Tag Archive | "chairman"

DB At The Movies: Too Big To Fail

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If you’ve been keeping up with your HBO original programming schedule, you know that Too Big To Fail, the movie based on Andrew Ross Sorkin’s 2009 book, airs next Monday evening. Last night was the premiere at the Museum of Modern Art and while the trailers looked promising, in order to make sure none of you wasted any of your precious time or DVR space in the event it wasn’t worth it, I attended to see how things turned out and report back. Warren Buffett did the same, though was initially met with some opposition at the door, in an encounter that went like this:

Door girls: Do you have your ticket?
Buffett: Uh…no…
Door girls: You need your tickets.
Buffett: Oh, uh…we were invited..
[One of Buffett's dates]: This is Warren Buffett.
[The group is seated]

Other people in attendance who did have their tickets, included but were not limited to: George Soros (with a entourage of lady friends), Meredith Whitney in a white pinstriped suit, Becky Quick, Rodgin Cohen, Regis Philbin, Michael Douglas and all the actors from the flick (William Hurt, Paul Giamatti, Billy Crudup, James Woods, Bill Pullman, Evan Handler, Tony Shalhoub, Matthew Modine, Ed Asner), though not all the real life people they portray (Jamie Dimon was getting ready for today’s JPM shareholder meeting in Ohio, Fuld was probably busy plotting his comeback).

The movie condenses Sorkin’s 539 page book into about 90 minutes and traces the slightly tense moments that were 2008 just after Bear Stearns was bought to the day Paulson locked the top bank CEO’s in a room and and forced them to accept his capital injections. William Hurt does a pretty badass Hank– who gets the most screen time by far– having spent a few days fishing with him in preparation for the role (during which one would hope HP described what it was like threatening to send Ken Lewis home in a body bag if he backed out of the Merrill Lynch deal). I liked it, you probably will too.** Now let’s get down to the nitty gritty.

Who Will Like TBTF

- Hank Paulson: The former Treasury Secretary is the lead role; the movie shows his sleepless nights, his afternoons spent vomiting, and his attempt to SAVE AMERICA, all without shotgunning just one beer or a single tablespoon of Pepto-Bismol like you know he wanted to but which Christian Science prohibits. The movie even gets into his bird fetish, opening with Paulson observing a majestic red tailed hawk outside his window.

- Tim Geithner: Who producers decided resembles Billy Crudup (who plays “freaked the fuck out” pretty well)

- Ben Bernanke: Paul Giamatti grew a beard and (adorable) jowls to play the Chairman of the Federal Reserve, which he mostly does from the shadows- in a poorly lit room where he and Paulson discuss the fact that the economy might collapse over breakfast or emerging from a corner, where he might as well be holding a flashlight under his chin as he informs Congress or the bank CEOs that they can 1. do what he and Paulson are telling them to do or 2. don’t and be responsible for a Depression worse than the one he studied at Princeton (his pump up speeches are some of the best parts of the movie)

- Jamie Dimon: Every time JD- played by Bill Pullman- appears on screen we’re told in one way or another that he’s the smart banker, the responsible banker, the King of the Bankers (**Dimon’s only gripe may be that Bill Pullman doesn’t entirely pull off the innate coolness, which isn’t his fault- Jamie was born this way and some things can’t be taught; it’d be like asking Pavarotti, “teach me to sing like you.”)

- Lloyd Blankfein: The Goldman CEO is described as “a superstar,” but more importantly, Evan Handler actually nails the various The Lloyd Face(s), which some of us (me) were very skeptical anyone could do

- John Mack: While Tony Shalhoub’s Southern accent is more of a cross between a Southern and Western accent, Mack’s character fares well and gets one of the funnier (fictional?) lines of the movie: “Great, here comes E-Harmony,” when Geithner is calling him about the idea to merge the investment banks with commercial banks.

- Vikram Pandit: If he can get past the “no one knows if he’s running Citi or Citi’s running him” line, and is ready to laugh about all this, the actor who plays him does justice to the scene in which Pandit turns down Lloyd.

- CNBC: The network financial crisis coverage is threaded throughout the movie with Erin Burnett, Maria Bartiromo and Steve Liesman getting the most shout-outs

- Christian Scientists: They ought to appreciate the scene in which Hank Paulson flushes the sleeping pills someone on his staff gave him, as a commitment to his faith.

- Andrew Ross Sorkin: Someone got a cameo

- The (Our) Lehman Coffee Cart Guy: Oh yeah, there’s a nice lingering shot of his setup.

