Meredith Whitney’s Blond Ambition Tour Rolls On
Will Meredith Whitney's Blond Ambition tour ever end? Her widely derided pitchbook and marketing campaign of the same name have enjoyed a longer half life than plutuntiom, and much like the uranium-234, she is deadly.
Her day started on CNBC, but she was also given a huge spread in Fortune, whose PR folks blanketed the blogosphere this morning with a blast email announcing the piece. I have to admit I am tiring of her marketing campaign; could she spend more time crunching numbers and less on TV? Make no mistake about it, this is all about her, and now you know more than you ever needed:
Just who is Meredith Whitney, and how the heck did a little-known analyst from a second-tier firm become the oracle of the bear market? The first question is simpler to answer. Whitney, 38, grew up in Bethesda, Md., one of three daughters born to Richard Whitney, a venture capitalist and onetime official in Richard Nixon's Department of Commerce (but not part of the famous Whitney clan that includes Eli and John Hay Whitney), and Barbara Gentry, an executive recruiter. She prepped at Lawrenceville, graduated from Brown University in 1992 (Whitney and I overlapped at Brown but didn't know each other), and has been working in Wall Street research pretty much ever since. Fortune
Is Lazard’s Stock Good to Go?
I have spent the better part of a year watching Lazard’s (LAZ-NYSE) outperform the brokers by a wide margin. In truth the shop is a M&A boutique with strengths in advising financials, thanks to franchise player Gary Parr, and and sizable asset management operation.
The stock has been hanging tough, and the SellSide remains generally constructive on the shares:
The New York firm reported second-quarter earnings of $64.6 million, or 54 cents a share, compared with $61.5 million, or 53 cents, a year earlier, the company said in a statement. Analysts were looking for earnings of around 51 cents a share.
Advisory revenue rose 37 percent in the quarter compared with last year, despite a slowdown in the economy and tight credit markets. The trend seems to be continuing, with Lazard working on deals valued at over $100 billion in July alone.
Notable deals the firm has worked on include Bear Stearns’ sale to JPMorgan Chase, InBev’s $52 billion takeover of Anheuser-Busch and KKR’s complex deal to take itself public.
The firm has also been involved in raising capital for financial companies including Lehman Brothers and Fannie Mae as they continue to write down the value of their souring mortgage assets.
“The key here is really that the story is working, in terms of both M&A and asset-management coming through with strong performance,” Merrill Lynch analyst Guy Moszkowski said.
Revenue from advising on financial restructurings - working with bankrupt or near-bankrupt companies -climbed 12 percent to $32.7 million as bankruptcies increase with the slumping economy. NY Post
Neuberger & Berman has been rumored to worth as much as $8 billion in a sale, a number that might be a tad optimistic. But with Lazard’s enterprise value to be in the neighborhood of $2.5 billion, you can buy a similar size operation (in terms of AUM) for less than half the price, and get Lazard’s M&A operation for free. While Bruce certainly pays himself handsomely, the stock would seem to be pretty attractive on a valuation basis.
Perhaps there are some contingent liabilities, besides option grants that give investors pause here. But it would seem there is some upside to the stock, although shareholders are probably not complaining given they have been spared the carnage of the last year.
But with any luck the stock will soon become more than just a hiding place for long only managers who are trying to maintain a weighting in financials.
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Not much drama here....
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LAZARD LIVING LARGE
New York Post
Previously
More to Lazard Ltd. Than Meets The Eye?
1440 Wall Street
Strong Buy on The Last Tycoons
1440 Wall Street
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The content contained represent 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 LAZ
Hot Hand Handicaps the Bounce
How much gas does the rally have left in it?
1320 at best, on the S&P 500, before reality sets back in, according to the hottest technical analyst on the Street, ISI Group's Jeff DeGraaf.
The sudden appetite for oversold financials came at the expense of energy stocks, as a mini-rotation took hold. Energy stocks, at least if the Energy Select Spyder is your proxy (XLE-AMEX), have been the source of funds, along with idle cash. But breakouts in rank and file stocks are few and far between, despite the one day wonders we experienced last week in breadth and volume.
