Markets live chat transcript for the chat ending at 12:13 on 12 Nov 2009. Participants in this chat were: Neil Hume, FT (NH) Bryce Elder (BE)
NH:
Good morning
NH:
it’s 11:03
NH:
just
NH:
and time for Markets Live
NH:
FT Alphaville’s daily markets chit chat
NH:
Miles is still suffering from the knock he picked up in yesterday’s session
NH:
so that means Bryce keeps his place in the team
BE:
Hello
NH:
right we are going to crack on this morning
NH:
because there’s lots or RAW
RAW is market chatter – information that has not been formally tested through traditional journalistic channels (PRs etc). The story might be complete rubbish, but if we believe there is some substance to it we will say so. Either way, Reader Beware.
NH:
well semi RAW stuff to have a look at
BE:
starting with BA I presume
NH:
yes
NH:
I think so
NH:
shares up 13.7p at 214.1p
NH:
a rise of 7%
BE:
God, I hope Miles closed that fantasy short
NH:
I think it only ran till Friday
NH:
which is lucky, very lucky
NH:
otherwise
NH:
BE:
Quite.
11:06AM
NH:
anyway the back story here
NH:
is that last night Sky New’s City editor Mark Kleinman reported that a deal with Iberia was close
NH:
http://blogs.news.sky.com/kleinman/Post:5d44786a-5e84-4c42-abe9-55c56a47c2ad
NH:
predictably that was rubbished by those sources close to the situation on Reuters
BE:
surprise, surprise
NH:
but then
NH:
El Pais came up with this
NH:
and for non Spanish readers
NH:
the salient points are
NH:
Iberia’s supervisory board meets today to decide on merger with BA, acc to
sources familiar with the situation
sources familiar with the situation
NH:
With no last minute hick-up, the merger will be announced in a few hours’
time, or, much less likely, the termination of talks
time, or, much less likely, the termination of talks
NH:
After 16 months of negotiations, the exchange ratio has been established at
45:55 IBLA:BAY. acc to the same sources
45:55 IBLA:BAY. acc to the same sources
NH:
Both airlines are to keep their brands
NH:
IBLA Q3 results due tomorrow
BE:
hmmm
BE:
based on that ratio
BE:
what’s a BA share worth
NH:
er pass
NH:
have had time to go through it
NH:
have not had
NH:
that should be
BE:
We could crowdsource the calculations. I’m sure the rabble will find time.
NH:
yes
NH:
good idea
BE:
So that’s your challenge for today: what’s a BA worth at 55:45? First one wins ….
BE:
er …
BE:
kudos.
NH:
Charles Stanley 2010 diary
BE:
Two in fact.
11:09AM
BE:
interesting that the market is ignoring the Reuters story though.
BE:
and taking the El Pais/Sky line
NH:
yep
NH:
and it would be so good
NH:
if this deal was finally sealed
NH:
how long has it been going on for??
BE:
16 months? Something like that.
NH:
it feels longer
BE:
Anyway, what other bits of RAW have we got?
NH:
well a bit more colour on this Heritage rumour
NH:
actually colour might be pushing things
NH:
more like additional rumours
BE:
Go on
NH:
well the chatter is that either a Chinese or Indian company is going to buy HOIL’s Ugandan assets
NH:
and that 100p a share of the sale proceeds will be returned to shareholders
NH:
and the rest will be used to develop their operations in Kurdistan
NH:
and that’s because the deal with Genel is off
BE:
hmmmm
BE:
you’ll have HOIL’s PR moaning about that
BE:
they are very very definite that this deal will go ahead
NH:
true
NH:
although not until the political situation has cleared up in Kurdistan
BE:
interesting rumour though
NH:
indeed
NH:
and one has to ask why the original deal with Genel has not been sealed
BE:
of course on the Ugandan side
BE:
Tullow is already trying to flog its interests in the country
BE:
which it holds with HOIL
BE:
Data room’s been open for more than a month
BE:
and I guess buying the HOIL interests
BE:
would put the buyer in pole position for that
NH:
exactly
BE:
Hoil share price?
NH:
hang on
Heritage Oil (HOIL:LSE): Last: 452.50, down 6.5 (-1.42%), High: 463.60, Low: 451.50, Volume: 177.56k
NH:
right
NH:
we have more RAW
NH:
and this needs to be handled with extreme caution
11:14AM
BE:
RAW gone off?
NH:
yes, this could well be rotten
NH:
but anyway
NH:
rumours have been swirling in the past day of a bid for a big UK utility company
NH:
talk that it could be either Severn Trent or United Utilities
BE:
Aye.
NH:
well, the latest
NH:
and I have to say I am sceptical about this
NH:
is that Warren Buffett is looking to take a stake in UU’s
BE:
right
BE:
stop there
BE:
this sounds very, very unlikely
BE:
it’s not that Buffett doesn’t have the cash
BE:
or that some utilities aren’t looking cheap
BE:
because they have had a fairly dismal run this year
BE:
but
BE:
is this really his style?
