuing it at around 4.7 billion pounds ($7.16 billion), a source told Reuters on Wednesday.

* The Portuguese government and JPMorgan Chase & Co are attempting to resolve a tussle over potentially costly derivative contracts sold by the U.S. investment bank to state-owned companies, a source familiar with the situation said.

* Swiss drugmaker Roche Holding AG is exploring a sale of its blood glucose meters business, three people familiar with the matter told Reuters on Wednesday, as the industry grapples with increased competition and reimbursement pressure.

* Macquarie Group Ltd -backed Asian Pay Television Trust has priced its Singapore initial public offering at S$0.97 per unit, at the bottom of a narrowed marketing range, people familiar with the matter told Reuters on Thursday, raising $1.14 billion.

* Before Optimer Pharmaceuticals Inc even put itself up for sale earlier this year, Cubist Pharmaceuticals Inc offered to buy the antibiotic maker for $20 per share, or nearly $1 billion, two people familiar with the matter told Reuters on Wednesday.

* Bain Capital LLC has emerged as the last party standing in the race for Yankee Candle Co Inc, three people familiar with the matter said, making it likely that the largest scented candle maker in the United States will stay in private equity hands.

* Singapore’s Changi Airport Group has sold its 8.36 percent stake in Italy’s Generale Mobiliare Interessenze Azionarie SpA at 1.43 euros per share, a source close to the situation said on Wednesday.

* British tour operator Thomas Cook Group Plc will announce plans to raise about 400 million pounds ($609.02 million) through a placing and rights issue on Thursday, according to two travel industry sources.

* Austin Brown, a portfolio manager with a focus on metals at Caxton Associates, has left the London office of the $6 billion U.S. hedge fund, according to a source at the company.

* Publishing company Mecom Group Plc is set to appoint veteran investment banker Rory Macnamara as its chairman as it continues to restructure its business, the Financial Times reported, citing people close to the company

 

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Capella Education (CPLA) upgraded to Outperform from Market Perform at William Blair
Ctrip.com (CTRP) upgraded to Neutral from Sell at Citigroup
General Motors (GM) upgraded to Buy from Underperform at CLSA
Ruckus Wireless (RKUS) upgraded to Buy from Neutral at Goldman
Standard Pacific (SPF) upgraded to Buy from Fair Value at CRT Capital
Tetra Technologies (TTI) upgraded to Outperform from Sector Perform at RBC Capital
U.S. Silica (SLCA) upgraded to Outperform from Sector Perform at RBC Capital

Downgrades

Actuant (ATU) downgraded to Neutral from Buy at SunTrust
Aruba Networks (ARUN) downgraded to Equal Weight from Overweight at Morgan Stanley
Aruba Networks (ARUN) downgraded to Market Perform from Outperform at Wells Fargo
Aruba Networks (ARUN) downgraded to Neutral from Buy at Janney Capital
Aruba Networks (ARUN) downgraded to Perform from Outperform at Oppenheimer
CAE (CAE) downgraded to Sector Perform from Outperform at RBC Capital
City Holding (CHCO) downgraded to Market Perform from Outperform at Keefe Bruyette
Deere (DE) downgraded to Sell from Neutral at Goldman
Disney (DIS) downgraded to Neutral from Overweight at Atlantic Equities
HSBC (HBC) downgraded to Neutral from Outperform at Exane BNP Paribas
L Brands (ltd) downgraded to Underperform from Hold at Jefferies
Manning & Napier (MN) downgraded to Underperform from Neutral at BofA/Merrill
MeadWestvaco (MWV) downgraded to Underperform from Sector Perform at RBC Capital
National Grid (NGG) downgraded to Neutral from Outperform at Exane BNP Paribas
Savient (SVNT) downgraded to Market Perform from Outperform at William Blair
Stryker (SYK) downgraded to Reduce from Neutral at SunTrust
TRW Automotive (TRW) downgraded to Hold from Buy at Deutsche Bank
Universal Health (UHS) downgraded to Neutral from Positive at Susquehanna
Williams-Sonoma (WSM) downgraded to Neutral from Buy at BofA/Merrill
Zimmer (ZMH) downgraded to Reduce from Neutral at SunTrust

