Opening Bell: 9.17.20 - Dealbreaker

Activist ValueAct played a key role in speeding up Citigroup CEO’s retirement, sources say [CNBC]
ValueAct was “very disappointed” in the bank’s performance under Corbat and his deputies since it built up a stake in 2018, primarily because the bank continually missed or changed its performance targets…. ValueAct said in a statement that it didn’t seek the retirement of Corbat. Instead, the firm, whose Citigroup investment is led by G. Mason Morfit and Dylan Haggart, was vocal with the bank’s board and management on the company’s shortcomings, creating tension internally and a situation where the company’s operators knew they were underperforming, said the people.

Trump Administration Pushes for U.S. Control of TikTok [WSJ]
ByteDance Ltd., the Beijing-based company that owns TikTok, has sought to retain majority ownership for its proposed partnership with Oracle Corp…. That has raised concerns among Senate Republicans and others, who say the proposed technology partnership between ByteDance and Oracle falls short of the full U.S. acquisition sought by Mr. Trump, leaving worries about the Chinese government’s potential access to U.S. user data in the future.
Asked about ByteDance maintaining a majority stake in TikTok, Mr. Trump said, “Conceptually, I can tell you, I don’t like that.”

Richard Branson to raise $400m for Spac [FT]
The finances of Britain’s best-known billionaire have been strained by Covid-19’s impact on Virgin’s businesses from airlines to gyms, prompting him to suggest in April that he may need to mortgage his home in the British Virgin Islands…. Recent launches of Virgin Hotels, Virgin Trains USA and Virgin Voyages, a cruise ship company based in Miami, were badly set back by the pandemic, and he has yet to find a partner to launch Virgin Money in the US.

A Case of Not Keeping One’s Word [II]
The plaintiffs allege that Goldman and certain executive officers at the firm represented (among other things) that Goldman maintains “extensive procedures and controls that are designed to identify and address conflicts of interest,” and that Goldman’s “clients’ interests always come first.” However, Goldman failed to disclose that it had substantial conflicts of interest with respect to at least four collateralized debt obligation (CDO) transactions involving subprime mortgages…. After examining the evidence presented by Goldman – which included expert testimony concerning 36 media reports that discussed Goldman’s conflicts of interest prior to the corrective disclosures, as well as an event study that attributed no price movement to the corrective disclosures — the Second Circuit held that the district court had not erred in concluding that Goldman failed to rebut the basic presumption. On the contrary, the Second Circuit credited the district court’s finding that the corrective disclosures had revealed new information that was not included in the prior media reports and that the event study was flawed.

SEC Bolsters Safeguards Against Penny-Stock Fraud [WSJ]
The SEC on Wednesday approved a change to its rules that would largely prevent brokers from quoting prices for OTC stocks unless the companies issuing such shares released up-to-date financial information to the public…. The SEC has suspended trading in hundreds of OTC stocks in recent years for failing to publish financial information.

Prosecutors in Chicago Trial Are at a Critical Juncture in Anti-Spoofing Effort [WSJ]
Prosecutors tried to boil down for the jury how the scheme works, using color-coded trading charts and the testimony of a third trader who said he spoofed and watched the defendants, James Vorley and Cedric Chanu, spoof…. In an effort to keep the jurors engaged through what promised to be some highly technical testimony, they explained that the scheme was like someone cheating you out of the price you sought for reselling your Chicago Bears season tickets.

A Capitalist Repents: Jeff Ubben Is Out to Make Things Right [Bloomberg]
“I’m on a crusade,” Ubben, 59, said in an interview at the Bloomberg Green Festival this week. “I’m late in life. I’ve got five years to fix the harm I’ve done….”
He carved out a reputation as the nice-guy activist: a thoughtful, long-term investor who would work with -- rather than against -- the companies his firm targeted.
It’s a distinction that, today, Ubben says was mostly false.
“We had plenty of business plans built on buying companies and firing the workforce of the acquired company, and then buying the next one,” he said.

Related

stevebannon

Opening Bell: 8.20.20

Tough day for Trump; good times for hedge funds (except those fighting with Citi); “the president has his own mind on some of these things;” and more!

