Clear Admit Provides GMAT Advice

Clear Admit, a MBA related website, provides sound advice on tackling the GMAT. The key is to leave yourself enough time to focus on apps. I didn't do this. I was typing apps and taking the GMAT at the same time. Things worked out, but I would recommend that applicants focus on this GMAT advice.

Youtube and its future

Youtube.com keeps growing. BusinessWeek speculates on what it could become.

Barclay's Growing Bond Business

Barclay's and it's growing bond business.

Law Firms paying more to their rank and file

Check out the dealbook's links and comments on the rising salaries for young lawyers.

Anheuser and Hansen?

Reuters is reporting an industry newsletter Beverage Business Insights article on possible discussions between energy drink maker Hansen Natural Corp and Anheuser-Busch. The article states that a possible partnership could be in the works or a potential outright acquisition.

"Hansen, maker of Monster energy drinks, and Anheuser-Busch, the largest U.S. brewer, are working on a variety of collaborations, from an alcoholic energy drink to adding Hansen's nonalcoholic energy brands into Anheuser-Busch's distribution network, the report said, citing energy drink executives, beer distributors and other industry sources."

Hansen shareholders have been having quite, the run, by the way.

Factset releases 1Q2006 merger activity data

Factset's Mergerstat group has released results for 1Q06 merger activity. See link here.

Casino operator Aztar gets a rival bid

Casino operator Aztar, which owns the Tropicana in Las Vegas and Atlantic City received a higher bid from Colony Capital than the previous high bidder, Pinnacle Entertainment. Colony Capital is a privately held real estate concern that owns the Hilton hotels in Vegas and AC.

"Colony will offer $41 ($1.5 billion) a share and would seek to refinance the $723 million in debt that Aztar carries, the company said. On March 14, Pinnacle of Las Vegas offered $38 a share for Aztar, or about $1.45 billion, not including the debt."

"Shares of Aztar hit a 52-week high after reports of Colony's offer surfaced. In 4 p.m. composite trading on the New York Stock Exchange, Aztar's stock was up $3.37, or 8.6%, to $42.42. Pinnacle added 23 cents to $29.23 on the NYSE."

This could turn into a bidding war. Aztar is attractive not because of the profitability of its casinos, but rather the value of the real estate it sits on. Vegas is hotter than ever, and land on the strip is a finite thing.

"More than half of Aztar's income last year came from its refurbished and expanded Tropicana property in Atlantic City. Aztar's crown jewel in Las Vegas isn't the faded hotel and casino sitting on the city's famed Strip, but the 34 acres of prime land it sits on.

For years, Aztar has discussed redeveloping the land, which is close to the Las Vegas airport and across the street from major MGM Mirage properties. The company never disclosed any firm plans and Pinnacle Chief Executive Dan Lee said earlier this month that his casino company would possibly develop a multibillion-dollar resort property at the site."

The GSB's ChiBus newspaper comes out with it's April Fool's issue

The GSB's Chicago Business newspaper came out with it's April Fool's issue. Check it out.

The Real Barbarians at the Gate?

Trader Monthly puts together an annual list of who is raking in the dough. No surprise that T. Boone Pickens is #1. Are these traders the true Barbarians at the Gate?

Just want to see the top 10?

Bank of New York Rumors

Rumors of Bank of New York selling its retail branches. Forbes sites JPM as a likely buyer. An asset swap is proposed, but this is all speculation at this point. Forbes points out the consolidation in the Northeast banking market, which is clear from the Capital One - North Fork deal that was recently announced.

Mergers More Succesful than You Think

The old adage in corporate finance world is that many mergers fail, for some reason or another. Like the restaurant business, which is supposedly so brutal that 90% of restaurants fail, the M&A landscape is often thrashed for failing to produce deals that live up to initial expectations. Fairness opinions and projections say deals will work because of synergies and revenue enhancement opportunities, but all too often, reality can fall short.

That being said, a recent report from Booz Allen that our friends at Reuters write about says that mergers are actually becoming more successful upon closing. Why? Well the article says that buyers are becoming more disciplined, shareholders are asking more questions, and mergers are becoming more strategically justified (combining companies in the same industry, rather than prospective deals like the VNU - IMS debacle).

Pfizer weighs consumer products division options

Pfizer, the drug giant, is considering strategic alternatives for its consumer products division, which makes household products such as Listerine. The WSJ reported yesterday that GlaxoSmithKline and Colgate are expected to bid on the unit. Pfizer is targeting a price of $14 billion.

"A straight sale would nonetheless create a considerable tax bill for Pfizer, meaning that the effective sale price would be far lower than the "headline number" first reported. Buyers would have to submit bids high enough to offset some of those tax effects."

Pfizer is contemplating an outright sale or a spin-off. It seems to me that spin-off may make more sense if valuations on an outright sale don't seem to be coming in correctly. We have seen two pretty large spin-offs in the insurance space (GE spinning off Genworth) and (Fortis spinning off Assurant). Both have been successful. Pfizer could wait for the right valuation to sell its remaining stake in a follow-on when the time is right.

In other news, BusinessWeek offered further insight on the sale of spin-off issue. The article sites one banker who has looked at the deal and feels that Pfizer will spin-off the asset to shareholders so it can avoid a large tax hit. BW further justifies the need for an outright cash sale given the size of Pfizer's cash balance.

