Archive for July 2007

Caxton Going Down?

brucekovnercaxtonassociates.gifWe’re hearing rumors that Caxton Associates is blowing up. Caxton is one of the largest hedge funds in the world with around $16 billion under multi-strategy management so this would be huge and, as they say, unlikely. Some are saying it’s because of the move SEPR has made of over the past few weeks (Caxton’s largest equity position had been SEPR), others that it’s the very fashionable credit situation. Right now, all just hearsay. Maybe funds this large don’t blow up. Maybe Caxton was already a red giant, and will contract into a white dwarf under a sea of redemption requests after some significant losses. Only then will it be ready for a supernova. Heard anything? You know where to find us.
Update: Caxton denies any such rumors. According a friend o’ DealBreaker, there was a “larger than normal liquidation in order to reduce risk,” the main fund is down 3-4% mtd and Caxton “made money today.” Make of that what you will.

Write-Offs: 07.31.07

$$$ Of Taxes and ‘Deals That Don’t Get Done’ [DealBook]
$$$ The Complicated, Modern Renaissance Man [Banker's Ball]
$$$ How to Say All Their Money is Gone [LoSC]

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  • 31 Jul 2007 at 4:26 PM
  • Banks

Jeremy Grantham: RUN FOR YOUR LIVES

Are you presently working for a hedge fund or major bank? May Jeremey Grantham, chairman of Grantham, Mayo, Van Otterloo & Co. (via us) suggest that you get the hell out of there, because most of you are going to die anyway? That’s right, Dealbreakettes, according to Grantham, credit-market declines are going to force “as many as half”– half, 50%, 1 of every 2– of all hedge funds to close in the next five years. Last year 717 hedge funds closed, leaving 9,800 in business. Ergo, FOUR THOUSAND NINE HUNDRED of you are soon to be history (we did the math). Oh, and at least one global bank (gut instinct: Goldman Sachs) and “one or two” of the largest private equity firms, because those assholes have it coming. Grantham can make such apocalyptic forecasts for 2012 because he is 68, and may very well be dead by then. Grantham, Mayo, Van Otterloo & Co will survive, presumably.

chelsea.jpg Did anyone catch today’s New York Times lovefest fluff-piece about Chelsea Clinton? There’s nothing she can’t do, from working in finance to reading “Goodnight Moon” at a college level to dating Jews. And as any truly well-fluffed piece will tell you, merit carries the day throughout Ms. Clinton’s orgy of success.
For instance, how did Chelsea deal with 9/11? In a bold, career-defining moment, Chelsea shuns the materialistic ambitions of her post-collegiate peers and decides to devote herself to good works. From the Times:

Ms. Clinton shared her answer in an earnest essay a few months later in Talk magazine: “For most young Americans I know, ‘serving’ in the broadest sense now seems like the only thing to do,” she wrote. “Is banking what’s important right now?” Her words are reminiscent of the young Hillary Clinton, who, as the campaign frequently reminds voters, chose children’s advocacy over corporate work after law school.

Chelsea’s true desire to “serve” and shun banking led her straight into a career in finance when she got back from Oxford. Nothing fulfills that desire to serve more than firing a few people from a struggling company in a management consultant role. More from the Times:

after Oxford, Chelsea Clinton signed up with McKinsey, a consulting company known as an elite business training corps. She was the youngest in her class, hired at the same rank as those with M.B.A. degrees. Her interview was more like a conversation, said D. Ronald Daniel, a senior partner. “That’s why she was a good consultant, because we are professional question-askers and professional listeners,” Mr. Daniel said.

