Merger Fever on Walls Street: Money Moves (07/29)

REPLAY VIDEO
Your next video will start in
Pause
  • Info

  • Comments

  • VIDEO TEXT

July 29 (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)

We have retail and pharmaceuticals and advertising.

Where is the next wave of m&a going to come from?

One area we are paying attention to is the grocery business.

That is not that sexy but we are seeing some nice premiums for some small independent grocers.

They are taking advantage of this wave of organic food.

There's a big deal for harris teeter with a nice premium.

At might encourage other grocers to sell we will be back in 30 minutes.

"money moves" stops starts right now.

Welcome to "money moves" where we focused on alternatives assets.

What investors are doing as well is what is going on in hedge funds and more.

Merger fever on wall street.

Behind the deals between sachs and hudson bay.

The transmission fee standoff between cbs and time warner cable.

What needs to happen in the next two hours.

The correlation with rockets.

All of that coming up.

We do begin with sachs.

The shares are moving higher after canada's largest department chain agreed to by sachs for 2.3 billion dollars.

This is more than just about the a lower of a retail brands.

Absolutely.

They also get the real estate.

Most of this is a success story.

This is just a few blocks away from lord and taylor.

Hudson bay also owns morgentaler.

Is there any energy between hudson bay itself?

It is.

They are there with the high customers.

Sachs does have outlet stores.

You have some affinity for the middle income consumers.

We talk about these assets, does it lead to the merger which they will be able to negotiate better prices and terms?

Absolutely.

1.5 is lord and taylor.

This is 50% more volume.

Just for the sachs line of business.

Could they negotiate better prices?

Absolutely.

Especially at the higher end.

Re: going to see some turn into lord and taylor or vice versa?

You have to wonder if there is more reason to have the location.

Is really depends.

They said they want to keep it and leverage that.

I am not sure if we could see that.

We talked a lot of about this.

This is still a real estate industry.

You mentioned the value of robert c. that trophy 5th avenue location.

Talk a little bit about that.

They definitely have real estate.

The value of that i do not think anyone has the right number.

There is definitely value to that.

There is definitely interest on the value.

What can you talk about the ceo.

I know you're not getting an opinion.

He is more of a real estate guy.

That this is background.

It is.

You can see him leverage the real estate more than most.

For the future we really need to look at this.

You really do.

Thank you so much.

We are going to move onto another big merger.

It will create a powerhouse of the world's largest advertising company.

Cristina alesci is covering this story.

This is 23 billion revenues.

This is huge.

This is $11 billion.

All of these are feeling the heat.

They are taught.

-- targeting consumers.

There are more engineering talent and puts them on a competitive landscape.

There has been a bit of criticism.

You could argue that you have greater leverage to negotiate.

We spoke with the ceo earlier.

What did he say that struck out?

The start to the script.

Is this a merger of equals?

It is a murderer of equals.

They do have more revenue.

One of the challenges here are going to be merging this over the next 30 months.

There'll be two ceos.

This is going to be challenging as well.

Is any reason to believe this'll be long.

They have to sign off on this deal.

If you look at the media buying landscape it could account for 40%. they are not going to take lightly to that situation.

There's been a lot of consolidation.

This is the biggest one eared are people talking about more?

For the longest time people thought that this is number four.

This is the primary one or two or three come in.

That is a wrong with this whole industry.

It is built on consolidation.

This is what happens from here.

This is a very difficult one to take apart and see what the premium really was.

We will take a look.

Thank you so much.

Onto our next story.

It is deadline day in the battle over transmissions on cbs and time warner cable.

They have until 5:00 to reach an agreement.

They are refusing to give the demand for 600% fee increase.

Why has it been so difficult for these to reach an agreement question mark they want a six percent premium over what they charge other ones.

Why do money for the same shows i'm paying for in the lesser markets.

It is the same market.

These are new york, los angeles, and dallas.

It is about 3 million.

It is 25% of the entire audience.

