An artist's rendering
Back in January, SAC Capital amassed a 5.3 percent stake in Domino’s Pizza, making it the fifth largest investor, at 3.2 million shares. While Cohen didn’t have any plans to meddle with management, behind the scenes he did do his part to enhance the brand, not only in an attempt to maximize profits but out of a love for bread, sauce and cheese. Little tweaks included: use of the DPZamboni as the standard delivery vehicle (it can do 150 on 95), product placement that involved getting Domino’s featured in a few pizza delivery-boy themed pornos, and tasking SAC employees with slapping slices out of the hands of anyone seen eating a competitor, putting a finger in their face and warning “that’s one” (after one you don’t want to know what happens). Things were good. REALLY good. They were double penetrating the market and Steve had big plans for the future. Unfortunately, SC’s had to significantly reduce his stake over the last few months, after what we’re assuming was a difference of opinion based on this: Continue reading »
After decades of responding to tips about fraud by writing notes on napkins and then throwing them away, the Securities and Exchange Commission finally got itself some computers and is excited to put them to use. Legitimate use. First up: figure out if maybe the computers are in fact the problem.
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Victoria police said they received a call Monday of a possible poisoning at a downtown office building on Vancouver Street. Three employees, all at once, had been taken to hospital with similar symptoms, including light-headedness, numbness in the limbs and disorientation. Investigation led to the office refrigerator and some brownies which, it turned out, had been baked with marijuana. Further inquiries revealed all three workers had eaten the baked treats. The brownies had been brought in by one woman who had discovered them in her freezer at home. Her son had baked the chocolate treats a year ago, stored them in the freezer and forgotten about them. The investigating officer confronted the son, who admitted to baking the brownies. No action was taken even though a criminal charge of possession of a controlled substance or administering a noxious substance could have been laid. However, it is expected that the son will take part in community work to hold him accountable. [TC]
The Germans would like to put it out there that they have no plans to “win market shares” by purging employees, despite reports suggesting otherwise. Continue reading »
Probably not, no. The Wall Street Journal reports today that the Fed asked BofA what it would do, just hypothetically, if it got sued even more than it’s already been sued. You might expect “find forty more Warren Buffetts” but BofA has actually got a trickier trick up its sleeve:
Executives of the bank recently responded to the unusual request from the Federal Reserve with a list of options that includes the issuance of a separate class of shares tied to the performance of its Merrill Lynch securities unit, these people said. Bank of America purchased Merrill Lynch in 2009, and it has become the bank’s most profitable division.
Chief Executive Brian Moynihan isn’t expected to pull the trigger soon, if ever, on the creation of a so-called Merrill Lynch tracking stock. Such a move would raise money from investors but could be viewed as counter to Mr. Moynihan’s strategy of knitting together the disparate parts of the franchise into a cohesive whole.
This seems like a pretty far-fetched, low-down-the-list option. The Journal points out that BofA probably wouldn’t get any valuation bump for Merrill by issuing a tracking stock, and that “If anything, a tracking stock would call into question whether the business is being fully integrated into BofA” and whether BofA is committed to holding on to it. Henry Blodget, on the other hand, thinks that selling tracking stock wouldn’t go far enough – that BofA could raise more cash, and please Merrill Lynch bankers who feel undervalued at a North Carolina commercial bank, by actually re-IPOing Merrill. Continue reading »
“Our fund declined 13.7% in August vs. -5.4% for the S&P 500, -4.0% for the Dow and -6.4% for the Nasdaq. Year to date, it’s down 22.1% vs. -1.8% for the S&P 500, +2.1% for the Dow and -2.2% for the Nasdaq. On the long side, our portfolio got clobbered across the board despite generally good company-specific news regarding our major holdings…In the rest of our letter, we discuss our annus horribilis, the concept of guaranteed underperformance, how we’ve built our business to withstand tough times, and six stocks: J.C. Penney, Iridium, Grupo Prisa, Goldman Sachs, Wells Fargo and Dell.” Continue reading »
Fresh Scrutiny Of BofA (WSJ)
U.S. regulators have pushed Bank of America Corp. to show what measures it could take if conditions worsen for the Charlotte, N.C., lender, according to people familiar with the situation. Executives of the bank recently responded to the unusual request from the Federal Reserve with a list of options that includes the issuance of a separate class of shares tied to the performance of its Merrill Lynch securities unit, these people said. Chief Executive Brian Moynihan isn’t expected to pull the trigger soon, if ever, on the creation of a so-called Merrill Lynch tracking stock. Such a move would raise money from investors but could be viewed as counter to Mr. Moynihan’s strategy of knitting together the disparate parts of the franchise into a cohesive whole. Its inclusion on the list as a theoretical option shows the bank is considering all possibilities as it wrestles with an array of problems weighing down its shares.
