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  Wednesday, 25 Feb 2015 | 12:44 PM ET

Four survivor CEOs since Nasdaq last hit 5,000

Posted By: Mary Thompson

Almost 15 years have passed since the Nasdaq first broke the 5,000 mark. Now, after the bursting of the dot-com bubble and a long recovery, the index is poised to pass that mark again.

The Nasdaq has changed though, as many of the companies that first drove the index to that lofty level have gone.

Still, a few that defined the index in 2000 have survived and thrived, as have their top executives—an unusual feat given the average tenure of an S&P 500 CEO is 9.7 years, according to the Conference Board.

"What these CEOs have in common is that they are business innovators, they have an ability to reinvent themselves and, importantly, they are not afraid to hire other people to help them reinvent," said Mike Kwatinetz, a general partner at the venture firm Azure Capital Partners.

The CEOs Kwatinetz is referring to are: Amazon's Jeff Bezos, Starbucks' Howard Schultz, Oracle's Larry Ellison and Cisco's John Chambers. All four were CEOs when the Nasdaq last hit 5,000 and all, save for Ellison, who stepped down as CEO last year but remains as chairman, are still in that role.

"They understand the business cycle," said Columbia Business School adjunct professor William Klepper when asked how these CEOs have lasted this long. "That it's like an 'S' curve with peaks and valleys and they've figured out what practices are best employed—what is the agenda."

Two of the four, Bezos and Ellison, are founders, and Schultz and Chambers were with their companies at the very early stages. Schultz bought the four original Starbucks outlets in 1987 and Chambers joined Cisco in 1991, becoming CEO four years later.

"The two things that strike me is that they are not only not just business innovators, they are organizational builders," said Don Hambrick, the Evan Pugh professor of management at Penn State University. "To have a great idea is rare enough, but to build a thriving organization is extraordinary. They are not Johnny-one-notes."

»Read more
  Tuesday, 24 Feb 2015 | 3:32 PM ET

Hedge fund: 'Distressed cycle' for energy coming

Posted By: Lawrence Delevingne
David Warren, DW Investment Management
Patrick T. Fallon | Bloomberg | Getty Images
David Warren, DW Investment Management

Another big hedge fund manager is getting ready to make money on the crash in energy prices.

"For the first time in years, the high-yield selloff has created opportunities to buy sound, albeit leveraged, companies at expected compound returns above 10 percent," DW Partners wrote of the opportunity in the junk bonds of companies in a market outlook for clients.

DW manages about $6 billion in credit-related investments and is led by former Morgan Stanley bond trader David Warren.

»Read more
  Tuesday, 24 Feb 2015 | 3:24 PM ET

JPMorgan CFO: Bigger is better...for now

Posted By: Kayla Tausche

Each year, JPMorgan Chase's investor day serves as the company's agenda-setting town hall. It lays out its strategy for the year ahead and the benchmarks by which it will measure its success.

Past years have focused on layoffs, with an improvement in mortgage credit and a sharp slowdown in underwriting forcing the bank to eliminate some 19,000 jobs.

This year, before getting to the nitty gritty of the bank's strategy, Chief Financial Officer Marianne Lake addressed the elephant in the room: A growing debate over whether the bank, the largest in the country by assets, would need to split up.

"Our synergies are real," said Lake, pointing to a slide showing some $15 billion in revenue and $3 billion in cost savings shared by the bank due to its wide-ranging business model. Previously, JPMorgan executives had discussed synergies in the range of $6 billion to $7 billion.

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  Tuesday, 24 Feb 2015 | 10:18 AM ET

Wall Street to companies: Get off your cash!

Posted By: Lawrence Delevingne
Rob Friedman | Getty Images

Wall Street has a clear message for CEOs: start spending all that cash.

Nearly three-quarters of financial industry professionals think companies have "too much cash" or "way too much cash" rotting in the bank, according to the Convergex Corporate Cash Survey obtained Tuesday by CNBC.com.

The technology sector was singled out as the most in need of additional spending. Some 73 percent of investment professionals said tech companies are holding too much dough, followed by the financial sector (43 percent), industrials (26 percent) and consumer staples (18 percent), according to Convergex.

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  Monday, 23 Feb 2015 | 1:19 PM ET

Hedgies all-in on stocks; here's how to play it

Posted By: Jeff Cox

After years of underperforming the market, hedge funds have gotten hot on stocks.