These are the owned and operated stations.

Not the other affiliate.

It has never gone dark.

This is going to go right down to the wire again.

There have artie been three this week.

This would push even further potentially.

There is potentially that we have this.

Does not mean it will not get done.

There just may be some near- term gain for people that like cbs programming.

Why and how is this dispute different from others that we have seen in the past?

Time warner cable has said if you want to see cbs you can subscribe to this service which is not even exist a year ago.

Area is an eight dollar a month service that has all the broadcasts online.

It is like an antenna that you a carry around on your tablet or what have you.

Time warner cable says just been a dollars a month and you can have it and then you can continue with our program.

That is different.

Cbs is in danger of losing its number two slot on the deal if they cannot come up with an agreement.

Some other channel could jump in and be the new number two when you put your channels on time warner cable.

That is prime real estate.

That is another shift here.

That has to do with different rules.

The basic theme is that it is leverage for time warner cable.

It is more than they have had.

They do not want to see a bunch of different subscribers going away because they are complaining.

Keep us posted on all the big developments.

When we return, turning america's industrial heartland into the next silicon valley.

The opportunities and venture capitalist.

Penitentiary funds arising to a record level.

The alternative assets between the insects that should be successful investing strategy.

All of this is coming up.

Welcome back.

We're serving all day long.

Applying to school or for a new job is incredible time- consuming for the applicant and the organization.

My next guest is trying to save both sides time and energy.

The company's cofounder and ceo joins me now.

I just try to imagine life would have been had this system but available when i was applying to college.

Not trendy giveaway my age.

The recruitment process is very labor intensive.

And by two people sitting around the table a candidate.

It is pretty incredible.

Most universities were still using pencil, paper, and 10-year old subtraction systems if at all.

Since lodging -- launching this tom -- we have managed omissions for over 100 universities.

It is software as a service which is where the industry seems to be going.

It moves quickly.

Each game up with this win?

You're only 26 years old?

I have to give it to my two other cofounders.

We were all going to school.

Mark and i were both music majors.

The whole process of burning dvds and mailing them to schools.

If you are in the receiving end of that big of being -- receiving a thousand dvds.

We started a video audition for an music schools.

Very quickly evolved it into a full application system.

Over the next couple of years.

You were opting to grow this business of her medical school.

Tell me about that decision.

Entrepreneurship, i quite be caught the virus.

My two other founders had a job at microsoft.

We all canceled the plans.

And having our startup.

There is no better time for a start it then right here.

Your personal risk is low.

Thank you so much.

A headline that we are following for you here, burial is pledging a combined $40 million to help fund a new campus for columbia's business school.

This is from business school back in 1987. coming up next, rating your friends digital iq and social media savvy and how your company can tell what it means for your quarter and weeks ahead.

Bmw moves in on tesla.

We will show you their new electric car.

All of that coming up next.

? x welcome back.

Facebook's latest earnings read word turn the corner and tried how to profit.

Sales increased 53%. this is the big piece of the revenue type.

Do they deserve the praise they are not getting?

Just using the stock price as a barometer, this is not necessarily reflected on the $35 price.

You were fairly skeptical on facebook.

Why is that?

I am skeptical at these prices.

The valuation is just extraordinary.

They had a remarkable announcements that if you look at what would typically justify that.

There is this advertising like impression.

The cpm's are dropping.

It would justify what is a healthy valuation.

Is a very big cloud you are describing.

It is whether or not the valuation is super relative to where it is.

There are some really interesting stories.

If you look at advertising this is arguably the only company in the world that is not experiencing a negative arbitron was -- arbitrage.

This is extra near for a media company.

Google is incurring a negative arbitrage.

A lot of them look at hp.

Facebook has shown they have effectively become a mobile company.

They're probably the most ardent development company in the world right now, over a billion dollars.

Zero revenue from mobile just 12 months ago.

Now 41%. the facebook exchange responsible for or effect percent of the targeted clicks worldwide.

