Unstructured Finance

Moelis climbs M&A ranks; former employer UBS does not

080904_kmoelis0.jpgFebruary’s M&A figures predictably stayed on their dismal track, with announced deals down 49 percent to $157 billion from $310 billion during the first two months 2007, according to Dealogic.

But there was one surprise in the numbers — Moelis & Co, which rainmaker Ken Moelis founded after leaving UBS last year, ranks fifth in U.S. advisory so far this year. That puts the nascent firm above JPMorgan, Merrill Lynch — and UBS.

Of course it’s only two months into the year and Moelis’ ranking is due to advising on a single deal, Microsoft and Yahoo. But new names on static league tables are significant. 

It’s way too early to tell — but with the credit crunch hampering bulge bracket banks, could deals this year be won more on advice than balance sheets or underwriting?

Below are the U.S. advisor rankings by volume from Dealogic.  Rank Advisor  Value (mln)   1 Goldman Sachs  $71,225   2 Lehman Brothers  $68,246   3 Morgan Stanley  $59,977   4 Blackstone  $50,590   5 Moelis & Co  $44,700   6 JP Morgan  $34,049   7 Merrill Lynch  $31,373   8 UBS  $12,469   9 Wachovia  $9,345   10 Citi  $8,808 

Victoria’s leaving the boudoir, back to the manor

vic1.jpgAttention men! Victoria’s Secret is toning down its sexy quotient. Let the mourning begin!
    
Sex has been the advertising driver for the lingerie brand in recent years. Its annual televised fashion show features nearly-nude models adorned with satin, sequins and feathers while strutting to Justin Timberlake’s “Put Your Sexy On.”
    
Their stores, meanwhile, evoke the inner sanctum of a very pink boudoir, filled with lace and ruffles on corsets, thongs, panties and bras, with a healthy dose of leopard skin to boot.
    
It’s enough to make you want to check into a convent.  

So the folks at headquarters think it’s time to take a breather. “Increasing the level of sophistication in our product offering” is how Victoria’s Secret Chief Executive Sharen Turney put it in a conference call to analysts this week.

“Ultra feminine” is in, tawdry sexuality out.

After all, Turney explained, the fictional character of Victoria at the center of this brand’s story was “Manor-born. She was from London.”

Retailers’ earnings take a trip in the Wayback machine

Higher food and gasoline prices. Costly heating bills. A credit market crunch. The deteriorating housing market. A worsening employment picture.

What does it all mean for U.S. retailers earnings? Quite possibly the worst quarterly decline in year-over-year earnings growth since the fourth quarter of 2000.

According to Retail Metrics, as of Thursday evening, roughly 45 percent of the 126 U.S. retailers in its Retail Metrics Retail Earnings Index had reported fourth-quarter results.

Check Out Line: Let the good times roll!

Check out consumers around the world shrugging off economic worries (or looking to bury them) and treating themselves to a stiff drink – much to the benefit of wine and spirits company Brown Forman.

On Friday, the drinks company reported a roughly 10 percent rise in quarterly profit and said its sales increased 16 percent.tequila.jpg

Around the world, consumers were reaching for its Jack Daniel’s Tennessee Whiskey and Finlandia Vodka, while in the U.S., it said it saw an ”exceptional” increase in demand for Gentleman Jack. 

Daily Briefing: Billionaires Club

Wilbur RossBillionaire investor Wilbur Ross has squared off with billionaire investor Warren Buffett with a $1 billion investment in bond insurer Assured Guaranty. Buffett has been actively exploring high-grade opportunities bond insurance, and Ross has been open about his plans to get into the struggling sector. Ross told CNBC he chose Assured over rival bond insurers MBIA Inc and Ambac Financial Group Inc because Assured was in better shape. “This is opportunity capital rather than damage-curing capital,” Ross said, adding that it was pretty clear he and Buffett were now playing in the same sandbox. Ross said he remains in discussions with other bond insurers.