NH:
Fair point
NH:
but
NH:
there is a buzz around in the sector
NH:
and as VP notes
NH:
the results of the reg review
NH:
are due shortly
NH:
end of the month is it
BE:
We’ve had the provisional recommendations, which were very ugly
NH:
yes
NH:
all the companies complained
BE:
As per
NH:
and we await the final conclusion
NH:
anyway
NH:
I agree it sounds unlikely
NH:
but
NH:
you want RAW
NH:
there it is
United Utilities Plc (UU:LSE): Last: 464.70, up 2.6 (+0.56%), High: 465.40, Low: 457.40, Volume: 702.90k
Severn Trent (SVT:LSE): Last: 981.50, up 7.5 (+0.77%), High: 985.00, Low: 967.00, Volume: 247.97k
11:18AM
NH:
Right
NH:
BA have gained more altitude
NH:
now up 7%
NH:
at 215p.
NH:
we are guessing
NH:
on teh back of this
NH:
IBERIA ACCEPTS CONDITIONS FOR MERGER – finanzas.com
NH:
anyone looked at that site before
BE:
Can’t say I have.
BE:
And still no BA estimate from the ROTR.
NH:
where’s Taxloss
BE:
Come on folks – there’s two rather plasticky diaries on offer.
NH:
I think that’s harsh
NH:
it’s fake leather
NH:
with some rather useful maps in it
NH:
Swansea
NH:
York
NH:
Southampton
Paul Murphy was raised in Portsmouth and tends to be abusive of anything Southampton-related
NH:
Galsgow
NH:
the sort of place
NH:
a City stockbroker expects to find itself in
NH:
anyway
NH:
let’s have a look at the wider market
11:21AM
BE:
FTSE up 10.2 at 5276
BE:
BT results helping
NH:
BA statement
BE:
Breaking …..
NH:
Further to recent market speculation, British Airways confirms that the British
Airways and Iberia Boards are holding separate meetings today, 12 November, to
consider a potential transaction. However, no decisions have been taken and, at
this time, there can be no guarantee that a transaction will be forthcoming. A
further announcement will be made in due course, if appropriate.
Airways and Iberia Boards are holding separate meetings today, 12 November, to
consider a potential transaction. However, no decisions have been taken and, at
this time, there can be no guarantee that a transaction will be forthcoming. A
further announcement will be made in due course, if appropriate.
BE:
“No decision has been made”
NH:
So board meetings today
NH:
and Rain
NH:
don’t be nasty to Monkey
NH:
he spends a lot of time researching UBSOTD
NH:
and we appreciate his efforts
NH:
BA price check
NH:
up 8% now
NH:
trading at 216p
NH:
I suppose
NH:
the positive
NH:
is they have something that can be put to the board
NH:
that’s a start
BE:
I guess
NH:
(Ransquawk = news robot, used by Zero Hedge)
NH:
and news robots are dangerous
BE:
Yup – no care for nuance.
BE:
Does to news what Kraft does to cheese.
NH:
11:26AM
NH:
Where were we?
BE:
Wider market, for what it’s worth.
BE:
Up a bit after another raft of results.
BE:
the pick of which is probably BT.
NH:
yep
NH:
they are motoring
NH:
up 7.1p tp 149.1p
NH:
in spite of big rise in the pension deficit
NH:
the market likes the results
NH:
and there are, to be fair
NH:
a lot of positives
NH:
upgraded guidance
NH:
good cashflow
NH:
improving margins at Gloal Services
BE:
Although it’s another cost cutting story, isn’t it?
NH:
yeah, I guess so
BE:
Turnaround of one half of the business, and a whole stack of sackings at the other.
NH:
indeed
NH:
anyway
NH:
time for some comment on the results
NH:
and also
NH:
the pension news
NH:
The IAS 19 net pension position at 30 September 2009 was a deficit of £6.8bn net of tax (£9.4bn gross of tax), compared with a net deficit of £2.9bn at 31 March 2009 (£4.0bn gross of tax).
The market value of the BT Pension Scheme assets has increased by £3.3bn since 31 March 2009 to £32.6bn at 30 September 2009. However, the value of the liabilities has increased to £41.9bn as a result of movements in bond yields and inflation expectations.
The liability calculation is based on the AA bond yield of 5.45% (31 March 2009: 6.85%) and future inflation expectations of 3.1% (31 March 2009: 2.9%). This does not reflect a change in the underlying pension obligations, but rather a change in market rates for AA bonds and inflation expectations.
NH:
Right
NH:
here’s the take from Citi
NH:
Revenues £5.12bn (in-line vs. Citi, cons). EBITDA preleavers
£1.43bn is +3.7% vs. Citi, +4.7% vs. cons. Contribution from GS
(£95m +53% vs. CIRA) and Wholesale (£328m +6.6% vs. CIRA) were the key
driver of beats; Clean EBITDA grew 1.6% YoY due to cost savings from labour
productivity and supplier management. EPS before specific items 3.7p (Citi
3.5p cons. 3.1p). DPS of 2.3p/share (CIRA 2.5p).