Initiations

Ambac Financial (AMBC) initiated with a Buy at BTIG
Cempra (CEMP) initiated with a Buy at Jefferies
Globus Medical (GMED) initiated with a Buy at WallachBeth
Infoblox (BLOX) initiated with a Buy at Needham
McCormick (MKC) initiated with a Neutral at Citigroup
NuVasive (NUVA) initiated with a Buy at WallachBeth
T-Mobile USA (TMUS) initiated with an Equal Weight at Barclays

HOT STOCKS

Northrop Grumman (NOC) announced additional $4B share repurchase authorization
Caterpillar (CAT), Mining Machinery resolved all outstanding issues
Dell (DELL) continues to expect “relatively weak” demand in end-user PC business
ING Groep (ING) to sell part of its direct stake in SulAmerica to International Finance Corp.
Yum! Brands (YUM) Taco Bell CEO sees doubling revenue to $14B in 10 years
Yahoo! (YHOO) granted favorable ruling in Mexico City superior court
Vascular Solutions (VASC) filed patent infringement complaint against Boston Scientific (BSX)

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
SINA (SINA), Bona Film (BONA), ViaSat (VSAT), Xueda Education (XUE), Brocade (BRCD), Envestnet (ENV)

Companies that missed consensus earnings expectations include:
Stage Stores (SSI), J.C. Penney (JCP), SMART Technologies (SMT), 21Vianet (VNET), Nordstrom (JWN), Aruba Networks (ARUN), Autodesk (ADSK), Cosi (COSI), Dell (DELL)

NEWSPAPERS/WEBSITES

  • JPMorgan Chase (JPM), in a last-ditch effort to beat back activist investors, sent a letter to shareholders who have yet to vote on the nonbinding proposal ahead of the May 21 annual meeting, urging them to reject a proposal to split the chairman and CEO roles held by James Dimon, the Wall Street Journal reports
  • Amazon.com (AMZN) will be called back to the British parliament to clarify how its activities in the U.K. justify its low corporate income tax bill, Reuters reports
  • J.C. Penney (JCP) CEO Ullman says that the department store chain is emerging from what he called an abyss but warned he needs time to fix the issues of the retailer, Reuters reports
  • Apple (AAPL), which holds $102B in cash and investments outside the U.S., will suggest changes to corporate-tax laws to encourage companies to bring more cash into the country, Bloomberg reports
  • Fiat’s (FIATY) deliberations over moving its headquarters to the U.S. after a merger with Chrysler Group LLC. raised concern among Italian unions and politicians about the plans of the country’s biggest manufacturer. CEO Marchionne is considering the move because Fiat’s main sources of revenue and profit are shifting to North America, Bloomberg reports

SYNDICATE

Marketo (MKTO) 6.059M share IPO priced at $13.00
Stemline (STML) 4.14M share Secondary priced at $14.50
TC PipeLines (TCP) 7.7M share Secondary priced at $43.85
Tableau Software (DATA) 8.2M share IPO priced at $31.00
Tesla (TSLA) 2.7M share Secondary priced at $92.24
Triple-S (GTS) 5.4M share Secondary priced at $18.25

ACTIVIST/PASSIVE FILINGS

SAC Capital reports 5.0% passive stake in Tessera (TSRA)
Yucaipa wants Morgans Hotel (MHGC) meeting to reflect $7.50 per share offer

    



 
Frontrunning: May 16
Thursday, 16 May 2013 06:45
No Comments
  • As scandals mount, White House springs into damage control (Reuters)
  • Glencore Xstrata chairman ousted in surprise coup (Reuters), former BP CEO Tony Hayward appointed as interim chairman (WSJ)
  • JPMorgan Chase asks Bloomberg for data records (Telegraph)
  • Platts Retains Energy Trader Confidence Amid Price-Fix Probe (BBG)
  • Syrian Internet service comes back online (PCWorld)