NASDAQ backing out of LSE bid

The NASDAQ announced that it will be backing out of its bid to buy the London Stock Exchange for $2.4 billion pounds. "But the second-biggest U.S. stock exchange operator left the door open to a tie-up in future, saying it might make an offer under certain circumstances, such as if the London Stock Exchange (LSE) agreed to a deal or a rival bidder emerged."

Maytag - Whirlpool given an OK

The Maytag-Whirlpool deal was approved by the Justice Department, sparking a huge lift in Maytag shares. "The ruling took many by surprise, as shown by the surge in Maytag’s shares after the news was announced Wednesday afternoon. Maytag’s stock jumped nearly 28 percent in the minutes before the regular close of trading."

This DealBook post links to other articles on the announcement as well.

U.S. News B-School Rankings Released Early (Unofficially)

The BusinessWeek.com boards are abuzz because someone got a copy of the U.S. News & World Report graduate school rankings before they are officially released.

You can find the unofficial download here: http://www.yourfilelink.com/get.php?fid=61982

Click "download file"

The Boutique Investment Bank

Found another hilarious article that anyone working at a boutique investment bank would enjoy (I do). Pure hilarity.

Welcome to the Club: Dealbreaker is the latest finance blog

Today marked the beginning of yet another financial blog trying to uncover the ins and outs of Wall Street. The site, www.dealbreaker.com, was started by the woman who oversaw Gawker.com. I am not impressed by the site so far, but I'll keep checking to see if it improves. What do you think?

WSJ says futures exchanges expect consolidation

The WSJ had a nice article on the future of the futures exchanges. Now that most of them are public in the US (NYMEX on its way following General Atlantic deal), each of the players have a currency to make acquisitions. Of course the run up in stock prices means any buyer will have pay a hefty multiple in order to get the seller to bite. I liken it to the real estate bubble. Everything is fine when buyers see appreciation, but sooner or later, someone's going to be left holding the back and when they want to sell, there won't be buyers at high prices.

Well the WSJ article had some interesting points. For one, the consensus is that consolidation in the futures space would occur domestically. Second, a compelling case could be made for a stock exchange to buy one of the futures exchanges (think NASDAQ or NYSE). But third, the mother of all deals, is indeed, an "elephant hunt" for any banker trying to make it happen. The deal would be to combine the CBOT and CME. Could it happen? Rumors have been going for years that it could. But as the article states, "a merged CME-CBOT would not be good for the marketplace regardless of any deal between European exchanges, fearing that such a business would have a monopoly on trading such economically important assets as government-bond futures."

Another good one from The Phat Phree

Phat Phree had a hilarious article on frats.

Facebook.com for sale?

BusinessWeek.com is reporting that it has learned that www.facebook.com (or www.thefacebook.com) may be for sale. Very interesting.

"Facebook, the Web site where students around the world socialize and swap information, has put itself on the block, BusinessWeek Online has learned. The owners of the privately held company have turned down a $750 million offer and hope to fetch as much as $2 billion in a sale, senior industry executives familiar with the matter say."

Facebook.com is the seventh most trafficked website on the net

A $2 billion deal would make the MySpace sale for $580 million to Rupert Murdoch's News Corp. seem like an afterthought.

BW is reporting that industry analysts feel that Viacom would be the most likely suitor for the Company.

Also, amazingly, the site was started by a few classmates at Harvard.

Check out popurls.com

If you are like me, you want to keep up-to-date on the buzz. Well www.popurls.com solves that problem. It puts all the headlines from a variety of websites that aggregate "what's popular." Very cool. Check it out

The Bear Hug tactic on the Rise

Reuters writes that the "bear hug" tactic is on the rise for unsolicited takeover offers. Instead of the deal being hostile, suitors are stating a price with the hopes that the potential sellers' shareholders will push management of the seller to consider a sale.

Funny Money

Check out the weekly Funny Money column from thestreet.com

Weekend Reading

Always a good read, check out Kedrosky's Weekend Reading for this week. It's a collection of the best finance related articles on the web.

IDD on Wall Street Bonuses

The Investment Dealers' Digest, often referred to as IDD, had a nice article on the state of the investment banking bonus.

Here is the link. IDD keeps the article up for a few weeks before it removes it for people who aren't registered for the site, so I have pasted the article below as well.

Fine-Tuning
Avital Louria Hahn (avital.hahn@sourcemedia.com)
March 27, 2006

After several years of working in the shadow of traders and fixed-income professionals, investment bankers in the US are finally getting some respect. Bolstered by a sparkling year in M&A, which logged its highest volume since 2000, Wall Street firms boosted the compensation they paid to investment bankers by some 20% in 2005, roughly double the 10% increase paid to traders and debt professionals, according to Johnson Associates, a compensation consultancy.

This turn of events has many investment bankers smiling-some wider than others. Since the market bust in early 2000, fixed income and trading have carried the day for Street firms, and as a result, bankers often had to suffer through flattish pay, not to mention the indignity of being subsidized by other groups. But in 2005, investment banking made a dramatic re-entry, as Street firms collected $53.1 billion in fees from M&A advisory and underwriting activities, a 25% increase over 2004, according to Bloomberg. That is not to say that investment banking is suddenly driving Street profits. Fixed income and trading still bring in the lion's share of the stuff. But 2005 was the year when $2.7 trillion in global M&A volume, not to mention other ancillary activity gleaned from cash-rich financial sponsors, greased Wall Street's fee machine and got it humming.

