Opening Bell: 1.27.17

Ackman tries subtlety for a change; hedge funds hit paydirt tracking planes; at least one Burger King has a secret weed menu; and more.

Author:
Dealbreaker
Updated:
Jan 14, 2019
Original:
Jan 27, 2017

Humbled Ackman plays coy about two behemoth buys (NYP)

The Pershing Square founder invested roughly $436 million, or 4 percent of his fund’s $12 billion capital, in late 2016 in one investment. The second, larger investment, totaling roughly 9 percent of his capital, or $981 million, was made in early 2017. Discretion is a rare move for Ackman, who is known to make media rounds and prepare several-hundred-page slide shows detailing his activist plays.

Hedge Funds Strike Paydirt on Actelion Deal After Tracking J&J's Jet (BBG)

Burned by failed deals, poor returns and client withdrawals, hedge fund managers needed a home run. With each passing day last week, as a Johnson & Johnson corporate jet remained mostly parked a short drive from Actelion Ltd. headquarters near Basel, Switzerland, they grew increasingly confident of a big score, according to hedge fund managers betting on the deal who tracked the plane’s movements on the Internet.

Kushner’s Felon Father Back At Helm Of New York Empire With Two Fellow Inmates (BBG)

It’s hard to find work right out of prison. But Avram Lebor and Richard Goettlich walked from their Alabama penitentiary into top jobs at the real estate company then run by Jared Kushner, now President Donald Trump’s son-in-law and senior adviser. The two men, convicted in separate sprawling fraud schemes, were hired several years ago by his father, Charles Kushner, who had been locked up in the same federal prison with them.

Elon Musk Has Trump’s Ear, and Wall Street Takes Note (NYT)

Adam Jonas, a prominent automotive analyst at Morgan Stanley, upgraded Tesla stock to overweight last week, with a target price of $305 a share. (It was trading this week at about $255.) He said that the “strategic relationship between Tesla leadership and the new administration is an important development” in his decision to upgrade Tesla stock.

Jilting Jefferies Said to Cost Credit Suisse Bankers $10 Million (BBG)

talent war between Jefferies Group LLC and Credit Suisse Group AG is threatening to escalate. Five Credit Suisse bankers who reneged on agreements to join Jefferies this month may face demands that they pay more than $10 million to their scorned suitor, according to a person with knowledge of the matter.

Alexa, Stop Making Life Miserable for Anyone With a Similar Name! (WSJ)

Apple Inc. picked “Siri.” Microsoft Corp. chose “Cortana.” ( Alphabet Inc.’s Google opted to keep its software nonhuman, calling it “Assistant.”) Amazon.com Inc.’s choice, as it happens, was the 39th most popular girl’s name in the U.S. in 2006. “I always liked my name, until Amazon gave it to a robot,” says Alexa Sussman, a recent New York University graduate who works in marketing.

UBS Misses Out on the Trump Bump (Gadfly)

Pessimists might now call into question the bank's decision to scale back in fixed income and focus on serving rich clients now that interest rates are rising and President Donald Trump is preparing to slash red tape for Wall Street. UBS shares are down slightly over the past year -- trailing gains of 12 percent at Deutsche Bank AG and 26 percent at Barclays Plc.

Stanford historian uncovers a grim correlation between violence and inequality over the millennia (Stanford)

What price do we pay for civilization? For Walter Scheidel, a professor of history and classics at Stanford, civilization has come at the cost of glaring economic inequality since the Stone Age. The sole exception, in his account, is widespread violence – wars, pandemics, civil unrest; only violent shocks like these have substantially reduced inequality over the millennia. “It is almost universally true that violence has been necessary to ensure the redistribution of wealth at any point in time.”

A Burger King Was Allegedly Selling Weed to Customers Who Asked for 'Extra Crispy Fries' (VICE)

It's not clear how long the pair was running their side hustle before police in the town of Epping—population 6,144—caught on. Last Saturday, an undercover cop pulled up to the restaurant, asked if "Nasty Boy" was working, and then placed his order with a side of extra crispy fries. Norris then reportedly gave the guy his Whopperito or whatever, along with a coffee cup full of pot.

