Corporate venture capital has begun to rival “traditional” venture capital and angel investing in its importance as an investment source for healthcare industry innovation. However, unlike VCs and angels, there is a dearth of information on how the various players in the corporate venture sector operate.
“Jennings asked him to stop somewhere for food before taking the highway, so he took […]
“Your BNP bonus story from earlier today missed the part that has BNP employees really rattled. The 4th and final deferred payment of the 2008 “retention bonus” was not paid out. It covered most employees who were here in 2008 and was pulled back because the bank fixed income department didn’t cover ROE target. We were told on Feb 22 that we did not reach the 14.5 % target. ROE calculations are not clean and employees (including Sr. Management) asked to see exactly what was included in the calculation. The bank refused. Despite frequent attempts they’re adamant about not releasing ROE calculations and acknowledged that we had 2.8 BB € write down on Greece. The CMIP plan covered hundreds of BNP employees. Clawbacks make sense but it’s never happened on such a wide scale with so little information. What does 2008 comp have to do with the 2012 European crisis? Absolutely nothing….it was like stealing.”
Former New York Mets star and financial guru Lenny Dykstra was sentenced to three years […]
The daily Seamless stipend is considered sacred for employees, and any abuse of the system appears generally overlooked by higher-ups. When Lehman Brothers went under, for instance, Morgan Stanley lowered the Seamless limit from $30 to $25, much to the anger of workers. “People went nuts,” recalls a former employee. “Every so often there were these fireside chats with [Morgan Stanley CEO] John Mack ‘Da Knife’ and a collection of analysts. One of the women on the call asked Mack to raise the limit to $30 again. Mack, not really having paid much attention to expenses, was surprised to hear it had been reduced. Concerned, he asked her why she needed $30 instead of just $25. She said that with the new reduction, ‘I can’t order my Perrier anymore.'” The next day, as legend has it, there was an entire case of Perrier on her desk–courtesy of John Mack.
In related news, the Morgan Stanley Seamless stipend is currently at $20. And while filing formal complaints at the top might have worked when MS was a free-for-all orgy of sparkling water and Italian pastries and whatever else your heart desired,** anyone considering pleading his/her case to James Gorman re: why this just won’t do should also think about boxing their shit up first, lest a hasty exit be necessary.
**Particularly if what your heart desired was a pair of fierce as fuck shoes.
The shareholder meeting to approve the sale of a public company is always a special occasion, both intense and bittersweet. Shareholders who have loyally stood by the target through its ups and downs over the years want to take some time to say goodbye, but they also know that the debate will be lively and spontaneous and that anything can happen: one passionate orator can sway the crowd for or against the deal. With so much riding on the meeting, space is at a premium; smart shareholders book their flights early, and I would not be surprised if El Paso shareholders camped out outside the Hyatt Regency Houston*, 1200 Louisiana Street, Houston, Texas 77002, far in advance of the shareholder meeting scheduled for 9 a.m. tomorrow. And they will be distraught to learn that the meeting was just moved to Friday.
No, just kidding, nobody goes to these** and they’re pointless formalities. You can tell because:
El Paso today said it was adjourning the shareholder vote on its proposed sale to Kinder Morgan until Friday, instead of Tuesday, following a judge’s criticism of the company’s sale negotiations.
But at the same time, El Paso said as of Friday it has received votes from 70% of the outstanding shares, with 98.5% of those shares voting in favor of the deal. That tally is not official and could change. Shareholders that had already cast their ballots now have until Friday’s deadline to change their votes. A simple majority is all that is needed for the vote to be approved.
Votes could change until Friday. ARE YOU DYING OF SUSPENSE?
I guess everyone already knows this but here we are with an internet so it bears repeating:
Shareholder litigation challenging merger and acquisition (M&A) deals has increased substantially in recent years. To study this increase and characterize the recent litigation, Cornerstone Research and Professor Robert Daines of the Stanford Law School reviewed reports of M&A shareholder litigation in Securities and Exchange Commission (SEC) filings related to acquisitions of U.S. public companies valued over $100 million and announced in 2010 or 2011. We found that almost every acquisition of that size elicited multiple lawsuits, which were filed shortly after the deal’s announcement and often settled before the deal’s closing. Only a small fraction of these lawsuits resulted in payments to shareholders; the majority settled for additional disclosures or, less frequently, changes in merger terms, such as deal protection provisions. Interestingly, while requiring additional disclosures is a common outcome, we have not encountered a case in which shareholders rejected the deal after the additional disclosures were provided.