Opening Bell: 02.05.13

Barclays CEO Vows To Improve Bank's Ethics (WSJ) Chief Executive Antony Jenkins said Tuesday he is "shredding" the legacy of the bank's self-serving culture by improving its ethics and moving beyond the misconduct issues that have cost it billions of pounds. Mr. Jenkins told a U.K. parliamentary group that his efforts so far include changing the way employee bonuses are calculated and abolishing commissions on financial-product sales. He said the changes would take time to produce results, but that ultimately he wants to eliminate a culture that at times has been "too short-term focused, too aggressive and on occasions, too self-serving." "Our resolve and intent behind this is absolute," Mr. Jenkins said. McGraw-Hill, S&P Sued by U.S. Over Mortgage-Bond Ratings (Bloomberg) The U.S. Justice Department filed a complaint Monday in federal court in Los Angeles, accusing McGraw-Hill and S&P of mail fraud, wire fraud and financial institutions fraud. Under the Financial Institutions Reform, Recovery and Enforcement Act of 1989, the U.S. seeks civil penalties that can be as high as $1.1 million for each violation. Earlier today, the company’s shares tumbled the most in 25 years when it said it expected the lawsuit, the first federal case against a ratings firm for grades related to the credit crisis. “It’s a new use of this statute,” Claire Hill, a law professor at the University of Minnesota who has written about the ratings firms, said in a phone interview today from Minneapolis. “This is not a line to my knowledge that has been taken before.” Dell Nears $25 Billion Deal To Go Private (WSJ) Late Monday, Mr. Dell was in talks with Microsoft Corp and private-equity firm Silver Lake Partners to offer shareholders between $13.50 and $13.75 a share, said people familiar with the matter, about a 25% premium to Dell's stock price in January before the possibility of a deal became public. The buyout, if approved by shareholders, would be the largest such deal since the financial crisis. It also would be an admission by Mr. Dell that he wasn't able to pull off the changes needed to improve his company's revenue and profit under Wall Street's glare. The buyout would give Mr. Dell the largest stake in the company, ensuring that the 47-year-old is the one who gets to oversee any changes. Gross: Beware 'Credit Supernova' Looming Ahead (CNBC) The head of the Pacific Investment Management bond giant has issued an ominous forecast in which he worries that the global central bank-induced credit bubble "is running out of energy and time." As a result, investors will have to get used to an atmosphere of diminishing returns and portfolios that will hold more hard assets like commodities and fewer less-tangible financial assets like stocks. "Our credit-based financial markets and the economy it supports are levered, fragile and increasingly entropic," Gross said in his February newsletter. Obama to Meet With CEOs of Goldman, Yahoo, Other Firms (Reuters) President Barack Obama will meet with chief executives from 12 companies including Goldman Sachs Group's Lloyd Blankfein and Yahoo's Marissa Mayer on Tuesday to discuss immigration and deficit reduction, according to a White House official. "The president will continue his engagement with outside leaders on a number of issues, including immigration reform and how it fits into his broader economic agenda, and his efforts to achieve balanced deficit reduction," the official said Monday. Other chief executives include Arne Sorenson of Marriott International, Jeff Smisek of United Continental Holdings, and Klaus Kleinfeld of Alcoa. A Billion-Dollar Club And Not So Exclusive (NYT) an unprecedented number of high technology start-ups, easily 25 and possibly exceeding 40, are valued at $1 billion or more. Many employees are quietly getting rich, or at least building a big cushion against a crash, as they sell shares to outside investors. Airbnb, Pinterest, SurveyMonkey and Spotify are among the better-known privately held companies that have reached $1 billion. But many more with less familiar names, including Box, Violin Memory and Zscaler, are selling services to other companies. “A year from now that might be 100,” said Jim Goetz, a partner at Sequoia Capital, a venture capital business. Sequoia counts a dozen such companies in its portfolio. It is part of what he calls “a permanent change” in the way people are building their companies and financers are pushing up values. The owners of these companies say the valuations make them giddy, but also create unease. Once $1 billion was a milestone, now it is also a millstone. Bigger expectations must be managed and greater uncertainty looms. Donald Trump to sue Bill Maher after bet feud (Politico) Donald Trump filed a lawsuit Monday in California against liberal comic Bill Maher, suing him for $5 million after Trump says Maher did not follow through on a $5 million public bet he made on “The Tonight Show.” “I don’t know whether this case will be won or lost, but I felt a major obligation to bring it on behalf of the charities,” Trump said in a public statement