Dealbreaker

Posts by Dealbreaker

Write-Offs: 07.25.14

$$$ Cynk Plunges 85% as Trading Resumes After SEC Suspension [Bloomberg]

$$$ Facebook Gain Makes Zuckerberg Wealthier Than Google Guys [Bloomberg]

$$$ SEC Drops Probe Into Facebook for Pre-IPO Disclosures [WSJ]

$$$ Greenlight takes Lam Research stake, gains on Micron, Apple [CNBC]

$$$ Adam West thinks Ben Affleck will make a fine Batman [NYP] Read more »

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Opening Bell: 07.25.14

Sodastream trader makes 3,000% profit in two hours (CNBC)
Two minutes before 10 a.m. ET on Thursday, one options trader bought 500 weekly 30-strike calls in Sodastream for 15 cents each (or $15 per contract, given that each contract controls 100 shares) that expire Friday. It was by far the biggest Sodastream trade of the day in terms of the number of contracts. The purchase gives the trader the right to buy Sodastream shares for $30 at the close of Friday trading. The reason those options were so inexpensive is that the stock was trading at about $29.50 at the time, meaning the chance of the stock closing Friday above $30 was considered to be especially low. But then, shortly before noon, Bloomberg reported that the company is in talks with an investment firm about taking the company private. After a halt, the stock sailed as high as $36. The news created an instant windfall for the trader, as these options, which were bought for $7,500, became worth as much as $250,000.

RBS First-Half Profit Doubles, Sees 2014 Cost Cuts on Track (Bloomberg)
Royal Bank of Scotland Group Plc said pretax profit almost doubled in the first half and forecast that it will meet a target to cut costs by 1 billion pounds ($1.7 billion) in 2014. The shares soared. Pretax profit at Britain’s largest state-owned lender may have increased to 2.65 billion pounds from 1.37 billion pounds a year earlier, RBS said in a statement today. Operating profit probably jumped to 2.6 billion pounds from 708 million pounds, according to the results, which were released a week early. Chief Executive Officer Ross McEwan, 57, who took over from Stephen Hester in October, is setting up an internal bad bank, combining divisions and scaling back the investment bank as he strives to shore up earnings at RBS after the lender reported its biggest annual loss since the financial crisis last year. RBS said today that it’s still facing “significant conduct and litigation issues” that could hurt future profit.

Moody’s Profit, Revenue Rise (WSJ)
The firm posted earnings of $319.2 million, or $1.48 a share, up from $225.5 million, or $1 a share, a year earlier. Revenue improved 16% to $873.5 million. Analysts polled by Thomson Reuters had estimated earnings of $1.01 a share and revenue of $803 million. The company’s Moody’s Investors Service debt-rating operation—its biggest revenue contributor—posted a 16% increase in revenue to $621.7 million. Global corporate finance grew 22% to $320.9 million.

Goldman bankers to Babble on their own chatroom (FT)
Goldman Sachs is spearheading an effort among Wall Street’s leading banks to develop a chat tool called “Babble” that could replace the instant messaging service on Bloomberg’s ubiquitous terminals…The company’s internal messaging service, known as Instant Bloomberg, is one of the main ways for bankers and traders to keep in touch with their customers at pension funds, hedge funds and asset managers. Goldman’s chatroom project comes after tensions between big banks and Bloomberg were also heightened last year when senior executives at the bank confronted the company over its reporters allegedly using private terminal data to track bankers…The Babble project is said to be less about concerns over data privacy issues, and more about creating an alternative network which comes at a much lower cost and can also be plugged in to different systems and used by both banks and their clients.

A Divorce That Thrusts Ken Griffin and Anne Dias Griffin Into the Spotlight (Dealbook)
Divorces in Illinois play out in open court, though either party can request mediation or move to seal their file, according to James H. Feldman, the chairman of the family law practice at the law firm Jenner & Block. The split is unlikely to affect Citadel’s ownership structure, because Ms. Dias Griffin is neither an owner nor an investor in the firm’s funds. And the two signed a prenuptial agreement governing any split of their assets, according to the divorce petition. Under the agreement, Ms. Dias Griffin would be entitled to cash in the event of a split, but Mr. Griffin would retain the art and real estate, two people briefed on the matter said. But she could contest the terms.