A lot of us think do i remember ads from facebook or mobile?

A lot designed the answer is no.

Just looking at the share price, it is at a high of may 2012. you have a couple of charts you brought with you including looking at prestige brand on facebook.

We have one who looks at the number of likes from burberry and dior.

A lot of friends are looking to modify.

The answer is "now what?" these communities have gotten so hermetic it has enabled the brand to facilitate interactive action.

They have not been able to monetize these communities.

It looks like burberry is taking more than this and reducing it.

Burberry has seen -- is seen as an iconic industry leader.

If you look at the chart, it is clear that even though there has been some away it is on a downtrend overall.

They spent drew mainly in the emerging markets.

Growth is faster in the emerging markets.

We look at the dollar value, where is it?

It is a bright spot for facebook.

The most engaged market by the community who likes shares or comments on that.

Aipac is now their largest community by region.

It is an extraordinarily strong board.

The other component is a lot of the traffic has not translated into actual sales.

Social commerce and asia looks like it might be a viable channel for commerce.

There are some social platforms or the track is converting to actual sales.

If facebook continues to innovate around this product development that has been extraordinary, you can see the social commerce sales probably come out of asia.

Do you see facebook allowed to operate in china anytime soon?

That is way above my pay grade.

It is so complex and so many behind the scenes moves.

Thank you so much.

Scott galloway.

You can read more on his research and the report on platform studies today at www.l2thinktank.com.

It is time for "on the markets" and alix steel has all the news.

The s&p is trying to save the late day rally.

It is down four points.

The dow is up by 22 on the nasdaq.

No surprise there.

The next one brought me to old.

Hedge funds are raising their bets that gold will rally.

Some stocks we want to hit on tesla.

It is hitting an all-time high.

We will be back in 30 minutes for more "on the market." ? we focus on innovative alternative assessment.

Here's a headline that we are keeping a close eye on.

Carl icon issuing another letter to dell shareholders.

It will only count them for or against the deal.

They raised their offer to $13 and $.75 a share.

Michael dell said he will raise the offer.

We are going to check in with adam johnson who is in the newsroom.

Hi.

perry go igo is buying elon.

Staying with farm of pfizer, they will split the three major internal businesses.

It is said to be positioning the new york-based company for a breakup.

Then there is a value business.

Bmw will begin selling its battery-powered car that happens next year in china.

They will be targeting families and commuters.

A are predicting china will be one of the top markets for the electric vehicles.

Make sure you tune in for "street mark yuriko --- "street smart." he is so involved.

A lot happening.

Angst so much.

Another headline that we are keeping track of.

The sec has rested its case against fabulous fab.

He is the former goldman sachs vice president.

According to regulators, he misled investments -- investors on the role of this.

He said he is not calling witnesses to the stand.

Heather caught up with him as he was leaving the courthouse on friday.

Do you think the jury is a fan?

I do not know.

The jury will be hearing closing arguments tomorrow.

To the other big case we are following at the federal court in downtown manhattan.

Criminal charges were announced against sec capital -- sac capital run by steven cohen.

It involves over 20 companies and dates back to 1999. today we learned that the u.s. attorney has committed to stay or delay the action.

Here with me is a former attorney who leads the ring with tori -- the regulatory action.

You predicted this will happen.

Why does a criminal case tape residents?

What they are going effectively after the same people.

A lot of times the u.s. attorney is not wanting to allow a civil case to go forward.

A lot of times you will see this happen.

It is not much of a surprise.

It is to some degree better news for steven cohen but now he does not have to worry about testifying.

Do you think the sec was rushing to get it against : himself?

He was approached by the attorney.

The ultimate goal was to either goes down or bring charges with the increase.

Let's keep him out of the advising and managing money for the public.

They can ban him for ever.

By bringing the criminal case it will have an effect upon the business.

Maybe the sec was hoping it would work in tandem.