Indeed, the Street set a compensation record in 2005 with $21.5 billion in bonuses, obliterating the prior record of $19.5 billion set in 2000, according to New York State Comptroller Alan Hevesi The largesse was widespread, reaching many. And bankers can take heart: The cheery earnings scenario for investment banking is expected to continue in 2006 (Goldman Sachs led the quarterly earnings parade last week with a performance so spectacular that at least one analyst was left gasping for a descriptive adjective).

But bankers got a dose of reality in their paychecks as well. No longer will Wall Street indiscriminately pass out the booty in the good times, having learned bitter lessons from past booms. It fine-tuned its pay practices in 2005 and inserted a good measure of discipline-carefully monitoring revenues as well as the capital and risk involved in making a deal happen, and going to great lengths to figure out exactly who brought in the business. It rewarded rainmakers with an outsize portion of the bounty, gave token raises to workhorses who played minor roles, and sent unmistakable messages to underperformers that they should consider other employment.

A good year, therefore, meant different things to different people. A top-producing managing director at a bulge-bracket investment bank, for example, could have gotten a package of $10 million or more, while a low-producing one might have seen his or her pay remain flat or edge up only 5% to $1.1 million, recruiters say (see accompanying tables).

"There was a lot more talk about tying pay to merit in the past few years," says Francisco Paret, head of the US investment banking practice at executive search firm Egon Zehnder International. "But in 2005, there has been a much more focused effort to link pay and performance."

Indeed, the lack of a raise in 2005 was more meaningful than ever. "If your pay didn't go up, you probably were not going to be working there long," says another recruiter.

Street firms are old hands at communicating with money, and they know just how small to make a bonus to insult someone into leaving. And bankers, while not considered exactly the most introspective of professionals, also have a fine ear for messages when money is involved. Thus does the industry use bonus season to tell its bottom 15% of performers to leave. Executive search pros say this practice helps banks upgrade their talent pool.

"Banks are finally being intelligent about compensation," says Laura Lofaro, president of Sterling Resources International. "They are running a business, and they realize that in order to incentivize and motivate people, they have to pay for performance."

Lofaro calls it a move towards a meritocracy. It is also a survival technique, as banks are having to work harder in areas such as trading, where commissions have taken a years-long beating, to generate profits. They are seeing revenues shrink in many areas, such as trading, and have to find new, higher margin businesses. Shareholder activism at the same time is putting pressure on firms to carefully husband their resources.

That is why banks, even in a good year like 2005, are hiring less than they would have in the boom years of 1998-2000, says Alan Johnson of Johnson Associates. They realize they can increase productivity with the team they have, add junior people as needed and put the big money into hiring and keeping stars. "The business is very competitive," Johnson says. "To really make a difference, you need a real star to add the edge."

But top junior people are not easy to come by, either. They are the foot soldiers who work killer hours doing everything from providing support to senior bankers in pitching new business to actually processing the deals, and they are invaluable. The best and brightest are now courted by hedge funds and private equity firms as well as Street firms-a dynamic that won't change anytime soon, says Brian Korb, a partner at executive search firm Glocap Search who specializes in private equity. "Demand for top talent among junior hires has shown no sign of waning," Korb says.

Banks are acutely aware of the importance of junior bankers, and they generally took good care of them in 2005-as they did in 2004. Some VPs got increases of as much as 25%, according to compensation experts. Demand is expected to continue to be high this year, especially if the industry activity level continues as strong as forecast. "There is still a dearth of talent on that level, and I think they were exceptionally taken care of," says John Rogan, global head of financial services at Russell Reynolds.

Happy days

In a good year such as 2005, the increased profits soothe some of the fault lines between what one recruiter calls "the stars and the worker bees."

Compensation experts surveyed by IDD estimate that firms paid investment bankers 20% more in 2005 than in 2004, the best increase since 2000. But bankers were not the only ones paid well. Wall Street pay was up 10% on average in 2005 over 2004, with trading and fixed income up 10% and commercial banking up 5%, according to Johnson Associates. That, of course, means some got a 40% hike and others got zilch. Still, the bounty reached many.

"On average, people are happier than I have seen in recent memory," says Andrea de Cholnoky, co-head of the investment banking practice at executive search firm Spencer Stuart. "I don't have a lot of people calling and saying, I've been treated badly.'"

Compensation experts say that most investment bankers got an increase in 2005 in the 5% to 15% range, while stars got much more. Because there was so much money available this year, non-star workhorses who may have gotten no raise in the recent past got some increase as well. "There was less of the haves and have-nots," says Rogan. "Even the have-nots did better than the year before."

Among the banks, there was significant variation in compensation. As usual, big investment banks typically paid the most. Among them: Lehman Brothers, which had a record year; Morgan Stanley, which paid some very well but also pruned heavily among its managing directors; Goldman Sachs, which continued to benefit from the M&A boom; Bank of America, which paid selectively well, and Deutsche Bank, which had disappointed bankers in years past but came through in 2005 with packages that pleased many.

Top-producing individuals in some of the hottest areas such as financial sponsors or M&A saw their pay soar. Many more managing directors reportedly broke the $5 million barrier this year, which in years past was reserved for the chosen few. Top producers were rewarded to the point that in some cases their pay eclipsed that of their group head.

Guarantees-both as a hiring and retention tool-were also used more frequently in 2005 than in the recent past. Banks didn't hesitate to use them in a counteroffer when a top banker was being wooed by another firm. The guarantees varied in length from one to three years, depending on the banker's caliber and position, with two- to three-year guarantees usually given to group heads. "Pay guarantees are now back," says Richard Lipstein, managing director at Boyden Global Executive Search. "If you are doing well and a competitor wants to hire you, they have to pay up for you."