    • (Read more…)

  • Japan Q1 growth hits 3.5% on Abe impact although fall in business investment clouds optimism for recovery (FT)
  • Soros Joins Gold-Stake Cuts Before Bear Market Drop (BBG)
  • Factory Ceiling Collapses in Cambodia (WSJ)
  • Sony’s $100 Billion Lost Decade Supports Loeb Breakup (BBG)
  • Snags await favourite for Federal Reserve job (FT)
  • James Bond’s Pinewood Turned Down on $300 Million Plan (BBG)

 

Overnight Media Digest

WSJ

* A heated takeover battle has erupted around generic drug company Actavis Inc as industry players seek to shore themselves up amid increasing competition and fewer new knock-off-drug opportunities.

* U.S. officials dealt a blow to the fledgling digital currency called Bitcoin, freezing an account tied to the largest Bitcoin exchange just months after regulators warned such entities should follow traditional anti-money laundering rules.

* One of Goldman Sachs Group Inc’s top energy bankers, Stephen Daniel, has retired, leaving the firm a year after his personal stock holdings in a pipeline company proved a point of controversy in a takeover deal.

* Mexican home builders and their creditors have been hiring U.S. bankruptcy lawyers and other advisers, as the companies struggle with mounting debt obligations.

Two of the country’s leading builders, Urbi Desarrollos Urbanos SAB and Corporación Geo SAB, missed debt payments in April and have reported dismal earnings. Urbi is considering a bankruptcy filing in Mexico as one option, some people familiar with the matter said.

* The rise in prices for agricultural land slowed somewhat to start the year in parts of the U.S. farm belt, new reports showed, signaling a boom in land values might be moderating as commodity prices cool and incomes for farmers are expected to weaken.

* An industry group wants to add criteria to a form of debt-default insurance that would lead to payouts for bondholders when banks are rescued.

The International Swaps and Derivatives Association is circulating a proposal that would add another item to that list of “credit events” that lead to payouts for swaps holders. The group is circulating its proposal this week to various members of its Credit Derivatives Market Practice Committee.

* Groupon Inc is not likely to name a permanent new chief executive until next year, the daily deal company’s interim chiefs said.

The company, which stumbled badly after going public in 2011, has been looking for someone to fill the top job since it ousted Andrew Mason in February following a string of missteps and disappointing results.

* Texas is pickup truck country and the front line in an expanding battle among auto makers to load up on profits from pickups, one of the richest businesses up for grabs as the global auto business roars back to life.

After years of waiting on the sidelines, pickup buyers are returning to dealer showrooms, offering millions of dollars in profit and potentially lifelong brand loyalty to Ford Motor Co , General Motors Co or Chrysler Group LLC and rivals.

* Comcast Corp’s NBCUniversal unit is projecting advertising sales of more than $800 million for the Olympic Games next year in Russia, which would be a record for the Winter Games, despite the decision of two longtime sponsors to pass on the event

 

FT

Google Inc has launched a subscription-based streaming music service on Wednesday ahead of rival Apple Inc , which pioneered online music purchases with iTunes but is yet to adopt the fast-growing newer business model.

In the last set of quarterly forecasts before Governor Mervyn King retires, the Bank of England predicted that Britain’s economic growth would be faster and inflation lower than it expected three months earlier.

RP Martin, the British interdealer broker that became involved in the Libor fixing investigation when two of its employees were arrested in December, suspended David Caplin, its chief executive, and Alan Farnan, an executive director, on Wednesday.

Lawyers for JPMorgan Chase & Co, one of the biggest customers of Bloomberg LP, have demanded details of which Bloomberg employees accessed data on the use of the bank’s financial terminals.

HSBC Holdings Plc said it would cut between 4,000 and 14,000 jobs as it intensified its cost-cutting efforts and became the first big bank in Europe to hint at a likely share buyback.

