Fate of SAC's $14: Money Moves (08/01)

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Aug. 1 (Bloomberg) -- "Money Moves" brings insight to investors looking for alternatives Deirdre Bolton talks to the professionals in hedge funds, private equity, venture capital, angel investing and real estate. Find out where they see opportunities. (Source: Bloomberg)

It is not clear exactly what could be spun off but going into this and talking to investors, they said that was a possibility.

The company could further streamline by spinning off some of its operations or that lafley could come in and an active management changes.

We haven't seen that yet.

He could makeit is still open he could make changes.

And on a pretty good course.

The stock is up 20% year to date.

You could not blame traders that wanted to cut their profits and go to the beach.

We will be back with more on the markets in 30 minutes.

"money moves" starts now.

? welcome to "money moves"." we will show you what investors are doing as well as what is going on in realist date and more.

Today there are questions about the $14 billion in assets and what to expect next from the u.s. attorney's office.

And carl icahn is doubling down on dell saying he will sue the company as they get set to vote on a buyout.

Old media is turned inside out and back again.

We will show you where you could find some winning bets.

We begin with what may be the highest row file defense contract in the world, the chance to build the president's next helicopter.

Our chief correspondent peter cook has more on the competition, or the lack of competition.

That is right.

At last check this contract worth as much as $6.7 billion only drawing the interest of a single bidder, united technology , which is the incumbent in this contract.

No other company committing to build the next marine 1 by today's deadline and that leaves them on its own.

They are as as much as three decades old.

This is a rendering of a on a five version of its chopper it is opposing to build.

This is a helicopter that is in use around the world.

The company says it is capable of making the unit -- meeting the unique demands of presidential travel.

The navy hopes to have them in service by 2020. president obama will not get the use of the new marine one.

Why did not others jump into the battle?

They have not they'll said -- not all said publicly.

Someone said in a statement there are proposal valuations issues we believe in our ability to submit a competitive offering and provide an advantage to our likely competitor.

We should note they did not protest the bidding process.

Thank you for the update.

Peter cook joining us from d.c. now to the first private equity and hedge fund manager in the u.s., reporting profit last quarter tripled to the highest since 2007. devan, what is driving this performance?

Is there a link between rising stock markets and fortress?

That is right.

A great quarter for fortress.

It is really driven by their macro bets.

They have macro funds that take big bets.

For example, there is a fund that is a $2 billion fund that is very hard more than a year before shinzo abe came to power.

They made a lot of money in the stock market as the yen fell.

They had shorted that trade.

They made a lot of money.

What does this say about the broader alternative asset industry?

The most interesting thing we heard today on the conference call was investors, this is a time to be selling investments more than buying invest.

The traditional tenant of investment has flipped on its head right now because the holdings of private equity firms are at good valuations.

They are ready to sell them but that means the market for companies they could be buying is very tough.

Prices are high.

That was the most interesting thing.

Thank you so much for your take on the latest results.

We are going to move onto to the fate of sap capital.

This is one of the most read stories on bloomberg today.

It's $14 billion may be in jeopardy.

With me now is the reporter that wrote the story and has been tracking developments for bloomberg.

We're talking forfeiture of their assets.

What that mean?

It is a legal strategy the u.s. attorney is using to try to basically get access to more than just the amount of money of the alleged insider trading.

The total amount of money if the prosecutors are correct, and that is yet to be proven, if they are correct, it adds up to several hundred million dollars.

Out of a $14 billion fund.

The laws in a civil case, if proven, would allow the u.s. attorney in manhattan to go after a larger sum of money.

It is not clear he could have access to all 14 billion.

Most of the experts suggested is going to be a smaller number.

Does he have a number in mind?

He has not shared it with us.

Some of the experts we spoke to in this field point out this could be a negotiation ploy to basically open up the potential amount that could be for favorable in order to facilitate a dialogue.

Not necessarily an intent to get all of it.

The government has not charged him with a crime or pseudonym.

What are his rights versus -- or pseudonym yeah.

What are his rights?

The suit was fired -- filed a week earlier.

If that goes forward, they could basically ban him from managing other people's money.

The criminal case against him would have the same net effect.

Basically putting the fund out of business and leaving co hen to be managing his own money.

He has been covering sa c and its founder.

Coming up next, google prepares to unveil its smartphone.

We will take you to the event that is happening in new york.

And how one of the biggest names in venture capital is betting on new media.

An emerging opportunities in commercial real estate.