Let me get this straight fluff-piece, Chelsea Clinton’s rare and unique business acumen resulted in her catapulting the entire McKinsey class?
Word on the Street (and from a couple tipsters) is that Chelsea was job shopping and resume padding like any other post-grad. McKinsey wanted a Clinton so badly that they were willing to give her a post-M.B.A. job. Other consulting firms laughed at the idea, even though word has it that Chelsea tried to play some hardball.
Chelsea was interviewing with BCG and a couple other places only prepared to throw her in with people of the same skill level who didn’t live in the White House. Apparently consultants at other firms didn’t have the right “conversations” with her, namely the ones deferred to her parents. The nerve.
Like her father, Chelsea is as drawn to integrity and character in her personal life as her professional life. This is why her boyfriend, Marc Mezvinsky is that rare combination of a Jew working at Goldman Sachs and the son of criminals. Mezvinsky’s father pleaded guilty in 2002 to swindling a bunch of investors out of $10 million, using his son’s bank account to transfer money undetected and often bragging about his Clinton connection. Papa M gets out of jail in November 2008.
Primed for a Second Stint as First Daughter [New York Times]

  • 31 Jul 2007 at 2:04 PM
  • Dow

NewsCorp-Dow Jones Deal Imminent

Rupert Murdoch New York Times Wall Street Journal.jpgIt’s finally pretty much almost over. Rupert Murdoch has secured enough Bancroft family shareholder votes to move forward with his $60-a-share, $5bn bid, one future News Corp holding reports.
One day after a Murdoch spokesperson said the deal was “highly unlikely,” the Denver branch of the Bancroft family, previously holding out for a higher offer, capitulated, giving News Corp at least 32% of the family vote. Nonetheless, one Bancroft family spokesperson said today, “Any suggestion that the process has been completed and/or that a particular level of support has been established is at this point premature.”
Both companies have board meetings this evening to formulate the take-over procedure. Dow Jones is trading up 7.04% to $57.50 today.
News Corp. Appears to Have Enough Votes to Clinch Deal [Wall Street Journal]
Murdoch Seen to Win Control of Dow Jones [NY Times]

mr burns.jpgWhich New York short-seller, Simpsons fan and Yale graduate had this to say about the recent adversity faced by Sowood Capital?
“Let Harvard have its academic and athletic excellence…Yale will always be known for the finest in gentlemanly club life…”
Earlier: Sowood Is So Sowwy

Sowood Makes Citadel Look Good

barclayseagle.gifABN Amro’s board decided over the weekend to withdraw its formal recommendation for a bid by Barclays, but it was only half-serious, and they were winking at the time (though that may have just been an involuntary spasm resulting from getting grapefruit in their eyes, which stings quite badly). ABN’s chief executive Rijkman Groenink said today that he supports the offer by the British bank and may formally recommend it to shareholders later, just not now, even though he sort of just did.
Groenick commented that “We continue to support the Barclays offer because we believe overall it is to the benefit of shareholders and stakeholders,” and the ABN-A board “still believes in the strategic rationale of the Barclays bid,” but they’re still “neutral.” So “neutral,” in fact, that they “acknowledged”—yes “acknowledged” numbers—that the 38.40 euros/ABN Amro share being offered by rival bidder Royal Bank of Scotland-Fortis Group of Belgium-Banco Santander Central Hispano is “higher” than Barclay’s proposed 35.73 euros/share. Because they’re “neutral.”
ABN’s Chief Expresses Support for Barclays’s Bid [WSJ]
Board to Remain Neutral in Bids for Dutch Bank [NYT]

stockbroker old.jpg (If you missed our first installment of “Great Moments in Financial History,” detailing Maria Bartiromo’s appearance on Celebrity Jeopardy, you definitely want to check this out)
Traders, take a second from shifting vol and imagine this announcement:
“Traders, your work here is done. The market has done all it can do for you this year, so we’re closing it. Come back in December, just in time for Christmas bonuses.”
That was pretty much the case this day in 1914, although some believe the extended holiday was due to that particularly gory flick showing in the European theater at the time. From the Freakonomics Blog:

On July 31, 1914, officials shut down the New York Stock Exchange following news that Germany had declared Kriegsgefahrzustand (defined as an “imminent-danger-of-war situation“) while Austria and Turkey were already mobilizing.