People Who Will Not Like TBTF

- John Thain: If the (unintentionally hilariously) bad toupee on Matthew Modine doesn’t do it, the fact that he’s pointedly made to look like the world’s biggest prick in every scene he appears might do it (Thain is portrayed as “selfish” (Paulson/Hurt’s words), conniving and greedy, and arguably comes off worse than Fuld)

- Charlie Gasparino: Who is not featured in any of the CNBC footage

- People Who Are “Tim Geithner Can Go Fuck Himself” Purists: This group will likely not appreciate the rewrite of the line uttered by John Mack while trying to do a deal with Mitsubishi and being repeatedly called by Tim Geithner. In the movie, he tells his secretary to pass on the message, “Tell Geithner he can blow me”

Wildcard

- Warren Buffett: On the one hand, when discussed by other characters, the point is driven home that he’s The Most Important Banker/Elder Statesman/ What Have You in the world. On the other, Ed Asner is about 40 pounds heavier, looks like a slob throughout the movie and deploys no folksy business wisdom con aberrant sex fetish. On the third, Buffett said at the 4 Seasons party afterwards that he thought the movie/Ed were great (and that “he did an excellent job portraying such a glamorous guy”)

- Alan Greenspan: Probably proud of the mention (Paulson to Bernanke: “Greenspan suggested we buy up all the vacant houses and burn them down”) but miffed at not having the entire movie be about him and his reign as Grand High Poobah

- Chris Cox: Comes off as kind of a pussy/imbecile but perhaps he’ll appreciate the accuracy?

- Barney Frank: Totally at a loss for whether or not he’ll approve of the outside the box casting of Dan Hedaya.

- Dick Fuld: Hear me out on this one. Yes, the movie (accurately) depicts Dick Fuld thinking that everything at Lehman was all good in the hood, that the only problem was “the god damn shorts,” that Lehman, as late as August 2008, would “stand strong and eat Goldman’s lunch,” that he wouldn’t fuck up the potential deal with Korea Development Bank by coming in and making the case that Lehman’s real estate holdings had a lot of value. But Fuld is also portrayed as actually caring about the bank and it’s employees, in his own way (which, if he wanted to show he cared, shouldn’t have blown a hole in their balance sheet and done some other stuff but retrospect, etc). Plus, he gets to watch himself be played by James Woods and who wouldn’t like that?

- Blankfein Humor Scholars: These people will likely be divided in their opinion that LB’s quips are generally more of the more subtle variety than, when discussing Paulson’s failure to get the authority from the FSA to do the Barclays/Lehman deal, “He didn’t drop the ball- he dropped the ball, kicked the coach in the nuts and took a shit in the quarterback’s mouth”

**Although you might not like the closing captions which I think some of you should probably close your eyes for if you’ve got blood pressure/heart problems and which I want to mention so badly but I won’t so see it and then we can discuss.



Article courtesy of Dealbreaker

Opening Bell: 05.05.11

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Fed Presidents Signal Record Stimulus Won’t Be Removed Soon (Bloomberg)
Eric Rosengren, president of the Federal Reserve Bank of Boston, and San Francisco’s John C. Williams followed the lead taken by Fed Chairman Ben S. Bernanke, who signaled last week that policy makers will keep stimulus in place after ending large-scale bond purchases in June. “Right now we’re pretty far away from our targets, and right now we’re keeping monetary policy accommodative,” Rosengren, 53, said yesterday in an interview with Bloomberg News. “It’s very appropriate given how far we are from our targets.”

Traders Exit High-Speed Lane (WSJ)
Companies that use fast-trading, computer-driven strategies, which were painted by some as culprits of the collapse, have curtailed trading. So, too, have many long-term investors, for whom the trauma of that May 6 afternoon was the final straw after a decade of stock-market turmoil. In their absence, trading volume and volatility have plunged, further deterring high-frequency traders.

A Lack of Supply Feeds Rise in Munis (WSJ)
Yields on a benchmark of highly rated 10-year general-obligation bonds, backed by a government’s taxing authority, have fallen to 2.79% from 3.21% at the start of the year, according to Thomson Reuters. Meanwhile, the cost of insuring against default by some of the most financially troubled states also has dropped…A major driver of the dropping yields, which move opposite to price, is the lack of new supply, which hit an 11-year quarterly low in the first quarter. That slowdown has prompted many investors and bankers to caution it is too early to size up whether the market could absorb any significant uptick in bond issuance.