Opening Bell

Ackman's latest letdown; hedge funds' love-hate relationship with Snap; Jenna Jameson's odd career turn; and more.

Opening Bell

Herbalife readies finishing move on Bill Ackman; Goldman plans finishing move on Volcker rule; firefighters feast on piglets they saved from fire; and more.

Opening Bell

Steve Mnuchin loves using government planes for personal matters; Ackman is a one-man good-cop-bad-cop; Equifax's login credentials were "admin/admin"; London's "total monster fatberg"; and more.

Opening Bell

Paul Singer put on blast for "legendary" partying; Goldman ditches the dollar trade; a drive-through weed dispensary; and more.

Opening Bell

Snap sets IPO price; solar permabear gets no love from the industry; models make a killing delivering weed; and more.

Opening Bell

Morgan Stanley Sees Core Earnings Weaken (WSJ) Morgan Stanley saw core earnings weaken, although the investment bank swung to a first-quarter profit as it benefited from a comparison with a year-earlier period bogged down by a heavy charge. For the quarter, the bank reported a profit of $984 million, compared with a year-earlier loss of $94 million. The per-share profit, which reflects the payment of preferred dividends, was 49 cents compared with a loss of six cents a year earlier. The latest period featured a decline in fixed-income trading revenue, but strong stock trading and continued improvements in Morgan Stanley's wealth-management division, which was buoyed by strong markets. ... Revenue jumped 18% to $8.16 billion. Excluding debt valuation, revenue was $8.48 billion. Analysts polled by Thomson Reuters most recently expected earnings, excluding debt-valuation adjustments, of 57 cents, on revenue of $8.35 billion. Blackstone First-Quarter Profit Rises on Fund Performance (Bloomberg) Blackstone Group LP (BX), the world’s biggest buyout firm, said first-quarter profit rose 28 percent as market gains lifted the carrying value of its holdings. Economic net income, a measure of earnings excluding some costs tied to the firm’s 2007 initial public offering, increased to $628.3 million, or 55 cents a share, from $491.2 million, or 44 cents, a year earlier, New York-based Blackstone said today in a statement. Analysts had expected earnings of 53 cents a share, according to the average of 15 estimates in a Bloomberg survey. Barclays Head of Investment Banking Rich Ricci to Retire in June (Bloomberg) Barclays Plc’s Rich Ricci, the head of investment banking and one of the last members of former Chief Executive Officer Robert Diamond’s management team, will retire at the end of June. Ricci, 49, will be replaced by Eric Bommensath and Tom King, 52, as co-chief executive officers of corporate and investment banking in May, the London-based bank said in a statement today. “The market will see this as an inevitable and appropriate piece of transitioning,” said Ian Gordon, an analyst at Investec Plc (INVP) in London. “Few tears will be shed and the reshuffle will be broadly welcomed.” Special Report: The battle for the Swiss soul (Reuters) A sign on display in UBS's museum, from a bank founded in 1747 in the Italian-speaking part of Switzerland, could almost be Switzerland's mantra: "MASSIMA DISCREZIONE" it promises. Swiss bankers have long adhered to an unwritten code similar to that observed by doctors or priests. Bankers do not acknowledge clients in public for fear of exposing them as account holders; they often carry business cards with just a name, rather than bank or contact details; and, at least until the 1990s, they never advertised abroad. ... Even today, few Swiss like to discuss the fact that much of the country's prosperity was built on bankers helping foreigners evade taxes. Visitors should avoid personal questions, advises Communicaid, a consultancy which advises businesses on cross-cultural awareness. It would also be wise to steer clear of discussing "Swiss banks, money or Switzerland's military role in World War One or Two." Reinhart/Rogoff and Growth in a Time Before Debt (RortyBomb via Felix Salmon) Here is a simple question: does a high debt-to-GDP ratio better predict future growth rates, or past ones? If the former is true, it would be consistent with the argument that higher debt levels cause growth to fall. On the other hand, if higher debt "predicts" past growth, that