Sniffing out a partner at a London pheromone party (AO)
In a bar in trendy east London, dozens of people mill about, sniffing from plastic bags. But there are no drugs inside – just slightly smelly T-shirts. These adventurous single men and women are at a “pheromone party”, an alternative dating trend based on the idea that smell plays a key role in the choice of a sexual partner. Each of them has agreed to wear the same cotton T-shirt for three nights in a row, with no deodorant or perfume, and to bring it to the party. The clothes, infused with the pure scent of the wearer’s body, are placed in transparent plastic bags with numbers on coloured labels – pink for women, blue for men. “Smell as many bags as you like, have fun!” encourages the organiser, Judy Nadel. There is some nervous laughter, then a sudden rush for the bags laid out on a big table in the middle of the room. Some people open the bags carefully, taking a timid sniff, while others plunge their noses right inside. “This one’s been worn for a few days,” quipped one young man, while his friend Steven Lucas, a 23-year-old law trainee, remarks that the clothes “all smell the same”. “It’s like sweat and a tiny bit of perfume, or just, like, clean,” he says. Those who get a sniff of their dream partner snap a picture of themselves with the bag. The images are then projected onto the wall, and the lucky owners of the chosen T-shirts have the chance to meet their admirers. Read more »

Write-Offs: 07.24.14

$$$ UBS Lashes Out at French Prosecutors [Dealbook]

$$$ KKR’s Quarterly Profit Surges [WSJ]

$$$ Schwartz, 32, looks much as he did when he was a student on the dean’s list at Cornell University, all the way back in the Aughts. He had no experience in fast food before going to Burger King; he spent almost a decade on Wall Street after college. And he’s surrounded himself with a similarly eager and fresh-faced inner circle. Josh Kobza, the chief financial officer, is 28. He and Schwartz are usually joined on conference calls by Alexandre Macedo, Burger King’s ancient 36-year-old president for North American operations, and Sami Siddiqui, the head of investor relations, who’s 29. Only one of the four saw a day of the Seventies. [BusinessWeek]

$$$ Bank of America Knew How to Sell a Basketball Team [BloombergView/Matt]

$$$ Judge tells Baldwin he’s a fan and to ‘be a good boy’ [NYP] Read more »

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Opening Bell: 07.24.14

SEC Sends McGraw Hill Wells Notice Tied to CMBS Ratings (Bloomberg)
McGraw Hill Financial Inc. (MHFI) said it received a notice from the U.S. Securities and Exchange Commission that the regulator may seek an enforcement action tied to six commercial-mortgage backed securities that its Standard & Poor’s division graded in 2011.

Calpers Pulls Back From Hedge Funds (WSJ)
Public pensions from California to Ohio are backing away from hedge funds because of concerns about high fees and lackluster returns. Those having second thoughts include officials at the largest public pension fund in the U.S., the California Public Employees’ Retirement System, or Calpers. Its hedge-fund investment is expected to drop this year by 40%, to $3 billion, amid a review of that part of the portfolio, said a person familiar with the changes. A spokesman declined to comment on the size of the reduction but said the fund is taking more of a “back-to-basics approach” with its holdings. The retreat comes after many pension funds poured money into hedge funds in recent years in hopes of making up huge shortfalls.

Billionaire Ken Griffin files for divorce (Crain’s)
Ken Griffin, the billionaire founder and CEO of Citadel LLC, a Chicago-based hedge fund and financial services firm, has filed for divorce from his wife of 10 years, Anne Dias Griffin, a French-born hedge-fund executive. A statement from Ms. Griffin’s attorney, Robert Stephan Cohen, indicated the divorce could be contentious: “Ken Griffin unilaterally filed a divorce petition today with no notice to either me or my client, knowing full well that she had just left for summer vacation with their three young children and would therefore be unable to respond. Anne’s highest priority remains her family, especially the wellbeing of her children. She is hopeful that this personal matter can be resolved privately and in the best interests of her children. We have no further comment at this time.”

‘Bring It On,’ Frank Tells Dodd-Frank Critics at Hearing
Barney Frank, the panel’s former chairman, returned to Washington Wednesday to sit before the committee and provide a feisty defense of that year’s regulatory overhaul, the Dodd-Frank Act that bears his name. The hearing split along partisan lines in support of and opposition to the wide-ranging law passed in response to the 2008 financial crisis. “I know the chairman said the financial reform bill is as damaging as the health-care bill,” the now-bearded Massachusetts Democrat said, referring to the current Republican chairman, Jeb Hensarling of Texas. “Well my recollection is this Republican Congress votes on a fairly regular basis to repeal the health-care bill. But where’s your bill to repeal the financial reform bill? If you have the courage of your convictions, bring it on.”

