BloggingStocks

Cramer on BloggingStocks: Don't bother with the private-equity chatter

Jim Cramer — 2008-08-28T09:25:00+00:00

Filed under: Rumors, Private equity, Market matters, Merrill Lynch (MER), Amer Intl Group (AIG), KKR Financial (KFN), Apollo Investment (AINV), Lehman Br Holdings (LEH), Blackstone Group L.P (BX), Cramer on BloggingStocks

TheStreet.com's Jim Cramer says the only action in the sector is that the rumor mill is spinning overtime.

There are tons of ridiculous stories that can be written in the Naked City. Notice that every day we are blessed with a story about how there are three private-equity firms examining Lehman Brothers (NYSE: LEH) (Cramer's Take) and Neuberger Berman (NYSE: NEU) (Cramer's Take). I think I have read that story a dozen times now.

You can list them, too: Blackstone (NYSE: BX) (Cramer's Take), KKR (NYSE: KFN) (Cramer's Take), Apollo (NASDAQ: AINV) (Cramer's Take), maybe Cerberus. What are they going to do, deny it? "No, we are not looking at it?" Their investors would love that: "Well what the heck are they doing with our money?" would be the reaction of investors if they issued denials. I predict weeks more of phantom tire-kicking of Lehman by nonexistent private-equity firms.

How about private equity about to swarm over collateralized debt obligations? Usual cast of characters there. Right? Come on, those stories are a penny a dozen. Every day I read about them. But nobody, other than Lone Star, is doing anything, anything at all on this front. If there were buyers, you can bet that Lehman and AIG (NYSE: AIG) (Cramer's Take) wouldn't be in the woods, lost, hopeless, with tons of bad European paper.

Or this one: Chinese and Korean banks eyeing down-and-out brokerage firms and banks. What a staple that is -- throw some names in, and you have a darned-tooting good story.

How in heck does any editor not see through this garbage? And the reason it is so important is that we have had these stories written all the way down, and they have created a remarkable amount of bogus confidence. In fact, the only real story of any consequence involving fresh capital in the last month has been Merrill's (NYSE: MER) (Cramer's Take) trade with Lone Star. Nothing else of any consequence has come to fruition. They are all just hope and made-up stories about private equity. Stop being conned: Nothing is happening. Too much money was lost in the spring.

There. End of story.

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Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in the stocks mentioned.

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Analyst downgrades: PEP, ACAS, O and KFN

Eric Buscemi — 2008-04-01T11:30:00+00:00

Filed under: Analyst reports, Analyst upgrades and downgrades, PepsiCo (PEP), KKR Financial (KFN)

MOST NOTEWORTHY: American Capital, Realty Income and KKR Financial were today's noteworthy downgrades:

Jefferies downgraded American Capital (NASDAQ: ACAS) to Underperform from Hold as they see a disproportionate risk profile in the company's current portfolio when compared to most peers.
Banc of America cut Realty Income (NYSE: O) to Sell from Neutral as they believe the current valuation is not sustainable.
Bear lowered KKR Financial (NYSE: KFN) to Peer Perform from Outperform following the company's announcement that it intends to sell 20M shares in a public offering.

OTHER DOWNGRADES:

Goldman cut PepsiCo (NYSE: PEP) to Neutral from Buy.
RBC Capital downgraded Avocent (NASDAQ: AVCT) to Sector Perform from Outperform.
JP Morgan removed NICE Systems (NASDAQ: NICE) from its Focus List.

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Newspaper wrap-up: Lufthansa could take stake in Continental, United combination

Laurie Pasternack — 2008-02-20T08:00:00+00:00

Filed under: Newspapers, Magazines, UAL Corp (UAUA), KKR Financial (KFN), Delta Air Lines (DAL)

MAJOR PAPERS:

The Wall Street Journal reported that KKR Financial Holdings LLC (NYSE: KFN), a unit of Kohlberg Kravis Roberts, revived concerns of a credit crunch after it asked for a restructuring of billions of dollars in short-term debt.

OTHER PAPERS:

According to sources, the Chicago Tribune reported that Deutsche Lufthansa AG (OTC: DLAKY) could look to take an equity stake in a merger between Continental Airlines Inc (NYSE: CAL) and UAL Corporation's (NASDAQ: UAUA) United Airlines.
The Associated Press reported that the pilots' unions of Delta Air Lines Inc (NYSE: DAL) and Northwest Airlines Corporation (NYSE: NWA) are unable to agree on how seniority for the companies' pilots would work under a combined carrier. The impasse puts the deal in "serious jeopardy," inside sources reported.

