Buffett attacks hedge funds in annual letter (Financial Times)
In his annual letter to shareholders, Warren Buffett took a swipe at hedge funds. He doesn't like their compensation structure, which he views as grotesque. Of course, many in the media are going to take his words as pearls of wisdom from the "Oracle of Omaha", but this is nothing more than the regurgitation of what's become some utterly conventional thought. Everyone is attacking hedge funds these days, so if anything Warren Buffett is just sort of late to the game here.
13 Accused of Trading as Insiders (NYT)
Another good old insider trading scandal hits the street. The whole thing sounds pretty straightforward. An individual in the stock research department at UBS has a friend who runs a hedge fund inside Bear Stearns. UBS guy furnishes Bear Stearns guy with advance word of upgrades and downgrades -- the two split the profits. What's funny is that the two originally arranged the deal because the UBS guy owed the Bear Stearns guy $25,000 (we're not sure what for, although we'd love to know). So it was the UBS guy that proposed the scheme. Now put yourself in this situation, and think about how you'd react. Somebody owes you $25,000, and they propose to pay it off by committing a crime together. Oh boy, what a deal!
Microsoft: Should They Buy Yahoo? (Tech Trader Daily)
This is a discussion that seems to pop up very 4-6 months. There's some belief that if Microsoft were to buy Yahoo, the combined entity could be a credible challenger to Google. Yes, Microsoft needs some help in the area of the internet, and yes Yahoo is still a big company with a lot of users. But it's unclear how a combined Microsoft+Yahoo would perform any better than Microsoft and Yahoo not combined. Both are losing out to Google, and nothing about the combination would seem to offer any real trick to get things turned around.
Asian Stocks Drop, Led by Toyota, on U.S. Growth Concern, Yen (Bloomberg)
Fittingly, the Asian shares slouched their way into the weekend, posting losses across the board. In Japan, shares of Sony and Toyota were both hit, as the rally in the Yen threatened exporters.
Oracle: Consolidation Catalyst? (BusinessWeek)
We already mentioned the Hyperion buyout yesterday, so we only link to this cause it's one of the silliest headlines we've seen in a while. Consolidation catalyst? Uh, yeah, you could say that.
A Bank Fails, Finally (Alpha & Omega)
Read into this what you will, but the US has had its first bank failure since 2004, as the Metropolitan Savings Bank of Pittsburgh, which had a $14 million loan portfolio, had to close its doors. It's not real surprising that banks don't fail much anymore. They're pretty much retail shops, selling various financial products, none of which carry real risk. Any risk that they do take on is typically passed on to larger entities that can absorb it more easily. It's almost surprising that more banks don't fail in the way traditional businesses fail, from not enough business, forcing them to have an "everything must go" sale. Hmm, not sure how that would work.
The Fallacy of Comparative Advantage (The American Protectionist)
If you're really bored this weekend (which you shouldn't be: you should either be out celebrating that the week is over, or you should be studying charts), then may we invite you to read an incredibly long blog entry devote solely to refuting the idea of comparative advantage. Of course, we haven't read it yet. Really, it's just too long. And we sort of suspect that the author's goal is to write something so long and dense that nobody will ever try to get through it. But if you do read it, and are interested in summarizing it for us, please let us know, cause we'd love to know what it says.
Trying to Make 'Care' Part of the Image of Hedge Funds (NYT)
Awww, hedge funds have a heart. Apparently, the concern that the public is wary about them and politicians hate them is prompting hedge funs to go on the offensive, doing whatever is necessary to bolster their image. Some in the industry are even backing a new charity called Hedge Funds Care. The man behind the charity says that the hedge fund industry is the most philanthropic one that there is, and the perception that they only care about profit is undeserved (mental note: don't invest with this guy). Hedge Funds Care has branched out all over the globe, and even has a location in the Cayman Islands. That must simply be out of habit. Perhaps he needs to be reminded that charities don't pay taxes, so there's no reason to have a location in a tax haven.
The $500bn Schwarzenegger bond issue? (FT Alphaville)
In a recent interview, governor Arnold Schwarzenegger said he needed $500 billion to remake California in the way it needs to be. While we're used to words like "billion" getting thrown about left and right, $500 billion remains an enormous sum on any scale. In fact, if you crunch the numbers, it comes down to over $22,000 for every working age Californian. There's always been talk about how California is an economy unto itself, but increasingly the state is becoming a nation unto itself -- which may or may not be a good thing. In edition to its nation-like stance on debt, it's also unilaterally acting on things like global warming, as a number of western governors have decided to take matters into their own hands.
Jolie files to adopt in Vietnam (CNN)
Vietnam is supposed to be up and coming. It's supposed to be the next China, no wait, the next Thailand, or was it the next India? We forget which. But Angelina Jolie is filing to adopt there, which is a good confirmation that it's time to go long corporate Vietnam. After all, she did do wonders for Namibia.