Britain’s Prime Minister David Cameron on Wednesday said he wanted Royal Bank of Scotland Group back in a state of “good health” and ready for sale “as fast as possible”, signalling a possible return of the state-controlled bank to private ownership before the next election.

 

NYT

* After the factory collapse in Bangladesh a search for new locations has taken on greater urgency for Western retailers, whose complex manufacturing needs already shrink the pool of potential locations.

* Under pressure from Wall Street lobbyists, federal regulators will soften a rule intended to rein in banks’ domination of the shadowy but lucrative derivatives market.

* In the midst of a closely watched investor vote on whether to separate the roles of chairman and chief executive at JPMorgan Chase, the firm providing tabulations of the vote stopped giving snapshots to the proposal’s sponsors.

* The Obama administration stepped up pressure on the Internal Revenue Service by ousting its acting commissioner and sought to insulate itself from the outcry over the agency’s special scrutiny of conservative groups.

* The U.S. administration is pushing for greater protections for reporters who refuse to identify sources, even as officials face anger over the seizure of Associated Press records.

* On Wednesday, Google unveiled a new Google Maps, by far the biggest redesign since it introduced Maps eight years ago. The company announced the maps at its annual I/O developers conference, where it also showed off new tools for search, photo editing and to-do lists, along with a music service and features for Android and Chrome apps.

 

Canada

THE GLOBE AND MAIL

* British Columbians voted overwhelmingly to send the Liberal Party back to power on Tuesday in one of the most dramatic political comebacks in recent Canadian history. The election was a stunning turnaround for Premier Christy Clark, although she was struggling Tuesday to hold her own seat in Vancouver-Point Grey.

* Canada will take the helm on Wednesday at a ministerial summit of the circumpolar, eight-nation Arctic Council, where Health Minister Leona Aglukkaq faces a clamour from southern nations seeking a greater role in the race to extract the Arctic’s vast oil and mineral riches. China, India, Japan, South Korea and Singapore all want observer status at the council as climate change exposes Arctic resources and opens new, shorter shipping lanes.

Reports in the business section:

* Ron Mock has completed his rise from the ashes of collapsed hedge fund firm Phoenix Research and Trading Corp, putting a controversial failure behind him to become the new chief executive of the Ontario Teachers’ Pension Plan.

Mock, 60, was named on Tuesday as the successor to Teachers Chief Executive Jim Leech, who is retiring at the end of the year. Mock is currently Teachers’ senior vice-president of fixed income and hedge funds, heading the largest of the pension plan’s six major asset management groups.

NATIONAL POST

* Canada’s Conservative government said on Tuesday it would boycott a United Nations disarmament conference chaired by Iran – currently targeted by sanctions over its rogue nuclear arms program – on the grounds that it makes a “mockery” of the effort against arms proliferation. It is the latest sign of a new boldness in Canada’s stance against the Islamic Republic.

FINANCIAL POST

* Canada’s oil sands and U.S. tight oil plays will contribute more than one third of new supplies to global markets between now and 2018, the International Energy Agency says. Production from northern Alberta’s bitumen reserves, the world’s No. 3 deposit, North Dakota’s Bakken play and the Eagle Ford shale in Texas will provide 40 percent of new supplies in the next five years as global output surges by 8.4 million barrels a day, the Paris-based agency said Tuesday.

* Internet video provider Netflix is facing an onslaught of competing streaming services launched by Canadian media giants such as Bell, Videotron and Astral as they clamour to cash in on the increasingly popular platform. But Reed Hastings, chief executive of Los Gatos, California-based Netflix, is nonchalant about the market his company pioneered becoming increasingly crowded.

 

China

CHINA SECURITIES JOURNAL

- The People’s Bank of China Shanghai branch released data that showed individual housing loans continued to soar in the month of April. In April Shanghai’s new foreign exchange personal housing loans rose to 5.3 billion yuan.

SHANGHAI SECURITIES NEWS

- The Chinese trade hub of Yiwu plans to expand its pilot scheme to allow more cross-border yuan settlement at the end of May.

