Good Tuesday Morning. This morning, it’s more like fun and run as in New Orleans, people are saying Happy Mardi Gras, but on Wall Street, the worry is what in the world has gotten into Warren Buffett, and PwC faces #envelopegate and nicknames like Probably Wrong Card.
Daylight – A letter from Buffett written this past weekend is still ricocheting around Wall Street, offering his most damning assessment yet of the hedge fund industry. He concluded that at least $100 billion had been lost to the sky-high fees charged by the funds and other money managers. “I believe my calculation of the aggregate shortfall is conservative,” he wrote.
Also, still ricocheting this morning and trending on twitter is hashtag #envelopegate – big Oscar mix up on best picture that has thrown accounting firm PwC into full-scale crisis-mode, as it’s the firm that has counted Oscar votes for 88 years and the firm whose partner, Brian Cullinan, handed the wrong envelope to Warren Beatty. Most of the time, if you take full responsibility early, everybody gives you a pass and moves on – not this time. PwC is in jeopardy of losing the Oscar contract. Maybe, they should change their name to PricewaterhouseCoopers. By the way, PwC has in the que ready to go a big national advertising campaign for TV on how great accountants they are – I think you let this thing blow over.
M&A – Priceline’s new CEO, Glenn Fogel, used to run the online travel agent’s M&A team. Priceline bought Kayak for $1.7 billion, OpenTable for $2.4 billion and now during Fogel’s first deal as CEO, he bought Momondo for $550 million. After a strong quarterly report, yesterday, Priceline hit an all-time high with an enterprise value of $70 billion. Here is the deal – he is not saying this out loud, but he wants TripAdvisor, whose shares have fallen by a third in 12 months, but still very expensive selling 34x earnings. It’s called how you screw up a winning streak.
Style – Maybe it’s more speed and strategy than style – The men of Moonlight are the new faces of Calvin Klein. Following a whirlwind night at the Oscars, Mahershala Ali, Trevante Rhodes, Alex R. Hibbert and Ashton Sanders have one more accolade to celebrate, thanks to Calvin Klein.
Economics – Future bookings are more important than past actuals when it comes to Entrepreneurial economics. – Increase of booking orders in U.S. durable goods for January was fueled by a 70 percent jump in orders for passenger planes and a 60 percent advance in bookings for fighter jets and related military goods. Orders for new cars and trucks also edged up 0.2 percent. Yet if airplanes and autos are stripped out, bookings fell 0.2 percent in January to mark the first decline in new orders minus transportation in six months. Orders fell for computers, networking gear, electrical equipment and primary metals used to make a variety of heavy-duty goods for businesses and consumers. As a result, a key measure of business investment known as core capital-goods orders dropped 0.4 percent in January. It was the first decline in four months. Probably an economic breather after a rapid Q4 pace and some uncertainty about what kind of policies will emerge from Washington that deterred businesses from proceeding with some investments so early in the year.
Live Rounds – Paul Tudor Jones’ New Hedge Fund Pitch: Low, Low Prices – Paul Tudor Jones for years charged some of the highest fees in the hedge-fund industry. Yesterday, the huge hedge fund investor announced he is cutting them for the second time in eight months. The move is a dramatic retreat by one of Wall Street’s best-known investors. . .The former cotton trader rose to fame with a big score during 1987’s stock-market crash.
Buzzard’s Roost – “We are fast running out of treatment options.” Those were the words of a World Health Organization official after the group released a list of a dozen antibiotic-resistant “superbugs.” The rate at which these new strains have emerged in recent years terrifies public health experts – and many consider them just as dangerous as viruses like Zika or Ebola.
2 Cities – With Budapest, Hungary pulling out of the competition to host the 2024 Olympic Games, there is now only two cities that actually want the infrastructural nightmare that is the Olympics: Los Angeles and Paris. Figures.
Hot – 400 hours – Number of hours of content being uploaded to YouTube every minute. The aggregate amount of time the human race spends watching web videos is still below the time spent watching television, but the gap is closing very fast.
Culture – You need to know Harvard Law Review just elected its first black female president in 130 years. ImeIme Umana, 24, the daughter of Nigerian immigrants, follows in the footsteps of former President Barack Obama, the journal’s first black male leader, and Susan Estrich, the first female editor. She said it felt like magic simply being there – Harvard. By the way, Ms. Estrich was Michael Dukakis’s campaign manager in his race against George H. Bush for President in 1988, and the attorney who defended Roger Ailes recently at Fox. She said it was the difference of being 30 and 60-years-old.
Investment Banking – Private equity losing out to cash-rich buyers on big deals – Private equity groups are losing out in fierce bidding wars for hot targets to cash-rich strategic buyers, driving down the share of deals involving buyout groups to the lowest level since 2009, according to analysis from Bain & Company, the consultancy. The research found that just 4.2 percent of deals ended up with private equity buyers in 2016, down from 5.4 percent in 2014. PE’s share of deals peaked in 2006 at 7.9 percent.
Hedge Funds – Formation Group, a principal investment firm, raised $121.3 million for its debut fund.
Aliter Capital, a new firm whose four founders all have ties to H.I.G., raised $111.8 million for its first fund.
Deal Stream>>>>>>>>>>>>>>>>>>>>>
IPO – KKR is preparing to take industrial machinery manufacturer Gardner Denver public in an offering that could value the company at between $6 billion and $7 billion including debt.
Exits – AES Corporation and Alberta Investment Management Corporation agreed to acquire FTP Power, an operator and developer of utility scale solar assets, from Fir Tree Partners for $853 million in cash.
Venture Capital – WeWork, an office-sharing startup, is close to raising more than $3 billion.
SoFi, an online lending startup, confirmed it has raised $500 million.
Cordial, a developer of software that tracks user behavior online to generate targeted marketing emails, raised $6 million.
Drizly, the developer of an on-demand alcohol delivery app, raised an additional $2 million.
Roadmunk, a provider of visual roadmap software for product management, raised $1.5 million.
Kinnos, a startup developing technologies to prevent surface-transmitted infections, raised $1 million.
Keriton, a provider of a pumped breast milk management system for neonatal ICUS, raised $1 million.
Arrakis Therapeutics, a biopharmaceutical company, raised $38 million.
Xenex Disinfection Services, a maker of disinfection systems for the healthcare industry, raised $38 million.
Pharma Two B, a specialty pharmaceuticals company focused on developing treatments for Parkinson’s disease, raised $30 million.
Private Equity – Cherwell Software, a provider of IT service management services for enterprises, raised $50 million.
Global Software, a provider of Excel automation and reporting software, acquired Globe Software Pty., a Perth, Australia-based creator of data analytic software.
Dermatology Associates, a provider of dermatology care, has rebranded as U.S. Dermatology Partners.
And that’s what’s ahead, Cliff
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