Thursday, 20 Nov 2014 | 1:21 PM ET

Under fire in commodity probe, Goldman makes move

Posted By: Kate Kelly

At a combative Capitol Hill hearing Thursday over its commodity investing and trading, a Goldman Sachs executive said the firm is in talks with a Russian buyer, among others, about selling its embattled metal warehousing business.

During the hearing, where a feisty Sen. Carl Levin grilled Goldman's higher-ups over allegations they manipulated metal investment rules for profit, hurting aluminum purchasers, the head of Goldman's commodity investment group, Jacques Gabillon, said the firm was in discussions with foreign investors—including at least one in Russia—about potentially selling Metro, its metal warehousing subsidiary.

"We are running a sales process right now and we have a variety of interest from companies in Europe, in Russia and in China," Gabillon said during the question-and-answer portion of the hearing.

The remarks are significant because other transactions between U.S. and Russian companies have been thrown into question amid powerful U.S. and EU sanctions against the country since its annexation of a portion of Ukraine earlier this year.

»Read more
  Wednesday, 19 Nov 2014 | 5:00 PM ET

Goldman accused of exploiting metal storage rules

Posted By: Kate Kelly

In a voluminous new report reflecting two years of research, an influential Senate panel accuses Goldman Sachs of manipulating aluminum storage rules in order to line its own pockets, even as manufacturers and customers suffered.

Since 2010, when it acquired the metal storage company Metro International Trade Services, Goldman has engaged in a slew of manipulative "merry-go-round" trades in which aluminum slabs are moved from one warehouse facility to another, says the 396-page report by the Senate Permanent Subcommittee on Investigations, resulting in record U.S. fees for storing and shipping aluminum and, as a result, higher overall costs for aluminum-product manufacturers and consumers.

"These merry-go-round transactions lengthened the metal load out queue to exit the Metro warehouse system [and] blocked the exits for other metal owners seeking to leave the system," states the report, unveiled at 5 p.m. on Wednesday in advance of a two-day hearing set to be held on the subject in Washington, D.C.

Read MoreNext for banks: Layoffs, chat smackdown, more regs

Those actions, combined with "extensive aluminum trading" that Goldman engaged in in the aluminum market during that period, the report adds, have "given rise to serious questions about the integrity of the aluminum market."

Early in the week of the report's release, the Senate hearings were already promising to be contentious. In its own 31-page position paper, prepared in advance of the release of the subcommittee's report, Goldman officials defended their actions with Metro and other commodity businesses. "The queues were the result of metal owners' independent, financially-motivated decisions to remove metal that had been placed in Metro's warehouses," the report stated. "Like any other landlord, Metro was merely competing for tenants."

Goldman enhanced its own profits in the physical storage and trading of aluminum, the Senate panel report argues, by purchasing Metro, a longtime warehousing business that stores aluminum, copper, zinc, and other base metals around the U.S.; stacking Metro's board exclusively with Goldman executives; and then striking backroom deals with aluminum owners like the international trading firm Glencore and the London hedge fund Red Kite.

Those deals allowed Metro to remove each client's aluminum from one Metro warehouse and move it shortly thereafter into another—tying up its ground transportation systems and creating substantial delays for other clients wanting to ship metal out of storage.

»Read more
  Wednesday, 19 Nov 2014 | 11:58 AM ET

This nifty ETF maneuver is becoming more common

Posted By: Jeff Cox
Traders work on the floor of the New York Stock Exchange, Nov. 7, 2014.
Lucas Jackson | Reuters
Traders work on the floor of the New York Stock Exchange, Nov. 7, 2014.

When companies do reverse splits on their shares, it's often seen as a Hail Mary pass by a stock that's circling the drain. When exchange-traded funds try the same move, it's often cheered.

That's yet another unusual feature of the ETF world, an industry that's rapidly approaching $2 trillion in assets.

