Opening Bell: 10.24.14

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Airbnb valued at $13B ahead of staff stock sale (FT)
Airbnb's valuation is set to rise to $13 billion, up from $10 billion earlier this year, as it prepares an employee stock sale, according to people familiar with its plans. The valuation would make the accommodation site second only to Uber in the rankings of Silicon Valley's most valuable private companies, at a time when some venture capitalists are becoming concerned about the rate at which start-ups are spending capital. Airbnb, which overhauled the design of its site and apps this summer, is without a chief financial officer after the departure of Andrew Swain last month, which may make an initial public offering unlikely in the near term.

Paul Allen To Give $100 Million To Tackle Ebola Crisis (NYT)
The billionaire Paul G. Allen said on Thursday that he would donate $100 million to the fight against Ebola, which has killed almost 5,000 people so far and crippled Western Africa. The amount roughly quadruples his earlier commitment of about $26 million to nonprofit groups and government agencies like the Centers for Disease Control and Prevention, making him one of the largest individual donors in the Ebola crisis. “Everybody feels called sometimes to really pursue a certain thing that resonates with them, and this has resonated with me,” Mr. Allen, a co-founder of Microsoft, said in a telephone interview on Thursday. He said when he first began hearing about the Ebola outbreak in July, he had a “nagging sense” that it could spiral out of control. “We’re up against an extremely tough opponent here,” he said. “The exponential nature of the growth of this disease is really a challenge — we’ve already seen in the U.S. where one case quickly became two.”

KKR Signals Buying Opportunities Amid Volatile Markets (WSJ)
Echoing sentiments from other private-equity executives, one of the top lieutenants to KKR co-founders Henry Kravis and George Roberts on Thursday said recent whipsawing markets could work to the firm’s advantage. “We like investing in complex situations when other investors may be nervous,” said Scott Nuttall, head of KKR’s global capital and asset management group, during a Thursday earnings call with analysts. “We’re hopeful this environment will lead to more opportunities. So, if the world gets difficult, we’ll be ready to capitalize.”

Unused vacation days at 40-year high (CNBC)
U.S. workers are using only 77 percent of their paid time off, according to the research group's report released Tuesday. And the decline is not just tied to recent economic worries; use of vacation days are at their lowest point in the past four decades. In 2013, U.S. workers took an average of 16 days of vacation compared with 20.3 days in 2000, according to the report.

Thirty-one banks prepare for Fed tests (FT)
Global banks will have to show how they can withstand a spike in oil prices, a rise in the US unemployment rate and an increase in risky corporate loans as part of the 2015 Federal Reserve stress tests. Passing the stress tests and related capital planning review is a top priority for banks, because this determines whether they can pay additional dividends or buy back shares. Companies that fail the test, which is aimed at showing how a bank would deal with a crisis situation, can also take a reputational hit. Citigroup suffered an embarrassing blow when it failed to pass the last review, and executives are determined not to repeat that mistake in 2015. The US units of HSBC, Royal Bank of Scotland and Santander, which took the tests for the first time last year, also failed. Fed officials have warned they will continue to raise the bar on expectations for banks, putting additional pressure on them. Thirty-one banks will participate in the 2015 capital planning scenarios, including Deutsche Bank for the first time. It is already under pressure from the Federal Reserve Bank of New York, which has told it in a private letter that its regulatory reports were “low quality, inaccurate and unreliable”.

Supermarket Says Sorry For Selling Hitler Coffee Creamer (AP)
A leading Swiss supermarket chain is apologizing for what it calls an "unforgivable blunder": distributing mini-containers of coffee cream bearing portraits of Adolf Hitler and Benito Mussolini. Migros, which also sells electronics and household goods, says it is immediately withdrawing boxes containing hundreds of the coffee cream containers and is breaking all ties with Karo-Versand, the small Swiss company that designed the collectible series of 55 different motifs — including likenesses of the German and Italian fascist dictators. In a statement Wednesday, Migros described the incident as an internal failure and vowed to "tighten our controls for these products drastically" to ensure no more such mistakes.

Herbalife ‘spiked’ Venezuelan profits: Ackman (NYP)
Herbalife “inflated” its profits over the past 12 months by as much as 22 percent by using outdated exchange rates on sales to Venezuela, a new report claims. The maker of nutritional shakes priced product shipped to its Venezuelan distributors at a 25-to-1 bolivar exchange rate but used an outdated official exchange rate of 6.3-to-1 to record the sales, thus overstating its profits, the report — commissioned by Herbalife nemesis and Pershing Square Capital CEO Bill Ackman — alleges. While the practice is not illegal, investors believe Herbalife will soon be forced to change the way it books its Venezuelan sales to the latest official rate of 50-to-1. Herbalife isn’t saying when or if it will change the rate at which it books its Venezuelan sales. The Los Angeles company will report third-quarter results on Nov. 3. “The hyper revenue growth and reported ‘profits’ that Herbalife has generated in Venezuela are a total fiction,” said Ackman, who has bet $2 billion that the company is a pyramid scheme.