That’s from this blog post; the slightly longer paper is here. The emphasis is mine and, y’know, look at it: every M&A deal is challenged (actually 96% of deals over $1bn), virtually none (5%) of the challenges result in any improved payment to shareholders, and all the terrible information about conflicts that plaintiffs’ lawyers discover somehow never convinces shareholders to change their votes.
The one constant is that plaintiffs’ lawyers get paid – an average of $1.2mm in the settlements that Cornerstone and Daines looked at. These suits often focus on incentives of the target’s investment bankers, who are paid only if a deal is completed; I suspect those bankers would love to be in an industry where they could be paid on 100% of assignments while only succeeding at 5% of them.
The El Paso case is interesting because judge is pretty pissed at the conflicts there and how they were handled, and sort of made known that he was thinking about awarding damages to El Paso shareholders – possibly in the form of judicially raising the deal price by 68 cents or so. (That’s the difference between, roughly, the price that KMI and EP ultimately agreed on and the higher price of $27.55 in cash that KMI had initially offered.)
That’s pretty rough justice. Your model of merger negotiations could be that you negotiate to the one market-clearing price where, for a penny more, the acquirer would say no, and for a penny less, the target would say no, but that of course isn’t the case. There’s just a range of plausible prices and you sort of hope that the deal shakes out in that range based on negotiating acumen or whatever on either side. You sort of hope – I do, anyway – that it doesn’t shake out based on a judge picking a number out of a hat.
You see that here. Kinder Morgan of course has every incentive now to testify that the final price – call it $26.87, loosely – was as high as it was willing to go, and that it would have walked if El Paso had pushed for any more. But it’s willing to close the deal even though it seems like, I dunno, a 50/50 chance that a judge will in effect force it to $27.55.
And El Paso shareholders – well, maybe they were screwed by missing out on the chance to get paid $27.55. But of course if that was the only price they were willing to sell at, they wouldn’t be selling at $26.87. And 98.5% of them seem fine right there.
El Paso Delays Shareholder Vote, But Early Tally Shows Approval Likely [Deal Journal]
El Paso Delays Vote on Kinder Morgan Deal (by a Few Days) [DealBook]
Developments in M&A Shareholder Litigation [Harvard Law School Monstrosity]
* As it happens I’ve probably spent more time at that hotel than any other in the world, and would be remiss not to recommend the burger at the Shula’s in the lobby..
** I actually went to one once and it was exactly what you’d expect: some executives say nice things about each other for 20 minutes, then about half a dozen retirees get up one at a time to be like “I remember when stamps were a nickel.”
These days, Sonia Jones, at 44, is a walking advertisement for the physical benefits of […]
[New York Times] 1. What does he bench? 2. Would it have killed the photographer […]
Greek Bond Swap Deal Rests on Knife Edge (FT)
People close to some bondholders warned other investors to take seriously threats by policymakers that if the deal fails Greece will default on its debt. “Some investors seem to think they will be rescued. That just isn’t the case,” one said. People involved in the deal denied that there was any nervousness about the outcome but nobody was willing to guess how high the participation rate would be.
Slim Beats Gates in First Daily Billionaire Ranking (Bloomberg)
If you like obsessively measuring your penis you’ll love this: Carlos Slim, the telecommunications tycoon who controls Mexico’s America Movil SAB, is the richest person on Earth, according to the Bloomberg Billionaires Index, a daily ranking of the world’s 20 wealthiest individuals…The Bloomberg Billionaires Index takes measure of the world’s wealthiest people based on market and economic changes and Bloomberg News reporting. Each net worth figure is updated every business day at 5:30 p.m. in New York. The valuations are listed in U.S. dollars.
