Saturday, March 31, 2012

Look Who May Have Made just made $4.8 billion

Forget the lottery. What Facebook Chief Executive Mark Zuckerberg made Friday makes $640 million look like child's play according to a Chicago Tribune report.

The Federal Trade Commission announced that a "transaction" was cleared by the U.S. government Friday involving Zuckerberg and the company he founded while at Harvard. That transaction is presumed to be Zuckerberg exercising his stock options and purchasing 120 million Facebook shares. The stock option was given to Zuckerberg in 2005 at 6 cents a share, according to the New York Times. Today, SharesPost is holding the final stock auction for Facebook shares on the secondary market, and it lists the company's stock value at $41 on the front page of its site.

At that rate, this transaction could mean Zuckerberg's shares, which were worth $7.2 million, could now be worth $4.8 billion.

But we can't all be Mark Zuckerberg…

Read more at http://www.chicagotribune.com/business/breaking/chi-zuckerberg-may-have-just-made-48-billion-20120330,0,4306543.story

Data Breach Sparks Worry: Hack Attack at Card Processor Compromises Potentially Thousands of Accounts


Concerns about credit-card security heightened Friday after a little-known Atlanta company disclosed it had been hit by hackers, potentially exposing hundreds of thousands of account holders to fraud the Wall St Journal reports. Credit and debit card processor Global Payments has been hit by a security breach that has put some 50,000 cardholders at risk,

The breach at Global Payments Inc. GPN -9.06% is the latest in a wave of data attacks that have heightened consumer concerns about identity theft. The card industry has been particularly vulnerable to those concerns amid a slew of big breaches in recent years as more Americans choose to pay with plastic rather than cash.

The company declined to say how many cards were at risk, but people familiar with the investigation estimated that it could be hundreds of thousands....

Visa said that the incident is being investigated by the U.S. Secret Service, which typically probes such breaches, as well as an unidentified forensic company.

Find out more at http://online.wsj.com/article/SB10001424052702303816504577313411294908868.html?mod=WSJ_hp_mostpop_read

Shrewdest Start Up of the Week: Harvard MBAs Selling Complete Essay Sets


Sitting down at a blank computer screen and figuring out how to write a compelling essay is one of the most challenges parts of an MBA applicant’s journey to business school, poetsandquants reports. . There are any number of essay services and admission consultants willing to help with the process.

But now a group of six Harvard Business School MBA students are launching a business that allows applicants a peek at actual essays written by recently successful candidates. Their goal is to create a database of successful essay sets and then allow potential applicants to buy them based on key criteria such as career experience, age, and whether international or domestic applicants wrote the essays.

The startup, called MBA Bee, comes out of Harvard’s newly revised MBA curriculum in which student teams are given seed money by the school and then required to create a new product or service development project. The goal is to create a business model from concept to launch, though the venture’s business is not endorsed by Harvard.
The students have persuaded their classmates to cough up the actual essays they wrote to get admitted to Harvard for free, though they are open to a possible revenue-share agreement to help them build out the business and expand to other top business schools. To protect the confidentiality of the students who hand over their essay sets, MBA Bee deletes certain identifying details from the documents...

Want to know more? Check out http://poetsandquants.com/2012/03/30/hbs-students-selling-complete-sets-of-essays/

Mr. Smith Goes to the Bank: Ex-Goldman Exec Scores Book Deal


Just weeks after gripping the financial world with a scathing Op-Ed piece about Goldman Sachs, Greg Smith has reportedly landed a seven-figure advance on a book deal. According to the New York Post, the Hachette Book Group’s Grand Central beat out rival publishers after a heated bidding war, agreeing to pay Smith a lofty $1.5 million advance to write a memoir of his experiences.

Offers to secure Smith’s work topped $1 million by the middle of this week and on Wednesday the Penguin Group dropped out of the running, the paper reported.
Earlier this month Smith penned an Op-Ed that appeared in The New York Times, describing Goldman as “toxic and destructive” and criticizing it for not having the best interests of clients at heart.

Smith blamed the Wall Street firm’s leadership and said he can “no longer in good conscience…identify with what it stands for.” Goldman, seen as Public Enemy #1 by many, pushed back, disputing Smith’s claims and portraying him as a relatively low-level employee who was suffering from sour grapes.

Read more: http://www.foxbusiness.com/industries/2012/03/30/mr-smith-goes-to-bank-ex-goldman-employee-scores-book-deal/#ixzz1qiFU2glh

How Wells Fargo May Prove Warren Buffett Right Again

When Wells Fargo reports first-quarter earnings later in April it may resolve a lingering question about Warren Buffett’s bank investing strategy: Has “Oracle of Omaha” put his money behind America's most profitable bank?

If you believe CNBC, expectations are for Wells Fargo to possibly unseat JPMorgan Chase as the most profitable U.S. bank by year end and solidify Buffett’s next bank investing coup.

Going into first-quarter earnings, investors are expecting big results out of Wells Fargo, after its record fourth-quarter earnings outperformed rivals. The San Francisco-based bank saw its earnings grow nearly 30 percent in 2011, significantly beating the sub-10-percent earnings growth of competitors like JPMorgan and Citigroup, while Bank of America swung from a 2010 loss to a moderate profit.
Wells Fargo is expected to earn $3.9 billion in first-quarter profits on $20.3 billion in revenue, according to consensus estimates compiled by Bloomberg. For 2012, the nation’s fourth-largest bank by assets expected to post a record $17.5 billion profit on $81.3 billion in revenue, which would put it in contest with the $18.5 billion in profit that JPMorgan is expected to earn….

Wait, wait…there’s more at http://www.cnbc.com/id/46905496

U.S. Shaky spree-for-all


Us consumers in February spent like drunken sailors — but the cash came from savings and not from increased wages so some on Wall Street feel the goods times can’t continue to roll according to the NY Post report.

“It’s definitely not sustainable,” said John Lonski, chief economist with Moody’s.
The Commerce Department said spending in February rose 0.8 percent, higher than expected, while incomes increased just 0.2 percent.
The spread between the two figures dropped the savings rate 14 percent to its lowest point, 3.7 percent, in 30 months. Without savings, consumer spending can quickly fall if costs — such as gas prices — spike.

On the bright side, consumers appeared to be buoyed by the improving labor picture and by the warmer spring weather.

“Nicer weather might make consumers more inclined to buy big-ticket items,” said Lonski. Lonski predicts the more bullish aspects of the US economic picture will win out. He said spending will continue to climb, albeit at a lower rate. Savings, Lonski added, will continue to grow rather than drop.

Read more: http://www.nypost.com/p/news/business/shaky_spree_for_all_QtZ94sdMA3dKWRMQniue4I

Soros' son strikes out on his own


According to Reuters’ Jennifer Ablan and Matthew Goldstein, the upheaval within billionaire investor George Soros' firm continues as one of his sons is separating some of his personal fortune to manage it himself.

Jonathan Soros, who stepped down in September from day-to-day management of Soros Fund Management LLC, plans to hire at least one of his father's key employees, say two people familiar with the situation. The two sources said Soros' son intends to set up his own family office - something the Soros Fund converted to last year - with the help of David Kulsar, currently chief risk officer for the Soros Fund.

"Jonathan wants to manage some of his own money so the (Soros Fund) family office has made that accommodation for him," said a source familiar with the situation….

Find out more at http://www.reuters.com/article/2012/03/30/us-sorosfamily-hedge-idUSBRE82T19C20120330

Weird’s Deep Thoughts (Saturday Morning Edition): A New Patent-Infringement Lawsuit Could Totally Cream Google's Stock

Clusterstock reports: Investor and writer James Altucher has an interesting post up at TechCrunch about a patent-infringement lawsuit that might soon be lobbed at Google. The post is called, in typically bold Altucher fashion, "Why Google Might Be Going To $0."

Here's the story in a nutshell. Way back in the 1990s, a computer scientist at Carnegie Mellon created and patented the technology that became Lycos. The patents covered several aspects of monetizing search, such as using algorithms and click rates to determine which search ads are most revelant.

Later, when a company called Overture applied for patents on search monetization, Overture was granted several patents but refused others--on the grounds that Lycos had already patented them. Still later, Yahoo used the search patents Overture was granted to sue Google for hundreds of millions of dollars.
Meanwhile, Lycos cratered.

Well, Lycos still exists, in some form. And James Altucher's friend recently bought back his search-monetization patents from the wreckage of Lycos. And he formed a company with them. And now that company is merging with a public company called Vringo. And Vringo, Altucher says, will use the patents it has just acquired to go into a new business--patent trolling….

http://www.businessinsider.com/google-patent-infringement-lawsuit-from-vringo-could-demolish-stock-2012-3?utm_source=inpost&utm_medium=seealso&utm_term=&utm_content=3&utm_campaign=recirc

At least three winners share record $640 million U.S. lottery

Reuters reports that the largest lottery jackpot in U.S. history of $640 million has at least three winners who bought tickets in Maryland, Illinois and Kansas, and officials were waiting on Saturday for the winners to come forward.

