Archive for 2007

• The Ron Paul Portfolio
  Eddy Elfenbein, May 16th, 2007 at 12:38 pm

  
  Well, he invests in what he believes. Gold. Lots and lots of gold.

• AFL-CIO Wants SEC to Make BG’s IPO DOA
  Eddy Elfenbein, May 16th, 2007 at 12:31 pm

  It’s official: Private Equity is the new bad boy.

  A major U.S. labor group on Wednesday asked market regulators to force changes to an initial stock offering by Blackstone Group, one of the first major U.S. private equity firms to go public.
  The AFL-CIO urged the Securities and Exchange Commission to require that Blackstone register as an investment company and submit to oversight under the same law mutual funds follow.
  The labor federation told the SEC in a letter that it believed Blackstone “deliberately structured its public offering … to hide the fact that the Blackstone Group LP is actually an offering of interests in pools of investment securities.”
  AFL-CIO Secretary-Treasurer Richard Trumka said in a statement: “That’s unacceptable, and the SEC should step in and enforce the law.”

• Citigroup’s Management Committee
  Eddy Elfenbein, May 15th, 2007 at 9:57 am

  Here’s a look at Citigroup’s Management Committee. By my count, there are 110 members. This is essentially Citigroup’s College of Cardinals.
  I have no idea how 110 people get together to run a company. Many companies aren’t that big. Nicholas Financial (NICK) only has about 200 employees total. But 110 just for a Management Committee? Where do you put all the chairs?
  Interestingly, the most recent papal conclave had 115 members.

• The Bond Market Wants a Cut
  Eddy Elfenbein, May 14th, 2007 at 3:31 pm

  
  The spread between the 90-day T-bill rate and the Fed Funds rate is now at 55 basis points, which is the widest its been since the days immediately after 9/11.
  The message is clear: The bond market wants a rate cut.

• DaimlerChrysler Chronology
  Eddy Elfenbein, May 14th, 2007 at 12:50 pm

  The AP ran this helpful chronology of the DaimlerChrysler takeover:

  April 12, 1995: Kirk Kerkorian’s Tracinda Corp. makes offer for Chrysler Corp. valuing company at $22.8 billion.
  Feb. 7, 1996: Chrysler makes peace deal with shareholder Kerkorian in return for stock buybacks and board seat.
  Feb. 12, 1998: Daimler-Benz AG and Chrysler Corp. begin secret takeover discussions.
  May 7, 1998: Daimler-Benz’s Juergen Schrempp and Chrysler Corp.’s Robert Eaton announce $36 billion takeover that creates DaimlerChrysler AG.
  Nov. 17, 1998: DaimlerChrysler AG U.S. shares begin trading at $84.31 per share.
  Jan. 6, 1999: DaimlerChrysler stock hits $108 per share.
  Oct. 26, 2000 Chrysler posts $512 million loss for third quarter.
  Oct. 30: Schrempp quoted as saying by the Financial Times he never intended a merger of equals but that it was portrayed that way “for psychological reasons.”
  Nov. 17: Schrempp puts Mercedes-Benz veteran Dieter Zetsche in charge of Chrysler.
  Nov. 27: Kerkorian sues company and Schrempp for $9 billion, accusing them of fraud.
  Jan. 29, 2001: DaimlerChrysler announces it will cut 26,000 jobs, or about one-fifth of the work force at Chrysler and idle six plants over the next several years.
  March 2001: Stock falls from more than $50 per share to roughly $38 as DaimlerChrysler grapples with weak North American and European economies.
  April 2005: Cash cow Mercedes Car Group posts its first quarterly loss in more than 10 years.
  April 7, 2005: Kerkorian loses his fraud suit against company.
  July 28, 2005: Schrempp announces he is stepping down, with Chrysler head Zetsche to replace him on Jan. 1, 2006.
  Sept. 1, 2005: Zetsche also takes over as head of Mercedes Car Group.
  September 2005: Mercedes Car Group announces elimination of 8,500 jobs.
  January 24, 2006: Company says it will cut 6,000 white-collar jobs worldwide — 20 percent of DaimlerChrysler’s administrative work force.
  Sept. 7, 2006: United Auto Workers union refuses to grant health care concessions to Chrysler Group, even though GM and Ford got them.
  Feb. 14, 2007: DaimlerChrysler says it won’t rule out “any option” including sale of Chrysler. Chrysler says it will cut 13,000 more workers. DaimlerChrysler shares rise 5 percent, to more than $67.
  April 4, 2007: Zetsche says company is in talks about future of Chrysler but does not say if it will be sold.
  April 5, 2007: Kerkorian’s Tracinda Corp. makes a $4.5 billion cash offer for Chrysler.
  May 14, 2007: DaimlerChrysler announces end of nine-year takeover effort as it agrees to sell 80 percent of Chrysler to private equity firm Cerberus for $7.4 billion (5.5 billion euros).

