Opening Bell: 11.26.14
Jefferies Bumps Up Against Big Rivals as It Looks to Expand (WSJ)
As Jefferies evolves from its roots as a trading firm to a midtier investment bank, it is knocking up against far larger financial firms vying for business, often from companies Jefferies helped to expand. Jefferies has often worked with smaller firms on transactions that bigger rivals may not pursue. As these customers get larger, the competition intensifies as they are courted by bigger financial firms. In 2014, Jefferies has been a lead underwriter on 25 U.S.-listed initial public offerings of health-care-related companies, topping all other investment banks, according to data provider Dealogic. But Jefferies ranks just eighth in net revenue generated by U.S. health-care banking overall—which includes stock and bond offerings, loans and merger advice—generating $196 million in revenue, trailing No. 1 J.P. Morgan Chase & Co.’s $639 million. “Investment banking has always been highly competitive,” Jefferies Chief Executive Richard Handler said in an interview at his office, just off the trading floor. The firm isn’t attached to a bank holding company and therefore has more flexibility in how it structures deals and compensates employees. This entrepreneurial structure was part of the allure when Mr. Lorello moved to Jefferies in 2009 with more than 30 health-care bankers, according to people familiar with the firm. Jefferies is a unit of Leucadia National Corp. and has net revenue topping $3 billion. “Our competitive advantage has never been stronger in the 25 years I have been at Jefferies,” Mr. Handler said.
Steven Cohen’s Ex-Wife Gets Outside Financing for Lawsuit (Dealbook, related)
Helping to fuel the long-running legal battle is Asta Funding, a financial backer of a Beverly Hills, Calif., firm that has provided litigation financing to Ms. Cohen, according to court documents and people briefed on the matter. Asta and the firm that is financing Ms. Cohen’s lawsuit — Balance Point Divorce Funding — have an agreement to share in the proceeds of legal recoveries by clients. All of this would appear to give investors in Asta, a publicly traded company based in Englewood Cliffs, N.J., a reason to cheer on Ms. Cohen, whose lawyers are scheduled to take a deposition from Mr. Cohen on Dec. 10. Balance Point, founded in 2009 by Stacey Napp after her own acrimonious divorce, signed a deal with Ms. Cohen in the summer of 2013 to provide Ms. Cohen with about $1.2 million to continue her litigation, said people briefed on the matter but not authorized to speak about a private transaction. While the specific terms of Balance Point’s arrangement with Ms. Cohen could not be determined, court filings in an unrelated lawsuit reveal it is common for Balance Point to get up to 25 percent of any legal recovery by a client in return for the financing provided. Balance Point is part of a niche business that provides financing in drawn-out matrimonial cases to litigants with wealthy spouses. Only a handful of companies provide such financing in the United States.
Uber Said Close to Raising Funding at Up to $40B Value (Bloomberg)
T. Rowe Price Group Inc. is in discussions to be a new investor, said the people, who asked not to be identified because the details are private. Existing investor Fidelity Investments is also set to participate in the funding, they said. Uber is raising at least $1 billion, the people said.
Shorting Chickens Becomes Hot Trade After Prices Surge (Bloomberg)
Short sellers have found a new asset to bet against: chickens. With no futures market to speculate on chicken-price movements, they’re turning to the equity market, borrowing record amounts of shares of two U.S. poultry producers that they in turn sell in anticipation of declines. The percentage of outstanding shares of Pilgrim’s Pride Corp. (PPC), the second-biggest U.S. chicken producer, that were sold short by investors has soared more than six-fold since Sept. 30, while the ratio for Sanderson Farms Inc. (SAFM) has almost doubled. The success, or failure, of the trade comes down largely on whether the eight-month surge in chicken, which has fattened producers’ profit margins, is over or not.