Claiming Fraud in A.I.G. Bailout, Whistle-Blower Lawsuit Names 3 Companies (NYT)
The lawsuit, filed by a pair of veteran political activists from the La Jolla area of San Diego, asserts that A.I.G. and two large banks engaged in a variety of fraudulent and speculative transactions, running up losses well into the billions of dollars. Then the three institutions persuaded the Federal Reserve Bank of New York to bail them out by giving A.I.G. two rescue loans, which were used to unwind hundreds of failed trades…The lawsuit names A.I.G., Goldman Sachs and Deutsche Bank as defendants, but not the Fed.

Facebook and Google mull Skype deals (Reuters)
Facebook Chief Executive Mark Zuckerberg has been involved in internal discussions about buying Skype, according to one of the sources. Another source said Facebook had reached out to the Luxembourg-based company about forming a joint venture.Google has also held early talks for a joint venture with Skype, the second source said.

Mexican central bank buys 100 tonnes of gold (FT)
The purchase, reported in monthly data published by Mexico’s central bank, is the latest in a series of large gold buys by emerging market economies intent on diversifying reserves away from the faltering US dollar. China, Russia and India have acquired large amounts of gold in recent years, while Thailand, Sri Lanka and Bolivia have made smaller purchases…Mexico bought 93.3 tonnes of gold in February and March, according to the central bank, in a haul valued at $4.5bn at current prices and equivalent to 3.5 per cent of annual mined output.

GM Profit Triples (WSJ)
GM said net income rose to $3.2 billion, or $1.77 a share, from $865 million or $0.55 a share. Operating profit, reflecting the strength of its core automotive business, increased to $2 billion from $1.7 billion. Revenue increased 15%, to $36.2 billion, from $31.5 billion.

Government Joins Bowl-Game Brawl (WSJ)
The Justice Department sent a letter Tuesday to the National Collegiate Athletic Association stating that “serious questions continue to arise” over whether the Bowl Championship Series—the sport’s much-criticized method for choosing a champion—complies with antitrust laws. The letter also asks why major-college football doesn’t have a playoff, when so many other college sports do; what steps the NCAA has taken to create a playoff; and whether the NCAA has determined that aspects of the BCS system are unfair.

Bank of America to Triple Number of Mortgage Help Centers (NYT)
The bank, which will announce the plan on Thursday, will focus on regions hit especially hard by the rising tide of homeowners struggling to make their mortgage payments. Seven locations will open in California and three in the Detroit area; other centers will be unveiled in St. Louis, Newark, Philadelphia and Tucson, among other cities…Additional centers may open later this year, the bank said. Counselors fluent in languages including Spanish, Korean, Vietnamese and Russian will be available for non-English speaking customers…Most of the counselors in the new centers will be transferred from other areas of the mortgage business, like sales and originations, which have slowed with the decline in mortgage demand.

Brazil Banks Beat Wall Street as Itau Shows JPMorgan Who Rules (Bloomberg)
Foreign firms pursuing investment-banking fees in Brazil, where an emerging middle class and rising commodity prices are propelling one of the world’s fastest-growing economies, face stiff competition. Local players have a greater capacity to finance deals, improved relationships with investors, experienced executives and the ability to provide services once offered only by large global banks.

Indian stocks suffer worst losing streak in 10 years (FT)
Mumbai’s BSE Sensex index fell for a ninth-consecutive session, its longest losing streak in a decade, on concerns over the impact of rising costs on corporate earnings. The BSE Sensex index fell 1.1 per cent to 18,266.79, taking its losses since Monday’s 50 basis point interest rate increase by the Reserve Bank of India to 4 per cent. Over the nine consecutive losing sessions, the index has fallen 6.8 per cent.

Charges, rising costs hit Societe Generale results (MarketWatch)
The group reported a profit of 916 million euros ($1.36 billion), compared to €1.06 billion a year earlier, driven by a €239 million accounting charge as improving spreads on the group’s own debt make it theoretically more expensive to buy back. The bottom line was below the €1.12 billion consensus forecast of analysts polled by Dow Jones Newswires.

Citi Hires UBS Banker (DealBook)
Kevin Cox, formerly head of Americas investment banking at UBS, is joining Citigroup as co-chairman of global industrials banking.  

Dalai Lama suggests Osama bin Laden’s death was justified (LA Times)
As a human being, Bin Laden may have deserved compassion and even forgiveness, the Dalai Lama said in answer to a question about the assassination of the Al Qaeda leader. But, he said, “Forgiveness doesn’t mean forget what happened. … If something is serious and it is necessary to take counter-measures, you have to take counter-measures.”