Lottery officials in Maryland and Illinois said that winning tickets were purchased in their states, and a winning ticket was also bought in Kansas, according to the state's lottery website...

Read more at http://www.reuters.com/article/2012/03/31/us-lottery-megamillions-idUSBRE82U00W20120331

Friday, March 30, 2012

And Now For Something Completely Different: Watching the Ivory Tower Topple


New online courses open to all constitute a thrilling collegiate coup, reports the Wall St Journal.

Turn down the Rihanna. No more bikinis and beer. Spring break is winding down, and college students are heading back to campus—which, if they're at a name-brand school, is the one place, whatever their actual smarts or behavior, that guarantees them approval. Kids don't put Harvard stickers on their rear windshields, parents do.

But for how long? These schools have much to recommend them: impressive students, organic dining halls, presidential alumni. To maintain their reputations, however, elite colleges have long relied on limiting access—Harvard's class of 2015 is about 1,700 students, Yale's is 1,300—and that may be coming to an end. Revolutionaries outside the ivy walls are hammering their way not onto campus but straight into class.

Elite schools have long relied on limiting access—but for how long? It's a thrilling collegiate coup. Last fall, a couple of hundred Stanford students registered for Sebastian Thrun's class on artificial intelligence. He offered the course free online, too, through his new company Udacity, and 160,000 students signed up. For the written assignments and exams, both groups got identical questions—and 210 students got a perfect overall score. They all came from the online group.

So if you bluffed your way into the Ivy League with plumped-up credentials or an essay edited by somebody else, it's time to start breaking a sweat…..

Read all about it at http://online.wsj.com/article/SB10001424052702304636404577293430981335366.html?mod=WSJ_Careers_CareerJournal_4

Guess Which Legendary Investor Lost $3 Billion Last Year


You're right on the money! John Paulson, the founder of Paulson & Co. had a crappy year in 2011 with some of his hedge funds losing between 30% and 50%, according to AR Magazine.
Not surprisingly, that means a lower payout for Paulson.

The legendary investor, who famously bet against the subprime housing market in 2007, fell off AR Magazine's annual so-called "Rich List", which surveys top-earning hedge fund managers….

Read more: http://www.businessinsider.com/john-paulson-did-so-poorly-last-year-that-he-lost-3-billion-from-his-personal-pay-2012-3

Leading the Hedge-Fund World, Dalio Rakes in $3.9 Billion in 2011


From Fox Business: As Americans dream about what they would do if they won the $540 million Mega Millions jackpot, hedge-fund heavyweight Ray Dalio knows he already banked more than seven times that figure last year alone. According to industry rankings published on Friday by Absolute Return magazine, Dalio took home an incredible $3.9 billion in 2011.

Dalio, 63, founded the secretive Bridgewater Associates, which is the world’s largest hedge fund. The firm’s largest fund, Pure Alpha, generated a healthy 16.05% return last year amid bullish bets that paid off on U.S. Treasurys and bearish ones on the U.S. economy, the magazine reports.

The $3.9 billion income for Dalio brings his two-year income to $7 billion and includes returns on his substantial personal investment in Bridgewater’s funds as well as his chunk of large management fees, Absolute Return reports.

Read more: http://www.foxbusiness.com/business-leaders/2012/03/30/leading-hedge-fund-world-dalio-rakes-in-3-billion-in-2011/

Goldman Puts Its Chips on Housing Recovery

Bloomberg writes: Goldman Sachs which survived the subprime mortgage crisis by making bets on a housing decline, is raising money for a new fund that will buy home-loan bonds to benefit from an improving real-estate market.

The U.S. Housing Recovery Fund is expected to finish its first round of capital raising and open April 1, according to a marketing document obtained by Bloomberg News. It will focus on senior-ranked securities without government backing, many of which now carry junk credit grades.

Goldman Sachs Asset Management is joining hedge-fund managers Kyle Bass and Metacapital Management LP in seeking cash for new mortgage funds. They’re following firms including Cerberus Capital Management LP, CQS U.K. LLP and Canyon Partners LLC that started similar investment pools after prices slumped last year….

Read all about it at http://www.bloomberg.com/news/2012-03-29/goldman-bets-on-property-rebound-with-new-fund-mortgages.html

BP: U.S. Withholding Extent of Oil Spill

The U.S. estimated in August 2010 that 4.9 million barrels of oil, plus or minus 10 percent, spilled into the Gulf after a rig exploded, according to Bloomberg's best. BP Plc (BP/) said the U.S. government is withholding evidence that would show the oil spill from the Macondo well in the Gulf of Mexico was smaller than claimed.

BP has identified 10,000 documents, out of more than 80,000 the government has sought to suppress, that relate to estimates of the April 2010 spill, the London-based oil producer said in a court filing yesterday in federal court in New Orleans. The U.S. estimated in August 2010 that 4.9 million barrels of oil, plus or minus 10 percent, spilled into the Gulf after a rig exploded.

BP said March 2 it would pay an estimated $7.8 billion to resolve private plaintiffs’ claims for economic loss, property damage and injuries. The settlement, to be paid from a $20 billion trust set up in 2010 for spill victims, doesn’t resolve federal and state government environmental damage claims. BP has set aside $37 billion to cover spill costs.

Find out the truth at http://www.bloomberg.com/news/2012-03-30/bp-says-u-s-withholding-evidence-of-extent-of-oil-spill.html

Warren Watch: Is Wal-Mart A Good Investment?


According to InsiderMonkey Warren Buffett is the man. The Oracle of Omaha has been quoted and mirrored for decades. When he makes a call about a stock, the world sits up and listens, be it a long time bullish position in Coca-cola (or an eyebrow raising stake in International Business Machines. While he does make some shorter term plays, for the most part, when Warren Buffett buys into a stock, he holds on to it and watches the stock increase in value over time – after all, most stocks will increase in value if held long enough thanks to inflation. Many of Buffett’s picks pay dividends as well, further adding to the upside. A perfect example of this is Wal-Mart.

Wal-Mart is one of the largest positions in his portfolio. As of December 31, 2011, Buffett’s Berkshire Hathaway had over $2.33 billion invested in the company – and he isn’t alone in his enthusiasm. Wal-Mart is also very popular amongst the 350+ hedge funds we track. There were 42 hedge funds with Wal-Mart positions in their 13F portfolios at the end of last year. Besides Buffett, Boykin Curry, Ken Fisher, Jean-Marie Eveillard, Cliff Asness, and Tom Gayner were also bullish about Wal-Mart….

Find out more at http://www.insidermonkey.com/blog/2012/03/29/is-wal-mart-a-good-investment/

The End Is Coming: January 1, 2013!


Businessweek reports: Jan. 1, 2013, seemed a long way off in the Chicken Summer of 2011. That’s when Congress reached a deal that ended, or rather postponed, the debt-ceiling crisis by declaring that automatic cuts in federal spending would be triggered at the beginning of 2013, unless a bipartisan supercommittee came up with a sweeping plan for reducing the deficit. (Predictably, it didn’t.) Even last August some House Democrats worried that their party had given away too much. Emanuel Cleaver of Kansas City, Mo., called the debt deal a “sugar-coated Satan sandwich.” Steve Cohen of Tennessee was even more imaginative. “I fear it’s a Trojan horse,” he said in floor debate on Aug. 1. “And if you look inside that Trojan horse, it’s Scylla and Charybdis inside, the whirlpools and the shoals.”

Now the Trojan horse with the roiling belly is staring us in the eye. With the attention of the political class fixated on the presidential campaign, Washington is in danger of getting caught in a suffocating fiscal bind. If Congress does nothing between now and January to change the course of policy, a combination of mandatory spending reductions and expiring tax cuts will kick in—depriving the economy of oxygen and imperiling a recovery likely to remain fragile through the end of 2012. Congress could inadvertently send the U.S. economy hurtling over what Federal Reserve Chairman Ben Bernanke recently called a “massive fiscal cliff of large spending cuts and tax increases…”

Read more at http://www.businessweek.com/articles/2012-03-29/the-end-is-coming-january-1-2013

CEO Takes Leave Amid Charges

The Wall St Journal reports that Highmark Inc. designated its chairman as acting chief executive, after disclosing that CEO Kenneth Melani will take an unpaid leave of absence as he faces charges of assault and trespassing. The leadership switch comes as the nonprofit company wages a high-profile battle with the University of Pittsburgh Medical Center.

Chairman and acting CEO J. Robert Baum, a University of Maryland professor, said in a statement Thursday that the company will continue with its current strategic direction, including its push to acquire a financially troubled local hospital operator, West Penn Allegheny Health System. Highmark, a major Pittsburgh-based health insurer, had $14.8 ....
Read all about it at http://online.wsj.com/article/SB10001424052702303404704577311930828094816.html?mod=WSJ_business_whatsNews

Apple’s big black eye


According to a NY Post report an audit of Foxconn Technology Group found “serious and pressing” violations of Chinese labor laws, prompting the biggest maker of Apple devices to pledge to cut working hours and give employees more oversight. Inspectors found at least 50 breaches of Chinese regulations as well as the code of conduct.
Apple signed when it joined the Fair Labor Association in January after deaths of workers at suppliers, the monitoring group said yesterday. Foxconn will bring hours in line with legal limits by July 2013 and compensate its more than 1.2 million employees for overtime lost due to the shorter work week, it said.

