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Today's Top News1. Bill Ackman's Vanity Fair treatment
You know you've made it in Manhattan when you grace the pages of Vanity Fair in a very splashy spread -- even if the article is decisively less than flattering. Hedge fund mogul Bill Ackman is the subject of a very gossipy profile in the April issue that features lots of people taking some colorful shots at him. One hedge fund executive was quoted saying, "Ackman seems to have this 'Superman complex,'" adding that, "If he jumped off a building in pursuit of super-human powered flight but then slammed to the ground, I'm pretty sure he'd blame the unanticipated and unfair force of gravity." Akman's defining trait, according to the article, is his "perceived arrogance." His battle with the likes of Carl Icahn and David Einhorn over Herbalife has been reported on continuously since the battle broke out. What's interesting is that the idea didn't come from analysts at Pershing Square Capital Management, but rather from the Indago Group, run by two women known in the industry as the Indago Grils. The group had pitched the idea of shorting the stock to the likes of Ackman and Einhorn, both of whom ran with the idea, though Einhorn soon closed out his position. Ackman seems to be settling in for the long haul in what has become the most riveting bull vs. bear battle on Wall Street. Carrying a $1 billion short position is not cheap, of course. And as of now, the payoff is uncertain, especially as Ackman's enemies circle overhead. Carl Icahn would like nothing more than to impose some massive losses on him. For more: Related articles: Read more about: Bill Ackman, Vanity Fair
2. Banks forced to grapple with more cyberattacks
Few people think that the widely covered cyberattacks on big banks, which I've discussed often over at FierceFinanceIT, are over. A timely reminder has cropped up in the form of yet another distributed denial of service attack, this one on JPMorgan's consumer banking web site. No one has specifically stepped forward to take credit for the attacks. But they may well be a continuation of the intermittent attacks since September, which have been attributed to a hacker activist group called the Izz ad-Din al-Qassam Cyber Fighters. Reuters journalists attempted to access the chase.com site this week and found that they could not, though they could connect via mobile phones. The bank said it was working hard to restore normal service. The attack on JPMorgan (NYSE:JPM) came to light just as U.S. intelligence officials announced that cyber crime had become the top threat to the United States, now ranking even higher than terrorist threats. It's fair to say that the banking industry, already in the crosshairs, will become even more of a prime target. "The public websites of several U.S. banks were hit by a spate of denial of service attacks this fall, causing those sites to be inaccessible and unable to load. While these attacks proved to be more of a 'nuisance' than a national security threat, the head of U.S. Cyber Command warned that continued attacks on the banking industry could have more serious effects and prevent people from accessing their money," reports The Hill. As of now, the main point seems to be politics. But in such conditions, opportunists could arise to figure out a way to use such distractions to steal money. In any case, banks have their work cut out for them in containing the fallout. One big issue is that the public at large is less sensitive to virtual attacks than real attacks. Customers who cannot gain access on demand will inevitably grumble, as if banks need another blight on their customer service records. For more: Related articles:
Read more about: JPMorgan, Cyberattacks 3. Apple to announce cash plans
Popular opinion right now is that Apple has been bullied into doing something dramatic to return cash to shareholders. The painful stock swoon and the willingness of hedge funds and analysts to publicly rap the company over its massive cash stash has left it no choice. One big investor, Gamco, says that the company will announce its cash plans next month at some time, as reported by Bloomberg. Perhaps such an announcement would coincide with the company's second-quarter earnings release. Exactly what the company will do is anyone's guess right now. Hedge fund manager David Einhorn has famously demanded that the company issue high-yielding preferred shares dubbed iPrefs. Others would like to see higher dividends on common shares. One analyst at Barclays has an overweight on the stock in part because of the potential for a massive capital return. He has written in a note to clients: "In line with our previous comments, we believe Apple should now be strongly considering tapping the debt markets to 'borrow against' the significant overseas cash position." Specifically, he would like to see Apple issue $50 billion in bonds to finance the dividends and buybacks. He added that, "Even though this issuance could be very large, we believe the market would back such an issuance at a very attractive rate for Apple considering the debt could still be repaid with existing international cash balances after assuming a 35% tax rate for repatriation. Based on precedent set by other maturing companies in our space, like IBM, we believe Apple would be able to borrow at very attractive rates – perhaps below 2%." All would agree that as of now the cash stash is hurting the company's stock price, and management's hand has been forced. The tension will build until definitive plans are announced. For more: Related article:
