Opening Bell

Opening Bell: 03.27.14

S&P wants to split up $5 billion U.S. ratings lawsuit (Reuters)
Standard & Poor’s asked a federal judge to split up the U.S. government’s $5 billion civil fraud lawsuit accusing it of lying about its credit ratings, saying it would be unfair to have to defend against a case of such “unmanageable scope” all at once. In a court filing on Tuesday, the McGraw Hill Financial Inc unit proposed holding a trial in two phases, with the first focusing on just the 17 securities where Citigroup Inc is alleged to have suffered losses. S&P said this would cover over 30 percent of alleged losses suffered by financial institutions on the 158 securities in the February 2013 lawsuit, and limit the risk of juror confusion. In contrast, a single trial would force jurors to balance government claims that S&P’s ratings lacked “independence” and “objectivity” against “an overwhelming amount of information regarding the actual securities at issue and the detailed process by which S&P determined its ratings,” S&P said.

Activist Investors Often Leak Their Plans to a Favored Few (WSJ)
Shares of Rino International Corp. sank 28% in the two days after investment firm Muddy Waters LLC put out a report attacking the Chinese company’s accounting. Three investment firms were ready for the news. The firms had been tipped beforehand by Muddy Waters about the scathing November 2010 report, according to a person close to the matter, who said one of them made a bet against Rino stock that produced a $1 million-plus profit. “We sold advance copies of our report,” said Muddy Waters’s founder, Carson Block, adding that since then he has tried to limit advance knowledge of his firm’s research. For a new breed of “activist” investors, tipping other investors is part of the playbook. Activists, who push for broad changes at companies or try to move prices with their arguments, sometimes provide word of their campaigns to a favored few fellow investors days or weeks before they announce a big trade, which typically jolts the stock higher or lower. In doing so, they build alliances for their planned campaigns at the target companies. Those tipped—now able to position their portfolios for price moves that often follow activist investors’ disclosures—benefit in a way that ordinary stockholders who are still in the dark don’t.

Citigroup’s Mexico situation ‘a horror show’: Dick Bove (CNBC)
“The situation in Mexico is, in my view, a horror show because basically, at this stage, seven years after the big crisis which almost—which did make them bankrupt—this company finds that it doesn’t have controls in Mexico and lets $400 million walk out the door,” he said. “This company is not a ‘buy.’ I don’t care what the price to tangible book is. It is not a ‘buy.’ ”

White House’s Sell Russian Stocks Recommendation Flopping (Bloomberg)
White House press secretary Jay Carney’s debut as a short-selling tout is off to a rough start. Since Carney said March 18 that the only investments worth making in Russian equities are wagers the market will decline, short sellers have been pulling out as the Micex gauge rebounded 1 percent. The percentage of borrowed shares in the biggest U.S. ETF tracking Russia’s market — a barometer of short selling — has fallen to 14 percent of the total stock, from 17 percent the day Carney spoke and a record 21 percent on March 3, according to financial data provider Markit.

Ergen says LightSquared could be worth $8.9 billion (Reuters)
LightSquared, owned by Phil Falcone’s Harbinger Capital Partners, went bankrupt in 2012, when the Federal Communications Commission revoked its license to operate spectrum out of concern it could interfere with GPS systems. Ergen then acquired about $1 billion of the company’s senior loan debt, giving him a controlling stake in LightSquared’s capital structure.

North Korean men must get Kim Jong Un’s haircut (NYDN)
Supreme Leader Kim Jong-Un, in a bizarre bit of tonsorial tyranny, decreed that his 12 million countrymen adopt his decidedly retro high-and-tight ’do. The diminutive despot delivered his “fashion guideline” about two weeks ago, likely ensuring that Dennis Rodman and his multi-hued mop will never return to the nation. The “Un and only” haircut, once popularized by ’90s boy bands, was unimaginatively dubbed “The Dear Leader Kim Jong-Un” — more of a mouthful than “a little off the sides.” The 31-year-old’s look is simple: Short and slicked back on top, buzzed to the skin above both ears. North Korea’s citizens were not too keen on the government-ordered grooming, griping that it’s not the right look for everyone. “Our leader’s haircut is very particular, if you will,” one source told the Korea Times. “It doesn’t always go with everyone since everyone has different face and head shapes.”

First Rule of Mergers: To Fight Is to Lose (WSJ)
Shareholders challenged 94% of U.S. public-company deals last year, up from 44% in 2007, according to Cornerstone Research, a litigation consulting firm. The average deal now faces five lawsuits, often filed in different state and federal courts. Lawsuits are among the weapons at shareholders’ disposal to hold boards accountable. But the recent proliferation of legal actions has diluted their power, people on both sides of these cases say. “It’s a classic case of crying wolf,” said Sean Griffith of Fordham University School of Law. “If the goal of the legal system is to add value for shareholders, it’s failing.”