Still, some habits that became ingrained during the lean days of investment banking endure. Despite the brisk hiring environment, bankers still think twice before moving, and they take into account factors other than money, notes Paret of Egon Zehnder. "People are cautious in making a move," he says.

Focus of complaints

In years past, bankers frequently complained that they were wronged on pay, but not in 2005. "If I step back and think of a theme I have been hearing from people who were unhappy and why that is, the most common complaint has been that they got looked over for a promotion," says de Cholnoky.

With pay so much improved, the slow road to promotions is more noticeable. Much of it stems from banks' tougher standards and their reluctance to award, for instance, a managing director title, which also entails a raise. Sometimes the raise can be substantial. At Goldman, for example, a promotion to partner can literally means tens of millions of dollars in stock and other emoluments over a career.

Another reason: fewer top slots. As deals have picked up, firms have shrewdly added more junior people to process deals, but they have not expanded with a proportional number of senior slots such as managing directors. "Firms have added a lot of people, but they have not added a lot of MD or director slots," says Johnson Associates' Johnson. He says that firms are also trying to avoid overhiring, having tired of painful large-scale layoffs in the recent past.

Hiring: supply and demand

While deals and fees have been gushing in, most banks have tuned their hiring practices with almost as much fervor as their pay practices. But even with this caution, the end result is that banks have ramped up their staffing levels, and indeed, recruiters say they are busier than ever looking for candidates pretty much across the board. Lehman Brothers grew its ranks by 8% in 2005 and plans a similar increase in 2006. Goldman plans to add 2-3% more employees in 2006. Meanwhile, executive search firms are licking their chops, waiting for Morgan Stanley, which axed numerous managing directors near the end of 2005 and in early 2006, to start hiring replacements.

Investment banking and equities are expected to be strong in 2006, according to the Securities Industry Association. Thus banks will likely continue to look for talented bankers in those broad categories, especially in hot sectors such as financial sponsors, FIG, energy, consumer products, and portions of technology.

Despite all the resumes that pour in, top Wall Street banks tend to hire among a known pool of people who usually work for rivals. "It's like playing musical chairs pretty much among those [already] in the game," says Murari Rajan, co-head of the US investment-banking practice at Egon Zehnder.

As 2006 has gotten under way, business remains brisk. M&A volumes are already at $606 billion, up from $422 billion in the same period last year, according to Thomson Financial, and equity underwriting is showing signs of a comeback. Fixed income and trading are expected to be strong, but at a more muted level than in the past. Meanwhile, the SIA is predicting an even a bigger bonus pool in 2006.

But there is an inescapable reality hovering over bankers. While they got paid well in 2005, their rebound year, their comp is still nowhere near the pay accorded to star traders, who help rake in the Street's bigger profits. "Investment banking doesn't drive these firms anymore," Johnson says. "It may not drive it again."

(c) 2006 Investment Dealers' Digest Magazine and SourceMedia, Inc. All Rights Reserved.

http://www.iddmagazine.com http://www.sourcemedia.com

St. Louis Blues Sold for $150 million

The St. Louis Blues, the second worst hockey team in the NHL, announced that will be sold for $150 million in cash and debt.

"The Blues announced Friday that owners Bill and Nancy Laurie will sell the team and the Savvis Center to Checketts and his Sports Capital Partners and Towerbrook Capital Partners."

TheStreet.com's Weekend Linkfest

As always, here is TheStreet.com's Weekend Linkfest put together by Barry Ritholtz.

More on Cramerica

More on the Jim Cramer rage on American investors. This Forbes article discusses some of the issues with people disclosing Cramer's recommendations before they are shown on TV.

NYTimes Dealbook: We got a deal, but we'll shop it too

Interesting piece from the NYTimes Dealbook in Sunday's paper. Andrew Ross Sorkin sheds light on the new phenomenon - the "go shop" provision in M&A deals that allows the seller to announce a deal with Company A, but go shop itself to others at the same time. If a higher bid comes in, then great, if not, no harm done, because the original deal was announced anyway. Any higher bidder would have to cover the break-up fee imposed on the original transaction. A recent deal using the go shop provision was the announced sale of the Atlantis casino/hotel to an investor group.

"Instead of the typical "no shop" term that has long been standard issue in merger deals — to keep sellers from soliciting higher offers after reaching an agreement to be sold — some boards of directors are now taking the opposite tack. Sellers are cutting deals with buyers that allow them to actively seek higher offers after reaching agreement. So, in the case of this week's deal, Kerzner International, owner of the Atlantis resort, and its advisers literally began an auction for Kerzner the day it agreed to be sold."

VC Investing: Mash-ups not always that attractive

A NYTimes article from several days ago discussed a trend in the venture-capital space to begin questioned mash-ups.

Blank Check IPOs: Time Running Out?

The blank check phenomenon is as rampant as ever. "Over the past two years, "blank-check" companies have raised more than $3 billion through initial public offerings, promising investors to go out and find attractive acquisition candidates." But, as Retuers says, some of these blank check companies have been silent on the deal front, and if they don't do one soon, they may have to return the money to investors. Therein lies the conflict for management. Why give money back to investors? Why not just do a dud deal and get paid to run a company? That could be a scary situation for retail investors in blank check companies. Of course the company could do a blockbuster deal like Services Acquisition Corp.'s acquisition of Jamba Juice (announced last week).