Read more about: activist hedge funds, Apple 4. Wells Fargo is the latest media target
It's no secret that Wells Fargo is now the big kid on the block in the retail mortgage market. As such, it has to understand it will be a big target. Media outlets are hungry for great stories, and what better story is there than David vs. Goliath, with big banks like Wells Fargo (NYSE:WFC) always cast in the role of Goliath. A great example of this cropped up in the form of an LAWeekly article that came to a stunning conclusion about a deceased man who was recently foreclosed upon by Wells Fargo: "Friends say he didn't die of heart disease that day in court, as the coroner found. He was, they believe, killed by a system so inhumane that it could not undo a devastating piece of red tape the system itself created." It's not often that a publication will accuse a bank of causing someone's death. Whether this is over-the-top melodrama or not, the point is that Wells Fargo more often than not is going to be treated as the bad guy. The Wells Fargo PR folks are no doubt savvy to this reality. If not, they ought to be. For more: Related article: Read more about: Wells Fargo, mortgages 5. Is Wall Street a zero sum game for women?
It's sometimes said that behind every great CEO, is a spouse willing to shoulder the lion's share of the parental work, the hardest job of all. When it comes to Wall Street, where all jobs are all-encompassing from the get-go, this rings true as well. One of the parents has to take primary responsibility for the family. This person can still work, but the job will often have to take a second chair to family. And that will limit his or her ability to advance at the firm. These folks are effectively on the family track--and everyone knows it. And even when you have the requisite support system in place, success is not guaranteed. This is especially true for women, who still face a stacked deck on Wall Street if they aspire to the C-suite. "Leaning in" is that much harder at the premiere banks to put it bluntly. In my mind, the CFOs that perhaps could write an even more compelling book than Sheryl Sandberg are Ruth Porat, CFO of Morgan Stanley, and perhaps Erin Callan, ex-CFO of Lehman Brothers. Callan has penned an op-ed piece in the New York Times that many will find sad. She sacrificed all for work and look where it got her. "I didn't start out with the goal of devoting all of myself to my job. It crept in over time. Each year that went by, slight modifications became the new normal. First I spent a half-hour on Sunday organizing my e-mail, to-do list and calendar to make Monday morning easier. Then I was working a few hours on Sunday, then all day. My boundaries slipped away until work was all that was left," Callan said. "Inevitably, when I left my job, it devastated me. I couldn't just rally and move on. I did not know how to value who I was versus what I did. What I did was who I was," she wrote. Her story has a happy ending: She has found a new, fulfilling life. Callan stands as a great example of one who struggled to make it to the top, only to find that the trip wasn't worth it. But she did get the opportunity, and that's a measure of progress. All in all, it's possible for women in this industry to make it to the top and still be happy, but lining up the stars remains way more challenging for women. For more: Related articles: Read more about: gender bias, Women on Wall Street Also Noted
SPOTLIGHT ON... Picking the winner of dividends vs. buybacks Those banks that are in good shape from a balance sheet point of view are no doubt pondering how to return more capital to shareholders. Are dividends, or buybacks, the best option? That's a great question. Credit Suisse predicts that among regional banks anyway, Regions Financial, SunTrust and Zions Bancorp will see the largest increase in their dividend payouts, as noted by Barron's. Banks with cheap stock will likely favor buybacks, as they will be able to get good bang for their buck in terms of boosting earnings and tangible book value. Article Company news:
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Thursday, March 14, 2013
| 03.14.13 | Bill Ackman's Vanity Fair treatment
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