first obtained by POLITICO. Last month, Maher said on NBC to Jay Leno that he would pay $5 million to Trump’s charity of choice if he provided a birth certificate proving that he’s not “spawn of his mother having sex with orangutan.” It was similar to an offer Trump made to President Barack Obama during the presidential campaign season, in which Trump wanted Obama to release his college records. Trump’s statement continued: “Bill Maher made an unconditional offer while offer while on The Jay Leno Show and I, without hesitation, accepted his offer and provided him with the appropriate documentation. Money-Market Funds Best By Excess Cash (WSJ) Money-market funds have a high-quality problem: investors are entrusting them with too much cash. The flood of money is prompting the funds, which buy short-term, top-rated debt, to seek higher returns in investments that until recently were seen as too risky, including French bank debt. Investors plowed $149 billion into U.S.-based money-market funds between the start of November and Jan. 30, bringing total assets under management to $2.695 trillion, close to the most since mid-2011, according to the Investment Company Institute. Knight Capital Group to Cut Workforce by 5 Percent (Reuters) Knight Capital, which recently agreed to be bought for $1.4 billion by Getco, will lay off 5 percent of its global workforce as part of efforts to restructure the automated trading firm, according to a regulatory filing released on Monday. FTC Corrects Language On Herbalife (NYP) The Federal Trade Commission yesterday corrected an earlier statement regarding a “law enforcement investigation” into Herbalife. In response to a Freedom of Information Act request by The Post, the FTC said some complaints against the company were withheld because the information was “obtained through a law enforcement investigation.” The agency said yesterday that the language in its letter accompanying the FOIA request was incorrect and it should have said that the exemption from disclosure was related to “foreign sources.” FTC spokesman Frank Dorman defined “foreign sources” as government entities, including law enforcement agencies, and the exemption relates to information-sharing between the FTC and these foreign government agencies. The FTC said that it “may not disclose any material reflecting a consumer complaint obtained from a foreign source if that foreign source has requested confidential information.” The agency said it could not confirm, or deny, an investigation into the nutritional supplements company. Hedge Fund Mogul, Swiss Villagers Clash Over Ski Slopes (Bloomberg) Since hotelier Tobias Zurbriggen can remember, the business of running Saas-Fee has been a local affair. Now, the Swiss ski resort neighboring the Matterhorn is feeling the heat from a New York-based financier. Edmond Offermann, a nuclear scientist turned millionaire working for hedge fund Renaissance Technologies LLC, invested 15 million Swiss francs ($16.4 million) in 2010 to revive Saas- Fee’s struggling ski-lift company. “It’s like a hobby, which completely got out of control,” Offermann, 53, said in an interview from Long Island, New York. He wants to shake things up by managing hotels and the ski-lift operator in one company controlled by a single chief executive. JPMorgan Joins Rental Rush For Wealthy Clients (Bloomberg) The firm’s unit that caters to individuals and families with more than $5 million, put client money in a partnership that bought more than 5,000 single family homes to rent in Florida, Arizona, Nevada and California, said David Lyon, a managing director and investment specialist at J.P. Morgan Private Bank. Investors can expect returns of as much as 8 percent annually from rental incomeas well as part of the profits when the homes are sold, he said. Man Allegedly Tries To Walk Out Of Costco With 24 Quarts Of Oil — Strapped To His Body (CBS) Jorge Sanchez, 35, was spotted about 4:30 p.m. trying to leave a Burbank Costco without paying for the oil. Store employees gave chase and officials said they lost Sanchez after he jumped a fence at the west side of the Costco parking lot. Burbank Police Sgt. Darin Ryburn told CBS2/KCAL9 reporter Andrea Fujii that nine of the 24 quarts were recovered during the foot chase. Authorities said Sanchez walked into the Costco and went straight to the oil aisle. He allegedly grabbed a couple of cases and emptied them. Said Ryburn, “He proceeded to hide the quarts of oil in his pants, socks, and in his shirt.” Sanchez was later apprehended near Beachwood Drive and Monterey Avenue, about eight blocks from the store. Officials said he was arrested on suspicion of burglary charges. Margo Martin was a witness to the apprehension. “All of a sudden, I hear ‘Get down on the ground’ and there is this man laying in our driveway.” Witnesses thought the man was running funny and weren’t sure why. Witness Manuel Atlas said, “He looked kind of heavy and out of shape.” Police said Sanchez was also running funny because he still had 15 quarts of oil strapped to him. Police said he used a bungee cord to strap the bottles down.