Assessors found cases of employees working longer hours and more days in a row than allowed by FLA standards and Chinese law. They uncovered inconsistent health and safety policies and instances of unfair pay for overtime work. To meet its commitments, Foxconn must hire, train and house tens of thousands of workers to assemble products for Apple, Dell, Hewlett-Packard and other customers, the FLA said.
“We appreciate the work the FLA has done to assess conditions at Foxconn and we fully support their recommendations,” Cupertino, Calif.-based Apple said in an e-mailed statement. “Empowering workers and helping them understand their rights is essential.”

Apple, led by CEO Tim Cook, fell after the report was released, dropping 1.3 percent to $609.86.


Wait, wait..there's more at : http://www.nypost.com/p/news/business/apple_black_eye_JFwEEU8pxaO2XUuln19NwJ

JPMorgan Banker Gay Divorce From Stage Star Sets U.K. Precedent

Go figure. JPMorgan Chase equity analyst Peter Lawrence won a U.K. appeal cutting to 1.37 million pounds ($2.18 million) a divorce payout to his ex-civil partner, former “Priscilla Queen of the Desert” star Donald Gallagher.

Lawrence must give Gallagher 33 percent of their assets rather than the 42 percent share awarded by a lower court, a three-judge panel at the Court of Appeal in London ruled yesterday.

Under the decision, the banker will keep the London apartment he purchased before the 11-year relationship began, even though the property “soared” in value from 650,000 pounds in 1997, when the couple moved in together, to 2.4 million pounds. Gallagher got the couple’s second home, valued at nearly 900,000 pounds….

More? Check out http://www.bloomberg.com/news/2012-03-29/jpmorgan-banker-gay-divorce-from-stage-star-sets-u-k-precedent.html

Sad News: Mark Lane of Lazard Dies at 44 in Turks and Caicos Boat Mishap


Mark Lane, a managing director at Lazard Capital Markets LLC who recently returned to work after a 3 1/2-year hiatus to help raise four young sons, has died after being hit by a boat in Turks and Caicos Islands. He was 44.

Lane was on a family vacation when he was struck by a motor boat March 24 while swimming off Grace Bay beach on Providenciales, said Paul Baker, a spokesman for the Royal Turks and Caicos Police. He was snorkeling, his wife, Lisa Craig, said yesterday in an interview. After the collision, which occurred around 3:30 p.m. local time, he was taken to a hospital and pronounced dead. The incident is under police investigation.


Read all about it at http://www.bloomberg.com/news/2012-03-29/mark-lane-of-lazard-dies-at-44-in-turks-and-caicos-boat-mishap.html

U.S. IPOs Come Roaring Back

The U.S. IPO market appears to be getting its mojo back, according to the Wall St Journal report. As March comes to a close with what could be the busiest week for initial public offerings since late 2007, before the financial crisis sapped sentiment, it has become clear that pricing and performance of new stocks have vastly improved compared with past months.

Increased investor interest in new stocks was on display Thursday, when mobile-advertising-service provider Millennial Media Inc. leapt 92% on its first day of trading, the best pop since LinkedIn Corp. rose 109% in May 2011. Millennial nearly doubled even after pricing at the high end ...

Find out more at http://online.wsj.com/article/SB10001424052702303816504577312033651818686.html?mod=WSJ_hp_LEFTWhatsNewsCollection

Shocker: Hedge Honcho Hired Former CIA Agents To Teach His Staff 'Deception Detection'


Most people on Wall Street know Dan Loeb, the founder of Third Point LLC, as the outspoken hedge fund manager who writes strongly worded letters to companies. And now we've just learned some interesting tid-bits about the sharp-tongued billionaire hedge fund manager and Third Point:

Loeb hired former CIA agents to teach his Third Point staff "deception detection." That's basically lie detection for corporate executives. (SAC and Goldman Sachs both did deception detection training)
.
When Third Point is shorting a stock they use private investigators so they can understand the situation better than anyone else.
Loeb thinks that a stock or industry that sounds terrible when pitched can be an opportunity because those "out of favor" stock or industries are often the best investment ideas….

Read more: http://www.businessinsider.com/dan-loeb-hired-former-cia-agents-to-teach-his-staff-deception-detection-2012-3#ixzz1qa8Tlkil

Thursday, March 29, 2012

Goldman commodities crown slips as traders exit


Reuters reports that at least 20 commodities traders, several senior, have left Goldman Sachs in the past months, dealing a blow to Wall Street's long-time king of commodities as talent moves to better paying trading houses and hedge funds.

The departures, according to around a dozen insiders and trading sources, mirror the exodus of traders from rival banks over the past two years. The outflow is driven by shrinking profits and tighter regulation of banking, which gives funds and trading houses greater scope to trade and to reward success...

Goldman said the departures will not have an impact on its
standing in commodities….

Read more at http://www.reuters.com/article/2012/03/29/goldman-commodities-idUSL6E8ES9I220120329

Is Spain the new Greece? (And This Time It's Big Enough To Matter...)


Spanish trade unions are holding a general strike across the country today to protest new labor reforms, and by all accounts it has been a largely peaceful protest,BusinessInsider reports. While for the most part conditions on the ground are relatively normal, photos from Madrid, Barcelona, and Pamplona indicated that some young protestors are escalating the angst, painting symbols supporting anarchy on walls, and causing small bouts of destruction.

Such events are reminiscent of similar protests in Syntagma Square, Greece, where groups of youthful protestors turned riotous despite generally calm strikes.
Two major points give us particular trepidation: the fact that these and similar protests closely resemble early protests in Greece a few years ago—when almost no one realistically considered the possibility of a Greek debt restructuring—and the sheer scale of Spanish youth unemployment. As in Greece, young people have been seen as responsible for escalating peaceful political protests to violent riots. Spain's unemployment data suggest that protests there could eventually be much larger—nearly half of young people are already unemployed and they face a tough future and a shrinking social safety net amid economic contraction and austerity measures...

Read more: http://www.businessinsider.com/photos-todays-general-strike-in-spain-looks-a-lot-like-greece-2012-3#ixzz1qWciuNx1

Hedge Funds Register, Wait for SEC to Visit


Reuters writes: Hedge fund managers are increasingly nervous about getting a knock on the door from U.S. securities regulators now that a new rule requires them to register as investment advisers and provide lots of data about their inner workings as a result.

The cost of paying lawyers and adding compliance workers to ready for the new requirement, which was part of the Dodd-Frank financial reform act, generally proved most burdensome for funds with less than $500 million in assets. And all types of funds — large and small — had to commit hundreds of hours going through the process of checking boxes and writing narratives.

Now a far bigger concern for the industry is what the U.S. Securities and Exchange Commission will do with some of the information they are required to provide. Some fear a possible "witch hunt" from regulators eager to make an example of a fund that has been sloppy in enforcing the new rules, industry analysts say….

Find out more at http://www.cnbc.com/id/46889241

Layoffs 2012: Best Buy

Death Of Best Buy's Big Box Store? Company Will Shift To New Model, Close 50 Existing Stores

Forbes reports that Best Buy will shift toward mobile sales and smaller stores in an effort to boost sagging revenue and compete with rivals like Amazon and Wal-Mart. Best Buy’s signature big box stores will be dialed back, and 50 will close in 2012, the company said this morning.

The world’s largest consumer-electronics retailer will test the new store models in San Antonio, Texas and St. Paul, Minneapolis. The renovation would reduce store square footage by 20%, and should be finished by next Christmas. Those new so-called “Connected Stores” will focus on selling cell phones, tablet computers and e-readers, as well as service plans not offered by Amazon and Wal-Mart. Best Buy employees in these new stores are expected to show customers how to connect electronics in the home.

Meanwhile, Best Buy will open another 100 smaller mobile-only stores in fiscal 2013. By 2016, the retailer expects to operate some 600 to 800 mobile-only stores, up from 305 today…

More? Go to http://www.forbes.com/sites/abrambrown/2012/03/29/death-of-best-buys-big-box-store-company-will-shift-to-new-model-close-50-existing-stores/

Occupy Spring: The protests are b-a-a-c-k


Almost from the moment Occupy Wall Street protesters were evicted from their camp in Zuccotti Park last November, observers have speculated whether the movement was finished, or if it would somehow rebound in the spring the Village Voice reports.

Dedicated Occupy activists dismissed the possibility that the movement had already run its course and promised an "American Spring," kicking off a new season of activism with May Day events coordinated across the country. As it turns out, spring came early. A March 17 rally downtown was originally conceived as a low-key way to mark the sixth anniversary of the movement, but as has happened so many times already in Occupy's history, police overreaction transformed the event into something more than it would have been on its own.