CHINA DAILY

- Chinese airlines will get their first Boeing Co Dreamliners this quarter, said Boeing’s China President Marc Allen. China Southern Airlines is due to receive its first Dreamliner jumbo jet by the end of May.

 

Corporate Finance

* Dish Network Corp has lined up four banks to finance its $25.5 billion bid for Sprint Nextel Corp, escalating the bidding war against Japanese telecom company SoftBank Corp, according to two people familiar with the matter.

* RP Martin Holdings Ltd, the British interdealer broker that became involved in the Libor fixing investigation when two of its employees were arrested in December, suspended its chief executive and a director on Wednesday, a source familiar with the matter told Reuters.

* The consortium of investors seeking to take over Severn Trent Plc offered just under 20 pounds per share for the British water company, valuing it at around 4.7 billion pounds ($7.16 billion), a source told Reuters on Wednesday.

* The Portuguese government and JPMorgan Chase & Co are attempting to resolve a tussle over potentially costly derivative contracts sold by the U.S. investment bank to state-owned companies, a source familiar with the situation said.

* Swiss drugmaker Roche Holding AG is exploring a sale of its blood glucose meters business, three people familiar with the matter told Reuters on Wednesday, as the industry grapples with increased competition and reimbursement pressure.

* Macquarie Group Ltd -backed Asian Pay Television Trust has priced its Singapore initial public offering at S$0.97 per unit, at the bottom of a narrowed marketing range, people familiar with the matter told Reuters on Thursday, raising $1.14 billion.

* Before Optimer Pharmaceuticals Inc even put itself up for sale earlier this year, Cubist Pharmaceuticals Inc offered to buy the antibiotic maker for $20 per share, or nearly $1 billion, two people familiar with the matter told Reuters on Wednesday.

* Bain Capital LLC has emerged as the last party standing in the race for Yankee Candle Co Inc, three people familiar with the matter said, making it likely that the largest scented candle maker in the United States will stay in private equity hands.

* Singapore’s Changi Airport Group has sold its 8.36 percent stake in Italy’s Generale Mobiliare Interessenze Azionarie SpA at 1.43 euros per share, a source close to the situation said on Wednesday.

* British tour operator Thomas Cook Group Plc will announce plans to raise about 400 million pounds ($609.02 million) through a placing and rights issue on Thursday, according to two travel industry sources.

* Austin Brown, a portfolio manager with a focus on metals at Caxton Associates, has left the London office of the $6 billion U.S. hedge fund, according to a source at the company.

* Publishing company Mecom Group Plc is set to appoint veteran investment banker Rory Macnamara as its chairman as it continues to restructure its business, the Financial Times reported, citing people close to the company

 

Fly On The Wall 7:00 Market Snapshot

ANALYST RESEARCH

Upgrades

Beazer Homes (BZH) upgraded to Buy from Fair Value at CRT Capital
Con-way (CNW) upgraded to Hold from Underweight at BB&T
First Busey (BUSE) upgraded to Market Perform from Underperform at Keefe Bruyette
InterXion (INXN) upgraded to Buy from Neutral at Citigroup
Palo Alto (PANW) upgraded to Overweight from Equal Weight at Morgan Stanley
Rosetta Resources (ROSE) upgraded to Outperform from Market Perform at Wells Fargo

