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Ace Greenberg: Giant in Finance and Philanthropy

Wall Street Journal MoneyBeat - Fri, 07/25/2014 - 17:16
Bloomberg News

Alan “Ace” Greenberg, put much of his money to work in philanthropy.

The former head of Bear Stearns and the longtime Wall Street executive died of complications from cancer in New York on Friday at the age of 86. Over the years, Mr Greenberg made large contributions to charities and instilled in his employees the importance of donating. He died of complications from cancer in New York on Friday at the age of 86.

Mr. Greenberg grew up in Oklahoma City in an upper middle-class Jewish family, and took pride in his roots. For decades he was highly involved in UJA-Federation of New York, a philanthropic organization for the Jewish community to help people in need.

He hosted the group’s annual charity launch event from 1988 until 2011 at his home in New York, raising hundreds of millions of dollars, said Eric S. Goldstein, CEO of UJA-Federation of New York.

“There’s probably no single philanthropist who was more closely identified with UJA-Federation than Ace,” he said. “He was a philanthropic giant for us who through force of personality and conviction inspired people to give incredibly generously.”

Mr. Goldstein, who attended several of the launch events, said Mr. Greenberg would “hold court,” sitting in a big stuffed chair in the front of the room where he’d introduce speakers ranging from former New York City Mayor Michael Bloomberg to Henry Kissinger to Barbara Walters. Mr. Goldstein said Mr. Greenberg would then announce his gift and “highly motivate others to reach deep.”

He also brought his philanthropic mindset to the office.

Senior managing directors at Bear Stearns were required to donate 4% of their after-tax compensation to any sort of philanthropic organization.

“He set the tone that it’s really important to give back,” said Barry Sommers, a former Bear Stearns executive who is now Chief Executives of Chase’s consumer bank.

Mr. Sommers recalls first interacting with Mr. Greenberg during one of his town hall chats about donating to charities that brought together Bear Stearns employees.

“I was fortunate to have a chance to work beside a legend,” Mr. Sommers said. “He was an incredible leader and created a great culture but as a person, he had a balance of caring about everybody in the office, being philanthropic, being a family man. He showed you could do it all.”

Mr. Greenberg remained involved in UJA-Federation up until this year. He met with Mr. Goldstein about two weeks ago at his corner J.P. Morgan office on Park Avenue after Mr. Goldstein was named CEO of UJA-Federation.

“To the very last, he was an enormous presence in our community,” Mr. Goldstein said.

Categories: Transactions

In Rescue Deal, K.K.R. Provides Financing to Troubled Sand Maker

New York Times DealBook - Fri, 07/25/2014 - 16:44
The private equity giant will provide $680 million of financing to Preferred Sands, a company that had been on the verge of bankruptcy.
Categories: Transactions

SEC Warning to Investors: Be Vigilant About Social Media, Fraud

Wall Street Journal MoneyBeat - Fri, 07/25/2014 - 16:34
Associated Press

The Securities and Exchange Commission warned investors Friday to be careful of fraudsters who use social media to manipulate stock prices and spread false information.

The warning came on the same day that purported social network Cynk Technology Corp. started trading again after SEC’s mandated two-week trading halt in the stock came to end. The agency stopped trading earlier this month amid concerns of “potentially manipulative transactions” in the stock after shares went from 6 cents to above $20 in less than a month.

In an investor alert, the SEC warned of the pitfalls associated with false information spreading quickly through social media. The SEC didn’t mention Cynk in its alert.

“While social media can provide many benefits for investors, it also presents opportunities for fraudsters. Through social media, fraudsters can spread false or misleading information about a stock to large numbers of people with minimum effort and at a relatively low cost,” the SEC said on Friday. “They can also conceal their true identities by acting anonymously or even impersonating credible sources of market information.”

The SEC said fraudsters may use social media as a tool to spread false and misleading information that can sway a company’s stock price. Social media can also be utilized in a negative way to help fraudsters promote “pump-and-dump” schemes.

“Investors who learn of investing opportunities from social media should always be on the lookout for fraud,” the SEC said.

Cynk shares dropped $11.90, or 85%, to $2.10 on Friday. Even so, the stock is still up more than 2,600% for the year.

Categories: Transactions

Podcast: The Optimism Intervention

Wall Street Journal MoneyBeat - Fri, 07/25/2014 - 15:27

In the latest edition of MoneyBeat Week, our Friday podcast, the crew differs on what earnings season has been telling us about the U.S. economy and discusses the latest attack by hedge-fund manager Bill Ackman.