Big Banks Face Suits On Mortgage Bond Losses (WSJ)
The Federal Housing Finance Agency, which is charged with conserving the assets of the failed mortgage giants, could file the lawsuits in the coming days, these people said. The suits are likely to allege that mortgages that were securitized by Wall Street firms and other issuers misled investors about the quality of the loans. The FHFA filed the first of what could be around one dozen lawsuits in July against UBS AG, seeking $900 million in damages. UBS, in a statement at the time, promised to “vigorously” defend against all charges in court. The lawsuit alleged that UBS made false statements about 16 mortgage-backed securities that it sold to Fannie and Freddie from fall 2005 to summer 2007, including overstatements of borrowers’ capacity to repay loans. The agency’s acting director, Edward J. DeMarco, declined to discuss the lawsuits in an interview last week but said there were “more to come.”
August Was Rotten For Many Hedge Fund Managers (Reuters)
For August, which began with a dramatic market sell-off and ended with tropical storm Irene drenching east coast hedge fund hubs in New York and Connecticut, hedge funds, on average, lost 5.85 percent.
Roubini: We Are In A ‘Worse Situation’ Than 2008 (CNBC)
Speaking at the Ambrosetti Forum on the shores of Lake Como, near Milan, Roubini said in an interview: “We are in a worse situation than we were in 2008. This time around we have fiscal austerity and banks that are being cautious.”
On 30th anniversary, HP launches limited-edition financial calculator (VentureBeat)
Hewlett-Packard is marking the 30th anniversary of its HP 12c Financial Calculator today by launching a limited-edition version aimed at nostalgic fans. HP calls this machine the “gold standard of business calculation,” and the Museum of HP Calculators calls it the “calculator that wouldn’t die.” Continue reading »
Raise your hand if you work with alternative investments. Continue reading »
The rivalry between two of the biggest names in the multi-trillion dollar global bond market, Bill Gross and Jeffrey Gundlach, has gotten more than just personal – after one appears to have claimed he was asked to take the other’s job…”PIMCO wants me to succeed Gross,” consultant Roger Brossy, in court testimony, recalled Gundlach saying in early 2009. And in a similar vein, Michael Conn, the executive assistant to TCW CEO Marc Stern, said in August 2009 that Gundlach remarked “that PIMCO would love to have him as a replacement for Bill Gross.” [Reuters]
The cheery infernal canines at Cerberus Capital Management have been pretty consistent in saying that (1) they’d rather not close on their deal to buy Innkeepers out of bankruptcy, (2) it’s because there’s been a material adverse effect, and (3) no, thanks, they’d rather not tell anyone what that MAE was. And in “anyone” they’re going to include the bankruptcy court, as they demonstrated yesterday. The judge remains curious, however, and set a trial for October:
Judge Chapman sympathized with Innkeepers’ desire to resolve the MAE issue as quickly as possible, citing widespread media coverage about the uncertainty of the deal.
She rejected Cerberus lawyer Adam Harris’ argument that Innkeepers should have done more to affirm its readiness to close the deal in August.
“Come on, Innkeepers was ready to close,” she said. “They were there. It’s not like asking a girl to dance. You didn’t need to hear from them the next day, saying: ‘We’re really, really ready to close.’”
Cerberus is not gambling everything on its strategy of never, ever saying what the MAE was. It released a statement saying:
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