Downgrades

3D Systems (DDD) downgraded to Underperform from Market Perform at William Blair
ABB (ABB) downgraded to Neutral from Buy at Citigroup
AMD (AMD) downgraded to Sell from Neutral at Goldman
CSC (CSC) downgraded to Hold from Buy at Deutsche Bank
Chesapeake Utilities (CPK) downgraded to Neutral from Outperform at RW Baird
Chesapeake (CHK) downgraded to Neutral from Overweight at JPMorgan
Comstock Resources (CRK) downgraded to Hold from Buy at KeyBanc
Covanta (CVA) downgraded to Equal Weight from Overweight at Barclays
Everest Re (RE) downgraded to Equal Weight from Overweight at Morgan Stanley
Great Plains Energy (GXP) downgraded to Neutral from Overweight at JPMorgan
Iconix Brand (ICON) downgraded to Hold from Buy at Benchmark Co.
Jack in the Box (JACK) downgraded to Outperform from Top Pick at RBC Capital
Lincoln National (LNC) downgraded to Underperform from Neutral at Credit Suisse
MB Financial (MBFI) downgraded to Underperform from Market Perform at Raymond James
Medtronic (MDT) downgraded to Neutral from Outperform at Credit Suisse
Piedmont Natural Gas (PNY) downgraded to Neutral from Outperform at RW Baird
SodaStream (SODA) downgraded to Hold from Buy at Deutsche Bank
Stratasys (SSYS) downgraded to Underperform from Market Perform at William Blair
tw telecom (TWTC) downgraded to Equal Weight from Overweight at Morgan Stanley
Unum Group (UNM) downgraded to Underperform from Neutral at Credit Suisse

Initiations

Amazon.com (AMZN) initiated with a Buy at Lazard Capital
Apple (AAPL) initiated with a Neutral at Susquehanna
Churchill Downs (CHDN) initiated with a Buy at Brean Capital
Interpublic Group (IPG) initiated with an Overweight at Evercore
Monarch Casino (MCRI) initiated with a Buy at Brean Capital
Stillwater Mining (SWC) coverage resumed with an Outperform at Wells Fargo
Wabtec (WAB) initiated with an Overweight at Atlantic Equities
eBay (EBAY) initiated with a Buy at Lazard Capital

HOT STOCKS

DDR Corp. (DDR) acquired select prime power centers from its Blackstone (BX) JV for $1.46B
TC PipeLines, LP (TCP) unit entered agreements for $1.05B in pipeline stakes
Wells Fargo (WFC) confirmed reinstatement of $203M judgment in overdraft case
FDA approved Simponi (JNJ) to treat ulcerative colitis
Arch Coal (ACI), Meritage Midstream Services to form joint venture
HollyFrontier (HFC) announced unplanned downtime at refineries
OCZ Technology (OCZ) to delay filing 10-Qs

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Prestige Brands (PBH), NetEase.com (NTES), Eagle Bulk Shipping (EGLE), Youku Tudou (YOKU), Acxiom (ACXM), Sapient (SAPE), Jack in the Box (JACK), Cisco (CSCO), Flexible Solutions (FSI)

Companies that missed consensus earnings expectations include:
TransAtlantic Petroleum (TAT), Aegean Marine (ANW), Multiband (MBND), Skechers (SKX)

Companies that matched consensus earnings expectations include:
Commtouch (CTCH), NetQin Mobile (NQ), Safe Bulkers (SB)

NEWSPAPERS/WEBSITES

  • The euro zone debt crisis has mutated into Europe’s longest slump of the post World War II era, with no recovery in sight for a broad swath of the continent. Continuing government austerity, banks that can’t or won’t lend and heavy household debts are weighing on many countries, the Wall Street Journal reports
  • Valeant Pharmaceuticals (VRX) and Mylan (MYL) are weighing options after approaches made to Actavis (ACT) were rebuffed, and a report by the Wall Street Journal, citing a source, says Novartis (NVS) is weighing whether to launch its own bid for Actavis
  • Google (GOOG) plans to help create a new laboratory to study quantum computing, a high-profile endorsement of the esoteric technology—and D-Wave Systems, a Canadian company that has been pursuing it since 1999. An unusual supercooled machine built by D-Wave, the Wall Street Journal reports
  • BP (BP) wants Prime Minister Cameron to intervene with the U.S. government over the escalating cost of compensating U.S. companies for the Gulf of Mexico oil disaster in 2010, according to the BBC, Reuters reports
  • Alternative asset managers such as Blackstone Group (BX) and KKR (KKR) have for decades scoured the stock market for undervalued companies. Now they are trying to convince investors that shares in their own firms are a bargain, Reuters reports
  • Gold demand slid 13% to the lowest in three years in Q1 as record exchange-traded product sales by investors outweighed a surge in buying from China and India, says the World Gold Council, Bloomberg reports
  • A year ago the U.S. housing market hit bottom after the biggest plunge in eight decades, and now signs of excess are re-emerging. The U.S. spring home buying season has been marked by a frenzy of demand fueled by the Fed’s move to push down borrowing costs, a scarcity of listings and Wall Street’s new appetite for foreclosed homes, Bloomberg reports