Paul Vigna

We start by talking about Mr. Ackman’s failure to land a knock-out punch on Herbalife Ltd., the nutritional supplement company he’s shorting.

Then we get a preview from our colleague Paul Vigna of a post he’s working on about second-quarter earnings. He’s not impressed by what he’s seen.

“I don’t see in these earnings reports any evidence that the economy is accelerating on its own,” he says.

That prompts us to attempt an optimism intervention. It doesn’t take.

Grab a set of headphones and take a listen to MoneyBeat Week right now. Or catch us on iTunes along with other Journal podcasts in the WSJ What’s News section.

Categories: Transactions

Train Reading: Tax Inversions for Humans?

Wall Street Journal MoneyBeat - Fri, 07/25/2014 - 15:14

Sunni Islamist insurgents destroy religious shrines as part of their crusade – WSJ

Wall Street legend Ace Greenberg passes away at 86 – WSJ

If corporations can be people, can people be corporations? And then do a tax inversion? – Catherine Rampell, via Washington Post

Corporatism not capitalism is to blame for inequality – Edmund Phelps, via Financial Times

Even if they want to, Herbalife’s executives shouldn’t sue Bill Ackman – MoneyBeat

A musical interlude: The Housemartins; Happy HourYouTube

Succinct summation of the week’s events – Big Picture

Which TV shows are winning the summer? – AdAge

Categories: Transactions

Goldman Turns Cautious on Stocks, Bonds

Wall Street Journal MoneyBeat - Fri, 07/25/2014 - 15:03
Bloomberg News

Goldman Sachs is advising clients to stay cautious on stocks and bonds in the short-term.

In a report circulated late Friday, Goldman said worries over a rising interest rate environment could lead to tougher times in bond and stock markets. The report, a collaboration between the firm’s global economics, strategy and commodities teams, said Goldman shifted to neutral on stocks over the next three months.

“A sell-off in bonds could lead to a temporary sell-off in equities,” Goldman said. “This makes the near-term risk/reward less attractive despite our strong conviction that equities are the best positioned asset class over 12 months, where we remain overweight.”

U.S. stocks maintained losses in the final trading hour as the Goldman note circulated across trading desks. The Dow Jones Industrial Average dropped 123 points, or 0.7%, to 16960. The S&P 500 fell 10 points, or 0.5%, to 1978.

The call comes after Goldman’s U.S. equity strategy team last week went from bear to bull on U.S. stocks. In a research note last week, the firm boosted its S&P 500 year-end price target to 2050 from 1900.

Friday’s note corroborates that view, although it suggests more short-term caution while maintaining an optimistic long-term view.

“We would see any sell-off over the next few months as an opportunity to increase exposure [to stocks] again also on a short-term basis,” Goldman said.

In corporate credit, Goldman moved to “underweight” over the next three and 12 months: “given already tight levels, rising government bond yields are likely to dominate the returns, especially for US [investment grade] credit where spreads are the lowest.”

On a macro basis, Goldman predicts sustained economic growth and higher bond yields over the next several years.

“Growth has improved substantially,” the firm said. “Most of the acceleration we had expected is now behind us, but we expect growth to be sustained at current or slightly higher levels, with the US growing at around 3% through 2017. We think the likelihood of a rise in government bond yields has increased and see this as a key aspect of the near-term macro outlook.”

–Chris Dieterich contributed to this post.

Categories: Transactions

Remembering Ace Greenberg, Through Good Times and Bad

New York Times DealBook - Fri, 07/25/2014 - 14:53
DealBook looks back at the career of Alan C. Greenberg, who led Bear Stearns through its rise and fall, in his words and others'.
Categories: Transactions

Alan ‘Ace’ Greenberg

Wall Street Journal MoneyBeat - Fri, 07/25/2014 - 14:51

To mark the death today of Alan “Ace” Greenberg, head of Bear Stearns when it was one of the biggest and most daring investment banks, we look back at this Page One article from his glory years in 1982. “You could put him in an empty room and lock him up, and he’d think of some way to make money.” Today in WSJ History.