Opening Bell: 10.16.12

Citigroup CEO Vikram Pandit Resigns (WSJ) Citigroup Chief Executive Vikram Pandit is stepping down, effective immediately, and will be succeeded by Michael Corbat. "Given the progress we have made in the last few years, I have concluded that now is the right time for someone else to take the helm at Citigroup," Mr. Pandit said in a statement. "We respect Vikram's decision," Chairman Michael E. O'Neill said. "Since his appointment at the start of the financial crisis until the present time, Vikram has restructured and recapitalized the company, strengthened our global franchise and refocused the business." President and Chief Operating Officer John P. Havens also resigned. Mr. Corbat, who has spent nearly three decades at Citi, previously served as its CEO for Europe, the Middle East and Africa. "Mike is a proven, hands-on leader who is known for his focus on enhancing productivity, holding people accountable and practicing sound risk management," Mr. O'Neill said. "He has consistently delivered impressive bottom-line results at many of our major global business units and has forged a strong track record of improving efficiency and mitigating risk while also optimizing the allocation of the company's capital." Mr. Pandit is resigning as a board member as well. Vikram Pandit Steps Down, Jim Cramer Loses His Mind (CNBC) “This is a complete shock. No one expected this whatsoever,” said Cramer. "The divisions were all in very good shape, I don’t even want for a second to tell people that there was anything in the works to make this happen. There was nothing...this was the quarter where you give him a big raise, he was under a lot of pressure but he got this right.” Cramer lauded Citi’s earnings results and questioned why he would leave so abruptly. “Vikram Pandit, 24 hours ago, was the belle of the ball. This guy finally got it right. Something’s wrong here,” he said. "I don't know what the heck is going on here." Goldman Swings To Profit (WSJ) Overall, Goldman's investment-banking arm recorded revenue of $1.16 billion, up 49% from a year ago, although 3.2% lower than in the second quarter. Goldman said debt underwriting revenue surged to $466 million from $168 million a year ago. Stock underwriting revenue more than doubled to $189 million, though financial advisory revenue fell 2.7% to $509 million. Fixed income, currency and commodities client execution revenue rose 28% to $2.22 billion. Goldman posted a profit of $1.51 billion, compared with a year-earlier loss of $393 million. Earnings per share—reflecting the payment of preferred dividends—were $2.85 from a loss of 84 cents a year earlier. Net revenue, including net interest income, more than doubled to $8.35 billion. Analysts polled by Thomson Reuters expected per-share earnings of $2.12 on revenue of $7.3 billion. Soros Demands Germany Stop Euro From Destroying Europe (Reuters) The crisis "is pushing the EU into a lasting depression, and it is entirely self-created," said Soros, chairman of Soros Fund Management. "There is a real danger of the euro destroying the European Union." He added: "The way to escape it is for Germany to accept ... greater commitment to helping not only its interests but the interests of the debtor countries, and playing the role of the benevolent hegemon." Wells Fargo Creates Markets Unit, Takes On Wall Street (Bloomberg) The division will be one of five main units under the Wells Fargo Securities brand and include equity and fixed-income sales and trading, commodities, prime services and futures clearing, the San Francisco-based firm said today in a statement. Walter Dolhare and Tim Mullins will oversee the division and report to John Shrewsberry, 47. Damien Hirst condemned for killing 9,000 butterflies in Tate show (Telegraph) Visitors to the exhibit at the Tate Modern in London observed the insects close-up as they flew, rested, and fed on bowls of fruit...Figures obtained from the Tate reveal that more than 9,000 butterflies died during the 23 weeks that the exhibition was open. Each week it was replenished with approximately 400 live butterflies to replace those that died – some of them trodden underfoot, others injured when they landed on visitors’ clothing and were brushed off. A spokesman for the RSPCA said: “In this so-called 'art exhibition’, butterflies are forced to exist in the artificial environment of a closed room for their entire lives. “There would be national outcry if the exhibition involved any other animal, such as a dog. Just because it is butterflies, that does not mean they do not deserve to be treated with kindness.” Reactions Ranges On Pandit Resignation (Reuters) Peter Jankovskis, co-chief investment officer of Oakbrook Investments: "I'm surprised...I would have expected he wanted to stay around and see some of the fruits of his labors there." Matt McCormick, analyst at Bahl & Gaynor: "He was not beloved by Wall Street. He was the accidental president. He was thrust into that position- he's a hedge fund guy." Florida cops hunt pee-wee coach for sucker-punching ref during game (NYDN) Referee Andrew Keigans told cops that he called the game a forfeit after West Park Saints assistant coach Dion Robinson, 43, made an ugly remark from the sidelines. Robinson was caught on camera pushing around Keigans before another coach restrained him. He then broke free, ran across the field and sucker-punched Keigans as he walked off the field, dropping the ref to the turf. Cops are still looking for Robinson and want to charge him with assault, the station reported.