Zuckerberg Doesn’t Rank on Billionaire Index (Bloomberg)
Sad trombone: At the time of the offering, Zuckerberg is likely to sell about $1.75 billion of Facebook stock to pay off the tax obligation he will incur when he exercises options to buy 120 million shares. The combined transactions will dilute Zuckerberg’s stake from 28.4 percent to about 21 percent. If the company maintains its projected $100 billion valuation, that would make Zuckerberg worth about $21 billion, less than the $28.4 billion implied by his stated ownership. At that net worth, Zuckerberg isn’t rich enough to qualify for the Bloomberg Billionaires Index, a new daily ranking of the world’s 20 richest people. The 20th spot is currently occupied by L’Oreal heiress Liliane Bettencourt.
AIG to Sell $6 Billion In Asian Insurer’s Stock (WSJ)
American International Group Inc. kicked off a $6 billion sale of shares in Asian life insurer AIA Group Ltd. on Monday morning in Hong Kong, moving forward with plans to repay another chunk of its 2008 U.S. bailout. AIG said the shares will be placed with institutional investors and expects them to be priced by Tuesday. The 1.7 billion shares up for sale represent around 14% of AIA, less than half the 32.9% stake AIG holds, according to a term sheet. Proceeds from this week’s sale have been earmarked to repay the U.S. government, which rescued AIG from near collapse during the financial crisis with a record $182.3 billion bailout that has been partially repaid. The Treasury Department still has to recoup about $50 billion in taxpayer funds, and about $8.4 billion of that amount will be repaid when AIG sells the AIA shares and other assets, including its airplane-leasing subsidiary. The rest of the money—roughly $42 billion—is supposed to come from the government’s sale of its 77% stake in AIG.
Lenders Stress Over Test Results (WSJ)
The 19 biggest U.S. banks in January submitted reams of data in response to regulators’ questions, outlining how they would perform in a severe downturn. Now, citing competitive concerns, bankers are pressing the Fed to limit its release of information—expected as early as next week—to what was published after the first test of big banks in 2009.
JFK Airport search of drug mule who said she was three months pregnant reveals she carried $20,000 worth of heroin (NYDN)
Awoyemi, coming off an Air France flight from Paris to New York and wearing a “loose-fitting dress” was asked whether she was pregnant, and the woman replied that she was three months along, Homeland Security special agent John Moloney stated in a complaint filed in Brooklyn Federal Court. The customs inspector noted that Awoyemi appeared nervous, so she was selected for a pat-down search. After feeling a “bulge” in Awoyemi’s groin area, the situation escalated to a partial strip-search, according to the complaint. When she dropped her drawers, Awoyemi’s scheme fell apart. Pellets containing brown powder began dropping from her groin area — and the substance tested positive for heroin. Awoyemi was taken to a medical facility at the airport, where the federal cops administered a pregnancy test that came back negative. An X-ray showed more pellets in her intestinal tract, and by the end of the day she had passed about 25 pellets of heroin in a special commode that Customs officials have dubbed the “Drug Loo.” The high-tech toilet sanitizes the incriminating evidence.
More On The Morgan Stanley Executive Charged in Cab Hate Crime Attack (Bloomberg)
Jennings left a bank holiday party sometime before 11 p.m. and headed to the street, where he was supposed to be met by a car service, Jennings said. He hailed Ammar’s cab after the livery car didn’t appear, according to the report. Ammar said Jennings agreed on the fare and told him he would pay cash. Jennings fell asleep during the trip, the driver said. Once at the destination, though, Jennings said “he did not feel like paying” because he was already home, Ammar told police…When Ammar threatened to call the local police, Jennings said they wouldn’t do anything to help because he pays $10,000 in taxes, according to a report by the Darien police department…The Morgan Stanley executive told police he was afraid to come forward after the incident because the cab driver knew where he lived. He then went on vacation to Florida, police said. Jennings told officers he subsequently called his lawyer after a friend told him police were looking for a suspect in the stabbing incident, according to the report.
JPMorgan Star To Launch Own Hedge Fund (FT)
London-based Mike Stewart, JPMorgan’s global head of proprietary trading, and former head of emerging markets, is set to start his own new hedge fund, Whard Stewart, in the second quarter, people familiar with his plans said. Mr Stewart’s emerging markets trading team at the bank is expected to join him. The departures come despite word last week that US regulators will probably delay implementation of the so-called “Volcker rule” , under which banks are in effect banned from proprietary trading.
