Edward Green London store sale

On Jermyn Street - Sale ends Jan 28, 3012. 


http://www.edwardgreen.co.uk/index.php?option=news_full&news_id=127

Niall Ferguson - Ascent of Money Pt 2

Stumbled onto this little gem. Worth a watch.

Models and Bottles for Marc Leder

Are you a big baller like Marc Leder, Sun Capital Partners co-CEO? Check out some of the rumors about his parties on Page Six:


Event Week 2011/2012 in St Bart's


Bridgehampton

Niall Ferguson - Ascent of Money Pt 1

Stumbled onto this little gem. Worth a watch.

Is Evercore branching out?

Evercore (EVR) is primarily an investment banking advisory, they have recently purchased a 45% stake in fund of hedge funds, ABS. Previously they had taken a minority interest in Trilantic Capital, the Lehman Brothers spin-out.

Morgan Stanley: 580 layoffs may come from NYC

Today Bloomberg reported that Morgan Stanley (MS) announced 580 of the 1600 layoffs announced last month may come from NYC. 

Fortress CEO taking leave

According to Reuters, Daniel Mudd, Head of Fortress Investment Group (FIG) and former CEO of Fannie Mae, will take leave in the wake of SEC investigations into Fannie Mae (FNMA) and Freddie Mac (FMCC).

BofA mulls selling ML?

Just saw the rumor on Bloomberg, but no link yet. They are looking at selling assets to meet new capital requirements. But it has been rumored for sometime.

BofA (BAC)

The Rockefellers Documentary

Lenovo thinkpads

Thinkpads are the solutions leading enterprises use across the world. High-performance and reliability typifies the machines. 

PEI 2010 Awards

For those of you not familiar with the private equity industry. PEI announced a awards for best performers by category and region. It's a good way to become acquainted with the names. 


PEI 2010 Awards

Incentive for top executives and salesmen

Ergo (division of Munich Re) has given their top salesmen and executives an orgy in a Budapest spa as reward. There were approximately 100 men from Ergo (mostly old guys) and 20 prostitutes. The prostitutes wore colored armbands to signify their availability. Some were exclusive only for "higher performers" and executives. But with a particular German twist, each prostitute was stamped on the arm for each time they serviced a client. 

Dailymail


Telegraph

The House Of Rothschild - The Money's Prophets

Interesting documentary of the Rothschild dynasty:

BBC Documentary: When Bankers Were Good

RBS Considering Closure of Equities Business

According to Bloomberg, RBS Considering Closure of Equities Business. 

Key facts:

options are to sell or shut the division

about 1000 people in the unit

why? to shrink the investment bank

upcoming regulatory change 

83% state-owned bank

Investment banking unit employs 19,000

30,000 jobs cut since bailout

2,000 further job cuts announced

final decision has not been made

UK Chancellor of the Exchequer George Osborne: 

"Investment banking will continue to support RBS’ corporate lending business,” Osborne said. “RBS will make further significant reductions in the investment bank, scaling back riskier activities that are heavy users of capital or funding.”

Recommended Macroeconomic books

Lloyds' boss takes off 6 weeks to fight stress

Lloyds' boss, Antonio Horta-Osorio, takes off 6 weeks to fight stress. 


See his story in the Sun.


See this story in the Telegraph

Zynga IPOs today

ZNGA IPO priced at $10 giving it a valuation of $7B. It is the largest tech IPO since Google. It opened at $11 and is now sinking. 

Better to be French than British?

France's finance minister Francois Baroin has said, 'It's better to be French than British'. He believes the British credit ratings should be lowered ahead of France as France is supposedly in a better shape. What do you believe? Is it just gamesmanship? 


In other news, France is believed to be heading towards a recession according to the INSEE. It will most likely affect Sarkozy's re-election bid. 

Credit Agricole sells PE unit

France's second largest bank by assets, Credit Agricole, is selling its private equity unit to Coller Capital for an undisclosed amount. It is expected to reduce its risk-weighted assets by $1.2B ahead of upcoming regulations. 


Additionally as part of its restructuring effort, it recently announced a 2350 job cut in its investment banking and consumer finance units. 

Citi cutting 4500 and Credit Suisse 1500, what's next?