A dissident investor group led by Harbinger Capital Partners has nominated a slate of four directors to the board of New York Times Co, Harbinger said in a federal filing. The investor group, which includes hedge fund Harbinger and investment firm Firebrand Partners, has nominated the candidates as part of a plan to push the company to shed noncore assets and reallocate capital to build up its digital businesses. “Harbinger … believes that the future of The New York Times depends on the willingness of its management and board of directors to take bold action to adapt to the changing media landscape,” the group said in a filing with the U.S. Securities and Exchange Commission.

Banque Populaire says it is in exclusive talks to buy 400 bank branches from HSBC France, mainly in the south of the country, for 2.1 billion euros ($3.17 billion). Credit Industriel & Commercial and BNP were the other participants in a final round of bidding, according to an industry source. HSBC had been rumored to be selling the regional banks for some time and the move is further evidence of its shift towards emerging markets.

Sprint: needs backbone

hesse-thm.jpgSprint Nextel’s earnings may have been weak, but its conviction to keep its long-distance network remains strong.

Sprint’s former Chief Executive Gary Forsee had resisted selling the long-distance business, despite continued calls from analysts for a sale of the unit after he spun off the company’s local telephone business.

On Thursday, Forsee’s replacement Dan Hesse sounded even more attached to the business. While he would not rule out a sale of the unit, he said there were many reasons why Sprint should hold on to it.

Hedge funds don’t sign blank checks

blank-check.jpgWith more traditional offerings sitting out today’s choppy markets, some of the hottest recent IPOs have been from so-called blank check companies. These special purpose acquisition companies, or SPACs, float shares to fund acquisitions — a strategy that looks promising as credit woes sideline more leveraged buyers like private equity.

But popularity may come at a price: bigger SPACs mean big investors like hedge funds can crater a deal by witholding support — potentially at the expense of the SPAC sponsor. 

If a SPAC doesn’t get a deal done, shareholder money is returned by the sponsor — so there’s always a chance sponsors will buy out naysayers at a premium to get the deal done. For the hedge funds that’s a low risk proposition — for sponsors it’s increasingly anything but. That’s why market sources say some sponsors are starting to think twice about going ahead with SPAC plans.

Purgatory Age or Golden Age?

fire.jpgWhile Carlyle Group co-founder David Rubenstein has said the private equity sector had fallen into the “purgatory age” to atone for past sins of success, Ripplewood Holdings CEO Tim Collins said on Thursday that the “golden age” was still to come.

Collins remained positive even though buyout volume has dropped 53 percent this year to $26.0 billion, down from $55.1 billion a year ago, according to research firm Dealogic. Financial sponsor deals accounted for 7 percent of total M&A volume this year, down from 11 percent a year ago.

“The golden age is when capital is scarce, courage is scarce and you can use your capital, not only to create extraordinary returns but to play a really important role in this transition period in the economy,” Collins said.

Sears’s Lampert compares struggling Kmart to Eli Manning

manning.jpgIn his letter to shareholders, Sears Chairman Ed Lampert compared the company’s struggling Kmart chain to New York Giants quarterback Eli Manning, the most valuable player of Super Bowl XL II.

But with sales at established stores falling 5.2 percent during the fourth-quarter, Kmart’s performance was hardly championship worthy.

In fact, it was more like Manning’s abysmal November performance against the Minnesota Vikings, when he threw four interceptions in a 41-17 loss that had fans and local media calling for his head. 

Check Out Line: Sears plans conservatively for 2008

sears.jpgCheck out Sears Holdings Chairman Ed Lampert pledging in a letter to shareholders to take a more conservative approach to inventory in 2008 after last year’s aggressive posture backfired, wrecking the retailer’s earnings and profit margin.

“Unfortunately we did not forsee the severe economic turbulence ahead … 2007 was not a good year in which to operate with increased inventory,” Lampert wrote.

Like many retailers, Sears struggled last year in a marketplace that saw shoppers pull back their spending in the wake of declining home values, rising grocery bills, and higher energy costs.

  •