Today - Wednesday, December 11, 2013
12:20 PMIcahn Enterprises tumbles for a 2nd day
- "If Carl Icahn is selling, do you want to be buying," asks Andrew Bary in Barron's. "Probably not." Icahn Enterprises (IEP -13.6%) extends yesterday's big post-secondary offering decline as Bary reminds the stock trades at a hefty premium to NAV of about $75 per unit.
- While it might be worth some premium to invest alongside Carl Icahn, says Bary, 80% is probably far too much (it's less since the article was published!).
- By contrast, you can invest with the Tisch family in Loews (L -1.3%) at a discount to NAV, and Berkshire Hathaway (BRK.A, BRK.B) trades at just 1.3x book.
- "Icahn can do the math and he seems to think the company's units are at least fully priced given the equity offering, which will add to his war chest as he pursues his distinctive brand of activist investing."
11:46 AMDeutsche a fan of NorthStar spinoff plan
- "We believe the separation of the asset management business will create value for shareholders, as the management company will trade at higher multiples than the traditional mortgage REIT and real estate business," says analyst Stephen Laws, reiterating his Buy rating on NorthStar Realty (NRF +16.2%) after the announced spinoff plan for the asset management business.
- His $12.50 price target is a "conservative valuation" given it values the asset management business at 12x 2014 cash available for distribution - the low end of a likely range of 12-18x. He also believes CAD is likely to show continued expansion thanks to growth in the non-listed REIT business as well as potential new income streams from managing additional funds.
- Earlier coverage
10:26 AMCiti adds Duncan Hennes to board
- Citigroup (C -1.1%) adds plenty of banking and hedge fund experience with its new board member, Duncan Hennes. Co-founder of bank advisory firm Promontory Financial Group, Hennes was previously CEO of Soros Fund Management, and a treasurer at Bankers Trust, where he led the consortium rescuing and taking over Long Term Capital Management in 1998.
- Press release
9:34 AMSunTrust agrees to sell asset management unit
- Asset management unit RidgeWorth Capital manages about $50.6B in assets (vs. $189,4B for the entire bank) and contributed about $25M to SunTrust's (STI -0.1%) YTD net income.
- The business is being sold to RidgeWorth employees and an investor group led by Lightyear Capital for up to $245M at closing and another $20M based on retention of certain assets. SunTrust estimates an after-tax gain on the sale of $50M.
- Press release
8:48 AMDimon pleased uncertainly over Volcker out of the way
- No surprise, but costs will rise and returns will decline at the big banks thanks to the Volcker rule, says Jamie Dimon (JPM), presenting at the Goldman financial services conference. Even if JPM's target ROE of 16% falls to the area of 14%, Dimon is confident in the bank's optimization efforts.
- "I'm glad that we now have certainty ... we'll be able to manage with Volcker."
- To review: Compliance with the near-1K-page rule has been delayed until July 2015.
- One must not forget to play the game: Dimon admits he lost track of keeping up with relationships with regulators the last several years. He says he will send "thank you" notes to congressional leaders for making a budget deal. To Paul Ryan and Patty Murray: "Thank you, thank you, and god bless you."
8:36 AMGramercy resumes preferred payments
- Gramercy Property Trust (GPT) declares a catch-up dividend in the amount of $10.23524 per preferred share, representing all accrued and unpaid payouts on the stock from Oct. 2008 until Oct. 15, 2013.
- The board declares quarterly preferred dividends of $0.50781 per share for the period from Oct. 15 through Jan. 14.
- Management reiterates its intention to initiate common stock dividends in 2014 Q1.
- Press release
8:08 AMWalter gains after MSR acquistion
- Walter Investment Management (WAC) is up 1.7% premarket after agreeing to buy MSRs with about $30B in UPB from "a large national depository."
- The portfolio consists of about 270K accounts - projected to be 99% current - and includes more than 100K HARP-eligible mortgages. The transfers are expected to occur in staged boardings in the first three quarters of 2014.
- Management's plan is to acquire MSRs with UPB of about $62B, and, to date, the company has entered into agreements for about $54B.
- Press release
7:55 AMNorthStar flies on spinoff plan
- NorthStar Realty (NRF) is now ahead 16.7% in the premarket following its plan to spin off its asset management business.
- The conference call is set for 10 ET, but the presentation slides are currently available.
- Certainly working at the moment is page 14 of the presentation which compares NRF's P/E multiple (8.3x) with that of what it picks out as competitors - Real Estate Managers (19.4x), Small Traditional Asset Managers (19.9x), MLP GPs (35.1x), and Altisource Asset Management (AAMC) at 50.1x.