Friends With Benefits (NYP)
Unlike his fallen pal Raj Rajaratnam, former Goldman Sachs director Rajat Gupta appears to have no shortage of character witnesses willing to testify at his upcoming insider trading trial. Indeed, dozens of well-heeled supporters are already putting their names on the line for the former consulting titan, including world-renowned speaker Deepak Chopra and Mukesh Ambani, the ninth-richest man in the world. “I have never seen him ask for anything for himself, always for the greater good,” Ambani, the chairman of Reliance Industries, said recently on a little-noticed website called friendsofrajat.com.
Cigarettes: The Most Stable International Currency (BusinessWeek)
Cartons of Good Cat brand cigarettes are selling for as much as RMB5,600 (US$890) per carton in the city of Xi’an, in Shaanxi Province. The suspicion, according to reports this week, is that they are being used to bribe officials.
Election Year Poses Challenge For Stocks (WSJ)
The Dow is off to its best start to a year since 1998. But if history is a guide, this exuberance soon could give way to the first pangs of electoral anxiety. In a typical presidential-election year, stocks start well but slip into a funk by spring, according to Ned Davis Research, which has measured election-year trends back to 1900. At least in part, the slump reflects the electoral unknowns, Ned Davis has concluded. In a good year, investors deal with their jitters by late summer or early autumn and stocks recover. People get more comfortable with the November election outlook and put money back into stocks. This year, with the Dow Jones Industrial Average up 6.2% in just over two months, many investors and analysts expect a pullback soon. The looming election adds to ambient uncertainty about European debt and U.S. and Chinese growth prospects. Tony Welch, an analyst at Ned Davis Research, says the Dow could pull back 5% or 6% in the coming weeks. “We think the election-year trend could be strong this year,” Mr. Welch says. “The market prefers certainty. It doesn’t like unknowns.”
Ochocinco was urinated on by a lion and lived to tweet the tale (YS)
The New England Patriots receiver was at a charity event in Miami on Saturday night when he ran into the caged animal. According to Ochocinco’s Twitter account, the king of the jungle proceeded to become the urine sprayer at the party. Tweets included: “Swear to lil 10 pound bearded baby Jesus I just got peed on by a real “Lion” I’m not lying either. And y’all wonder why I don’t go out!!!!!,” “It’s not funny i have on my good church clothes,” and “I wasn’t that close, he sprayed like a water gun.”
$$$ Facebook Adds Citi, Credit Suisse, Deutsche Bank on IPO [Bloomberg]
$$$ Goldman CEO Blankfein deposed in insider case [Reuters]
$$$ Greek Official Warns Debt Holdouts [DealBook]
$$$ John Lanchester talks about why there’s so little fiction about money [FT]
$$$ And when making such comparisons between economics and physical science, there’s yet another point: what we call “microfoundations” are not like physical laws. Heck, they’re not even true. Maximizing consumers are just a metaphor, possibly useful in making sense of behavior, but possibly not. [Paul Krugman]
$$$ Hoboken Steels for Wave of Drunken Revelers [Bloomberg]
Is Mike Mayo the most powerful man on Wall Street, able to bend CEOs and bank chairmen to his will with the greatest of ease? If you’d asked us days ago we would have said “Well he does have a varsity analyst jacket but eh.” Today? The answer is we have no idea but Dick Parsons is certainly helping make that case by not only complying with the demands of Mayo but doing so on his specified time schedule. [WSJ, Earlier: “I think that Parsons should leave in the next two weeks,” said Mayo on Feb. 23]
There are so many good stories in Jesse Eisinger’s piece in ProPublica about how the […]
William Bryan Jennings is the co-head of North American fixed-income capital markets at Morgan Stanley, though his responsibilities have been passed onto a coworker for the time being until a particular matter is “resolved.” That matter would be a cab ride he took on the evening of December 22, which resulted in Jennings being charged with “second-degree assault, theft of services and second-degree intimidation based on race or bigotry.” At present, there are two conflicting stories about what happened.