DV.load("//www.documentcloud.org/documents/1235929-wsj-greenberg-011882.js", { width: 550, height: 700, sidebar: false, text: false, container: "#DV-viewer-1235929-wsj-greenberg-011882" });

The Wall Street Journal, Jan. 18, 1982 (PDF)

The Wall Street Journal, Jan. 18, 1982 (Text)

Categories: Transactions

Weekend Reading: Waiting on Rupert

New York Times DealBook - Fri, 07/25/2014 - 14:43
The announcement today that 21st Century Fox was selling some of its European assets has renewed talk that Rupert Murdoch is reloading for a new Time Warner bid.
Categories: Transactions

IPOs Gear Up But See Tepid Pricing

Wall Street Journal MoneyBeat - Fri, 07/25/2014 - 14:30
Bloomberg News

A slew of companies went public this week, but had a hard time selling shares at the valuations they expected.

Nine of this week’s 10 U.S.-listed IPOs fetched a price at the low end of the company’s projection or below it. The outperformer was Mexican-inspired restaurant chain El Pollo Loco Holdings Inc., which sold shares at the high end of expectations to raise $107 million and rallied 52% in midafternoon trading Friday.

The generally weak pricing results mark a speed bump for IPO market, which is gearing up again after a pause in activity around July 4, when investors’ holiday vacations make bankers reluctant to schedule deals.

The stock-sale calendar remains active, helped by persistent demand for equities that has kept share indexes near record highs and volatility at historic lows. But the past three weeks, shares of small companies and upstart drug development firms have pulled back, a sign investors have lost some appetite for the type of early-stage, relatively risky prospects that often characterize much of the IPO calendar.

Half this week’s debuts were small healthcare companies raising less than $100 million, such as eye-care development company Ocular Therapeutix Inc., which sold 5 million shares for $13 each, below the $14-to-$16 forecast it had given in a regulatory filing.

But the weakness wasn’t limited to the healthcare sector. Chemical company Orion Engineered Carbons SA, which staged the week’s largest IPO—raising $351 million—saw its shares fetch $18 apiece in its debut, below the $21-to$24 range it had forecast.

Next week will bring another busy week for IPOs, including the spinoff of General Electric Co. consumer-finance arm Synchrony Financial Inc. Synchrony’s expects its offering to raise as much as $3.25 billion, which would mark the largest U.S.-listed IPO since that of Grupo Financiero Santander Mexico SAB de CV, which listed both in New York and Mexico in September 2012.

Categories: Transactions

For White House, It’s Still the Economy. Stupid?

Wall Street Journal MoneyBeat - Fri, 07/25/2014 - 13:48
President Barack Obama meets at Canter’s Deli in Los Angeles, July 24, 2014, with, from left, Kati Koster, Aaron Anderson, Joan Waddell, and Katrice Mubiru, on the final day of a three-day West Coast trip. The four wrote to the president about issues that included education, military veterans resources, and the economy.
Associated Press

A popular saying around the Obama White House during the economic crisis in 2009 was: If you’re not talking about the economy, you’re not relevant. That still seems to be the driving mantra in the West Wing.

President Barack Obama has pressed ahead with economic events this past week despite the cascade of high-stakes overseas crises dominating the news. His weekly address last Saturday was about his economic “opportunity agenda.” On Thursday, he focused on closing a corporate tax loophole he said hurts the American job market.

In more private remarks, however, he made a risky argument: At a series of West Coast fundraisers, he said Americans are better off now than they were when he took office.

“Across the board, you could argue that we’re in a better place,” Mr. Obama said Wednesday at a fundraiser in Los Angeles. “But,” he told the supportive crowd, “You knew there was a ‘but,’ otherwise there wouldn’t be much of a call to arms here. The truth is that people across the country still feel anxious.”

It’s the kind of remark, however couched, that Mr. Obama’s critics are likely to use to build the case that he’s out of touch and employ against Democrats running in the November elections.

Mr. Obama’s “better-but” explanation isn’t echoed by some of his fellow Democrats. Hillary Clinton, for instance, has been offering a far more downbeat portrait of economic conditions.

And so it’s been since Mr. Obama has been in office. The White House has always struggled with how to balance positive economic signs and the widespread feeling among Americans that life isn’t getting better.

Even now, with the unemployment rate down to 6.1% in June, White House officials are still scratching their heads about why growth measures, such as GDP, aren’t as positive.

“Although the economy has done well in the aggregate, for the average person it feels as if incomes, wages just haven’t gone up; that people, no matter how hard they work, they feel stuck, and that’s not an illusion,” Mr. Obama said at a fundraiser Tuesday in Seattle.

