$$$ I.S.S. Backs 2 Loeb Nominees for Sotheby’s Board [Dealbook]
$$$ Legal Memo Defends Ackman’s Actions in Allergan Bid [Dealbook]
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$$$ I.S.S. Backs 2 Loeb Nominees for Sotheby’s Board [Dealbook]
$$$ Legal Memo Defends Ackman’s Actions in Allergan Bid [Dealbook]
‘Flash Boys’ Resonates as Survey Finds High-Frequency Concerns (Bloomberg)
More than two-thirds of financial industry participants, 70 percent, say the U.S. equity markets aren’t fair for all, according to a survey conducted by ConvergEx Group LLC, which provides brokerage and trading-related services. Just over half, 51 percent, also said high-frequency trading is harmful or very harmful.
Facebook CFO Ebersman to Step Down Two Years After IPO (Digits)
Mr. Ebersman is leaving June 1 and being replaced by David Wehner, who joined Facebook in 2012 from Zynga to become the company’s vice president of corporate finance and business planning. Mr. Ebersman joined Facebook in 2009, leading the company into its initial public offering in May 2012. The former Genentech finance chief says he is returning back to the healthcare industry, without disclosing where.
Ratings Firms Ride Bond Resurgence (WSJ)
Six years after getting a failing grade for their role in the financial crisis, credit-rating firms are at the top of the class. Riding a global bond boom, the two biggest U.S. firms, Standard & Poor’s Ratings Services and Moody’s Investors Service, this month are expected to post record first-quarter profits. Fitch Ratings said in its annual filing this month that 2013 was “one of its best years ever.”
Investors Embrace ‘Catastrophe Bonds’ (WSJ)
With the U.S. hurricane season about a month away, insurers are issuing “catastrophe bonds” at the fastest clip since before the financial crisis. Insurers sell the bonds to help cover potential claims from hurricanes, tornadoes, earthquakes and other major insured risks. While losses on so-called cat bonds have been rare over the years, investors can forfeit both interest payments and their principal if disaster costs exceed designated levels, which gives insurers the right to tap the funds. The bonds have floating interest rates and are usually paid off upon maturity in three or four years. Cat-bond issuance in the first quarter more than doubled from the year-earlier period, to $1.2 billion, and second-quarter issuance is expected to hit an all-time high above $3.5 billion, according to Willis Capital Markets & Advisory. More than $2 billion of deals have closed or been announced this quarter, Willis said.
America’s First Cat Café is Popping Up in NYC This Week (Eater)
Pet food brand Purina ONE is opening a pop-up cat café at 168 Bowery this Thursday. For those unfamiliar, a cat café is a coffee shop populated with cats for customers to play with. It’s all the rage in Japan and Europe, and enterprising cat-lovers in San Francisco, Oakland, Portland, LA, Vancouver, and Toronto are racing to open cafés of their own. But with this pop-up, New York will become the very first North American city to actually get a cat café. Read more »
$$$ “I love Coke, I love the management, I love the directors, so I didn’t want to vote ‘No’,” Buffett said. “It’s kind of un-American to vote ‘No’ at a Coke meeting. I didn’t want to express any disapproval of management but we did disapprove of the plan. The plan compared to past plans was a significant change.” [Reuters]
$$$ Not long ago, a cereal called Holy Crap might have been the punch line of a joke. Or it might have been banned. Few would have expected annual sales to grow to $5.5 million in four years. [NYT] Read more »
Judges Consider What Defines Insider Trading (WSJ)
Federal prosecutors were peppered with tough questions Tuesday on the legal underpinnings of their near-perfect record in insider-trading cases, raising the prospect that some convictions could be overturned. In an hourlong hearing in Manhattan, judges of the U.S. Court of Appeals for the Second Circuit signaled that federal prosecutors may have taken too broad a view of insider trading, saying Wall Street needs more of a “bright line” about what constitutes a crime. At issue is whether a trader, to be guilty of insider trading, must have known a tip was illegally disclosed in exchange for a reward. Prosecutors have argued they need only show that people who used insider information knew it had been disclosed in breach of a fiduciary duty.
Numericable Set to Issue Record Junk Bond (WSJ)
A French cable operator is preparing what could be the largest junk-bond sale in history—a sign of investors’ ravenous appetite for risk in an era of low rates and a mark of the profound shift in bond financing on a continent that had long borrowed heavily from its banks. Bankers working on the deal say Numericable Group SA NUM.FR +3.93% was expected to raise the equivalent of €8.4 billion ($11.6 billion) from the bond sale Wednesday, about €2 billion more than initially planned. The Numericable deal would clobber the current record junk-bond sale, the $6.5 billion issue last year by U.S. telecommunications provider Sprint Corp. So big is the Numericable offering that it was being parceled into several chunks and issued in both dollars and euros. According to a banker working on the deal, the chunks will yield between about 5% and 6.5%.