WEB SITES:

Electronics retailer Sharper Image Corporation (NASDAQ: SHRP) has filed for bankruptcy, citing declining sales and profitability, Bloomberg reported.

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Before the bell: Futures lower as investors await data

Melly Alazraki — 2008-02-20T07:37:00+00:00

Filed under: Before the bell, International markets, Earnings reports, Hewlett-Packard (HPQ), Market matters, Economic data, KKR Financial (KFN), Housing, Federal Reserve

U.S. stock futures were significantly lower this morning, indicating U.S. stocks could have a rough start as investors await data on inflation and housing. Despite solid results from Hewlett-Packard after the closing bell Tuesday, renewed concerns about the credit market, oil climbing above $100 a barrel and the uncertainty about the upcoming data pulled futures lower.

Like seemed what was going to be a healthy gains day Tuesday, ended on a down note after oil futures reached the $100 a barrel. The Dow industrials fell nearly 11 points, or 0.09%, the S&P 500 lost over 1 point, or 0.09%, and the Nasdaq Composite dropped 15 points, or 0.67%.

Several economic readings are due for release today:

At 8:30 a.m., consumer price index for January will be reported. Economists predict inflation may have grown 0.3% during January, or 0.2% excluding fuel and energy prices.
At the same time, January housing starts and building permits also will be released. Economists expect the data to remain near the lowest level since 1991 in January, as the deepest real-estate recession in a quarter-century will weigh on the economy for a third year.
At 2 p.m., the Fed will release minutes from the last interest-rate policy committee in which it slashed rates by a half-point.

Meanwhile, around 10:30 a.m., weekly crude inventories will be reported. Oil closed for the first time above $100 a barrel Tuesday, but prices retreated somewhat Wednesday to around $99 a barrel. Concerns over a refinery explosion and the possibility that OPEC may cut its output caused oil prices to spike with several other factors remaining in the background.

Overseas, stocks fell in Europe and Asia following oil's price spike. Stocks in Asia fell sharply with Japan's Nikkei 225 Stock Average sinking 3.3%, and Hong Kong's Hang Seng Index slipping 2.2%.
In Europe, Germany's DAX declined 1.9%, France's CAC 40 lost 1.8% and the U.K.'s FTSE 100 also slid 1.8%.

Fresh credit fears were brought forth when KKR Financial Holdings (NYSE: KFN) has postponed repayment of billions of commercial paper and is restructuring talks with creditors. KKR Holdings is the listed affiliate of private-equity firm Kohlberg Kravis Roberts & Co.

On a good note, though, Hewlett-Packard (NYSE: HPQ) said it earned $2.13 billion, or 80 cents per share, for the three months ended in January. That compared with net income of $1.55 billion, or 55 cents per share, in the same period a year earlier. Excluding one-time items, HP said it would have earned 86 cents per share, exceeding the 81 cents analysts have been expecting. Revenue for the period increased 13% to $28.5 billion. H-P shares are up over 4.2% in premarket trading and the good news will likely help boost the tech sector.

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KKR - moving into Goldman territory

Tom Taulli — 2007-11-06T14:16:00+00:00

Filed under: Private equity, Goldman Sachs Group (GS), KKR Financial (KFN)

When KKR filed its IPO, the firm mentioned that it was exploring activities beyond its core private equity business.

Well, it's getting started. As pointed out in a recent piece in the Wall Street Journal [a paid service], KKR is edging into the IPO game. That is, the firm is the joint book-running manager on an equity offering for Rockwood Holdings (NYSE: ROC), which is a major specialty chemicals manufacturer. The company plans to issue 10 million shares.

Basically, KKR will help to drum up investors for the offering. No doubt, it's a lucrative business (where commissions have held steady over the years). In fact, KKR is a major shareholder in Rockwood (always nice to double dip, huh?)

Despite the fact KKR is getting competitive with Wall Street investment banks, that's not having much impact on this deal. After all, Goldman (NYSE: GS) and UBS (NYSE: UBS) are participating.

And, with private equity cooling off, it seems KKR has no choice but to expand its business -- turning itself more into a full-fledged financial services firm.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

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Money Face-Off: Steve Schwarzman vs. Henry Kravis

Sarah Gilbert — 2007-09-16T13:34:00+00:00

Filed under: Management, Private equity, KKR Financial (KFN), Blackstone Group L.P (BX)

This post is part of our Money Face-Offs feature. Let us know who you think comes out ahead in this head-to-head match-up, and check out our other Money Face-Off posts.