U.K. Banks Seen Facing Decades to Tackle `Toxic Culture' (Bloomberg)
U.K. banks will need at least two decades to clean up a “toxic culture” that has cost them more than 38.5 billion pounds ($60 billion) in fines and compensation, Cass Business School said in a report. Banks were forced to make provisions of at least 27 billion pounds to compensate customers for improperly sold insurance products from 2010 to 2014, according to the report commissioned by New City Agenda. The mis-selling of interest-rate hedging products has cost lenders 4.1 billion pounds. “It has become clear that having an aggressive sales culture, which ripped-off customers, has cost banks dearly,” David Davis, a Conservative member of Parliament, said in the statement. “A toxic culture which was decades in the making will take a generation to turn around.”
Siberian police consider deputizing reindeer (AP)
Officials in northwest Siberia said police could soon be deputizing reindeer to help chase down criminals in the region. Irina Pimkina of the Yamalo-Nenets region's Interior Ministry said police in the area, which is located in Russia's Arctic tundra, often find themselves at a disadvantage when chasing down local criminals, who often employ reindeer as getaway rides. "Of course we have snowmobiles in service, but one should understand that a machine is a machine," Pimkina told the Izvestia newspaper. "A snowmobile can break down or get stuck in the tundra, but the deer will run at all times." The deer would join the animal ranks of about 150 donkeys and mules employed by the Russian Defense Ministry to serve in mountain brigades. The legislation governing the animals also allows for reindeer to be used for law-enforcement purposes.
JPMorgan Data Breach Shows Need for Global Crackdown, ASIC Says (Bloomberg)
Markets regulators across the world must work together to counter cyber crime as the attack on JPMorgan (JPM) Chase & Co. exposes the risks posed by hackers, according to the head of Australia’s financial markets watchdog. “Cyber crime is a global problem that requires a global solution,” Greg Medcraft, chairman of the Australian Securities and Investments Commission, said in the text of a speech at Bloomberg’s Sydney office today. “The links between market players and infrastructure mean that the impact of a cyber attack can spread quickly and has the potential to dangerously affect the integrity and efficiency of global markets.”
Carl Icahn raises stake in car rental company Hertz (Reuters)
Activist investor Carl Icahn raised his stake in U.S. car rental company Hertz Global Holdings Inc to 10.77 percent from 8.48 percent. The billionaire was already Hertz's largest shareholder and in the past few months had successfully pushed for management changes and won board seats on the company.
In Moscow, a Financial District in Name Only (NYT)
In the coveted corner office, a bearded man in sweatpants scrambled eggs at a kitchenette, all the while taking in the serene beauty of the city lights twinkling far below. In the conference room, or as the company prefers to call it, the “common area,” two other men lounged about playing video games on an Xbox. In place of cubicles, there are bunk beds. High Level Hostel, one of the newest tenants in the financial district here known as Moscow City, sits on prime real estate on the 43rd floor of a multimillion-dollar glass-and-steel tower. It is not a youth-hostel-themed work space, but an actual youth hostel — dirty socks and all. “We thought, ‘why not open a hostel in a skyscraper?’ ” said Roman Drozdenko, the 25-year-old owner. “Nobody’s done that before.” The tower, with its marble veneer foyer, banks of elevators and breathtaking views, was clearly built for lawyers, accountants or stock traders. But “there were no questions regarding our guests” from the building management when he opened in September, Mr. Drozdenko said. “In fact, there were no questions at all.”
Joey Fatone helps break pillow fighting record (UPI)
The Guinness World Record for largest pillow fight was broken at South Dakota State University with 4,201 people, including NSYNC's Joey Fatone, organizers said. Motel chain Super 8, which sponsored the attempt Saturday to celebrate its 40th anniversary, said the number of participants topped the previous record, set only a few months ago, by just one person. The attempt took place Saturday at Coughlin-Alumni Stadium during a game against rivals University of South Dakota. Fatone gave a countdown on the stadium's screen and the pillow fight then lasted for the Guinness-mandated 60 seconds. "Super 8 came to me with the whole idea as far as coming here and kind of kicking it off," Fatone told KSFY-TV. "I think due to the fact that with me, what you see is what you get. I'm always energetic, always have fun, so they said, 'we'd love to have Joey Fatone and start off the fun.' I said, 'Hey, I'm all for it, so let's do it.'"
