CreditJason Henry for The New York Times
“Here we sit, a year after we were supposed to die,” — Chris O’Neill, chief executive of Evernote.
This was supposed to be the year of the great reckoning for Silicon Valley start-ups, but some are still waiting for the crash.
And while they wait, some companies, like Evernote, have gotten back on their feet. Last year Evernote was a poster child for the collapse of Silicon Valley, but after cutting back on staff and eliminating some employee perks, it has stabilized. “It was hard for employees to readjust expectations,” Mr. O’Neill said. “They had only known a world where another fund-raise was just around the corner.”…
11% more projects backed by overseas cash, says government
U.S. still No. 1 source, but Latin American funding up 240%
A record number of overseas investments were made in the U.K. in the 2015-16 financial year, buoyed by a surge from emerging markets, making the country Europe’s most popular for external financiers.
Total projects funded by foreign direct investment rose 11 percent to 2,213, the Department for International Trade said in a statement Tuesday. FDI created or protected 116,000 jobs including in life sciences, financial and professional services, and energy and infrastructure…
CreditSeth Wenig/Associated Press
A senior Democrat on the House Financial Services Committee is pressing regulators to share two years of market data they have collected in connection with the Volcker Rule, a provision of the Dodd-Frank Act intended to rein in banks’ risky trading and investments.
Representative Carolyn B. Maloney, Democrat of New York, sent a letter to regulators on Monday requesting information about certain quantitative trading metrics that the agencies had been collecting since before regulators prohibited banks from making risky bets with their own money last July…
Average barrel strike price is 8.3% below most recent close
Mexico oil prices hedged at lowest level since at least 2008
Mexico said it’s locked in the equivalent of $9.5 billion of oil revenue for 2017, buying hedges to sell the nation’s crude at the lowest price since at least 2008.
The purchases were completed between May 13 and last week, the Finance Ministry said. The country’s annual trade represents the largest sovereign oil hedge in the world.
CreditElise Amendola/Associated Press
A tragic figure in American literature has an analog in modern finance. Once upon a time, the billionaire investor Edward S. Lampert was hailed as the next Warren E. Buffett. These days, his decade-plus obsession with the struggling retailer Sears resembles Captain Ahab’s with Moby-Dick.
Mr. Lampert was a hedge fund star when he took the discount store Kmart out of bankruptcy in 2003 and merged it with Sears two years later. A devotee of Ayn Rand and Mr. Buffett, Mr. Lampert had parlayed $28 million of seed corn into a spot on the Forbes rich list by making savvy bets on undervalued companies…
Sun Hung Kai paces drop among builders with 1.8% retreat
Currency peg to dollar makes Hong Kong vulnerable to Fed rates
Hong Kong stocks fell for the third time in four days amid concern rising borrowing costs will dent the outlook for the city’s property market.
The Hang Seng Index lost 0.4 percent at the close. A gauge of real estate companies declined, with Sun Hung Kai Properties Ltd. and Cheung Kong Property Holdings Ltd. sliding at least 1.2 percent. Sands China Ltd. paced a retreat by casino operators. Prada SpA jumped the most in nearly five years after the luxury-goods maker’s chairman predicted a return to growth in sales and earnings next year. The Shanghai Composite Index was little changed at the close, with a 10-day volatility gauge falling to a two-year low…
Billionaires bicker as sentiment burns.
The ongoing squabble between billionaire hedge fund luminaries William Ackman and Carl Icahn over Herbalife Ltd. distracts from a large warning sign for activist managers: they’re failing to live up to the expectations of institutional investors.
The August edition of research provider Prequin’s Hedge Fund Spotlight shows that 100 percent of institutional investors surveyed indicated that returns on their activist hedge fund investments had fallen short of their expectations…
Weekly poll shows pessimism on home prices jumped 8.5 points
Preliminary data show Vancouver real estate market is cooling
Canadians may finally be getting skittish about real estate.
The share of survey respondents who expect a decline in local housing prices jumped by 8.5 percentage points, the most since weekly polling began three years ago for the Bloomberg Nanos Canadian Confidence Index. The increase to 20.5 percent from 12 percent dragged the broader sentiment index down from 2016 highs.
Mitsubishi planes being checked again for airconditioner snag
MRJ, beset by delays, seeks to challenge Embraer, Bombardier
After two aborted test flights in as many days following a faulty air-conditioning system, Japan’s first locally built passenger jet was back for checks and fixes amid delays to a program aimed at challenging the dominance of Brazil’s Embraer SA and Canada’s Bombardier Inc.