The NYPD responded with a chilling and disproportionate show of force, once again evicting the protesters from the 24-hour park and arresting scores of them with a level of violence Occupy veterans said they hadn't seen before….

Get the big picture at http://www.villagevoice.com/2012-03-28/news/occupy-spring-may-day?utm_source=Newsletters&utm_medium=email

What dough? Hedge Fund Honcho Tells Divorce Judge He’s Insolvent


Highland Capital Management LP Chief Executive Officer James Dondero testified in a divorce proceeding that he’s insolvent, while his lawyer said his client’s net worth is negative $50 million, according to a Bloomberg report.

Dondero, 49, told Texas state court Judge David Lopez in Dallas today that the 2008 financial crisis took his debt- investing firm “to a state of insolvency and we’ve been juggling liquidity since that.” Highland Capital assets under management fell to $23 billion by Jan. 1 from $39 billion at the end of 2007.

“The last three, four years have been negative to the tune of hundreds of millions of dollars,” Dondero said. The money manager said his annual income is “a million, two.”
Highland is the largest manager of collateralized loan obligations in the U.S. by dollar amount, according to Moody’s Investors Service. In 2008, the Dallas-based firm had to suspend investors’ withdrawals from two hedge funds as a result of the credit crisis, resulting in litigation with investors and banks…

Find out more at http://www.bloomberg.com/news/2012-03-28/highland-capital-chief-tells-divorce-judge-he-s-insolvent.html

MF Global Exec Pleads The Fifth

Edith O’Brien, the MF Global Holdings Ltd. (MF) assistant treasurer who has become a key figure in tracing the disappearance of as much as $1.6 billion in customer funds, declined to answer questions from House lawmakers, Bloomberg reports.

O’Brien, who appeared yesterday under subpoena before a House Financial Services subcommittee, invoked her constitutional right against self-incrimination during a hearing on the New York firm’s Oct. 31 bankruptcy.

After indicating that she would decline to answer all questions by members of the subcommittee, O’Brien was dismissed from the hearing room….

Find out more at http://www.bloomberg.com/news/2012-03-29/mf-global-hearing-epa-war-on-coal-freight-cartel-compliance.html

Goldman Board Meets Amid Talk of Splitting Top Jobs


Half a world away from Wall Street, the board of directors of embattled Goldman Sachs were meeting in India amid reports that senior executives have talked about splitting the roles of chief executive and chairman, both held now by Lloyd Blankfein. CNBC writes that the meeting is the first in India for the directors of the investment bank.

Access to the presidential suite hired by Goldman Sachs at Mumbai's landmark Taj Mahal Palace hotel, which was heavily damaged during the deadly November 2008 militant attack on the financial capital, was blocked to non-guests on Thursday morning.

Goldman declined to give any details of the annual board meeting, but a source previously told Reuters the U.S. bank had scheduled it in India in a sign of its "commitment" to the fast-growing emerging market….

Read all about it at http://www.cnbc.com/id/46888711

For Hungry Students, Wall Street Still a Draw

From Fins.com: On a recent Saturday night in Cancun, Mexico, Kyle Carnes partied with his friends on spring break, listened to a live band and watched fire twirlers spin flaming sticks.

He couldn't quite relax, though. Every few minutes he checked his iPhone. Mr. Carnes was waiting to find out whether he had gotten a final interview for a summer internship program at a major European bank. Winning the three-month internship would have put him a step closer to his dream: working on Wall Street.

The financial industry may be in retreat, with tighter regulation, smaller bonuses, layoffs and persistent questions over its ethics and culture. But for hundreds of students like Mr. Carnes, a 20-year-old junior at Tufts University in Medford, Mass., Wall Street is still seen as the ultimate launch pad to a successful career….

http://www.fins.com/Finance/Articles/SBB0001424052702304636404577297810311618478/For-Hungry-Students-Wall-Street-Still-a-Draw

Look Whose CEO Was Shut Out on Cash


Bank of America’s Chief Executive Brian Moynihan is paying a price for the bank's difficulties in 2011. Mr. Moynihan was the only top exec at the Charlotte, N.C., company who didn't get a cash bonus for last year, according to a filing Wednesday with the Securities and Exchange Commission the Wall St Journal reports.

The bank's board awarded each of five other officers cash incentives worth at least $1.3 million, and three of those officers—all of whom report to Mr. Moynihan—were paid more than their boss.
The filing said that "in each case," those executives "met or exceeded expectations," words that weren't used in discussing Mr. Moynihan. The pay gap shows the board is holding Mr. Moynihan responsible for the company's performance,…

Read all about it at http://online.wsj.com/article/SB10001424052702304177104577309993060012380.html?mod=WSJ_business_whatsNews

Banks in Best Shape in Three Decades

Banks are in the best financial shape they've been in three decades, and noted banking analyst Dick Bove said he will continue to recommend bank shares in the second quarter, CNBC reports.

"For the last few years we've been dealing with this situation where people buy financial stocks in October and sell them in May," the Rochdale Securities vice president told CNBC Wednesday. But "these companies are doing extremely well" right now.

"Everything is going right" for banks, including loan growth, trading income, and pre-tax earnings, Bove said. Earnings have been up for the last 10 quarters year-over-year and "they are going to do it again for the eleventh," he said, adding that the banks are "in the best shape in three decades…."

Read more at http://www.cnbc.com//id/46881620

Gird your loins for a new era of oil shocks


According to Financial Times’ Martin Wolf oil prices are up. Barack Obama is to blame. Drilling in the U.S. is the solution. This is the mantra from the president’s opponents. All presidents tend to get the blame for high fuel prices. But with the price of gasoline nearing $4 a gallon, Mr. Obama is getting it by the barrel load.

This may be good politics. But it is absurd. Oil, unlike natural gas, is a globally traded commodity, whose price is set in world markets. In 2010, the U.S. produced 7.8 million barrels a day, 9 per cent of the world’s supply. Unlike Saudi Arabia, the U.S. lacks spare capacity: it is a price taker. Responding to his critics, Mr. Obama said: “We are drilling more. We are producing more. But the fact is, producing more oil at home isn’t enough to bring gas prices down overnight.” These remarks are correct, except for the last word. Producing more oil would have next to no effect on oil prices….

More? Check out http://www.theglobeandmail.com/report-on-business/international-news/global-exchange/financial-times/prepare-for-a-new-era-of-oil-shocks/article2383828/

Hot Debut of the Day: Annie's IPO Jumps 89%

Shares of organic foods maker Annie's Inc. BNNY +89.05% rose 89% Wednesday in their first day of trading, another hopeful signal for an initial public offering market that has been in torpor for months, the Wall St Journal reports.

Stock in Annie's, known for its organic macaroni and cheese, was originally sold for $19 per share late Tuesday. When the shares opened for public trading Wednesday, they started trading at $31.11. Investor demand took them still higher, and by 4 p.m., the shares were selling for $35.92 on the New York Stock Exchange, giving the company a market value of about $600 million.

That performance made Annie's the single best IPO performance since LinkedIn Corp. LNKD -1.19% went public in May 2011, according to data from Dealogic…..

Find out more at http://online.wsj.com/article/SB10001424052702303404704577309534266590926.html?mod=business_newsreel

Wall Street's Other Huge Problem


Years after the global financial crisis of 2008, there's a new problem on the minds of those working on Wall Street, HuffPo writes.

That's the conclusion of a new report from PricewaterhouseCoopers, a professional services firm based in London. PwC found that so-called cybercrime -- defined in the report as "an economic crime committed using computers and the internet" -- accounted for 38 percent of all the economic crime experienced at financial service companies last year.

That's a huge jump from 2009, when financial service firms reported no cybercrime at all.

It's worth dwelling on the cybercrime figures for a moment longer though. A cybersecurity expert at PwC told The Wall Street Journal that there probably wasn't zero cybercrime in 2009 -- it's just that financial service firms didn't know enough about the problem to realize it was happening.

Thus, it's hard to say for sure whether cybercrime has really gotten worse over the last few years, or whether companies have simply become more attuned to it.

Something similar has happened at the FBI, where investigators now have about 2,500 corporate and securities fraud cases on their books -- a 47 percent increase since 2008, a year when the importance of detecting financial misconduct became painfully clear, and the government began allocating more resources to do so….

http://www.huffingtonpost.com/2012/03/28/cybercrime-financial-sector_n_1385029.html?ref=business

Wednesday, March 28, 2012

Billionaire Strikes Out: Steve Cohen Loses Dodgers Bidding

Steven Cohen will have to keep his day job. The hedge fund billionaire was rebuffed yesterday in his bid to buy baseball's Los Angeles Dodgers. Instead of the SAC Capital Advisors founder, outgoing Dodgers owner Frank McCourt picked a group led by Los Angeles Lakers legend Magic Johnson according to a finalternatives report.

