Breakingviews

Why buybacks should be banned

By Edward Hadas
September 16, 2014

Some share repurchases get Warren Buffett’s seal of approval. But the great investor is on the wrong track. Buybacks are really dividends by another name. The price doesn’t matter. Besides, the practice is unfair to some shareholders and to governments. The world would be better without them.

Alibaba’s small IPO hike leaves room for believers

September 16, 2014

Boosting the maximum share price by 3 pct won’t affect appetite for the Chinese e-commerce giant’s $21 bln-plus offering. Investors appear more focused on Alibaba’s growth prospects than on governance risks. That points to a warm reception when it starts trading later this week.

LVMH, Hermes in five-year handbag peace

September 3, 2014

The French luxury leader will distribute to its shareholders the stake it stealthily built up in the Birkin bags maker. The founding family remains in control of Hermes. But Groupe Arnault will retain 8.5 pct of its capital, suggesting it is keeping its long-term options open.

Tesco should cut its dividend

August 27, 2014

Shareholders ultimately lose out when too-high payouts prevent companies from responding well to problems. Right now, Tesco needs all the financial flexibility it can muster. With a new CEO coming, the UK grocer has a window of opportunity it would be wise to climb through.

Blackstone finds way to outsource skin in the game

August 21, 2014

The private equity firm’s latest securitisation would normally require it to keep 5 percent of the risk. But Blackstone has found a way to outsource its equity sliver to other investors. The structure looks acceptable – but investors should be wary of copycats that might not be.

Ballmer’s exit value is now Nadella’s to preserve

August 20, 2014

Microsoft’s market capitalization grew by over $100 bln from the day about a year ago the longtime CEO said he would resign to Tuesday, when he left the board. With his predecessor fading from the picture, maintaining the momentum is now firmly in new boss Satya Nadella’s hands.

Latest blunder hits StanChart where it most hurts

August 20, 2014

New York regulators have fined the emerging markets bank another $300 mln for compliance lapses. StanChart’s biggest problem is still its misfiring strategy. But such avoidable missteps reinforce a disturbing impression that senior managers are too detached from daily operations.

BHP spin-off won’t appeal to commodity players

August 19, 2014

The mining giant plans to hive off some assets into a new company. The prices of nickel and aluminium, two of its key products, are rising. Investors could use the new firm to follow the trends. But they probably won’t. There are purer plays and better-diversified producers.

Coke investment reveals half-empty idea bottle

August 15, 2014

The beverage behemoth is paying $2.2 bln for 17 pct of the trendy energy-drink maker Monster. It goes to show that even a $176 bln global powerhouse with significant distribution and marketing advantages can struggle to stay ahead. At least Coke got the deal formula right.

Venezuela digs way to distressed seller status

By Christopher Swann
August 14, 2014

The country wants to offload Citgo, its U.S. refinery and pipelines unit. It may be worth up to $15 bln, money that’s sorely needed thanks to President Nicolas Maduro’s barmy economic policies. And the drop in value of heavy-oil assets like Citgo owns makes it a bad time to sell.