Paulson Joins Icahn in Yahoo! Fight
Originally Published In the News May 15, 2008 2:25 PM
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John Paulson made the biggest trade in Wall Street history, and is investing some of his profits into Yahoo!’s stock as activists look to shake up the jokers running the company:
Paulson & Co, the hedge fund that won a huge bet over the last year on the subprime credit meltdown, has built up a stake of around 50 million shares in Yahoo Inc (YHOO.O: Quote, Profile, Research) in recent months, sources familiar with the matter told Reuters.
Paulson, a $30 billion “merger arbitrage” hedge fund led by veteran investor John Paulson, began increasing its stake around the time when Microsoft Corp (MSFT.O: Quote, Profile, Research) made its unsolicited offer to buy the company, the sources said.
While the Microsoft-Yahoo talks ended this month, the share build-up suggests that Paulson is betting a merger will eventually happen, particularly since billionaire investor Carl Icahn launched a proxy battle on Thursday to replace the entire Yahoo board. Reuters
If Paulson makes 6 points on the stock, he will clear $300 million. Is it worth him even getting out of bed for such a paltry sum? One thing is certain, Icahn will welcome the reinforcements.
Paulson hedge fund buys 50 million Yahoo shares
Reuters
Blackstone’s Conference Call Reassures Shareholders
Is the stock market underestimating the earnings power of Blackstone Group? The ongoing conference call is a well orchestrated affair, and highlights Blackstone’s (BX-NYSE) growing business lines and financial discipline.
Sure, they will be known as a private equity shop for the foreseeable future, but they are building out many business units, and will soon have a significant presence in hedge fund of funds and internal hedge funds. They are continuing to build our their international efforts as well, including an Asian team that was recently recruited from SAC.
And while their LP’s are taking markdowns, they are winning me over with candid remarks, a stark contrast to the manner in which Fortress Investment Group handled their recent earnings release and call.
Blackstone will be opportunistic, and have largely been sitting on their hands waiting for the credit crisis to run its course. The decline in the value of its stake in Deutsche Telekom accounted for the lions share of the bad news, although a decline in the value of real estate hurt results.
Still, many of Blackstone’s units are outperforming their relevant benchmarks and competitors, and the current environment on Wall Street should allow them to hire the people they want on their terms as the firm morphs into an alternative asset management operation that looks much different than the traditional vanilla mutual fund shops like Janus or Legg Mason, or the sellside.
Stephen Schwarzman let Tony James handle the conference call, but his formal comments sum it up:
“Turbulent markets throughout the world persisted in the first quarter, affecting virtually all asset pricing across credit and equity markets. This was both good and bad for us. On the one hand, it meant lower carrying values of some of our investments in the short term and restricted our disposition activity. On the other hand, purchase prices for new deals declined, opening up many interesting investment possibilities. Credit market dislocation, while limiting availability of debt for large leveraged transactions, has also created attractive debt investment opportunities, particularly in leveraged loans. Our well-timed GSO acquisition dramatically expanded our efforts in this area. Despite the challenges presented by a slowing global economy, overall our portfolio companies and real estate investments continued to perform well. Our balance sheet remains healthy, and our long-term contractual management fees position us well to increase market share.”
Blackstone is growing its assets under management in a tough environment, and with dry powder available, the days of picking on their stock might be over. Getting too granular in your analysis in unlikely to pay dividends; there are many moving parts to the story and you can find something you will not like. But the long side of Blackstone’s stock is probably the place to be if you believe they will continue to methodically grow their business and assets under management.
The hype over their IPO was silly, but you now have your chance to get in bed with Steve, at 50% of last year’s sticker price.
Not only that, but they are hiring.
Yes, unlike May of 2007, now there is a little bit for everyone at Blackstone as they take advantage of their hobbled competitors and financial flexibility.
And although I have been skeptical of the possibility of a Citadel IPO, another 5 points in BX and OZM and I will entertain the possibility, as a lift in the comps is a prerequisite to Ken Griffin joining the ranks of publicly traded alternative shops.
The Blackstone Group Reports First Quarter 2008 Results
Business Wire
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The content contained in this blog represents the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author. No Position
Stuck in the Middle with Schwarzman
A decade ago Mr. Pink ruled the internet, muzzling stock promoters and outing scams on the chat boards of Yahoo! and Silicon Investor.
Mr. Pink, who never formally fessed up to his true identity, went on to build a $5 billlion hedge fund complex that remains in the headlines to this day. He is the real deal, even if he borrowed his name from the classic movie.
While his online antics are a distant memory, Blackstone is evoking the the legendary Tarantino flick with a picture from their annual report, according to Dennis Berman.
But one could well make the case that Blackstone remains the Alpha Males of the alternative-asset business, having beat rival KKR to the public markets; having assembled a huge war chest of assets under management; all the while building a brand name that carries cachet across Asia and Europe.
Subconsciously or not, this photo implores viewers to take note and pay respect. Blackstone is coming in your direction. Deal Journal
Of course, Schwarzman assumes the middle spot in this picture, but none of the guys are over 5'9 it would appear. Does private equity shrink people?
Speaking of shrinkage, Blackstone (BX-NYSE) had better figure out a way to get their stock up, even if they have to resort to a little financial engineering.
And I gotta wonder, has Mr. Pink been short the stock? He always get his pound of flesh.
Blackstone Goes Reservoir Dogs
Deal Journal
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The content contained in this blog represents the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.
Countrywide’s Stock Nearly Worthless, says FBR
Originally Published May 5, 2008 1:38 PM
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Although Bill Miller is catching some grief in the media today over his posture and position in Yahoo!, the shares of Countrywide Financial (CFC-NYSE) have done far more damage to his performance, and reputation, over the past year.
FBR is questioning Bank of America’s acquisition price, no doubt Ken Lewis would have do it differently is he had the chance:
Friedman, Billings, Ramsey & Co. analyst Paul Miller said in a research note Bank of America should walk away from its acquisition of Countrywide, or at very least reduce the purchase price, because of continued deterioration in the mortgage market. Miller pegged a new sale price at between $0 and $2 per share. He set his price target for Countrywide at $2.
In January, Bank of America agreed to acquire Countrywide for about $4 billion in an all-stock deal. The deal is supposed to close during the third quarter. Based on Bank of America’s Friday closing price of $39.79, the deal values Countrywide shares at about $7.25. AP
The deal, inked in mid-January, was the first glimmer of hope for a market that was looking for a lifeline after a nasty streak to start the year.
Lewis jumped on a hand grenade, but might not survive this deal if his critics have their way. And Bill Miller’s judgment here looks far worse than any missteps he made in Yahoo!, and his realative performance against his peers will be lousy again given the performance or Countrywide and Yahoo!’s shares today.
Countrywide shares fall as analysts question deal price
AP
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The content contained in this blog represents the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author. No Position