Hero dog helped snare Osama (The Sun)
Heavily armoured hounds — equipped with infrared night-sight cameras — have been used in the past by the top-secret unit. The war dogs wear ballistic body armour that is said to withstand damage from single and double-edged knives, as well as protective gear which shields them from shrapnel and gunfire…Wearing oxygen masks, the pooches have been trained to jump from aircraft at 25,000ft, before seeking out insurgents in hostile environments.



Article courtesy of Dealbreaker

DE Shaw Might (Help) Start A Bank

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With Indian billionaire Mukesh Ambani.

Ambani is known for keeping his cards close to his chest. No surprise, then, that more than a month after he announced his entry into India’s financial services sector via a joint venture with DE Shaw, the US hedge fund, few know exactly what he intends to do in the world of finance. The union between the secretive businessman behind Reliance Industries and the $20bn fund known for using complicated mathematical models to spot market trends has left investors and market observers guessing.

But behind closed doors and in the exclusive clubs where many of Mumbai’s most influential spend their weekends, rumours abound that the billionaire aims to found the first bank owned by an Indian conglomerate.

“[Mukesh] Ambani definitely wants to open a bank,” says a person close to the chairman of Reliance Industries, his flagship holding company. “The man likes to think big when it comes to investing in a new business.” His end goal, say people familiar with the matter, is a “Bank of Ambani” – as some financiers have termed the budding financial venture – that can compete with ICICI Bank, India’s largest private sector lender and retail bank.

[FT]



Article courtesy of Dealbreaker

Opening Bell: 05.02.11

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Buffett Seeks To Limit Damage (WSJ)
In contrast to his March 30 remarks, when he said he thought Mr. Sokol’s actions weren’t “in any way unlawful,” Mr. Buffett on Saturday called Mr. Sokol’s actions “inexcusable” and said they violated the company’s insider-trading rules and code of ethics. He said Berkshire had turned over “some very damning evidence, in my view” about Mr. Sokol’s trades to the SEC. Mr. Sokol maintains he did nothing wrong, and his attorney late Saturday released a statement calling Mr. Buffett’s stance a “resort to transparent scapegoatism.”

Buffett Extols Berkshire’s CEO Candidates, Faults Sokol’s Trades (Bloomberg)
“There is no real chance the next CEO comes from outside of Berkshire,” the 80-year-old billionaire said yesterday at a press conference in Omaha, Nebraska, site of the company’s annual meeting. “If you picked the worst of the candidates we have, that person would be very, very good.”…Sokol’s stock deals, which Buffett called “inexplicable” considering his wealth, depleted Berkshire’s list of possible CEOs. Berkshire said in February that it had four candidates, without identifying them. “The leading candidate right now, I would lay a lot of money on him being straight as an arrow,” Buffett said at the April 30 meeting.

Buffett: Failure To Raise Debt Ceiling Is Asinine (Reuters)
Warren Buffett said he expects the Congress to raise the nation’s debt ceiling before it expires in mid-May, and said it would be that body’s “most asinine act” ever if it failed.

The Berkshire Hathaway Annual Meeting (Deal Journal)
A question about what Berkshire is doing to protect against the fall of the dollar. Buffett in the past has bet against the U.S. dollar, but said he’s lately been inactive in foreign exchange markets. “There’s no question the purchasing power of the U.S. dollar will decline over time. The only question is at what rate, Buffett said. But other currencies will decline too, and he said he doesn’t have strong feelings about which ones will decline faster or slower. Buffett ends by saying he’d rather be in the U.S. right now than any other place or any other time in history.

Osama Bin Laden Killed in Pakistan, Obama Says (Bloomberg)
Al-Qaeda leader Osama bin Laden was killed in Pakistan yesterday in a firefight with a team of U.S. operatives who raided the compound where he had been hiding, President Barack Obama said. “On nights like this one we can say to those families who have lost loved ones to al-Qaeda’s terror: Justice has been done,” Obama said in a late-night televised address from the White House.

Bin Laden Was Found At Luxurious Pakistan Compound (Reuters)
Few windows of the three-story home faced the outside of the compound, and a terrace had a seven-foot (2.1 meter) privacy wall, officials said. “It is also noteworthy that the property is valued at approximately $1 million but has no telephone or Internet service connected to it,” an administration official said. “The brothers had no explainable source of wealth.”

Buffett, Charlie Munger’s Share Thoughts On Trump (Reuters)
The biggest laughs of the day came from a question on Trump’s prospects for the White House. “Obviously, I think he’s a jerk,” Berkshire’s Vice Chairman Charlie Munger said, with Buffett adding in a more diplomatic way that he did not expect Trump to win the presidency.