There has been a steady stream of reverse splits in 2014, among the most recent being ProShares' announcement that it was performing a 1-for-4 split on 10 of its inverse and leveraged products. While many of the firm's short funds have declined in price since the Oct. 15 reverse splits, that's primarily because the sectors the funds covered have gained with a rising stock market. Conversely, those "short" funds benefit from market declines. Otherwise, the funds have shown little damage from the move.

A normal split sees investors get multiple shares per each they hold. An inverse does the opposite and is often used to prop up flagging prices for a struggling company.

»Read more
  Tuesday, 18 Nov 2014 | 11:55 AM ET

Pimco is pulling down rest of the bond market

Posted By: Jeff Cox
A man walks past a Pacific Investment Management Company LLC (PIMCO) advertisment which is displayed on a building in Hong Kong, China.
Brent Lewin | Bloomberg | Getty Images
A man walks past a Pacific Investment Management Company LLC (PIMCO) advertisment which is displayed on a building in Hong Kong, China.

Investors have been withdrawing money aggressively out of bond funds recently, and it's pretty much all Pimco's fault.

In fact, when excluding flows from the Newport Beach, California-based fixed income behemoth, all other bond funds actually have been taking in money, according to calculations from Morningstar that highlight just how pronounced a reaction investors have had to Bill Gross leaving the firm he founded.

In total, taxable bond funds lost $41.8 billion in September and October. When subtracting Pimco from the equation, October's number turns positive by $9.2 billion, the data show.

»Read more
  Tuesday, 18 Nov 2014 | 10:31 AM ET

Paul Singer: Big pension 'off base' to ax hedgies

Posted By: Lawrence Delevingne
Elliott Management founder and CEO Paul Singer speaks during the SkyBridge Alternatives conference in Las Vegas, May 9, 2012.
Jacob Kepler | Bloomberg | Getty Images
Elliott Management founder and CEO Paul Singer speaks during the SkyBridge Alternatives conference in Las Vegas, May 9, 2012.

Billionaire investor Paul Singer has a message for the California Public Employees' Retirement System: Dumping your hedge funds makes no sense.

"We are certainly not in a position to be opining on the 'asset class' of hedge funds, or on any of the specific funds that were held or rejected by CalPERS, but we think the decision to abandon hedge funds altogether is off-base," Singer wrote in a recent letter to clients of his $25.4 billion Elliott Management Corp.

CalPERS, the largest public pension in the country, announced in September that it was axing most of its hedge funds, a $4 billion slate of a $300 billion portfolio, save for those that use a corporate activist strategy.

"Hedge funds are certainly a viable strategy for some, but at the end of the day, when judged against their complexity, cost and the lack of ability to scale at CalPERS' size, the [hedge fund] program is no longer warranted," Ted Eliopoulos, CalPERS' interim chief investment officer, said at the time.

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  Monday, 17 Nov 2014 | 2:06 PM ET

You'll never guess who's ruling hedge fund world

Posted By: Kate Kelly , Dawn Giel

When it comes to hedge fund reporting, a great deal of ink is spilled covering the moves of highfliers like Third Point, Appaloosa, and Greenlight in the stock market.

But according to a recent survey, the real money on individual stock picking is being made by a host of less well-known funds that have managed to find investment gems even in battered sectors.

Whale Rock Capital Management, Matrix Capital Management, PAR Capital Management, Senator Investment Group, and Starboard Value appear to be the top stock pickers for the fourth quarter so far, according to regulatory filings and performance-based skill assessments conducted by Symmetric, a New York-based research firm.

In determining the current rankings, Symmetric also factored in the consistency of upside over one- and three-year periods, looking for hedge funds that showed impressive stock-investment results at a time when many of their peers were struggling to do so.

»Read more
  Monday, 17 Nov 2014 | 1:47 PM ET

What corporate tax reform may look like in 2015

Posted By: Jeff Cox
U.S. Capitol building
Getty Images
U.S. Capitol building

After the Republican-controlled Congress sorts out its new hierarchy, and after it gets done battling President Barack Obama over immigration, then will come the time to get some actual work done.

