S&P: No subtext in industrial exodus from benchmark
Manitowoc Co is set to be the third U.S. manufacturer dropped from the Standard & Poor’s 500 index this year — but the brains behind the benchmark said the shift does not reflect a desire to soft-pedal the sector.
“Our general concern about sectors is the proportions of sectors in the market and the index should be close to one another, and close is around a percentage point or so,” said David Blitzer, an S&P managing director who chairs the index committee. “Given that the 500 is 75 to 80 percent of the total market cap of the U.S. market, we’re never going to be too far off.”
S&P said late on Monday that it would remove Manitowoc, a maker of cranes and ships, from the benchmark S&P 500 after the close of trading on Aug. 31, noting that its market capitalization ranked it last in the group.
Manitowoc will be replaced by Cardinal Health Inc spin-off, CareFusion Corp, a medical products company.
In March, Tyco International Ltd was dropped from the index, followed by Ingersoll-Rand Co in June. They were replaced by New England’s largest utility Northeast Utilities and utilities contractor Quanta Services Inc.
But Tyco and Ingersoll had something in common besides their sector — they both reincorporated from Bermuda to Europe, making them ineligible for inclusion on this list.
“Two of the three industrials that left did it themselves,” Blitzer said.
GE’s Immelt’s subtle defense
General Electric Co Chief Executive Jeff Immelt went to Michigan, the bleeding heart of the U.S. industrial heartland, on Friday to call for a resurgence in American manufacturing. But even as he warned against relying too heavily on the financial industry to drive economic growth, he subtly set up a defense of the largest U.S. conglomerate’s hefty finance arm.
Analysts and investors are worried that the Obama administration’s proposed overhaul of U.S. financial regulations could force GE to spin off GE Capital, which has businesses ranging from leasing jet planes to investing in commercial real estate.
“We also need a financial system that is built around helping industrial companies to succeed,” Immelt told the Detroit Economic Club. “GE is an important part of this financial services approach. We plan to focus GE Capital on financing small- and medium-sized customers in industries that we know the best.”
He said that after first contending that the U.S. had come to rely too much on Wall Street wizardry and consumers who spend more than they earn to drive prosperity. Disparities in pay reflect that imbalance, he said.
“You know something is wrong when a mortgage broker is pulling down $5 million a year while a Ph.D. chemist is earning $100,000,” Immelt said.
Immelt did not directly address the proposal on Thursday. But earlier this week, he told GE employees that the largest U.S. conglomerate would fight any effort to force it to separate GE Capital from its industrial core.
Several analysts this week warned that the administration’s current proposal, which would prevent large financial institutions from having nonfinancial operations, would likely require such a separation. However, they pointed out that even the current proposal — which would be subject to negotiation in Congress — allows a five-year grace period.
Sam Israel’s wooded hideout
GRANVILLE, Mass. — Hedge fund managers are known for having a taste for the world’s glamorous vacation spots. But for his time on the lam, fugitive and one-time millionaire Samuel Israel hid out in a place that typically caters to people of more modest means – a campground in rural Granville, Massachusetts, according to some of the camp’s current guests.
“It’s different, that’s for sure,” said Ken Cudworth, 37, as he moved his family into a site at the campground. Cudworth had been waiting for an opening at the wooded camp for a few days and got a call on Wednesday morning that one had opened up – the site that Israel, who was convicted of a scheme that defrauded investors of $450 million, vacated when he turned himself in at a local police station.
“I’ll be digging some holes to see if he left anything,” Cudworth said.
Jim Cooley, 63, also staying at the camp, said he’d seen a man who matched Israel’s description pull out of the site on a motorscooter. That was the vehicle Israel rode to Southwick police station where he turned himself in after a four-week nationwide manhunt for the person who committed the longest-running fraud in the $2 trillion hedge-fund industry.
None of the campground visitors interviewed had talked with Israel during his stay or realized who he was prior to news of his surrender. But Cooley had a theory as to why Israel turned himself in.
“I think he got bored here and said, ‘Heck, they’re never going to find me here. I’m going to turn myself in,’” Cooley said.
As he rode out Prospect Mountain camp ground for the last time, Israel would have passed the children’s play area, where among the climbing toys is a pen with a sign that reads “Campground Jail.”
On the road with Sam Israel
BOSTON – It’s no Maserati. The fuel-hungry, possibly damaged 2007 Coach Freelander Recreational Vehicle is the antithesis to the flashy, often glamorous stereotype of powerful hedge fund managers.
But it appears to be the getaway vehicle of choice for fugitive former hedge fund manager Samuel Israel III.
And unlike the larger than life returns Israel promised investors, the vehicle is big. Really big.
“Everything about the Coachmen Freelander Class C motorhome shouts out ‘big’, more storage, big tanks, large doors, tall ceilings, and big beds,” the company said in a press release.
The U.S. Marshals Service, which tracks fugitives, issued a release describing the nearly 30 ft, white Freelander. It has a blue 2005 Yamaha scooter attached to the back, possible damage to the rear passenger side, a New York license plate (EEN-5973) and sporty swoosh stripes — the kind that convey family fun.
And where would he go in such a vehicle?
RV Parks? Camp grounds? Highway rest stops, perhaps? Yes to all three places, say the Marshals.
It’s a shame that all of the money that Sam has socked away is going to be sucked up when he has to refill that thing’s gas tank! 
Hi, Danny & Jim… Still stewing?
from Summit Notebook:
PequotVentures exec trumpets Big Apple advantage
PequotVentures, the venture capital arm of hedge fund Pequot Capital Management, has shut down its Silicon Valley office and now operates only out of New York. Managing general partner Lawrence Lenihan said the contrarian move made sense because the plethora of venture capital operators in Silicon Valley forced PequotVentures to compete on price.
That's not so true in New York, where there's less competition on the fund side but lots of promising media and finance businesses, he told the Reuters Hedge Fund and Private Equity Summit on Tuesday.
New York is also looking like increasingly fertile ground relative to Boston's once booming Route 128 corridor. Lenihan, who admits that as a New Yorker he may carry a certain bias, said that shuttle flights which once were packed with New York investors going to Boston to check out companies are now carrying many more Boston investors in the opposite direction.
"If you look at the deal flow and you look at the amount of companies that are being built, I think there's been a noticeable slowdown in technology innovation in the Route 128 corridor," he said.