- The comps may or may not make sense, but if NorthStar Asset Management is anything like the Altisource Asset Management spinoff, investors would be wise to get in early ... in size. AAMC's more than a 10-bagger since being spun off from Altisource Portfolio Solutions (ASPS) one year ago.
7:41 AMMoody's buys Amba Investment Services
- Boosting the research and analytical capabilities offered by Moody's Analytics, Moody's (MCO) acquires Amba Investment Services for an undisclosed amount of cash.
- About 10 years old, Amba is known for providing outsourced investment research and analytics to financial institutions. It's expected to generate about $39M in revenue this year.
- The deal isn't expected to have a material impact on Moody's EPS.
- Press release
7:16 AMLloyds fined $46M over sales program
- The £28.04M penalty is the largest ever by the U.K.'s Financial Conduct Authority (formerly the Financial Services Authority) for retail conduct. The regulator accused Lloyds (LYG) of failing to properly manage its compensation program so financial advisors - in order to meet sales targets - were not encouraged to push products on customers they didn't really need.
- “The findings do not make pleasant reading,” says Tracey McDermott, the F.C.A.’s director of enforcement and financial crime. “Financial incentive schemes are an important indicator of what management values and a key influence on the culture of the organization, so they must be designed with the customer at the heart.”
4:36 AMEU agrees on plan for dealing with failing banks
- European finance ministers could be creating the conditions for a future run on banks after agreeing on a framework for winding down failing firms in the sector.
- Crucially, major depositors will be a first port of call if a bank needs cash to shore up its finances, as happened in such brutal fashion in the bailout of Cyprus earlier this year.
- Money could then be taken from a country's national resolution fund, which could request assistance from the funds of other nations. Eventually, a common European-wide fund would be created.
- ETF: EUFN
4:13 AMFDIC OKs plan for taking over failing financial firms
- The board of the Federal Deposit Insurance Corp. (FDIC) has authorized a draft plan on how the agency would break up large financial firms that are about to collapse and without a taxpayer bailout.
- The FDIC has the authority to take over failing banks under the 2010 Dodd-Frank rule in order to limit the impact of any collapse on the financial system; the regulator would keep the operating parts of an institution open, prioritize creditor repayments - although this includes imposing losses as well - and it would recapitalize a firm.
- The agency is now seeking public comment on the plan.
- ETFs: FAS, XLF, FAZ, UYG, VFH, IYF, SEF, IYG, FXO, PFI, KBWB, RWW, FINU, RYF, PSCF, FNCL, FINZ
3:59 AMRBS finance chief quits after just 10 weeks
- RBS (RBS) Finance Director Nathan Bostock has resigned after just 10 weeks in the job and is returning to Santander (SAN), where he has held several senior roles.
- Bostock will become the chief risk officer and deputy CEO at Santander's U.K. operations, which are set to be spun off at some point and separately listed.
- Bostock's departure is the latest blow for RBS as it carries out a review of its operations; last month, for example, IT problems left over 1M customers stranded.
- Shares are -1.6% in London.(PR)
Tuesday, December 10, 2013
5:33 PMGundlach reiterates bullish MBS call
- Rising interest rates have killed refinancing - eliminating prepayment risk - and home prices continue to move higher, a particularly bullish cocktail for non-agency MBS, says Gundlach (DBL, DSL), who finds those securities vastly more attractive than high-yield paper (HYG, JNK).
- Asked about Annaly (NLY) - an owner of agency MBS - Gundlach says he likes it and likes its management, but won't be buyer until after the dividend is cut to something more in line with what core earnings might be.
- "Something for Nothing" slides and webcast
- Non-agency MBS players include: MTGE, MFA, DX, TWO
- Related mREIT ETFs: REM, MORT, MORL
- High-yield ETFs: HYG, JNK, HYS, HYLD, SJNK, PHB, SJB, ANGL, XOVR, UJB, QLTC, SHYG
- Previous: "Freaking out" about interest rate risk
4:57 PMFranklin brings buyback plan up to 30M shares| Comment!
4:15 PMNorthStar Realty to spin-off asset management unit; +6% AH
- The spin-off into a separate public company will be in the form of a tax-free distribution, and is expected to be completed in 2014 H2. The new company's name will be NorthStar Asset Management.
- NorthStar Asset Management will have a 20-year contract to manage NRF along with its non-traded REIT business, and will own its own broker-dealer platform.
- Contract details: Base management fee of $90M, plus an additional base management fee of 1.5% of cumulative equity raised at NRF, along with incentive fees - 15% payable when cash available for distribution at NRF exceeds $0.78 per share; 25% payable when CAD exceeds $0.90 per share.
- CC tomorrow at 10 ET
- Shares +6.2% AH
- Press release
4:07 PMNew York Mortgage Trust maintains dividend| 4 Comments