is a signature of reverse causality. ... As is evident, current period debt-to-GDP is a pretty poor predictor of future GDP growth at debt-to-GDP ratios of 30 or greater—the range where one might expect to find a tipping point dynamic. But it does a great job predicting past growth. Ottawa sets up taxpayer-funded food truck in Mexico to promote Canadian cuisine (National Post) When author Anita Stewart first heard about the Canadian government’s new food truck parked in Mexico City, she laughed so hard she cried. The new Canada-branded, taxpayer-funded venture, which kicked off its three-week pilot project last week, is serving up a Mexican-ized version of poutine, using Oaxaca cheese instead of curds. Also on the menu are Alberta beef tourtière, and maple-glazed Albacore tuna. China Vows Wider Yuan Movement (WSJ) China's central bank plans to widen the yuan's trading band in the near future, People's Bank of China Vice Governor Yi Gang said Wednesday, suggesting that China's leaders will press ahead with change despite the surprise slowing of the economy. "The exchange rate is going to be more market-oriented," Mr. Yi said on a panel at the International Monetary Fund spring meetings in Washington. "I think in the near future we are going to increase the floating band even further." IMF warns on risks of excessive easing (FT) Extraordinarily loose monetary policy risks sparking credit bubbles that threaten to tip the world back into financial crisis, the International Monetary Fund warned on Wednesday. In its global financial stability report, the fund cautioned that policy reforms were needed urgently to restore long-term health to the financial system before the long-term dangers of monetary stimulus materialised. German Parliament Approves Bailout for Cyprus (WSJ) German Finance Minister Wolfgang Schäuble called the vote a "strong signal" by Germany in favor of the euro and the euro zone. The parliament also voted in favor of a seven-year extension of the maturity on European Financial Stability Facility loans for Ireland and Portugal with a large majority. SEC to Move Past Financial Crisis Cases Under New Chairman White (Bloomberg) Mary Jo White, the first former prosecutor to serve as chairman of the U.S. Securities and Exchange Commission, has pledged to run a “bold and unrelenting” enforcement program at the agency charged with regulating Wall Street. With financial crisis cases mostly done and some of the biggest insider-trading cases in history closed, White will have to chart a course into new areas to keep that pledge. White, who was sworn in last week, has already provided a few signals about what that might be. During her Senate confirmation hearing, she said she intends to focus on high- frequency and automated trading. She has also raised questions about a drop in the number of accounting fraud cases the agency has brought in recent years. Dispute in Hamptons Set Off by Effort to Hold Back Ocean (NYT) Soon after Hurricane Sandy hit last fall, Joshua Harris, a billionaire hedge fund founder and an owner of the Philadelphia 76ers, began to fear that his $25 million home on the water in Southampton might fall victim to the next major storm. So he installed a costly defense against incoming waves: a shield of large metal plates on the beach, camouflaged by sand. His neighbor, Mark Rachesky, another billionaire hedge fund founder, put up similar fortifications between his home and the surf. Chris Shumway, who closed his $8 billion hedge fund two years ago, trucked in boulders the size of Volkswagens. Across a section of this wealthy town, some residents, accustomed to having their way in the business world, are now trying to hold back the ocean. ‘Elvis’ is busted in ricin terror (NYP) The FBI last night busted a troubled Mississippi Elvis impersonator as the poison-wielding man who mailed ricin-laced letters to President Obama and two other officials. ... Despite his rock ’n’ roll hobby, Curtis shows his angry side on Facebook, where he lashes out in a conspiracy-filled rant. “I’m on the hidden front lines of a secret war,” he wrote. “They burned down my home, killed my dogs, my cat, my rabbit, blew up my 1966 Plymouth Valiant . . . and guess what? I am still a thorn in their corrupt anals! I will remain here until Jesus Christ decides it’s time for me to go.”