Short Cramer?

Is Jim Cramer a good prognosticator? Kellogg students say no. What do you think?

Also see this.

Check out Dealscape Blog

Looking for real-time analysis of deals and rumors? Check out theDeal.com's Dealscape Blog. This blog, run by the staff that writes for www.thedeal.com has insightful links to some of the best news and commentary on the corporate finance space. It is a nice complement to the DealBook blog that I have discussed on this blog before. You may remember that theDeal is a corporate finance trade journal that is owned by a holding company run by the venerable "Bid 'em Up" Bruce Wasserstein.

FYI, Dealscape has an RSS feed as well.

"Almost Every Group Has One"

Hilarious article from the Phat Phree. Kudos to the writer. Every group has a cab fare or dinner tab ducker. These people need to be stopped.

Aviva backing out of Prudential bid

The U.K.'s biggest insurer, Aviva, is backing off its bid to buy Prudential for approximately $30 billion. Aviva said that it would only pursue the deal if it was friendly (as opposed to be hostile). However, terms apparently have not been agreed upon between the two parties and so Aviva is backing off.

USAToday: share buybacks are rampant

Excess cash has translated into more share buybacks, says the USA Today. "Standard & Poor's 500 companies snapped up a record $349 billion of their own shares in buybacks last year, according to a report S&P will release today. That's greater than the market value of Microsoft. "

It makes you wonder though, if EPS growth is coming from decreasing denominators, is that really a bullish sign? Even the Oracle from Omaha questions the rampant share buyback trend in his annual letter. "This tendency for buybacks to goose EPS, regardless of the company's actual performance, encourages executives paid with stock options to do more buybacks, Warren Buffett wrote in his Berkshire Hathaway 2005 letter to shareholders."

Interesting new way to play the housing market

Rumblings from most market prognosticater is that the real estate market is set for a correction, especially in certain markets. Well, a new index from the S&P 500 will add legitimacy and data to predictions. A WSJ article today discussed the S&P's initiatives to come out with "10 indexes that will track housing prices in various regions of the U.S., as well as a composite index. The indexes, which plan to launch in April, will serve as the basis for futures and options contracts that will trade on the Chicago Mercantile Exchange."

"The contracts will allow investors to go long or short on a specific housing market -- that is, bet on it rising or falling in value.
Dubbed the S&P/Case-Shiller Metro Area Home Price Indices, the 10 cities comprise Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco and Washington, D.C.
The composite index will be weighted, with New York, for instance, carrying more influence than Miami because the Big Apple has higher housing values and more homes."

Pretty interesting. Here is the article if you don't have a WSJ password:

S&P Will LaunchIndexes to TrackHousing Prices
By KAREN TALLEY March 23, 2006; Page D2
Investors who think the housing bubble is about to burst will soon be able to bet not only on when it will happen, but where.
Standard & Poor's, a unit of McGraw-Hill Cos., is rolling out 10 indexes that will track housing prices in various regions of the U.S., as well as a composite index. The indexes, which plan to launch in April, will serve as the basis for futures and options contracts that will trade on the Chicago Mercantile Exchange.
The contracts will allow investors to go long or short on a specific housing market -- that is, bet on it rising or falling in value.
Dubbed the S&P/Case-Shiller Metro Area Home Price Indices, the 10 cities comprise Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco and Washington, D.C.
The composite index will be weighted, with New York, for instance, carrying more influence than Miami because the Big Apple has higher housing values and more homes.
"Obviously all this talk about housing bubbles is going to enhance interest in the product," says David Blitzer, chairman of Standard & Poor's Index Committee. But he adds the indexes are also meant to serve as a reliable source of information about what is many consumers' most valuable asset.
The indexes will use calculation techniques developed by economics professors Karl Case and Robert Shiller, such as repeat-sales calculations and a database comprised of home sales from a variety of sources, including lenders, multiple-listing services and public records. Data will be gathered continuously, and the indexes will be updated and published monthly, Standard & Poor's said.
Futures contracts obligate an investor to buy or sell an underlying asset on a certain expiration date at a fixed price, unless the investor makes an offsetting trade beforehand. Options grant the right, but not the obligation, to buy or sell an underlying asset at a fixed price anytime before expiration.
Write to Karen Talley at karen.talley@dowjones.com1

Lucent and Alcatel?

The NYTimes and WSJ reported that discussions have arisen between one-time techboom darling Lucent and French telecom equipment maker Alcatel. This evening Lucent and Alcatel confirmed discussions are occurring regarding a possible MOE (merger of equals) but, as with many deals, the talks are preliminary and there is no guarantee that a deal will be consummated.

Hortons prices offering; $672 mm deal

Tim Hortons priced its IPO at $23.16 this evening. Look for a pop tomorrow.

• "The company sold 29 million shares at $23.16 per share, netting $671.6 million. The estimated price range was $22 to $24 per share, which was increased Monday from a previous target of $18 to $20 per share."
• Wendy's will retain 85% of the Company

Google: Welcome to the club

The venerable Google has been added to the S&P 500 and investors have cheered. Often when a company is added to a popular index, the stock rises as portfolio managers of mutual funds that track the S&P are forced to buy the stock in their portfolios, thereby driving up the price. Investors are applauding, as seen in the after-hours movement in the stock.