All of that is coming up on "money moves." streaming on your phone, tablet, and bloomberg.com.

? google is said to unveil a new smart phone from its motorola unit.

Jon erlichman is at the event in new york.

A lot of anticipation right now.

That is because this is the first big product announcement since the $12.5 billion acquisition by google.

We know they went back to the drawing board to think about what kind of product they could put in the market that might make a dent against apple and samsung.

We will be looking for some of the details on what this product looks like and how it works.

It has been a lot of talk about the technology it might use.

Pricing is also going to be important because depending on that, we will see the number of shipments could be different.

It is also important story in where google is going in terms of keeping android fresh when it comes to operating systems that are running phones around the globe.

Those details are coming out and about the fact this is a phone been assembled here in america at a facility in texas.

We will ask a lot of these questions.

Made in the usa appliance.

How unusual.

Jon erlichman, joining us in new york today.

Mobile is the great disruptor.

It has turned the entertainment industry upside down.

My next guest is a venture capitalist focused on the digital media specter.

He is here with us.

When we talk about the media space, it is all about content.

You hear it from the traditional broadcasters and new media.

Is that we use see?


There are two trends changing the media business.

There is a proliferation of mobile devices which are billions of small televisions in everybody's pocket.

The second is this over-the-top phenomenon where phenomenon where players like netflix are bringing television content to consumers using the internet.

So these models are both creating opportunities for the incumbent players and opportunities for upstarts to help them navigate.

The new start ups, are they complementary?

We actually see and fund both types.

There is a lot that are actually working with companies like zephyr, who does claiming on behalf of companies.

There is a bunch of other companies that create an interface for traditional television and new internet companies.

There are some that do that and they are brand-new companies that dreamworks just acquired which created a set of an original new programming to the teenage market which was brand- new content.

It was some ways disruptive and dreamworks thought it would help them.

Owing back to the idea of content.

Jon was telling us about the moto x. it is very fragmented.

How does new media play into that?

Does it benefit?

Yes and no.

The most important thing is there is carriage around the world.

There is consumers, it used to be when you a content business, most of you went after a household.

Now you can reach consumers on a global basis.

The mobile phone is the primary creator of that distribution and you can use mobile and internet signals to get that content to the consumer.

The consumer, sorry, the content matters because now it is gett able.

Accessible to everyone.

You focus on new companies but what about the traditional companies?

If you look at how they are valued, there is much talk about how valuable they are.

Does that surprise you?

Not really.

If you think about the television business initially, the studio side of the creation has never been better.

It has readily -- radically increase of these narratives like "breaking bad." consumers can go back online and catch up and then actually go back and watch and they can license it.

So that creates a huge windfall for the studio side of the business.

However, the networks are under pressure.

So if you look at nickelodeon, spongebob is worth a fortune but the audience is under pressure because the younger kids are watching it on youtube and other things that are encroaching on their audience.

What is i going to look like in five years?

The smart ones are going to program across the light forms and extend their reach onto mobile devices so that consumers do not only find the content in a way they do not have established.

Folder -- for the older networks, it is less of an issue.

But others with mtv and nickelodeon, they need to be aggressive to make sure they are dominant.

Some of these companies, is the goal to be bought out by google or yahoo or one of the entrenched players?


I think the answer is both.

I think the technical companies like google and microsoft have their own initiatives.

They are going to be looking for technology and ways to scale out their initiatives quickly.

I think media companies are going to be looking for content but also some of them are heavily invested.

They are struggling with figuring out what to do exactly because they obviously want to amplify the value of the content they own but they also want to the disruptive to their own business.

Mark terbeek, and exciting sector.

When we will be watching.

Just ahead, a new name in consumer electronics.

The transformation one online search company and competition for angie's list and your local hardware store.

We are going to introduce you to her.

And the growing popularity of investing in commercial real estate.

That is coming up on "money moves." ? one headline we are following, sprouts formers market opening at $35 a share.

The stock more than doubling after its ipo price of $18. sprouts is backed by apollo global management.

It raised 330 $3 million in his public offering.

Investors are betting on hurling interest as the economy makes a comeback.

From private equity to commercial real estate, real estate has emerged as an alternative investment.

Are pretty occupancies are on the rise thanks to steady job growth.

Rental yields have never been higher as well.

We bring in the managing director of the largest u.s. broker of real estate.

He joins us from san francisco.

Good afternoon.