Another shift in Mr. Obama’s economic argument this year is his use of the phrase “economic patriotism” to describe his agenda. In advocating Thursday for a change to the corporate tax rule, he called it an “unpatriotic tax loophole.”

In an interview with CNBC on Thursday, Mr. Obama said: “if you’re basically still an American company but you’re simply changing your mailing address in order to avoid paying taxes, then you’re really not doing right by the country.”

Mr. Obama’s message on the 2014 campaign trail has shifted from the one he delivered when campaigning for re-election in 2012 when he argued that the economy was on the right trajectory, even if some people were struggling, and Americans should re-elect him to keep it going in that direction. Now, with the country is in a similar place, his message to voters is: Don’t get cynical. As he told donors in Seattle, “When people get cynical, they withdraw.” (Read: They don’t vote.)

That’s one of the White House’s biggest concerns in the November elections, despite the president’s effort to make the case that Americans are better off now than they were five years ago.

Categories: Transactions

Why Cynk Didn’t Sink 100%

Wall Street Journal MoneyBeat - Fri, 07/25/2014 - 13:45

This wasn’t your typical 36,000%-percent gain.

Cynk Technology Corp. briefly was worth more than $6 billion earlier this month after its shares jumped to $21.95 in mid-July from 6 cents in early June. That caught the attention of the Securities and Exchange Commission, which suspended trading over concerns about the accuracy of available information and potentially manipulative transactions.

The question now is why, when trading resumed Friday, the stock dropped only 85% not 100%. Ironically, the skeptical attention drawn by the stock’s rise may have played a part. Sensing a classic “pump and dump” scheme, skeptics who sold short the stock instead saw it keep surging. Facing theoretically unlimited losses, some would have been forced to cover bets by buying from insiders at even more ludicrous prices. To add insult to injury, others would have been stuck paying to borrow the worthless shares during the suspension.

Many were likely buying Friday to close out those positions. That could explain why Cynk still was valued around $600 million. What goes up must come down, but it can take a while.

Categories: Transactions

A Landlord Rents Office Space, and Maybe a Picture or Two

New York Times DealBook - Fri, 07/25/2014 - 13:38
The Durst Organization, a New York office landlord, and Asher Edelman, an art financier, plan to acquire fine art and allow businesses to lease it for their office walls.
Categories: Transactions

At Goldman Sachs, the Right Candidate for a Half-Right Job

New York Times DealBook - Fri, 07/25/2014 - 13:37
The Wall Street firm has named Adebayo Ogunlesi to be the board's new lead director. If only Goldman saw fit to call him chairman, writes Antony Currie of Reuters Breakingviews.
Categories: Transactions

S.E.C. Says Citigroup Unit Failed to Protect Customer Trading Data

New York Times DealBook - Fri, 07/25/2014 - 13:27
Citigroup will pay $5 million to settle charges that LavaFlow, a unit that operates an alternative stock trading venue, allowed another bank subsidiary to access customer trading data.
Categories: Transactions

When Advisers Charge You to Fire Them

Wall Street Journal MoneyBeat - Fri, 07/25/2014 - 12:07
Even a “fiduciary” investment adviser may still be able to treat clients in ways that might surprise you.
Categories: Transactions

Transforming the Investment Case for BSkyB

New York Times DealBook - Fri, 07/25/2014 - 11:52
Sky Europe promises scale, growth, and cost savings -- but leverage will soar and cash returns will shrivel, writes Quentin Webb of Reuters Breakingviews.
Categories: Transactions

British Prosecutor to Pay $5.1 Million in Case Related to Kaupthing Inquiry

New York Times DealBook - Fri, 07/25/2014 - 11:40
Britain's Serious Fraud Office apologized to Vincent Tchenguiz, a property magnate, over how it handled his case as part of an inquiry into the collapse of the Icelandic bank Kaupthing.
Categories: Transactions

Taking Stock of Four Years of Dodd-Frank

New York Times DealBook - Fri, 07/25/2014 - 11:30
Banks are still too big to fail and the regulatory framework is incomplete, writes Jennifer Taub, a professor at Vermont Law School.
Categories: Transactions

Buy and Hold’s Not Dead, and It’s Not Alive – It’s Impossible

Wall Street Journal MoneyBeat - Fri, 07/25/2014 - 11:12

Buy and hold, one of the more popular and debated investment strategies, is neither dead nor alive, MarketWatch’s Chuck Jaffe said this morning on the MoneyBeat show. The more accurate adjective to describe it, he says, is impossible.

Categories: Transactions

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