According to the cabbie, Jennings was driven from Manhattan to his home in Darien, CT, at which point he refused to pay the $200 cab fare and instead began “threatening the driver and using racial slurs,” before intentionally stabbing the guy’s hand with a “pen knife” that he “uses for fishing.” According to Jennings’ lawyer, upon arriving at in Connecticut, WBJ, who colleagues have described as the “nicest guy you’ll meet,” was appalled to learn of the “exorbitant amount” the driver was charging (which WBJ claims had been upped to $300). After refusing to pay, the driver supposedly told Jennings he was “going to take him back to the city,” at which point Jennings pulled out the pen knife he had on him and “demanded to be let out of the car because he was fearful for his safety,” cutting the driver who WBJ “did not intend to hurt” after he put his hand through the dividing window. Jennings’ lawyer has 1) denied the racial slurs and 2) said it’s “mind-boggling” that his client was charged and not the other way around (though, according to reports, the driver called the police at 12:30am to report the incident, and Jennings never did).
As none of us were there at the time, we should refrain from speculating as to which half of the he said/he said is telling the truth. Though clearly there are a couple of important takeaways here, including but not limited to the fact that if one is going to snub the Metro North, one should expect to pay, figuratively but more so literally. Manhattan to Connecticut? I’ve had rides from the UWS to Midtown East cost upwards of $40. Let’s not do this dance.
Financial Crisis Amnesia (WSJ)
Tim Geithner: “My wife occasionally looks up from the newspaper with bewilderment while reading another story about people in the financial world or their lobbyists complaining about Wall Street reform or claiming they didn’t need the Troubled Asset Relief Program. She reminds me of the panicked calls she answered for me at home late at night or early in the morning in 2008 from the then-giants of our financial system. We cannot afford to forget the lessons of the crisis and the damage it caused to millions of Americans. Amnesia is what causes financial crises. These reforms are worth fighting to preserve.”
IMF Says Threat Of Sharp Global Slowdown Has Eased (Reuters)
So that’s nice.
Life as Libor Traders Knew It Seen as Abusive by Investigators (Bloomberg)
Regulators probing the alleged manipulation of global interest rates are focusing on what traders involved in setting the benchmark say were routine discussions condoned by their superiors…“A few hundred people, mostly based in one city and sitting in close proximity to each other, set an index rate for trillions of dollars of securities with little or no oversight,” said Mark Sunshine, chief executive officer and chairman of Veritas Financial Partners, a Florida-based firm that provides loans to businesses and real estate companies. “That cannot continue. The mechanism itself, the oversight and the penalties if violated, are woefully inadequate.”
Twitter’s Slow Road To IPO (WSJ)
In just six years Twitter Inc. has become the world’s digital soapbox, amassing more than 100 million monthly users—from everyday people to Lady Gaga to Middle East protesters—who use the service to spread pithy updates and breaking news. Yet despite the service’s growing influence on society and culture, the business behind it still has a ways to go until it’s ready for an initial public offering. To understand why, travel to Cincinnati, where last June Twitter planted a staffer blocks from Procter & Gamble Co.’s headquarters and assigned him a critical task: Teach the country’s biggest advertiser to use Twitter and buy its ads. But when P&G spent $150 million to promote the launch last month of a Tide laundry detergent, the company bought magazine pages, billboard spots and television commercials during the Academy Awards—and no Twitter ads. “All [P&G] brands are asking questions about what to do with Twitter and how to leverage it; nobody really had a clear, lean answer,” said the staffer, J.B. Kropp.
US Seeks Dismissal Of Lawsuit On AIG Takeover (Reuters)
In November, Hank Greenberg’s company, Starr International Co, sued the U.S. government for $25 billion, calling the 2008 federal takeover of the insurer unconstitutional. Starr sued the government in the U.S. Court of Federal Claims in Washington, D.C., which handles lawsuits seeking money from the government. It brought that lawsuit on behalf of itself and other AIG shareholders…In a filing with the U.S. Court of Federal Claims in Washington, D.C., on Thursday, the government said although Starr may disagree with the terms to which AIG agreed, any loss resulting from that agreement should be borne by AIG and its shareholders, and not the public.