Stephen A. Schwarzman, co-founder of the Blackstone Group vs. Henry Kravis, co-founder of KKR. A showdown so delicious, it's already been immortalized on Page Six -- Schwarzman calls Kravis a "one-trick pony," Kravis calls Schwarzman "the poster boy for greed." Who is more arrogant? More eccentric? Richer? Only the planners of their lavish parties can tell ...

The two have been in a high-stakes tennis match of sorts for years in every financially-oriented aspect of their lives, starting with the companies they target, continuing through their more personal acquisitions and not even ending in their contributions to charity.

Nope. In the world of private equity, KKR had always been the hugest, the most storied, the most secret and powerful. KKR was responsible for the 1988 leveraged buyout of RJR Nabisco, inspiration for thousands of MBAs, as well as a book and a movie. Not many financial deals have inspired so much as a little sonnet, but this, this was the stuff of legend.

Part of that legend? Kravis' formidable ego.

The hostile takeover was orchestrated in part because RJR CEO F. Ross Johnson considered talking to a rival firm about the LBO. And so began a long series of deals meant to keep the chip firmly planted on Kravis' shoulder (keeping his sense of self-importance intact appears to be even more important than his place on Forbes' list of billionaires -- at #349, he's oddly exactly 100 spots behind Schwarzman).

It seems that Kravis and Schwarzman compete constantly in an almost theatrical way, each vying to have the better art collection, the more fabulous assortment of vacation homes (Kravis' four vacation homes are in Southampton, Palm Beach, Paris and Meeker, Colorado; Schwarzman also counts the Hamptons and Palm Beach on his list of vacation spots -- forget Paris, Mr. Schwarzman?), the lovelier wife (really, I know nothing about their wives except that Mrs. Schwarzman wanted to put an offer on Donald Trump's Palm Beach mansion while construction was still in progress on her own, and Kravis has had a whoppin' three wives).

But the biggest point of contention seems to be this little IPO of Schwarzman's. When he took the Blackstone Group public this year, it either set the market price or ruined the market for future private equity IPOs, depending on your perspective. He also beat Kravis to the punch. And whether Kravis is truly mad at him for piercing the veil and making private equity a little less private, or actually because now KKR will always be second fiddle in the public markets to Blackstone, well, it's certainly the case that the two men can't stand one another.

And if you ask me, there's no better theatre than when two really rich, really powerful, really egotistical men hate each other. I believe it's your move, Mr. K?

Vote in our poll for Henry Kravis or Steve Schwarzman, and let us know in the comments why your choice has the financial edge in this match-up. Also be sure to check out our other Money Face-Offs.

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Analyst upgrades: ANN, CAL, CECO, INTC and KFN

Kevin Shult — 2007-08-16T10:47:00+00:00

Filed under: Before the bell, Analyst reports, Analyst upgrades and downgrades, Good news, Intel (INTC), KKR Financial (KFN), Stocks to Buy

MOST NOTEWORTHY: Commercial Metals (CMC), KKR Financial (KFN), Career Education (CECO), Ann Taylor (ANN) and Intel (INTC) were today's noteworthy upgrades:

CIBC upgraded Commercial Metals (NYSE: CMC) to Sector Outperformer from Sector Performer based on valuation.

KKR Financial (NYSE: KFN) was raised to Outperform from Market Perform at Friedman Billings, following managements detailed conference call and managements prudent and rapid actions to address the sale of its Rambus (RMBS) portfolio.

Bear Stearns upgraded Career Education (NASDAQ: CECO) to Outperform from Peer Perform based on valuation.

Ann Taylor (NYSE: ANN) was upgraded to Outperform from Market Perform at Piper Jaffray due to the upside at the company's LOFT division and the firm's belief that there is upside to their 2008/2009 estimates for Ann Taylor.

Credit Suisse upgraded shares of Intel (NASDAQ: INTC) to Outperform from Underperform based on expected margin expansion, a more benign competitive environment in the MPU sector, better positioning vs. AMD (AMD) at the high-end, and strong demand trends...

OTHER UPGRADES:

Citigroup upgraded Sovereign Bancorp (NYSE: SOV) to Buy from Hold.

Network Appliances (NASDAQ: NTAP) was upgraded to Buy from Neutral at Merrill Lynch and Caris raised shares to Buy from Above Average.