£1.43bn is +3.7% vs. Citi, +4.7% vs. cons. Contribution from GS
(£95m +53% vs. CIRA) and Wholesale (£328m +6.6% vs. CIRA) were the key
driver of beats; Clean EBITDA grew 1.6% YoY due to cost savings from labour
productivity and supplier management. EPS before specific items 3.7p (Citi
3.5p cons. 3.1p). DPS of 2.3p/share (CIRA 2.5p).
NH:
YTM10 Guidance Upgrade — Revenue decline improved to 3-4% (from 4-5%,
CIRA -3.8%), capex c.£2.6bn (from c.£2.7bn, CIRA £2.7bn), underlying cost
cuts “at least £1.5bn” (from “well over £1bn”, CIRA £1.2bn), FCF “at least
£1.6bn” (from “over £1bn”, CIRA £1.3bn). New net debt guidance of <£10bn
(CIRA £9.8bn), full-year dividend "up c.5%" (CIRA +10%). This implies c.5%
uplift to EBITDA, +c.10% to EPS, +c.20% to FCF.
CIRA -3.8%), capex c.£2.6bn (from c.£2.7bn, CIRA £2.7bn), underlying cost
cuts “at least £1.5bn” (from “well over £1bn”, CIRA £1.2bn), FCF “at least
£1.6bn” (from “over £1bn”, CIRA £1.3bn). New net debt guidance of <£10bn
(CIRA £9.8bn), full-year dividend "up c.5%" (CIRA +10%). This implies c.5%
uplift to EBITDA, +c.10% to EPS, +c.20% to FCF.
NH:
Further Cost-Cutting Announced, FCF Up — As widely expected, previous
guidance was of “well over £1bn” of reductions in Opex and Capex has been
formalised to “at least £1.5bn”. FCF (pre-pension costs) therefore increases
from >£1bn to at least £1.6bn. This increase includes a one-off tax benefit of
£215, capex reduction of £100m and £70m from moving a tax shield into FCF.
guidance was of “well over £1bn” of reductions in Opex and Capex has been
formalised to “at least £1.5bn”. FCF (pre-pension costs) therefore increases
from >£1bn to at least £1.6bn. This increase includes a one-off tax benefit of
£215, capex reduction of £100m and £70m from moving a tax shield into FCF.
NH:
not much comment there
NH:
all numbers
BE:
Not a lot
NH:
have you any analysis Bryce?
BE:
Well, the UBS note’s not bad.
BE:
Highlighting the divi as a potential disappointment
BE:
Beats, raises guidance, but by £100m cash flow underlying, dividend weak
Revenue £5,122m, 0-1% below consensus, EBITDA £1,436m 4.7%, EPS 7%
ahead at 4.5p, dividend 2.3p in line. Post-tax pension of £6.8bn is high (£5.7bn
June). Guidance rises to ‘at least £1.6bn cash flow’ from ‘at least £1bn’, consensus
£1.3bn. Staff and other savings are strong, however £226m comes from a tax
rebate, the underlying upgrade is at least £100m, or c7% for consensus cash flow.
We wonder if 5% dividend rise to 6.8p (consensus 7.0p) will likely disappoint
some.
Revenue £5,122m, 0-1% below consensus, EBITDA £1,436m 4.7%, EPS 7%
ahead at 4.5p, dividend 2.3p in line. Post-tax pension of £6.8bn is high (£5.7bn
June). Guidance rises to ‘at least £1.6bn cash flow’ from ‘at least £1bn’, consensus
£1.3bn. Staff and other savings are strong, however £226m comes from a tax
rebate, the underlying upgrade is at least £100m, or c7% for consensus cash flow.
We wonder if 5% dividend rise to 6.8p (consensus 7.0p) will likely disappoint
some.
BE:
Core –KPIs and revenue weak
Core revenue is better than thought, particularly at Wholesale. Transit and Other is
the main beat, and the reason for the revenue upgrade in our view. Broadband
trends are strange, BT Retail falls 1% (2% growth Q1), Openreach grew 19% (9%
growth Q1), is this ongoing price pressure vs connection fees? KPIs show 34%
share of broadband adds (44% Q1). Line and call revenue slipped to -11%.
Core revenue is better than thought, particularly at Wholesale. Transit and Other is
the main beat, and the reason for the revenue upgrade in our view. Broadband
trends are strange, BT Retail falls 1% (2% growth Q1), Openreach grew 19% (9%
growth Q1), is this ongoing price pressure vs connection fees? KPIs show 34%
share of broadband adds (44% Q1). Line and call revenue slipped to -11%.
BE:
Global Services stronger, good cost savings and cash flow
Global Services accounted for £20m or 1/3rd of the EBITDA beat. The balance
came from strong Core savings on staff (-12%) and other costs (-6%). The outlook
for the year is raised to at least £1.5bn of savings (UBSe currently £1.3bn, £100m
from capex). Cash flow of £705m was driven by a £226m HMRC rebate.
Valuation – Current multiple-based target 100p, on 6.5% dividend yield
Before results 20-30% expensive in our view, must see what changes are needed.