Latest update on bank layoffs:


Citi


Credit Suisse

Update: Morgan Stanley layoffs

Reuters has just stated:


At Morgan Stanley, which employs 62,648 people globally, the job cuts will come across all staff levels and geographic areas, including investment banking, trading and back-office functions, spokesman Mark Lake said.

Morgan Stanley to layoff 1600

Morgan Stanley just came out with the announcement this morning they will be cutting 1600 jobs. 

Hilarious Columbia Business School MBA comedy skit video

Nuthin' but a "J" Thang (I'm Sponsored)

No brown shoes in banking!

Here is a link to the original Reuters article:


link

Zynga's not so quiet period

According to an article in the Thestreet.com, CEO, Mark Pincus has been talking up his company's ability to double the number of paid subscribers to potential investors at Warburg Pincus. This was not mentioned in its IPO prospectus.


What will the SEC think about such an event occurring during the mandatory IPO quiet period? Will there be any action?

Bonobos sale on Gilt

Gilt just posted some Bonobos for sale. Pants start at $49 up to their flagship pants at $125


Gilt.com

Update: EU Banks Selling ‘Crown Jewels’

Bloomberg has detailed more options for banks as they downsize their balance sheets and raise capital. 

EU Banks Selling ‘Crown Jewels’

Earlier this year, Santander sold a majority of its Latin American insurance operations to  Zurich Financial Services Group for $1.67B. 

What will happen to shrinking bank balance sheets? Any takers?

Bloomberg has mentioned a couple of possible acquirers:


1) Asset Managers


2) Insurers  

France Telecom to sell Orange Suisse - PE interest

According to Bloomberg, the following groups have shown interest in the sale:


Apax
EQT Partners
Providence Equity
Xavier Niel/ Goldman Sachs
Orascom
Liberty Global




left the process:
Bain Capital
Carlyle Group


The 800 lb gorilla is CVC who owns rival Sunrise. Although a merger was earlier attempted and refused by Swiss authorities, it seems another effort might be in the works. 

Good PE/ Hedge Fund resource for free

Prequin is an alternative asset research firm. They offer a 

Free newsletters and research signup

Hilditch & Key Autumn Winter Sale 2011

Sale Link


Alternatively if you are in London or Paris, you can visit their shops to enjoy the sale at 37 and 73 Jermyn Street, London SW1 or 252 Rue De Rivoli, 75001 Paris.

DB CEO targeted with letter bomb

Read more about it on Businessweek

Corzine MF Global prepared statement

From Bloomberg:












Is it the Col Klink defense (even though Sgt Schultz is saying it)?

Sex scandals on Wall St

Thought you might be interested in this piece from the Business Insider.

14 Of The Most Shocking Sex Scandals To Hit Wall Street

Inside Job film

Just saw it. Documentary about the 2008 crisis narrated by Matt Damon. 

Update: India closes doors to Wal-mart & Tesco shortly after welcoming them

Just a few days ago, India had announced opening of their retail markets to foreign companies  (Foreign direct investment/ FDI) the likes of Wal-Mart (WMT). Now the ruling party have been forced to reverse their decision after opposition parties in parliament have prevented any legislative action until it is reversed. 


Although India is a member of the WTO, this hardly seems to be a fair, open, and free market move. This will prove to be a black eye in their bid to become global power. 

Rovio exec's wife wears Angry Birds dress to Ball at Presidential Palace

Rovio exec's wife wears Angry Birds dress to Ball at Presidential Palace. Rovio, the Angry Birds game developer, is set to IPO in 2012. TechCrunch is indicating a value around $1B.





Everything Angry Birds at BarnesandNoble.com!

JPM Banker stalked his ex (and colleague) to London

The two met while she was an unpaid intern at the bank. Read more at the DailyMail. Will this scandal affect JP Morgan (JPM)? Unlikely. 

SAP buys SuccessFactors, who is next?

SAP (SAP) bought SuccessFactors (SFSF) for $3.4B to expand its cloud products. This represents a 52% premium to Friday's close. SuccessFactors is an HR cloud software provider. This sector is also know as Software as a service (SaaS).

So the question is who is next? Its closest competitor to SuccessFactors is be Taleo (TLEO). It's up currently up 18% on the news today.  Who could buy it? SAP competitor Oracle (ORCL) is a possibility. 

