Opening Bell: 08.26.14

Ackman Gains 30% With Burger King, Herbalife Wagers (Bloomberg)
Since Ackman’s three-hour presentation in Manhattan on July 22 that sent Herbalife’s stock soaring, the company has slumped 26 percent after reporting disappointing earnings. Ackman’s $1 billion bet that the firm’s shares will collapse has helped spur the money manager to his best year since 2009. Pershing Square Capital Management LP’s oldest fund has gained about 30 percent this year, according to a person with knowledge of the returns, compared with the average 2.5 percent for the hedge-fund industry. He’s done it through big wagers on a small group of companies. Yesterday, Ackman’s firm made $203 million on Burger King Worldwide Inc. after the fast-food chain said it was in talks to buy Tim Hortons Inc.

Warren Buffett to Help Finance Burger King’s Takeover of Tim Hortons (WSJ)
Investor Warren Buffett is helping finance Burger King Worldwide Inc.’s planned takeover of Canadian coffee-and-doughnut chain Tim Hortons Inc., according to people familiar with the matter, in a surprise twist that could add to investors’ enthusiasm for the deal. The Berkshire Hathaway Inc. BRKB +0.35% chairman and chief executive would invest in the deal in the form of preferred shares, some of the people said. Berkshire is expected to provide about 25% of the deal’s financing, one of the people said. The exact structure of Mr. Buffett’s participation in the deal remains unclear, and the discussions are ongoing.

Hedge Funds Sue to Get Argentine Bond Payment in London (Dealbook)
A group of hedge funds, including George Soros’s Quantum Partners and J. Kyle Bass’s Hayman Capital, is seeking a 226 million euro interest payment on Argentine bonds from Bank of New York Mellon that was blocked by a United States judge last month. In a lawsuit filed in London against Bank of New York, the trustee handling Argentina’s bond payments, the hedge funds contend that the bank’s London unit must release money that was deposited by Argentina for its euro-denominated bondholders. The money was part of a $539 million interest payment that Judge Thomas P. Griesa of the Federal District Court in Manhattan prevented the trustee from paying last month. The latest lawsuit, filed last Thursday, poses a challenge to the scope of Judge Griesa’s ruling and will further complicate what has been a long and drawn out battle between the government of Argentina and a group of New York hedge funds that have waged a court battle that has lasted years.

Why Amazon Is Paying $1 Billion to Help People Watch Video Games (BusinessWeek)
There are a few reasons Amazon would want Twitch, some of them Amazon-specific, others more general. First, a primer on Twitch. It’s a website on which people watch other people play video games. Some of the people playing are experts; others aren’t even all that good. To understand why Amazon would pay for a website such as this, you have to accept one fact: People like watching other people play video games. This consistently baffles many non-gamers, but it’s true. Twitch, founded in 2011 as part of now-defunct Justin.tv, has 55 million unique monthly users, and 7 million people log onto the website each day. While Web entertainment is reputedly all about short attention spans, Twitch users stick around for nearly two hours per day on average. Any company that attracts such deep levels of engagement is going to appeal to Silicon Valley’s acquirers, not least because advertising to those people could be very lucrative. And Amazon is increasingly interested in building its advertising business.

Quake leaves Napa Valley vintners with dregs (NYP)
The cherished $13 billion Napa Valley wine industry in California is picking up the pieces after it was ravaged by a 6.0 magnitude earthquake Sunday that left winemakers scrambling to salvage their last remaining bottles of red and white. “We’re wading around in a sea of Cabernet,” Henry Hill & Company wine warehouse owner Bill Hill told NBC News. Hill said his company’s building — which housed nearly 1,000 barrels of wine, including the pricey and highly sought after Cabernet Sauvignon — felt the full brunt of the earthquake and suffered “severe” damages. The epicenter of the earthquake was only six miles Southwest of Napa, which is home to approximately 430 wineries that contribute to an enormous industry with an annual economic impact of $50 billion, NBC News reports.