Global Services accounted for £20m or 1/3rd of the EBITDA beat. The balance
came from strong Core savings on staff (-12%) and other costs (-6%). The outlook
for the year is raised to at least £1.5bn of savings (UBSe currently £1.3bn, £100m
from capex). Cash flow of £705m was driven by a £226m HMRC rebate.
Valuation – Current multiple-based target 100p, on 6.5% dividend yield
Before results 20-30% expensive in our view, must see what changes are needed.
NH:
I have Merrill
NH:
which don’t seem very impressed
NH:
even though they have a buy rating
NH:
Despite the upgrade to revenue guidance, which was probably partly exchange
rate related, the pressure was evident with an underlying fall of 6% yoy this
quarter, despite the in line revenue figure. Underlying revenue declines were 8%
yoy at Global, 6% at Retail, 4% at Wholesale and 1% at Openreach.
Management reiterated comments from previous quarters that sales cycles were
extending and we expect order intake to stay subdued.
rate related, the pressure was evident with an underlying fall of 6% yoy this
quarter, despite the in line revenue figure. Underlying revenue declines were 8%
yoy at Global, 6% at Retail, 4% at Wholesale and 1% at Openreach.
Management reiterated comments from previous quarters that sales cycles were
extending and we expect order intake to stay subdued.
BE:
Ok, and here’s Oppenheimer’s conclusion
BE:
Although we appreciate opex- and capex savings, the decline in underlying
sales and EBITDA continues. We believe that operating improvements will
slow down significantly in H2 based on a lack of positive one-off effects, a
normalizing working capital and an expected weaker order book at Global
Services.
sales and EBITDA continues. We believe that operating improvements will
slow down significantly in H2 based on a lack of positive one-off effects, a
normalizing working capital and an expected weaker order book at Global
Services.
NH:
actually
NH:
doesn’t look that good at all
NH:
does it?
BE:
Nope. Here’s Caz, who are in-line
BE:
Based on our preferred measures of earnings and cash flow for 2009/10E, BT
trades on a PER of 10.4x with a 10.2% equity free cash flow yield and a 4.7% dividend yield. These remain at
a premium to the sector (9.6x, 11.7% and 6.3% respectively). However, a selfhelp story is developing at BT
which should lead to materially higher cash flows in the future, not least due to the inherent gearing.
Whilst our formal recommendation reflects our longer term concerns regarding revenue growth, today’s
results will add further credibility to the selfhelp story and we expect to see a stronger share price in the
nearterm.
trades on a PER of 10.4x with a 10.2% equity free cash flow yield and a 4.7% dividend yield. These remain at
a premium to the sector (9.6x, 11.7% and 6.3% respectively). However, a selfhelp story is developing at BT
which should lead to materially higher cash flows in the future, not least due to the inherent gearing.
Whilst our formal recommendation reflects our longer term concerns regarding revenue growth, today’s
results will add further credibility to the selfhelp story and we expect to see a stronger share price in the
nearterm.
NH:
ok
NH:
thanks for all that
11:33AM
NH:
Right
NH:
we must make a correction
NH:
on RANsquawk
NH:
who are not a news robot, apparently
NH:
We’re not news robots, we work very hard on nuance!
Many thanks,
NH:
RANsquawk
NH:
and look
NH:
their director of operations
NH:
is posting on the left
11:34AM
NH:
where to now
NH:
I have an idea
NH:
UU
BE:
Again?
NH:
yes
NH:
apparently
NH:
the Buffett stuff
NH:
might be wrong
NH:
and the real story
NH:
is that UU is finally about to sell its non regulated business
BE:
hardy perennial that one.
NH:
yes
NH:
and what’s it worth
NH:
I have heard £1bn
NH:
£250m
NH:
and a few numbers in between
BE:
£1bn was the number in my head, although that’s usually prefaced with “up to”
11:36AM
NH:
Right
NH:
some flashes appearing from Iberia
NH:
RTRS-SPAIN’S IBERIA SAYS HAS TAKEN NO DECISION ON BA MERGER
11:35 12Nov09 RTRS-SPAIN’S IBERIA SAYS NO GUARANTEE TRANSACTION WILL TAKE PLACE, TALKS CONTINUE
11:35 12Nov09 RTRS-SPAIN’S IBERIA
BE:
So, in summary, there’s a meeting and they haven’t made a decision ahead of it.
NH:
er yes
BE:
I think that’s now clear.
NH:
and
NH:
they have results tomorrow
NH:
so this subject
NH:
was always likely to come up
BE:
Yup – it sets a deadline.
BE:
Although we’ve seen a few of those come and go over the past couple of years.
BE:
Let’s move on
11:38AM
NH:
Where now?
NH:
What about Dynamic Decisions Capital Management.
NH:
A defunct Chelsea hedge fund, based just round the corner from Bibendum
BE:
Aha
BE:
Interesting this
BE:
Today we’ve had news that that SFO has been called in.
BE:
After receiving complaints about its investment activities
BE:
That comes after its $550m main fund was put into liquidation in May
NH:
Never heard of this thing before.
