Archive for June, 2007

• Greenspan Comes Out Of Retirement For One More Interest Rate Hike
  Eddy Elfenbein, June 25th, 2007 at 9:00 am

  
  The Onion scoops Wall Street:

  Confirming a rumor that first appeared in March on the FDIC Fan Forum message board, former Federal Reserve chairman Alan Greenspan came out of retirement Tuesday to raise interest rates on federal funds by a quarter of a point.
  “You may remember this one from 1989,” said Greenspan, barely audible above the roar of an estimated crowd of 20,000 gathered in front of the Marriner S. Eccles Building. “But before I start, I think I’m gonna need [current Federal Reserve chairman] Ben [Bernanke]’s help with this. C’mon up here, Ben.”
  Greenspan refused to comment on buzz that he was planning a five-nation comeback tour to stabilize international housing markets.

  There really is a Fed meeting this week and I wouldn’t mind seeing a 0.25% cut.

• Just Another Friday
  Eddy Elfenbein, June 22nd, 2007 at 1:58 pm

  Tom Wolfe:

  We may be witnessing the end of capitalism as we know it.

  Paris Hilton:

  I’m much more grateful for everything that I have, even just to have a pillow at night or food.

  Here are the 10 largest IPOs:
  Stock……………………………………………….Value…………..Date
  AT&T Wireless Group……………………….$10,620.0…….26-Apr-00
  Kraft Foods Inc……………………………….$8,680.0………12-Jun-01
  UPS………………………………………………$5,470.0………9-Nov-99
  KKR Private Equity Investors…………….$5,048.8………3-May-06
  CIT Group Inc…………………………………$4,866.2………1-Jul-02
  Conoco………………………………………….$4,403.5………21-Oct-98
  Travelers Ppty Casualty Corp…………….$4,273.5……..21-Mar-02
  Agere Systems Inc…………………………..$4,140.0………27-Mar-01
  Blackstone Group LP………………………$4,133.3……..21-Jun-07
  Charter Communications Inc………………$3,714.5………8-Nov-99

• SEI Investments Splits 2-for-1
  Eddy Elfenbein, June 22nd, 2007 at 10:03 am

  One of our Buy List stocks, SEI Investments (SEIC), split 2-for-1 this morning.
  For tracking purposes, the number of shares will double from 839.4896 to 1678.9792 and the initial price falls from $59.56 to $29.78.
  For more details on how I track the Buy List, see here.

• Blackstone is LIVE
  Eddy Elfenbein, June 22nd, 2007 at 9:53 am

  Blackstone (BX) opened at $36.45 at $17 million shares. That’s 17% higher than the offer price.
  Interestingly, Stephen Schwarzman is not on the floor, but guess who is? Tom Wolfe!

• Firefox
  Eddy Elfenbein, June 21st, 2007 at 8:54 pm

  I just downloaded Firefox—oh my god! OMG! It’s waaay better than IE. I mean WAY better.
  C’mon people…how come no one told me? Why am I always the last person to know about these things?
  If you’ve read this blog for any amount of time, you ought to know that I can’t be trusted with anything technomological.
  Now if you’ll excuse, I have to get back to an exciting game of Parsec on my T1-99.

• Blackstone Priced at $31 a Share
  Eddy Elfenbein, June 21st, 2007 at 5:52 pm

  Hold on, folks. Trading in BX will begin tomorrow. At $31 a share, Stephen Schwarzman’s stake is worth about $7.7 billion. The entire company is worth about $30 billion. Impressive, but it’s still about one-fifth the size of Berkshire Hathaway (BRKA).

• The Cyclical-Stock Party Is Ending
  Eddy Elfenbein, June 21st, 2007 at 12:59 pm

  My latest at RealMoney on the last gasp of the cyclical rally. It’s a paid link, but here’s a sample:

  The CYC is up over 22% this year and up over 40% in the past 11 months. Going back to the March 2003 low, the CYC has jumped 180%, which doubles the S&P 500. Not too shabby.
  But the best has come recently.
  This year, the CYC has already set an amazing 40 new highs. In April it burst through 1000, and it’s quickly closing in on 1100. Like all good rallies, however, this must come to an end, and I’m afraid it won’t be pretty.

