$$$ Gorman Gets a Big Bump in Base Salary [DealBook]
$$$ Wasendorf Gets 50 Years [WSJ]
$$$ Tony James thinks private equity should maybe be renamed “clarity equity” [DealBook]
$$$ Tony James also thinks that “the hot credit markets are more of a negative” for private equity [Fortune]
$$$ No, Obama Will Not Tear Down Reagan’s Childhood Home Brick by Brick [DI]
$$$ World Class PhD Modellers – New Jersey – Hedge Fund – say no more [DBCC]
$$$ U.S. Sues to Halt Takeover of Modelo [WSJ]
$$$ Monte Paschi Rating Cut as Probe Digs Deeper Into Losses [Bloomberg]
$$$ “Very few people live their lives with wealth-maximization as their exclusive goal, and if Zuckerberg doesn’t want to maximize Facebook’s financial value nobody can make him.” [Slate / Matt Yglesias]
$$$ The perpetualisation of debt [FTAV]
Former Goldman Sachs trader Fabrice Tourre has only one tie left to the securities firm where he helped assemble an infamous bond deal: his legal bills. Mr. Tourre no longer works for Goldman, which put him on paid leave after the Securities and Exchange Commission accused him in April 2010 of misleading investors in a […]
[via Mark Frauenfelder]
We’ve narrowed it down to people who own or have access to a private jet and have been known to appreciate the birds of prey. So it could be Prince Alwaleed, and we want it to be because Team Citi could use a pick-me-up in the form of an impromptu falcon petting zoo day at HQ, but it could also be someone else. Help us out here.
When regular old bank analysts switch firms, people don’t tend to make a big deal about it. Gardening leave is taken, contracts are signed, key cards are distributed, new business cards are printed. Sometimes you’ll get an email address with updated contact information. That’s usually it. Dick Bové, as you all know, however, is no regular bank analyst. Which is following his departure from Rochdale Securities, potential employers didn’t interview him, he interviewed them, why his son/spokesman, Joe Bové sent out a press release announcing the final countdown to Bové Day, and why, when that blessed day arrived, it was celebrated with a three-course banquet and a little something called the Dick Bové Banking Manifesto.
So it looks like Apollo Global Management and Metropolous & Co. will be bringing back the Twinkie. And they’re willing to pay almost as much for that right as Hostess said it was worth—all of it—when it filed for bankruptcy.
We’ve talked a lot about bank capital today but there’s still time for one quick addendum. First, though, two rough-and-ready equations: Capital = cash paid in by shareholders plus retained earnings Capital ratio = capital divided by assets The first equation explains my puzzlement at the claim that Deutsche Bank “book[ed] a loss to boost […]
If you were going to try and extort money Bear Stears alum, how would you do it? Would you call him at his new job and talk trash about his wife? Would you call his house and tell his wife he was running around on her with another woman? Would you call his mother-in-law in New Jersey and breathe heavily into the phone? Or would you bring out the big guns and start sending pizzas, sometimes 20 at a time, to his home in New Canaan, as a sign you really meant business? Donato Anthony Minicozzi chose all of the above.
Among the many reasons typically cited by hedge fund managers who choose to run their business out of Connecticut instead of New York are: 1. The room to stretch their shit out 2. Proximity to the Long Island Sound 3. Convenience for those already living in the area. Some probably also believe that the Fairfield County is slightly safer than New York City. That you’re not going to get jumped walking out of the office or beaten with a tire iron because you messed with someone’s man or woman. OR WILL YOU?