Obama Back On Wall Street (Politico Morning Money)
Obama raised just north of $5 million for his re-election campaign and the DNC at four events in NYC last night including a swank dinner ($35,800 per person, $71,600 per couple) at Jean-Georges Vongerichten’s ABC Kitchen on East 18th Street. The dinner, the first Wall Street-heavy event since Obama doubled down on his proposed bank tax, was hosted by a handful of the President’s stalwart industry supporters including Robert Wolf, Blair Effron, Mark Gallogly, Marc Lasry and Orin Kramer.
Sex Work Among Medical Students On the Rise? (ABC)
Sex work among medical students is on the rise, claims a new editorial, published in the journal Student BMJ. The UK-based publication noted that students are likely seeking extreme measures to deal with their financial hardship. One in 10 students knows of another who participated in prostitution to pay their medical student loans, according to the editorial. “Mounting evidence suggests that more university students are engaging in prostitution as a means to pay increasing tuition fees, growing debts, and high living costs,” Jodi Dixon, the author of the editorial, wrote. “With escalating debts, students in the United Kingdom may view prostitution as an easy way to get rich quick.”
Greek Swaps Headed Back to ISDA Committee (Bloomberg)
Holders of credit-default swaps on Greek bonds shouldn’t tear up their contracts after yesterday’s ruling against a payout. The International Swaps & Derivatives Association said the swaps hadn’t been triggered by the European Central Bank’s exchange of Greek bonds for new securities exempt from losses taken by private investors. The group will now probably be asked to determine whether collective action clauses, or CACS, being used by Greece to impel investors to participate in a wider exchange of bonds that would trigger the swaps.
Madoff moneyman Merkin near $400M AG deal (NYP)
After a bitter three-year legal battle, Ezra Merkin, the Manhattan moneyman who funneled more than $2 billion to convicted Ponzi king Bernie Madoff, is nearing a settlement with the New York attorney general that could have him shell out as much as $400 million. Sources said the settlement with AG Eric Schneiderman would recover the bulk of the $470 million in fees the notorious middleman pocketed from investing his clients’ cash with Madoff.
Game Changer For Zynga: No Facebook (WSJ)
The San Francisco-based company, whose offerings have long been associated with Facebook as well as apps for mobile devices such as Apple Inc.’s iPhone, said a “beta,” or prerelease version of what it calls the Zynga Platform, will initially allow customers to play five of its popular titles—”CityVille,” “Hidden Chronicles,” “Zynga Poker,” “CastleVille” and “Words With Friends”—from its website. Zynga said more of its games will become available on the website over time.
Cops Ticket Woman For Resting Injured Leg On Seat In Deserted Subway Train (Gothamist)
Brooklyn resident Kate Wilson was riding the D train home to Sunset Park around 1 a.m. one morning in February when several police officers entered her subway car at 36th street. The subway car was mostly empty, with plenty of empty seats, and Wilson was resting her right leg—which she had injured in a race that day—on a corner of one seat. What followed was an absurd yet all too familiar encounter with overzealous, quota-filling transit cops and ended with a $50 summons.
$$$ Eurozone delays Athens rescue funds [FT]
$$$ Loans to Banks Cool Debt Crisis [WSJ]
$$$ An explanation of that Barclays tax trade, with cartoons [FTAV]
$$$ Sofa King can no longer advertise prices that are “Sofa King low” in the UK [Language Log]
$$$ Mitt Romney has worn a garbage bag for rain gear
$$$ Fed’s Dilemma: Markets Want Both Growth—And Stimulus [CNBC]
$$$ Facebook seeking bigger credit line [Reuters]
$$$ Unlike other types of complex financial transactions, insider trading prosecutions usually do not require jurors to develop sophisticated knowledge of the financial markets or securities valuation. There is not a statutory definition establishing its parameters, so it can be applied to a wide variety of transactions, and the crime does not have complicated requirements for proving a violation. Prosecutors are cracking down on insider trading because there’s no law telling people what’s illegal and unsophisticated jurors will convict [DealBook]
$$$ Oprah’s Book Club makes people read less [MR]
$$$ The personal assistant of Paris Hilton’s sister’s hedge funder ex-husband Todd Meister was maybe dating him while she was stealing $1mm from him, or something like that [NYP]
Delaware Chancellor Leo Strine has a bright future in blogging if chancelling doesn’t work out for him. Here’s how he describes Kinder Morgan’s negotiations to buy El Paso, specifically KMI CEO Rich Kinder’s price retrade with EP CEO Doug Foshee:
Kinder said “oops, we made a mistake. We relied on a bullish set of analyst projections in order to make our bid. Our bad. Although we were tough enough to threaten going hostile, we just can’t stand by our bid.”