Allocations in the $3 trillion industry have turned to their most bullish positions ever, with a net-long exposure of 57 percent entering 2015, according to a Goldman Sachs analysis.

Jumping on the equities bandwagon hasn't helped turn around the group's waning fortunes, however. The average fund has returned just one percent in 2015, lagging major indexes like the S&P 500, which is up 2.4 percent so far, and the Russell 3000, which has risen 2.6 percent. The reason is a "poorly timed" move that came as the index slid 3 percent in January, the analysis said.

Goldman did deem the returns "respectable" given that the Sharpe ratio, which measures returns when adjusted for risk, is 0.2 for hedge funds and 0.1 for the S&P 500. That's some consolation for an industry that has underperformed the S&P 500 for six years running—essentially, since the end of the financial crisis—and brought home just a 3 percent return in 2014 when the broader market gauge jumped nearly 14 percent.

"Market timing and popular positions have worked against hedge fund returns YTD while a rise in volatility and commitment to energy stocks have supported returns," Goldman said in a report for clients.

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  Monday, 23 Feb 2015 | 11:28 AM ET

Watch out for this Turkish company, Jeff Bezos!

Posted By: Lawrence Delevingne
Turkish e-commerce website Hepsiburada.com
Source: Hepsiburada.com
Turkish e-commerce website Hepsiburada.com

An online retailer will use fresh private equity cash to strengthen its mobile offering, enhance technology infrastructure and move into a new custom million-square-foot fulfillment center to process the 500,000 products it sells, from tablet computers to Pilates gear.

If it sounds like Amazon.com, it's because Turkish e-commerce business Hepsiburada.com is trying to be as ubiquitous in Turkey as Jeff Bezos' online empire is in the U.S.

The Abraaj Group, a $7.5 billion developing markets-focused private equity firm, announced Monday that it bought a minority stake in Hepsiburada in a bid to help tap into growing online consumer spending in Turkey.

Terms of the deal weren't disclosed, but a person familiar with the situation said Abraaj took a 25 percent stake at a valuation of $400 million, meaning Abraaj's cut is worth $100 million.

»Read more
  Monday, 23 Feb 2015 | 7:00 AM ET

Janet Yellen's got some explaining to do

Posted By: Jeff Cox

Federal Reserve Chair Janet Yellen has a few fences to mend.

That's because the normally chummy relationship the U.S. central bank has with Wall Street hit a bump last week when minutes from the Open Market Committee's most recent meeting left room for confusion about the Fed's path forward.

Where the market thought the FOMC was getting confident enough in the economy to move forward with a steady stream of small interest rate increases, the minutes indicated a jittery bunch of central bankers. They worried at the January meeting that it might be too soon to start raising rates, fretted over upsetting the market by removing the word "patient" from the post-meeting communique and generally conveyed an air of hesitation over how to unwind the Fed's mammoth balance sheet.

Consequently, Yellen's got some work to do in conveying certainty to the Street. She'll get her first chance Tuesday, which marks the start of two days when she'll address Congress in her semiannual briefing sometimes referred to as the Humphrey-Hawkins hearings.

The remarks will give her a chance to undo some of the damage from the release of the minutes and help give the market a better handle on the pace of rate increases. The Fed is widely expected this year to lift its target fund rates from near zero, but how it will do so remains a mystery. Initial reaction after the meeting had futures bets leaning toward a September hike or later, compared to previous expectations of a June move.

"A mixed and muddled message" was how Michael Hanson, an economist at Bank of America Merrill Lynch, described the January meeting deliberations.

»Read more
  Friday, 20 Feb 2015 | 10:51 AM ET

Hedge fund rips into Sotheby's

Posted By: Kate Kelly

In a strongly worded letter issued to Sotheby's lead director Friday, the activist hedge fund Marcato Capital Management accused the auction house's board and management of "willful neglect" and demanded both an immediate $500 million share repurchase and the replacement of the company's chief financial officer.

The letter cited poor or nonexistent returns on capital.

"Despite our dialogue with you and other members of the board, a substantial portion of Sotheby's invested capital continues to earn a poor return or worse yet, earns no return at all," wrote Mick McGuire, founder of the $3 billion San Francisco fund company, in his Feb. 20 letter to lead independent director Dominico De Sole. "This willful neglect on the part of both management and the Finance Committee of the board must end urgently."