SYNDICATE

Ambit Biosciences (AMBI) 8.125M share IPO priced at $8.00
Customers Bancorp (CUBI) 5.373M share IPO priced at $16.75
Cyclacel Pharmaceuticals (CYCC) files to sell common stock
DDR Corp. (DDR) files to sell 32M shares of common stock
Diamondback Energy (FANG) 4.5M share Secondary priced at $29.25
OMA Airports (OMAB) files to sell 100M Series B shares for selling holder
Tesla (TSLA) files to sell 2.7M shares, CEO intends to buy $100M of stock
UBIC, Inc. (UBIC) 1.1M American Depositary Share U.S. IPO priced at $8.38
Wave Systems (WAVX) files to sell 1.8M shares for holders
William Lyon Homes (WLH) 8.7M share IPO priced at $25.00

QUARTERLY HEDGE FUND FILINGS

Berkshire Hathaway: NEW STAKES: Liberty Media (LMCA) and Chicago Bridge & Iron (CBI). INCREASED STAKES: Wells Fargo (WFC), IBM (IBM), Wal-Mart (WMT), DirecTV (DTV), and DaVita (DVA). DECREASED STAKES: Mondelez (MDLZ), Kraft (KRFT), and Bank of New York Mellon (BK). LIQUIDATED STAKES: General Dynamics (GD) and Archer Daniels (ADM).
Greenlight Capital: NEW STAKES: Oil States International (OIS), Hess (HES), Spirit (SPR), IAC/InterActiveCorp (IACI), and Capital Bank (CBF). INCREASED STAKES: Apple (AAPL). DECREASED STAKES: Microsoft (MSFT), Seagate (STX), Delphi (DLPH), CBS (CBS), and Computer Sciences (CSC). LIQUIDATED STAKES: Ensco (ESV), Xerox (XRX), Yahoo (YHOO), NVR (NVR), and Google (GOOG).

    



 
Communism For Some, $815 Million For Others: How Mao’s Granddaughter “Greatly Leapt Forward” To Untold Riches
Thursday, 09 May 2013 16:55
No Comments

For a country, whose founder Chairman Mao once upon a time envisioned great wealth equality for all and a communist utopia, things sure have had a very capitalist ending. Perhaps nowhere is this more visible than in Mao’s lineage itself, where we find that the granddaughter of Mao, Kong Dongmei, managed to rise above the great unwashed mass of egalitarianism, and ended up just slightly more equal as a result of the Great Leap Forward, with a personal fortune amounting to $815 million according to New Fortune, a Chinese financial magazine. But it is not so much the realization that the occupation of politics is one grand lie (second perhaps only to economics) and where preaching equality for all is merely a means to achieve great wealth for yourself, but that the 40 year old descendant of (Read more…) Chairman, with her wealth of nearly $1 billion, is merely the 242nd richest person in China, which means there are over 200 billionaires in the country, the bulk of whom we can only imagine are descendants of the original “communist” founders of the country.

From AP:

Kong is the grand-daughter of Mao and his third wife He Zizhen. In 2001 she founded a book store in Beijing selling publications about Mao and promoting “Red Culture” after studying at the University of Pennsylvania in the US.

 

In 2011, Kong married Chen, who controls an insurance company, an auction house and a courier firm, after they had maintained an extramarital relationship for 15 years, according to the magazine, which cited other Chinese media reports.

 

The couple have two daughters and a son, said New Fortune — likely to be a violation of China’s one-child policy.

