U.S. mortgage applications rise, but so do rates: MBA

NEW YORK, Wed Aug 7, 2013 — Potential buyers crept back into the U.S. housing market last week as applications for mortgages edged up, even though rates resumed their ascent, data from an industry group showed on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose 0.2 percent in the week ended Aug 2.

The gauge of loan requests for home purchases, a leading indicator of home sales, was stronger, adding 0.7 percent after falling in four of the past five weeks.

Appetite for mortgages has dropped over the summer, hurt by a surge in interest rates on the Federal Reserve’s plan to start slowing its economic stimulus later this year if the economy progresses as expected.

The Fed is currently buying $85 billion in bonds a month to keep borrowing costs low. The cheap mortgage rates have helped spur home buying and worries have emerged that higher costs could take some of the strength out of the housing market’s recovery.

U.S. judge approves Citigroup $590 million settlement

NEW YORK, Thu Aug 1, 2013 — A federal judge gave final approval Thursday to a $590 million settlement by Citigroup Inc. that resolves a shareholder lawsuit accusing the bank of hiding tens of billions of dollars of toxic mortgage assets.

“Although the $590 million recovery is a fraction of the damages that might have been won at trial, it is substantial and reasonable in light of the risks faced if the action proceeded to trial,” U.S. District Judge Sidney Stein in Manhattan wrote in a 48-page opinion.

The settlement resolves claims by shareholders who purchased Citigroup shares from February 2007 to April 2008 that the New York-based bank misrepresented its exposure to securities known as collateralized debt obligations that were tied to mortgage investments.

Citigroup lost $27.68 billion in 2008. The lawsuit cited the plunge in the company’s stock price from $47.89 at the start of the fourth quarter of 2007 to $2.80 by January 2009.

The settlement was announced last August.

Chesapeake quarterly profit tops Street estimate

OKLAHOMA CITY, Okla., Thu Aug 1, 2013 — Chesapeake Energy Corp. reported a better-than-expected quarterly profit on Thursday as it produced more crude oil than Wall Street targeted.

Shares of Chesapeake rose 4 percent to $24.26 in premarket trading.

Chesapeake, the second largest U.S. producer of natural gas, said oil production in the quarter rose 44 percent to 116,000 barrels per day (bpd). It raised its crude output forecast for the full year.

Analysts at Bernstein Research had estimated Chesapeake’s oil production at 105,000 bpd in the quarter.

Second-quarter profit at the Oklahoma City-based company fell to $457 million, or 66 cents per share, from $929 million, or $1.29 per share, a year earlier.

But adjusting for one-time items, Chesapeake had a profit of 51 cents per share. Analysts, on average, expected 41 cents per share, according to Thomson Reuters I/B/E/S.

This is the first quarter that Chesapeake has reported earnings under CEO Doug Lawler, who was named to replace former CEO Aubrey McClendon in May.

How Richard Weissman found the silver lining in The Learning Experience


Richard Scott Weissman, president, CEO and co-founder, The Learning Experience

Richard Scott Weissman, president, CEO and co-founder, The Learning Experience

Family Business


Richard Scott Weissman
president, CEO and co-founder
The Learning Experience

For Richard Scott Weissman, there’s a silver lining in each storm cloud.

“The best time to learn and grow a company is during the worst of times; adversity builds character and forces a company to develop systems that mitigate risk while never sacrificing the brand,” he says.

Through a focus on core competencies of motivating people and creating lasting concepts in business, Weissman has led The Learning Experience, one of the leading providers of child care and early childhood development services.

But it wasn’t easy street. After a few years as a boutique investment firm operator, he decided that his father Michael Weissman’s business, child care, had a lot of potential, and he wanted to be part of it.

Many serious discussions were held, and there were differences of opinions. Finally, they went ahead with expansion plans and bought a bankrupt rival chain. Michael retired and Richard located a fund to invest in the company. However, the fund wanted to change everything. Richard returned to his career on Wall Street — but then 9/11 occurred.

Richard and the rest of the management team strongly believed that if they could expand and build strong foundations for the company during the crisis, then they would be ready to “explode” when the economy stabilized.

The Weissman family put $6 million into the company to grow during the recession.  Richard felt the need to hand-hold certain franchisees during the economic crisis. Most stayed on board with TLE; however, the few that were not bought into the vision of the Company, left.   He heavily invested in technology, which has enabled the Company to cut from 95 employees to 70 in the corporate office.  TLE has more than 200 schools and is opening on average two new schools per month. It has also reached the mark of being one of the top 10 child care companies in the U.S. as ranked by license capacity.

How to reach: The Learning Experience, www.thelearningexperience.com

Tenet Healthcare to buy Vanguard Health for $4.3 billion

DALLAS, Mon Jun 24, 2013 — U.S. hospital operator Tenet Healthcare Corp. will buy smaller rival Vanguard Health Systems Inc. for $4.3 billion including debt to expand into new geographies.

The offer of $21 per share represents a premium of 70 percent to Vanguard’s Friday close. Vanguard shares were up 66 percent at $20.51 in thin trading before the bell.

The companies said the deal includes the assumption of $2.5 billion of debt.

Tenet said it expects the deal to add to earnings in the first year and estimates annual savings of $100 million to $200 million.

“This acquisition will take Tenet into new geographic markets, expand the breadth of our service offerings, diversify our earnings sources and increase the benefits we expect to realize under healthcare reform,” Tenet CEO Trevor Fetter said in a statement on Monday.

Tenet has hospitals in California, Texas, several states in the U.S. Southeast and in Pennsylvania.

Vanguard owns and operates 28 acute care and specialty hospitals in the U.S. Midwest, South and Massachusetts.