Trump Says He’s Decided ‘In My Mind’ To Pursue Presidency (Bloomberg)
“In my mind, I have already decided,” Trump, 64, said in a telephone interview yesterday. “I am going to announce. But I can’t do anything until the show ends.”

Abu Dhabi, Hedge Funds to Back Glencore IPO (Reuters)
The listing, which could be London’s biggest ever, will be aided by strong support from cornerstones, who could buy nearly 30 percent of the shares sold — or some $3.6 billion worth, if the listing raises its maximum target of $12.1 billion.

Facebook Numbers Feed IPO Outlet (WSJ)
Lou Kerner…pegged Facebook’s profit margin—in earnings before interest, taxes, depreciation and amortization—at about 50%. He said Ebitda should be $1.95 billion this year, and he estimated the company’s value in the public market would be $112.9 billion.

Greece Suggests EU/IMF Repayment Extension (Reuters)
In an interview with French daily Liberation published a day ahead of an inspection visit by the lenders, Papaconstantinou became the first Greek official to float the idea of a further easing of conditions on the 110 billion rescue.

Seth Meyers’ White House Correspondent’s Dinner Speech (TRB)

After Roasting, Trump Responds In Character (NYT)
“Seth Meyers has no talent,” Mr. Trump said in an interview on Sunday. “He fell totally flat. In fact, I thought Seth’s delivery was so bad that he hurt himself.”



Article courtesy of Dealbreaker

The Most Important Aspect Of The Bernanke Press Conference: His Chair

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As you may know, we’re less than 20 minutes away from Ben Bernanke’s historic (!!!!!) press conference and it’s all people can do not to give themselves strokes over the whole deal. CNBC has rebranded itself the Bernanke Channel and spent the last 6 hours analyzing the event from every angle imaginable. Such as the Fed Chairman sitting versus standing, which Erin Burnett and Melissa Lee speculate is pretty significant.



Article courtesy of Dealbreaker

Opening Bell: 04.27.11

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Barclays, Credit Suisse Post Lower Profits (BW)
Net income at Credit Suisse fell to 1.14 billion Swiss francs ($1.31 billion) from 2.06 billion francs in the year-earlier period, the Zurich-based bank today. That compares with the 1.32 billion-franc average estimate of 16 analysts surveyed by Bloomberg…Barclays said today its first-quarter profit fell 5.2 percent to 1.01 billion pounds ($1.67 billion) as earnings at its Barclays Capital investment banking unit dropped 33 percent. Sales and trading revenue fell 17 percent from the year-earlier period.

Bernanke’s Code: A Guide To The Fed Chairman’s First Q&A (WSJ)
Balance sheet: Look for Mr. Bernanke to affirm that QE2 will end in the summer, as planned. Any deviation from that position would be major news. Listen for what Mr. Bernanke says about the future size of the balance sheet. In this new world of Fed policy, how many securities the central bank holds is the primary signal of how much support it is providing the economy; the Fed has injected more than $2 trillion into the economy since the financial crisis. It is considered unlikely, but if Mr. Bernanke hints the Fed may stop reinvesting the proceeds from its mortgage holdings, it will be seen as the first step toward actual monetary tightening. If Mr. Bernanke drops such a hint, expect the dollar to rally.

Fed’s ‘Extended Period’ May End In May 2011, Economists Say (Bloomberg)
Thirty-three of 44 economists surveyed said the central bank will remove the two-word phrase from its post-meeting statement in 2011, with 18 betting it will move by September. The Fed may wait until 2012 to announce sales of mortgage or Treasury securities it bought to reduce borrowing costs, with 26 respondents expecting a plan next year, according to the survey, conducted from April 20 to April 25.

Hedge Fund Pot Farmer Pleads Guilty (TB)
Tara A. Bryson, executive of Ridgefield-based New Stream Capital has plead guilty to drug possession charges. She was sentenced to one year in jail, which was suspended, and a year of probation. Bryson copped a last minute plea deal with the State of Connecticut. In return she had felony charges of conspiracy to cultivate a pot farm reduced to a misdemeanor–possession of a controlled substance under four ounces and possession of drug paraphernalia. Bryson’s arrest report shows Connecticut State police found over 203 marijuana plants in her million dollar Newtown home so the charges being subbed out from cultivation of marijuana to only possession less than four ounces appears to be a lucky break.

Banks Warn Obama On Soaring Debt (FT)
“Any delay in making an interest or principal payment by Treasury even for a very short period of time would put the US Treasury and overall financial markets in uncharted territory and could trigger another catastrophic financial crisis,” said Matthew Zames, a JPMorgan executive, in a letter to Tim Geithner, the Treasury secretary, this week.