BE:
Likewise.
BE:
But the founder seems an interesting chap.
BE:
Alberto Micalizzi.
BE:
An academic big cheese in the world of quants
BE:
Ex Imperial College and Bocconi University in Milan
BE:
Here’s a profile of him from a couple of years ago.
BE:
Plenty of scope for schadenfreude in there…
BE:
Anyway, here’s the gist
BE:
Micalizzi developed the theory of Growth Premium Analysis (GPA) that uses real options valuation to make selections within a pairs trading universe. “The concept of real options is still in its early adoption phase, although it is viewed by those familiar with the field as the most exciting development in the world of finance over the last few decades,” says Micalizzi.
NH:
hmmmm
BE:
And here’s some stuff about the fund, which was hived out of the advisory business.
BE:
Dynamic Decisions, as a firm, was established in 2001 to provide advisory services for major institutional management houses, including independent equity research. In 2003-04 it was advising a Luxembourg SICAV on the construction of a market neutral strategy, long equities and short the NASDAQ 100 universe. With this fund achieving 16% in less than two years, it was becoming increasingly evident that Dynamic Decisions should try its hand at money management. “It was obvious that our stock selection had proved to be effective,” Micalizzi says.
BE:
Thus, in 2004 he founded Dynamic Decisions Capital Management as an FSA-registered investment manager, having taken the decision to apply his theories to practical money management. Its first and thus far only fund, DD Growth Premium, was launched in January 2005 with $5 million. The fact that it now has over $310 million in assets under management, most of that received after it completed its 24 month trading track record, is testament to the growing confidence of the investor community in the Micalizzi formula. “August – and our lack of correlation with the market – has been a strong catalyst for us,” he says.
BE:
And, surprise surprise, it all went quite spectacularly pearshaped
BE:
With investors accusing DD of “gross mismanagement and misfeasance”.
NH:
There’s a Bloomberg story from back in March that gives all the gory detail, which is worth whacking up in full.
NH:
A Cayman Islands court may decide
tomorrow to put Dynamic Decisions Capital Management Ltd.’s main
hedge fund under the protection of an outside firm after
investors accused the manager of “gross mismanagement and
misfeasance,” according to people familiar with the case.
tomorrow to put Dynamic Decisions Capital Management Ltd.’s main
hedge fund under the protection of an outside firm after
investors accused the manager of “gross mismanagement and
misfeasance,” according to people familiar with the case.
NH:
The Grand Court of the Cayman Islands is set to consider a
petition for a provisional liquidator to safeguard DD Growth
Premium Master Fund, said the people. According to the filing,
fund director Humphrey Polanen said on a March 13 conference
call with investors that London-based Dynamic Decisions founder
Alberto Micalizzi had stated that the fund had “substantial”
losses last year and that assets may have fallen to as low as
$20 million, excluding illiquid assets. Assets were $550 million
at the end of 2008, according to the petition.
petition for a provisional liquidator to safeguard DD Growth
Premium Master Fund, said the people. According to the filing,
fund director Humphrey Polanen said on a March 13 conference
call with investors that London-based Dynamic Decisions founder
Alberto Micalizzi had stated that the fund had “substantial”
losses last year and that assets may have fallen to as low as
$20 million, excluding illiquid assets. Assets were $550 million
at the end of 2008, according to the petition.
NH:
Micalizzi “vehemently denies these allegations and
believes that they are unfounded,” Raul Guerrero, a spokesman
for the fund manager, said in a telephone interview today. “He
firmly believes he acted in the best interests of investors at a
time of substantial market upheaval.”
“Since Feb. 27, Micalizzi has been prevented by the board
from speaking to investors,” Guerrero said.
believes that they are unfounded,” Raul Guerrero, a spokesman
for the fund manager, said in a telephone interview today. “He
firmly believes he acted in the best interests of investors at a
time of substantial market upheaval.”
“Since Feb. 27, Micalizzi has been prevented by the board
from speaking to investors,” Guerrero said.
NH:
and Micalizzi is denying everything again
NH:
RTRS-FOUNDER OF HEDGE FUND FIRM DYNAMIC DECISIONS SAYS “ABSOLUTELY NO FRAUD” IN GROWTH PREMIUM MASTER FUND
11:19 12Nov09 RTRS-DYNAMIC DECISIONS FOUNDER SAYS FUND TO PAY OUT INVESTORS IN LINE WITH DEC 2008 VALUATIONS
11:19 12Nov09 RTRS-DYNAMIC DECISIONS FOUNDER SAYS INVESTOR COMPLAINTS LINKED TO SFO PROBE DUE TO DELAYS IN FUND PAYING OUT REDEMPTIONS
11:20 12Nov09 RTRS-DYNAMIC DECISIONS FOUNDER SAYS FUND IN TALKS TO SELL ALL ASSETS TO ONE BUYER FOR AROUND $550 MLN
11:19 12Nov09 RTRS-DYNAMIC DECISIONS FOUNDER SAYS FUND TO PAY OUT INVESTORS IN LINE WITH DEC 2008 VALUATIONS
11:19 12Nov09 RTRS-DYNAMIC DECISIONS FOUNDER SAYS INVESTOR COMPLAINTS LINKED TO SFO PROBE DUE TO DELAYS IN FUND PAYING OUT REDEMPTIONS
11:20 12Nov09 RTRS-DYNAMIC DECISIONS FOUNDER SAYS FUND IN TALKS TO SELL ALL ASSETS TO ONE BUYER FOR AROUND $550 MLN
BE:
Here’s a bit more of that Bloomberg story giving the background
BE:
Micalizzi, 40, said in a Feb. 20 letter to investors that
the firm had cut its equity and options holdings in mid-December
and invested in asset-backed bonds. Settlement of those
purchases was delayed until February because of “credit market
conditions,” according to the letter.
