A Few Brave Investors Scored Huge, Market-Beating Wins (WSJ)
In early September, on the heels of a drop of more than 5% for stocks over the previous month, David Tepper turned more bullish, despite widespread concerns about rising interest rates. Mr. Tepper, who runs Appaloosa Management LP, a $21 billion hedge-fund firm, began buying “calls,” or options that pay off when the market rises. Mr. Tepper felt these bullish positions were inexpensive relative to the cost of options that bet on a drop in the market, according to someone close to the firm. The market climbed during the last four months of the year, and the firm’s biggest hedge fund rose about 42% in 2013, after fees, likely earning several billion in profits for Mr. Tepper and his investors, this person said. Mr. Tepper says he remains “cautiously bullish,” arguing that stock prices, based on earnings, aren’t yet expensive given how low interest rates are likely to remain. Paulson & Co.’s $2.7 billion Recovery Fund began the year with bullish stock positions amounting to more than twice its bearish positions, or about twice the average of rival hedge funds measured by J.P. Morgan Chase & Co. The firm, run by John Paulson, added to its bullish trades this spring, piling into mortgage insurers, international banks and real-estate stocks, according to documents shared with investors. The fund jumped 55%, after fees, through the end of November, the latest figures available. As a result, Mr. Paulson could earn hundreds of millions of dollars, based on the fund’s 20% performance fee. His other strategies also reported double-digit gains, except for his gold fund, which is small compared with the firm’s others. It posted significant losses, according to a person close to the firm.
Buffett beats S&P for second straight year (CNBC)
Berkshire’s Class A shares finished 2013 at $177,900, just below their 52-week high of $178,900 set in late July. That’s up 32.70 percent from their $134,060 close in 2012. It’s the biggest annual gain since 1998 when the shares soared 52.2 percent.
JPMorgan Halts Latvia Dollar Deals After Probes, Bank Group Says (Bloomberg)
JP Morgan, which has been told by U.S. regulators to bolster money-laundering safeguards, has stopped clearing dollar transfers for Latvian lenders, according to the Baltic nation’s banking association. “JPMorgan was a meaningful partner, no doubt,” Martins Bicevskis, president of the Latvian Commercial Banking Association, said in an interview. “But that won’t hinder working further and looking for other partners.”
Buyout Shops Double Down With Debt Play (WSJ)
When buyouts go badly, many are now purchasing debt of companies they took private, putting them in a position to use restructurings or bankruptcies to shed jobs, pensions or onerous debts and give themselves a second chance at making money on the deal. The moves are sparking controversy in some cases and have become a hot topic among private-equity executives and restructuring advisers. The Loan Syndications and Trading Association, a New York trade group backing banks and other secured lenders, is developing guidelines for buyout firms to follow when purchasing debt of companies they own so they can avoid conflicts and legal skirmishes, said Elliot Ganz, the association’s general counsel. The guidelines could take as long as a year to implement, he said. “The market isn’t waiting for us. They’re doing the deals the way they’re doing the deals.”
Pot tourism ready to light up in Colorado in 2014 (CNBC)
As Colorado becomes the first state in the nation to allow recreational marijuana sales beginning Jan. 1, a budding pool of “potrepreneurs” have high hopes for an influx of out-of-town pot tourists. Colorado High Life Tours, which promises “fun, affordable and discreet” cannabis-centered excursions, is expanding its private and public limo and bus tours. “You’ll be able to buy a little pot here and there, see a commercial grow, visit iconic Colorado landmarks and take lots of pictures,” said company owner Timothy Vee. “It will be like a Napa Valley wine tour.” [...] Travelers…won’t find much information about pot tours alongside official city and state tourism brochures, vacation guides and websites promoting Colorado’s skiing, hiking and cultural activities. Pamphlets created by a coalition of marijuana industry organizations seek to fill in the gaps, informing tourists of what they can and cannot do while in Colorado and offering such advice as “Do not eat the whole brownie” and “Remember, Uncle Sam says ‘Stay off federal lands with that devil’s lettuce.’ ” [...] Prior to Jan. 1, Colorado High Life Tours has mixed sightseeing with stops at glass-blowing shops, marijuana grow centers and has offered customers “free samples”—because buying pot was not yet legal. “You live and learn,” said Vee. “On our tours, we’re getting a lot of empty nesters that haven’t smoked pot in 20 years. We’ve also had people who have never smoked pot take our tours and had one couple get high and so paranoid that we had to interrupt the tour and take them back to their hotel.”