Cohen pleaded the fifth earlier.

Will he testify in the criminal case?

Like that is a good question.

I am not quite sure it is always the best approach.

I think that depends on the circumstances of the case.

In this case?

I think a lot needs to be decided and looked up.

How would you advise him?

I think there are certain things they need to focus on.

Several hundred employees are research analyst.

The other thing you have to consider is this that he may be to an review all the e-mails that came in.

11 were the ones he read through the it comes down -- 11% were the ones he read." . he would've had to know that the information was coming from an anticorporate sewers.

-- source -- and inside corporate source.

What they had was material.

It was confidential, not public that other people were unaware of.

They can defend the various charges.

I would expect it.

How significant will be wiretapped be?

I am not sure that they will play a bigger role here.

To the extent they have wiretaps it might be that he would have allowed.

I do think most brokerage firms to have systems in place where they do regularly record phone call conversations and what goes on in the trading desk.

I would not be surprised if there were tapes out there.

It will come down to what he and others say, what their meaning was, and what they understood what the meaning of the e-mails.

A lot of room for lawyer speak.

Inc.

You so much.

-- thank you so much for your time today.

Thank you.

Rejecting the investment of new york's bravest and finest.

The chief investment officer for the city of new york's pension fund.

That is coming up on "money moves" right here on bloomberg television.

? been new york city pension fund announce returns of 12.3%, bringing it to a record of 137 billion dollars.

It is used to pay retirement benefits to city employees , teachers, firefighters.

13% is an alternative investment.

The majority is being invested in private equity and real estate.

Larry is the chief investment officer.

We welcome you back.

Quite i am glad to be back.

12 point three percent return -- 12.3% return.

What changed?

The market changed.

We over allocated u.s. equities.

U.s. equities were up 20%. we called it right.

We are also under allocating u.s. government bonds.

That went the wrong way.

It was the right way to be set up.

We made is about -- about as much money as you can make.

You are now just above 13% for all matures -- for alternative investment.

Where do you plan to take it?

It should be about 20%. the interesting thing about alternatives is that we have committed about $6 billion this year.

You might think it should move up.

Those are commitments.

It is going to take us for our five years for those commitments to be invested.

We took out $400 million from our money managers this year because they took companies public or sold them.

It is a very long treadmill to get that number up.

The only alternative asset class we put the money right away is hedge funds.

We put in about $1 million worth of hedge funds this past year.

How long do you have to see before you get that tangible return in alternative investments?

It probably takes five or six years.

It is a very long-term illiquid asset class.

If you do it right it is the only asset pass on an actuarially bases that get you over the 7% on a consistent basis.

Will you be putting more money into hedge funds?

We are.

We will have about 3 billion dollars in hedge funds.

Do you have any specific new areas you want to enter that you are iming?

We made our first commitment to infrastructure.

We changed our real estate asset class to be real assets.

Real estate, timber, mlp.

N.y.c. is one that is not managed its own assets.

Can you tell us why there is this reluctance?

It is a very complex question.

The simple answer is compensation.

Ultimately, we are paying the fees to the money managers who pay the compensation to their employees.

You can eliminate the middleman if you eliminate compensation to your own employees.

A typical employee makes $100,000. if you are a first-year harvard mba you make 200 $50,000. that is absurd.

That is a big difference.

That is a first-year associate.

I make 224,000. you think i am more than a first-year associate.

I think we should have a stab at invest directly as well as in on an -- funds.

Very quickly, your fund is at a record when detroit is going bankrupt.

Any advice for the city of detroit?

No.

it is very complicated.

It took decades to get into that situation.

We are nowhere near that situation.

I wish everyone involved in detroit my best.

Good luck.

Words to live i. -- to live by.

Coming up next, senator john mccain on the next budget standoff in washington.

That is coming up next on bloomberg television streaming on your phone, tablet, and bloomberg.com.

Keep it here.