the firm had cut its equity and options holdings in mid-December
and invested in asset-backed bonds. Settlement of those
purchases was delayed until February because of “credit market
conditions,” according to the letter.
BE:
“The board had little information concerning the
investment in bonds, and were not even sure if the bonds were
genuine,” according to the investors’ petitions. The main fund
holds illiquid, commodity-linked bonds that were organized and
executed by Micalizzi, according to the petitions.
“Micalizzi believes the bonds are genuine and have
value,” Guerrero said. An independent firm has been hired to
investigate the holdings, Guerrero said.
Micalizzi’s firm says in marketing documents that its
strategy is to invest mainly in the shares of large U.S. and
European companies. According to the petitions for the DD Growth
Premium and DD Growth Premium 2X funds, 55 percent of assets
were held in commodity-linked bonds at the end of 2008.
investment in bonds, and were not even sure if the bonds were
genuine,” according to the investors’ petitions. The main fund
holds illiquid, commodity-linked bonds that were organized and
executed by Micalizzi, according to the petitions.
“Micalizzi believes the bonds are genuine and have
value,” Guerrero said. An independent firm has been hired to
investigate the holdings, Guerrero said.
Micalizzi’s firm says in marketing documents that its
strategy is to invest mainly in the shares of large U.S. and
European companies. According to the petitions for the DD Growth
Premium and DD Growth Premium 2X funds, 55 percent of assets
were held in commodity-linked bonds at the end of 2008.
BE:
Dynamic Decisions also provided conflicting information and
failed to give five days’ notice to investors about the
termination last year of its prime broker relationship with
Morgan Stanley, as well as the change in its auditor to Deloitte
& Touche LLP from PricewaterhouseCoopers LLP, according to the
petitions.
Dynamic Decisions also gave inconsistent and late
information to investors about the amount of assets it managed.
The firm said in a January investor letter that the DD Growth
Premium 2X Fund, which borrows money to help boost profits,
returned 16.2 percent last year while the DD Growth Premium Fund
gained 9.1 percent.
The investors also made unsuccessful attempts to reach
Micalizzi, according to the petitions.
“Since Feb. 27, Micalizzi has been prevented by the board
from speaking to investors,” Guerrero said.
failed to give five days’ notice to investors about the
termination last year of its prime broker relationship with
Morgan Stanley, as well as the change in its auditor to Deloitte
& Touche LLP from PricewaterhouseCoopers LLP, according to the
petitions.
Dynamic Decisions also gave inconsistent and late
information to investors about the amount of assets it managed.
The firm said in a January investor letter that the DD Growth
Premium 2X Fund, which borrows money to help boost profits,
returned 16.2 percent last year while the DD Growth Premium Fund
gained 9.1 percent.
The investors also made unsuccessful attempts to reach
Micalizzi, according to the petitions.
“Since Feb. 27, Micalizzi has been prevented by the board
from speaking to investors,” Guerrero said.
BE:
Seems like a hell of a bunfight, this one.
NH:
it does
BE:
And we’d be very interested to hear from anyone who crossed paths with Alberto when he was at Imperial
11:46AM
NH:
Right, we have just had an interesting proposition.
BE:
Really?
NH:
yeah
NH:
might be a bit embarassing though
NH:
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NH:
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NH:
I might send Izy
NH:
she wants to see a trading room
NH:
this could be an ideal opportunity
NH:
I think
NH:
Murph
NH:
and I should stay well away
BE:
Did one of those at Peel Hunt earlier this year.
BE:
Lost a packet.
NH:
of course
11:48AM
NH:
Right
NH:
we should just provide an update on the MSCI changes
NH:
so of which
NH:
like Ladbroke
NH:
got into the market
BE:
But the biggest impact’s been on Inmarsat.
BE:
– appropriately enough.