GundlachExplainsItAll

Opening Bell: 8.18.17

Truth Gundlach strikes again; Leon Cooperman has some strong words for Bill Ackman; Trump is worth $2 billion to Twitter; Marilyn Monroe sex dolls are not kosher; and more.

Lloyd Zoom

Opening Bell: 8.22.17

Lloyd Blankfein can't quit trolling Trump; Jeff Gundlach could use a friend right now; Steve Mnuchin's wife is apparently reprising her role as Marie Antoinette; and more.

Opening Bell: 09.19.12

Goldman Names New Finance Chief (WSJ) Mr. Viniar has told colleagues he wants to spend more time at his home in Santa Barbara, Calif., where he often returns on the weekends. His thrice-weekly basketball game has been on hold since he underwent knee-replacement surgery this year. Goldman's New CFO Harvey Schwartz to Receive $1.85 Million in Annual Salary (Reuters) Schwartz's predecessor is among the best-paid executives on Wall Street. He earned $15.8 million last year and held 1.8 million shares of Goldman as of March 26, according to a proxy filing. In 2007, he made $58.5 million. Mary Schapiro May Be Heading For Exit (NYP) Sources say that Schapiro is chafing under the political gridlock in Washington that she feels has stymied a number of her initiatives. “Part of the problem for [Schapiro] is that the tone in Washington has been so partisan,” said Christopher Whalen, of Tangent Capital Partners. The chairwoman’s recent handling of talks surrounding new rules governing money-market funds, some detractors say, has also created bad blood within the SEC. “She’s just frustrated,” Whalen noted. However, Schapiro’s critics say she hasn’t cracked the whip hard enough on Wall Street bad guys. One former Washington insider said that Schapiro is liked by President Obama and would stay on until a replacement is named, should he win re-election. One possible early front-runner to replace Schapiro may be FINRA CEO Richard Ketchum, sources speculate. For Superfast Stock Traders, A Way To Jump Ahead In Line (WSJ) Haim Bodek was a Wall Street insider at Goldman Sachs and UBS before launching his own trading firm. Now he is taking on the financial establishment that spawned him. Mr. Bodek approached the Securities and Exchange Commission last year alleging that stock exchanges, in a race for more revenue, had worked with rapid-fire trading firms to give them an unfair edge over everyday investors. He became convinced exchanges were providing such an edge after he says he was offered one himself when he ran a high-speed trading firm—a way to place orders that can be filled ahead of others placed earlier. The key: a kind of order called "Hide Not Slide." The encounter set off an odyssey for Mr. Bodek that has fueled a sweeping SEC inquiry into the activities of sophisticated trading firms and stock-exchange operators—including Nasdaq OMX Group Inc., NYSE Euronext, Direct Edge Holdings LLC and BATS Global Markets—according to exchange and other officials, and lawyers with knowledge of the inquiry. Vulture Funds Seek Fresh Meat (WSJ) “There hasn’t been a big bankruptcy in the last six to nine months,” said a hedge fund investor. “More stuff is coming out of distress than is going in.” US corporate bankruptcy filings peaked in the second quarter of 2009, at around 16,000, and have been trending downward ever since. In the first quarter of 2011, they hit about 11,000, according to the American Bankruptcy Institute. Silver Point co-founder Edward Mulé is optimistic the feast will continue. The $6.7 billion firm has had one of the best performances of distressed funds. It gained 10.36 percent this year through August and is up 98.6 percent since January 2009. “The tail of the 2008/2009 distressed credit cycle, coupled with weak global growth and de-leveraging, will continue to generate a steady stream of interesting opportunities,” said Mulé in a recent investor letter. Inside The Dark World Of Online Sugar Daddies (BuzzFeed Shift) Shortly after my profile's approval, emails started flooding my new fake account. One was from "International Finance Don Juan." He wrote: "You look hot. Let's meet." He claimed he was exotic and athletic, over six