Robot Stock Picker Beats Human Managers After Japan Quake (Bloomberg)
Six computer programs, making all the investment decisions for T&D Asset Management’s Kabu-Robo Fund, generated returns of 1.9 percent in March. The average actively traded fund that invests in Japan lost 6.9 percent during the month, according to Tokyo-based Rating and Investment Information Inc. The benchmark Nikkei 225 (NKY) Stock Average dropped 8.2 percent in the period. “People tend to go with the herd when there’s a panic,” said Kazuhiro Kunisada, chief executive officer of Trade Science Corp., which designed the programs for T&D’s Kabu-Robo Fund. “Robots just follow the rules.”

NYPD Admits It Provided Diddy With A Police Escort (NYP)
The NYPD admitted today that it provided Sean “Diddy” Combs with a police escort following a concert last week, a decision slammed by Mayor Bloomberg. “The bottom line is the police department should treat everybody exactly the same. If you don’t get a police escort, P. Diddy shouldn’t,” Bloomberg said.

Does Corporate America Kowtow To China? (Reuters)
“I don’t blame the Chinese, they’re just pursuing their national interest,” said Patrick Mulloy, a member of the Congressional U.S.-China Economic and Security Review Commission. “I blame us for not realizing what’s happening to us and for doing nothing about it.”

White House Distributes Copies Of Obama’s Birth Certificate (BW)
Today’s release was made because “the president believes it was becoming a distraction,” White House communications director Dan Pfeiffer said.

S&P’s Japan Outlook Goes Negative (WSJ)
In a statement Wednesday, the credit-rating firm said it estimated reconstruction costs owing to the quake and subsequent tsunami and nuclear disaster at ¥20 trillion to ¥50 trillion ($245 billion to $613 billion), with a central forecast of ¥30 trillion.

PIMCO Says Greece Needs To Restructure Its Debt (Reuters)
“So far none of the solutions for the Greek debt crisis have worked. And a lot of people – including me – don’t believe that they will work in the future,” Mohamed El-Erian, chief executive of PIMCO, wrote. Greece will need “a preferably voluntary and orderly restructuring” to relieve itself of its debt burden, the PIMCO CEO said.

I handed over £6.2m to gigolo out of love for him: Heiress tells how conman turned blackmailer (Daily Mail)
Married mother of three Ms Klatten, who is said to be worth more than £6 billion through holdings in car giants BMW and chemical firm Altana, fell for conman Helg Sgarbi, 46, after meeting him in a luxury hotel. The Swiss born former investment banker had told her he was a ‘special adviser for the Swiss government’ and fed her a string of lies, winning her over and within weeks they had become lovers. He wooed her with his charm but it later emerged that it was all part of an elaborate plot hatched by mystical faith healer Ernani Barretta, 63, whose trial began in Pescara today.



Article courtesy of Dealbreaker

Lloyd Blankfein, Analysts “Pleased” With Goldman’s First-Quarter Results

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Net income dropped 21 percent but it still beat expectations so high-fives all around!

Goldman…today reported net revenues of $11.89 billion and net earnings of $2.74 billion for the first quarter ended March 31, 2011. Diluted earnings per common share were $1.56 compared with $5.59 for the first quarter of 2010 and $3.79 for the fourth quarter of 2010. Annualized return on average common shareholders’ equity (ROE) (2) was 12.2% for the first quarter of 2011.

Excluding the preferred dividend of $1.64 billion related to the redemption of the firm’s Series G Preferred Stock, diluted earnings per common share were $4.38 (1) and annualized ROE was 14.5% (1) for the first quarter of 2011.

“We are pleased with our first quarter results,” said Lloyd C. Blankfein, Chairman and Chief Executive Officer. “Generally improving market and economic conditions, coupled with our strong client franchise, produced solid results. Looking ahead, we continue to see encouraging indications for economic activity globally.”