Stocks have been treated more like commodities for sure, valuation has not mattered a bit as stocks crack five and 10-year valuation troughs time and time again, burning buyers who, until last week, were getting more gunshy with each passing day.
Breadth last week was rather punk however; DeGraaf was looking for more like 9:1 than the reltively tepid 3:1 we witnessed on Wednesday's rally. And while he is respectful of a bounce, until credit markets improve, and crude cracks $121, DeGraaf remains skeptical.
With financials quickly approaching overbought status, he thinks the next trade might be back into energy. Still, "counter-trend bounces often last longer than anticipated", and DeGraaf admits it is possible the percentage of stocks above their 50-day moves back above 80%, from the 20% we saw early last week, before the bounce runs it course.
UBS Auction-Rate Buy Leaves Some Investors Out in Cold
The hits just keep coming for the private client division of UBS. Things are so bad the Joe Grano, the former bigshot at PaineWebber, would probably not be interested in participating in a buyout of the franchise, should UBS seek to sell it for a song.
The tax scandal is bad enough, but over 15 class action lawsuits are being brought on behalf of UBS clients. UBS announced everyone would be made whole, but it is not proving to be that simple:
UBS AG, Switzerland’s largest bank, plans to buy back as much as $3.5 billion of auction-rate preferred shares after being sued in the U.S. for fraudulently selling the securities as low-risk alternatives to cash.
Clients holding the securities in UBS accounts will be able to get their money back in full, the Zurich-based company said yesterday. The offer, the first by a broker, applies to shares issued by tax-exempt closed-end funds managed by firms such as BlackRock Inc. and Nuveen Investments Inc. It doesn’t include auction-rate debt from municipalities or student-loan providers.
Bloomberg
Initial reactions to the news were of relief:
``It’s fabulous,’’ Harry Newton, 66, an investor in New York who owns $3.5 million in auction-rate preferred securities, said about UBS’s decision. ``They were the worst of all the brokerage companies that sold this stuff.’’
This debacle has been overshadowed by bad news everywhere else, but has certainly contributed to the bewilderment on Main Street over what exactly is going on with banks and brokers. The IndyMac news threw more fuel on the fire; near panic has been the order of the day. Main Street is confused, and for good reason.
An old friend of mine was caught up in the machinations at UBS. After saving diligently for over 10 years she had finally accumulated a quarter million dollars to be used as a down payment for a house in Southern California.
A UBS rep got her to move her money from her longtime Washington Mutual branch a a year ago; but ultimately she had little contact with the asset gathering broker. He invested the funds in auction rate securities, telling her they were as good as cash, even as she explained that she was house hunting and would need to access the funds.
Several months later she submitted an offer an a house, and tried to pull a chunk of the money out to make the deposit and down payment. Only at this time was she told what had happened, and UBS offered to given her a loan against the securities, but was less than forthright about the economics.
She passed on the offer and walked away from the house; too bad considering she was well qualified and ready to buy from a motivated seller. The housing market is getting hit from a perfect storm.
I called her yesterday to email her a link to the story in Bloomberg. Since she had no debt from municipalities or student loans we thought she could see the light at the end of the tunnel.
Unfortunately question marks remain, given the email I just received back from her:
i was just told that they are only buying back the non tax ones since only 75% of them have paid out. apparently it’s a lottery that the companies like the ones i own, ING, DNP and cohen & steers are cashing out by cusip number. i now have to call each company and bitch--are they really “randomly” selecting cusip numbers or cashing out people they know and call to bitch!!
If anyone you know is caught in this situation make sure they go on the offensive if they have auction rate debt at one of the big mutual fund complexes. Waiting for them to contact you might not be so prudent, lottery or not.
And while an apology would be nice, getting your money back would be better.
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UBS Seeks to Appease Clients With Auction-Rate Buy
Bloomberg
UBS RAISES ADVISER PAY TO KEEP ITS TALENT
NY POST
UBS used ‘cloak of secrecy’ on US tax
FT
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The content contained in this blog represents the opinions of underthecounter. 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 Positions