The Return of the Strategic Buyer

With all the hype of leveraged buyouts and private equity boom, what then of the strategic buyers? IDD had a nice article on the prospect of strategic buyers returning to the game. With high cash balances, shareholders might want to see the cash being used to do deals rather than buyback stock or issue dividends. I guess the big question is, if strategics are back in the game, won't that just bid up deal values in auctions even more?

Google's Finance Website

I still use quote.yahoo.com but Google's new Finance site is pretty slick, especially the scrollable charts.

Tim Hortons IPO expected tomorrow

IPOs come and go but some catch everyone's attention. Recently Chipotle was the high-flying IPO of the year, doubling on its first day. The New York Stock Exchange's first day as a public company rather than as Archipelago was met with open arms and enormous interest. A few years back it was Google's massive IPO that got the attention of investors everywhere, especially considering their online IPO auction process. And now add Wendy's IPO spin-off of the Tim Horton's doughnut chain as the next talk of the street. Just yesterday, Wendy's announced that it would be upping the price range from $18-$20 to $22-$24. The offering is expected to raise $700 million. Sources I found said that the offering is expected to price tomorrow.

BusinessWeek ran an interesting piece analyzing the IPO and its prospects. Horton's is dominating in Canada, but almost to the point that there isn't much room left, or so it seems. So now it will have to compete with Dunkin Donuts and Starbucks in the U.S. Not the easiest feat.

Reuters: Insurance Market Will Continue to Consolidate

Reuters had a nice article that discussed the prospect for more buzz in mega insurance mergers. First there was buzz of St. Paul and Zurich. Recently there has been buzz of Aviva and Prudential. With the excess capital being created since rates have hardened following 9/11, maybe other deals will follow.

The American Stock Exchange looking to IPO

As this blog has discussed before, the buzz in the exchange market has been consolidation and IPOs. Well Reuters and other financial websites are reporting that the American Stock Exchange will pursue a demutualization and an IPO in the near future. In a demutualization, the seat owners, who own the exchange, give up their seats in return for shares in the company.

Reuters
TheStreet.com

Frothy Private Equity and Banking Market?

Go where the money is, or so goes the saying. In the latest trend of post-MBA dream jobs, private equity and hedge funds seem to be at the top of every future Gordon Gecko's shortlist. Of course not ever polished 30-year old is KKR or Carlyle material, but that doesn't stop the masses from trying. Why the big push? The likeliest theory is that MBAs are being turned off by the time committment associated with i-banking. The traditional path seems to be for someone to bite the bullet and do banking as an analyst for two to three years after undergrad before venturing into private equity or going back to business school. Business schools traditionally have not been active recruiting grounds for private equity firms given that most shops don't hire too many post-MBAs and the fact that the jobs are so coveted that there isn't a need to convince students to enter the LBO world through campus recruiting, but rather, students would actively find firms on their own. With a large amount of endowment, high net worth, and pension money flowing into private equity firms and hedge funds, however, many in the industry are wondering if a bubble might be developing. It is true that the hedge fund and private equity markets have become the industry "du jour" for people to buzz about at cocktail parties, but as with most trends, too many people jump in, things get overheated, deals begin selling for frothy prices, and a one unlikely correction in the market becomes a reality.

Check out two interesting articles:

NY Sun on the Harvard MBAs and their drive to break into the private equity business

A Harvard MBA says that too many Harvard MBAs pursuing finance jobs. That means that a stock market correction is imminent.

London Stock Exchange Still the Prime Jewel

The Economist had some nice pieces on the speculation behind financial exchange consolidation. The recent buzz of the London Stock Exchange rejecting NASDAQ's proposal has been covered extensively by the media, as the mere idea of a bid has people thinking of mass consolidation.

UChicago GSB

The best news I have heard in some time came through the wire yesterday, when I received indication that I was accepted to the University of Chicago's Graduate School of Business, Class of 2008. I will be starting this fall as a full-time student and, needless to say, I am thrilled about the opportunity. I received the call late yesterday evening and have been on cloud nine since. The application was a long, strange trip that included months of anxiety and frustration. Somehow it all worked out in the end and I couldn't be happier. Work has calmed down somewhat and I am getting ready to pursue the next venture in my career. I am excited to meet my new classmates at the admit weekend and can't wait to undertake the GSB experience. It should be a great two years.

On another note, the focus of this blog will still be on the markets, especially the deal environment. But it will also now be a place for me to share my thoughts on the MBA/GSB experience. I will try to help people applying to the school get acquainted with the ins and outs of the school as well as the admissions process. One of the things you will likely see me get involved in is the Chicago Business newspaper, and you can be sure that I will link blog readers to some of my articles.

Look out for new posts on my MBA experience as well as the usual deal related news and analysis.

Thanks

Jamba Juice Sold

Everyone's favorite smoothie joint, Jamba Juice, will be sold to Services Acquisition Corp for $265 million. Services Acquisition, run by Steven Berrard, the former chief of Blockbuster, will take over the privately held entity that reported $342 million in sales through its 532 locations. Services Acquisition is an interesting story. The Company went public as a "blank check" company in 2005. Basically, this means that they raised capital from the public markets to do a deal, although the deal they were going to do wasn't disclosed at the time of issuance (and it may not have even been known by Services at the time of the IPO). Needless to say, Services shareholders have responded favorably to the proposed deal.

I recall a Barron's article on Blank Check companies a few months back. It referred to some of the risks inherent to them. I'll try to dig it up from the archives and post it.

But at any rate, here is an article on the Jamba Juice deal.

The DealBook's view.