The Johnson group—whose primary backing comes from Guggenheim Partners and CEO Mark Walter—agreed to pay $2 billion for the team, smashing the record for a North American sports franchise set when Stephen Ross bought the Miami Dolphins for $1.1 billion.

News that Cohen's bid, backed by Los Angeles' richest man, had failed came just hours after he, along with the Johnson group and another group led by St. Louis Rams owner Stan Kroenke, were approved by Major League Baseball to buy the team...

Read more at http://www.finalternatives.com/node/20037

Gupta grilling for Lloyd


The NY Post reports that Goldman Sachs CEO Lloyd Blankfein must detail his meetings with federal prosecutors and regulators when questioned by lawyers for ex-Goldman director Rajat Gupta, a federal judge ordered yesterday.

Manhattan federal judge Jed Rakoff ruled that Blankfein must submit to another two hours of questioning by Gupta’s lawyers, who deposed him for seven hours last month.
During the earlier deposition, Gupta’s lawyers asked Blankfein if he had met with anyone other than his attorneys in preparing for the deposition. Blankfein said he had met with attorneys from the Securities and Exchange Commission, prosecutors from the Manhattan US Attorney’s Office, which is prosecuting Gupta, and at least one FBI agent. When Gupta’s lawyers asked Blankfein what the feds talked about at those meetings, SEC attorneys objected, saying the discussions are their private “work product.” Yesterday, Rakoff rejected that argument....

Read all about it at http://www.nypost.com/p/news/business/gupta_grilling_for_lloyd_OudktrQupugXkh19OP4KyN

PIMCO’s Gross: It's time for investors to plan a "Great Escape"


According to FORTUNE -- Apparently, Bill Gross picks movies as well as investments.
Bond investor Gross, who runs the world's largest mutual fund Pimco Total Return, is known for his quirky letters to investors. In the past he has dispensed love advice (specifically for Europe) and written about why he hates automatic flush toilets. His letter this month, which came out on Tuesday, instead offers movie advice. Gross' big screen pick is The Great Escape.

The movie came out in 1963, is about World War II and stars Steve McQueen as the head of a group of American soldiers trapped in a German POW camp. Gross says the movie reminds him a lot of what it feels like to be an investor today. Ouch. Except it's debt that is playing the role of the Nazis. And if you don't dig a really big tunnel it's not clear you will ever afford to retire. Not encouraging stuff.

Basically, Gross' thesis is that the market, and investors, will be trapped in a low-return world for the next few years. That's because all the things that have been boosting the market for the past few decades - rising debt, low inflation, low-interest rates - are about to reverse….

http://finance.fortune.cnn.com/2012/03/28/pimco-bill-gross-great-escape/?iid=SF_F_River

How You Can Quit Your Job and Make $1 million

Sound impossible? Not so. For example take former Goldman Sachs executive Greg Smith, who resigned this month via a scathing op-ed in the New York Times, has triggered a media bidding war for his memoir of life inside the belly of the Wall Street beast.

One top editor said he believed the auction was already nearing the magic $1 million mark. Smith is being represented by Paul Fedorko at N.S. Bienstock, an agency that specializes in reality TV shows and news personalities. Fedorko didn’t return calls for comment.

Others in the publishing industry were a little more skeptical.
“It could go either way,” said another top editor who is not involved in the bidding when asked if the auction could crack $1 million. “There’s some big upside potential as well as some downside….”

Read more: http://www.nypost.com/p/news/business/bidding_war_for_smith_book_could_uIGA27t3bhOxIWL2U7Nf8H

Facebook IPO: Zuckerberg's Absence Worries Wall Street


From Reuters: Mark Zuckerberg wants at least $5 billion from Wall Street investors, but those investors will not be getting much face time in return. The Facebook co-founder and CEO made that clear when he skipped the social networking company's first major briefing for analysts and bankers last week. The meeting was the first of many that will take place in the run-up to an IPO that could value the company at close to $100 billion.

Zuckerberg's dismissive approach is hardly unique among elite Silicon Valley companies, but it could become an issue with investors because of the enormous control he exerts over Facebook via special shares.

"We don't think that he should be hiding from the investors," said Carin Zelenko, the director of the capital strategies department for the International Brotherhood of Teamsters, whose pension and benefit funds have more than $100 billion invested in the capital markets.

According to Zelenko, the Teamsters will send a letter to the trustees of the various Teamster funds advising them to be wary of long-term risks associated with investing in Facebook as a result of its "anti-investor" corporate governance structure…..

Read all about it at http://www.huffingtonpost.com/2012/03/28/mark-zuckerberg-wall-street_n_1384351.html?ref=business

Going, Going, Gone: A Major Source Of Free Money For Americans Is Starting To Disappear


Reuters reports that applications for U.S. home mortgage purchases rose last week, though demand for refinancings dropped for a sixth week in a row as interest rates climbed, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes refinancing and home purchase demand, fell 2.7 percent in the week ended March 23.
The MBA's gauge of loan requests for home purchases rose 3.3 percent, though the measure of refinancing applications dropped 4.6 percent. The decline in refinancing was driven by a 12.0 percent drop in government refinance activity, while conventional applications fell just 3.4 percent, the report said.

The refinance share of total mortgage activity slipped to its lowest level since July of last year at 71.9 percent of applications from 73.4 percent. Fixed 30-year mortgage rates jumped to their highest level since November to average 4.23 percent, up 4 basis points from 4.19 percent...

Read all about it at http://www.chicagotribune.com/business/breaking/chi-mortgage-applications-fall-on-drop-off-in-refinancings-20120328,0,5486712.story

Guess Who’s Getting Sued for Not Paying Taxes Now

Yes folks, you'd think Warren Buffett would jump at the chance to pay more taxes. Evidently not.

Buffett, the billionaire investor and CEO of Berkshire Hathaway, has for several months insisted that he and other affluent Americans should have a higher tax burden. Buffett's ideas have been well received among the millionaire community and the general population, and President Obama is likewise a fan. In fact, a proposed tax named in Buffett's honor is projected to raise $31 billion in additional rich-people dollars over the next decade if it passes.

But just because Buffett wants to pay a higher effective tax rate doesn't mean companies related to him are chomping at the bit. According to The New York Times' DealBook, one of the companies within Buffett's Berkshire fiefdom -- an Ohio-based private aviation firm called NetJets -- is being sued by the federal government for what the government says is a whopping sum of unpaid taxes…

Want to see more? Check out http://www.huffingtonpost.com/2012/03/27/warren-buffett-netjets-taxes_n_1382591.html?ref=business

Top Firm faces investors’ class action suit


According to a PIonline report U.S. District Judge Donovan W. Frank in St. Paul, Minn., certified the suit as a class action Tuesday, finding that common issues predominated, including whether Wells Fargo “knew or should have known that the investments it selected did not comport with investment mandates.” These issues “will likely turn on substantially the same evidence for the class as a whole,” Mr. Frank said in a 21-page decision.

The lawsuit, filed in 2010 by the $175 million Farmington Hills (Mich.) Employees Retirement System on behalf of more than 100 other institutional investors, claimed breach of fiduciary duty and fraud. The investors sought to be allowed to pursue the case against Wells Fargo as a group.

The suit claimed that Wells Fargo “touted” its securities lending program “as a highly secure way for its institutional clients to maximize portfolio returns,” according to the complaint. Instead, the pension fund said, “Wells Fargo invested a substantial portion of the collateral in extremely risky securities….”

Read all about it at http://www.pionline.com/article/20120327/REG/120329875/wells-fargo-to-face-investors8217-class-action-over-securities-lending

Gupta Loses Bid to Suppress Wiretaps at His Insider Trial


The Wall St Journal reports that prosecutors can play secretly recorded telephone calls with a hedge-fund manager allegedly tipped by former Goldman Sachs Group Inc. director Rajat Gupta at his insider-trading trial later this year, a federal judge has ruled.

Mr. Gupta, a former director at Goldman and Procter & Gamble Co., had argued that federal law doesn't allow wiretaps to be used in insider-trading probes and the secretly recorded calls were improperly obtained by prosecutors.

The wiretaps include conversations from Galleon Group founder Raj Rajaratnam's cellular telephone and were a key component in Mr. Rajaratnam's criminal trial last year. Mr. Rajaratnam, who was convicted ...

Learn more at http://online.wsj.com/article/SB10001424052702303816504577307483635114796.html?mod=WSJ_markets_liveupdate

Goldman Bows to Pressure


Goldman Sachs Group Inc. agreed to change its board structure in order to persuade a union pension fund to drop a shareholder proposal that could have cost Chief Executive Lloyd C. Blankfein his job as chairman.

The deal between the New York securities firm and the American Federation of State, County and Municipal Employees means Goldman will appoint a "lead" director, but shareholders won't get a chance to vote at the firm's annual meeting in May on the proposal to replace Mr. Blankfein with an independent chairman.

The union had claimed stripping Mr. Blankfein of his chairman powers would help ...

