Archive for January 2012

Write-Offs: 01.31.12

$$$ Facebook readies to file US$5bn IPO, could grow [IFR]

$$$ Amazon Profit Beats, But Revenue Falls Short; Stock Slides [CNBC]

$$$ EU Targets Bank Bonuses That Fly in the Face of ‘Morality’ [Bloomberg]

$$$ Gupta Faces New Charges in Insider Trading Case [DealBook]

$$$ Einhorn Case Highlights Britain’s Broader Definition of Insider Trading [DealBook]

$$$ Colbert super PAC reports $1 million in donations [CBS]
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  • 31 Jan 2012 at 7:02 PM

Fred Goodwin Has Seen Better Days

The past couple years have not been what one might characterize as the best of times for former RBS CEO Fred Goodwin. After retiring from his post in November 2008, he missed out on helping the bank collect the award for biggest loss in British corporate history (£24.1 billion for the year), the windshield of his Mercedes-Benz S600 was smashed by a bunch of hoodlums, a brick was thrown through his window, and the banging of an underling came to light. He’s also had quite a bit of trouble getting a new gig on account of being “overqualified.” No, he’s had it pretty rough but the one thing that kept him going? That made life slightly more bearable? That kept him warm at night? The fact that he could look himself in the mirror and see an official Knight looking back. “Fuck ‘em if they can’t take a joke [vis-à-vis bombing a bank from the inside],” he’d say to himself. “One of us is a Knight and the other? Not so much.” When the neighborhood kids would throw shit throw shit at his house and spray paint “royal bum” on his front walk, he could at least comfort himself by muttering, “That’s Sir Royal Bum to you, thanks very much.” And now? He can’t even do that. Read more »

  • 31 Jan 2012 at 6:55 PM

Layoffs Watch ’12: Credit Suisse

The cuts won’t go down until the spring, so just something to keep in mind. Read more »

What is the best thing about these Jefferies bonuses? For me it’s this:

For 2011, we offered our employees the option to receive the stock portion of their year-end compensation in the form of either shares or cash, with the cash amount being equal to 75% of the grant-date amount of the stock that an employee would otherwise receive. The election resulted in a decrease to share-based compensation expense of approximately $23.3 million, as certain employees elected to receive reduced cash awards lieu of the full grant-date amount of the shares. This offset increased cash compensation expense by approximately $17.5 million. The net effect of this election on total compensation and benefits expense was a reduction of approximately $5.8 million. While these cash awards were fully expensed in 2011, they will legally vest in future periods.

When I first skimmed the headline I thought, okay, paying a 25% discount for liquidity makes sense. I, anyway, would be a lot wealthier had I gotten … really almost any percentage of my stock-based comp in cash rather than vaporizing most of it and leaving a small stub subject to a nondisparagement agreement when I left (I love you guys!), but that is neither here nor there. Because that’s not actually what the Jeffererers got. The people taking the “cash” got no more liquidity or vestedness or, um, cash, than the people taking the shares. They got … at a first approximation, they got an illiquid JEF bond. If they’re around, and Jefferies is around, and the cash is around, in three years or whenever this stuff vests, then they get a fixed amount of money. If not, not.

So the only thing that the Jeffers got for giving up 25% of their stock-based comp was … avoiding the risk that Jefferies stock would decline by more than 25%. Here’s a silly coincidence: Read more »

Remember a couple of months ago when former AIG CEO and current dog fancier Hank Greenberg sued the government for $25 billion because it had stolen AIG from him? We all had a good giggle at that but some people think he wasn’t entirely crazy. One of those people is friend of Dealbreaker and Stanford GSB student Ed Couch, who feels Hank’s pain but also has some doubts about his lawyers’ efforts on the case. We pass along his views on the complaint in case you are (1) Hank’s lawyers (give Ed a call!), (2) particularly keen on Hank getting or not getting, as the case may be, his deserved or undeserved $25bn from AIG’s government captors, or (3) just generally interested in the wonky mechanics of equity-linked voting and exchange procedures, which YOU DAMN SURE KNOW I AM but the rest of you can keep your own counsel. Here’s Ed: Read more »

Tough calls. Read more »


“How does Bill Ackman do it” is a question the investing community surely asks itself on a daily basis. Three words: Berkshire Mountains hideaway. Outsiders may figure in-depth research combined with skillful and ethical activism and a highly concentrated portfolio are the keys to Pershing Square’s success but, really, a 100-acre spread in upstate New York is the engine that drives this firm.

Specifically, the one found in Chatham, New York, that Ackman “scraped together the money” to buy in 2003, just months before his second act hedge fund launched, to arguably more success than its predecessor, Gotham Partners. Coincidence? Bill doesn’t think so. “This place has really good investing karma,” Ackman tells us. (Since buying the house, Pershing has had 21 percent compound returns. You do the math.) Is this information relevant in any way to your universe? If you’ve got $5 million to spare, a yen for sweeping views of the Berkshire mountains, and a desire to pump up lackluster returns it might be.

Despite spending many a happy (and profitable) weekend at the place over the last nine years, Ackman has with great reluctance and probably more than a few tears decided to put it on the market, having precious little time to make the (quick and painless!) trip up now that his three children have many an extracurricular commitment to tend to. According to Bill, he’s offering you “the deal of a lifetime” (and, in our professional opinions, we agree), when you consider 1) what he bought it for ($3.2 million, then put another $1.5 million in) and 2) what you’re getting. Things like: Read more »

Ryan Seacrest, the radio and TV producer and host of “American Idol,” garnered a commitment for as much as $300 million from Thomas H. Lee Partners LP and Bain Capital LLC to fund media ventures. The private-equity investors will provide capital to Ryan Seacrest Media to buy and develop companies, content and other properties, according to a statement today. Clear Channel Communications, the radio broadcaster controlled by the investors, will also participate…The accord deepens the ties between the private-equity groups and Seacrest, who hosts nationally syndicated radio shows carried by San Antonio-based Clear Channel, the largest U.S. radio broadcaster. Ryan Seacrest Productions makes “Keeping Up with the Kardashians,” the highest-rated show on the E! cable TV network, as well as spinoff programs. [Bloomberg]