Interesting NCAA Pool Format Written About in Monday's WSJ

The Wall Street Journal never ceases to amaze and provide insightful commentary on financial and non-financial issues. As the venerable financial publication has done in the past, the Journal, yesterday, published a guide to the NCAA tournament. The guide included information on some of the teams, a bracket the size of two pages, an analysis of George Washington's rise to college basketball fame, a discussion of atheltic programs at Duke, Northwestern, Stanford, and UCLA that received VC funding, and other insightful pieces on the "business of the tournament."

What was most interesting to me, however, was the piece describing an innovating NCAA pool format called a Calcutta. In a Calcutta, people "buy" teams through an auction. All 64 teams are purchased based on demand among members of the pool (usually your buddies or colleagues). As you would expect, the most expensive teams are the best teams (the Dukes, UConns, etc.). As the tourney plays out, teams you "own" win you money as they get through each round. The winner of the tournament often wins about 1/4 of the entire pot. Here is the article in case you don't have a WSJ subscription.

How to Buy a College Team

A Calcutta auction can be a brainy twist on the traditional tournament betting pool

By PETER SANDERS
March 13, 2006; Page R4

For Dan Gati, the most exciting night of March Madness isn't the final game. Or any game, for that matter. Rather, it comes two days after the National Collegiate Athletic Association announces the seedings for the men's tournament.

That's when Mr. Gati presides over a "Calcutta" auction, an increasingly popular variation of the tournament betting pools that are so common among friends and co-workers nationwide.

Mr. Gati, a 29-year-old lawyer in New York, gathers a handful of friends in an Upper West Side apartment, with two or three more conferenced in on speaker phone, and conducts an auction for each of the 64 teams in the tournament. The money that's collected will be distributed in the following weeks to the "owners" of the winning teams in each round of the tournament.

Last year, Mr. Gati and seven friends threw just under $7,000 into the pot with their bids. The big winner was Mike Kestenbaum, who collected $1,871 -- just over a quarter of the pot -- when a team he bought for $500 at the auction, the University of North Carolina, won the tournament.

"I decided to organize this auction for my friends because I have a lot of free time and I'm good with Excel," says Mr. Gati, who has run his auction every year since 2001. (For serious Calcutta enthusiasts, computer proficiency is essential to calculating how much to bid on each team.) "As we get older and make more money, it gets more and more ridiculous."

For recreational gamblers and sports fans long accustomed to the standard tournament office pool -- where each participant picks the winner of every game before the tournament begins, and points are awarded for each correct pick -- Calcutta-style auctions offer a livelier, and, proponents say, brainier way of betting on one of the biggest gambling events in all of sports.

Participants in a Calcutta auction often rely at least in part on gut instinct or team loyalty, just as they would in any bet. But the bidding process injects a strategic element that's missing in the standard pool.

Computers and Catholics

Calcutta auctions vary slightly according to the whims of the participants, but the basic setup goes like this: Teams are put up for bid in random order until all 64 are sold. There is no limit on the number of teams a bidder can buy. The number of games a team wins in the tournament determines the percentage of the pot the owner is awarded -- a tiny sliver for teams that win only one game, all the way up to perhaps a quarter of the pot for the team that wins six games to take the championship.

In the broadest sense, the bidding is simple as well: Lower-seeded teams typically can be bought on the cheap, while highly ranked squads go for bigger bucks. But for many Calcutta fans, the fascination is in placing a value on each fluctuates as the bidding progresses, since it depends in part on how much money ends up in the pot.team, and then trying to buy a team for that amount or less. And that's trickier than it might sound, because the value of every team

Many bidders conduct elaborate, computer-aided analyses to map out their bidding strategy, taking into account factors including past tournament results and auction histories, as well as each team's prospective opponents. For those who aren't quite up to doing the analysis themselves, there are plenty of pundits online who offer bidding advice, free or for a fee.

It's all part of an annual gambling spree that the Federal Bureau of Investigation has estimated at nearly $2.5 billion in legal and illegal bets. Office pools and Calcuttas generally are illegal but rarely draw the attention of authorities, who focus their resources on bigger, continuing gambling operations where the organizer is taking a cut of the bets.

Still, it's not easy to get gamblers to open up about the big-time Calcuttas, partly because gambling winnings are taxable, and also because some people are concerned that their employers or others would frown on their participation. And Calcuttas do get big. For the past decade, one 69-year-old lawyer in New York has run a Calcutta with a group of about 50 attorney friends. They gather at a bar on Long Island and run an auction similar to Mr. Gati's. The difference: This auction runs well into six figures, with the annual pot reaching between $150,000 and $200,000, the lawyer says. The owner of the tournament winner gets 18% of the total.

"If St. John's, Notre Dame or Villanova are in the tournament, then the bids spike, it all goes up," the lawyer adds. "We've got a big Catholic contingent."

For Mr. Kestenbaum, who is 29 and a second-year M.B.A. student at the University of Pennsylvania's Wharton School, Calcuttas are all about strategy -- using the same tactics found in the business world. Besides participating in the New York pool, Mr. Kestenbaum runs a Calcutta with about 25 of his classmates.

Last year, they held their auction at a Philadelphia bar, laptops aglow as groups of M.B.A. students furiously typed numbers into Excel spreadsheets during the bidding. "There's so much strategy involved in continually trying to estimate the total pot amount at the end, which determines what you're willing to pay for each team," says Mr. Kestenbaum. In 2005, the Wharton group's pool totaled $11,135, a "pretty good size for a bunch of students," he says.

