createpositivechange

Category: Business

  • Amidst Bear Stearns takeover, Greenberg and Cayne criticize each other

    The animosity between Bear Stearns’s former chairman Alan Greenberg and its soon-to-be former chairman James Cayne has become painfully public.

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    As The New York Times writes today, “their sometimes tumultuous relationship has boiled over into an outright feud.”

    Greenberg claims that he warned Cayne about the dangers of the firms investment in subprime mortgages, but that Cayne refused to listen. Cayne, the Times reports, has told colleagues that he never received such advice from Greenberg.

    Now, with the pending takeover by JPMorgan, the two men’s fortunes couldn’t be headed in more different directions.

    Greenberg he sold his stock regularly before the decline. JPMorgan has invited him to remain as vice chairman emeritus. And he’s writing a memoir, a narrative that isn’t likely to favor Cayne.

    Cayne, widely blamed for Bear’s near failure, leaves the company next month. His personal wealth plummeted by $900 million with the collapse of Bear’s stock.

    “Goodness,” Greenberg commented, when Times reporter Landon Thomas Jr. mentioned Cayne’s loss in net worth. “That’s a shame.”

  • Warren Buffett Predicts More Losses but Says Worst May Be Over

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  • Robert Thomson is Heir Apparent at the Wall Street Journal

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  • The Bill Gates portfolio – beyond Microsoft

    Business manager Michael Larson has a portfolio of billions of dollars and a client list of one.

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    Larson, a former bond investor with Putnam Investments, picks stocks for Cascade Investment LLC, whose sole owner is Bill Gates.

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    Larson is known as a conservative investor who maintains a low profile. However, regulatory filings by Cascade provide a glimpse into the decisions he and his boss are making.

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    At the end of 2007, Cascade reported $4.2 billion in publicly reported securities. More than $570 million was in Berkshire Hathaway, the company headed by Gates’s good friend Warren Buffett.

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    Cascade also holds a 10.8 percent stake in GAMCO Investors, Inc., a firm led by Mario J. Gabelli. Gates and Gabelli have done business in the past. In 1999, Cascade loaned $25 million to Gabelli’s local telephone venture, the Lynch Interactive Corporation.

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    Cascade’s biggest investment was in the Canadian National Railway, with holdings worth more than $1.6 billion.

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    Other bets by Gates’s investment vehicle included the Mexican media company Grupo Televisa, the Mexican brewer Fomento Economico Mexicano and the waste-management company Republic Services.

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    Gates has invested in several energy ventures, including ethanol producer Pacific Ethanol and PNM Resources, a utility based in Albuquerque, NM. Another investment, Minnesota-based Otter Tail Corporation (NASD: OTTR), provides electric power, as well manufacturing and health services.

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    Cascade has lesser investments in two companies that have seen their stock price decline in recent months – Six Flags Inc. (NYSE: SIX) and Planetout (NASD: LBGT). PlanetOut, a publisher targeting gays and lesbians, announced earlier this month that it would sell its magazine and book divisions and focus on its online activities.

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    Cascade Investment was so-called because “Cascade” is a generic business name in the Northwest. No sense in drawing undue attention.

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    Larson, who has worked for Gates since 1994, generally stays out of the limelight. However, in a rare interview with Fortune in 1999, he said he had the best job in the world.

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    “It’s pure investing,” he said. “No marketing. Not much management. And client relations is limited to one guy.”

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  • Fisker CEO says Tesla Motors’ “lawsuit is nonsense”

    The legal battle over high-end green car technology continued on Thursday as Fisker Motors’ CEO Henrick Fisker called a lawsuit filed by Tesla Motors “nonsense.”

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    The press release issued by Fisker Automotive claimed it was Tesla Motors that “breached the arbitration agreement in its contract with Fisker by filing these meritless claims in San Mateo County court.”

    Earlier this month Tesla Motors filed a suit against Fisker Automotive, its design subsidiary and two of its top executives, Hendrick Fisker and Bernhard Koehler, alleging fraud, breach of contract and violation of a confidentiality agreement.