You say there is a window of opportunity in commercial real estate.

Where do you see it opening up?

Is a shopping center?

We are seeing exuberance for commercial real estate that appears to be sustainable because the fundamentals are improving so much.

Now that the economy is picking up some steam and job growth is putting up better numbers, there is more interest in real estate.

Apartments, because of the strength given the housing crisis, where the first to recover.

There is a lot of demand.

Now we are seeing retail comeback very strongly as retailers think about expansion instead of foreclosure.

Even though office markets, which have lagged, are showing better momentum going into the second half of 2013. is there anywhere where the window is closing?

I would say all property types offer an array of investment opportunities because interest rates, despite the rise in the last 30 days, or even apartments have led to the recovery and rent growth, they are still performing well.

We think each sector, you have value opportunities which are higher yield, maybe a tired asset.

And then you have your opportunity investment categories, which has not had a big run in prices.

That provides a window of tremendous improvement ahead of us.

Perhaps in september, does the close the window?

Not at all.

We are expecting interest rates to rise when the economy performs better.

Reaction in the markets were overdone.

If you have occupancy basically income levels that are growing at a rapid pace, that offsets the interest rate increases.

We are not seeing a big comeback of new construction.

You have to remember construction cross having -- construction costs have increased.

We are not expecting an oversupply which is the enemy to the cyclical gains in real estate.

Rate it down for us.

Low risk, low yield market.

New york, san francisco, boston.

What is the return versus the recovery market, the ones that have are making their way back?

Those markets are supply constrained.

It is difficult to add new supply so they tend to hold their views better.

The prices are high and the yield is lower because the risk is lower but when you look at texas and florida, atlanta, even las vegas, which were very hard hit during the recession and had a housing crisis, those markets are showing an economic recovery that is sustainable and the demand for commercial real estate is coming back.

Texas is a great example of job growth and not a lot of new supply on the horizon to the point of derailing the recovery.

Seattle or the inland empire in california, also shows a lot of prospects for rent growth.

And then you have your stable markets like chicago where you have stability, higher yields, and an arbitrage among these better performing markets.

What kind of investors are active right now?

Are they foreigners?

Individuals in the u.s.? exuberance across the board.

Initially the recovery was institutional investors coming back into the market in 2010. but in the last 18 months we have seen it brought in.

You have retail investors coming back into the market.

Buying small to midsize assets.

We are seeing foreign capital come into the u.s. at a higher degree as well.

They tend to be very select it.

-- selective hessam nadji joining us from san francisco.

Bloomberg is on the market.

Olivia sterns has all of the details.

Let's take a look at how markets are doing right now.

It is a sea of green.

The dow jones is up over 140 points right now.

This after the s&p already had its best month in january back in july.

The s&p on track to be up 20% since the start of the year.

Data points driving the markets higher today, two names i want to highlight for you, carl icahn plans to sue dell.

Dell is up about two percent.

Check to speak energy is also up after beating estimates.

-- check the speak -- chesapeake energy is also up after beating estimates.

More after the break.

? this is "money moves" where we focus on alternative investments.

One headline we are following today, your is in the sec case against -- are now in their second day of deliberations in downtown manhattan.

A are weighing whether he is liable of each of seven counts including negligence.

The sec alleges he was tied to the collapse of the housing market.

The jury had three notes for the judge including a question about whether the sec had to prove he obtained money as a result of his conduct.

He said he had to receive more than his normal compensation.

With us as we continue to cover this trial.

We will take you on the scene when there are breaking developments.

We want to get to adam johnson in the newsroom.

Edward snowden has received a one-year asylum in russia.

He leaked details about surveillance programs to the press and until today he had been in the moscow airport transit area since june 23. his lawyer says he is headed for a safe location that has yet to be disclosed.

The obama administration has urged russia to expel snowden to the u.s. the white house is evaluating how to proceed in the g 20 summit.

Italy has upheld tax fraud conviction of prime minister release conine.

This is the first final conviction for release conine -- berlusconi.

Mario draghi says the worst is over as the euro region is on its way back from the longest recession never.

He spoke at a news conference after they announced they are keeping their benchmark rate at .5%. the ecb will not tighten policy anytime soon.

And in this country, carl icahn is pulling out all the stops to halt a $24.4 billion leveraged buyout of dell computers.

He said he is filing a complaint to stop dell from changing the voting date.

He says the michael dell-plan undervalues the company.

And coming up at 3:00, we will hear from ceo dennis woodside.

