Bear’s Hail Mary Was Not Gary Parr’s Finest Moment
Thinking proactively on Wall Street is essential to success. Bear Stearns was not proactive, and apparently neither was Gary Parr, their rock star banker from Lazard Freres.
Bear’s final days were not his finest moment; too bad he was not reading this address last summer. The warning signs were there, and he might have been able to talk some sense into the Politburo at 383 Madison but he ended up scrambling and ended up throwing one deep. And, unlike Doug Flutie’s remarkable pass, this ball did not find its mark:
Bear Stearns sought rescue financing from Temasek of Singapore in the days before its sale to JPMorgan Chase but was rebuffed, underscoring the growing reluctance of sovereign wealth funds to make high-profile investments.
Temasek received the request for money late in the day Singapore time on March 14, the Friday of the weekend when the deal to sell Bear was brokered by the Federal Reserve and other US regulators, people familiar with the matter say.
Temasek, which is considered one of the few sovereign funds with the internal capability to vet complex transactions, declined for practical and political reasons.
Bear’s advisers at Lazard Freres told Temasek it needed to respond before Monday morning in New York, which would have made it hard to do any real due diligence. Temasek also feared that an investment in Bear could generate controversy given “how American” the bank was.
Temasek’s response to the Bear deal was mirrored by the response of sovereign wealth funds from the Middle East and Asia that were asked to provide capital for Wachovia – another US bank with a strong domestic orientation – but refused. Wachovia declined to comment. FT
Parr’s fees would have been much larger if he could have cut a deal earlier, and given his lousy advice, should have donated any fees to the guys in Bears mailroom.
Of course, Parr gets the last laugh. The stock of his employer, Lazard Ltd. (LAZ-NYSE) is doing just fine, given their variable cost structure in M&A and to a lesser extent, asset management. And no book of toxic subprime slime on the balance sheet, either.
Yes, he was busy, but he dropped the ball on Bear.
Not long ago Portfolio called him The Global Engineer in a glowing portrait, but if he cannot get the Sovereign Wealth Funds to put some money to work, and soon, I will be forced to pin a new moniker on him.
The Janitor
Because he will have a big mess to sweep up.
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Photo by Jessica Antoia
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Parr is no Flutie
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Temasek rebuffed late plea from Bear Stearns
Financial Times
The Global Engineer
Portfolio
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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
Dan Loeb’s Third Point Enters the Yahoo! Fray
Will we get a scathing letter to Yahoo! management from Dan Loeb? Lets hope so, Dan’s new life with a wife has taken some of the fun out of Wall Street, but his Third Point LLC is backing Icahn as the assembled team arrayed against Yahoo! is beginning to resemble the New York Yankees, circa 1927:
Third Point LLC, a $5.7 billion hedge fund headed by activist Dan Loeb, has recently accumulated a stake of over 5 million shares in Yahoo Inc and is supporting investor Carl Icahn’s proxy battle, a source familiar with the matter said on Tuesday.
Third Point, which held 1 million shares in Yahoo as of March 31, may build a stake of up to 10 million shares in the company, the source said. Reuters
Although Loeb is known as an activist, he is really event-driven with an occasional twist. But if he truly is involved it brings another dimension to the story, and you can add to him a growing shareholder list that includes T. Boone Pickens and John Paulson.
Resistance is futile, Jerry Yang.
Third Point backs Icahn in Yahoo fight
Reuters
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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
Barclays Diamond Takes a Shine to U.S. Brokers
Is Robert Diamond, the head of Barclay's (BCS-NYSE) out of his mind? Reports out of Europe indicate that he is considering doing a Jamie Dimon impersonation, and buying a U.S. financial institution:
Bob Diamond, the bank's president and the head of its investment banking arm, is thought to have looked at both Lehman Brothers and UBS in recent weeks..... Irfan Younus, an analyst at NCB Stockbrokers, said an acquisition cannot be ruled out, but any expansion in the capital markets arena is unlikely to be well received given the perception that Barclays' write-downs still look light compared to peers.
"Bob Diamond has said several times since last summer that he would not want to miss out on the chance of taking advantage of the current market turmoil to grow in the U.S.," Younus said. MarketWatch
Apparently Diamond thinks he is operating from a position of strength, claiming that he has taken fewer writedowns and is healthier than his peers.
A glance at the chart of Barclay's indicates otherwise, however, and he is also unlikely to get a bargain basement price similar to what Jaime Dimon was handed.
And reading between the lines, Diamond's ego might be playing a role.
Eric Sprott Suggests Shortsellers Ruined Public Debut of Sprott, Inc.
One of the most profitable areas for hedge fund managers to find profitable shorts over the past 12 months has been in asset management stocks, particularly among the recent crop of IPO's. Alternative or vanilla, its been a less than memorable for aftermarket buyers of the stocks.
Indeed, there is nary a winner to be found in Och-Ziff Capital Management (OZM-NYSE), Fortress Investment Group (FIG-NYSE), Pzena Asset Management (PZN-NYSE), GLG Partners (GLG-NYSE) or Blackstone Group (BX-NYSE). And while the valuation compression might lead to some opportunities to get long, there is no historical valuation data to hang your hat on, and the valuation premiums garnered by the alternative managers might remain excessive to their vanilla peers. But are brazen shorts manipulating trading in the stocks?
Eric Sprott thinks it might be the case. Sprott is blaming a tepid reception of his Canadian asset management operation, Sprott, Inc. (SII.TO-Toronto) on short sellers:
Star hedge fund manager Eric Sprott admits he was taken aback by his company's less than stellar stock market debut Thursday, and figures short sellers were behind the massive trading volume.
“I have to believe or think or conclude that there must have been some significant short selling,” Mr. Sprott, the founder, chairman, chief executive officer and controlling shareholder of Sprott Inc., himself a short-seller of no mean repute, said Friday.
“I can't believe that on a 20-million-share issue that 12 million shares, approximately, should trade – it's ludicrous, ” he said in a telephone interview before stock markets opened Friday and the shares fell again. Globe and Mail