Edward Green Factory Sale

For those of you in (or visiting) the UK , it might be worth a trip to the factory:

Banco Santander SA raising $2.6B in capital

According to Bloomberg, Santander (SAN) is planning to raise $2.6B in capital. They seek to swap preferred shares for ordinary shares to boost their capital. The price will be the average of shares traded between Dec. 14 and 23. This is occurring to address the 11.5B euro shortfall European regulators identified.


What does this mean? It dilutes shares. So if you are a shareholder it dilutes your ownership of the bank. But on the other hand, if it couldn't boost its capital, what would be the result of a capital shortfall?

Notable Zynga investor - Alisher Usnanov

According to Barrons this weekend, it has come to light that Alisher Usmanov is a Zynga investor. The Russian oligarch is one of the richest men in the world with Forbes estimating his wealth at $18B, and ranking him number 35 in the world. His investment vehicle, Digital Sky Technology fund also owns shares of Facebook and Twitter. 

For those of you curious about him, here is something on YouTube about his stake in the English football club, Arsenal. 

Update: Zynga filed updated S-1

Touted as the largest American tech IPO since Google. They have just filed a new amended S-1 ahead of their roadshow. 


According to Tech Crunch, Mark Pincus won't be selling but his investors will. Among them are Kleiner Perkins, Google, Silver Lake, and Tiger Global. 


Valuations have not changed since the last post. 

Update: Zynga IPO

Businessweek has stated that Zynga is planning to raise about $900M in the IPO with shares to price between $8 to $10. 10% or less of outstanding shares are expected to be sold. This would give it a valuation of about $10B. Compare that to the two current leaders in the space: Activision Blizzard (ATVI) with a market cap of $14.2B and Electronic Arts (ERTS) with $7.69B. 


Sharepost implied valuation currently stands at $12.9B.

Potential bank failure prompted central bank action?

What prompted the central banks to act in a rare collaborative effort yesterday? Was it a major European bank on the verge of failure? Here is what Forbes had to say:

Big European Bank Failure Averted: What Central Banks did not tell us, Forbes

ECB & Central Banks Actions (Nov 30)

Is it dollar liquidity driving this action or the EU crisis? Or both?


see:


Central Banks Pushed to Act as Funding Squeeze on Banks Worsens, 
Businessweek


Anyway, the news should give a pop to equities worldwide, at least for today. 

Zynga employee relations to affect the company?

For those of you not in the know, Zynga is the maker of Farmville and Mafia Wars games on Facebook and as a standalone app. Earlier this year it applied to IPO. Roadshows should start soon. However publicity over its treatment of its employees are coming to light and not in a good way. 

Its reputation could've possibly affected potential acqusitions of Popcap, which it offered $950M in cash, and Angry Birds maker, Rovio, for $2.5B. Both turned down offers. 

see:

Zynga’s Tough Culture Risks a Talent Drain

Zynga to employees: Give back our stock or you'll be fired

Current implied valuations on Sharepost stand at $12.9B, as of Nov 29, 2011. 2011Q1 earnings hit $12M with full year revenues believed to be above $1B. 

see:

Zynga road show kicks off next week: sources

ZYNGA FILES FOR $1 BILLION IPO: It Did $235 Million In Revenue, Earned $12 Million In Q1

Games are for free, but die-hards called whales (named after their casino counterparts), will spend money to gain that edge over others. It was estimated that 1% of Zynga's players account for 25-50% of its revenue.  It's the new revenue model for the free video game business model. Businessweek highlighted a customer who spent $500 in Farmville and a competitor to Zynga claiming it had 200 people who spent more than $10,000 per year on their games. 

see:

Zynga’s Quest for Big-Spending Whales

Update: Italian Bond rates spike in latest auction

3-yr bonds have hit an unsustainable rate of 7.89%. 

Facebook 2012 IPO?

Reuters reported today that Facebook can possibly IPO next year, raising $10B and thus valuing the company at over $100B. For those unfamiliar with the Facebook story, there was a Hollywood movie, The Social Network, last year.




How can you play this as an investment? You can't! Unless you are a very large (or important) high net worth individual (HNWI) at Goldman Sachs ex-US according to an earlier Reuters report. It was rumored that Goldman offered HNWIs the chance to invest a minimum of $2M with a lockup until 2013. Goldman was estimated to raise $1.5B in the private placement. 