Grubhub Profit Rises 400% as More Become Customers (Reuters)
The online food delivery company GrubHub reported a more than 400 percent increase in quarterly profit as more people ordered meals from it. GrubHub said the number of active diners using its services grew 50 percent to 4.6 million from a year earlier. GrubHub’s revenue rose 51 percent to $61.9 million from a year earlier, and net income rose to $6.5 million, or 8 cents a share, in the third quarter ended Sept. 30, from $1.2 million, or 1 cent a share, a year earlier. Analysts expected an average adjusted profit of 6 cents a share on revenue of $57.4 million, according to Thomson Reuters.

Warren Buffett Puts Wind in Berkshire’s Sails (WSJ)
Warren Buffett is synonymous with his hometown of Omaha, Neb., but for a glimpse into the future of his investment empire, look east…to Iowa. In the neighboring Hawkeye State, the Berkshire Hathaway Inc. chairman has sunk billions into wind-farm projects, part of a big gambit on renewable energy by a utility company he acquired in 2000 and has built into one of the country’s largest power suppliers. Through a majority-owned subsidiary, Berkshire Hathaway Energy, Mr. Buffett plans to double the $15 billion already committed to renewable-energy projects through early this year, and he is on the hunt for more utility acquisitions. Charles T. Munger , Mr. Buffett’s longtime business partner and Berkshire’s vice chairman, last month predicted that the company would be “the biggest utilities business in the United States” in a few years.

New Manager of Pimco’s Flagship Fund Sticks to View on Low Interest Rates (Dealbook)
In one of his first public appearances since he succeeded Bill Gross last month as the fund’s lead manager, Scott A. Mather emphasized that there would be no changes to Pimco’s house view that interest rates would remain low in a weak global economy. In such an environment, Pimco has argued, there is a strong case to made for investing in riskier securities, be they high-yield corporate bonds in the United States or debt securities issued by Mexico or Brazil. The Total Return fund also has large holdings in inflation-protected Treasury bonds, which are very actively traded and provide a substantial liquidity cushion for the portfolio.

Italian couple get stuck in frolic at sea (The Local)
...the amorous couple were making the most of a warm day, and a practically deserted beach, when they decided to take a dip in the ocean at Porto San Giorgio to express their love. But their lovemaking came to an embarrassing end when the man was unable to extricate himself from the woman due to suction, the newspaper said. They remained in the water until they caught the attention of a woman walking along the beach, who gave them a towel after they struggled back to the shore. A doctor was called and they were taken to a hospital emergency room. There the woman was given an injection usually used to dilate the uterus of pregnant women, in order to untangle the couple.