British man fined for fake kidnapping claim so he could stay out partying (NYDN)
A man has been fined by police after he told his girlfriend he had been kidnapped just so he could stay out all night partying. Officers spent seven hours searching for the man from Bolton, in northwest England, on Friday. His girlfriend had gone to the cops after he told her he was being held against his will over a debt. Instead he was at a house party. The 32-year-old was found after police checked closed-circuit TV footage taken close to his home, reported the BBC. “Considerable resources and time went into finding this man, who it transpires made the entire thing up so he could stay out and party,” Det. Insp. Jo Clawson said. “This is without doubt one of the most foolish and irresponsible incidents I have been involved in.”

Bullard says Fed needs to alter guidance (FT)
Mr Bullard said in an interview with the Financial Times that the Fed would have to alter both its declaration of “significant” underutilisation of labour resources and its pledge not to change rates for a “considerable time” after it stops buying assets. His comments highlight the probable focus of Fed debate this autumn: how to reshape guidance on interest rates once its “QE3” round of asset purchases comes to an end in October.

Priciest Divorce Ever? How Oilman Harold Hamm Could Lose $17 Billion (CNBC)
In legal terms, the case comes down to “active” versus “passive” appreciation of marital assets, explained Carolyn Thompson, a prominent divorce lawyer in Oklahoma City. “To the extent that it was his work that made him wealthy, then it’s a marital asset, subject to equitable division. If it is attributable to what we call ‘passive’ factors—outside his control—then it remains Harold’s property.” In February Judge Howard Haralson set this question in motion. He ruled that Mr. Hamm’s stake in Continental Resources was personal property. After all, Mr. Hamm had founded the company back in 1967, two decades before he married a brown-eyed lawyer named Sue Ann. But Continental’s value has quintupled in recent years, producing more than $17 billion in value, according to an economic analysis by his wife’s legal team. On Monday Judge Haralson released that document, and within the next few weeks he plans to apportion the $17 billion based on what he believes created it: the work of Mr. Hamm, the grace and beneficence of Mother Earth, or, most likely, some combination. The result is a downright Shakespearean drama, according to a lawyer familiar with the case. In one corner, the richest energy mogul in America—a drawling, cantankerous, fire-eyed game hunter and amateur pilot—is claiming that all $17 billion was essentially dumb luck. In the other, his wife—who moved out years ago—is claiming that all $17 billion is the result of her husband’s infinite wisdom.

Harried Travelers Take the Bus (NYT)
As airline travel becomes more complex with added security, overstuffed bins and tightly pitched seats, and train passengers grapple with on-time reliability and erratic Wi-Fi connections, business travelers like Mr. Alday are turning to upscale executive coaches with hefty price tags and limited seating. Experts say corporate time constraints, leaner travel budgets and environmental awareness are also contributing to the rise of executive buses. “The stigma for bus travel has evaporated,” says Joseph P. Schwieterman, director of the Chaddick Institute for Metropolitan Development at DePaul University. “People are willing to endure a longer commute for a mobile office benefit.”

Banks Want Lehman to Increase RMBS Reserves to $12.14 Billion (WSJ)
In a Friday filing with U.S. Bankruptcy Court in New York, lawyers for the trustees representing the residential mortgage-backed securities trusts said an independent review of the loans packaged and sold by Lehman before the financial crisis shows Lehman’s liability is much worse than the original $5 billion estimate. “The review of the sample by the…trustees’ experts statistically implies that Lehman breached its representations and warranties with respect to over half of the covered loans that suffered a loss or are projected to suffer a loss,” the trustees’ lawyers said in their filing. The trustees oversee about 416,000 loans across 255 trusts. The trustees are concerned that if the dispute isn’t resolved quickly, no money will be left to pay their claims beyond the $5 billion already reserved.

Geriatric poker foursome cheated casino (WPTV)
All four have rap sheets with convictions for cheating while gambling in other states spanning many years. Although the cheating at Canterbury Park in Shakopee, Minn., netted the four barely more than $200 over the 45 or so minutes that they were at the card room on July 4, 2013, a Canterbury spokesman said that vigorously pursuing this nefarious activity is vital to the business’ credibility. “Integrity is important,” spokesman Jeff Maday said Thursday. “It’s important if you are another one of the players. You want to know that the game is legit.” Charged with felonies and being held in the Scott County jail in lieu of $50,000 bail is Duane L. Racle, 75, of Lake City, Fla. Also charged are James P. Minehan, 75, of Tamarac, Fla.; Wildred Sanchez, 74, of Pembroke, Fla.; and Nicholas R. Crowder, 77, of Ferndale, Mich.