U.S. Considers Issuing Debt With Maturities of More Than 30 Years (WSJ)
The U.S. government has asked big banks whether it should issue bonds that mature in more than 30 years, as officials consider tweaking the types of debt they sell. In a questionnaire sent to dealers last Friday, the Treasury Department asked 22 primary dealer banks, which underwrite U.S. government debt sales, about possible demand for ultra-long-term sovereign bonds. A Treasury official cautioned that at this stage, the U.S. wants to get the views of market participants. “We would give significant heads up” if the Treasury decided to sell ultra-long bonds, said the official, adding that nothing is imminent. The Treasury regularly asks primary dealers about auction demand and supply. Selling longer-maturing debt could help the U.S. borrow at low rates for long periods, but it could also be an unreliable type of funding, said analysts and investors.

Moody’s downgrades Atlantic City general obligation bonds to junk status (CNBC)
The credit rating service cut the city’s underlying rating to “Ba1″ from “Baa2.” It affects $245 million in outstanding debt. “The downgrade to Ba1 reflects the city’s significantly weakened tax base, revenue-raising ability, and broader economic outlook,” Moody’s said in a statement, adding that its outlook remained negative.

Deep-Fried Doritos Debut at SoCal Fairs (LA Weekly)
Every year, Charlie Boghosian, aka Chicken Charlie, tries to outdo himself with his deep-fried concoctions sold at California fairs. The man began his arterial onslaught modestly several years ago with deep-fried Twinkies and deep-fried Snickers bars. Seeking ever greater challenges, he took on deep-fried Oreos, deep-fried cookie dough, deep-fried Spam, deep-fried Pop-Tarts and of course, the Zucchini Weeni. Many thought he had reached the apex of his hot-grease powers in 2011 with deep-fried Kool-Aid. But that was until a CBS News reporter’s daughter, along for an interview, recently challenged Charlie to deep-fry her bag of nacho cheese-flavored Doritos. “I did and it was delish,” Boghosian told the Weekly. “What’s amazing is the deep-frying made it more crunchy.” Boghosian explained his process: “I dipped the chips in a very watered down fish-and-chip batter, and after they were finished frying, I topped them with a season mixture of mine similar to Cajun seasonings.” He quickly added the new deep-fried discovery to his fair-food menu. Now a week and a half into the Orange County Fair, “It has become a fan favorite,” he says…The deep-fried Doritos aren’t the only new addition to Boghosian’s menu this year. Proving that they don’t call him Chicken Charlie for nothing, he’s also debuting deep-fried chicken skins. “You know people always say the skin is the best part,” he explains. “I thought one day, let’s just get to the best part and not waste any time on the rest of the chicken. It worked. It’s amazing and delicious. It’s like chicharrones, only better.” Read more »

Write-Offs: 07.23.14

$$$ Allianz, the German insurer which owns Pimco, wants to ensure that in a post-Gross era the asset manager he co-founded will not be so reliant on the investment decisions of one person. [Reuters]

$$$ The big money still loves hedge funds [NetNet]

$$$ World’s Biggest Wealth Fund Reviews $8 Billion Russian Holdings [Bloomberg]

$$$ Ex-Jefferies Managing Director Litvak Gets Two-Year Sentence [Bloomberg]

$$$ Jets Fans Can Earn Rewards Points For Not Being A$$holes [Deadspin] Read more »

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Opening Bell: 07.23.14

Herbalife Bashing Brings Bill Ackman Behind Where He First Began (Bloomberg, earlier)
During a more than three-hour presentation yesterday, billionaire investor Bill Ackman choked up while describing his family’s immigrant beginnings, called Herbalife (HLF) Ltd. Chief Executive Officer Michael Johnson “a predator” and labeled that company “a criminal enterprise.” Herbalife stock rose 25 percent. The increasingly public spectacle of Ackman eviscerating a company on stage, television and online after betting $1 billion that it will fail is raising questions about his credibility on Herbalife and whether there are limits to how short sellers make their case…Ackman has denounced Herbalife as a pyramid scheme since December 2012, spending $50 million of Pershing Square Capital Mangement LP’s money for a probe that included undercover investigators. He has since predicted that Herbalife’s distributors would leave in droves and that auditors wouldn’t sign off on the company’s financial statements. So far he is wrong about both.

John Paulson Makes Almost $1 Billion on OneWest Sale (Bloomberg)
John Paulson’s hedge funds made almost $1 billion on his investment in OneWest Bank, which is being purchased by CIT Group Inc. (CIT) for $3.4 billion in cash and stock. The $21.4 billion Paulson & Co. owns the investment through its Recovery Fund, which was created in October 2008, and a credit pool, according to a memo sent to clients. The funds spent $400 million to purchase a 24.9 percent stake in Pasadena, California-based OneWest in 2009. The sale values that stake at $788 million and Paulson also received $551 million in dividends. The total gain for the funds is $939 million. The transaction will take six to nine months to close and Paulson & Co. will be restricted from trading the stock for six months, the firm wrote in the memo.

