Well, this is upsetting. We’re big on babies and formalities, so had we known Dick Parsons was having a lovechild with model MacDella Cooper, we would’ve sent over a nice note and maybe a plush stuffed duck or something, like we’ve done in the past for all our favorite bank chairmen and CEOs. Now, it’s too late, and we look like assholes. This is why we need to be kept abreast of such situations.
Archive for May 2009
It must be a measure of the times that a firm that regards itself with such favor would deign to even consider participating in something so base as a government recovery program, much less discuss it on the record. Or perhaps Mr. Kravis is just a lot more loose-lipped than he used to be. That’s saying something.
Still, it is hard to blame KKR for wanting to play. Accepting free money handed out without thought to risk or reward by dimmer bulbs is, after a certain sense, what private equity is all about. Kravis argues the point (unconvincingly).
KKR could take advantage of the infrastructure stimulus plan but is less interested in buying banks or their troubled assets, co-founders Henry Kravis and George Roberts have told the Financial Times.
“I think there may be some programmes where it will be appropriate for us to partner with the government,” Mr Kravis said. “I think one area in particular that I think is a very big need and where we will have opportunities to participate is in infrastructure.”
The Obama administration has committed hundreds of billions of dollars to infrastructure spending as part of its plan, ranging from road and bridge construction to investments in broadband and “green” energy.
Mr Kravis said the firm was looking at the public-private investment partnership and other initiatives. But the partners expressed caution about an overly opportunistic approach.
“Simply buying a pool of assets [through] a highly levered vehicle because a government is willing to give you more leverage than the markets and just sitting there and running off the assets and giving the money back to your partners is not what we do,” Mr Roberts said.
Of course this is totally ridiculous. This is exactly what private equity firms do and if the government had been offering buyout artists even a tenth of a percent lower rates than the leveraged finance groups that multiplied like rabbits over the last fifteen years the Treasury would now labor under a balance sheet bloated with large swaths of now-private businesses in or approaching default.
KKR sets out stall for role in stimulus package [The Financial Times]
It’s Friday before a long weekend and clearly we don’t have to tell you we’ve completely checked out.* Unfortunately we’re obligated to stick around here for a few more hours, so, shall we discuss everyone’s Memorial Day plans? This guy Joe Couceiro– Barry Williams’ doppelgänger–would probably appreciate it if we all took a trip to SeaWorld, and while we’re gonna pass, we’re oddly mesmerized by Jeffrey (Geoffrey?), the “frisky” lemur from Madacascar that appeared on Squawk Box with him early this morning. Anyway, plans. Ken Lewis tells us he’ll be spending what will probably be his last MemDayWeekend at the Hilton Head vacay house with the Boone’s Farm representatives he met the other night, which sounds nice. Now you go. Something fun, or studying for the CFA while fantasizing about a life that doesn’t so closely resemble hell?
*A state of mind probably caused in large part by the fact that we’re typing this from a roofdeck where cocktail hour starts at 10AM on holiday weekends.
William Richards is off today. OB brought to you by anal_yst.
Ezra Merkin Quits Synagogue Post (NYT)
And just after being nominated chairman. Might’ve had to do with losing a bunch of members a truckload of money.
The Road To Bankruptcy (The Atlantic)
“At the end of his book’s harrowing account of mortgage mistakes and credit card crises, NYT reporter Edmund Andrews writes: “While our misadventure had certainly been more extreme than those of many other Americans, our situation was not all that unusual.” And indeed the book reads like the story of an American Everyman, easily sucked in to the alluring world of easy credit as he struggled to blend a new family. The terrifying implication is that it could happen to you–to anyone who leads with their heart and not their head.
But en route to that moral, it turns out the story has been tidied up a little. Patty Barreiro, Andrews’ wife, has declared bankruptcy twice. The second time was while they were married, a detail that didn’t make it into either the book or the excerpt that ran in last Sunday’s New York Times Magazine.”
Sears Holdings Swings to Q1 Profit (sec.gov)
“In this challenging economic environment we are pleased with the progress we have made in improving our gross margin rate, controlling inventories and further reducing our cost structure,” said W. Bruce Johnson, Sears Holdings’ interim chief executive officer and president. “Our efforts had a clear impact on our overall results as both net income attributable to Holdings’ shareholders and Adjusted EBITDA increased significantly during the first quarter as compared to last year.”
This is all well and good and surely cause for a huge pop in the stock, BUT (and forgive me for raining on Eddie’s parade), the main driver of this quarter’s profit was reduced advertising and payroll expenses. Yea, good luck repeating that every quarter until the economy “recovers.” Lemme know how that works out for ya’.
PIMCO’s Gross: US could lose AAA rating (Reuters, via FT)
O noes! Sayeth the (formerly) Moustachio’d one:
The United States will face a downgrade in “at least three to four years, if that, but the market will recognize the problems before the rating services — just like it did today,” Gross told Reuters.
I know its too much to hope that within 3-4 years time no reasonably sane investor will give a flying fuck what S&P/Moodys has to say, but its not like the fundamentals are a big secret here. US issues metric asston of debt, re-inflates asset bubbles…shit eventually hits fan. Of course, given the various precedents set by the Gov’t over the past year or two, I think its obvious that if any rating agency were to even loosely consider a downgrade on US Sovereign (“Sovereign”) debt, the PPT would be all over that shit like white on rice.
$$$ Sleep where Marissa Brown née Noel (daughter of Walter and Monica) hath slept. She and the husb have put their UES townhouse on the market for $12 million, though apparently they’re willing to take “much” less. [Daily Intel]
$$$ Mild Skepticism: Credit Card Bill of Rights Edition [DJT]
$$$ Of course Google isn’t buying a newspaper. [The Deal]
Muffie Benson-Perella (muffie AT muffmarkets.com) was an Associate in the Investment Banking Division of a “Bulge Bracket” bank. She holds a B.A. in French and Art from Vassar College and an M.B.A. from Harvard Business School. She concentrated in Contemporary French Poetry at prep school where she was awarded the exclusive premiership of the school’s “French Club.” Today, Ms. Benson-Perella is the Founder and Managing Director of “Muffie on Markets” (http://www.muffmarkets.com), a deep dive into capital markets, finance and investment strategy. She is also the Founder and Managing Director of Muff Cap, LLC., an invitation only, private investment vehicle for non-existent, prestigious and accredited investors only, employing an actively managed, long-short strategy.
