GM's Got A Little Competition For Chrysler

Dr. Z doesn't necessarily want to be eaten up by America's second-most-troubled automaker, apparently. From Marketwatch:

Russia's second-largest automotive company, OAO Gaz Group (GAZA.RS), is interested in acquiring Chrysler from U.S.-German carmaker DaimlerChrysler AG (DCX), German weekly Focus magazine reported Saturday, without revealing its sources.
In an advance copy of a report to be published in Monday's Focus, the magazine says Gaz isn't an unknown partner for DaimlerChrysler, as Chrysler already supplies four-cylinder engines for cars and mini-vans to the Russian carmaker. DaimlerChrysler couldn't immediately be reached for comment Sunday. DaimlerChrysler Chief Executive Dieter Zetsche earlier this month triggered speculation about a possible sale of Chrysler when saying "all options are on the table" after Chrysler posted disappointing earnings.

CNBC: Howard Schultz Calls Starbucks "Cookie-Cutter"

Fast Money just reported an alleged leaked memo from CEO of Starbucks Howard Schultz, where he says some have referred to the company as "soulless" and "cookie-cutter," among other things... then goes on to say "others have never been to a Starbucks."

Unbelievable that he would make these comments about his own company!

Backdoor Backstreet Boys Raid

ORLANDO, Florida (Reuters) - U.S. agents on Thursday raided the home and offices of boy-band impresario Lou Pearlman, known for launching 'N Sync and the Backstreet Boys, as part of a criminal investigation, officials said.

Pearlman has already been sued by the state of Florida for alleged securities fraud involving an employee investment program.

Federal prosecutors and the FBI were investigating "various allegations leveled against Mr. Pearlman and his entities," U.S. Attorney's Office spokesman Steve Cole said.

According to the state lawsuit, Pearlman's companies for 15 years have sold unregistered securities in what was called an "employee investment savings account" program, committing securities fraud by implying the money was safe and insured.

But like a Ponzi scheme, according to the complaint, early investors were paid $118 million in dividends from deposits by more recent investors, while $7 million was paid in sales commissions and $50 million went to Pearlman and two other defendants.

It ain't no lie, if you invested with Pearlman, kiss your money bye-bye-bye...

Farewell, Condoflip.com

Condoflip.com, established to allow for the listing and eventual fire sale of condos, is no more. The website says this succinctly:

How Did The Market Change in 2004 and Beyond? We saw a dramatic shift in how preconstruction condos were bought and sold. The condo boom was driven by overly-ambitious speculators, [editor: ya think?] many of whom had been successful in flipping condos in the past. As condo inventories grew and prices rose many speculators realized that further purchasing was increasingly risky. So, buyers just stopped buying. What Kinds of Results Did Condo Flip See? We saw thousands of sellers, and very few buyers. It didn't make sense for us to maintain a marketplace where there were few buyers.

Personally, I don't know anyone who went there for any reason other than schadenfreude, so it makes sense.

Ford: Is Any Press Good Press?

Trash-filled Ford Focus crashes when coffee cups, etc wedge under the gas and brake:















Link with video.

On one hand, it's testimonial that someone was willing to spend a lot of time in this car. On the other hand...

REIT Buyout Targets from Forbes

While it's likely that anyone anticipating a REIT buyout is betting on the last legs of this particular game, Forbes identified five targets: Colonial Properties, Felcor Lodging, Home Properties, Maguire Properties and Sunstone Hotel Investors, that might still be lucky enough to get a bid. Their chart (click for legible rendition, my apols for Blogger's narrowness):

Stocks and Bombs: "The Bishop"

From the Chicago Sun-Times:

A pipe bomb was delivered to the investment firm of Perkins, Wolf, McDonnell & Co. on S. Wacker Drive last week accompanied by a letter directing them to invest in various stocks.

It gets better. He's not just trying to move certain stocks, he has a very interesting goal price in mind:

In 2005, The Bishop started sending anonymous, threatening letters to financial services companies in the Midwest demanding the targeted companies take action to move specific stocks to a predetermined price, often $6.66, the report said. The letters were signed "The Bishop."

The devices he sent weren't equipped with triggers, which makes sense: if it really did blow up, ya couldn't read the memo on which stocks to purchase. If this individual is captured, it should be interesting to hear their background and personality profile.

Maria Bartiromo at CBGB?