feet and an independent stockbroker on his profile. After some small talk, he asked to meet me at the W — a "cool" luxury chain where seemingly all these guys wanted to meet or get a hotel room. “Don Juan” had sent a face shot of himself. It was cropped and a little blurry, but I had a general idea of what he looked like. When he walked in to the lobby bar, though, instead of "athletic," he looked as if he could have checked off "more to love." I guess all that matters is that these guys have the cash they say they have...He asked what I'd like to drink. I said I liked pinot noir or champagne. "Oh, Prosecco is basically the same thing," he said, and ordered me one. I had made up a story that I was a graduate student in literature at Sarah Lawrence so I was only in the city once or twice a week to see friends. He wasn't trying to feign interest, but was looking my body over in a conspicuous way. "You've got an amazing ass," he said. "I looked when we were walking in. I hope you don't mind." He attempted to wink, but it seemed more like a tic. I said thanks in the most convincing way I could to a sweaty, slobbering guy with the most repugnant perpetual hard-on visible through his khakis. "You like me?" he asked. "You seem very nice. I'm just, I'm just suddenly not feeling well," I blurted out. "You feel sick, or you're not into me?" he asked. "You know, if you want, I live close. You could come and lie down and I can give you a massage. Since it's our first time meeting, once you're better, you could just give me a blow job. How about $550? Probably the quickest $550 you'll ever make, huh?" Soros Fund Invests in Mozambique Ethanol Project (WSJ) The Soros Economic Development Fund on Wednesday said its investment will give it a 19% stake in the $20 million project, started by food-and-energy company CleanStar Mozambique. Executives say the investment is in line with the fund's aim of backing businesses that provide a return on capital and spur broader economic development. US Fiscal Cliff Trumps EU Crisis as Top Worry (CNBC) A looming fiscal problem in the U.S. is now identified as the top tail risk for investors, marking the first time in 17 months that Europe’s debt crisis was not seen as the biggest concern for fund managers, a monthly survey by Bank of America/Merrill Lynch shows. The U.S. “fiscal cliff,” a combination of tax hikes and spending cuts set to come into force in January 2013, was identified by 35 percent of respondents as the largest risk going forward, up from 26 percent in August. In contrast, 33 percent of the respondents rated the euro zone debt crisis as their biggest concern, down from 48 percent in August. The survey of 186 fund managers, who oversee a combined $524 billion, was conducted from Sept. 7 to 13. BOE Looks Set For More Stimulus (WSJ) Rate-setters think the annual rate of inflation will take longer to fall to its 2% target than they thought last month because of rising commodity prices and an increase in companies' labor costs, according to the minutes of the September meeting of the central bank's Monetary Policy Committee, published Wednesday. Annual inflation was 2.5% in August. Lindsay Lohan arrested in New York after striking pedestrian outside nightclub (NYDN) Lohan was arrested early Wednesday in New York after hitting a pedestrian with a Porsche, police said. The troubled actress was maneuvering around a crowd of people in an alley between the Dream Downtown, a hotel and nightclub in the Meatpacking District, and the Maritime restaurant. "She's driving in this freight area, going very slow," a police source said. "She's hitting her horn because there's a lot of people in the area. The crowd moves but she kind of brushes against this one guy. Lohan was driving a 2010 black Porsche Carrera, not hers, when the incident occured around 12:30 a.m. Lohan and friends went inside the club, and the man — who hasn't been named but is 34 — called police. Lohan was later arrested about 2:30 a.m. and booked for leaving the scene of an accident with an injury. She was issued a desk appearance ticket. Her lawyer took the car after the arrest.