Bank earnings season is always a little surreal, I guess because there’s an inherent surrealism about banking. Deutsche Bank reported earnings today,1 and those earnings had an up-is-down quality that Bloomberg’s summary captured in this amazing sentence:2 Deutsche Bank AG, Europe’s biggest bank by assets, exceeded a goal for raising capital levels as co-Chief Executive […]
Ed. note: This post appears courtesy of Techdirt. We’ll be sharing business-related posts from Techdirt from time to time on Dealbreaker. We’ve talked in the past about how unfortunate it is that the US Copyright Office seems almost entirely beholden to the legacy copyright players, rather than to the stated purpose of copyright law. That […]
Banks are opaque, or so I hear, and so the only way many people can stand to be around them is if they can have some sort of number to serve as a flashlight into all that opacity. One of the big numbers is Basel III risk-weighted assets, which are intended to, as the name […]
Deutsche Bank Swings To A $2.9 Billion Loss (WSJ)
In the fourth quarter alone, the bank took €2.9 billion in charges, €1 billion of which was for “litigation-related charges.” Mr. Jain said the charges “relate to developments in regulatory investigations and adverse court rulings which you are all familiar with,” but didn’t elaborate further. Deutsche Bank is currently embroiled in a number of legal disputes on both sides of the Atlantic, including the decade-long legal battle in the 2002 bankruptcy of Germany’s Kirch Media Group. It is also among the banks that are under official investigation for allegedly rigging interbank benchmark rates, including the London Interbank Offered Rate. The rest of the quarter’s charges were mainly related to losses from businesses bought before 2003, such as Bankers Trust and Scudder in the U.S., and impairments related to its investment in the Cosmopolitan Resort in Las Vegas and Maher Terminals in North America, which it put into an internal bad bank. The quarter’s net loss of €2.17 billion compares with a profit of €147 million a year earlier. For the full year, net profit was €611 million, down from €4.13 billion.
Deutsche Bank Beats Capital Goal as Jain Shrugs Off Loss (Bloomberg)
“We’ve galvanized Deutsche Bank around the achievement of our capital targets,” Jain, 50, said on a conference call with analysts. The loss “reflects a number of decisions we took to position Deutsche Bank,” he said.
Barclays, RBS May Pay Billions Over Improper Derivatives Sales (Bloomberg)
The lenders, including Lloyds Banking Group Plc and HSBC Holdings Plc, have set aside around 740 million pounds to cover the claims. Analysts say the total charges for the industry may be much higher than that after the Financial Services Authority said it found “serious failings” in reviews of product sales.
SAC And Elan Blasted By Investor Who Lost Nest Egg (NYP)
Ronald Weiland realized he’d made a bad bet in 2008, when he lost his $1 million nest egg trading shares of drug company Elan. What he didn’t know then was that the cards were stacked against him. Weiland now believes that he and other investors were played by Steve Cohen’s SAC Capital Advisors when the hedge fund giant — acting on information from a former trader accused of insider trading — abruptly dumped its huge long position in Elan and Wyeth and started shorting both stocks. “They had information that I didn’t have access to,” said Weiland, a 53-year-old former consultant for Arthur Andersen. “It’s totally a matter of seeing very wealthy people being able to game the system.” The big trading swing that netted $276 million for SAC and led to the arrest of former trader Mathew Martoma has also landed the firm in hot water. Elan investors have filed at least two lawsuits against SAC, accusing the firm of costing them millions, and several class-action law firms are looking to tee up more.
US Targeting Tax Evasion (WSJ)
On Monday, a federal judge in New York approved an Internal Revenue Service summons demanding still more records from UBS. According to court filings, the government now is focusing on U.S. taxpayers with accounts at smaller Swiss banks that didn’t have U.S. branches but served customers through a UBS account in Stamford, Conn.
Interactive Map: What NYC Neighborhoods Have The Most Public Drinking Complaints? (Gothamist)
Greenpoint, Williamsburg, the Lower East Side, Hamilton Heights, East Harlem and Washington Heights are the worst offenders—on the other hand, almost no one is getting in trouble in Midtown, the Financial District, Red Hook, Dumbo, and the Upper East and West Sides. Since we already know there can be a a historical correlation between public drinking and public urinating (and sometimes only the urinating part is public), we decided to look at public urination complaints too…Some conclusions from this comparison: Midtown East and Chelsea have way more urination complaints than drinking ones. Union Square, Greenpoint and Randalls Island are also urinary offenders. It seems like nobody on Staten Island cares about people urinating on their lawns, and same goes for anywhere west of East Flushing.
Blackstone Swings To Fourth Quarter Profit (WSJ)
As of the quarter’s end, total assets under management reached a record $210.22 billion, up 26% from the year earlier, as all of Blackstone’s investment businesses continued to see net inflows and carrying-value appreciation…Blackstone posted a profit of $106.4 million, or 19 cents a unit, compared with a year-earlier loss of $22.7 million, or five cents a unit. On the basis of so-called economic net income, the firm reported a profit of 59 cents a unit, versus a profit of 42 cents a unit a year earlier. Analysts surveyed by Thomson Reuters recently expected a per-share profit of 47 cents.