– appropriately enough.NH:
yes
NH:
up 30.5p at 640p
NH:
a rise of 5%
NH:
here’s some expected flows
NH:
on the back of the news
NH:
Europe – Top 10 Buys Expected Days to Trade
NH:
1 ISAT LN INMARSAT 17.2
2 VPK NA VOPAK (KON.) 10.4
3 IEA AV IMMOEAST 8.2
4 TCG LN THOMAS COOK GROUP 3.7
5 TRYG DC TRYGVESTA 1.4
6 UL FP UNIBAIL-RODAMCO 1.1
7 MAERSKB DC AP MOLLER MAERSK B 1.0
8 BAYN GY BAYER 0.9
9 GLE FP SOCIETE GENERALE 0.5
10 SWEDA SS SWEDBANK 0.5
2 VPK NA VOPAK (KON.) 10.4
3 IEA AV IMMOEAST 8.2
4 TCG LN THOMAS COOK GROUP 3.7
5 TRYG DC TRYGVESTA 1.4
6 UL FP UNIBAIL-RODAMCO 1.1
7 MAERSKB DC AP MOLLER MAERSK B 1.0
8 BAYN GY BAYER 0.9
9 GLE FP SOCIETE GENERALE 0.5
10 SWEDA SS SWEDBANK 0.5
NH:
Europe – Top 10 Sells Expected Days to Trade
Ticker Name Days to Trade
1 BKG LN BERKELEY GRP HLDGS UNIT 10.2
2 HHFA GY HAMBURGER HAFEN UND LOGI 9.1
3 VOW GY VOLKSWAGEN STAMM 7.8
4 ACE IM ACEA 6.2
5 RSL LN FRIENDS PROVIDENT HLDG 5.0
6 LAD LN LADBROKES 4.6
7 SRS IM SARAS 4.1
8 LTO IM LOTTOMATICA 1.8
9 NESN VX NESTLE 1.1
10 NOVOB DC NOVO NORDISK B 0.9
NH:
now
NH:
ISAT
NH:
going in
NH:
it not ideal
NH:
because the stock is pretty illiquid
NH:
two hedgies own 40%
BE:
Harbinger and Landsdowne
NH:
and then there is a lot of long only money
NH:
Blackrock have 10%
NH:
could get a bit squeezy
BE:
2.2m traded through the LSE so far today.
NH:
it that quite high?
BE:
Average is 1.4m
NH:
hmm
NH:
and Thomas Cook
NH:
also getting a boost from this reshuffle
Thomas Cook Group (TCG:LSE): Last: 220.20, up 4.7 (+2.18%), High: 223.10, Low: 217.60, Volume: 2.06m
BE:
Less of a liquidity problem there now though.
NH:
post the Arcandor sale
11:53AM
NH:
Time for small cap corner briefly
BE:
Sure – what’s on your radar?
NH:
well
NH:
i was asked about Solo Oil early
BE:
A Lenigas special.
NH:
it is
NH:
he has been trying to raise cash
NH:
around £6m I hear
NH:
at around 0.75p
NH:
the cash will be used to take a stake in a licence
NH:
Tullow has in Tanzania
NH:
well, that’s the talk in the market anyway
Solo Oil (SOLO:LSE): Last: 0.98, up 0.05 (+5.38%), High: 1.10, Low: 0.93, Volume: 6.50m
NH:
other than that
NH:
the debata about the founder shares sales at Afren drags on
NH:
a few people
NH:
not buying the line
NH:
about them being sold for tax purposes
NH:
have a look at this
NH:
I did some maths on the Founder Warrants and share sales. The numbers clearly demonstrate that the CEO (Osman Shahenshah) took more than £2.2m net OUT of the company through the exercise of these REPRICED warrants and share sales. The fig leaf of ‘tax payment on the warrants’ clearly doesn’t hold water. Note that the CEO now only owns c.4m shares, having sold 9m yesterday. See the table below – warrant exercise price 39.75p, sale price 81p, tax rate UK cap gains @ 18%.
NH:
Egbert Imomoh 6,000,000 2,385,000 3,100,212 2,511,172 22,711 103,461 3,672,246 3,286,660
Osman Shahenshah 12,000,000 4,770,000 9,230,486 7,476,694 487,205 2,219,489 4,181,515 3,742,456
Shahid Ullah 4,000,000 1,590,000 2,756,039 2,232,392 115,630 526,761 3,081,461 2,757,908
Constantine Ogunbiyi 4,000,000 1,590,000 2,909,324 2,356,552 137,979 628,573 1,295,676 1,159,630
Osman Shahenshah 12,000,000 4,770,000 9,230,486 7,476,694 487,205 2,219,489 4,181,515 3,742,456
Shahid Ullah 4,000,000 1,590,000 2,756,039 2,232,392 115,630 526,761 3,081,461 2,757,908
Constantine Ogunbiyi 4,000,000 1,590,000 2,909,324 2,356,552 137,979 628,573 1,295,676 1,159,630
NH:
sorry
NH:
that table does not really work
BE:
Interesting through
BE:
Afren’s down 1p at 88.75p.
NH:
(thanks Lorcan)
11:57AM
NH:
also
NH:
Did you see the announcement which came out from Imagination Technologies?
NH:
I think so
BE:
Missed that.
NH:
small deal with a US company called Green Plug
NH:
but detail of the announcement is very interesting
NH:
Most of the value in Imagination relates to the graphics processor technology, right?
BE:
Yeah.
NH:
but the company also has a general purpose processor offering (known as META processor) which competes with ARM’s general purpose processor cores
NH:
or so I am told
BE:
And that’s the market where Arm’s the gorilla at the moment.