He is launching a new phone for google today.

The moto x. we will ask him all about it.

We look forward to that.

Adam johnson, of "street smart." today it announced an acquisition.

The company was formerly known as -- until last year when it acquired an online leader in tax preparation.

Today it acquired an online provider of electronics and accessories.

The stock hit a new 52-week high today and we building -- bring in the ceo of blucora.

Good afternoon.

You are focused on search and the new expanded and now you provide electronic accessories.

What is the common thread between these businesses?

We are very excited about the acquisition today.

It really boils down to three elements we are excited about.

It is a great business run by a very good team and confronting an interesting market opportunity.

The finances of this business are very sound.

We offer a lot of return potential for shareholders.

This fits with the overall strategy we have articulated for blucora, to own multiple businesses confronting digital trends and actively participating in online migration trends.

So altogether we think it is a winning formula.

Do they complement one another?

Certainly the search business, which is the original business we have owned over 10 years as a public company is a stand-alone business.

It is not related.

They have a lot of similarities but they are addressing different market.

They are each challenger brands with very strong value propositions around quality and service.

And each engaging with customers directly.

I want to get to your search part of the business.

How do you succeed if you are not one of the big players?

Precisely because we partner with each of those parties.

Our motto in search is not to own and operate a search marketplace the way bing is doing and google has done.

Instead to partner with them and take their search content and their search result to a network of distribution partners.

We work in the middle between the large search engines and the network of partners that are looking for solutions that want to work with somebody smaller who is going to pay attention to them.

You also have a digital do it yourself thing.

Is this a play on a certain demographic gekko i have to think -- certain demographic?


I think that trend is observable.

We participate in a do-it- yourself tax-preparation market.

Where you have a cross-section of the population that is very comfortable taking advantage of technology and software to do taxes on their own every year.

That represents 40% of the filing population.

And with mono price, it is a similar profile where you have consumers that are value conscious and looking for quality products but also comfortable assembling it themselves for their own use.

I think there are similarities.

Given some of those common themes, what kind of opportunities are you looking at in terms of acquisitions?

First and foremost, our businesses we currently own are going to have adjacent opportunities where we can invest or acquire to accelerate what they are trying to do strategically.

We are going to be looking at those opportunities.

If we come across a business that is outside of what we are doing, that has all of the elements we like, which is good business with great management and we can structure that deal in a way that makes sense, we will pursue those transactions as well.

Bill ruckelshaus joining us from seattle.

When we come back, call centers and other features for companies including home depot, box.

The ceo on the future of cloud communication.

? tullio helps customers keep updated on behalf of home depot and it also lets box users share share files safely and securely.

I spoke with the ceo earlier this week and asked him how it works.

Tullio is a cloud communications company for communications and something that companies use to develop that into their corporations.

You get the example of a car company that sends you text messages when you're cap is pulling up.

That keeps you in the loop about when to expect the cab.

How do you position against big companies like a via?

We started the company focused on software people.

By moving this and for structure from inside your closet, moving it as a shared infrastructure in the cloud, this is a change.

You see this in software as a service, salesforce, you see this in the infrastructure how amazon is moving the data center in the cloud.

We are doing it for communications.

Software is about eight percent.

Medications is 44%. it is an enormous part of how companies invest.

This has not yet moved to the cloud and twilio is making that happen.

You expect more competition going forward?

Twilio is a unique take.

We were born to serve as software people and was born in the cloud.

Everything we do is focused on providing global, scalable resources in the cloud to incorporate communications into their applications.

That is a unique take because that is not what the history of telecom has been geared toward.

That is where we have made a footprint.

What are the biggest misconceptions about the cloud?

That is a good question.

A lot of people ask about, how is it going to work with my business?

Is a reliable?

I think as a technology world, we come to grip with the facts the cloud is a better alternative to having every company run their own infrastructure in their own server closet.

That is because when you have 100,000 customers running the same stuff, they are all responsible for making it reliable and secure.

As we have seen with infrastructure as a service, vendors run multitenant infrastructure and they focus that scalability and reliability on providing one environment that performs better than what 100,000 companies can do.

That was twilio's ceo.

A high-tech way to book a handyman.

? your apartment is dirty, the faucet is leaking, and of course you are working all day in somebody's kitchen.

You do not need to call and help . that is where handy book steps in.

It is an online booking service for handy people and housekeepers.

The ceo is here with me now.