Mitsubishi Aircraft Corp., the builder of the Mitsubishi Regional Jet, will make a decision on resuming its test flight to the U.S. after the problem has been fixed, Spokesman Kenichi Takemori said by telephone from Nagoya Monday. The company has delayed delivery of the aircraft at least four times. ANA Holdings Inc. is scheduled to receive the first MRJ in the middle of 2018…
Chain borrowed $150 million from private equity firm in 2014
Judge rejects claims Sycamore plotted to bankrupt company
Aeropostale Inc. opened a bankruptcy auction Monday with senior lender Sycamore Partners joining the bidding, days after the teen-clothing chain lost a court fight to keep the private equity firm away from the table.
The retailer borrowed about $150 million from affiliates of Sycamore in 2014 as it tried to reorganize. Two years later, the company filed for bankruptcy in Manhattan, claiming Sycamore was partly to blame for its downfall…
Funds turn to outside managers to run complex portfolios
TIAA brought company president to Connecticut college pitch
When the University of Connecticut sought help managing a slice of its small endowment, TIAA found it was competing with 26 other money managers. So the financial services giant sent its biggest gun: President Roger Ferguson, a former vice chairman of the Federal Reserve, to pitch in person.
CreditLeft: Hiroko Masuike/The New York Times; Right: Heidi Gutman/CNBC
Call it the Bill and Carl Show.
William A. Ackman and Carl C. Icahn — two Wall Street hedge fund giants — duke it out over a nutritional supplements company called Herbalife. Arguing that the company is a pyramid scheme, Mr. Ackman stakes $1 billion on a wager that the stock will go to zero. Mr. Icahn, calling him a “crybaby in the schoolyard,” buys as many shares in Herbalife as he can.
Japan’s GPIF wipes out all gains since shift to shares
Investment losses are no reason to change strategy: Sera
The world’s biggest pension fund posted a $52 billion loss last quarter as stocks tumbled and the yen surged, wiping out all investment gains since it overhauled its strategy by boosting shares and cutting bonds.
Japan’s Government Pension Investment Fund lost 3.9 percent, or 5.2 trillion yen ($52 billion), in the three months ended June 30, reducing assets to 129.7 trillion yen, it said in Tokyo on Friday. That erases a 4.1 trillion yen investing return for the previous six quarters starting October 2014, the month it decided to put half its assets into equities…
CreditAlex Wroblewski/The New York Times
A change is coming at the end of the month in the way stock indexes are classified. Real estate, now part of the broader financials category, will go out on its own.
AB InBev will pay $1.74 billion in fees, expenses, taxes
SABMiller to pay $202 million in fees to advisers on deal
Banks, law firms, accountants, public relations companies and the tax man are lining up for about $2 billion in fees and expenses from Anheuser-Busch InBev NV’s $103.8 billion takeover of rival SABMiller Plc.
AB InBev will pay out $1.74 billion, the company said in a statement Friday. That includes:
In large and complex corporate bankruptcies, shareholders are usually kicked to the curb, left with nothing of any value to show for their investments. Normally, that’s the way it should be: Bankruptcies, after all, involve companies whose assets are worth far less than their obligations.
But what if those assets are actually worth more than the company contends? Then shareholders are forced to leave money on the table for other stakeholders to grab, particularly the company’s dominant creditors who typically drive the bankruptcy process…
Wait for it…
Carl Icahn has recently discussed selling his stake in Herbalife Ltd. to a group including the company’s arch-nemesis William Ackman, another surprising twist in a battle between billionaires that has riveted Wall Street for years.
GPIF’s domestic equity holdings tumbled last quarter in rout
Fund’s investments fall short of its target for the asset
The world’s biggest pension fund has room for a Japan stock shopping spree after the value of its investments tumbled last quarter.
The $1.3 trillion Government Pension Investment Fund would need to spend $53 billion on domestic shares to meet its target for the asset, according to Bloomberg News calculations, after the fund said Friday that holdings fell to 21 percent of investments at the end of June. Its goal is a quarter of the portfolio. The fund also has scope to offload $56 billion in domestic bonds after falling yields boosted their weight to 39 percent of the total, above the 35 percent level it seeks to hold…
Bad-loan coverage ratio drops to lowest since late 2010
Capital-adequacy ratio declined to 12.81% in second quarter
Agricultural Bank of China Ltd., the nation’s third-largest lender by assets, posted a 0.5 percent profit gain in the second quarter as bad loans climbed.
