Weekly Financial Biz Recap: Citigroup and Goldman Sachs Employees Bail, Warren Buffett Antes Up
Berkshire Hathaway (NYSE:BRKA) is a 5.5% owner of IBM (NYSE:IBM), Warren Buffett tells CNBC’s Squawk Box. Berkshire Hathaway shares are getting a bit of a bounce. The Oracle also tells the gang he’s been adding to his Wells Fargo (NYSE:WFC) position “month after month.”
Bank of America (NYSE:BAC) has reached a deal they say will generate roughly $2.9B in Tier 1 capital. Selling the bulk of its remaining stake, 10.4B shares to a group of investors in China Construction Bank, will boost its Tier1 capital ratio by 24 bps. The end result will be a post-tax gain of $1.8B.
JPMorgan (NYSE:JPM) boosts its rating on shares of Allied World Assurance (NYSE:AWH) to Overweight from Neutral. Not only is the rating boosted, but its price target on shares went from $60 to $72. Analysts with the firm point to the potential for increased pricing, a mature U.S. platform, and growth that should outpace peers.
Deutsche Bank’s (NYSE:DB) Josef Ackermann withdraws from consideration for the lender’s Supervisory Board. He was to head it after retiring as CEO in 2012. The move likely will give new co-CEO Anshu Jain more latitude to shape the direction of the bank in the coming years.
Credit Suisse’s (NYSE:CS) Aa1 rating given by Moody’s (NYSE:MCO) is under review for downgrade following the bank’s CHF 800M Q3 loss. This is after stripping out CVA gains. The powerful Swiss franc has caused some of the loss, but Moody’s sees the difficult macroeconomic environment as a bigger issue.
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Capital One (NYSE:COF) delinquencies rose from 3.65% to 3.73% for the third straight month and international charge offs rose from 5.65% to 6.24%, while U.S. charge-offs only rose 0.06%.
Morgan Stanley (NYSE:MS) struggled in Q3 though according to an SEC filing they were one of the three biggest financial holdings as of Sept. 30. Ken Heebner was buying 6.9M shares, whom is known for making concentrated bets on industry, of which his CGM Focus Fund had 42% of its assets in (NYSE:C),(NYSE:SPG), and Morgan Stanley.
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Goldman Sachs (NYSE:GS) announces an unusually high number of partner retirements internally in recent weeks. Kevin Kennedy and Jeff Resnick are among the top well-known Wall Street names leaving. Kennedy was running Latin American operations, and Resnick was head of commodity trading.
Bank of America’s (NYSE:BAC) brand is high-jacked thus suffering another PR blow. Google Plus Pages was filled with mocking photos and comments after being “brandjacked”. In the midst of massive job cuts, it goes to show why a company must still keep an eye on their social media presence.
JPMorgan Chase (NYSE:JPM) must pay $1.9M in fines associated with customer losses. These incurred from the unsuitable sales and recommendations of unit investment trusts and floating rate loan funds. The agency says Chase brokers steered clients with conservative risk profiles to investments consisting of high-yield or junk bonds that in some cases were illiquid.
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Citigroup (NYSE:C) could join the list of banks cutting staff. The WSJ reports the bank is considering a cut of almost 3000 jobs. Around 900 would include jobs in securities and banking arms. Revenue has fallen in those sectors due to market volatility. A cut this large amounts to 1% of its workforce.
BNY Mellon (NYSE:BK) and State Street (NYSE:STT) have whistleblowers lambasting the companies for overcharging clients for currency trades. This could provide an early test of the SEC’s new program to encourage tips about financial wrongdoing. The tips are among the first publicly reported possible bounty claims to the SEC.
Goldman Sachs (NYSE:GS) and JPMorgan (NYSE:JPM)have sold CDS protection on more than $5T of debt around the globe. However, don’t expect to get detail on which it was that sold. The banks have hedged themselves perfectly, and are not likely to divulge how they did so, unless they suffer a run similar to what has occurred to Jefferies (NYSE:JEF).
Bank of America (NYSE:BAC) teeters precariously near the $6 level. Sterne Agee’s Todd Hagerman remains uninterested in the shares despite their huge discount to book value. He states “ongoing sale of non-core legacy assets (CCB), recently announced stock swap, [and] persistent legal claims highlight ongoing capital needs [and] diminished core EPS power.”
Morgan Stanley (NYSE:MS) agrees to pay more than $3.3M to settle an SEC investigation. The claim is that a closed-end fund investing in Malaysian stocks charged investors for third-party services that the investors didn’t actually receive.
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Jefferies Group Inc. (NYSE:JEF): Bondholders could benefit from the rumor that Jefferies is in dire straits as some seem to suggest. But its market valuation as a percentage of book value is in line with Goldman Sachs (NYSE:GS) and ahead of several financial firms, Heard On The Street says. Distressed prices could prove lucrative, if concerns around Jefferies’ European exposure really is being driven by fear rather than fundamentals. JEF shares recently traded at $10.10, down $0.01, or 0.1%. Its market capitalization is $2.23 billion. They have traded in a 52-week range of $9.50 to $27.12. Volume today was 9,155,243 shares versus a 3-month average volume of 5,079,890 shares. The company’s trailing P/E is 6.85, while trailing earnings are $1.47 per share.
CME Group Inc. (NASDAQ:CME): Fears of CME’s liabilities seem to calm a bit after Evercore suggests limited fallout. Angst stemmed from MF Global’s meltdown. Though trading volumes could be affected, legal exposure looks “low,” even though CME will likely see increased legal costs and stricter regulations down the line. Evercore thinks much of this is already priced in given the stock’s pullback. CME shares recently traded at $249.52, up $11.47, or 4.82%. Its market capitalization is $16.57 billion. They have traded in a 52-week range of $235.23 to $328.00. Volume today was 1,141,728 shares versus a 3-month average volume of 675,682 shares. The company’s trailing P/E is 13.23, while trailing earnings are $18.86 per share.
SunTrust Banks, Inc. (NYSE:STI): SunTrust (NYSE:STI) joins a line of large firms steering employees into 401k programs. Traditional pensions – promising a fixed income for life – are dying off in the private sector. STI shares recently traded at $18.04, up $0.17, or 0.95%. Its market capitalization is $9.60 billion. They have traded in a 52-week range of $16.51 to $33.14. Volume today was 5,291,314 shares versus a 3-month average volume of 8,192,620 shares. The company’s trailing P/E is 17.13, while trailing earnings are $1.05 per share.
NYSE Euronext, Inc. (NYSE:NYX): Deutsche Boerse (DBOEY.PK) and NYSE Euronext (NYSE:NYX) submit proposals to sell European equity-option operations. They are looking to gain EU antitrust approval for their $9B merger and thus will provide competitors with access to a major derivatives clearinghouse. A ruling is due at the year-end. NYX shares recently traded at $27.13, up $0.55, or 2.07%. Its market capitalization is $7.11 billion. They have traded in a 52-week range of $21.80 to $41.60. Volume today was 2,588,631 shares versus a 3-month average volume of 3,630,780 shares. The company’s trailing P/E is 11.12, while trailing earnings are $2.44 per share.
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