Flurry of Allergan Trading Preceded Offer (WSJ)
Investors made outsize bets on Allergan Inc. stock in the 10 days during which activist hedge-fund manager William Ackman was privately accumulating a stake in the Botox maker, according to a Wall Street Journal analysis. Mr. Ackman’s Pershing Square Capital Management LP said Monday after the close of trading that it had bought a 9.7% stake in Allergan and had joined with Valeant Pharmaceuticals International Inc. to buy Allergan. Mr. Ackman and Valeant unveiled the offer, valued at roughly $46 billion, on Tuesday, and Allergan’s stock surged 15%. Even after stripping out Mr. Ackman’s buying, the volume of stock trading in Allergan during the 10-day period before Monday’s announcement was 86% higher than its average over the previous year, according to the Journal analysis, based on trading data provided by research firm S&P Capital IQ. There is no indication investors were tipped off about Pershing’s and Valeant’s offer. And other traders could have bought based on the higher volume. But such a significant surge in trading suggests that information about the potential buyout bid could have leaked to other investors, analysts said.
Russian bank launches post-Crimea bond (FT)
A Russian bank in the oil-rich region of Tatarstan has become the country’s first lender to issue a dollar-denominated bond since Moscow’s official annexation of Crimea and the subsequent tension with western governments. Tatfondbank, which has branches across Russia, raised $70m on Tuesday through a three-year bond priced to yield 11 per cent for investors. The issue, which was privately placed, was led by Bank of America Merrill Lynch along with two Russian banks, Region Broker Company and Otkritie Capital, part of Nomos Bank. According to bankers the bond issue could indicate a thawing in Russia’s debt capital markets, which have been largely put on hold as global political discord over Ukraine escalates. Nick Darrant, head of emerging markets syndicate at BNP Paribas, said the deal showed an uptick in demand for Russian debt remained in spite of the political risks.
Einhorn Shorting Tech as ‘Cool Kid’ Stocks Show Bubble (Bloomberg, earlier)
“There is a clear consensus that we are witnessing our second tech bubble in 15 years,” the New York-based firm said in a quarterly letter to clients.
Florida Man Catches 800-Pound Shark, Fries It Up (HP)
Joey Polk landed an 805-pound mako shark while fishing off the Florida panhandle last Tuesday. Video of the epic haul captured the moment Polk and his cousins pulled the giant fish ashore — and then took the remains home to eat. The 29-year-old, who lives in Milton, Fla., told WKRG that he’d prefer to keep a low profile, and doesn’t want any unnecessary attention paid to land-based shark fishing…”The funny thing is, as I left the house to go out that night, I kissed my son and said ‘Daddy’s gonna catch up a big, big fish tonight,’ but I didn’t think it would be this big,” Polk said, according to SFGate. Polk said he doesn’t want people to get the impression that gulf waters are teeming with sharks, and he doesn’t want people to go rushing out to the beach to try and land the big fish either. He said it’s all about the sport. According to Polk, the majority of the sharks he pulls in get tagged and released. But after an exhausting, hour-long fight, Polk said that the 11-foot mako shark couldn’t be saved. “We release about 98% of what we catch… we only bring in the ones too injured to swim away,” Polk said, according to SFGate. “We tried to revive the fish and send him back out, but he was too worn out to swim.” The website reports that Polk butchered the shark and cooked it for his community. He said it fed about 250 people. Read more »
$$$ Ex-Barclays Executive Sees ‘Golden Decade’ for Banking [Bloomberg]
$$$ Citigroup’s leaders say company is still too complex [Reuters]
$$$ What’s in a Name: The Ongoing Saga of Medbox [SIRF / Roddy Boyd]
$$$ Paulson, [Warren] says in the book released today, sold the $700 billion Troubled Asset Relief Program to the public as a “near par” transaction in which taxpayers would receive assets that were roughly equal to their investment. Though, she writes, in her capacity as a member of a congressional oversight panel for the program, she commissioned a report that found the Treasury was receiving 66 cents on the dollar. “Their conclusions sent a chill through me,” Warren writes. “Treasury had overpaid — and not just by a little. Treasury was subsidizing these banks pure and simple.” [Bloomberg]
Williams Urges Fed to Avoid Stoking Risk as It Boosts Jobs (Bloomberg)
“We’re exactly on the right track” with current policy, Williams said in an interview yesterday in San Francisco, predicting unemployment will fall to 5.5 percent by the end of next year and inflation will accelerate to about 1.7 percent. Trying to achieve the Fed’s goals sooner “would take policy actions that might have more negative effects,” he said.