Net income rose to 50.46 billion yuan ($7.6 billion) in the three months through June, according to a statement released by the Beijing-based bank on Friday. That compared with the 50.1 billion-yuan median estimate of four analysts in a Bloomberg survey.
The bank pared back its bad-loan buffer, setting aside 18.6 billion yuan in provisions, down 3 percent from a year earlier…
Borrowing to buy phones is leading to high personal debt
Applicants don’t need credit history or parental approval
Across college campuses in China, a small army of marketers is recruiting students to borrow money at interest rates many times that charged by the nation’s banks.
Those without a credit history or parental approval can borrow money to buy a smartphone, pay for holidays, or get the latest sneakers through a raft of apps such as Fenqile. The market leader, whose name literally means Happy Installment Payments, has 50,000 part-time marketers across more than 3,000 universities and proudly touts the slogan “Wait no more; love what I love.”…
Citic Bank’s core Tier-1 ratio fell to 8.89 percent as of June
Lender’s balance-sheet expansion ‘unsustainable’: analyst
China Citic Bank Corp. plans to raise as much as 40 billion yuan ($6 billion) by selling bonds convertible into yuan-denominated shares after an expansion in assets that one analyst describes as “unsustainable.”
The money will fund growth and ultimately replenish the bank’s core Tier-1 capital, the Beijing-based lender said Thursday, after its core Tier-1 ratio fell to 8.89 percent as of June 30 from 9.12 percent six months earlier.
CreditZach Gibson/The New York Times
They’ve had plenty to chew on, but it seems the misbehavior has continued nevertheless.
On Tuesday, the S.E.C. fined Apollo Global Management about $53 million over accusations the firm misled investors on two issues and failed to supervise a senior executive suspected of misconduct. The executive was caught “improperly charging personal items and services” to Apollo funds, the S.E.C. said. The Financial Times identified the executive as Ali Rashid, a former partner…
The housing recovery has really been an odd one. It has been driven by low inventory, anxious builders, and an army of investors. In the end what has occurred is that the homeownership rate is near a generational low, we have 10 million new renter households over the last decade, and home prices are up on relatively low sales volume. How can there be big sales volume when inventory is so constrained? It is a good question to ask. In any market you will have periods of capitulation, where people simply give in. You see it happening in this market where people purchase crap shacks as if taking their medicine when they were a child. The place physically sucks and is overpriced but hey, you need to do it because mommy told you it was the right thing to do. We’ve been in a holding pattern for a couple of years yet last month, sales did take a rather big drop. It was the biggest drop since April 2011. Is this simply an anomaly or are people priced out?…
HARP program will continue through September 2017, FHFA says
Companies will launch a new refinance program in October 2017
Fannie Mae and Freddie Mac are extending one of the most successful federal programs enacted in response to the mortgage crisis into next year, even as the pool of borrowers who could benefit from it continues to shrink.
Borrowers can continue to use the Home Affordable Refinance Program, or HARP, though September next year, the Federal Housing Finance Agency, which regulates the mortgage-finance companies, said Thursday. HARP allows some borrowers to refinance to a lower rate even if the equity they have in their home is less than 20 percent, the typical cutoff for some refinances…
Viacom has one good reason to keep its interim chief executive, Thomas Dooley: a breakup of the media company.
Mr. Dooley, the company’s former chief operating officer, who has close ties to his predecessor, Philippe Dauman, makes an odd choice if the $17 billion company plans to do anything else. A veteran who has been at Viacom on and off since 1980, though, Mr. Dooley may be well suited to finding the best value for Viacom’s various assets.
Here’s the latest sign of recovery in the overall U.S. housing market: Distressed sales, comprised of foreclosures and short sales, accounted for just 5 percent of total purchases of previously owned homes in July. That’s the smallest share since the National Association of Realtors began tracking the data in 2008. Distressed purchases peaked in March 2009 at nearly half of total sales…
CreditSaurabh Das/Associated Press
WASHINGTON — President Obama on Thursday nominated Jim Yong Kim for a second five-year term as president of the World Bank despite persistent complaints among employees about his leadership at a time when the mission of the global development institution is in question.