In a written statement issued Friday evening, Sotheby's responded to the Marcato letter. "The Board welcomes shareholder views and suggestions," said De Sole, "but our immediate priority is selecting a new CEO and determining a strategy to increase shareholder value. We will address capital allocation based on our strategy and the resulting capital needs."

Patrick McClymont, Sotheby's CFO, had no immediate comment on demands for his replacement.

Marcato's broadside is only the latest in a string of activist critiques to be levied upon Sotheby's. The company's shares were up 1.3 percent in afternoon trade after the hedge funds demands were first revealed on CNBC, suggesting that some investors might consider them an overreach—at least for now.

Charles Elson, the University of Delaware finance professor who specializes in corporate governance, said in an interview that De Sole's rationale made sense.

"The key in an organization is the leadership, the CEO, and once a new CEO comes in, you typically see a change in the leadership team," Elson said. "And I think you have to be a little patient until they find someone."

McGuire, however, who with 7.4 percent of Sotheby's shares is its second-largest stakeholder, according to FactSet, disagrees. (Accounting for options he holds that amount swells to 9.5 percent.)

"Shareholders deserve leadership that combines sound business strategy with skilled financial management," he wrote. "For the duration of Marcato's investment, we have enjoyed neither." (With 9.6 percent of the shares, Third Point, the large New York hedge fund, is Sotheby's single-largest shareholder, FactSet reports.)\

»Read more
  Friday, 20 Feb 2015 | 12:40 PM ET

Mass. liberals to Warren: Don't run for president

Posted By: Jeff Cox
Sen. Elizabeth Warren, D-Mass., listens during a hearing on Capitol Hill, in Washington.
Pete Marovich | Bloomberg | Getty Images
Sen. Elizabeth Warren, D-Mass., listens during a hearing on Capitol Hill, in Washington.

Even folks in Elizabeth Warren's own backyard don't want her to run for president.

The Massachusetts senator, who has repeatedly rebuffed suggestions that she will or should enter the 2016 race, faces doubts among her own solidly liberal base in the state's western region.

"She's wise to stay where she is right now. It's not time for her," said Raymond Jordan, vice chairman of the state's Democratic Party, in a Warren profile in The Boston Globe.

The newspaper quoted a variety of other voters and political watchers in the region who turned out for a tour Warren conducted of the state Thursday. There seemed little appetite among her supporters for a run at this point.

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  Friday, 20 Feb 2015 | 1:42 PM ET

Dan Loeb bets on future Geico of Greece

Posted By: Lawrence Delevingne
Dan Loeb, founder and chief executive officer of Third Point.
Amanda Gordon | Bloomberg | Getty Images
Dan Loeb, founder and chief executive officer of Third Point.

Warren Buffett has Geico, and now Dan Loeb has Hellas Direct.

It was announced this week that the billionaire hedge fund manager bought a 20 percent stake in the start-up online insurance company, another move to make money in Greece amid political turmoil that has been the talk of the market.

The exact amount of Loeb's investment, through the Third Point Hellenic Recovery Fund, wasn't disclosed. But it is tiny: The company has raised 17 million euros ($19 million) overall since the business was launched in 2012 by two former Goldman Sachs employees.

Despite Hellas Direct's small size, it already has an impressive group of angel investors. They include Trifon Natsis, co-founder of prominent hedge fund firm Brevan Howard; private equity veteran Jon Moulton; and former Goldman Sachs economist Jim O'Neill.

The Third Point investment this week came along with money from Linda Rottenberg's Endeavor Catalyst, a nonprofit that backs promising entrepreneurs. Loeb is the largest shareholder; Moulton is second at about 17 percent.

»Read more

About NetNet

  • NetNet is where you'll find the low-down and the high jinks of Wall Street. It's the place for insider stories, trader gossip, and tales of the foibles of the moneyed crowd and the culture of finance.Wall Street news and commentary served fresh all day long.

 

  • Jeff Cox is finance editor for CNBC.com.

  • Lawrence Develingne

    Lawrence Delevingne is the ‘Big Money’ enterprise reporter for CNBC.com and NetNet.

  • Stephanie Landsman is one of the producers of "Fast Money."

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