Atop the priority list, at least from a market perspective, will be meaningful tax reform to address some of the thornier issues of concern to corporate America.

With another whiff of change in the air, Wall Street pros are starting to handicap the odds of getting some actual changes in the tax code.

The priorities are to help U.S. companies bring home some of the more than $2 trillion they have parked overseas in an effort to avoid highest-in-the-world corporate tax rates. Doing so would have a two-pronged benefit: Getting some cash that hopefully would be used to grow the economy, and ending the rash of so-called inversions in which companies do deals that allow them to establish domiciles in lower-tax countries.

»Read more
  Monday, 17 Nov 2014 | 1:05 PM ET

Allergan deal a win for more than Ackman

Posted By: Lawrence Delevingne

Bill Ackman isn't the only hedge fund manager who likely made big money on the Allergan deal.

Actavis announced on Monday that it will acquire Allergan for $66 billion, or $219 per share in cash and Actavis shares. The stock had been trading bear $110 earlier this year.

Read MoreActavis to buy Allergan for $66 billion

Allergan is one of the most widely held stocks by hedge funds. As of Sept. 30, some 19 percent of hedge funds owned it, according to an analysis of public holdings by data analysis company Symmetric.

The largest holder is Ackman's Pershing Square Capital Management, with $5.14 billion worth of shares (28.8 million) as of Sept. 30. The firm bought the stock at an average price of $127; at the current price, that means a more than $2 billion gain after a profit-sharing arrangement with Valeant. (Ackman had tried to buy Allergan by teaming up with Valeant earlier this year.)

»Read more
  Sunday, 16 Nov 2014 | 12:00 PM ET

Gross running Janus? 'That's not going to happen'

Posted By: Jeff Cox
Bill Gross
Bill Gross

Talk about a big fish in a small pond: Bill Gross cast a long enough shadow at Pimco, something only exacerbated by his move over to Janus Capital.

In September, the so-called Bond King left Newport Beach, California-based Pimco, with its $1.9 trillion under management and the biggest bond fund in the world, for much smaller Janus, a $178 billion firm nestled in a leafy, slow-paced section of Denver.

By now, all of Wall Street knows the ensuing headlines well: Gross departed Pimco under a cloud of controversy, reportedly about to be fired after a two-year stretch of underperformance and investors flocking for the door.

A wave of speculation followed: Was Gross through? Had not only Pimco management but also fixed income investors tired of his eccentric ways, including the cryptic, opaque messages he delivered in monthly letters to clients that only seemed to magnify how he had lost his magic touch when it came to reading the tea leaves of the bond market? Would he be able to regain his mojo?

But while the rest of the investing world was contemplating Gross' demise, folks over at Janus were salivating over the chance to get someone justifiably regarded as an investing legend into the stable.

»Read more
  Friday, 14 Nov 2014 | 2:02 PM ET

How Regis may give investors a bad haircut

Posted By: Lawrence Delevingne
Source: Supercuts | Facebook

The big money can't make up its mind about stalled haircut giant Regis.

One prominent hedge fund manager, Starboard Value, just exited its investment despite years of work on a corporate turnaround.

Another, Birch Run Capital Advisors, keeps buying more stock in hopes of a board-engineered revival. Wall Street analysts are neutral. And other investors are short the stock, believing earnings will continue to deteriorate despite a new management team that has cut costs and reinvested in the business.

Minneapolis-based Regis owns some of the best-known salon chains—including Supercuts, Sassoon Salon, Regis Salons, MasterCuts and SmartStyle—whose more than 7,000 locations dot malls and Wal-Marts across the country (some are abroad, too).

But Regis isn't as powerful as it used to be. Comparable same-store sales had been in decline for six years until the last fiscal quarter. While the now-$17 stock is up about 20 percent in 2014 on hopes of a turnaround, it's down from a high of $46 in December 2004 and has hovered below $20 since 2008.

»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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