GOLDMAN SACHS REPORTS FIRST QUARTER EARNINGS PER COMMON SHARE OF $1.56 [GS]
Goldman Sachs First-Quarter Profit Tops Analysts’ Estimates [Bloomberg]
Goldman Sachs Earnings, Sales Beat Wall Street Views [Reuters]
Goldman Beats Estimates Despite 21% Dip [FT]



Article courtesy of Dealbreaker

Opening Bell: 04.14.11

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Senator Levin: Goldman Sachs Misled Congress After Duping Clients (Bloomberg)
Goldman Sachs misled clients and Congress about the firm’s bets on securities tied to the housing market, the chairman of the U.S. Senate panel that investigated the causes of the financial crisis said. Senator Carl Levin, releasing the findings of a two-year inquiry yesterday, said he wants the Justice Department and the Securities and Exchange Commission to examine whether Goldman Sachs violated the law by misleading clients who bought the complex securities known as collateralized debt obligations without knowing the firm would benefit if they fell in value….Much of the blame for the 2008 market collapse belongs to banks that earned billions of dollars in profits creating and selling financial products that imploded along with the housing market, according to the report. The Levin-Coburn panel levied its harshest criticism at investment banks, in particular accusing Goldman Sachs and Deutsche Bank AG of peddling collateralized debt obligations backed by risky loans that the banks’ own traders believed were likely to lose value.

Senate Report Lays Bare Mortgage Mess (WSJ)
“I think I found white elephant, flying pig and unicorn all at once.” –Goldman Sachs email describing an Australian client that invested in a souring mortgage structure 4/26/2007

Moody’s, S&P Caved to Goldman, UBS Mortgage Pressure, Levin Says (Bloomberg)
“Investment bankers who complained about rating methodologies, criteria, or decisions were often able to obtain exceptions or other favorable treatment,” according to the Levin report. The decisions appeared to be “concessions made to prevent the loss of business.”

US Probes Libor Dealings (WSJ)
For the past year, law-enforcement officials have been investigating whether the U.S. and European banks understated their own borrowing costs, which are used to calculate the London interbank offered rate, or Libor. The investigators are now looking into whether the banks effectively formed a global cartel and coordinated how to report borrowing costs between 2006 and 2008.

Geithner: We Must Raise Taxes (PBS)
Appearing on the PBS NewsHour Wednesday evening, U.S. Treasury Secretary Timothy Geithner said there is “no plausible way” to cut the deficit without raising taxes. “Unless you’re going to cut deeply into commitments we have made to seniors and to the disabled and to the poor, or ask the country to go borrow the money, you can’t solve this,” he said.

Raj Keeps Chin Up (NYP)
One reason Rajaratnam has to smile might be the ebullient praise he received yesterday from prominent educator and social activist Geoffrey Canada. Canada, who was called as a character witness, called Rajaratnam a “dear friend” with “a genuine concern for children.”
“Raj and I hit it off right away,” said Canada, the CEO of charitable group the Harlem Children’s Zone. Canada said he approached Rajaratnam earlier this decade to donate to the group and found him eager to help “level the playing field for kids.” “I never had to convince Raj” to be a donor, Canada said when asked to respond to the prosecution’s allegations that Rajaratnam committed his alleged crimes out of greed. “He’s a very generous person,” he added.

Deutsche Bank Sold Mortgage-Linked ‘Pigs’ as Market Buckled, Lawmakers Say (Bloomberg)
“Keep your fingers crossed but I think we will price this just before the market falls off a cliff,” Michael Lamont, the group’s co-head, said in a Feb. 8, 2007, e-mail about Deutsche Bank’s Gemstone CDO VII Ltd., according to a report released yesterday by the Permanent Subcommittee on Investigations. The Frankfurt-based firm sold $700 million of the instruments, which lost most of their value within 17 months.

IMF: Banks Face $3.6 Trillion ‘Wall’ of Maturing Debt (Reuters)
Many European banks need bigger capital cushions to restore market confidence and assure they can borrow, and some weak players will need to be closed, the International Monetary Fund said in its Global Financial Stability Report.

Obama Challenges Republicans With Deadline For Deficit Deal (Bloomberg)
The timeline Obama proposed for coming up with an agreement — beginning talks in early May and completing them by late June — sets up a negotiation over the nation’s long-term fiscal challenges in parallel with a congressional debate over raising the $14.29 trillion legal debt limit.

Glenore Aims For $8.8 Billion In IPO (WSJ)
The company said it plans to list a 15% to 20% stake, through an offer to raise around $6.8 billion to $8.8 billion in new capital and up to $2.2 billion in existing shares. At the upper level, that would make it London’s largest-ever initial public offering, topping Rosneft’s $10.6 billion offer in July 2006.

London Retains Lure For Hedge Funds As Banks Demure (Reuters)
Throgmorton’s Rubio points to the “Harvey Nicks effect” — referring to upmarket London department store Harvey Nichols, a magnet for big spenders — and said he had seen one manager relocate to Barcelona, only to move back to London.