The bank’s board announced two days earlier that it was beginning to consider who would be its next president, inviting nominations as it did for the first time in 2012. While many World Bank watchers expect Mr. Kim to be reappointed, given the seven-decade tradition of choosing an American picked by the United States, the bank’s largest contributor, they say he will have to work to solidify support…
Workers’s group criticizes Fed structure, Richmond Fed answers
Fed presidents slated to meet with activists Thursday evening
As Federal Reserve officials and top economists meet in Jackson Hole this week, the Fed Up coalition will be criticizing the central bank’s structure from the sidelines.
The pro-worker group, an initiative of the Center for Popular Democracy, expects to have 120 workers and activists at the annual economic symposium in Wyoming. On Thursday evening, representatives will meet with Kansas City Fed President Esther George and her fellow bank presidents William Dudley, Neel Kashkari, Loretta Mester, Robert Kaplan, Eric Rosengren and John Williams, along with Fed Governor Lael Brainard, said Fed Up organizer Jordan Haedtler…
Jeffrey Ubben may not exactly be Dan Loeb when it comes to correspondence. But, as an activist investor, it should suffice to say that the ValueAct Capital chief isn’t used to writing love letters. But when he lays eyes upon the rugged Australian visage of Morgan Stanley CEO Jim Gorman, he just can’t help himself. Nor can he figure out what the hell is wrong with everyone else, who don’t see Gorman’s genius—the record number of firings, the advisory business’ growth, the telling employees what he really thinks of them. But if the morons in the market want to give Ubben a value opportunity—one that probably won’t even run afoul of regulators…
Los Angeles County is massive. It is also a renting majority county. L.A. County is the least affordable county based on price-to-income ratios. And when things get out of control, all of a sudden every area is gentrifying and every property is one step away from being a Taj Mahal. This summer the housing hounds have been released and all of a sudden real estate is the greatest deal in town. Housing can do no wrong and for those priced out, you must dig deep in those wallets and make that bet! You only live once! Carpe diem. No one ever regretted buying California real estate aside from all those that regretted buying California real estate. Today we’ll take a trip to Huntington Park. According to the real estate gods, gentrification should be happening in every niche of L.A. County.
The Williams Companies, which recently lost a court battle to preserve a takeover by another pipeline operator, is facing a new fight. This time, it is from a former director who owns a big stake in the company and has an unconventional plan to overhaul the entire board.
Keith Meister, the managing partner of Corvex Management, which holds a 4 percent stake in Williams, issued an open letter to the rest of the shareholders on Wednesday and submitted the names of 10 nominees for directors at Williams. Investors will vote on board nominees at the company’s annual meeting in November…
Pent-up demand by a growing U.S. population driving the market
Homebuilder CEO says housing recovery still in early stages
Housing demand will keep riding high even if prices continue to rise and mortgage rates go up, the chief executive of homebuilder Hovnanian Enterprises Inc. said.
“Actually and amazingly, there were more homes sold in 1981 when mortgage rates were 17 percent,” Ara Hovnanian said in an interview on Bloomberg Television. “The reality is there’s a lot of pent-up demand, demographics are building, the population is growing and they need shelter.”
Pro wrestler claims lease plan won’t cover monthly costs
Manhattan property worth $4.25 million in December appraisal
Hulk Hogan helped bring down Gawker Media. Now he’s throwing a wrench into the personal bankruptcy proceedings of company founder Nick Denton.
It is not just coincidence that after 147 years of serving institutions and the ultra-wealthy, Goldman Sachs has decided that it will start catering to the common man: It is opportunism borne of necessity.
The years since the financial crisis have not been particularly kind to Goldman Sachs’s moneymaking machine – not that anyone is weeping for the company or the people who work there — despite an improving economy and record numbers of corporate financings and mergers and acquisitions. In the last three fiscal years, Goldman has made a cumulative pretax profit of about $33 billion. By contrast, JPMorgan Chase, the nation’s biggest bank by assets, has had cumulative pretax profit of $87 billion, nearly three times more. In 2007, Goldman and JPMorgan were much more evenly matched when it came to profitability. Goldman made $17.6 billion in pretax profit in 2007; JPMorgan made nearly $23 billion…
Monthly increases reflect more-modest pace of gains, FHFA says
Price appreciation cutting into affordability for many buyers
Home prices in the U.S. rose 5.6 percent in the second quarter from a year earlier, extending gains that have cut into affordability for many buyers.