Wait,wait...there's more at http://online.wsj.com/article/SB10001424052702303816504577307871991956472.html?mod=WSJ_hp_LEFTTopStories

Tuesday, March 27, 2012

NY Court Nixes Suit Against UBS

A New York appeals court tossed out on Tuesday a key argument in an early lawsuit related to the implosion of U.S. subprime-mortgage market. The appeals court said that HSH Nordbank could not claim it was fraudulently induced into investing some $500 million in a collateralized debt obligation from Swiss investment bank UBS, which was represented by firm Paul Hastings in the case.

The court said that HSH was aware of the risks related to the investments and was sophisticated and big enough to perform its own due diligence.

“HSH is complaining that UBS — which HSH agreed was not acting as its advisor or fiduciary in this matter — induced it to enter into a deal that would enable UBS to exploit, at HSH’s expense, a feature of the relevant securities market that was common knowledge among participants in that market. This does not constitute a legally sufficient cause of action for fraud, certainly not when pleaded by a sophisticated business entity that disclaimed reliance on the party it now accuses of fraud...”

Read all about it at http://blogs.wsj.com/deals/2012/03/27/court-tosses-argument-against-ubs-in-2008-cdo-suit/?mod=google_news_blog

Banking services withdrawn: Madrid escorts declare sex war


No seriously folks.... Madrid’s high-class escorts have found a way to regulate the Spanish banking sector. The ladies want to have their say in the economy by withholding sexual pleasures from bank employees.
The largest trade association for luxury escorts in the Spanish capital has gone on a general and indefinite strike on sexual services for bankers until they go back to providing credits to Spanish families, small- and medium-size enterprises and companies.

It all started with one of the ladies who forced one of her clients to grant a line credit and a loan simply by halting her sexual services until he “fulfills his responsibility to society.”

The trade association's spokeswoman praised their success by stressing the government and the Bank of Spain have previously failed to adjust the credit flow. "We are the only ones with a real ability to pressure the sector," she stated. “We have been on strike for three days now and we don't think they can withstand much more….”

Find out more at http://rt.com/news/spain-banks-escorts-sex-198/

Looks Like Someone Can Cancel His Appointment With That Prison Consultant For Now


According to Matt Levine of Dealbreaker fame, one thing that I’ve assumed from the beginning about MF Global is that no one’s ever going to find an email from Jon Corzine saying “Hey guys – can you steal a bunch of customer money to keep us afloat? Then kill the witnesses and bury their bodies in shallow graves.” This faith was tested on Friday when it came out that MF Global treasurer Edith O’Brien claimed in an email to have just such instructions, though she would say that since she’s currently the leading candidate for having buried all the bodies. But, false alarm: JSC did apparently say “transfer that money,” but he thought it was not customer money, so no probs. For now….

Find out more at http://dealbreaker.com/2012/03/looks-like-someone-can-cancel-his-appointment-with-that-prison-consultant-for-now/

Goldman ‘sacks’ Couple: Bank pillaged $450M in stock

According to a NY Post report, a Silicon Valley couple who entrusted their $1 billion tech fortune to Goldman Sachs claims newly discovered documents show the Wall Street firm hijacked $450 million of stock by wrongly deleting their names as owners and substituting the name of the firm.

Sehat Sutardja, 49, and his wife, Weili Dai, who founded chip giant Marvell Technology Group, have found stock certificates and related paperwork showing that Goldman had about 25 million shares of Marvell shares transferred from the family’s personal ownership, under management by Goldman, to the firm, lawyers for the couple claim.

The family insisted that they had never approved such a transfer of their stock holdings, which were managed by Goldman’s tony private client group.
The documents were provided to The Post by lawyers for the family. The family is expected to file a new claim against Goldman today with the Financial Industry Regulatory Authority, or Finra, backed by the recently discovered documents.

Wait, wait...there's more: http://www.nypost.com/p/news/business/goldman_sacks_oarn7rws39lAXmkuE75wJI

Obamacare is toast! Supremes skeptical over health care constitutionality


NBC's Pete Williams, who has been listening in as the Supreme Court hears arguments about President Obama's health care reform law, says he thinks it's "very doubtful" the high court is going to find the law constitutional. Two years after a hard-fought victory, President Barack Obama’s signature legislative accomplishment -- the health care reform law -- seemed at risk of being struck down as the Supreme Court heard arguments Tuesday.

“I think it’s very doubtful that court is going to find the health care law constitutional,” NBC’s Pete Williams reported after watching the two hours of oral argument before the high court. “I don’t see five votes to find the law constitutional.”

While it's difficult to know for certain after Tuesday's oral arguments, the conservative justices appeared skeptical of the constitutionality of the law’s requirement that uninsured people purchase insurance.

Court observers caution that one shouldn't read too much into what any particular justice says during oral arguments; a justice will sometimes test out a theory and his comments don’t necessarily indicate which way he or she will decide....

Find out more at http://nbcpolitics.msnbc.msn.com/_news/2012/03/27/10883874-supreme-court-expresses-skepticism-over-constitutionality-of-health-care-mandate

Signs of the Times: City May Sell Historic Landmarks


More than a dozen historic landmarks in Baltimore may be up for sale soon. But as Gigi Barnett reports, the city first wants to know how much they will bring in first. The city says its historic buildings are a liability, an eyesore and a drain on its pockets.

Baltimore’s Shot Tower was the tallest building in the nation back in 1828 and became a national historic landmark in the early 1970s. The city says it wants to know how much the Shot Tower is worth to a private developer.

“We have some great properties in unique locations and we hope we can find the right kind of marriage to make it work,” said City Director of Planning Thomas Stosur….

Read more at http://baltimore.cbslocal.com/2012/03/25/city-may-sell-historic-landmarks/

Warren Buffett's $50 Billion Decision


(Note: This article, by Warren Buffett, as told to Randall Lane, appears in the upcoming April issue of ForbesLife magazine, as part of its “When I Was 25″ series.)

“Benjamin Graham had been my idol ever since I read his book The Intelligent Investor. I had wanted to go to Columbia Business School because he was a professor there, and after I got out of Columbia, returned to Omaha, and started selling securities, I didn’t forget about him. Between 1951 and 1954, I made a pest of myself, sending him frequent securities ideas. Then I got a letter back: “Next time you’re in New York, come and see me.”

“So there I went, and he offered me a job at Graham-Newman Corp., which he ran with Jerry Newman. Everyone says that A.W. Jones started the hedge fund industry, but Graham-Newman’s sister partnership, Newman and Graham, was actually an earlier fund. I moved to White Plains, New York, with my wife, Susie, who was four months pregnant, and my daughter. Every morning, I got on a train to Grand Central and went to work.
“It was a short-lived position: The next year, when I was 25, Mr. Graham—that’s what I called him then—gave me a heads-up that he was going to retire. Actually, he did more than that: He offered me the chance to replace him, with Jerry’s son Mickey as the new senior partner and me as the new junior partner. It was a very tiny fund—$6 million or $7 million—but it was a famous fund.

"This was a traumatic decision. Here was my chance to step into the shoes of my hero—I even named my first son Howard Graham Buffett. (Howard was for my father.) But I also wanted to come back to Omaha. I probably went to work for a month thinking every morning that I would tell Mr. Graham I was going to leave. But it was hard to do….”

Don't stop now...Read all about it at http://www.forbes.com/sites/randalllane/2012/03/26/warren-buffetts-50-billion-decision/

Goldman’s Jim O'Neill: Glass 'More Half Full Than Empty'


The world economy is on the mend despite problems in Europe, but investors are still scared and react by retreating to cash every time they hear bad news, Jim O'Neill, chairman at Goldman Sachs Asset Management, told CNBC on Tuesday.

Investors are "obsessed" with the problems in Western economies, but actually the U.S. economy is recovering, and in Europe there are some countries that are doing better than others, O'Neill said.

"Generally speaking, cash is king; people are really reluctant and cautious," he said, citing the example of last week, when at the first sign of disappointment in Europe after some bad economic data investors were in a "panic." "That is the mood across the board," O'Neill added.

This mood makes it hard for investors to get back into stock markets because the focus is on short-term results, he explained….

Learn more at http://www.cnbc.com/id/46853218

Facebook's $100 Billion Management Secrets

According to Fortune’s Miguel Helft and Jessi Hempel -- On a Friday morning not long ago, Mark Zuckerberg gathered his troops for a much-anticipated all-hands meeting at Facebook's brand-new headquarters. It was billed as a not-to-be-missed event. Employees who were traveling were encouraged to return to the mother ship, and those in New York, Dublin, Hyderabad, and other satellite offices were told to watch via live stream. In Menlo Park, Calif., some 2,000 employees marched into a large white tent that was set up for big gatherings on a lawn across from the parking lot. The mood was effervescent, or as one employee described it, "part religious revival." The pre-meeting buzz had people betting that Zuckerberg was finally ready to discuss the momentous event that would transform the eight-year-old company from hot startup into card-carrying member of the business establishment: Facebook's IPO.