    Fisker Kharma
    Fisker Kharma

    Fisker said today that its Fisker Kharma, a plug-in hybrid sports coupe, would be delivered on schedule by the fourth quarter of 2009 and that it would “vigorously defend” itself against the allegations made by Tesla in the suit.

    Foreshadowing what may be its legal defense, Fisker quotes Alan Niedzwiecki, a Fisker director and president and CEO of Quantum Technologies, the designer of the plug-in hybrid electric vehicle (PHEV) technology being used in the Kharma.

    “In January of 2007 I first met Henrik Fisker. Soon thereafter, I became convinced that a strategic alliance joining together Quantum’s (PHEV) unique technology position with Fisker’s design expertise could be leveraged into a company capable of launching the first premium sports sedan for the (PHEV) segment. In August 2007 that vision became a reality with the inception of Fisker Automotive Inc., effectively combining Quantum’s (PHEV) drivetrain expertise with a remarkable design from Fisker Coachbuild LLC.”

    Kleiner Perkins has invested millions in the Fisker venture with partner Ray Lane on the Fisker board. Lane stated that he is “confident that Fisker Automotive continues to be a tremendous investment opportunity. The design innovation of Henrik Fisker combined with the hybrid drive train experience of Quantum is unique in the automotive market.”

    Henrick Fisker’s 19 years of design experience includes work on BMW E-1 electric car in 1991, the BMW Z8 and the Aston Martin V8 Vantage.

    In our earlier report we noted the tangled web of Silicon Valley bigwigs involved in the companies.

    Elon Musk, co-founder of PayPal and Zip2, is an investor and the chairman of Tesla. Google co-founders Sergey Brin and Larry Page, as well as Jeffrey Skoll, former president of eBay and executive producer of Al Gore’s Inconvenient Truth, are investors in Tesla. Steve Westly, a former controller for the state of California and a former eBay exec, is a director.

    In January, Fisker announced a multimillion dollar investment by Kleiner Perkins Caufield & Byers and the appointment of Kleiner partner Ray Lane as a director at Fisker Automotive. At the time, Lane said Kleiner believed “that Fisker Automotive’s groundbreaking, forward-thinking design stands to pave the way for a greener and more efficient future.” The day following the announcement of the Kleiner investment Fisker unveiled the Fisker Kharma plug-in hybrid sports car at the North American International Auto Show in Detroit.

    The lawsuit puts Kleiner Perkins in an interesting position as an investor in both Google and Fisker. Additionally, Kleiner adviser Al Gore is a director at Google while fellow Google board members Sergey Brin and Larry Page are investors in Tesla.

  • Ebay Sues Craigslist in Stock Dispute

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  • Murdoch Close to Buying Newsday From Tribune

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  • Delta, Northwest hire power brokers to push merger

    Delta and Northwest airlines have hired high-powered lobbyists, including two former senators, to argue their case before Congress to create the world’s biggest airline.

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    The two carriers, which want to combine into a single, mega-airline called Delta to reduce costs, announced a proposed merger last week. Executives immediately went on the road to sell the idea to newspaper editorial boards and airline employees in major hubs like Atlanta, Minneapolis, Cincinnati and Salt Lake City.

    This week, flanked by high-profile lobbyists, they take their case to the nation’s capitol where they are expected to face questions from competitors, consumers and union representatives.

    Among those lined up on behalf of the airlines are two of the best-known former lawmakers in the lobbying world — Trent Lott of Mississippi, who until recently was the second highest-ranking Republican senator, and his new lobbying partner, former Democratic Sen. John Breaux of Louisiana.

    Also signed on is Mehlman Vogel Castagnetti, which boasts numerous former Capitol Hill staffers and Bush administration officials.

    Delta’s top executives told the Atlanta Journal-Constitution that they have also hired R. Hewitt Pate, who ran the anti-trust division at the U.S. Justice Department from 2003 to 2005, to deal with questions from regulators. Pate now heads the “global competition” practice for the Hunton & Williams law firm.