Ackman Ahead In Herbalife Bet (NYP)
Ackman has scored a gross profit of about $260 million on his $1 billion short bet against the nutritional supplements company, based on an estimated 20 million shares shorted at an average price of $50. Loeb, who bought 8.9 million shares at an average price of $32, is up $44.5 million. Ackman has widened his lead considerably. Just two weeks ago, his gross gain stood closer to $120 million while Loeb had made an estimated $108 million.
Threats Cloud Euro’s Flight (WSJ)
The euro, once on death’s door, is on a monthslong tear, rising Wednesday to its highest level since November 2011. But even some investors who helped propel the currency above $1.3560 Wednesday say it can’t fly much further. Europe’s economy is still in the doldrums, they say, and a stronger euro could make the situation worse. And with central banks elsewhere racing to push down their own currencies, boosting the relative value of the euro, the European Central Bank eventually could be compelled to join them.
Jobless Claims in U.S. Rose 38,000 Last Week to 368,000 (Bloomberg)
Economists forecast 350,000 filings, according to the Bloomberg survey median. The increase followed a combined 45,000 drop in the prior two weeks.
Guy Inadvertently Posts Public YouTube Video Inviting His Fiancée’s Best Friend Over for a Threeway (Gawker)
We’ve all been there. You’re super excited after getting the go ahead from your fiancée Cynthia to invite her best friend Zoey over for a threeway, so you hastily record a video introducing yourself to Zoey and letting her know that you’re totally open to having a threeway this week, next week, the week after that, whenever, anytime, today, or maybe tomorrow, whenever possible, and you’re just really excited to show her things that she’s never seen and do things that were never done before in a threeway. Then you hastily upload the video to your public YouTube account that 300 people are subscribed to, and await your threeway.
$$$ Is Renaissance Technologies Falling off the Mark? [II Alpha]
$$$ Draghi Bank of Italy Knew of Monte Paschi Missteps in ’10 [Bloomberg]
$$$ Venezuela’s bonds have had a 14.7% annual return [Bloomberg]
$$$ Goldman Sachs braces for bond market blow up [Fortune]
$$$ Treasury Posts Losses on TARP Auctions [WSJ]
$$$ “What is the problem with Internet trolls? Why do people dislike them so much? Is it just an example of following-the-herd mentality? Some kind of deeper prejudice? A love of bridges? What is the source of this animosity? Why does it perpetuate itself? Where did this prejudice come from?” [The Awl]
New versions of the BlackBerry mobile device won’t come equipped with BrickBreaker, a simple game that for years was installed on every BlackBerry and at its peak developed a cult following among traders and Wall Street executives. Richard S. Fuld, the former Lehman Brothers chief executive, became so addicted that in 2006 he had his […]
Speaking to Bloomberg Television at the World Economic Forum in Davos, Switzerland, George Soros cast doubt on hedge funds’ future ability to do better than the broader markets. “Since hedge funds are now a dominant force in the market, they can’t, as a group, outperform the market,” Soros said. The 82-year old added that managers’ […]
Is JPMorgan too big to manage the quantity of public confusion about its operations? Maybe? This Reuters story about how JPMorgan was betting against its own Whale trades is a bit silly: the fact that JPMorgan’s investment bank dealer desk may have been long (short) some of the instruments that JPMorgan’s Chief Investment Office was […]
Brandon Fradd is a former hedge fund manager who previously ran Apollo Medical Partners with a guy named James Melcher. Melcher claims that Fradd cheated him out of $6 million in profits. Fradd claims that Melcher was never owed those profits in the first place, as per their profit-sharing agreement. Initially, Fradd attempted to argue that because his former partner never made a stink about his cut while they were working together, he wasn’t entitled to anything after the fact. When that argument proved unconvincing, he turned to Plan B, the (alleged) forging of a document that conveniently contained “an amendment to the profit agreement [that] undermine Melcher’s claim.” Unfortunately for Fradd, someone on the other side had to go and call in an “ink expert,” which sent him scrambling to figure out Plan C, in order to the prison sentence that generally comes with forging documents. Let him know what you think. Please consider that he didn’t have much time to come with this:
The IntercontinentalExchange really, really wants the Liffe. Oh yea, and the New York Stock Exchange, too. Sure. But it’s really, really worried that those damned antitrust bureaucrats are going to screw them, as they are wont to do.