Zuckerberg had other plans. He mentioned the IPO only in passing. This was a gathering to discuss priorities for 2012, according to employees. In a sense, the purpose of the meeting was to remind everyone to stay on course even as Facebook prepared to undergo its biggest change yet. No matter what happens on the outside, Zuckerberg told employees, keep your heads down. "Stay focused," he urged. "Keep shipping." Twelve days after the January staff meeting, Facebook announced its plans to go public….

Want to know more? Go to http://tech.fortune.cnn.com/2012/03/01/inside-facebook/

MF Global’s Top Lawyer Talks

MF Global’s top lawyer is expected to break her five-month silence on Wednesday to tell Congress that she was unaware of a gaping shortfall in customer money until hours before the brokerage firm filed for bankruptcy on Oct. 31 NY Times’ Dealbook reports.

Laurie Ferber, MF Global’s general counsel, was expected to tell a House panel that she “had no reason to believe” that the firm had raided customer accounts to meet its own obligations, according to a copy of her prepared testimony. While Ms. Ferber learned of a shortfall in customer money in the afternoon of Oct. 30, she said she believed it to be an accounting error.

“My impression throughout the afternoon and late into the evening was that the apparent deficit was a reconciliation issue and did not represent an actual shortfall in customer funds,” she planned to tell the oversight panel of the House Financial Services Committee.

Ferber, who previously worked at Drexel Burnham Lambert and Goldman Sachs, is a central figure in the collapse of MF Global and the ensuing hunt for more than $1 billion in missing money. As legal counsel, she helped oversee attempts to sell MF Global as it careened toward failure and advised the firm on a dispute over a crucial transfer of money to JPMorgan Chase. That transfer contained customer money, a fact that MF Global officials have said that they did not know at the time….

Read more at http://dealbook.nytimes.com/2012/03/26/mf-globals-top-lawyer-will-break-her-silence/?ref=global

Apple Plans More Investment in China


Those fine folks at Bloomberg write: Apple said it plans to make greater investment in China as Chief Executive Officer Tim Cook visited the world’s most populous country, where store openings have trailed a forecast from the company two years ago.

Cook had “great meetings” with Chinese officials, Carolyn Wu, a Beijing-based spokeswoman, said by telephone yesterday, without identifying the people. Cook posed for photos earlier in the day with customers at Apple’s store in the Joy City Mall in Beijing’s Xidan shopping area.

China is Apple’s second-largest market after the U.S., Cook said in October. His visit comes almost three months after crowds threw eggs at another Apple store in Beijing’s Sanlitun district when it didn’t open on the first day of sales for the iPhone 4S. Demand for the iPhone in China was “staggering,” and the company “didn’t bet high enough,” Cook said Jan. 24.

“Apple has done a great job with the relatively small number of retail stores they have got here,’” David Wolf, CEO of Wolf Group Asia, a Beijing-based marketing strategy consulting firm, said in an interview yesterday. “The challenge now is to extend the successful retail model they have in the U.S. to China....”

Don't stop now. There's more at http://www.businessweek.com/news/2012-03-26/apple-plans-further-china-investment-as-cook-visits-beijing

Hedge funds take profits after bumper Q1

Hedge funds are cashing in some of their chips after enjoying a bumper first quarter, wary that a sudden change in market sentiment could see them take the sort of losses suffered in last year's volatile markets, according to Reuters.

Hedge funds returned 5 percent in the first two months of the year, the best start to a calendar year since 2000 according to Hedge Fund Research, as the European Central Bank's 1 trillion euro ($1.3 trillion) ca s h injection boosted assets across the board.

Some star names recorded huge gains. Crispin Odey's Odey European fund gained 21.1 percent and Johnny de la Hey's Tosca fund rose 13.7 percent to mid-March, while Michael Hintze's $1.4 billion CQS Directional Opportunities fund was up 13.9 percent to end-February.

Many managers remain positive on markets, but in a number of cases have opted to trim their bets, influenced by sharp volatility last year during the euro zone debt crisis that saw the average fund lose 5.3 percent and some more bullish funds take much bigger losses…

Find out more at http://www.reuters.com/article/2012/03/27/hedgefunds-markets-idUSL5E8EG34H20120327

Big Brother Wants Your Facebook Password


If you want to become a state trooper in Virginia, you should probably delete any indelicate information you have on Facebook. During the job interview process, the Virginia State Police requires all applicants to sign into Facebook, Twitter, and any social-networking site to which they regularly post information in front of an administrator, Businessweek reports.

“You sign a waiver, then there’s a laptop and you go to these sites and your interviewer reviews your information,” says Corinne Geller, spokeswoman for the Virginia State Police. Virginia is not the only state to do this; other police departments and government entities have similar policies….According to the ACLU, the number of employers who request access to applicants’ Facebook profiles has risen over the past year. Accessing such private information puts employers in a legal gray area and may potentially open them up to both privacy and discrimination lawsuits.

More? Check out http://www.businessweek.com/articles/2012-03-27/big-brother-wants-your-facebook-password

Mitt Romney's hedge fund kingmaker


From Fortune: As he gears up for the final stretch in the marathon that is the Republican nomination campaign, Mitt Romney has no shortage of eminent financiers to call on -- for advice or money. Billionaire hedge fund titans such as Julian Robertson of Tiger Management, Louis Bacon of Moore Capital, and John Paulson of Paulson & Co. have all lined up behind the front-runner. Steve Schwarzman, the co-founder of private equity giant Blackstone, recently held a high-level fundraiser for Romney at his Park Avenue apartment. Romney's old friends at Bain Capital, the buyout firm he co-founded in 1984, have also been generous in their support.

But perhaps none of Romney's Wall Street supporters will be more crucial to the candidate's success, or have more influence on his thinking, than Paul Singer….

Find out more at http://finance.fortune.cnn.com/2012/03/26/paul-singer-mitt-romney/?iid=SF_F_LN

JP Morgan the best of a bad banking lot


The Fiscal Times’ Suzanne McGee writes:

The House of Dimon won the race to be the top investment bank for the first quarter of 2012, according to preliminary data from Dealogic. The competition, of course, is the race to emerge as the top investment bank for the first quarter, a race that the House of Dimon won triumphantly. It won the top spot by generating the largest share of revenue from underwriting equity deals, according to preliminary data from Dealogic, although it ceded top spot to Citigroup (C 0.00%) and Goldman Sachs (GS 0.00%) when it came to transaction volumes.

When it came to the debt markets, JPMorgan Chase grabbed the lead in both the number of transactions in which it was lead bookrunner, and in terms of the revenue it earned from those deals, Dealogic calculated. Not surprisingly, the giant global bank -- one of the biggest post-financial crisis winners -- consolidated its dominance of global capital markets by capturing 8% of global investment banking revenue, with Bank of America Merrill Lynch (BAC 0.00%) trailing behind at 6.2%.

Still, JPMorgan Chase's celebrations may be somewhat muted given the decline in overall underwriting activity across the board. Whether it came to syndicated lending, debt underwriting or negotiating mergers, the pace at which transactions occurred nosedived in the first quarter. True, the stock market may have been on a tear, but investment banking income flagged significantly, according to preliminary data from Dealogic, a worrying sign for profits from the like of Goldman Sachs (GS 0.00%) and Morgan Stanley (MS 0.00%)…..

Overall, global investment banking revenue in the first three months of the year was about $13.8 billion, down 31% from the first quarter of last year and 3% below fourth-quarter levels.

Read all about it at http://money.msn.com/top-stocks/post.aspx?post=0123ac00-3ee8-4600-b2e5-4ac49ccad3e1

Trader Loses Out On Millions After Court Rules Against Him


J.P. Morgan Chase will not have to pay a currency trader £580,000, or $921,000, after the company mistakenly missed a decimal point when printing his contract, a British court ruled.

The Swiss-based trader, Kai Herbert, was expecting to earn an annual salary of 24 million rand, or $3.1 million, when he left UBS to join J.P. Morgan in South Africa.
However J.P. Morgan said that it had erred and the contract should have been printed at 2.4 million rand.

By the time Herbert got the bad news, he had already left UBS.

Read more: http://www.businessinsider.com/jp-morgan-doesnt-have-to-pay-trader-ten-times-salary-for-misplaced-decimial-2012-3

Mongolia goes bigtime into global debt markets

From BNE.com: Given Mongolia had the world's fastest growing economy in 2011, it was only going to be a matter of time before the country sought to leverage its position as the latest global financial hotspot in order to raise funds on the international bond markets and underpin its go-to investment status.

And that was just what has happened in recent days as both Mongolian Mining Corporation (MMC) and the Development Bank of Mongolia (DBM) tapped fixed-income investors with benchmark-sized issues. Thanks to the buzz around the Central Asian state, both issuers were easily able to hit their desired bond size targets and also price the bonds at cheaper levels than initially hoped for.

On March 23, MMC became the first Mongolian corporate to access the international bond markets with a benchmark-sized $600m, five-year issue that's callable after three years. Bank Of America Merrill Lynch, ING and JP Morgan were bookrunners in the deal, which featured an 8.875% coupon, at the tight end of the pre-launch marketing range of 8.875-9.00% and well inside the initial price talk of a 9.50% yield...

