Great Article on DFA

Great article on DFA, a fund run by several UChicago grads and former students of Eugene Fama.

Morningstar Publishes Views from Top Asset Managers

Morningstar had a great article that discussed viewpoints of several top buyside managers. The list of managers seemed to be centered on value-based PMs.

Morningstar provided links to all of their shareholder letters as well, which is very useful.

Cramer admits to market manipulation

Link here.

Is Motorola for sale, looking to buy Palm, or is this just pure speculation?

So the rumor mill was brewing yesterday that something is going on at Motorola that could involve a sale of the business or even an acquisition of Palm. The rumors started after MOT CEO Ed Zander cancelled plans to deliver a keynote address at a conference. Speculation ensued that something big was going to happen at Motorola.

SeekingAlpha had nice coverage of all the possibilities here.

ICE and CBOT?

The deal announcement surely shook heads, and the fact that many CBOT execs had to find out when bids were slipped under their hotel room doors only makes the whole process more interesting. The Intercontinental Exchange (the ICE as it is often called) made an unsolicited bid for the Board of Trade that could unravel CBOT's merger plans with the CME. Suddenly we could have a bidding war and surely both sides have their cases.

The CME-CBOT merger makes sense on several fronts for both parties. The CME currently does all clearing for the CBOT, so a merger makes operational sense. The fact that both of the behemoth futures exchanges are in Chicago only adds to the ease of closing a transaction. To be sure, antitrust issues remain given the share of the U.S. futures market the combined entity would command. The CME-CBOT supporters will point to the globalization of the futures market and the blending of derivatives exchanges that makes a CME-CBOT deal a big piece of the pie, but not as big as one might think.

The ICE deal makes a lot of strategic sense for both parties. Agriculture futures and energy futures (ICE concentrates on energies) make ideal complements. The ICE offered a premium of 12% to the CME offer for CBOT and the ICE is proposing that the CBOT own 51% of the pro forma company. The fact that CBOT can keep control of the company has value which only sweetens the ICE deal.

The expected outcome? It's tough to say. The CBOT says they are planning to stay the course with the CME but will take a hard look at the ICE offer (it's their fiduciary duty to shareholders to do so).

Links on the Deal
Chicago Tribune Article
WSJ Article
Reuters Article

Blackstone going public

Is Blackstone worth $40 billion? Somebody thinks so, the WSJ is reporting today and the behemoth PE firm may take 10% of its company public and raise $4 billion.

Check out the WSJ article here.
Good video interview here.
Good analysis of the rationale for PE IPOs here.

Latest ChiBus Column

Here is my most recent ChiBus column.

List of the World's Billionaires

Forbes published their annual list of billionaires. List here.

Top ten:

1. William Gates III, Washington, 51, $56, Microsoft

2. Warren Buffett, Nebraska, $52, Berkshire Hathaway

3. Carlos Slim Helu, Mexico, 67, $49, telecom

4. Ingvar Kamprad and family, Sweden, 80, $33, Ikea

5. Lakshmi Mittal, India, 56, $32, steel

6. Sheldon Adelson, Nevada, 73, $26.5, casinos, hotels

7. Bernard Arnault, France, 58, $26, LVMH

8. Amancio Ortega, Spain, 71, $24, Zara

9. Li Ka-shing, Hong Kong, 78, $23, diversified

10. David Thomson and family, Canada, 49, $22, inheritance

New Finance Website for Young People?

The New York Post reported a few days ago that Barry Diller may team up with Dow Jones to start a website dedicated to the markets that will target young people.

D.R. Horton CEO's Candid Quote

DR Horton's CEO said that 2007 would "suck" for his Company.

Lazard Book Causing a Stir

The WSJ had an interesting article on a book covering the mystique at Lazard called "The Last Tycoons" that is set to hit the market soon, but is already causing a stir in the offices of the storied boutique bank. See below.

Lazard Mystique Uncloaked

'The Last Tycoons,'
In Bookstores April 17,
Jolts Firm, Wall Street

By DENNIS K. BERMAN
March 7, 2007; Page C2

The most popular book around investment bank Lazard Ltd. hasn't even been published yet.

"The Last Tycoons," which hits bookstores April 17, bills itself as a "secret history" of the storied investment house. Executives there have begun passing around photocopied galleys of the 700-plus-page tome, which was written by William D. Cohan, a former banker at J.P. Morgan and Lazard.

Mr. Cohan's work has sent a jolt through Lazard and the rest of Wall Street. "Last Tycoons" delves considerably into the peccadilloes of the bank's senior executives, both past and present. It also moves to uncloak some of the business mystique of the bank, once a deeply secretive private partnership and now a publicly held company with a $2.4 billion market value.

One person close to Lazard who has read an early copy described Mr. Cohan as having learned more than anyone -- dead or alive -- about the firm. He wondered, however, whether the average reader would want to spend more than 700 pages on the topic.

The book's publisher, Bertelsmann AG's Doubleday, is making a big push behind "Last Tycoons," having committed to a first run of 75,000 copies, a sizable run for a topic that is obscure to many readers. By comparison, the much-publicized Enron retelling by Kurt Eichenwald, "Conspiracy of Fools," got a first printing of 100,000. Yesterday, "Last Tycoons" ranked at 110,599 on Amazon's best-seller list, though publication is still six weeks away.

Mr. Cohan aggressively pursues the story of Bruce Wasserstein, Lazard's current chairman and chief executive. He relates how Mr. Wasserstein wrested control of the bank from its then-presiding leader, Michel David-Weill, with only a $30 million investment in the firm, rather than a $200 million injection that was widely reported

While lingering on Mr. Wasserstein's private life -- including an interview with his first wife -- Mr. Cohan also spends plenty of space critiquing Mr. Wasserstein's impeccable sense of market timing. "Bruce has made more money from investment banking than any single man in the last 10 years," Mr. Cohan said in an interview. "Not because he's a great banker, but because he's a smart, opportunistic principal investor."

Mr. Wasserstein, "is an incredible opportunist and took advantage of Michel," Mr. Cohan added. "He took Lazard public, and his stake is now worth $600 million."

Mr. Wasserstein declined to comment, and didn't participate in the writing of the book. A number of other top Lazard figures did, including current executives Ken Jacobs, Steve Golub and Mike Biondi, as well as past Lazard figures Felix Rohatyn, Mr. David-Weill and Steve Rattner.

Since Lazard's founding in 1848, infighting has been a part of the culture, with various factions of the bank warring over profits and territory. Mr. Cohan devotes a number of pages to the firm's history during World War II, when the firm's New York head, Frank Altschul saved Pierre David-Weill (father of Michel David-Weill) and Andre Meyer from Nazi persecution.

It wasn't long thereafter, however, when the two staged a coup and forced Mr. Altschul from the company.

That kind of behavior was still on exhibit for 47-year-old Mr. Cohan when he worked as a junior banker there between 1989 and 1995. The sense of history at Lazard was "palpable," he said. "You could really feel that you were surrounded by Renaissance men who believed the myth they created about the firm. But it was incredibly ruthless."

Write to Dennis K. Berman at dennis.berman@wsj.com

Buffett's 2007 Letter

Here is Buffett's 2007 shareholder letter.