Certainly history will write its own lists of heroes and villains with respect to the credit crisis. It is a sort of mandatory, cleansing practice that collates the pages of the current time of troubles. And, while many of history’s verdicts may form less than a consensus, it seems clear that the verdict rendered for Benjamin N. Dover, III will be one of the rosier ones.
Mr. Dover’s sometimes controversial, but always insightful observations writ large by the disclosure requirements of the SEC and FDIC public comment process have set the cutting edge for debate on everything from short-selling to the PPIP programs for the last several weeks. Here is a passage of his work:
Truth #1: Stock Market Crashes Are Caused By Stock Sales.
It should be painfully obvious by now that the market’s decline since November 2007 was caused by stock selling. Not even pernicious speculators like George Soros would dispute this basic truth. Similarly, the market’s steep fall after several large bank failures and the deepening of the economic crisis in September 2008 also was the result of stock selling. We can safely conclude, therefore, that had stock sales been banned in 2007 the stock market crash of 2008-2009 never would have happened. Logically, it follows that banning stock sales would also prevent future market crashes.
Agree or disagree, you simply cannot ignore his common sense approach to markets, finance and economics. But who is Benjamin N. Dover, III? Very little biographical information is available on the maverick finance expert, but I decided to find out. Accordingly, to lift the curtain on this modern finance mind I sat down with Benjamin N. Dover III at the Peninsula for his first public interview:
Muffie Benson-Perella: Benjamin Dover, is that British? Perhaps Irish?
B. Dover: I’m an American original. (Not be confused, of course, with Native American.) And I appreciate your calling me by my given name. For some odd reason, many people seem to find it amusing to use its abbreviation.
As soon as replacements are found for the chair and CEO positions, which are being separated. Any takers?
Dear Colleagues,
I wanted to let you know that I have informed the Board of Directors of my intention to
step down from my roles as Chairman and Chief Executive Officer once the Board
successfully concludes a search for replacements for these roles.
While much work remains to be done at AIG, we can all be proud that much has already
been accomplished. With the financial assistance of the Federal Reserve Bank of New
York and the U.S. Department of the Treasury, we have made substantial progress in
stabilizing AIG, reducing the systemic risk that led the government to rescue the
company, protecting our policyholders and our businesses, and developing a plan to
repay American taxpayers.
As it relates to Tuesday night’s completely bizarre episode with Dennis Kneale? Gawker reports that the network is worried about his mental health, which may have something to do with “stressful” contract negotiations. Apparently, we’re told, everyone is “highly disturbed” by the showing, up to the “highest levels of CNBC,” and some people wonder if he “overdosed on something” prior to going on the air Tuesday. Separately, we’ve also been informed that Macke has been on executives’ radars for the past several months, after an on-air tiff with Dylan Ratigan caused Macke to send a drunk email later that night, joking that he was going to “break” D-Rat’s legs, which the former Fast Money host proceeded to report to HR. (Really.)
This is somewhat overdue, but our default is to avoid tough conversations, preferring instead to bury our feelings and live in denial. But the time has come. As you may or may not know, we love (most) Dealbreaker readers and are happy to have you here. And we want you to feel comfortable, and not like a guest in our house. We’ve invited you to not only take off your shoes and put your feet up on the table, but treat it like the ex-frat house you so deeply miss and spend nights weeping over. But– there’s always a but– we draw the line when you start pissing on the walls or defecating in the stairwells, which a select few of you are under the misguided impression is appropriate. This isn’t Merrill Lynch. Not only is it not okay but it makes us– how to put this– want to take a walk over to your places of business and wring your god damn necks or run you over (and over and over) with the Zamboni we have on loan or at the very least, yell “shut the fuck up, asshats.” However, we’re more evolved than that. So. Some ground rules will be laid out. They are not up for discussion or interpretation, and believe me when we tell you we will go prison warden crazy on the asses of those who fail to comply and/or dispatch Charlie Gasparino to take care of whatever needs taking care of. Don’t make us go to an all-registration format. You won’t like it, and SteveInStamford has already been snagged. Join us as we review (for those of you who don’t like words, feel free to refer to the tag, and have a great day):
Treasury Secretary Timothy Geithner said the U.S.’s $700 billion financial rescue package can’t be used to aid
Lehman Brotherscities and states facing budget crises.
The law “does not appear to us to provide a viable way of responding tothe issues that Lehman Brothers facesthat challenge,” Geithner told a House Appropriations subcommittee in Washington today. Among the hurdles: Money from the Troubled Asset Relief Program is reserved for financial companies, he said.
The Treasury chief said he will work with Congress to helpinvestment banksstates such as California that have been battered by the credit crunch and are struggling to arrange backing for municipal bonds and short-term debt.
Geithner Says TARP Can’t Help U.S. States Solve Budget Crises [Bloomberg]
Even now Marc Dreier’s assets are being fire-saled away. What an awful pity. Perhaps someone should have pointed out, however, that “Dreier’s Escape” was sort of slow for a get-away craft.
Marc Dreier’s Fire Sale at Sea [Cityfile]
