Archive for April 2006

My Shark Tank Is Bigger Than Your Shark Tank

Fortune says the new status symbol for hedge funds is a massive aquarium**:

City Aquarium, which he founded in 1999, now has a client roster that includes sultans, supermodels, Russian heiresses, Broadway producers, and an increasing number of hedge funds like SAC Capital Advisors and Sandell Asset Management (both declined to comment on their expensive toys). “Aquariums are status symbols,” says [City Aquarium owner] Muir, who has also designed aquariums for hedge fund managers’ homes. “These guys say, ‘Okay, if we are going to do [an aquarium], it has to be hot.’ ” So what’s the hottest thing right now in hedgie tanks? Sharks, natch. The price: around $2,000 each.

When we hear “shark tank” and “SAC” in the same sentence, we either think, “metaphor,” or this, which Stevie Cohen bought for $12 million:
Does that count as an aquarium?
**One vendor in New York = trend.
Latest Status Symbol: $600,000 Aquarium [CNNMoney/Fortune]

  • 28 Apr 2006 at 11:02 AM
  • Overstock

LiveBlogging Overstock’s Conference Call…

dvader.jpgRECAP: The OSTK call was less eventful than what we’ve come to expect from Byrne, but there was the usual hint of conspiracy and gratuitous media bashing (see Roddy Boyd, swipes at; Wall Street Journal, accusations of fabricated quotes). Byrne also says that one of the “big three” bulge bracket banks has been calling up some of OSTK’s partners and telling them to drop OSTK. And guidance: next quarter will look exactly like this quarter.
11:59 – final comments. Jason: we stumbled and we know we stumbled and don’t let anything we say make you think we’re making excuses.. but in the long run it might be a good thing for the business… when we had the debacle we had, replacing all of our systems this year, and we shrunk a lot… it’s given us time to take a deep breath and harden our systems. [our core business] is getting a lot of attention. As bad as the systems got, i think the core shopping business, as far as somebody orders a product and they get it on time, i’m not sure our business has ever been better… i think investors should be pleased and in the next 6 months to a year, you’ll see a big difference in our financial performance. Byrne – to me this is all a function of bad decisions i made in the first half of ’05, both in that they were belated, and that… we stumbled… To jason’s point… we couldn’t have gotten better or more refined looks at inventory or more refined looks at marketing… travel beat budget for the quarter, auctions was just a little behind budget…we don’t really have any great new businesses planned. we’re just refining what we have… i’m sure you welcome having Jason back to provide adult supervision… Expect that same thing for one more quarter..

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  • 28 Apr 2006 at 9:30 AM
  • NYSE

No More Salisbury Steak for the NYSE; Dark Paneling Down 24%

lunch.jpgThe NYSE is closing its dining club, citing rising costs, lower membership and, of course, 9-11. (When we hit the decade, we assume blaming 9-11 will seem sufficiently ridiculous that people will stop doing it. But we usually give people too much credit.) At any rate, the club was at its peak… guess when. Guess. Just guess:

The Luncheon Club hit its heyday in the early 1980s, when it served up to 500 meals a day, according to one report. The club occasionally served as a backdrop for inter-member skullduggery, with four separate NYSE disciplinary actions over the years arising from misuse of members club charge accounts.

We predict that this is just harbinger for the decline of dark-paneled private clubs in general. (Except the Racquet Club. And the University Club. And the Century Club. And the Union League Club…)
NYSE Ditches Dining Club [NYPost via WSF]

