Tag Archive | "journal"

Executing Losing Trades For Libyans Put Goldman Sachs Execs At The Business End Of A Hissy Fit (Update)

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Zarti, reprising the role of Jake LaMotta

In early 2008, Libya’s sovereign-wealth fund controlled by Col. Moammar Gadhafi gave $1.3 billion to Goldman Sachs Group to sink into a currency bet and other complicated trades. The investments lost 98% of their value, internal Goldman documents show… In July 2008, Mustafa Zarti, the fund’s deputy chairman, summoned Mr. Kabbaj, Goldman’s North Africa chief, to a meeting with the fund’s legal and compliance staff, according to Libyan Investment Authority emails reviewed by the Journal. One person who attended the meeting says Mr. Zarti was “like a raging bull,” cursing and threatening Mr. Kabbaj and another Goldman employee. Goldman arranged for security to protect the employees until they left Libya the next day, according to people familiar with the matter.

Update: According to Lucas van Praag, the Libyans’ anger was misplaced:

Van Praag said the trades that resulted in a huge loss for Libya were designed and approved by the LIA and that Goldman was hired to execute the trades. He also said the Journal report doesn’t mention that in mid-2008, Goldman recommended restructuring the investments and asked the LIA if they wanted to discuss it. Van Praag said the LIA did not respond to Goldman’s query.


Article courtesy of Dealbreaker

Write-Offs: 05.17.11

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$$$ In Europe, a first call for IMF chief Strauss-Kahn to quit (WaPo)

$$$ This is what Ben Stein had to say about the Dominique Strauss-Kahn situation: “The prosecutors say that Mr. Strauss-Kahn “forced” the complainant to have oral and other sex with him. How? Did he have a gun? Did he have a knife? He’s a short fat old man. They were in a hotel with people passing by the room constantly, if it’s anything like the many hotels I am in. How did he intimidate her in that situation? And if he was so intimidating, why did she immediately feel un-intimidated enough to alert the authorities as to her story?” (American Spectator)

$$$ A Once-Tight Flock at Goldman, Now Scattered [Dealbook]
$$$ Skepticism grows on Geithner’s debt limit deadline (Reuters)

$$$ losing faith in world economy (FT)

$$$ Hedge Funds Line Up for AIG Pitch Meeting (CNBC)

$$$ LinkedIn IPO: Biggest Price Bump Since Tech Bubble (Deal Journal)

$$$ Goldman’s Hatzius: The Next US Recession ‘Is Years Away‘ (CNBC)

$$$ Barclays Pays Its Top Staff 7% Interest on Five-Year Deferred Cash Bonuses (Bloomberg)

$$$ A colour-coded guide to the Greek crisis (BofA/ML via FT Alphaville)

$$$ Reality vs. Matt Taibbi, Part I [Stone Street Advisors]

$$$ Warren Buffett’s Ride on the Rails Is Paying Off (Businessweek)

$$$ Suit vs Citigroup execs over mortgages tossed out (Reuters)

$$$ Kohn ‘regrets’ pain of millions in financial crisis (FT)

$$$ fine fat people for not dieting? (BBC)

$$$ Famed NYC eatery Elaine’s to close down six months after owner Elaine Kaufman dies (NYDN)

Article courtesy of Dealbreaker

Opening Bell: 05.17.11

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IMF chief claims consent in hotel ‘attack’ (NY Post)
“The evidence, we believe, will not be consistent with a forcible encounter,” said Ben Brafman, the high-powered lawyer of IMF chief Dominique Strauss-Kahn, at the suspect’s sensational arraignment in a packed criminal courtroom. A source close to the defense later told The Post, “There may well have been consent.”

New York Investigates Banks’ Role in Fiscal Crisis (NYT)
The New York attorney general has requested information and documents in recent weeks from three major Wall Street banks about their mortgage securities operations during the credit boom, indicating the existence of a new investigation into practices that contributed to billions in mortgage losses. Officials in Eric T. Schneiderman’s, office have also requested meetings with representatives from Bank of America, Goldman Sachs and Morgan Stanley, according to people briefed on the matter who were not authorized to speak publicly.