From the NYSE’s website, the exchange, “Reopened for trading in bonds with price restrictions on November 28, 1914; for trading in a limited number of stocks under price restrictions on December 12, 1914; and for trading in all stocks, under price restrictions, on December 15, 1914. All restrictions were removed April 1, 1915.” The hiatus was the longest in the NYSE’s history since 1885. There was no extended closing during World War II.
And Today Is… [Freakonomics Blog]

  • 31 Jul 2007 at 10:59 AM
  • Health

DealBreaker PSA: Second Hand Printing

laser printer 2.JPG Ever wonder why, after a few minutes on the treadmill at the end of a grueling week, you’re breathing harder than (eighteen pack a day smoker) James Simons trying to explain 5/44 to investors? Forget the crippling fatigue, lousy diet, self-loathing and emotional stress, it’s the PRINTERS.
Australian scientists from the Queensland University of Technology have found that office laser printers can damage lungs as much as smoke particles from cigarettes. Almost a third of the 60 printer models studied emit dangerous levels of toner into the air. A detailed explanation of your deteriorating health, from the BBC:

Almost one-third were found to emit ultra-tiny particles of toner-like material, so small that they can infiltrate the lungs and cause a range of health problems from respiratory irritation to more chronic illnesses. Conducted in an open-plan office, the test revealed that particle levels increased five-fold during working hours, a rise blamed on printer use. The problem was worse when new cartridges were used and when graphics and images required higher quantities of toner.

Since “working hours” for bankers include most of the 168 hours in a week, it turns out banking causes you to really suck, much more than originally thought.
Office printers ‘are health risk’ [BBC]

bradgreenspannewscorpdowjonesmyspace.jpgThis is a list of people who we respectfully submit are liars: CNBC’s David Faber, Thestreet.com’s Nat Worden, and Reuters. We believe these entities to be capital ‘L’ small ‘i’ small ‘a’ small ‘r’s because among them they share the distinction of having reported or re-reported this morning that there will be an official announcement of News Corp.’s Dow Jones victory tonight. Nothing personal, it’s just that we no longer believe the words coming out of the mouths of people who say anything—outright, implying, leading, lip synching—that even hints that this whole thing will be conclusively finished before hell freezes over. We WANT to believe them, we just can’t. Know anyone you’d like to add to our list? Send his/her name to tips at dealbreaker dot com.
In other news, MySpace co-founder Brad Greenspan sent an open letter to Dow Jones shareholders detailing a new proposal (he’s done this before, several times) in which he would invest $600 million in cash and stock in three joint ventures with DJ. Greenspan says he’s received “interest” from five “credible” investor groups, though he would not disclose their names, and their profiles are set to private. Brad informed shareholders that he and his investors “can meet this week” in order to “firm investment commitments,” but starting next week things are going to be really tight for him, so if Dow Jones could really get back to him A-sap to nail something down that would be solid, just name the time and place, but seriously, get back to him soon, otherwise, who knows, he could be busy.
Dow Jones to Agree To Takeover by News Corp. [CNBC]
Dow Jones Deal Gets Closer [WSJ]
Dow Jones Soars As Deal Appears Near [thestreet.com]
News Corp., Dow Jones deal expected Tues [Reuters]
MySpace Co-Founder Makes Another Dow Jones Proposal [Bloomberg]

kung fu hustle.jpg Steve Schwarzman is selling state secrets to the Chinese. Is Schwarzman trying to pull a Jack Bauer’s father in last season of 24 (Schwarzman is the only PE fund guru as “tall” as Keifer Sutherland, after all)?
For the low, low price of $540 million dollars, or a nice $23 million a day, the Chinese government has been studying the U.S. buyout market, courtesy of Blackstone’s IPO. The first lesson is an awfully bitter fortune cookie – PE fund IPOs allow shrewd fund partners to cash out while passing impending turmoil onto investors.
China used its increasingly hard to employ $1 trillion “rainy day fund” of foreign exchange holdings to pump money into a 10% stake in Blackstone’s IPO. China bought shares at a 4.5% discount and watched Blackstone’s share price fall 18% in 24 trading days.
China is watching patiently, slowly developing the script for taking the PE reigns from the West, and the script for “Shaolin PE Investing,” starring Stephen Chow.
(Pictured: Some Chinese investors have lost their shirts in the deal, others just have an axe to grind.)
Blackstone share slump costs China $540 million [MarketWatch via Deal Journal]