Tuesday, 23 Dec 2014 | 9:31 AM ET

Dow at 18,000: A buy signal for retail crowd?

Posted By: Jeff Cox

Everybody loves a big, round number, especially in the stock market and especially when that number is climbing higher rather than plunging lower.

Investors have endured both over the past seven years, watching as the widely watched Dow Jones Industrial Average climbed past 14,000 then quickly tumbled lower. First 13,000 (November 2007), then 12,000 (June 2008)...then a blazing trail all the down below 7,000 (March 2009) at the height of the financial crisis.

Then the recovery...the leap over 10,000 (November 2009), then past the old highs and onto a succession of new records that has the bluechip index knocking at the door of another milestone.

Though the market's stubbed its toe in recent days, the break of 18,000 seemed almost an afterthought. The market finally reached that mark Tuesday after revised data showed the economy grew at 5 percent in the third quarter, its strongest rate in 11 years.

But now what?

»Read more
  Monday, 22 Dec 2014 | 9:00 AM ET

Sex, drugs & public divorce: New normal for Wall St?

Posted By: Lawrence Delevingne

The coda to the Sage Kelly divorce scandal came on Dec. 17, when the elite Jefferies investment banker resigned to "focus on family matters."

The departure followed two months of intense scrutiny prompted by a salacious legal filing from his wife, Christina Di Mauro Kelly, that included allegations of cocaine and mushroom use, a four-person orgy involving a client and anecdotes of questionable parenting. She demanded $7 million and joint custody of their two children. The details were so juicy that it prompted international media coverage, moved two related-biotech stocks, and led to an impromptu urine test by top Jefferies executives.

Then, in a surprising about-face, Christina issued apology for the mess from "inaccurate, untrue or hyperbolic" media coverage. She called Sage, who had strongly denied the allegations, a "great father" as the two former spouses settled their case for an undisclosed amount and joint custody of their daughters—an apparent victory for Christina.

The Kelly saga is just one of many recent Wall Street breakups to play out in public.

Anne Dias Griffin noted in a legal document that her husband, billionaire hedge fund manager Ken Griffin, had forced her into a prenuptial agreement and, after breaking up, locked her out of family homes and even said he would demolish part of one. The Chicago press led the charge on the wealthiest man in Illinois.

Katherine Nelson wrote in a lawsuit that her alleged philandering lover, insurance executive Robert Rosenkranz, had promised her $100,000 to not speak of their supposed affair (Rosenkranz is still married). Again, the New York Post and others jumped in, soon leading to breathless spreads in the U.K. tabloids.

And professional investor Brad Zipper slapped his much-younger girlfriend Nicole Raef with a restraining order as the couple broke up. Zipper later explained in court he had trouble leaving her in the past because of makeup sex, as reported in the Post.

Is a nasty split in scorching public view the new normal for Wall Street power couples?

»Read more
  Friday, 19 Dec 2014 | 5:07 PM ET

Meredith Whitney's fund in turmoil: Report

Posted By: Hailey Lee
Meredith Whitney
Patrick T. Fallon | Bloomberg | Getty Images
Meredith Whitney

Financial analyst Meredith Whitney's hedge fund firm, Kenbelle Capital, seems to be in trouble a little more than a year after it launched.

Two executives have left the fund, and its biggest investor, a group tied to BlueCrest Capital Management, has requested to redeem its investment—not once, but twice—sources told Bloomberg.

A LinkedIn profile indicates that Kenbelle co-founder and portfolio manager Stephen Schwartz left in November. Kenbelle CFO Andrew Turchin has parted ways as well, a person familiar with the matter told Bloomberg.

Read More Male bankers beat females in hedge fund job hunt

Kenbelle invests in U.S. equities and targets annual returns of 12 percent to 17 percent. But Kenbelle's American Revival Fund lost 4.7 percent through the first half of the year, according to a July investor letter, Bloomberg said. The American Revival Fund invests in stocks following national trends.

Whitney rose to prominence for her prediction on Citigroup's mortgage troubles leading up to the financial crisis while she was an analyst with Oppenheimer.

Hedge fund shut downs have escalated in 2014 after another year of relatively weak returns. Through September, 661 hedge funds have closed this year. But hedge fund industry assets have still increased overall this year—gaining about $190 billion in capital through October.

Read the coverage on Bloomberg.

»Read more
  Friday, 19 Dec 2014 | 11:36 AM ET

Howard Marks: Oil prices expose 'debt's weaknesses'

Posted By: Lawrence Delevingne
Oaktree Capital Management co-founder and Chairman Howard Marks speaks during an interview in New York, Sept. 5, 2014.
Victor J. Blue | Bloomberg | Getty Images
Oaktree Capital Management co-founder and Chairman Howard Marks speaks during an interview in New York, Sept. 5, 2014.

Howard Marks thinks that the drop in oil prices could finally expose low lending standards and ultimately provide better value in the markets.

"We've argued for a few years that credit standards were dropping as investors—chasing yield—became less disciplined and less discerning. But we knew buying opportunities wouldn't arrive until a negative 'igniter' caused the tide to go out, exposing the debt's weaknesses," the Oaktree Capital Management chairman wrote in a note to clients late Thursday.

"The current oil crisis is an example of something with the potential to grow into that role. We'll see how far it goes."

»Read more
  Thursday, 18 Dec 2014 | 12:34 PM ET

Activist to public pensions: Thank you!

Posted By: Lawrence Delevingne
Greg Taxin
Jeff Chiu | AP
Greg Taxin

The surging power of activist investors is bolstered by a growing ally: public pensions and other big institutions.