How Big Investors Are Betting (WSJ)
Mr. Cohen, whose SAC Capital reported a 9.3% increase in securities holdings in the quarter ended March 31, increased a stake in consumer electronics retailer Best Buy Co. to 2.3 million shares from 53,306 at the end of the previous quarter. SAC also more than doubled its stake in BJ’s Wholesale Club Inc. to 2.8 million shares from 1.1 million.

John Paulson Loves Hewlett-Packard (Deal Journal)
The $5 Billion Man, hedge fund manager John Paulson, reported plowing $1 billion into Hewlett-Packard, pared his stake in Citigroup and is standing pat with his big investment in a gold ETF…Paulson & Co. also disclosed owning 123.6 million shares of Bank of America, down by 226,522 from the end of 2010. And one interesting new holding showing up on Paulson’s radar: Lubrizol.

Soros Fund Cuts Gold, BofA, J.P. Morgan Stakes; Adds to Citi, Wells (Deal Journal)
Soros decreased his holdings of the SPDR Gold Trust, a gold-backed exchanged-traded fund, by 4.7 million shares to 49,400 shares, valued at $6.9 million at March 31…The fund lowered its Bank of America holding by 1.2 million shares and now owns 29,400 shares. Soros sold 378,050 shares of J.P. Morgan, leaving him with 624,600 shares. In contrast, his firm tripled its stake in Citigroup to 29.4 million shares. Soros’ stake in Wells Fargo climbed six-fold to 3.5 million shares.

Bill Ackman Throws in the Towel on Target (Deal Journal)
Pershing Square reported owning 7.4 million Target shares as of Dec. 31, but there is no whisper of the Target investment in Pershing’s latest snapshot of its stock holdings as of March 31.

David Einhorn Buys…General Motors (DJ)
David Einhorn’s Greenlight Capital investment fund reported new ownership stakes in two newly public companies, hospital operator HCA Holdings and General Motors, a.k.a. Government Motors.

Falcone’s Harbinger Holdings Adds Bunge Shares, Trims Gold Stake (Bloomberg)
Harbinger Holdings LLC, the hedge fund run by Philip Falcone, bought shares of food company Bunge Ltd. (BG) in the first quarter and sold shares of SPDR Gold Trust, according to a regulatory filing.

Schwarzenegger fathered a child with longtime member of household staff (LA Times)
Former California Gov. Arnold Schwarzenegger and his wife, Maria Shriver, separated after she learned he had fathered a child more than a decade ago — before his first run for office — with a longtime member of their household staff.

Jump in Revenue Helps Halve California Deficit (NYT)
After months of doomsday scenarios and apocalyptic warnings about cuts to California schools, parks and the police, the news from Gov. Jerry Brown on Monday was nothing short of startling: California is now expected to see $6.6 billion more in revenue over the next two years than had been expected.

U.K. Inflation Quickens More Than Forecast (Bloomberg)l
Consumer prices rose 4.5 percent in April after a 4 percent increase in March, data today showed. The median forecast of 32 economists in a Bloomberg News survey was 4.1 percent. Core inflation quickened to the fastest in at least 14 years. King said in a letter to Chancellor of the Exchequer George Osborne that the surge is being driven by higher sales tax and increases in energy and import prices.

London Finance Job Openings Climbed 15% in April (Bloomberg)
The number of openings in the City, London’s main financial district, and elsewhere in the capital rose to 6,426 last month from 5,569 in April 2010, executive search firm Morgan McKinley said today. The figure was flat compared with the previous month.

President, first lady’s assets valued at $1.8 million to nearly $12 million (WaPo)
Financial disclosure documents released Monday showed the assets for last year…Assets are listed in wide ranges on the disclosure forms — for example, between $1 million and $5 million — making it difficult to determine their value with precision. Royalties from Obama’s books, “Dreams From My Father” and “Audacity of Hope,” totaled between about $1 million and $6 million.

Man To Eat 25,000th Big Mac (HP)
Wisconsin-based Don Gorske plans to eat his 25,000th Big Mac on May 17, 2011, 39 years after his first Big Mac bite on May 17, 1972. He averages two Big Macs per day and has 10,000 Big Mac cartons still in his possession. He keeps two Big Macs in his luggage in case he cannot find a McDonald’s when he travels. Gorske believes he has drank over 200,000 Cokes along with his burgers.

Article courtesy of Dealbreaker

Microsoft close to buying Skype for $7B to $8B?