Find out more at http://www.bne.eu/storyf3392/Mongolia_goes_big_in_the_global_debt_markets

Monday, March 26, 2012

What Scares Dr. Doom?


From Nouriel Roubini in the straitstimes: Today's fragile global economy faces many risks: the risk of another flare-up of the eurozone crisis; the risk of a worse-than-expected slowdown in China; and the risk that economic recovery in the United States will fizzle (yet again). But no risk is more serious than that posed by a further spike in oil prices.

The price of a barrel of Brent crude, which was well below US$100 in 2011, recently peaked at US$125. Gasoline prices in the US are approaching US$4 a gallon, a damaging threshold for consumer confidence, and will increase further during the high-demand summer season.

The reason is fear. Not only are oil supplies plentiful, but demand in the US and Europe has been lower, owing to decreasing car use in the last few years and weak or negative GDP growth in the US and the eurozone. Simply put, increasing worry about a military conflict between Israel and Iran has created a 'fear premium…..'

Find out more at http://www.straitstimes.com/Project_Syndicate/Story/STIStory_778975.html

Is This The Death Of The Gold Bull Market?


Is it time to start dumping your holdings in gold? Has the turning point finally arrived? According to the Financial Times this past week that answer according to Streetalklive is a “yes”.

"Investors are losing their enthusiasm for gold as signs of improvement in the US economy tempt them away from the traditional haven.
Interest in gold has surged in the past ten years, as prices have risen more than sevenfold from just $253 in 2001 to a peak of nearly $2,000 last year. But investors have become more wary about putting fresh money into the metal ... according to some bankers

Read more: http://www.streettalklive.com/daily-x-change/776.html#ixzz1qFVCUcUv

Bernanke says U.S. needs faster growth; market ralllies


The U.S. economy needs to grow more quickly to bring down the unemployment rate further, Federal Reserve Chairman Ben Bernanke told Reuters Monday, defending the central bank's policy of very low interest rates. While he offered no indication that the Fed is keen to embark on a third round of bond purchases, Bernanke also made clear the Fed is in no rush to reverse course after responding aggressively to a deep recession.

Bernanke said the recent decline in the jobless rate, which dropped to 8.3 percent in February from 9.1 percent last summer, was "somewhat out of sync" with the rather modest pace of economic growth.

"To the extent that this reversal has been complete, further significant improvements in the unemployment rate will likely require a more rapid expansion of production and demand from consumers and businesses,….

Need to know more? Check out http://www.reuters.com/article/2012/03/26/us-bernanke-idUSBRE82P0GZ20120326

Is Ex-Goldman Exec Seeking Book Deal? Already?

Greg Smith, the former Goldman Sachs executive who used the Opinion Page of The New York Times to announce his resignation in spectacularly public fashion, is reportedly shopping a book proposal about his time at the firm. Per "several people with knowledge of the conversations," Smith held meetings with publishers last week, pitching the book as "a coming-of-age story, the tale of someone who came into the business with good intentions and sky-high ideals that were ultimately pierced by Goldman’s obsessive focus on making money." Publishers who attended those meetings seem split on the project's viabilities.

According to The New York Times, some publishers think the book could be another Liar's Poker, while others are wary of the "legal issues that could be involved with a former employee’s writing a damning book about a large, deep-pocketed company." Other concerns voiced by publishers include whether a book focused on the derivatives market could be accesible to a wide audience, the ability of a mid-level employee to write a persuasive indictment of Goldman's corporate culture, and whether anyone will still remember Greg Smith six months from now. Said one unenthusiastic publishing executive: "It's a story that had its moment,"

Read all about it at http://www.nytimes.com/2012/03/24/business/greg-smith-ex-goldman-executive-is-said-to-be-seeking-book-deal.html?_r=1
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The Wall Street multibillion scandal no one is talking about


Much of the talk about bad behavior on Wall Street since the financial crisis has been about mortgages with a little bit of insider trading sprinkled in, according to Fortune. And that makes sense. Everyone immediately understands what a mortgage is. And the housing bust that resulted from all those bad home loans affected us all. And Hollywood has taught us to ooh and ah over insider trading.

But there is another scandal that has come out of the financial crisis that at least to me makes the mortgage underwriting scandal look like small peanuts, and it has been heating up lately. Two weeks ago, the government disclosed that it is looking into bringing criminal cases against traders and banks that manipulated a key bank lending rate, called LIBOR. A source close to the case says the government's "may" will be dropped soon. Both Barclays and Deutsche Bank have disclosed that they have been the focus of investigations. Banks have suspended dozens of traders.

Today, Credit Suisse announced that it was cooperating with regulators on the case. Traders at UBS reportedly are already working with the government on its investigation. Looking for instances in which Wall Streeters go to jail, unlike mortgages, this may be the one.
Find out more at http://finance.fortune.cnn.com/2012/03/23/the-wall-street-multibillion-scandal-no-one-is-talking-about/

Ex-Hedge Fund Manager Accuses Goldman Of Forcing Him Into A Life Of Chicken Farming

A former hedge fund manager is accusing Goldman Sachs of illicitly managing his short positions as the market was melting down in 2008, causing his $1.5 billion firm to go under, the New York Times' Gretchen Morgenson reports.
As a result, the manager, Marc Cohodes, has turned to raising chickens on a farm in Northern California.

Cohodes recently testified in another Goldman lawsuit unrelated to the closing of his firm, Copper River Fund, that he believed the investment bank never borrowed the shares needed to perform a stock short.


Read more: http://www.businessinsider.com/former-hedge-fund-manager-accusing-goldman-sachs-of-forcing-him-into-chicken-farming-2012-3#ixzz1qEpF1KsV

E-Mail to Corzine Said Transfer Was Not Customer Money


Believe it or not according to the NY Time4s’ Dealbook: Jon S. Corzine, the former chief executive of MF Global, was told during the brokerage firm’s final day of business that a crucial transfer of $175 million came from the firm’s own money, not from a customer account, according to an internal e-mail.

The e-mail, sent by an executive in MF Global’s Chicago office, showed that the company had transferred $175 million to replenish an overdrawn account at JPMorgan Chase in London. The transfer, the e-mail said, was a “House Wire,” meaning that it came from the firm’s own money. The e-mail, sent at 2:20 p.m. on Oct. 28 to Mr. Corzine and two of his assistants in New York, says the transfer came from a “nonseg” account, industry speak for a noncustomer account.
But the e-mail, a copy of which was reviewed by The New York Times, did not capture the full story behind the wire, which turned out to contain customer money….

Read all about it at http://dealbook.nytimes.com/2012/03/25/e-mail-to-corzine-said-transfer-was-not-customer-money/

The Biggest Fire Sale In History Is Going On In Europe!


According to the Daily Reckoning it’s going to be the biggest fire sale in history — and it begins in 2012.

Europe’s banking sector holds 2½ times as many assets as the U.S. banking sector. It’s huge. And it’s in big trouble. Europe’s banking sector needs cash — mountains of cash. As a result, it will have to sell more than $1.8 trillion of assets, which will likely take a decade to work through. For perspective, it sold only $97 billion from 2003–10. “The list of asset sales is the longest I’ve seen in 10 years,” says Richard Thompson, a partner at PricewaterhouseCoopers in London. Knowing how these things work, the final tally could well be double that. The world has never seen anything this big before.


Read more: http://www.businessinsider.com/the-biggest-fire-sale-in-history-2012-3

Markets Are Falling Everywhere


From Bloomberg: Things started off on a positive note in early Asian trading, but the tone now is more negative.

US futures are pointed just slightly down.

Europe is worse. Italy is off 0.5%. Germany is down 0.3%. France is down 0.4%. There are a couple of good datapoints. Consumer confidence in Italy ticked up, as did the German IFO index.


Read more: http://www.businessinsider.com/morning-markets-march-26-2012-3

Hedges Make Wrong-Way Bets for a Fourth Week

Hedge funds wagered the wrong way on commodity prices for a fourth consecutive week, boosting bullish holdings just before reports showing a contraction in manufacturing from China to Europe drove prices lower according to Bloomberg.

The S&P GSCI fell to a three-week low on March 22 after reports showed factory output in Germany and France unexpectedly shrank in March and a measure of China’s manufacturing was the weakest since November. U.S. government data the following day showed purchases of new homes unexpectedly fell last month, increasing investor concerns about the durability of the world’s largest economy.

The MSCI All-Country World Index of shares fell 1.1 percent last week, with about $607 million erased from the value of global equities, according to data compiled by Bloomberg. The dollar retreated 0.6 percent against a basket of six major trading partners, and Treasuries returned 0.4 percent, a Bank of America Corp. index shows.

Learn all about it at http://www.bloomberg.com/news/2012-03-25/hedge-funds-make-wrong-way-bets-for-a-fourth-week-commodities.html