Prices increased 1.2 percent on a seasonally adjusted basis from the previous three months, the Federal Housing Finance Agency said in a report Wednesday. In June, prices climbed 0.2 on a seasonally adjusted basis from May. The average estimate of 21 economists was for a 0.3 percent gain…
Internet lending to U.S. consumers fell 34% in second quarter
‘Everyone had to hit a reset,’ says CEO of firm tracking data
LendingClub Corp. wasn’t alone in its suffering during the second quarter.
Online lending to U.S. consumers tumbled 34 percent industrywide from the first quarter as investors pulled back from funding loans, according to a report Wednesday from Orchard Platform, a data provider tracking the sector. That’s even worse than the 29 percent drop at LendingClub, where the surprise resignation of its leader in May rattled confidence…
Inventory of properties decline year-to-year for 14th month
Purchases of homes less than $250,000 fell from July 2015
Sales of previously owned homes dropped more than forecast in July from a nine-year high, restrained by limited choices for buyers, National Association of Realtors data showed Wednesday…
Student loan companies that don’t meet the Consumer Financial Protection Bureau’s expectations face the risk of lawsuits.
An American defaulted on a student loan direct from the U.S. Department of Education every 28 seconds over the past year. Nearly all of those more than 1.1 million defaults were avoidable, because almost every borrower is eligible for a repayment plan based on affordability.
Too few borrowers in distress know they can reduce their payments simply by sharing a few recent pay stubs or a copy of their most recent tax return. Something in the repayment system is clearly broken, and so last month federal education officials moved to scrap it—slowly. In a few years, the Education Department hopes, loan companies to which it outsources collections will prioritize showing debtors how little they can pay to remain current over collections…
Detached home sales down 66% in first two weeks of August
Price gains slowing this year, even before foreign buyer tax
British Columbia’s measures to cool off North America’s hottest real estate market are starting to have the desired effect.
Early data from the Real Estate Board of Greater Vancouver suggest the 15 percent foreign buyer’s tax, which was unveiled July 25 and took effect Aug. 2, may be curbing sales and limiting price gains, adding to a slowdown that started in May amid concern a housing bubble was forming in Canada’s third-biggest city…
July outflow tallied at $25.2 billion by tracker eVestment
Annual flows could be negative for only third time on record
For hedge funds, the news is getting worse.
Investors pulled an estimated $25.2 billion from hedge funds last month, the biggest monthly redemption since February 2009, according to an eVestment report.
The withdrawals were the second straight for the beleaguered industry, which saw $23.5 billion pulled in June. They bring total outflows this year to $55.9 billion, driven by “mediocre” performance after a number of funds lost money last year, according to Wednesday’s report…
Carillion lobbies government after July plunge in spending
Construction stocks rally on hopes for post-Brexit stimulus
U.K. construction companies are urging the government to give the sector a boost after infrastructure spending plummeted following the country’s vote to leave the European Union.
Hopes for a stimulus have lifted the share prices of builders like Balfour Beatty Plc and Carillion Plc, which plunged after the June 23 Brexit referendum. Carillion, whose shares slipped Wednesday as it reported flat first-half pretax profit, is up 34 percent from its low after the vote, while Balfour Beatty has risen 46 percent…
ESG and environmental investing booms to $223 billion
Lack of standards for what counts as ethical starts G-20 probe
Thinking of putting your money into a fund that describes itself as ethical? You’d better read the fine print if backing Exxon Mobil Corp. and British American Tobacco Plc isn’t your idea of doing good.
The oil company accused of misleading investors by hiding evidence about climate change and Europe’s biggest cigarette maker are among the holdings of some of the 30 biggest funds that invest following environmental or social governance guidelines, according to data compiled by Bloomberg…
CreditMax Whittaker for The New York Times
It has been an excruciatingly long time coming, but the housing sector in the United States is finally getting healthy. Thank millennials and thank homebuilders who are starting to produce more of the starter houses young people demand.
The Williams Companies, the American pipeline operator, is getting the proxy fight it deserves.
Keith Meister, an aggressive investor who recently quit as a director, is back challenging the board with a whole new slate. Because of a deadline, however, his hedge fund’s nominees are merely stand-ins until real candidates can be found. The year of merger and acquisition helter-skelter for Williams makes this new madness somehow fitting.
Mr. Meister, the Carl Icahn protégé whose Corvex Management owns about 4 percent of the $21 billion Williams, said on Monday that he planned to put forward 10 of his employees to serve on the Williams board. If voted in, they would be replaced by independent directors whom Corvex intends to identify before shareholders submit their ballots on Nov. 23…