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Microsoft is close to a deal with Skype to buy the internet phone company for $7 – $8 billion, according to the Wall Street Journal.

If it’s true, it would be an aggressive move by Microsoft to become a big player in the convergence of communication, information and entertainment. The deal could be announced as early as Tuesday, according to sources cited by the Journal. Microsoft and Skype declined comment to the Journal.

The deal could still fall part. Including Skype’s long-term debt, the value could be about $8.5 billion. Skype allows users to make calls for free to each other over the internet. The service makes money when those users want to connect to someone with a land line or hold a video phone call with multiple parties.

Microsoft could use Skype’s name value to build out a bigger consumer business and integrate the popular service with its Xbox Live online gaming service. The deal could be one of the biggest that Microsoft has ever undertaken in hits 36-year history. In 2007, Microsoft bought aQuantive, an online ad firm, for $6 billion. And it almost bought Yahoo for $48 billion nearly three years ago.

While Microsoft has successfully moved into video games, most of its profit still comes from its Windows and Office franchises. Microsoft has a a communications platform called Linc, which ties together email, instant messaging, and voice communications into a single application. Skype could help enhance that. But for the most part, Skype would be a major diversification for Microsoft.

Of course, Skype has been part of a failed diversification in the past. The company was founded in 2003 by Niklas Zennstrom and Janus Friis, the creators of the Kazaa file-sharing technology that was associated with music piracy. Skype was disruptive, offering free phone calls when most carriers still charged for such service. Then eBay bought Skype for $2.6 billion in 2005, presumably so buyers and sellers could communicate in eBay auctions. That didn’t work out.

eBay sold a 70 percent stake to Silver Lake Partners, Index Ventures, Canada Pension Plan Investment Board and Andreessen Horowitz. Skype hasn’t had the best of luck making a profit. The company posted revenue of $860 million in 2010 and a net loss of $7 million. It has debt of $686 million. Skype had been planning to go public since last August, seeking to raise $1 billion.


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Article courtesy of VentureBeat » deals

Oracle’s Ellison Number Two On WSJ Pay List

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In case you’re wondering who some of the highest-paid tech CEOs might be, The Wall Street Journal’s CEO compensation study is published in this morning’s edition, and there’s a full chart over at the site of 2010 compensation.

Larry Ellison of Oracle (ORCL) weighs in as the second-highest paid chief executive among the heads of the biggest 350 U.S. public companies, with $69 million in salary, incentive pay, stock grants, restricted grants, and performance awards, behind Philippe Dauman of Viacom (VIA).

IBM’s (IBM) Sam Palmisano is number 14 on the list, with $24 million in total direct compensation, and John Chambers of Cisco Systems (CSCO) is number 32 with about $19 million. Apple’s (AAPL) CEO Steve Jobs brings in a grand total of zero, putting him at the bottom of the chart, next to Citigroup’s (C) Vikram Pandit.

The survey is conducted on behalf of the journal by Hay Group, a management consulting firm.

Article courtesy of Tech Trader Daily

Opening Bell: 04.29.11

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Deutsche Bank Profit Rises on Record Consumer Bank Earnings (Bloomberg, DB Release)
Deutsche Bank reported a 17 percent increase in first-quarter profit, exceeding analyst estimates on record earnings at the consumer- banking and asset-management units. Net income climbed to 2.1 billion euros ($3.1 billion), the second-highest quarterly result ever and more than the 1.8 billion-euro average estimate of 11 analysts surveyed by Bloomberg.

Goldman Sachs, JPMorgan Face EU Antitrust Probe of CDS Market (Bloomberg)
Goldman Sachs, JPMorgan Chase and other 14 other investment banks face a European Union antitrust probe into credit-default swaps for companies and sovereign debt, regulators said. The European Commission said it opened two antitrust probes. It will check whether 16 bank dealers colluded by giving market information to Markit, a financial information provider. It will also examine whether nine of the banks struck deals with ICE Clear Europe that block other clearinghouses from entering the market and give rivals “no real choice where to clear their transactions.”

Facebook’s value plateaus as $90B deal flops (NYP)
Ahead of the company’s long-rumored IPO, a group of Facebook employees and investors tried to unload $1 billion in stock at a $90 billion valuation but couldn’t find enough investor appetite. Instead, they had to lower their asking price to an implied $70 billion valuation — the high end of where Facebook has traded on private exchanges that traffic in the shares.