Instead of telling Kinder where to put his drilling equipment, Foshee backed down.
I umm … I’m pretty sure that that quote from Kinder is approximate.
Anyway, this is from Strine’s opinion refusing to block the KMI-EP merger from proceeding even though he is pretty pissed about some of the apparent conflicts of interest in the deal, including that Goldman Sachs owns almost 20% of KMI while also advising EP, that the lead GS banker owned some KMI stock that he didn’t disclose, and that Foshee negotiated the merger single-handed while also maybe thinking about possibly LBOing EP’s E&P business for his own self.
Lucrative though my current pseudoprofession is, I suspect that if Strine ever leaves the chancelling racket he’d probably prefer to try his hand at merging and/or acquiring. Certainly he is fond of dispensing tactical advice:
Has there ever been a person in your life you didn’t realize how much meant to you ’til they were gone? Who you would have treated better if you’d known your final day with was your last? Who you would have begged to stay? Who you assumed would be back eventually but as the weeks, months, and years crept on forced you to come to the hard realization that the next and only time you’d see them would be in your dreams, because they were never coming back? Whose permanent absence, once finally accepted it, hit you like a ton of bricks? Then you know how people involved with Bill Gross’s Mustache feel today. Once a
daily presence on the PIMCO manager’s face, the BGM went away for a while but it was assumed not for good because how could that be? Why would that be? It felt impossible. Then this happened:
Bloomberg’s Tom Keene: When does the mustache come back?
Gross: Never. My wife has finally adjusted, so it’s not coming back.
If you never got to say a proper good-bye, if you would have done things differently, if you feel like the wind’s been knocked out of you, if you can’t bear the thought of being alone tonight, join us as we light a candle in memoriam.
Key Chicago employees were away and a significant transaction was botched in the lead up […]
ISDA decided today that there has been no credit event for purposes of Greek CDS. Obvs! And by “obvs!” I mean what I said the other day, which is that with 100% certainty there’s been no credit event yet, but with 100% certainty there will be, so everyone should just chill out.
Except that it seems like that last part may be wrong. So go ahead and panic.
I used to make convertible bonds and some of my time was spent answering questions about what happened to things upon Events. The most popular was: what happens after a merger? If you have a convertible that converts into 10 shares of XYZ stock, but now XYZ is being acquired and each share of XYZ is being acquired for $30 in cash and 4.5 shares of PQR stock and a pony – what happens to the convertible? And the answer I would give usually started with “don’t trouble your pretty little head about it.” Like, it’s fine: you have a convertible that converts into 10 Things, and before the merger each Thing was an XYZ share, and after each Thing is exactly what an XYZ share transformed into, so you convert into $300 and 45 PQR shares and 10 ponies. It just works because it has to work. Economic interests follow without interruption from changes in form; derivative securities poof into derivatives of things that the underlying poofs into. There is no arbitrage!
That assumption is central to doing any sort of derivative work, and it spoiled me a bit. Sometimes people would come up with more complicated scenarios involving dividends, multiple-step transactions, weird splits and spinoffs and sales, etc. etc. And I would generally start from the bias “it has to work, so I am sure the document written in the way that works.” Where “works” means “the economics and intent of the trade are preserved after the change in form.” But of course the document was written by humans, often specifically me, and those humans, often including me, are fallible. So there may well be documents from my former line of work that don’t “work” in the sense that an issuer could do some structural tricks that would screw holders out of their economics – where the derivative doesn’t follow the underlying everywhere it might go. These tricks are unlikely enough that I don’t lose sleep over them. You can’t predict everything.
I sort of assumed that Greek CDS also had to just work but here is Felix Salmon at Reuters saying no. Lisa Pollack at FT Alphaville said something similar a week ago but I could not fathom that she meant it so I read it to mean something else. But she means it, and Felix does too. Go read it but the basic gist of this theory is:
In 2010, the 10 best paid hedge fund managers made a combined $17.53 billion. To […]