US warned of up to 25 groups eyeing foreign switch to cut tax (FT)
Up to 25 more US companies are considering relocating overseas to cut their tax bills this year, a Democratic senator has warned, as he assailed investment bankers for encouraging the idea. The prediction came as concern mounts in Washington over a rise in merger deals, known as inversions, which US multinationals use to move their headquarters to countries with lower corporate tax rates…Ron Wyden, chairman of the Senate finance committee, intensified his attacks on inversions on Tuesday. “The inversion virus now seems to be multiplying every few days,” he said. “How many more infections can America’s economic body endure?” He complained that even as they hurt US employment and shrank the country’s tax base, the deals were being promoted by “fast-buck artists” such as investment bankers, private equity groups, lawyers and accountants.

Connecticut Supreme Court to Revisit Protection for Whistleblowers (WSJ)
The Connecticut Supreme Court will consider whether a 2006 U.S. Supreme Court ruling that restricted protections for workers who expose alleged wrongdoing by their employers should apply to cases brought under Connecticut law, which is friendlier than federal law on employee rights. Richard Trusz, 58, said he was fired from his Connecticut-based position as head of valuations at UBS’s real-estate investment arm, UBS Realty Investors LLC, in August 2008 after confronting senior management about properties that he considered overvalued, and therefore led to excessive fees for clients including state pension funds. The unit Mr. Trusz led was responsible for determining the market value of its real estate and mortgage investments. Mr. Trusz later sued the Swiss bank in federal court, saying his superiors engaged in “acts of intimidation and retaliation” and “treated him differently from others who didn’t complain” before terminating his employment. A UBS spokeswoman said recently that Mr. Trusz’s claims were “thoroughly looked into both internally and externally many years ago.” She declined to comment on Mr. Trusz’s valuation allegations and said the bank is continuing to seek dismissal of the lawsuit. The state will remain a haven for corporate whistleblowers if the Connecticut Supreme Court sides with Mr. Trusz. But if it applies the U.S. Supreme Court ruling, the state will fall in line with the federal standard.

Dodd-Frank not final chapter on reform: Dodd (CNBC)
Four years after the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law, its co-authors told CNBC the law was doing its job, but said it certainly isn’t the last chapter in regulating Wall Street and private equity firms. “We didn’t pass the Ten Commandments. We talked about a bill here, giving regulators the ability to modernize the architecture of our financial services industry,” said former Sen. Christopher Dodd, who authored the law with former Rep. Barney Frank.

Justin Bieber could face citizen’s arrest if illegal activity takes place at new Beverly Hills penthouse (NYDN)
Police have talked to folks at Bieber’s ritzy new Beverly Hills building about the possibility of placing him under citizen’s arrest if they see any illegal activity, the Daily News confirmed Tuesday. Cops discussed the option after being called to his posh penthouse a half dozen times Saturday night into Sunday morning for noise complaints related to a rooftop party, a police source said. “We responded six times this past weekend, as late as 3 a.m. Four were for the party, and two were calls for screaming fans outside,” Sgt. Max Subin with the Beverly Hills Police told The News. “Our officers went there and advised residents there are three ways to handle any situations of this nature,” he said. “We can give a citation for municipal code violations. There’s the possibility of arrest by us for something done in front of us. And the third way is a private person’s arrest for a misdemeanor not committed in police presence.” Read more »

Write-Offs: 07.22.14

$$$ Ackman’s ‘Death Blow’ to Herbalife Falls Short of Its Billing [Dealbook, earlier]

$$$ U.S. judge orders Argentina, creditors meet until deal reached [Reuters]

$$$ CIT Group to Buy OneWest; Profit Tops Estimates [WSJ]

$$$ Spitzer Returns, Taking Aim Again at Financial Analysts [Dealbook]

$$$ All Yankee employees will receive free admission and two free lap dances, the Show Palace in Queens announced. Plus, the dancers will be painted in pinstripes. [HP] Read more »

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Opening Bell: 07.22.14

Argentina asks U.S. judge to put debt payment order on hold (Reuters)
Argentina asked a U.S. judge on Monday to put on hold an order requiring it to pay bondholders who did not participate in debt restructurings following the country’s 2002 default, while it seeks a “global resolution.” Ahead of a July 30 deadline to reach a deal or face a new default, Argentina filed papers asking a New York federal judge to stay a ruling that it pay the holdout investors $1.33 billion plus interest. Argentina, which has been in settlement talks, said any deal must take into account other bondholders and factor in a clause in its restructured bonds that could open it up to further liability. “As those risks remain, so does the necessity and appropriateness of a stay,” Argentina’s lawyers wrote.

