Yahoo’s Alibaba spinoff attracts big discount

February 12, 2015

The company’s plan to distribute its stake in the Chinese company hasn’t excited investors. A Breakingviews calculator suggests they are attaching a 34 pct discount to the U.S. tech firm’s Alibaba shares – assuming Yahoo’s core business is worth something. That’s too cautious.

A fat and happy GM is a dangerous company

By Rob Cox
February 12, 2015

It’s an irony bordering on conflict of interest that Harry Wilson, who helped Uncle Sam convert debt to equity in bankruptcy, is pressing the carmaker to reduce its cash cushion. Yet absent externally imposed fiscal discipline, GM runs the risk of repeating mistakes of the past.

Credit Suisse earns the chance to be proactive

February 12, 2015

The Swiss bank has kept its full-year dividend and now aims to slash an extra $75 bln of assets in 2015. Private and investment banking are for once both doing well, and fallout from the rising Swiss franc looks bearable. That gives CS scope to tackle its weak capital position.

Drugmakers unlikely candidates for next big short

February 11, 2015

Kyle Bass, a hedge fund manager who bet successfully on a U.S. housing crash, is targeting pharma companies worth $450 bln. A new method of challenging patents gives him a tool. But it’s not clear how his firm, Hayman Capital, has a leg up on existing, aggressive generic firms.

Sky’s insecurity helps Premier League net $8 bln

February 11, 2015

The pay-TV giant is spending 83 pct more than its last deal to retain most of England’s top-flight soccer. Sky can make the sums add up. But runner-up BT is a real threat. And Sky can’t afford to test what losing its football dominance would mean. The big winners are the clubs.

DuPont drives wedge between shareholders and Peltz

February 6, 2015

Adding two turnaround vets to the $70 bln chemical giant’s board may make shareholders think twice about voting a rival slate from Nelson Peltz’s Trian. DuPont says the activist nixed an offer to add one of his picks because he wanted the spot. He may just have been outplayed.

Rob Cox: When CEOs are worth more as former CEOs

By Rob Cox
February 5, 2015

Investors this week applauded the abrupt exits of bosses at Ally and Petrobras, whose market value surged by $8 bln. Ousters at McDonald’s recently and Microsoft in 2013 earned similar welcomes. The common thread seems to be relief after a CEO becomes entrenched and inflexible.

Pfizer’s generics injection lifts mood for breakup

February 5, 2015

The pharmaceutical giant’s $15 billion purchase of Hospira gives it a shot at reversing a history of value-destroying acquisitions. The injectable drug maker’s strength in non-branded medications should fortify Pfizer’s generics unit – and clear the way for spinning it off.

Smucker deal may keep activists in Kibbles ‘n Bits

February 4, 2015

The jam maker is gobbling Big Heart Pet Brands for $5.8 bln. Mixing coffee with dog food could create bargaining heft with stores but more likely will leave uppity investors hungry for a breakup. There’s a reason the one-time Nabisco division is caught in a cycle of spinoffs.

Negative yields can go much more negative

February 2, 2015

Investors now pay for the privilege of owning almost a quarter of euro zone government debt. The practice sounds strange, but monetary theory calls for it. If deflation sets in, yields could keep falling. The result might be the end of cash, or a new theory about interest rates.