    In addition, they have brought in leading anti-trust lawyer Donald L. Flexner of the firm Boies, Schiller & Flexner LLP. Flexner was featured as the lawyer to call “to survive life-or-death antitrust matters” in the April 2007, Inside Counsel magazine.

    The mission of the expanded team, who join Delta’s veteran in-house lobbyist Donald Yohe, is to persuade the Justice Department that the merged airlines will not be a monopoly. They are expected to argue that the two companies serve different regions.

    The House Judiciary Committee’s antitrust task force is slated to look at the proposed merger in a hearing at 10 a.m. Thursday. The Senate Judiciary subcommittee that deals with antitrust issues will examine the proposed combination in the afternoon.

    Congress has no authority to stop the merger, but committee appearances often become public forums for lawmakers who oppose or support such plans. The biggest potential threat to the deal right now is public opposition of Rep. James Oberstar, the Minnesota Democrat who chairs the House Transportation and Infrastructure Committee.

    Oberstar, who was largely responsible for grounding hundreds of planes this month by insisting on rigorous FAA inspections, has pledged to press the Justice Department for “vigorous scrutiny” of the plan.

  • Biogen Idec Rejects Carl Icahn Slate

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  • Mortgage crisis helped John Paulson reap $3.7 billion (Muckety)

    A bad year for homeowners meant a good year for John A. Paulson.

    Paulson, the founder and president of the hedge fund Paulson & Company, made $3.7 billion last year, according to an annual listing of the 50 most highly paid hedge fund managers.

    The list compiled by Institutional Investor’s Alpha Magazine was previewed on the magazine’s website yesterday.

    Paulson acquired his money by betting against the subprime mortgage market, using a complicated system that increased his earnings as the value of financial instruments bundling the mortgages dropped.

    In other words, as the world got poorer, Paulson got richer.

    He was by no means alone.

    The list of top managers shows four other billion-dollar earners.

    George Soros, of Soros Fund Management, made $2.9 billion last year, followed closely by the 2006 leader, James H. Simons of Renaissance Technologies at $2.8 billion.

    Philip Falcone of Harbinger Capital Partners earned $1.7 billion and Kenneth Griffin of Citadel Investment Group came away with $1.5 billion.

    The average compensation for the top 25 fund managers last year was $892 million, according to the survey.

    The report of this wealth stands in contrast to other recent news about home foreclosures, record-high oil prices and food shortages in some parts of the world.

    Even Wall Street is a little “uneasy” that some individuals are doing so well because others are doing so badly, the New York Times reported.

    “There is nothing wrong with it – it’s not illegal,” William H. Gross, the chief investment officer of the bond fund Pimco, told the newspaper. “But it’s ugly.”

    The Wall Street Journal wrote in January that Paulson had told friends he was going to increase his charitable giving to help those in need.

    In October 2007, he donated $15 million to the Center for Responsible Lending. That money was to help families about to lose their mortgages.

    “While we never made a subprime loan and are not predatory lenders, we think a lot of homeowners have been victimized,” Paulson told the Journal.

    Paulson, 52, who is not related to U.S. Treasury Secretary Henry M. Paulson Jr., began his investment career at Odyssey Partners. He moved on to Bear Stearns, where he was in mergers and acquisitions. From there, he went to Gruss Partners, the investment firm.

    In 1994, Paulson started Paulson & Co. with $2 million. By the end of last year, the firm had $28 billion in assets, an increase in $22 billion from the previous year, the Times reported.

    In January of this year, Paulson & Co. made news by appointing Alan Greenspan, the former chairman of the Federal Reserve, to its advisory board.

    The appointment was panned by some. They said that Greenspan had switched sides by joining up with a company that had profited from the failure of low-interest policies that he had advocated while leading the Federal Reserve.

    ([Muckety](https://createpositivechange.org/2008/04/17/mortgage-crisis-helped-john-paulson-reap-37-billion/2212)