Money Manager Foiled By Bad Bets (WSJ)
A former Olympic fencer who was one of the few hedge-fund managers to predict the financial crisis is floundering in more placid markets. Balestra Capital Partners LP, founded by Wall Street veteran James Melcher, saw investors yank more than $600 million—or more than 60% of its assets—at the end of the second quarter, according to investor documents. New York-based Balestra’s investments were down more than 14% for this year through the end of June, the documents show. The 74-year-old Mr. Melcher, who competed for the U.S. in fencing at the 1972 Summer Olympics in Munich, is an extreme example of the pain being inflicted on many of Wall Street’s so-called macro traders. Many of those traders, who bet on global economic trends, including wagers that make money when markets fall, have been negatively affected by low interest rates and damped volatility across many of the markets in which they operate.

Wall Street Adapts to New Regulatory Regime (WSJ)
Four years after the Dodd-Frank financial law became reality, Washington’s regulatory machine is altering Wall Street in fundamental ways. Banks are selling off profitable business lines, pulling back from the short-term funding market, cutting ties with businesses that could attract extra regulatory scrutiny, and building up defenses to help weather future crises. While profits are up as firms slash costs and reduce funds set aside to cover future losses, their traditional profit engine—trading—is showing signs of weakening as banks step away from some activity amid regulatory pressure.

Fantex Completes Second Football Player I.P.O., Though Demand Is Slack (Dealbook)
Shares linked to the future income of [E.J. Manuel, a 24-year-old quarterback with the Buffalo Bills] Manuel started trading on Monday on an exchange operated by Fantex, a Silicon Valley start-up that helps athletes raise money through public offerings of stock. The firm previously sold shares linked to Vernon Davis of the San Francisco 49ers. The offering of 523,700 shares received a significant amount of support from Fantex itself. Unable to sell all of the Manuel stock to investors, the company stepped in to buy 250,000 shares, or 48 percent of the total amount offered, according to Buck French, the chief executive. This level of support was expected, Mr. French said. Despite the slack demand, the stock was trading higher in its debut on Monday. After opening for trading at $10 at noon, the shares were up 15 percent in early afternoon trading.

Fox’s Time Warner bid could hit $105 a share (NYP)
…according to Moody’s Investors Service, which in a report Monday laid out a scenario where Fox could offer $105 per share for Time Warner without jeopardizing its credit rating. That’s $20 more per share than Time Warner turned down from Rupert Murdoch’s company earlier this month. Moody’s scenario also boosts the deal’s cash component to $35.34 billion, up from $28.88 billion in Fox’s initial proposal. The beauty of Moody’s analysis, however, is Fox’s not having to break the bank to reel in Time Warner. In fact, the credit rating agency projected a Fox-Time Warner combo could return to Fox’s coveted leverage ratio — 3.0 times debt to Ebitda — inside of 18 months.

Soros Chart Shows Euro-Yen Reaching 2008 High (Bloomberg)
The euro will surge to a six-year high against the yen by the end of 2014 as the European Central Bank isn’t printing money as fast as the Bank of Japan, according to Daiwa Securities Co…Japanese traders and investors refer to this gauge as a “Soros Chart,” after billionaire investor George Soros correctly predicted in the 1990s that the yen would weaken because of Japan’s burgeoning money supply. Also tracked are the euro, which recently traded at 137 yen, up 46 percent since July 2012, and the slowing inflation rate in the 18 nations sharing the common currency.

Angry husband sends wife Excel spreadsheet detailing sex-starved month (NYDN)
A woman’s fed-up husband sent her an Excel spreadsheet listing every time she shot down his attempts to have sex over the past month, including her excuses, according to a Reddit post. The user throwwwwaway29 posted the doc to the site on Friday along with a plea for advice, Deadspin reported. “Yesterday morning, while in a taxi on the way to the airport, Husband sends a message to my work email which is connected to my phone,” the woman wrote. “I open it up, and it’s a sarcastic diatribe basically saying he won’t miss me for the 10 days I’m gone,” she said. The spurned hubby’s rundown showed the couple had only had sex three times since June 3, despite 27 tries on his part to get frisky. One column listed the wife’s apparent excuses, including protests that she felt “gross,” was too busy watching TV or ate too much. The successful rolls in the hay were marked with an italicized “Yes.” The beleaguered wife called the dry-spell “a temporary slow-down due to extenuating circumstances.” Read more »