? welcome back to "money moves" on television, air tablet, your phone, and bloomberg.com.

Senator john mccain will be meeting with the white house chief of staff to figure out how to keep government funding and october and avoid hitting the debt ceiling.

Hans nichols just sat down with mccain moments ago.

He has a wrapup of the conversation.

What did you learn?

John mccain is back to wheeling and dealing.

He expressed both optimism and frustration with the current state.

We have achieved a lot but we have had discussions.

We have tried to narrow the differences and clearly explained the different positions we have.

There has been conversations in between us and democrats.

There has been did as mcdonough and the head of the office budget has been over.

She has been very good.

We have been trying to establish parameters.

We have not made a lot of progress.

What was frustrating?

It is always frustrating until something breaks.

I am not saying that something will break.

I know that something cannot break unless we continue to have these discussions.

Of the deadline, we have one coming up.

The government will run out the money.

Whose advantage is that in terms of forcing action?

The experience that i have , and i think most members have had is the advantage goes with the president.

People blame congress for not passing legislation to keep the government functioning.

I think that some of my newer collie may not have learned that lesson.

In the house or the senate?

Both.

Any specific noun -- names?

No.

we need to keep this behind us.

If we can subtract some concessions we do not have to do this every year, then that is good.

We really cannot let the government shutdown.

Has there been a decision on whether or not to tie this to funding with the sequester and how did the debt ceiling play into this?

There are different scenarios.

That is one of the problems we have.

We have not decided whether to tie the sequester to the ideal or the debt limits.

Generally it has been accepted to tie the sequester into a grand bargain.

Honestly, we have not moved off discussions on any of those.

Would like to tell you we have that we have not.

Maybe other people have been making more progress.

I just have not been a part of it.

When the white house as they will not negotiate, do you believe them on that?

I would much prefer to say the president say i want to sit down and talk with the members of congress as well as in the senate.

I do not think it is helpful.

Way john mccain is doing is describing an oncoming train wreck we have the sequester come together they have this all around the october deadline.

It is crucial.

They hang republicans lose negotiating power every day they walk toward that deadline.

You're starting to hear mccain send messages to the house and colleagues.

They need this now, not later.

They will be in a position of weakness.

It sounds like the advantages with a white house.

What else have you talked about with john mccain?

We will be talking about this later.

The president is deeply critical of the white house and the chief of staff.

He says they have lost all credibility because of this argument that you hear some in the white house and some in the military community making, that the u.s. cannot direct a no-fly zone in syria.

He thinks it is patently untrue.

He thinks it gets to this.

Hans nichols, our white house correspondent.

We're going to check the markets after the break.

? . . tomorrow, where hedge brokers are hunting for yields.

I will be speaking to achieve investment officer.

Plus the chief investment officer of trulio on the future of wearable technology.

And how to clean up your online presence.

All of that tomorrow on "money moves." in the meantime, it is 56 minutes past the hour, so time to check on the markets.

For that we go to alix steel.

The dow now down 23 points.

The nasdaq off by seven.

Roper industries is lagging on the s&p. the company are ported earnings.

They missed revenue estimates cut the 2013 forecast.

Pfizer is up today.

The company announced it will split up its three major internal businesses and shuffled management.

And finally we end on caterpillar.

The hump and he announced its accelerated stock repurchase plan.

-- the company announced its excelerator it's hot repurchase -- its accelerated stock repurchase plan.

Joining us, our casino and gaming analyst, brian.

It is so great to have you here.

Wynn has been underperforming macau.

What could change that?

W ynn has been underperforming macau for the last few quarters.

For them, it is more growth keeping in mind profitability.

They want to keep the table yields where they are.

What do you mean by table yields?

You're talking about baccarat.

You want to measure different casinos on the per dave pieces.

That's a relative value metric.

Las vegas was certainly ahead

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

Advertisement

BTV Channel Finder

Channel_finder_loader

ZIP is required for U.S. locations

Bloomberg Television in   change