JP Morgan added Continental (NYSE: CAL) to its Focus List. Punk upgraded Washington Mutual (WM) to Buy from Market Perform.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

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Analyst downgrades: CFC, HD, KFN and PEP

Kevin Shult — 2007-08-15T11:32:00+00:00

Filed under: Before the bell, Analyst reports, Analyst upgrades and downgrades, Bad news, PepsiCo (PEP), Home Depot (HD), Countrywide Financial (CFC), KKR Financial (KFN), Stocks to Sell

MOST NOTEWORTHY: PepsiCo (PEP), Countrywide Financial (CFC), KKR Financial (KFN), Home Depot (HD) and Visteon (VC) were today's notable downgrades:

PepsiCo (NYSE: PEP) was cut to Neutral from Buy at Goldman based on valuation.

Merrill downgraded Countrywide Financial (NYSE: CFC) to Sell from Buy, citing liquidity concerns in the mortgage sector as accelerated margin calls and forced asset sales could lead to further problems and selling pressure.

KKR Financial Holdings (NYSE: KFN) was downgraded to Market Perform from Outperform at Friedman Billings based on the liquidity crisis and impact on equity. Lehman cut shares to Equal Weight from Overweight based on capital market funding concerns.

Home Depot (NYSE: HD) was downgraded to Hold from Buy at Gabelli due to near-term uncertainty.

Goldman downgraded Visteon (NYSE: VC) to Sell from Neutral...

OTHER DOWNGRADES:

Credit Suisse downgraded UBS (NYSE: UBS) to Neutral from Outperform.

Merrill cut Deutsche Bank (NYSE: DB) to Neutral from Buy.

Bear Stearns downgraded LG Philips LCD (NYSE: LPL) to Peer Perform from Outperform.

Keefe Bruyette downgraded Security Bank (NASDAQ: SBKC) to Underperform from Market Perform.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

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Blackstone Group IPO -- the real thing?

Melly Alazraki — 2007-03-16T12:50:00+00:00

Filed under: Private equity, Goldman Sachs Group (GS), KKR Financial (KFN), Apollo Investment (AINV), Blackstone Group L.P (BX)

Since the story of private equity firm The Blackstone Group's potential initial public offering has been out only a couple hours, it is still very much developing. With so few details out, the implications are as yet unknown. Here is Tom Taulli's earlier piece on the subject.

From CNBC's Faber (you can watch the video here, partial transcript's here) we know that the Goldman Sachs Group Inc. (NYSE:GS) and Blackstone attorneys are preparing a prospectus. Preparing is one thing and filing is another, and yet Faber is quite adamant in his belief Blackstone will file within two weeks or by the end of March. Also, the decision to go public rests on Chairman and Chief Executive Stephen Schwarzman. Once again, an adamant Faber says "the decision has been all but made."

While Faber said that Blackstone's market value could be easily in excess of $20 billion according to bankers, MarketWatch points out that it isn't clear yet what kind of an IPO this would be. The shares could represent

the Blackstone Group itself, or they could represent a fund that's managed by Blackstone Group, much like Kohlberg Kravis Roberts & Co. KKR Financial Corp. (NYSE:KFN) real-estate investment trust and Apollo Management's Apollo Investment Corp. (NASDAQ:AINV).

Regardless, and especially if the Fortress Investment Group (NYSE:FIG) is any indication, there would be strong interest in the IPO. Considering all the noise and after the year private equity had had, I, for one, think that this IPO is going to be the real thing.

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Private Equity: Carrying a Big Stick and Speaking Louder

Tom Taulli — 2006-12-27T16:45:00+00:00

Filed under: Private equity, KKR Financial (KFN)

With a name like "private equity," it does make sense that the industry has been without a trade association. But as private equity deals get bigger and bigger, it is important to become much more politically savvy.

So, finally, the industry has its own trade group. The name is: The Private Equity Council. The leader is Douglas Lowenstein. His prior gig was the leader of the Entertainment Software Association (this is the trade group for video gaming).

According to the press release, the Council will do things such as: "launch research, public affairs and government outreach initiatives to explain the multiple contributions private equity makes..." Although the real purpose is likely to get buy-in on Capitol Hill. Also, as private equity moves offshore, expect the Council to take a global perspective.

And, with backers like the Blackstone Group, Carlyle, KKR (NYSE:KFN), and Texas Pacific Group, there should be no shortage of resources.

Tom Taulli is the author of various books, including the Complete M&A Handbook and operates DealProfiles.com.

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