I get this makes sense if you move to a new neighborhood but how is this better than word-of- mouth referrals from your neighbors?

It is all about making it easy to book him services.

If you think about the referral you get from a friend.

Or a neighbor.

You have to check whether that is good.

And then you have to contact the person and schedule this.

Is that person free, and have to negotiate a price.

You have to actually be there and trust the person is going to show up on time and you have to handle payment.

At handy book, we take that away.

We pre-check professionals.

We let you book them instantly on our mobile app.

One other distinction, you do not have to be home.

You are vetting these candidates carefully.

Three percent of applicants get accepted.

That is lower than harvard.

That is right.

We put a huge amount of effort in finding the very best people.

If you're not going to be there, you want somebody you can trust to do a good job.

35% of our business comes from word-of-mouth and that is coming from the fact we are doing such a good job.

We put that down to the vetting process we do.

That make sure people aren't legal.


There are 14 steps.

In person training, all of that goes through to make sure everybody on the platform can be trusted.

What is the distinction between your service or angie's list or even craigslist?

Handybook is about making the transaction simple.

There are a lot of services to give you access to data that leaves it up to you to contact a service provider to go through the process.

We have said, why can't we buy the services the same way you buy a car service on unbeber?

That is what handybook is all about.

Pressing a button on the app and knowing somebody is going to show up on time and do a great job.

How many times have you scheduled a service provider and they have been lake?

We can take that away.

Even with the convenience of doing a one touch scheduling efforts, there is going to be changes.

How do you get around that?

We have a customer service operation 16 hours a day to make sure if your life changes and you need to make a change, we can take that into account.

Of course if there is a crazy incident, that happens such a small fraction of cases, we will try to get somebody on time.

In those cases, we go for the same approach, if we are late, we will do it for free.

How many people are using it?

Over the last 30 days we have doubled.

The 30 days that we doubled.

It is huge growth over the last three months.

How do you make customers happy?

They might find somebody they like and go off-line with that person and arrange something on their own.

There are two sides to the platform.

You try to incentivize your service providers to stay on the platform.

When you think about these service providers, you are scheduling a lot of work in your rewarding people who keep more work on the platform.

The more work you do, more jobs we give to those providers.

. on the customer side, it it is about the guarantee.

We will schedule another person for you.

It is knowing your payments are going to be processed.

You don't have to remember to leave cash.

There is a $2 million insurance policy.

Who are your investors?

We have some great investors.

We have highland capital in boston and a couple of angels who have been helpful.

Do you expect to get another round of financing?

We raised about $2.4 million over last september.

That was 18 months and that the moment we have significant interest.

What are you looking to expand to?

You are prominent in the cities but the suburbs are untapped right now.

We started in boston.

We chose not just the city, we chose everywhere inside the interstate 90. in new york and chicago and d.c., miami, we focused on the urban centers but as we grow, we will look at suburbs.

Oisin hanrahan, the founder and ceo of handybook.

Next, the stocks moving ahead of the closing bell.

You'll check all of the markets.

? tomorrow, we will meet a start up the accused kick starter to raise funding and to test and improve their method of making pcs perform at top speed.

Plus, helping kin and a blue dashed groupon securing their clout network.

That is all coming up tomorrow on "money moves." bloomberg is on the markets.

For that we're going to check check in with olivia sterns.

Let's take a look at how markets are trading into the last hour of the session.

It is green across the board.

The dow jones is up 130 points.

This is after we had the best month of the year on the s&p 500 for july.

What a nice way to kick off the month of august.

A few movers i want to highlight, dreamworks is up over eight percent after reporting a surge in second-quarter profits.

One of the drivers, the hit movie "the crews." -- croods." it is doubling on his debut.

The company is up over 100%. the ipo had priced at $18 but opened at $35 and is now trading at $38. some happy executives at sprouts farmers market.

And a big day also for the automakers, companies like gm, ford, all saw a gain in july.

Right now automakers are on track for their best year since 2007. which brings us to the sector report.

Joining us to discuss the success of autos is jamie butters.

Thanks for joining us.

The chevy impala is getting rave reviews.

I believe the ford sold out at one point.

Our american automakers back at the front?

They are doing well.

The chevy impala got a great review from consumer reports.

It is a transitional product.

It had been a rental car.

Sold stripped- down, a big car that was durable and now they have made it a good looking car.

It is a nice car.

It is really moving up in the segment.

This text has been automatically generated. It may not be 100% accurate.


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