Although it has come to light there is an alternative market trading pre-IPO private shares. Sharepost is reportedly trading private shares of Facebook, Twitter, and Zynga to name a few. In order to qualify, the website states that you must be an accredited investor. The current Sharepost Facebook implied valuation is $73B. Without data it's difficult to determine the proper valuation. However if the investor were able to get in at $73B and it IPO'd at $100B, the gains will be sizable. 


For all the remaining retail investors, you will have to wait until the IPO hits the secondary market. 

IMF to provide an aid package to Italy?

Over the weekend there was a rumor that the IMF was preparing a 600 Billion Euro aid package for Italy. However this morning, the IMF has officially denied it. 


So what is the outlook for Italy if it doesn't receive a bailout like Greece and Ireland? Not too good. Italy has amassed $2.2 Trillion in debt, 120% of GDP and now its 10-year bond is now sitting firmly above the 7% rate, the rate at which signaled peril for Ireland and Greece. The market has lost confidence and is demanding more to lend. 

About half of the debt is held domestically. But who are the other large Italian debt holders?


1. France, $105B
2. Germany, $51B
3. Japan, $30B
4. Belgium, $17B
5. US, $14B


source: Wallstcheat


To note, Belgium was just downgraded by Standard & Poor's from AA+ to AA. 


What does it mean to your investment portfolio? An exposure to Italian banks would be something to avoid. As of Friday (Nov 25), Fitch downgraded 8 mid-size banks citing a rise in cost of funds and the risk of the Italian economy heading into recession. 


According to Professor Paolo Manasse, of Bologna University, Unicredit (UCG) owns as much as 40 Billion Euros in government bonds, while Intesa Sanpaolo (ISP) 64 Billion Euros. 

Hedge fund type ETF Strategies

Once the domain of sophisticated investors such as hedge funds, market- neutral strategy ETFs are now accessible to the retail investors. Although it will attract pension funds, hedge funds, and institutional investors. The ETFs are traded on the NYSE. 


What is this market-neutral theme? In short, investing long in one instrument while going short another, irrespective of market movements the spread should generate a profit. Ideally the two instruments should be negatively correlated. There are different variations of the theme based on the market sector (i.e. telecom), market index, exchange rate, rates, dollar weight, beta, size, and other factors. One example is the equity-pairing method. An investor could have gone long on Apple (AAPL) as the iPhone popularity surged while shorting Nokia (NOK) which has declined significantly. Although Apple operates other businesses besides cell phones, the chart below illustrates the negative correlation, and hence a hedge.  

Source: Google finance


The key weakness inherent in this strategy is the constant need to rebalance the portfolio to maintain the hedge. As transactions incur cost, this can be a significant impact on returns. Another transaction disadvantage is the creation of undesirable tax effects. 


Back to the ETFs. FFCM LLC is a Boston-based adviser running the QuantShares ETFs. Here is a short spot on them ringing the NYSE opening bell:

They offer 7 variants of the theme:


(1)  U.S. Market Neutral Momentum Fund (MOM)


(2)  U.S. Market Neutral Value Fund (CHEP)


(3)  U.S. Market Neutral High Beta Fund (BTAH)


(4)  U.S. Market Neutral Size Fund (SIZ)


(5)  U.S. Market Neutral Quality Fund (QLT)


(6)  U.S. Market Neutral Anti-Momentum Fund (NOMO)


(7)  U.S. Market Neutral Anti-Beta Fund (BTAL)

Press release on Sep 7, 2011

These funds have just started so let's see how they will perform. The current economic backdrop will provide a good stress test. 

Margin Call

Latest Hollywood movie to cover Wall Street. Here's the preview:

Watch the villain from Heroes, Zachary Quinto, take on Wall Street as his investment bank has to unwind their positions set at the beginning of the economic crisis of 2008.

Black Friday

Even with poor economic conditions, US consumers managed to create record Black Friday sales, pushing it up 6.6% from last year.

Which companies are likely to profit? The largest retail chain in the world, Wal-Mart (WMT) comes to mind. If the following video is any indication, there was foot traffic.

Wal-Mart is also helped by recent developments in India where it is now allowed to start operating. Previously foreign retailers were not allowed to operate in the Indian market.