TODAY’S FAYRE – Tuesday 29th April 2014
“Take this kiss upon the brow!
And, in parting from you now,
Thus much let me avow-
You are not wrong, who deem
That my days have been a dream;
Yet if hope has flown away
In a night, or in a day,
In a vision, or in none,
Is it therefore the less gone?
All that we see or seem
Is but a dream within a dream.
I stand amid the roar
Of a surf-tormented shore,
And I hold within my hand
Grains of the golden sand-
How few! yet how they creep
Through my fingers to the deep,
While I weep- while I weep!
O God! can I not grasp
Them with a tighter clasp?
O God! can I not save
One from the pitiless wave?
Is all that we see or seem
But a dream within a dream?
Edgar Allan Poe – poet – 1809-1849
My daughter-in-law Annabel (Bugsy) Buik and two friends have just finished a really innovative and creative ‘labour of love’, publishing a book called “Stumped by Cricket.” This beautifully illustrated book explains very simply all the rules, laws, culture and nuances from the maze of cricket. This book is really a ‘Bible’ for cricket, suitable for all children from 7 years upwards and more to the point, for their Mums, Aunts and cousins. It’s a joy to read and should sit on every family coffee table or children’s playroom. To purchase it – http://www.allaboutboys.co.uk
It is a great pity that many of you were not watching ITV4 on Monday night when Fulham put Chelsea to the sword in the first leg of the FA under 18s Cup Final 3-2 at the Cottage. Let’s hope these amazingly talented youngsters can be used by the club before they are ‘ear-holed’ by the big clubs – Pat Roberts and Moussa Dembele in particular. If, and some might say when, Fulham are relegated they will need these youngsters to put them back in to their rightful place in football society.
The Street of Dreams was not exactly in a mood to fly to the moon during yesterday’s session, but the limited corporate results were positive enough to prevent investors losing their nerve. The only ‘damper’ was Twitter – whose share price dropped by 10% – below the IPO issue price of $39. Concern over forward earnings and valuation was posing a problem and not a little heartache for punters. The M&A melting pot was given plenty of stirs with thoughts that Allegan might have a nibble at Shire Pharmaceutical or will the Botox magnate prefer to get in the sack with Sanofi-Aventis or Johnson & Johnson rather than Valeant – such mind-blowing numbers these days – $40 billion for Botox! Please! Oh and Sanofi-Aventis has served notice to see part of its drug portfolio for $8 billion – probably taking a leaf out of GSK/Novartis’s book. The volumes around the world are so thin, investors must be forgiven for believing that a measurable correction awaits – maybe in mid-May.
Sir Christopher Kelly’s report on the Coop which included evidence from 130 interviews was damning in the extreme, slamming Britannia Building Society’s Neville Richardson for leaving the business in bad shape in 2011 and rather more visceral language was used to describe CEO Peter Marks’s thoroughly inept performance. A compendium of poor management of this mutual triggered its worst loss in its long history. The departure of Euan Sutherland as CEO, who felt the movement was ungovernable, set the tone for Lord Paul Myners open criticism of the way the bank was run. Many of the management appointed were wholly unqualified in many cases to do the job required. The Coop Bank is now left with the thorny problem of whether to stump up £120 million as its share of extra capital required. Many believe that the hedge fund managers, which already own 70% of the bank, should increase their stake and take overall control. The Coop’s retail is the 5th largest in the country, but it must stop trying to take Tesco’s on in its own backyard. The Coop is a huge organisation with 90k employees and 7 million clients. It needs a clean bill of health sooner rather than later. It is interesting to note that Ursula Lidbetter, the Coop’s chairman, has served notice to dispense with KPMG’s services. KPMG were auditors at the time of the Britannia acquisition.
I would very much like to know what the FT means by a ‘bad bank’, referring to Barclays. I was of the opinion that Barclays was not bailed out and sought fresh capital. It has been profitable. Its bonus structure may have been distasteful – at times full of avarice and greed and disproportionate to shareholder value. ‘Bad bank’ seems rather harsh to me. Maybe it means hiving off Barclays Capital. Skip McGee, an essentially clever acquisition from the smouldering remnants of Lehman Bros 5 years ago i9s to relinquish his post as CEO of Barclays Capital. McGee, who runs Barcap from New York, has decided to cash in his chips, supposedly valued at about £8 million. McGee has probably taken the very sensible decision, being a rich man, not to pit his wits against virulent regulators such as the SEC and the FCA. It makes far more sense for McGee to join private equity, set up his own or join a hedge fund, make money and enjoy himself, without all the grief of savage controls. He might even join Uncle Bob Diamond! The news about the FT’s ‘bad bank’ will no doubt come out in Antony Jenkins’s policy statement next week. It has become clear that investment banking was likely to pay a more subservient role than before, but I suspect Jenkins did not expect McGee to quit! Joe Gold takes over.
This morning saw another rather nebulous session in Asia. The market was not surprised that WH Group has abandoned plans for the time being for its IPO in HK due to deteriorating conditions. In London at 9.00am the FTSE 100 moved in to positive territory – +2 points at 6771. There were a slew of results which included Royal Dutch Shell, Home Retail, Standard Life, Pendragon, Ladbrokes, BATS and many others. Most were reasonable and had travelled and arrived. The exception was Shell, whose profit was down 45% for the same period last year at $4.5 billion with narrowing margins. Analysts clearly saw more than I did for the future – +4.25%. GSK posts numbers later this morning.
Alstom formally re-opened today – up 11%. Negotiations started formally with GE, though Siemens wants plenty of time to look at the books before parting with $13.5 billion. Hollande says he comfortable with GE as an acquirer; however I suspect there would be more comfort from unison with the German industrial titan.
These are David Buik personal views
Twitter – @truemagic68
D +44 (0)20 7886 2775
Panmure Gordon & Co
One New Change | London | EC4M 9AF | United Kingdom
http://www.panmure.com – The information in this e-mail and any attachments is confidential and may be legally privileged. It is intended solely for the addressee(s). If you are not an intended recipient, please delete the message and any attachments and notify the sender of mis-delivery: any use or disclosure of the contents of either is unauthorised and may be unlawful.
Panmure Gordon (UK) Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.
Please refer to http://www.panmure.com/emaildisclaimer.aspx for additional important disclaimers and legal information.