The locals, attuned to flagrant examples of hypocrisy, were not exactly delighted with the revelation:

Kong’s inclusion on the rich list triggered hot debate on China’s Twitter-like weibos, with some accusing her of betraying her grandfather’s status as the “great teacher of proletariat revolution”.

 

“The offspring of Chairman Mao, who led us to eradicate private ownership, married a capitalist and violated the family planning policy to give birth to three illegal children,” wrote Luo Chongmin, a government advisor in southwest China.

 

China has implemented the one-child policy for many urban residents for over 30 years, although there have been recent suggestions that the rules may be loosened.

 

“Did Kong Dongmei… pay any fines after being a mistress for more than 10 years and giving birth to three kids?” asked another user with the online handle Virtual Liangshao.

Yes, and a bundler for the president in another non-crony capitalist country is in prison for commingling client funds before blowing up his firm as a result of his greedy bets. Oh wait…

But at least Kong was not caught trying to hide her wealth offshore like some of her uber-wealthy peers in a country in which parking one’s cash has become the biggest priority. And lots of cash to park there is. According to China Daily, “Privately held wealth on the Chinese mainland hit 80 trillion yuan ($13 trillion) in 2012, with more than 700,000 individuals now holding 10 million yuan or more in investable assets, more than double the number at the end of 2008, according to a new report.” In US terms, this means the number of millionaires has doubled under 350,000 during the course of the great financial crisis, once again showing that not even China is willing to let a crisis go to waste.

The findings, from China Merchants Bank and US-based management consulting firm, Bain & Co, showed that the richest on the mainland are stepping up their investment in foreign assets as they try to preserve their fortunes in the face of uncertain economic prospects.

 

Many of those surveyed said they are becoming increasingly concerned by potential changes in Chinese regulatory policies, financial market volatility and other business risks.

 

About 60 percent of respondents indicated they were now focused on preserving their wealth, against using it to make more.
Chen Kunde, wealth management business director at China Merchants Bank, said the shift in priority was being driven by uncertainties over economic growth.

 

“As the rich gradually age and their knowledge changes, they are tending to focus more on preserving the wealth instead of fighting to create more, in a business environment where it is becoming more difficult to make extra money.”

Where do the wealthy want to stash the cash?

On top of cash holdings in traditional bank accounts, individuals said they had a strong interest in forming family trusts, and in creating a diversified portfolio of international interests to preserve their wealth and spread the risk, said the report, with more than half having overseas investments.

 

Jennifer Zeng, a Bain partner in Beijing and a co-author of the report, said: “We don’t see a great difference between high-net-worth individuals in China and other countries when it comes to their goals, although the situation here is changing and the shift toward the preservation of wealth might accelerate as the speed at which the wealth was created was faster than in most parts of the world.”

 

The report said that Chinese banks had strengthened their position in the domestic wealth management market, while foreign banks had a much lower share of the market due to business restrictions.

 

It said the need for overseas asset allocation among the rich is rising, and China’s banks should be encouraged to develop overseas business models and accelerate overseas expansion, to better cater to that rising demand.

Our advice: stay away from banks susceptible to bail-ins. So anywhere in Europe.

As for the great wealth disparity forming between both China, and the rest of the world’s, uber rich, and everyone else, a similar divergence developed in 18th century France with less than desirable consequences for the wealthiest. This time will likely not be very different.

The only delaying factor is the presence of the great welfare state myth, which has so far kept the great unwashed in their place, not so much through violent oppression, but through the illusion of how much they stand to lose if they overthrow the system that provides for them, and hands them crumbs in times of need. The same system that is now and always has been, an insolvent ponzi scheme which by definition lasts only as long as the new entrants put in more than existing members take out.

That equilibrium, however, is rapidly changing all around the globe, as more and more realize, voluntarily or otherwise, that the system is broke, and with the great debt creation apparatus now hinging purely on the world’s central banks – a process which just like in Cyprus dooms the restoration of confidence as it is impossible to be confident about a system sustained solely by a few global “bad banks” which are terrified to remove the training wheels – that the days of the ponzi are numbered.