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2. GE Financial's new marketing concept

Goldman Sachs doesn't appear to be completely satisfied with the reaction of Bloomberg to the terminal-snooping controversy.

In particular, the bank is exploring new technologies that might replicate features offered by the powerful Bloomberg terminal and is pondering the extent to which Bloomberg might be gleaning data from the bank in support of competing products, according to the New York Post.

An article notes that, "To be sure, Goldman — one of Bloomberg LP's biggest clients — isn't looking to entirely pull the plug on its Bloomberg terminal usage."

But the influential bank "has been talking to counterparts at Bloomberg over the past month about how the data provider uses Goldman's client information. Of particular concern is whether data [sic] being mined by Bloomberg to create products and services that compete directly with Goldman."

It also noted that, "One such discussed product is Bloomberg's 'Tradebook,' a profitable broker-dealer created in the late 1990s to help create additional revenues for the company. Goldman is trying to determine if Bloomberg has used the bank's data to help drive business at Tradebook. Even if Goldman doesn't kick off its own Bloomberg-like services, it will look to be more 'aggressive' in placing limits on how Bloomberg uses its data."

It would be hard to replicate the majority of features offered by Bloomberg, though banks might find alternatives in specific areas, such as in-house messaging.

In the end, this controversy might be a sign that the power of Bloomberg has finally reached a tipping point. Competitors will take note, hoping for an even bigger backlash. They might try to market the idea that companies should avoid becoming overly dependent on a vendor of such prowess.

For more:
- here's the article

Read more about: Goldman Sachs, Bloomberg Terminals
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By Jim Kim

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3. Prepare for more hedge fund fights with Japanese management

By one estimate, GE Capital accounted for 47 percent of total earnings for General Electric in 2012, up from 28 percent in 2009. Commercial lending and leasing -- mainly to midsize companies -- was responsible for about a third of GE Capital earnings.

Management is aiming for more, and the time might be right to really press the pedal to the metal. Banks remain less than fully engaged when it comes to lending to small companies, and the economy seems to be on the mend. Sensing opportunity, GE Capital is embarking on a unique roadshow, according to the New York Times.

The firm is collaborating with SlateCustom, the custom-publishing arm of Slate.com, on a "native" campaign that will feature plenty of online collateral. The centerpiece, however, may well be an ambitious six-month roadshow.

The Roadshow for Growth calls for a "bus tour through various cities across the United States. After Kansas City, it moves on to St. Louis, Indianapolis, Chicago, Detroit, Cleveland, Pittsburgh, New York, Dallas, Atlanta and Los Angeles, among others. It will end in Columbus, Ohio, in late October."

The article notes that, "At each stop, the roadshow will host different events, like town hall discussions, conversations with the city's mayor, and visits with middle-market businesses. In Kansas City on Monday, for example, there was a meeting with Mayor Sly James and a town hall session with GE Capital employees, while the Chicago visit on Thursday is to include a discussion moderated by Jacob Weisberg, chairman of the Slate Group, and featuring Mayor Rahm Emanuel and economist Austan Goolsbee, chairman of the Council of Economic Advisers during the first term of the Obama administration."

The Times adds that, "Daily blog posts, video and commentary on the roadshow will be published on a special Web site, roadshow.slate.com. The Web site is being promoted as a 'sponsored section' on slate.com."

It would be nice to see some banks do some counter-advertising in interesting ways as the roadshow rolls through specific towns. But that might be asking too much at a time like this.

For more:
- here's the article

Read more about: marketing, small cap
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By Jim Kim

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4. Social impact bonds starting to take off

"Abenomics" will hopefully prove to be a gold mine for U.S. hedge funds, many of which have already loaded up on Japanese equities.

Symphony Financial Partners stands as a great example of this. The $300 million hedge fund, which targets cash-rich Japanese firms, has returned 43.6 percent in the first quarter. The fund manager, David Baran, told Reuters that "The bear market, which started in January 1990, is over…A year ago, you couldn't get someone to focus on Japan. It was bizarre. Investors used to say you can never make money in Japan."

More money is definitely flowing into the country, as the "Abe Trade" makes sense to more fund managers. Hedge fund inflows to firms that invest in the country took in $100 million in March, their first net inflows since July last year.

This raises the question: Will activist U.S. hedge funds bring their trademark approach to a country that has long been less willing to tolerate public confrontations?

The question is relevant in light of the news that Dan Loeb of Third Point has built up a 6.5 percent stake in Sony. He's now agitating for management to spin off pieces of the company, such as the entertainment units and possibly the insurance units.

Loeb's action, according to the Financial Times, "sets up a potential struggle between one of America's most combative investors and Japan's most celebrated technology company, albeit one that has struggled in recent years."

But this is also a struggle, in some sense, for the very future of the Japanese financial system, which has been hobbled for years by the perception of bureaucratic rigidity that stifles companies. Hopefully, this is a harbinger of massive change that will unlock years of built-up hidden value. Other hedge funds will no doubt take note.

For more:
- here's the article
- here's the letter to the Sony CEO

Read more about: Japan, Dan Loeb
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By Jim Kim

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5. Glass Lewis' recomendations for Goldman Sachs

I noted not too long ago that Goldman Sachs (NYSE:GS) was pioneering an approach to social engineering via so-called social impact bonds.

The bank agreed to finance an experimental program aimed at reducing recidivism among people released from Riker's island prison. If the program reduces recidivism by 10 percent, the bank would be repaid the entire $9.6 million. If recidivism drops more, Goldman could make as much as $2.1 million in profit. If recidivism fails to fall by at least 10 percent, Goldman could lose as much as $2.4 million.

Since the program was announced in August, the idea has caught fire. Bank of America seems intrigued.

The National Journal notes that, "President Obama requested $485 million for SIBs in his last budget, and several federal agencies have already made money available, including $20 million from the Labor Department. Massachusetts has authorized $50 million to finance two social-impact bonds, New York state has requested suggestions, and Illinois plans to do the same."

I can only hope that these experiments work out. Goldman Sachs deserves credit for boldly stepping into a new area. But it's running a business as after all.

"Goldman itself was leery of a high-risk, low-return loan, so Bloomberg Philanthropies offered to guarantee a $7.2 million repayment even if the intervention fails. The foundation is also covering MDRC's costs," the article notes.

So the key to success may well be philanthropies willing to provide financial guarantees. What might be interesting for some banks is to consider holistic solutions that depend on the bank's philanthropic arm in some way.

For more:
- here's the article

Read more about: Bank of America, Goldman Sachs
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By Jim Kim

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