Lloyd Banks vs Lloyds Bank

Amid all the market chaos occurring over the past 48 hours, one news item stuck with me – Lloyds Bank threw down USD 21 billion to buy a mortgage lender. I was shocked I knew Lloyd Banks was doing well from his stint with 50 Cent and the rest of the G Unit crew…but not USD 21 billion good. Then I realized it was Lloyds Bank of London who was acquiring HBOS not the rapper Lloyd Banks. My bad…the movement of a letter in the name makes all the difference, for future reference:

The Rapper – Lloyd Banks

The Bank – Lloyds Bank

Uncle Sam the newest PE shop in town

The US Government over the past several months has turned into a formidable distressed investing Private Equity shop. The General Partners (Uncle Sam and team) have said that the Limited Partners (taxpayers) will have limited exposure if any. Hmmm…not sure how the deals were structured but as a Limited Partner I’m hoping to get a peak at the term sheets. Anyways, let’s take a look at their recent deals:

Bear Sterns – This deal is very unique from a PE perspective, JPMorgan owns 100% of the company assets and Uncle Sam is potentially liable for 100% of the debt. I’m not sure what the exit is for Uncle Sam, it seems there is no upside and only downside.

Fannie/Freddie – Although they are separate entities I’ll treat them as one.  Uncle Sam again owns nothing has the ability to own upto 79.9% in these entities and has already pulled rank and fired the CEO’s of both entities when the deal was announced. Uncle Sam is on the hook for USD 5 trillion in mortgages that Fannie/Freddie own. (I believe that is the first time I’ve used the word trillion on my blog). The “term sheet” (hat tip Todd).

AIG – Uncle Sam will own 79.9% equity right off the bat.  AIG will have access to a loan facility of upto USD 85 billion at LIBOR + 850 basis points.  I hope as a limited partner I can get some insurance discounts from AIG.

As with any PE shop I hope they are looking to diversify, the financials seem a bit risky. I suggest they look at the automotive sector, I hear Cerberus Capital is getting raked over the coals with Chrysler.

Lehman has left the building

Actually Lehman has sold the building. Lehman’s US broker/dealer operations were sold to Barclays for USD 1.75 billion, which seems like a good amount of dough till you read the specifics.  Barclays will spend USD 1.5 billion for the Lehman headquarters in Times Square and 2 data centers and the rest – USD 250 million for the operations, people, brand, etc…So all the talk about how a companies most valuable asset goes down the elevator every day is all BS.  In this case, the actual elevator and building are worth more then the employees.

In India Lehman Brothers is looking to windup operations at every level.  What forced Lehman Brothers to file for bankrupty was their Real Estate portfolio. Sundaram Rajagopal was the Managing Director of the Real Estate portfolio for Lehman India. In India they were very aggressive in getting deals done, they had two portfolios: the PE Real Estate fund and their own prop book.  It seems the prop book is going to see some serious unwinding (read – liquidation) which will add more pressure to property prices in India.

Financial Implosion

If you are a fan of watching financial markets as a sport then the past 4 days have been action packed with all sorts of hail marys. As of now 3 of the 5 investment banks are gone – Bear, Merrill and Lehman.  That leaves only Morgan Stanley and Goldman Sachs as the last of the true independent broker/dealer/investment banks.  I’m guessing in short order they will be folded into a bank, although I bet Goldman buys a bank. What we are seeing in the financial markets is the equivalent of the dot com implosion.  Stock prices almost going to zero, back in March 2007 Lehman (LEH) traded as high as USD 85 with a market cap of USD 46 billion, today it’s trading at 21 cents with a market cap of USD 145 million – DOWN 99.75%.

Locally in India, Lehman who recently moved into arguably the most expensive office building in India, Ceejay House, has already shut down part of their operations. The broker/dealer arm is still going, but most people will not trade with them and that’s the death knell for a broker.

One of Merrill’s top guys Andrew Holland has jumped ship to Ambit Capital to head institutional equities and run their prop book. DSP Merrill Lynch Mutual Fund will now be renamed DSP BlackRock Mutual Fund.

The biggest winner from all this carnage is probably Hemendra Kothari who sold out a major chunk to Merrill back in December 2005 for USD 500 million.

Auto router reboot script

For some retarded reason my new internet service provider (MTNL) requires me to reboot my router at midnight and 8am to qualify for free unmetered service. Sadly, it makes sense to comply since you can easily download 2-3GB of content a night.  However, there has to be a better way then physically turning off the router and rebooting it every damn night. There had to be a technology angle to getting this going automatically every night. There are a couple utilities for the Mac, however I didn’t want to rely on 3rd party hacks but wanted to use the native tools via OS X. My solution is a bit convoluted but once you implement it, it takes only a couple clicks a night. The apps I used were AppleScript, iCal and the Energy Saver preferences on the Mac.

1. Create 2 scripts: app_start.scpt and router_reboot.scpt (you can download mine: app_start.scpt and router_reboot.scpt).
app_start.scpt
will start Terminal and telnet to your router
enters a username/pass
issues a reboot command (this assumes a D-Link router)
Starts my favorite BitTorrent client Transmission
Issues a command to update all my podcasts in iTunes

router_reboot.scpt
will start Terminal and telnet to your router
enters a username/pass
issues a reboot command 

2. Use iCal to execute the scripts at the time you want them to occur, to do this create an appointment with an alarm and select “run script.” I have the app_start script kickoff at 12:05am and the router_reboot script starts at 7:55am (image below). You can further automate this by creating a repeating event every day.

3. In the System Preference Pane for Energy Saver. I have my Mac awake at 12:05am. (image below)

Finally, before you goto bed put your Mac to sleep. And at 12:05am your Mac will awake and execute the app_start script.  Then at 7:55am, the router_reboot script is executed.

The BRIC's are falling like…bricks

Back in October 2003 a report from Goldman Sachs highlighted the four countries of Brazil, Russia, India and China termed the BRICs would be a hugh force in the world economy.  5 years later the term has stuck and the 4 countries have made some big progress as predicted in the report which can be downloaded here.

However, the equity markets in all 4 countries are getting slammed.  You talk to people in India and they are wondering how it could happen to them.  The reality is EVERY equity investor worldwide is getting killed and India ain’t so bad when compared to most other countries, as I call it “the cream of the crap.” Let’s take a look at each BRIC:

Brazil (Bovespa)
52 week high – 73,920
52 week low – 47,606
Sept 12, 2008 – 52,392.86
DOWN 29.1%

Russia (Traded Index)
52 week high – 3717.03
52 week low – 1858.89
Sept 12, 2008 – 1991.10
DOWN 46.4%

India (Sensex)
52 week high – 21206.80
52 week low – 12515
Sept 12, 2008 – 14000.81
DOWN 33.9%

China (Shanghai SE Composite)
52 week high – 6,124.04
52 week low – 2,199.36
Sept 12, 2008 – 2,079.67
DOWN 66%

Back on the Grid!

After having switched ISP’s, I’m finally back on the grid and it feels damn good!! I went from a 512k connection to a 2MB connection…welcome to the third world of internet connectivity. My connection was down for 10 days and during that time Om Malik was complaining about Comcast introducing metered internet service and the death of the internet.  Well, it’s already happened in India…Comcast is talking about a cap of around 250GB a month, my current internet provider is going to provide me with 1.25GB (yes, 1250MB) a month and the great luxury of unmetered service from midnight to 8am every day as long as I turn my router on/off every day at midnight and 8am…man where is FIOS!!