• Felix Salmon Smacks Down Ben Stein
  Eddy Elfenbein, May 14th, 2007 at 12:43 pm

  This is good.

  What does Stein mean, for instance, by this?

  If oil, for example, becomes denominated in euros, the price in dollars rises — perhaps significantly.

  Er, no. If Tarallucci e Vino were to start denominating the price of its cappuccinos in euros, and the dollar continued to fall, then certainly the price in dollars would rise. But that’s because cappuccino prices are fixed. Oil prices, on the other hand, are not: they change from day to day and indeed from minute to minute. At any given point in time, oil has a price in dollars, in euros, in Venezuelan bolivars, or even in pork bellies, should you be so inclined. If the dollar falls, then oil might indeed cost more dollars. But that’s got nothing to do with denomination.

• Wall Strip Sold for $5 Million
  Eddy Elfenbein, May 14th, 2007 at 11:00 am

  Jossip is reporting that CBS is buying Wall Strip for $5 million (via Tech Dirt). Congrats to Howard, Lindsay and everyone on the Wall Strip team. Now please don’t go all corporate on us….
  Here’s today’s show on American Standard:
  
  Here’s my take on the stock.

• RM + WSJ: Let’s Do The Math
  Eddy Elfenbein, May 14th, 2007 at 10:03 am

  Howard Kurtz in today’s Washington Post makes some interesting points about Rupert Murdoch’s bid for Dow Jones:

  The newspaper business is battered these days, with rich folks buying up properties at fire-sale prices and proceeding to slash costs. Avista Capital Partners just cut 50 newsroom jobs at the Minneapolis Star Tribune. Philadelphia public relations executive Brian Tierney laid off 71 at the Philadelphia Inquirer. Chicago real-estate mogul Sam Zell hasn’t taken a wrecking ball to the Tribune papers yet, but the chain’s jewel, the Los Angeles Times, announced plans to eliminate another 150 editorial jobs. And none of these new owners had a previous day of newspaper experience.
  Along comes Murdoch with a generous offer to buy Dow Jones, and he’s not talking about slashing costs. In fact, he told the New York Times he wants to expand the Journal’s Washington coverage.

  The Financial Times reports that some Bancrofts are ready to meet with Murdoch.

• One-In-Three Chance Greenspan Is Making Sense
  Eddy Elfenbein, May 11th, 2007 at 10:36 am

  Alan Greenspan is in the news again. The former Fed chair now thinks there’s a 1-in-3 chance of a recession. Or more specifically, he said:

  At the moment, I still say as I said before, by algebraic implications, the odds are 2 to 1 we won’t have a recession.

  Oh dear lord. He can’t even deliver a simple declarative sentence. I think half the battle of making everyone think you’re a genius is simply being convoluted. Also, start dropping phrases like “algebraic implications.”
  So, let’s take a closer look at what Greenspan is really saying.
  I looked at the data from the last 20 years. Of the last 80 quarters, real GDP declined for five quarters and growth came in below 2% for 22 quarters. This means that economy is close to recession levels for one-quarter of the time. (I’m being pretty liberal in my definition, but you get the point.)
  Despite his algebraic implications, Greenspan is hardly making a bold prediction. This is almost like saying that there’s a 1-in-5 chance that any given day is Saturday.
  Why is this news?

• Whole Foods Bombs
  Eddy Elfenbein, May 10th, 2007 at 2:54 pm

  I’ve been a bear on Whole Foods Market (WFMI) for some time so today’s earnings dud doesn’t come as a surprise.
  I first warned about the stock in December 2005 when it was at $76 a share. Thanks to today’s sell-off, the shares are down to $41.
  But! It could be a good buy soon. I’d consider paying $35 for WFMI.