"Activists have become more effective because they can draw upon institutional investor support and can help companies drive their stock prices closer to intrinsic value," said Greg Taxin, managing member of activist investor Luma Asset Management. "It's a great thing for investors, for pensioners, for retirees and the capital markets generally."

Taxin, the recently departed president of hedge fund firm Clinton Group, made the comments this week during a panel discussion on activist investing hosted by the Harvard Business School Club of New York and moderated by Yale School of Management's Jeff Sonnenfeld.

»Read more
  Wednesday, 17 Dec 2014 | 1:12 PM ET

Here's 'The Trade of 2015' that better be right

Posted By: Jeff Cox
Traders work on the floor of the New York Stock Exchange, Dec. 12, 2014.
Brendan McDermid | Reuters
Traders work on the floor of the New York Stock Exchange, Dec. 12, 2014.

2015 is shaping up as the year the U.S. consumer will have to shine the light for the rest of the world—or else.

Main Street Americans have been the neglected stepchild of the bifurcated post-crisis economy, in which stock market players at the top of the scale have seen their assets blossom while real incomes have stagnated and prices at the grocery store and gas pump climbed.

That dynamic at least has the potential to change.

Most strategists are predicting trend-like returns for the S&P 500 as they see less accommodative monetary policy creating a more challenging environment for equity gains.

Meanwhile, a strengthening dollar and declining energy prices are creating a more favorable landscape for consumers.

Michael Hartnett, chief investment strategist at Bank of America Merrill Lynch, believes the trend could be the most important thing for investors to watch in the year ahead:

»Read more
  Wednesday, 17 Dec 2014 | 4:53 PM ET

Investors walking, not running out of Russia funds

Posted By: Lawrence Delevingne

Early effects of market turmoil in Russia are starting to show up in the U.S., but it's not outright panic.

Investors pulled just $55.9 million over Monday and Tuesday from the largest Russia-focused exchange-traded fund, Van Eck's Market Vectors Russia, according to data from ETF.com. The Russian stock-focused fund still manages $1.23 billion and has seen net inflows of $1.22 billion over 2014 despite losing more than 50 percent of its value (The net flow number reflects big swings over 2014; the fund started the year at $1.05 billion, with a high point of $2.1 billion and a low point of $719 million).

The much-smaller iShares MSCI Russia Capped ETF had virtually no net outflows this week and only lost $4.2 million so far in December, according to ETF.com. It manages $151 million overall.

"Investors are not pulling out of Russia en masse yet because of what's going on this week," said ETF.com analyst Stacey Brorup. "There have been outflows all month long before the ruble drop and overall the fund is still up in assets for the year."

»Read more
  Wednesday, 17 Dec 2014 | 11:46 AM ET

Jefferies banker in wild divorce case resigns

Posted By: Lawrence Delevingne
F. Carter Smith | Bloomberg | Getty Images

Sage Kelly, the Jefferies banker at the center of a salacious marital scandal, has resigned.

The former head of healthcare investment banking — already on voluntary leave because of a nasty divorce proceeding that attracted significant media attention for its allegations of drug use and extramarital sex — is leaving to "focus on family matters," according to a person close to the situation.

A spokesman for Jefferies declined to comment. The news was announced in an internal Jefferies memo Wednesday morning.

»Read more
  Tuesday, 16 Dec 2014 | 5:27 PM ET

Funds slammed by Russia

Posted By: Lawrence Delevingne

The rapid fall of the ruble and stocks on the Moscow Exchange means even more pain for investment managers who have been trying to play Russia, virtually all unsuccessfully.

Mutual funds, designed to bet on price gains in securities, have predictably suffered the most. The Voya Russia Fund, for example, is off more than 43 percent in 2014 as of Monday on bad bets such as energy company Lukoil (down 25 percent), retailer Magnit (down 52 percent), and miner Norilsk Nickel (down 27 percent), according to public holdings as of Sept. 30. The fund has the highest mutual fund exposure to Russia at 76.7 percent, according to data compiled by Morningstar.

Another to suffer is the T. Rowe Price Emerging Europe Fund, which has a second-highest 51 percent of assets in Russia. The fund is down 37.2 percent this year on losing bets such as energy company Gazprom (down 33 percent) and local banking giant Sberbank (down 52 percent).

»Read more
  Monday, 15 Dec 2014 | 3:36 PM ET

Big hedge funds win again on PetSmart, Riverbed

Posted By: Lawrence Delevingne

Another week, another set of wins for activist investors.

On Sunday, pet supply retailer PetSmart agreed to the largest leveraged buyout of the year at $8.7 billion. Hedge fund firm JANA Partners had been pushing for a sale and, with a 9.9 percent stake in the company, appears to be in line for a pay day of about $230 million.

On Monday, enterprise tech company Riverbed Technology said it would sell itself to private equity firm Thoma Bravo for $21 a share. Hedge fund manager Elliott Associates, who also agitated for a sale, owns 9.6 percent of the company, meaning it will likely net about $102 million on the transaction.

Those deals add to the wins by activist hedge funds in 2014. Other notable successes this year include Pershing Square Capital Management's bet on Allergan (which was sold to Actavis and netted Bill Ackman's firm about $2.2 billion); Starboard Value's involvement in Darden Restaurants (it took over the board with all 12 seats, and the stock has gained since); and Icahn Enterprises' play in Family Dollar Stores (the company is in the process of being sold, and Icahn netted a reported $200 million profit).

"Without question, activists and suggestivists have been highlights amid a generally lackluster year for the industry," said Rick Teisch, director of research at hedge fund investor Liongate Capital Management in New York. "Several managers have generated returns far north of equities by pressing lethargic management and/or arming companies with creative ways to enhance shareholder value."

»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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