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One Of Three Guys In The Running To Succeed Warren Buffett Resigns From Berkshire Hathaway

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David Sokol has left the building. Here’s the note on the matter from WB. Apparently there’s a question about some buying and selling of Lubrizol on Sokol’s behalf, which Buffet says, to his knowledge, was in no way “unlawful.”

This press release will be unusual. First, I will write it almost as if it were a letter. Second, it will contain two sets of facts, both about Dave Sokol, Chairman of several Berkshire subsidiaries.

Late in the day on March 28, I received a letter of resignation from Dave, delivered by his assistant. His reasons were as follows:

“As I have mentioned to you in the past, it is my goal to utilize the time remaining in my career to invest my family’s resources in such a way as to create enduring equity value and hopefully an enterprise which will provide opportunity for my descendents and funding for my philanthropic interests. I have no more detailed plan than this because my obligations from Berkshire Hathaway have been my first and only business priority.”

I had not asked for his resignation, and it came as a surprise to me. Twice before, most recently two or so years ago, Dave had talked to me of resigning. In each case he had given me the same reasons that he laid out in his Monday letter. Both times, I and other Board members persuaded him to stay. Berkshire is far more valuable today because we were successful in those efforts.

Dave’s contributions have been extraordinary. At MidAmerican, he and Greg Abel have delivered the best performance of any managers in the public utility field. At NetJets, Dave resurrected an operation that was destined for bankruptcy, absent Berkshire’s deep pockets. He has been of enormous help in the operation of Johns Manville, where he installed new management some years ago and oversaw major change.

Finally, Dave brought the idea for purchasing Lubrizol to me on either January 14 or 15. Initially, I was unimpressed, but after his report of a January 25 talk with its CEO, James Hambrick, I quickly warmed to the idea. Though the offer to purchase was entirely my decision, supported by Berkshire’s Board on March 13, it would not have occurred without Dave’s early efforts.

That brings us to our second set of facts. In our first talk about Lubrizol, Dave mentioned that he owned stock in the company. It was a passing remark and I did not ask him about the date of his purchase or the extent of his holdings.

Shortly before I left for Asia on March 19, I learned that Dave first purchased 2,300 shares of Lubrizol on December 14, which he then sold on December 21. Subsequently, on January 5, 6 and 7, he bought 96,060 shares pursuant to a 100,000-share order he had placed with a $104 per share limit price.

Dave’s purchases were made before he had discussed Lubrizol with me and with no knowledge of how I might react to his idea. In addition, of course, he did not know what Lubrizol’s reaction would be if I developed an interest. Furthermore, he knew he would have no voice in Berkshire’s decision once he suggested the idea; it would be up to me and Charlie Munger, subject to ratification by the Berkshire Board of which Dave is not a member.

As late as January 24, I sent Dave a short note indicating my skepticism about making an offer for Lubrizol and my preference for another substantial acquisition for which MidAmerican had made a bid. Only after Dave reported on the January 25 dinner conversation with James Hambrick did I get interested in the acquisition of Lubrizol.

Neither Dave nor I feel his Lubrizol purchases were in any way unlawful. He has told me that they were not a factor in his decision to resign.

Dave’s letter was a total surprise to me, despite the two earlier resignation talks. I had spoken with him the previous day about various operating matters and received no hint of his intention to resign. This time, however, I did not attempt to talk him out of his decision and accepted his resignation.

Effective with Dave’s resignation, Greg Abel, presently President and CEO of MidAmerican Holding Company, will become its Chairman; Todd Raba, President and CEO of Johns Manville, will become its Chairman; and Jordan Hansell, President of NetJets, will become its Chairman and CEO.

I have held back nothing in this statement. Therefore, if questioned about this matter in the future, I will simply refer the questioner back to this release.

Berkshire Hathaway and its subsidiaries engage in diverse business activities including property and casualty insurance and reinsurance, utilities and energy, finance, manufacturing, retailing and services. Common stock of the company is listed on the New York Stock Exchange, trading symbols BRK.A and BRK.B.

[BusinessWire]



Article courtesy of Dealbreaker

Warren Buffett Still Not On Board With This iPad Business

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“We held very few [electronics makers such as Apple] in the past and we’re likely to hold very few in the future,” the chairman of Berkshire Hathaway said in Daegu, South Korea, today. Coca-Cola, based in Atlanta, is “very easy for me to come to a conclusion as to what it will look like economically in five or 10 years, and it’s not easy for me to come to a conclusion about Apple,” he said. “Even though Apple may have the most wonderful future in the world, I’m not capable of bringing any drink to that particular party and evaluating that future,” Buffett said.[Bloomberg]



Article courtesy of Dealbreaker