Nah, of course not. She was Joey Ramone's financial advisor, though. From Page Six:

February 10, 2007 -- MARIA Bartiromo has some punk-rock roots - she used to privately advise Joey Ramone on how to manage his finances. The much-in-the-news CNBC "Money Honey" tells the March/April issue of Executive Travel magazine: "Most people don't know this, but he was an avid investor. He used to call me up, e-mail me and ask me detailed questions about his portfolio." Just how the late, beloved leader of the Ramones fared with her help isn't known, but he did end up penning a gushing song about her, "Maria Bartiromo," which was on his posthumously released 2002 album "Don't Worry About Me." It included the catchy lyrics, "I watch you on the TV every single day/ Those eyes make everything OK." CNBC had no comment on Bartiromo's extracurricular sideline. She also tells the magazine, "Joey Ramone was the coolest guy . . . [He] invited me down there [to CBGB] to see him perform the show live. I said, 'What time should I meet you?' I remember he said he'd probably go on stage about midnight. I said, 'Oh, I cannot be there. I have to be up at 5 a.m.' "

How To Play Fortress? Goldman, Sears Holdings, Supply and Demand

Much ado about Fortress...

This little hedgie (FIG) came public yesterday and closed at $31, a 60-something-percent increase over its offering price. This is not the time to get me started about how offering prices are set ridiculously low in so many cases to give a lot of money to i-banks' best clients at the expense of the company going public, but I promise to explore that tangent one of these days.

I hear a lot about how to play Fortress.

One idea: Fortress' P/E ratio can be used to determine a proper P/E for Sears Holdings (SHLD). Eddie Lampert, former king of the hedgies, has pretty much admitted he runs this thing like a hedge, hasn't he? I mean, who the hell wants to go from top of the world to managing a bunch of Sears and Kmarts? I haven't even set foot in either of those stores in years, but from the outside they sure look like hell. So Lampert puts all the revenue from Weatherbeater paint or whatever into credit-default swaps, and people like Jim Cramer crow that SHLD is the next Berkshire Hathaway. Um, don't get me started on Berkshire either; why the hell would Buffett want to buy a NEWSPAPER? Anyway, FIG's P/E = SHLD's P/E in Cramer's playbook, so buy SHLD as its current P/E is below that.

Sounds good, but the biggest flaw in that plan is that Cramer also expects Eddie Lampert to continue returning 30%/year -- what he did at the hedge funds. Do you have that much confidence in Ed?

Alternately, you could just take this as a sign of health in the investment sector as a whole and load up on its crown prince, GS, which has been golden the last couple years (yes, I sold too early).

Or, you could just buy Fortress itself in the near-term. Think of the ethanol sector last year; supply and demand. When there were comparatively few ethanol stocks, share prices went through the roof. Enter a wave of new ethanol company IPOs and down the prices went. Right now, there's not many private equity or hedgie companies to buy up, but those IPOs are sure to follow the spectacular performance of this one. If you buy FIG now, monitor circumstances carefully and when you see the wave of hedge-fund IPOs, get the hell out.

Paul Wolfowitz's Socks

Darn it all.

DUKE AND DUKE GET THE COMMISSIONS???!!

He's flabbergasted by the crop report, you can tell.

Chicago Tops US Hot Property Spots

Financial Times reports:

Chicago shot to the top of the list of the hottest US office property markets last year as investors flocked from the east and west coasts towards cheaper prices in the Windy City.

The amount of office property changing hands in downtown Chicago soared to more than 26m square foot last year, nearly tripling from the year before, and shooting past midtown Manhattan’s property market, according to data from Cushman and Wakefield, the property services company.

Link

EOP may keep numbers up for 2007, but looking at sheer volume I wouldn't expect a repeat; offices don't get flipped like condos. Well, historically, they haven't. I suppose a new trend could emerge in anything.

Money Honey Piggy Banks

Are your kids the financial type? Do they live and breathe by their Federal Reserve comic books? Maria Bartiromo seems to think at least a few kids who fit this image exist. She's trademarking her "Money Honey" nick for use on children's television, cookie jars, piggy banks and similar swag.

No word on whether Citigroup is providing a first round of financing for the endeavor.

Hedge Fund Qui Tam

So how do you be a manipulative little hedgie? On the long side, you buy up enough of a company to wheedle your minions onto the board. On the short side, apparently... you bring suit against them on behalf of the US Government. WSJ reports:

Now Greenlight Capital, a fund with a big negative bet on Allied Capital Corp., is breaking into new ground -- the courts.