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Opening Bell: 01.31.13

Deutsche Bank Swings To A $2.9 Billion Loss (WSJ) In the fourth quarter alone, the bank took €2.9 billion in charges, €1 billion of which was for "litigation-related charges." Mr. Jain said the charges "relate to developments in regulatory investigations and adverse court rulings which you are all familiar with," but didn't elaborate further. Deutsche Bank is currently embroiled in a number of legal disputes on both sides of the Atlantic, including the decade-long legal battle in the 2002 bankruptcy of Germany's Kirch Media Group. It is also among the banks that are under official investigation for allegedly rigging interbank benchmark rates, including the London Interbank Offered Rate. The rest of the quarter's charges were mainly related to losses from businesses bought before 2003, such as Bankers Trust and Scudder in the U.S., and impairments related to its investment in the Cosmopolitan Resort in Las Vegas and Maher Terminals in North America, which it put into an internal bad bank. The quarter's net loss of €2.17 billion compares with a profit of €147 million a year earlier. For the full year, net profit was €611 million, down from €4.13 billion. Deutsche Bank Beats Capital Goal as Jain Shrugs Off Loss (Bloomberg) “We’ve galvanized Deutsche Bank around the achievement of our capital targets,” Jain, 50, said on a conference call with analysts. The loss “reflects a number of decisions we took to position Deutsche Bank,” he said. Barclays, RBS May Pay Billions Over Improper Derivatives Sales (Bloomberg) The lenders, including Lloyds Banking Group Plc and HSBC Holdings Plc, have set aside around 740 million pounds to cover the claims. Analysts say the total charges for the industry may be much higher than that after the Financial Services Authority said it found “serious failings” in reviews of product sales. SAC And Elan Blasted By Investor Who Lost Nest Egg (NYP) Ronald Weiland realized he’d made a bad bet in 2008, when he lost his $1 million nest egg trading shares of drug company Elan. What he didn’t know then was that the cards were stacked against him. Weiland now believes that he and other investors were played by Steve Cohen’s SAC Capital Advisors when the hedge fund giant — acting on information from a former trader accused of insider trading — abruptly dumped its huge long position in Elan and Wyeth and started shorting both stocks. “They had information that I didn’t have access to,” said Weiland, a 53-year-old former consultant for Arthur Andersen. “It’s totally a matter of seeing very wealthy people being able to game the system.” The big trading swing that netted $276 million for SAC and led to the arrest of former trader Mathew Martoma has also landed the firm in hot water. Elan investors have filed at least two lawsuits against SAC, accusing the firm of costing them millions, and several class-action law firms are looking to tee up more. US Targeting Tax Evasion (WSJ) On Monday, a federal judge in New York approved an Internal Revenue Service summons demanding still more records from UBS. According to court filings, the government now is focusing on U.S. taxpayers with accounts at smaller Swiss banks that didn't have U.S. branches but served customers through a UBS account in Stamford, Conn. Interactive Map: What NYC Neighborhoods Have The Most Public Drinking Complaints? (Gothamist) Greenpoint, Williamsburg, the Lower East Side, Hamilton Heights, East Harlem and Washington Heights are the worst offenders—on the other hand, almost no one is getting in trouble in Midtown, the Financial District, Red Hook, Dumbo, and the Upper East and West Sides. Since we already know there can be a a historical correlation between public drinking and public urinating (and sometimes only the urinating part is public), we decided to look at public urination complaints too...Some conclusions from this comparison: Midtown East and Chelsea have way more urination complaints than drinking ones. Union Square, Greenpoint and Randalls Island are also urinary offenders. It seems like nobody on Staten Island cares about people urinating on their lawns, and same goes for anywhere west of East Flushing. Blackstone Swings To Fourth Quarter Profit (WSJ) As of the quarter's end, total assets under management reached a record $210.22 billion, up 26% from the year earlier, as all of Blackstone's investment businesses continued to see net inflows and carrying-value appreciation...Blackstone posted a profit of $106.4 million, or 19 cents a unit, compared with a year-earlier loss of $22.7 million, or five cents a unit. On the basis of so-called economic net income, the firm reported a profit of 59 cents a unit, versus a profit of 42 cents a unit a year earlier. Analysts surveyed by Thomson Reuters recently expected a per-share profit of 47 cents. Ackman Ahead In Herbalife Bet (NYP) Ackman has scored a gross profit of about $260 million on his $1 billion short bet against the nutritional supplements company, based on an estimated 20 million shares shorted at an average price of $50. Loeb, who bought 8.9 million shares at an average price of $32, is up $44.5 million. Ackman has widened his lead considerably. Just two weeks ago, his gross gain stood closer to $120 million while Loeb had made an estimated $108 million. Threats Cloud Euro's Flight (WSJ) The euro, once on death's door, is on a monthslong tear, rising Wednesday to its highest level since November 2011. But even some investors who helped propel the currency above $1.3560 Wednesday say it can't fly much further. Europe's economy is still in the doldrums, they say, and a stronger euro could make the situation worse. And with central banks elsewhere racing to push down their own currencies, boosting the relative value of the euro, the European Central Bank eventually could be compelled to join them. Jobless Claims in U.S. Rose 38,000 Last Week to 368,000 (Bloomberg) Economists forecast 350,000 filings, according to the Bloomberg survey median. The increase followed a combined 45,000 drop in the prior two weeks. Guy Inadvertently Posts Public YouTube Video Inviting His Fiancée’s Best Friend Over for a Threeway (Gawker) We've all been there. You're super excited after getting the go ahead from your fiancée Cynthia to invite her best friend Zoey over for a threeway, so you hastily record a video introducing yourself to Zoey and letting her know that you're totally open to having a threeway this week, next week, the week after that, whenever, anytime, today, or maybe tomorrow, whenever possible, and you're just really excited to show her things that she's never seen and do things that were never done before in a threeway. Then you hastily upload the video to your public YouTube account that 300 people are subscribed to, and await your threeway.