During the years of 2005-2009, I had the amazing experience of being a sommelier at Veritas Restaurant. At this time Veritas, arguably, had the best restaurant wine list in the US. I opened more great wines during those four years than I will probably ever open again in my career. One gentleman that opened more […]
MF Global’s Bankruptcy Nears Happy Conclusion (NYT)
On Thursday, a bankruptcy court will review a proposal that would return 93 percent of the missing money to customers like Mr. Desai, who lost his $580,000 nest egg in the brokerage firm’s chaotic final days. And the trustee who has submitted the proposal, James W. Giddens, has quietly identified a way that, if sent to the judge and approved, could plug the remaining shortfall for customers in the United States, according to people involved in the case. The broad push to make MF Global customers nearly whole, a goal now surprisingly within reach, is a remarkable turnaround from the firm’s 2011 bankruptcy filing when such a recovery seemed impossible. “I’m surprised that, magically, the money has shown up,” said Mr. Desai, a software account executive who, like most customers in the United States, has only 80 percent of his money. “I feel very relieved.”
Deutsche Bank Seen Missing Goldman-Led Gains on Cost Rise (Bloomberg)
Europe’s biggest bank by assets may post a loss of 210 million euros ($282 million) compared with a profit of 147 million euros in the fourth quarter of 2011, when it reports earnings tomorrow, according to the average estimate of nine analysts surveyed by Bloomberg. Goldman Sachs and three other leading U.S. investment banks saw their combined net income jump 92 percent annually to $9.73 billion in the period. Co-Chief Executive Officers Juergen Fitschen and Anshu Jain are eliminating staff and bolstering capital levels, the lowest among Europe’s biggest investment banks, in their first year in charge to help meet stricter capital rules. The costs countered a surge in trading revenue, spurred by the European Central Bank’s measures to stem Europe’s sovereign debt crisis. “Deutsche Bank is trying to look forward and hoping no one can really blame fourth-quarter losses on the new management as they only took over mid-year,” Andreas Plaesier, an M.M. Warburg analyst who recommends investors buy the shares, said by telephone from Hamburg. “It would rather see its earnings wrecked in one quarter and show it’s making progress on building capital.”
Chesapeake CEO To Exit (WSJ)
Chesapeake Energy Corp. Chief Executive Aubrey K. McClendon is leaving the company he built into the country’s second-biggest natural-gas producer, citing “philosophical differences” with a board of directors largely installed by shareholders to curb his risk-taking and free-spending ways.
Paul Singer Is a Backer of ‘Les Miserables’ (CNBC)
Singer writes in his investor note: “December marked the end of the ‘Beverly Boulevard II’ film slate submission period. We accepted the final two additional film submissions during the quarter, bringing our remaining funding commitment to seven films set for release in 2013 and 2014. One film in the slate, ‘Les Miserables,’ was released during the quarter. It will be several more weeks before we begin to have any reliable idea of the ultimate economic performance and value of the big-screen version of this huge stage hit, but early indications are promising and the film just garnered three major awards at this year’s Golden Globe Awards.” “Beverly Boulevard II” is run by Relativity Media and Elliott Management appears to be a large investor in the company, at least according to this 2010 article from Institutional Investor.
JPMorgan Bet Against Itself In ‘Whale’ Trade (Reuters)
It was widely known that a group of about eight credit-focused hedge funds, such as BlueMountain Capital Management and Saba Capital Management, were on the other side of the trades that JPMorgan’s London-based Whale team made on an index tied to corporate default rates. But the role JPMorgan’s own investment bank may have played in the messy unwinding of the derivatives trade has not come out until now. One of the three people familiar with the matter claimed that JPMorgan managers discussed merging the two sets of trades in an attempt to offset some of the CIO’s losses. Those talks ended about a month before Bloomberg News first reported the CIO trades on April 5 last year, the source said. JPMorgan’s Kristin Lemkau said that this “never came up in our exhaustive internal investigation.”
Police Say Man Steals Ambulance, Then Tries to Steal Horses (WHNT)
Police say it all began when Todd was arrested for DUI after a car crash. He was taken to Marshall Medical Center South for treatment. Police say while at the hospital, he walked out, got into a running ambulance and drove away. They say he later got the ambulance stuck on Barnard Street, but that was just the beginning. “He walked across a pasture and got into a barn where he tried to saddle up two horses,” says Boaz Assistant Chief Todd Adams. “One was two wild for him and the other he appeared to be too intoxicated to properly saddle the horse.” Police say Anderson then stole a car, which he crashed. They say he then stole another car and got away. However, on Saturday police say Anderson started bleeding from his original injuries. He sought treatment back at the hospital, was recognized and then arrested.