NH:
yes. but there must be some reason why Green Plug chose to use Imagination’s META core rather than the industry-standard cores offered by ARM.
NH:
or am i over-playing things?
BE:
Hm
BE:
Having not even glanced at the statement, it would seem that Green Plug’s application’s fairly low end
BE:
Where the processors are fairly generic and the margins are low
Imagination Technologies Group (IMG:LSE): Last: 229.50, up 5.7 (+2.55%), High: 240.00, Low: 222.00, Volume: 219.45k
BE:
Will look into it though
12:00PM
NH:
Right
NH:
I must dash
NH:
have a lunch
BE:
Anywhere nice?
NH:
not sure
NH:
not been there before
NH:
St Clements Café & Bar
Middle Temple Lane
London EC4Y 9BT
Middle Temple Lane
London EC4Y 9BT
BE:
Must be good
BE:
They’ve got a picture of the FT on their homepage
NH:
so they have
NH:
as it happens
NH:
the place is owned by the wife of a big City PR man
BE:
Who?
NH:
Andrew Grant of Tulchan
NH:
ironically
NH:
I am being taken by a PR man
NH:
from another firm
BE:
Menu?
NH:
one moment sir.
NH:
Isle of wight vine tomato, coco bean & thyme soup
Today’s Salads
Salad of crisp prosciutto, buffalo mozzarella,
fig & wild rocket with balsamic dressing
Braeburn apple, beetroot & red cabbage
salad with toasted hazelnuts, Harbourne
blue cheese & Dijon mustard dressing
Daily Specials
Traditional Lancashire hotpot with
celeriac puree & cavolo nero
Tart of mascarpone, slow cooked leeks
& girolle mushroom with leafy salad
Puddings
Sticky toffee pudding with pecan nuts & medjool dates
Carrot cupcakes with cream cheese frosting
Millionaires shortbread
NH:
St Clements was set up by Olivia Cundy, who has a background in catering, and a passion for simple, great quality food. St Clements offers delicious food, made fresh daily in the kitchens by experienced chefs. The endlessly varying menu uses the best seasonal ingredients sourced from the UK, Italy and France.
NH:
actually
NH:
I may never find this place
NH:
We are located just below the Middle Temple Library, on Middle Temple Lane, London EC4. Click on the map for an interactive version that will allow you to request directions
NH:
sounds very tucked away
BE:
Temple’s a bit of a maze at the best of times.
NH:
Access to The Temple
Pedestrian Out of Hours Access – on weekends, and after 20:30 on weekdays, the entrance is via Tudor St. The exit is either via Tudor St or the top of Middle Temple Lane, joining Fleet St.
NH:
Right
NH:
as for Xmas drinks
NH:
I am trying to organise something
NH:
with the team
NH:
and readers
NH:
what date works best
NH:
the week before Xmas
NH:
or earlier
NH:
not sure we will be able to run a Webbys style tab though
NH:
which reminds me
NH:
I found the bill the other day
BE:
NH:
in Murph’s old desk
BE:
Yikes
BE:
And … ?
BE:
Is this publicly disclosable information?
NH:
the total isn’t
NH:
but the volume is
NH:
67 bottles of white wine
NH:
97 pints of Adnams
NH:
sorry
NH:
there’s another 36 on the bill
NH:
5 OJ’s
NH:
3 bottles of Evian
NH:
and 3 Badiot
NH:
that’s the fuzzy stuff
NH:
oh
NH:
and 120 fish and chips
NH:
and yes
NH:
Monkey
NH:
the bill
NH:
looks to have been upaid
NH:
I quote
NH:
“I enclose a copy of your bill for which we would like settlement within seven days”
NH:
letter dated
NH:
Weds Sept 2
BE:
As highlighted by Monkey, Miles alone accounted for at least a third of the wine. We should garnish his salary.
NH:
and get this
NH:
the letter
NH:
was orignally sent to Pearson head office at the Strand
Pearson plc is the parent company of the Financial Times, publisher of FT Alphaville.
NH:
and opened!!!!!!!!!!!!!!
BE:
Ok – on that bombshell, are we done?
NH:
*WAL MART BOOSTS FORECAST
NH:
that just flashed up
NH:
FTSE update
NH:
hang on
NH:
down on the day now
NH:
off 1.7 points at 5,265
BE:
Stuck in a holding pattern as BA soars
NH:
(TL, might be in your neck of the woods at the end of the month)
BE:
Ok – lunchtime.
NH:
right
NH:
I must dash
BE:
Thanks everyone for all your comments.
NH:
(TL – Sat 28th am in Ilkley)
BE:
Bye
NH:
thanks for all the comments
NH:
although this one
NH:
on Tracy’s CoCo post
NH:
is a bit puzzling
NH:
TMA Nov 12 11:55
I wish ML would stop clowning about.
I wish ML would stop clowning about.
NH:
eh?
NH:
TMA
NH:
can you explain?
NH:
anyway
NH:
till the morrow
NH:
goodbye