• Novo Nordisk
  Eddy Elfenbein, June 21st, 2007 at 11:47 am

  While American drug companies Merck (MRK) and Pfizer (PFE) aren’t doing well (or at least Merck has bounced off its deep lows rather nicely), check out the performance of Denmark’s Novo Nordisk (NVO):
  
  The stock is up about $5 a share today to $106. I had to cut off the top part of the chart because it’s a logarithmic scale, but you get the idea.

• Stephen Schwarzman’s Foolish Antics
  Eddy Elfenbein, June 21st, 2007 at 9:12 am

  Slate’s Daniel Gross looks at the recent behavior of Blackstone’s Stephen Schwarzman:

  First, he threw himself a (much-covered) 60th-birthday party at the Park Avenue Armory in February. It featured, among others, Martin Short, Rod Stewart, Marvin Hamlisch, and Patti LaBelle leading the Abyssinian Baptist Church choir singing, according to a great article in the Wall Street Journal, “a tune about Mr. Schwarzman.” (“He’s Got the Whole World in His Hands”?) The best bit: “A huge portrait of Mr. Schwarzman, which usually hangs in his living room, was shipped in for the occasion.” (I wasn’t invited, but my gift would have been a first edition of Christopher Lasch’s Culture of Narcissism.)
  Next came a cover story in the March 5 Fortune declaring Schwarzman, who had just completed the gigantic acquisition of Equity Office Properties, “The New King of Wall Street.” Then, only a few months after saying that Sarbanes-Oxley was deterring companies from going public, he filed a huge IPO for the Blackstone Group. If it goes through as planned, according to the Wall Street Journal, Schwarzman’s sale will be worth $7.5 billion. This offering included several wrinkles that solidified Schwarzman’s smartest-guy-in-the-room reputation but also seemed designed to elicit scrutiny. As the Financial Times reported ($ required), the preliminary prospectus said the firm planned to “book profits from private equity at the time an asset is bought”—not when the assets are sold, as most businesses do. More significantly, the offering was structured as a “publicly traded partnership” to take advantage of an absurd wrinkle in the tax code. Under current rules, the asset-management fees that private-equity partnerships like Blackstone reap are taxed not at the 35 percent corporate income-tax rate, but at the 15 percent long-term capital-gains rate, allowing Blackstone to save tens of millions of dollars annually on its tax bill. Finally, in May, at a time when concerns about China’s role in the global economy and its influence on the United States were at a fever pitch, Schwarzman agreed to sell a 10 percent stake in Blackstone to an entity controlled by China’s government.

  The stock is expected to hit the world tomorrow. But now some people are wondering if the share price is too high.

  If Blackstone goes public at $30, its price-earnings ratio (share price divided by earnings per share) would be about 14, based on the company’s 2006 results. By comparison, premier investment bank Goldman Sachs Group Inc., which has a large private equity operation, trades at about 11 times profit.
  Shares of Fortress Investment Group had a price-earnings ratio of about 15 when the company went public in February at $18.50 a share. With the shares now at $26.52, the ratio has risen to about 22.

  Bloomberg reports that the Blackstone underwriting group is being forced to accept a lower in return for more business in the future:

  Morgan Stanley, Citigroup Inc. and the 15 other investment banks that Blackstone hired to distribute shares in today’s IPO will get a 3.6 percent commission, or as much as $170 million, according to regulatory filings. That’s slightly more than half the 6.2 percent average rate banks charged U.S. companies to go public this year.
  The securities firms are accepting the lower fee because they expect to make a lot more arranging and financing takeovers when New York-based Blackstone invests its $19.6 billion buyout fund, the second-biggest ever raised. Schwarzman’s firm paid $571.4 million for those services last year and $248.1 million in the first quarter of 2007 alone, according to estimates by industry consultants at New York-based Freeman & Co.

• This is NOT Happening
  Eddy Elfenbein, June 20th, 2007 at 3:51 pm

  From the AP:

  Rupert Murdoch’s News Corp. is discussing…

  Me running in slow motion

  …swapping social networking Web site…

  waving my arms

  …MySpace…

  screaming

  …for a 25 percent stake…

  Nooooooo…

  …in Yahoo.

  …ooooooooooo!!!!