Fed Risks Losses From Bonds (WSJ)
The Federal Reserve could be charting a course that leaves the highly profitable central bank with no extra income to hand over to the U.S. Treasury for several years. That is the conclusion of five Fed staff economists who examined how the central bank’s bond-buying programs will affect its profitability over the long run. Right now the Fed is earning large returns on its bond portfolio and sending most of its profits to the Treasury. Several years from now, when the economy is stronger, the Fed is expected to sell bonds and raise short-term interest rates to tighten credit and restrain inflation. The group found the Fed might have to sell bonds at a loss and incur higher expenses on interest it pays to banks on the reserves they hold at the Fed.
Italy Scours Deals Abroad for Elusive Tax Revenue (WSJ)
Italy, which has one of the biggest tax-cheating problems in the developed world, is cracking down on suspect offshore investments as part of an unprecedented drive to find new sources of tax revenue and ease concerns about its €2 trillion ($2.69 trillion) in debt. The country just added a new property tax and is boosting its sales taxes to narrow its fiscal gap. In an effort to claw back an estimated €120 billion a year in unpaid taxes, it has limited cash payments to €1,000 so that untaxed money can’t slosh around the economy without leaving a paper trail and is hunting down people who buy luxury yachts yet report little income. One of the brightest spotlights is on companies suspected of earning money or shifting it abroad to avoid paying Italian taxes. Italy netted €600 million in additional taxes last year after prosecutors pursued two cases involving money stored illicitly to Switzerland.
NBA Union Chief Hunter Fires Family After Nepotism Report (Bloomberg)
Billy Hunter purged family members from roles in the National Basketball Association players union that he runs after a report that criticized nepotism at the organization. The moves dismissing personnel including his daughter and daughter-in-law were disclosed in a letter from Hunter to members of a special committee of players established prior to the investigation by the law firm Paul, Weiss, Rifkind, Wharton & Garrison. A copy of the letter, dated Jan. 23, was obtained by Bloomberg News.
No Twinkies ‘Til September? (NYP)
While bankrupt Hostess Brands is expected to select a preferred bidder for its snacks business today, regulatory approval, time needed to close the deal and then the firing up of the Twinkies manufacturing process means it’ll be early September before the spongecake treats are available at retailers, experts said. Leon Black’s Apollo Global Management and co-bidder C. Dean Metropoulos, a veteran food exec, are expected to be named the preferred bidder for Twinkies, Ding Dongs, Donettes and other Hostess snacks.
Zimbabwe has $217 in the bank: finance minister (AFP)
After paying public workers’ salaries last week, the balance in cash-strapped Zimbabwe’s government public account stood at just $217, Finance Minister Tendai Biti said Tuesday. “Last week when we paid civil servants there was $217 (left) in government coffers,” Biti told journalists in the capital Harare, claiming some of them had healthier bank balances than the state. “The government finances are in paralysis state at the present moment. We are failing to meet our targets.” Biti said that left no choice but to ask the donors for cash. “We will be approaching the international community,” he said.
$$$ Chesapeake CEO McClendon steps down after year of tumult [Reuters] $$$ “Herbalife has owned ‘therealbillackman.com,’ ‘billackman.net’ and ‘therealackman.net’ since Jan. 18, according to Go Daddy’s database of registered domain names. So far, the sites are inactive.” [NYP] $$$ How should central banks think about the financial system? [Free Exchange] $$$ “It’s time to revive […]
I’m mesmerized by this JPMorgan research chart showing that big banks shouldn’t be broken up because they lend so much more to businesses and consumers than small banks do. See: Basically for every dollar of normalized capital, JPMorgan has extended $12 of credit between March 2010 and September 2012, according to this note by JPM’s […]
The panel– moderated by Morgan Stanley’s chief US economist, Vincent Reinhart, and featuring Jeff Vinik of Vinik Asset Management, Ken Ebberts of Goldman Sachs Investment Partners, Michael Novogratz of Fortress Investment Group, and Rob Citrone of Discovery Capital Management– was asked to grade Ben Bernanke. Everyone on the panel gave the Federal Reserve Chairman an […]