The $4 billion New York City fund has filed a lawsuit in federal court in Atlanta in the name of the U.S. government claiming that Business Loan Express LLC, a subsidiary of Allied Capital known as BLX, submitted fraudulent loan documents to the Small Business Administration, bilking millions of dollars from the U.S.

The government declined to intervene in November; now, Greenlight is bringing suit in their name. This battle has been going on for five years and it's probably a surprise Greenlight's attorneys didn't do this sooner.

Icahn's Next Buyout Target

Carl Icahn's on Bloomberg right now, and he's speculating on a buyout and breakup of Federated (FD), which might make some sense considering the amount of chafing they've experienced with their Borg-like assimilation of the nation's department stores under the Macy's flagship brand.

YouTube Revenue Sharing

A rumored idea -- not to be confused with PROFIT sharing, of course, as it's doubtful they have any of those to share -- is coming to fruition. Chad Hurley has announced revenue sharing at YouTube, and while specifics aren't available, you know it breaks down to a cut of the advertising attached to user-uploaded content, assuredly paying very similar to Google AdSense.

Notice I said user-uploaded content and not user-generated content. I am curious as to whether revenue generated from ads attached to what turns out to be copyrighted works will be returned to the copyright holder, negated into the ether or who knows what.

Anyway, expect a deluge of LonelyGirl videos out of this news.

Ford

Record losses again. I didn't bother reading how they accrued them -- I assume they've started paying out the equivalent of Powerball jackpots to retiring employees, not quite sure. It's irrelevant, as the stock didn't move. You'd think that means this news is priced in, but you'd probably be wrong. Every quarter, investors assume "This has to be the worst for Ford, right? It can't get worse from here, so the stock has to go up," then the next quarter it gets worse.

I'd buy puts on this one a couple months out. With reports like this, F is more like a .80 stock than a 8.00 stock. OK, I exaggerate, but my price target is closer to their 52-week low. Or perhaps below that. No disrespect to Alan Mulally, but he's a CEO, not a magician.

Who Really Wants Cheap Oil?

Democrats or Republicans?

The Republicans have been accused both of pandering to oil interests by allowing prices to rise, and of seeking cheap oil via miscellaneous wars in the Middle East. These statements obviously contradict one another. You can, I suppose, present the evidence that oil prices DID spike during the Bush administration and that cheap, favorable oil leases were granted to the majors; however, now that oil prices are lower (below $60, at least), Bush is proposing a refill of the Strategic Petroleum Reserve. Is this to create additional demand in the near term and bolster prices or to offer a safety valve in case of additional price increases? Who knows.

On the Democratic side, you hear calls to either impose a profits tax on large oil companies or to impose a substantial tax on gasoline purchases, which would be used to subsidize various companies investigating alternative energy technologies. The former would potentially decrease supply and raise prices, while the latter artifically raises prices by tax with the hope of decreasing demand.

I don't know who really wants "cheap" oil, at least not for the consumer -- the answer to that is, probably, none of the politicians. However, both sides offer corporate welfare in various forms. Pick your investment accordingly.

High Fashion Substandard

A note for those associating Chinese imports with poor quality: they are, apparently, taking imports to task for the same flaw.

Top fashion labels declared 'substandard'

January 20, 2007 05:07pm
Article from: Agence France-Presse

CLOTHES from some leading international fashion labels have been declared substandard in China with some containing large levels of a chemicals. Quality control tests were conducted on garments from 40 labels for sale in Shanghai including luxury brands Armani, Burberry, Polo Ralph Lauren, ST Dupont and MaxMara, China's bureau of commerce and industry said.

Of the 59 garments and shoes tested, 25 were declared substandard with some having high levels of formaldehyde, unacceptable amounts of acid (pH) and poor dyes, the bureau said in a notice on its website. All but one of the 25 garments were imported.
Formaldehyde can cause skin rashes, eye irritations, provoke allergies and cause respiratory problems and cancer, in extremely high levels, the notice said. One garment contained twice the amount allowed under regulations, the notice said.

The results will spark concern among retailers and shoppers in China, the world's third-largest consumer of luxury goods after Japan and the United States. About 250 million Chinese are expected to be able to afford luxury goods by 2010, according to leading French pollster the IPSOS Institute.

Other problems include erroneous labelling, with one garment saying it was 20 per cent cashmere, but tests discovered it contained just 1.7 per per cent. The bureau said the clothes would be withdrawn and penalties imposed on the manufacturers.

Gazprom Gets Enviro, Too