Pope’s sharp words make a wealthy donor hesitate (CNBC)
At issue is an effort to raise $180 million for the restoration of St. Patrick’s Cathedral in New York being spearheaded by billionaire Ken Langone, the investor known for founding Home Depot, among other things. Langone told CNBC that one potential seven-figure donor is concerned about statements from the pope criticizing market economies as “exclusionary,” urging the rich to give more to the poor and criticizing a “culture of prosperity” that leads some to become “incapable of feeling compassion for the poor.” Langone said he’s raised the issue more than once with Cardinal Timothy Dolan, archbishop of New York, most recently at a breakfast in early December at which he updated him on fundraising progress. “I’ve told the cardinal, ‘Your Eminence, this is one more hurdle I hope we don’t have to deal with. You want to be careful about generalities. Rich people in one country don’t act the same as rich people in another country,’ ” he said.
Chinese Banks Eye Global Bond Market (WSJ)
China’s banks have long tapped foreign equity investors for funds, but they are set to count on overseas bond buyers for billions of dollars in cash in the next few years. The country’s banks will need to raise up to two trillion yuan ($330 billion) from share and bond sales in the next five years, according to McKinsey & Co. With growing levels of bad debt in a slowing domestic economy, weakness in stock markets and rising capital requirements, Chinese banks can no longer rely on share sales and the country’s four-trillion-yuan bond market for cash.
U.S. Merger Activity in ’13: Back at the Trillion-Dollar Level (Dealbook)
While global deal-making was basically flat for a fourth consecutive year, annual volume in the United States was up 11 percent in 2013 compared with the previous year, according to Thomson Reuters. Companies from New York to San Francisco announced more than $1 trillion worth of deals during the year, the most since the financial crisis. That led the United States to account for 43 percent of all deals worldwide, the biggest proportion since 2001. What’s more, activity picked up over the final two quarters, with volumes rising sharply from the first six months of the year.
Gold Rebounds With Silver After Worst Annual Retreats Since 1981 (Bloomberg)
Gold rallied from its worst year in more than three decades as a decline to a six-month low was seen spurring physical purchases, potentially prompting some investors to reverse bets on lower prices. Silver jumped. Bullion for immediate delivery traded at $1,212.55 at 10:12 a.m. in Singapore from $1,205.65 on Dec. 31, when prices sank to $1,182.27, the lowest level since June 28. Gold slumped 28 percent in 2013 for the biggest annual loss since 1981.
Painted pooches: Pet owners pay groomers to dazzle up dogs with bling, bows (NYDN)
Sugarplum went into the salon as a reddish-blonde dachshund mix and came out with pink and green ears, a rainbow tail and a bow in her fur. “It’s like having a little unicorn creature,” said Sasha Sinnott, an attorney from Pasadena who was nearly giddy about her dog’s makeover. For some dog owners, simple bathing and combing is not enough. So they pay groomers to turn fur into an artist’s canvas, where vibrant sweeps of chalk and paint transform pooches into fantasy fur balls that draw both compliments and strange looks. For an extra 10 or 15 minutes at the groomer, the everyday dog can get an outlandish redesign with a temporary paint tattoo, Mohawk, feather extension or glued-on jewels. Then there are the “extreme groomers,” who turn their own pets into elaborate creations like zombies, flowers or even whole jungle scenes, transformations that can take months as hair grows, paint is applied, fur is braided or extended, and shapes are sculpted. “For me, it is about a closer connection with my pets. People are now showering their pets with the amenities and affections that they would like themselves,” said Lauren L. Darr, founder of the International Association of Pet Fashion Professionals.