US Officials Unfazed By Dollar Slide (WSJ)
In recent days, the nation’s top two economic policy makers—Federal Reserve Chairman Ben Bernanke and Treasury Secretary Tim Geithner—have publicly expressed their desire for a strong dollar. But there is little indication of a change in policy from either the Fed or Treasury—or in underlying economic conditions—that would alter the currency’s downward course.

Nasdaq, ICE Are Said to Consider Tender Offer for NYSE Euronext (Bloomberg)
While announcing a tender offer for NYSE Euronext shares would demonstrate Nasdaq OMX and ICE’s urgency, it carries little weight, said Sang Lee, a managing partner at Aite Group LLC, a Boston-based financial-research firm. That’s because the Big Board’s governing documents, mandated by the Securities and Exchange Commission, prevent investors from accumulating a 20 percent stake in the company without the approval of the board.

The Waiting Game: Notes From A Tense Courtroom (Law Blog)
One man who has attended every day of the trial, but whose identity has remained a mystery to reporters because he has repeatedly declined to give his name, said in a brief interview Thursday that he ran a brokerage, Cummins Financial, that counted Rajaratnam’s hedge fund, Galleon Group, among its clients. The brokerage closed in 2008. David Cummins, 49 years old, said he has known Mr. Rajaratnam about 10 years, and that the two men and their wives and kids are “close friends.” He said of Galleon and its employees: “They were immaculate.”…Another supporter, Peter Malaszuk, said he worked with Rajaratnam for 15 years and was a “logistics manager” at Galleon. “He’s a great man,” Malaszuk said. Asked what toll the trial is taking personally, he said, “He’s a tough man – very successful, but this is getting to him.”

Calling Animals ‘Pets’ Is Insulting, Academics Say (Telegraph)
Domestic dogs, cats, hamsters or budgerigars should be rebranded as “companion animals” while owners should be known as “human carers”, they insist. Even terms such as wildlife are dismissed as insulting to the animals concerned – who should instead be known as “free-living”, the academics including an Oxford professor suggest. The call comes from the editors of then Journal of Animal Ethics, a new academic publication devoted to the issue.

Can Macquarie Again Become a Millionaires Factory? (CNBC)
Friday’s results revealed yet another decline in profit at the company called the “Millionaires Factory” thanks to the huge bonuses paid to top executives and employees. From record profits of A$1.8 billion posted in 2008, Macquarie’s annual profits have now fallen nearly 50 percent to A$956 million in the year to March 2011. Now the question facing both the company and its shareholders is, can Macquarie ever recover to the glory days?

Banks Rush To Improve Foreclosure Practices (WSJ)
Under orders from U.S. regulators, 14 financial institutions have until mid-June to lay out plans to clean up their mortgage-servicing operations—and another 60 days to make the changes.

Buffett To Face Question On Praising Sokol Before Audit Reports (Bloomberg)
Berkshire is facing “governance challenges” that may hurt the company’s credit quality, Moody’s Investors Service said April 1, citing Sokol’s stock trades and resignation. The Securities and Exchange Commission is probing whether Sokol bought Lubrizol shares on inside information…“The whole notion of Berkshire Hathaway operating on a higher plane was based upon the idea they didn’t just do what was legal, they did what was ethical,” said Cornelius Hurley, a professor at Boston University School of Law and former assistant general counsel at the Federal Reserve Board of Governors. “When one of your senior officers gets caught with his hand in the jar and you say, ‘Oh it’s legal,’ you’ve kind of blown away that principle of higher standards.”

William’s Royal Giggle Fest (TDB)
As Kate entered Westminster Abbey, the cameras respectfully panned away from Prince William, who seemed to suffer an attack of the giggles as his future wife made her way up the aisle. When the couple were finally face to face, William mouthed, “You look beautiful,” and a billion hearts melted around the globe.

Article courtesy of Dealbreaker

No Off Button: Apple’s iPhone Stores Data When Locations Services Disabled

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As ‘Locationgate’ continues to unfold, the Wall Street Journal is reporting today that Apple‘s (AAPL) iPhone stores users’ locations even when the service is turned off.