Cornering a Region

Participants use several broad tactics, Mr. Kestenbaum says. One common approach, he says, is "where you own a few expensive blue-chip teams" with a good likelihood of reaching the Final Four; you can also "buy a whole basket of midtier teams, which you own for value." There are plenty of ways to get creative, too. One highly unorthodox strategy Mr. Kestenbaum mentions is to try to buy every team -- or at least every remotely competitive team -- in one of the four regions the tournament is broken up into. That way you have guaranteed winners in every round of regional play, and a good shot at the final prize, since you are assured of having one of the Final Four teams. Of course you would also have guaranteed losers in every round of regional play, so crafting your bids to make this strategy pay off would be particularly challenging.

"The Calcutta has appeal to students here who are investors and are getting ready to go into careers in banking and hedge funds, which require real knowledge and skill about valuation disciplines," says Mr. Kestenbaum, himself off to a hedge fund after he graduates.

Bob Stoll, a professional sports handicapper in San Francisco, agrees that the educated gambler has an edge in Calcuttas. Through his Web site, DRBobSports.com⁷, Mr. Stoll, 40, sells a road map for bidders to use during Calcutta auctions, based on his statistical analysis of the teams and the auction process.

"What you get in a lot of these auctions are just people who love certain teams and they're not necessarily that savvy," he says. "They forget about teams where the real value is: teams from mid-major conferences that are good and people just don't know it."

Mr. Gati, meanwhile, eagerly anticipates his own Calcutta, and is hoping for better luck this time. Last year, he spent $2 on No. 16 seed University of Montana and $28 on No. 9 seed University of Nevada, Las Vegas. He had a $4 profit between the two and was out of the action after the tournament's second round. "It's more fun when you have more teams," he says. "When you're bidding on a 16 and a 9 and having them eliminated in the first rounds, when you're still running a pool, it's not that much fun."

--Mr. Sanders is a staff reporter in The Wall Street Journal's Los Angeles bureau.

Write to Peter Sanders at peter.sanders@wsj.com⁸

Bloomberg Lists the Top 20 Investment Banks by Fees

The article, which appeared in Bloomberg Magazine, analyzes the investment banks that garnered the most fees in debt and equity capital raises and M&A advisory services.

Weekend Reading, Linkfest, and Funny Money links

Here are links to TheStreet.com's great weekend pieces

1. Ritholtz's Linkfest
2. Kedrosky's Weekend Reading
3. Kreisler's Funny Money

NASDAQ makes an informal offer for the London Stock Exchange; Offer is Rebuffed

In a unexpected takeover overture, U.S. based OTC exchange NASDAQ made an informal offer to the London Stock Exchange to buy the British entity for $4.1 billion in cash. The offer, the London Stock Exchange announced it had received on Friday, was quickly met with rejection by the LSE, which said it undervalued the enterprise's worth.

Many may recall that Euronext and the Deutsche Borse exchange have made attempts at acquiring the LSE, but have been met with rejection. There were rumors in 2005 that Australian based Macquarie was interested in LSE, but nothing has panned out.

The prospects of a deal between a U.S. based exchange like the NASDAQ and the London Stock Exchange seems logical given how much dynamics in the exchange industry have changed. The New York Times article linked above makes an interesting point when it states that the move by NASDAQ was an attempt to be a suitor for an attractive target before the newly public NYSE could swallow it. This makes sense given that NYSE CEO John Thain has publicly stated that one of NYSE's goals as a public company is to pursue acquisitions, since it has the currency to do so.

In other interesting news, one of NASDAQ's advisors has announced that it will be relinquishing its role given potential conflicts. J.P. Morgan has stated that due to the fact that it has a joint venture relationship with Cazenove Group, conflicts exist that make advising NASDAQ through a hostile deal could be problematic. More specifically, Cazenove is a corporate broker for the LSE. "Corporate broking is a particularly British type of banking advice where bankers serve as confidants and advisers to a company's chief executive. The broker can provide advice on mergers and acquisitions, underwrite stock issuances and take the pulse of investors before a company makes a move."

It will be interesting to see how everything plays out.

NYTimes' DealBook is now updated through a blog as well

As I have mentioned in earlier posts, the NYTimes DealBook has been a great source for corporate finance news and analysis. Each morning, the DealBook sends an email to subscribers containing links to some of the deals and rumors in the M&A space. Well, along with the daily email, Andrew Ross Sorkin of the DealBook now will run a blog here. So far the site looks great and it is nice that is updated so often. There are RSS feeds for the blog, which is a big plus. As many readers of this blog know, RSS is, in my opinion, the "next big thing" and something that all people that like keeping up with trends and news should use.

Here is a press release on the new DealBook blog.

TheStreet.com's Linkfest

While this site will help point you to great articles that I found interesting, it will also point you to sites that list articles that other's find interesting. Check out TheStreet.com's Linkfest.

Wendy's will explore options for its Baja Fresh Chain (Wall Street Journal)

According to the Wall Street Journal, Wendy's will assess strategic alternatives for its Baja Fresh Mexican Grill chain. Wendy's announcement to pursue strategic alternatives comes on the heels of the Company's filing of an IPO for its Tim Horton restaurant chain. It seems that the influence of invester Nelson Peltz has been instrumental in bringing about these strategic moves at Wendy's. A Baja fresh IPO would follow the successful IPO that McDonald's oversaw for its Chipotle mexican chains. Check out the WSJ link here.