Opening Bell: 4.28.06

counterfeit.jpgCongress has big ideas on gas prices (Seattle Times)
Forgive us if it sounds like a broken record, but it would seem that idiocy on a daily basea needs daily debunking. Real quickly, the latest proposal, you’ve probably heard, is for the government to send all drivers a $100 rebate check. This isn’t much different than the $300 that Bush had sent back to each taxpayer a few years ago. What’s funny, is if you were to ask the average person whether it’s a good idea to just print up $100 bills and send them out, they’d probably recognize that you can’t just print up currency to make people wealthier. That’s why counterfeit currency isn’t good. Yet, if you write everyone a check, and say it’s a gas rebate, people will think it’s a good idea — even though it’s the exact same thing. That being said, will our status as car-less New Yorkers prevent us from getting the coin?
Exxon’s $8.4 Billion Net Faces Fire on All Fronts (WSJ)
It wasn’t quite the $9.9 billion they made last quarter, but it seems that $8.4 billion is enough to piss off the politicians who did their usual tango. Still it came up a little short of Wall St.’s expectation. Perhaps it was intentional, maybe some knowingly wasteful expenses, a few more massages here and there for Lee Raymond, just to keep earnings a little low. Now, here’s the lesson of the day Schumer, just in case you’re reading. Suppose you imposed a gas cap, and earnings dropped to $3 billion/quarter. You’d probably go around saying that the company is still plenty profitable, so it’s no big deal. But the stock would drop, thus meaning major capital losses for all of its investors. In other words, it’s been a major loss of money. Their profit is an illusion, as the company has actually caused a loss for its owners. Got that Chuck?
Pfizer Shareholders Back CEO’s $83M Golden Parachute (Forbes)
Congratulations to Hank Mickinell for securing his $83million dollar retirement. It’s not quite as much as Lee Raymond’s $400 million $99 million, but it’s pretty good for an executive at a company that’s not exactly firing on all cylinders these days. More importantly, it’s a victory for what corporate law professor Stephen Bainbridge calls rational shareholder apathy. Basically, on matters like this, it’s just not worth it for the shareholders to care. In a case like this, when the pay package barely represents pennies per share, why the did people rent airplanes waving a sign that said “Give it Back, Hank!” and fly them over the shareholders meeting? For more on the kind of demagoguery over CEO pay, particularly with respect to the Pfizer case, check out some of the writing of Larry Ribstein.
Microsoft’s Pig in a Poke Problem (Infectious Greed)
A lot of people, including Eric Savitz at Barron’s have been trumpeting the fact that Microsoft is heading into a very strong product release cycle. There’s the new Vista, Office, etc., all of which should provide a tailwind for sales. But Paul Kedrosky notices a problem, after reading last night’s earnings reports. All of the company’s fat profits are being plowed into losers, like their endless quest to catch up to Google in search, and their costly XBOX program which isn’t paying off. They’re going to plow another $2 billion into search next year, few having much confidence that it will work out. So, yeah, winners subsidizing losers, that’s a tough strategy.

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Write-Offs: 04.27.06

$$$A sexy line of credit and a big revolver” Columbia B-school kids re-define sucking up to the teacher. [WARNING: This file contains a Vanilla Ice parody. Probably Safe for Work, But Not Recommended for the Weak.] [via LongOrShortCapital]
$$$ AOL launches, a blog about individual stock performance. From the press release: “These blogs will focus obsessively on what average investors care about most, giving readers an interactive platform to get behind the headlines and exchange insights on some of the most widely held and talked about companies.” (Average investors or the average investor? Eh, probably both.)
$$$ McKinsey predicts that investors will eventually tire of mediocre hedge fund performance and writes a report about it. It’s just that sort of sophisticated observation that makes the seven-figure consulting fees entirely worth it. [Daily Dose of Optimism]
$$$ David Wittig, insider trading and now a surge in blind-pool offerings. The ’80s are back. Again. []

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  • 27 Apr 2006 at 3:13 PM
  • Labor

Aliens of Extraordinary Ability

gisele.jpgH-1B visa limits have been long stretched to the max for engineers, programmers and other people with specialty technical expertise. (Just ask the people in your newly-created Bangalore office.) But now another profession is hitting the H-1B ceiling: we’re told by an agency owner that it’s nearly impossible to get foreign-born supermodels into the country these days. See that on the left there? There will be no more of those. We’ve got enough, apparently.
(Now we better understand why Bill Gates wants to abolish H-1B caps.)

  • 27 Apr 2006 at 11:05 AM
  • analysis

DealBreaker Financial Tools™

In keeping with our continuing coverage of the “New, New Economy” we have begun collecting a series of mergers and acquisitions analysis and valuation tools. Cumulatively, we expect these will give the modern investment banker a goodly number of financial arrows in her quiver. On Tuesday, we formalized the Idov Multiple. Today we bring you the Kanige Chaos Theory of M&A due diligence.
(You’re welcome.)
Eventually, we expect that bankers who do not have these tools will be left behind in the fast-paced financial world, shortfalling $200 million dollar valuations of commerciablog firms and executing poorly vetted $500 million acquisitions of bricks and mortar publishing firms silly enough to sign a teenaged author.

Multi Capital Group, Donald Trump and Ecstacy Dealing

dtrump.jpgAccording to this story in Philadelphia magazine, Donald Trump’s new business partner in the area is Raoul Goldberg (nee Raoul Goldberger), a principal real estate bank/developer Multi-Capital Group. Goldberg has a colorful history that includes a 1999 conviction for ecstacy dealing. Upon learning of the conviction, Multi Capital and Trump have been distancing themselves from Goldberg:

“We were unaware of his past,” Multi-Capital said, through the powerhouse Rubenstein PR firm, “and he is no longer associated with the marketing of the project and he is not a principal in the development.”

But we’re sure Goldberg will survive. After all, he’s faced tough business problems before:

From a 1999 NY Post article: [Michel] Hemli, a resident of Belgium, sent shipments to Goldberger and Freund in a hollowed-out night table, the feds said. The trio began to panic earlier this month when a New York-bound shipment of 200,000 pills was “misdirected” to Spain, according to wiretapped talks. “I’ve been in this business for years,” Goldberger told [partner Marc] Freund during an April 24 phone call. “There is nothing you can do when the s–t hits the fan.”