25 comments (hidden to protect delicate sensibilities)
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Comments (25)

  1. Posted by Carl's Jr | August 26, 2014 at 8:48 AM

    Holy shit!

  2. Posted by guest | August 26, 2014 at 8:53 AM

    Finally an article posted before noon

    - UBS timesheet MD

  3. Posted by Guest | August 26, 2014 at 9:10 AM

    You mean all that poon is just there for the taking?

  4. Posted by IBANK4LIFE | August 26, 2014 at 9:21 AM

    Should of had that 'Nup Harold

    -Yeezus

  5. Posted by Joe Momma | August 26, 2014 at 9:23 AM

    When you're done with that, take the new analysts's fingerprints and show them their benfit package.

    - UBS HR website bot

  6. Posted by Jeff Mackerel | August 26, 2014 at 9:24 AM

    Things are going to get better before they get worse like fish to the slaughter.

  7. Posted by Fewdollarsmore | August 26, 2014 at 9:27 AM

    ….and then Mr. Bullard said, "This is without doubt one of the most foolish and irresponsible incidents I have been involved in."

  8. Posted by UFOinsider | August 26, 2014 at 9:29 AM

    re: Harold Hamm

    Lots of interesting implications in the ethics of this case. If he is not responsible for the investment decision to sustain allocation in the company (he most certainly is), and the wealth exists due to "the grace and beneficence of Mother Earth", then by default he is not entitled to the wealth on some level. He does not have ownership of the creation/extraction, and therefore itis communal/familty propery. Carry this out to its logical conclusion, and no one is….or everyone is entitled to it. By that logic, huge amounts of wealth can not be controlled by property claims.

    Wow. The law is a funny thing. It took me like 1/4 second to come up with that.

    - Magnetar creative financing quant

  9. Posted by guest | August 26, 2014 at 9:30 AM

    No, this is actually just yesterday's opening bell

  10. Posted by Ted Mosby's Vagina | August 26, 2014 at 9:48 AM

    Fuckin Hamm Sandwich! Amirite fellas?

  11. Posted by snergies | August 26, 2014 at 10:07 AM

    all this boredom is a bit scary

    Hoot Owl "scary, isn't it?" quant

  12. Posted by SMU Secure | August 26, 2014 at 10:17 AM

    Stay classy Okies……

  13. Posted by Narcissus Bellicose | August 26, 2014 at 10:25 AM

    In other news, the offices of Berkshire Hathaway were raided by the IRS this morning.

  14. Posted by Guest | August 26, 2014 at 10:36 AM

    Berkshire Hathaway IS the IRS.

  15. Posted by No one | August 26, 2014 at 11:11 AM

    Dallas is truly the mark of sophistication.

  16. Posted by Jesse Pinkman, CFA | August 26, 2014 at 11:13 AM

    brilliant

  17. Posted by Guest | August 26, 2014 at 11:26 AM

    20 comments already, and not one Shaz joke.

    Disgraceful.

  18. Posted by DJ Scribble | August 26, 2014 at 11:37 AM

    Omek…..Omeka……Omeka Okafor…….

  19. Posted by quest | August 26, 2014 at 11:43 AM

    Ackman's kicking butt. Notice how quiet Carl Icahn has been of late.

  20. Posted by Guest | August 26, 2014 at 11:45 AM

    In unrelated news Ackmans daughter is banging like a screen door in a hurricane due to apparent daddy issues….

    Other than that I have zero concerns or objections

  21. Posted by Im_a_Dude | August 26, 2014 at 12:30 PM

    you shouldn't have wasted the time

  22. Posted by guest | August 26, 2014 at 12:33 PM

    no, it's not.

  23. Posted by Homer | August 26, 2014 at 1:18 PM

    Welcome to the club, Number 493. You have become a member of the ancient and noble society of Stonecutters, who since ancient times have always endeavored to shatter the stone of ignorance, to bring forth the light of truth… now, let's all get drunk and play Ping-Pong!

  24. Posted by Guest | August 26, 2014 at 1:38 PM

    Dat assz!

  25. Posted by Guest | August 26, 2014 at 2:04 PM

    28th bitchaz!