The Journal’s tests found that the information seems to be collected via cellphone towers and Wi-Fi access points near a user’s phone, but doesn’t  appear to be transmitted back to Apple.

However,  the fact remains that the iPhone is collecting and storing location data even when users have actively chosen to turn off location services, highlighting how little control they have. This comes after last week’s revelations that Apple keeps a database of where users bring their iPhones, and that operating systems by both Apple and Google (GOOG) transmit location information back to the companies. Some members have Congress have also been calling for an investigation into the matter.

The Journal describes the tests as follows:

Reporters disabled location services (which are on by default) and immediately recorded the data that had initially been gathered by the phone. The Journal then carried the phone to new locations and observed the data. Over the span of several hours as the phone was moved, it continued to collect location data from new places.

These data included coordinates and time stamps; however, the coordinates were not from the exact locations that the phone traveled, and some of them were several miles away. The phone also didn’t indicate how much time was spent in a given location. Other technology watchers on blogs and message boards online have recorded similar findings.

Article courtesy of Tech Trader Daily

Correction: T.Rowe ‘Likes’ Facebook

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Mutual fund giant T. Rowe Price (TROW) spent more than $190.5 million to invest in Facebook, according to recent filings.

T. Rowe paid $25 a share for the stock, which it distributed across 19 funds, the Wall Street Journal is reporting.

Also highlighting the company’s attraction to tech companies, T. Rowe disclosed an investment of nearly $72 million in Zynga Inc. in the filings, and a stake of about $35.4 million in Angie’s List.

The positions aren’t make-or-break for T. Rowe, which had $482 billion in assets under management as of the end of 2010. However, the firm has been more aggressive than most in building positions in young tech companies. It already owns stakes in Twitter and Groupon.

(A previous post incorrectly stated the amount of money invested in Facebook and Angie’s List. The original Journal article has also been corrected.)

Article courtesy of Tech Trader Daily

Groupon advancing towards a $15B IPO?

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andrewmasoncashfanGroup-buying titan Groupon has taken further steps towards an initial public offering by selecting Goldman Sachs and Morgan Stanley to underwrite the offering, according to an article in the Wall Street Journal citing “people familiar with the matter.”

It’s been pretty clear for the past few months that an IPO is in Groupon’s sights, especially after the company walked away from a $6 billion acquisition offer from Google last year then raised a whopping $950 million in funding.

Bloomberg reported last month that Groupon was planning a $25 billion IPO this year. Now the Journal says that the IPO is expected to value the company between $15 and $20 billion. A number of consumer Internet companies, such as LinkedIn, have started filing for their IPOs this year. As reported, Groupon’s IPO would dwarf the offerings announced so far, though Facebook is likely to follow with an even larger IPO in the next couple of years.

I’ve emailed Groupon for comment and will update here if I hear from them.


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Article courtesy of VentureBeat » deals

Netflix: Paramount, Miramax Talk Boosts Stock

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Shares of Netflix (NFLX) are up $5.64, or 2.6%, at $235.65, adding to gains in the pre-market, following an announcement of a new multi-year deal with Paramount, and following Saturday’s story from The Wall Street Journal that the company is also near a deal with Miramax.

Netflix this morning said it reached a deal with Viacom’s (VIA) Paramount Pictures to add “hundreds” of movie titles for viewing by Netflix’s Canadian customers of its streaming video options. The deal runs for five years and adds over 350 new movies, the company said. More important, perhaps, Netflix said the deal gives its represents “the exclusive subscription television rights to all first-run films” from Paramount for the Canadian market.

The deal follows a story in Saturday’s Journal by Lauren Schuker and Ethan Smith that said independent film gaint Miramax is finalizing a five-year deal worth more than $100 million to stream 700 titles from its catalog via Netflix, citing anonymous sources. The deal would be part of efforts by Miramax’s acquirers to earn back the $660 million they spent buying the company from Disney (DIS) last year.

Titles in the Miramax library include “Kill Bill,” “No Country For Old Men,” the “Scream” and “Scary Movie” series, and “Good Will Hunting,” the authors note. Miramax is reportedly also talking with Google (GOOG) and Facebook about possible distribution, the authors write.

It seems the content pendulum can swing back and forth for Netflix: Last Friday’s trade was mostly about the threat that Starz LL would take away some titles from Netflix.

Article courtesy of Tech Trader Daily