Dawn raid makes comeback via activist drone strike (Reuters)
Remember the dawn raid, when a would-be acquirer built up a stake before the target realized it was under attack? Activist investor Bill Ackman has come up with a kind of drone strike version. His Pershing Square Capital Management hedge fund and Valeant Pharmaceuticals have teamed up to grab a potential 9.7 percent stake in Allergan, with a hostile takeover by Valeant ready for deployment. The acquisitive Valeant has reasons to be receptive to such an arrangement. For one thing, it’s essentially the creation of an activist hedge fund, ValueAct Capital, which set it on the path of serial dealmaking. Slashing research and development costs and applying its low tax rate to acquired businesses has served investors well. Its stock is up more than tenfold since it started buying rivals in 2008. The prospect of another deal kicked its shares 10 percent higher after regular market hours on Monday, taking its market capitalization up to $46 billion.
HK regulator reprimands, fines RBS over emerging-markets rates trades (Reuters)
Hong Kong’s Securities and Futures Commission (SFC) said on Tuesday it reprimanded Royal Bank of Scotland (RBS.L) for internal control failures, fining the bank HK$6 million ($773,800). The SFC said in a statement RBS failed to detect and prevent unauthorized trades in its emerging markets rates business in the city in 2011, following the discovery of unauthorized trades by former trader Shirlina Tsang. Tsang was sentenced last year to 50 months in jail after pleading guilty to fraud after was she caught falsifying records of her trades, Reuters previously reported.
Worker sends 1,000 ducklings to boss’s home in wages dispute (Metro)
Builder Chiu Xiang arranged for the 1,130 live ducklings to be dropped in the home of his employer, Hung Bin, in a dispute over wages. The 60-year-old, who worked for Bin for three years, said he was owed £300 in unpaid wages after quitting his job in China’s Sichuan province last year, according to the Shanghaiist. ‘It was all he deserved,’ he said. ‘I hope the ducks drove him quackers.’ Xiang organised for a contact who runs a poultry business to drop the ducks off, telling him they would be paid for on delivery. Police were called to the scene after Bin refused to pay for the duck delivery. ‘It was drastic but necessary,’ said Xiang, who has been promised a negotiated settlement with the local labour authorities. Read more »
$$$ Argentina Asks Supreme Court to Protect It From ‘Vulture’ Hedge Fund [BusinessWeek]
$$$ Sandals for Men Gain Ground [WSJ]
$$$ The Humane Society’s New Pitch: This Pork Producer Is a Bad Investment [BusinessWeek]
$$$ Singer, Griffin Among Billionaires Funding Rove Super-PAC [Bloomberg]
$$$ The Power Breakfast Spawns the Power Cut [WSJ]
Barclays to Exit Most Commodities Trading in Bid to Bolster Profit (WSJ)
The U.K. bank will pull back from trading in base metals, energy and agricultural products and fold its precious metals business into its currency trading unit, people familiar with the plans said Monday. The move comes as Barclays prepares to tell investors on May 8 how it will reshape its investment bank, where the commodities business is housed, to adapt to costly new regulations and a slowdown in some business areas.
SEC Weighs Making Brokers Disclose Where Trades Are Sent (Bloomberg)
The proposal could give investors more insight into whether they are getting the best price when they buy and sell large numbers of shares, according to three people familiar with the matter. Brokers entrusted with orders in the U.S. stock market can choose from dozens of exchanges and private venues. Some money managers such as T. Rowe Price Group Inc. (TROW) have told regulators that incentives offered by exchanges for attracting orders can put a broker’s financial interest at odds with the customer’s.
TPG-Led Group Closes $450 Million Investment in Airbnb (WSJ)
A group led by private-equity firm TPG has finalized an agreement to invest more than $450 million in Airbnb Inc., valuing the home-rental site at $10 billion, according to people familiar with the situation. The funding round makes Airbnb one of the world’s most valuable startups, matching investors’ price tags for file-storage company Dropbox Inc. and Chinese smartphone maker Xiaomi Inc. Airbnb, which lets people rent their homes to travelers, is also now valued higher than large publicly traded hotel chains Wyndham Worldwide Corp. and Hyatt Hotels.
Ice Cream Turf War Breaks Out On Easter (Fox2)
A ice cream truck turf war broke out Easter morning in north St. Louis County on Parker Road, near Highway 367. Just after 1 pm, two ice cream trucks got into a dust up, when the driver of one truck cut off another truck, threatening the driver of the first truck. The driver of the second truck then proceeded to damage the first truck, music siren and merchandise. The driver of the damage truck says he’s had the same route for seven years and the second driver wanted to take over his route. But the real kicker here is that both drivers work for the same company. The victim says he plans on keeping his route, and that other driver may lose his job. Read more »