How's Bill Gross doing?
Great, so glad you asked. Like "a 70-year old version of Justin Bieber." In fact, "Bill Gross is the kindest, bravest, warmest most wonderful human being you’ve met in your life," says Bill Gross. Why is the 70-year-old teen pop idol king of the "happy kingdom at Newport Beach" so chipper? It might have something to do with the fact that he's been selling lots of volatility as volatility has been disappearing, which has been working out well for him. That would make anyone feel ... well I guess the word is "complacent"? It seems a little weird for your strategy to be to keep selling volatility at recent lows for volatility, but there's a reason he's Bill Gross and I'm not, and it's not just that he's "a pretty cool looking dude."
What's going on with Valeant and Allergan and Bill Ackman?
"Without some level of coordination, that 25% threshold in the bylaw could never be reached, it would seem to me," Mr. Bouchard said, according to a transcript reviewed by The Wall Street Journal. "The rub here, as I see it, is that the stockholders' ability to exercise their franchise rights by calling a special meeting … can be rendered functionally meaningless as a practical matter because of the deterrent effect" of the poison pill.
Getting expedited doesn't necessarily mean that Ackman will win, but it helps. It really ought to push Allergan and Pershing Square and Valeant to a settlement; as Ronald Barusch says, "It does not seem like it would be hard to come up with a list of rules for Pershing to follow." Meanwhile Valeant's and Pershing's exchange offer for Allergan shares makes the question "was Pershing's initial secret accumulation of Allergan stock insider trading?" retrospectively more interesting, because you can't trade on news of a tender offer. It's probably fine though. And in another part of the world, Shire has turned down a takeover offer from AbbVie; there has long been vague speculation that Allergan would try to buy Shire, in part to prevent the Valeant deal, so I guess that's still available.
How'd that Markit IPO go?
The initial public offering of Markit Ltd. seems to have been perfect. It priced at $24 -- the midpoint of the marketing range of $23 to $25 -- and upsized, suggesting that the underwriters could have been more aggressive on price but chose instead to sell more shares. Then it traded up 11.3 percent, a more or less ideal first-day pop. I said yesterday that an IPO managed by banks who are also the major shareholders of the issuer, has really good incentives to get the pricing right. While the performance of any individual deal is random and idiosyncratic, this one at least seems to support that belief.
How carefully do you have to audit Chinese companies?
Not that carefully: Moore Stephens, a Hong Kong auditing firm, failed to notice that Puda Coal's managers had taken all of the company's assets in 2009 (and issued a public filing saying so!), so they certified the company's fictitious financial statements in 2010, which allowed it to raise $116 million from stock offerings in the U.S. This went poorly for the shareholders, who sued. And:
This week, a federal judge in New York dismissed a shareholder class-action lawsuit against the audit firm, saying that the plaintiffs had failed to present sufficient evidence to show that Moore Stephens had acted recklessly and failed to follow auditing procedures required by the United States Public Company Accounting Oversight Board.
Rulings like this make total sense -- auditing firms don't get paid enough to provide hundred-million-dollar insurance policies on public offerings -- but are also a bit discouraging. You do want them to feel a bit of fear, at least enough fear to check the public records of companies whose managers have taken all of their assets.
What's Carl Icahn doing these days?
I haven't been paying much attention to his Family Dollar activism, which seems pretty routine (for him) so far, but yesterday he sent a letter to the company's chief executive officer thanking him for dinner and saying that "it is imperative that Family Dollar be put up for sale immediately." Carl Icahn, write with nouns and verbs! Obviously Icahn wants Family Dollar to sell itself, but if it's not on the block by Monday, what's gonna happen? I'm sticking to my story that this is Icahn engagement is a little boring, "imperatives" notwithstanding.
Insider trading in the U.S. and Europe.
Here is a European scholar arguing "that the U.S. should reconsider the virtues of the parity-of-information theory and enact a more straightforward and easily enforceable regulation of insider trading based on this theory." The "parity-of-information theory" basically says that, if you have material non-public information, you shouldn't be allowed to trade on it -- as opposed to U.S. law, which has all sorts of rules about how you come by that material non-public information. So for instance under the European rules it sounds like Pershing's initial secret accumulation of Allergan stock probably wouldn't fly, though it's not clear because those rules don't seem to be particularly strongly enforced.
Here is an animated picture of a stoned Wall Street bull pouring Doritos into his mouth next to a pink bong because why not. Also in stoner-food news, cereal is not just for breakfast; it's also for "off-breakfast eating." Here is a chart of water usage in Berlin. Internet companies are basically all awful. Buy a house for 2,286 bitcoins, sure. "I find that politically connected firms on average are less likely to be involved in SEC enforcement actions and face lower penalties if they are prosecuted by the SEC. " You can get people to put a virus on their computer by paying them a penny. Here is a man who enjoys talking to people in the elevator, and loves "the ritual of holding the elevator door for an approaching stranger," and I can't even.
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