Sons of Rupert Murdoch Get Expanded Roles (WSJ)
Rupert Murdoch elevated his two sons, Lachlan and James, to senior positions at his entertainment and publishing operations, signaling that both are likely to play roles in the long-term future of the family-controlled media empire. 21st Century Fox Inc. named Lachlan Murdoch, 42 years old, as nonexecutive co-chairman, alongside his father, who is chairman and chief executive. The company simultaneously promoted James Murdoch, 41, to be co-chief operating officer, alongside current COO and President Chase Carey. James Murdoch, who was previously deputy COO and chairman and CEO, International, will continue to report to Mr. Carey. Lachlan Murdoch on Wednesday also was named nonexecutive co-chairman at News Corp, the print media concern that separated from 21st Century Fox last June and retained the old name of the original conglomerate. News Corp owns The Wall Street Journal.

US to require casinos to vet high rollers’ funds (Reuters)
The rule is likely to require casinos to get more information about certain customers in order to shed light on high-risk transactions such as international wires and large cash deposits, said the sources, who asked not to be named.

Crowdfunders of the Maker of Oculus Rift Denounce a Facebook Buyout (NYT)
For many of Oculus VR’s early backers, news that the virtual reality start-up was selling to Facebook for $2 billion was a little like watching Bob Dylan star in a Super Bowl Chrysler commercial. The Southern California company got its start on Kickstarter, the crowdfunding site where enthusiastic virtual gamers helped it raise $2.4 million in exchange for a free developer’s kit or a T-shirt. Now some of those donors are crying “sellout.” They want their money back — and are happy to return the T-shirts. “I supported this because it’s something that I’ve wanted to see become a reality since I read my first William Gibson novel,” one Oculus donor wrote on Kickstarter. “Now I find out that I might as well have handed my money right to Facebook and I feel a little sick.”

Crimea’s Dolphins Join Russian Forces, State Media Says (HP)
A Soviet-era military program training dolphins and seals for combat will be revived in Crimea after its annexation by Russia, according to Russian state media. The so-called combat dolphins will be re-trained, re-equipped and deployed battle-ready to the Russian Navy, an employee at the aquarium in Sevastopol told Voice Of Russia on Wednesday. Russian troops have ousted Ukrainian forces in Crimea and seized their ships and military bases after Russia incorporated the peninsula as part of the country last week, a move denounced as illegal by Ukraine. As Russian passports are distributed and Crimea’s residents contemplate their sudden nationality switch, state news agency Rio Novosti pointed out the far-reaching implications, noting: “The dolphins themselves have now become Russian.”

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26 Responses to “Opening Bell: 03.27.14”

  1. London Banker says:

    But they all already looked the same anyway!

    – SMU Secure

  2. Guest says:

    Ackman 1- Icahn 1?

    "In a previously unreported development, the SEC has since sent about 25 subpoenas to hedge funds asking for information about their trading in Herbalife, according to people familiar with the investigation. The SEC spokesman declined to comment. So did a spokesman for Soros Fund Management, which manages the assets of billionaire George Soros, his family and their foundations. Mr. Sohn didn't return calls for comment. "

  3. V. Sassoon says:

    In a related development, Kim Jong Un ordered all North Korean women to "get with the times" and adopt the bald beaver style for their nether regions. Dear Leader went on to say "In order to move forward toward world domination, our prized female citizens must have hairless crotch"

  4. Guest says:

    Jay Carney only needed to call on a couple of his namesakes– Mark, Brian, John– to give him a good tip on Russia. He should have gotten the call right.

  5. Guest says:

    No word on Ken Lewis' 3 year ban from Boone's Farm… ?

  6. Buster B says:

    War dolphins are one thing but seals?

  7. Guest says:

    Who, exactly, are these dolphins expected to fight? Beach goers? The Ukrainian capitalist dolphin cohort?

    – Confused guest

  8. 3rd yr Sull and Crom says:

    I love how the new links below are already fucked up.

    Above the law now goes here.

  9. Guest says:

    I can bench more than that dolphin.

    -Charlie Tunarino

  10. Notti says:

    Crowdfunding – sick of it. Used to be a good ole fashion circle jerk. Well you can't say that anymore. Some kid called home crying to his momma.

  11. investorcluzo says:

    Let me get this straight – they tell you the business model is "you give us money, we'll give you a t-shirt and a nice thank-you note". You give them requested money and receive said t-shirt. They make product then sell the company. Now you're mad? Maybe you should have asked for equity INSTEAD of a t-shirt.

    -Crowdfunding Quant

  12. Guest says:

    how many tshirts do the winkievoss twins have?

  13. 1997 Enthusiast says:

    Putin: You know, I have one simple request. And that is to have sharks with frickin' laser beams attached to their heads! Now evidently my cycloptic colleague informs me that that cannot be done. Ah, would you remind me what I pay you people for, honestly? Throw me a bone here! What do we have?

    Number Two: Dolphins.

    Putin: Right.

    Number Two: They're mutated dolphins.

    Putin: Are they ill tempered?

    Number Two: Absolutely.

    Putin: Oh well, that's a start.

  14. he Ukrainian capitalist dolphin cohort?