U.S. hospital stocks have rallied this year as investors expect the companies to benefit from President Barack Obama’s healthcare reform that will expand insurance coverage to more Americans. The reform has also spurred consolidation in the sector.

Tenet has secured fully committed financing from Bank of America Merrill Lynch.

Home resales rise to three-and-half year high; prices jump

WASHINGTON, Thu Jun 20, 2013 — Home resales rose in May to the highest level in 3-1/2 years and prices jumped, a sign the housing sector recovery is gathering steam and could give the economy a significant boost this year.

The National Association of Realtors said on Thursday that existing home sales advanced 4.2 percent to an annual rate of 5.18 million units, the highest level since November 2009 when a home-buyer tax credit was expiring.

“Whatever inventory is coming onto the market, buyers are ready to snap it up,” said Lawrence Yun, an economist at the NAR.

The increase beat expectations for a rise to a 5 million-unit rate last month.

The housing market is one of the brightest spots in America’s economy and is helping counter Washington’s decision to raise tax rates and cut government spending this year.

A very accommodative monetary policy by the Federal Reserve, which has held mortgage rates near record lows, is helping to lift the housing market off the floor. Fed Chairman Ben Bernanke, however, gave clear signals on Wednesday that the Fed was on track to start dialing back its stimulus by the end of this year.

In May, the median home sales price increased a whopping 15.4 percent from a year ago to $208,000. That was the biggest year-over-year increase since 2005 and left prices at their highest level since July 2008.

“Prices have recovered quite suddenly and quite spectacularly,” Yun said.

As Facebook grows up, grand ambitions get reality check

SAN FRANCISCO, Wed Jun 5, 2013 — Facebook, which once seemed poised to take over the Internet, is showing its limitations: a host of newer services are gaining ground among trend-setting youth; a much-hyped smartphone app has received a tepid response; and grand ambitions such as taking on Google in the search business seem ever more fanciful.

In a volatile Internet industry where companies can rise and fall almost overnight, one might even say that the nine-year-old Facebook Inc. is suffering a mid-life crisis.

Yet even if the social network falls short of its goal of becoming an all-encompassing Web destination that consumers turn to for everything from messaging to shopping, experts say Facebook has likely achieved enough scale and ubiquity to assure its staying power.

“They’ve gotten so big that it’s one of those things you have to use,” said Dan Niles, chief investment officer of tech-focused hedge fund firm AlphaOne Capital Partners, which does not have a Facebook position. “You may not like the electricity company but I guarantee you you’re still getting electricity.”

Concerns that Facebook is losing its grip on consumers, underscored by a recent report from Pew Research that showed declining enthusiasm among some teens, have kept a lid on the company’s share price even as stock markets rallied. Facebook shares closed at $23.52 on Tuesday, near their six-month low and almost 40 percent below the company’s May 2012 IPO price.

Brokerage firms debate value of Certified Financial Planner title

NEW YORK, Mon Jun 3, 2013 — Some of Wall Street’s biggest brokerage firms are at odds over the bottom-line returns of a three-letter credential they are vigorously promoting to their brokers.
The CFP (for certified financial planner) title is conferred by the nonprofit Certified Financial Planner Board of Standards, which touts it as “the standard of excellence for competent and ethical personal financial planning.”
The insignia has become a popular addition to brokers’ business cards since clients were traumatized by the market collapse of 2008. With consumer faith in brokers’ investment skills shaken – and commissions for simple buy and sell orders slipping – brokers are positioning themselves as trusted advisers that help clients meet goals ranging from saving for college to estate planning.
Yet while some firms are pushing their brokers to earn the CFP credential as a way of attracting clients and profits, others say the bottom line benefits have not been proven.
Over the last five years, the number of CFP holders has grown 23 percent to 68,0000, about half of whom work at the 50 largest financial services firms, said Joe Maugeri, director of firm relations at the CFP Board. Firms pushing advisers to get the license range Bank of America Corp.’s Merrill Lynch to Charles Schwab Corp., which traditionally offered little direct advice to clients.
Even firms that disdain working with people with less than $250,000 to invest are pitching to wealthier clients with the kind of college-and-retirement planning talk traditionally aimed at the less well-to-do by insurance sales people.

Bain, Advent cancel sale of WorldPay’s U.S. unit

NEW YORK, Fri May 31, 2013 — WorldPay’s private equity owners, Bain Capital LLC and Advent International Corp, have canceled the auction of the payment processing firm’s U.S. unit, WorldPay told Reuters on Friday.
No potential buyer was willing to meet Bain’s and Advent’s price expectations of $800 million to $1 billion, sources familiar with the matter said.
The buyout firms bought 80 percent of WorldPay from Royal Bank of Scotland Group Plc in 2010 for about 2 billion pounds ($3 billion) and were looking to sell WorldPay’s U.S. assets to pay themselves a dividend and pay off debt.
Thomas H. Lee Partners LP, CVC Capital Partners Ltd. CVC.UL and Thoma Bravo LLC were among the private equity firms in discussions with WorldPay about a deal, the sources said.
Thomas H. Lee explored a partnership with iPayment, a New-York-based company that provides credit and debit card payment processing services to small businesses, in order to acquire WorldPay U.S., said the sources, speaking on condition of anonymity because details of the auction are confidential.
WorldPay U.S. has earnings before interest, taxes, depreciation and amortization of between $90 and $130 million, depending on how its business is accounted for, making its valuation contentious, the sources said.
“Following a strategic review of WorldPay U.S., we have concluded that the growth potential and value of the business will be maximized by remaining part of WorldPay Group,” WorldPay spokesman Simon Kutner told Reuters in an email on Friday. He declined to comment on details of the auction.
Bain, Advent, Thomas H. Lee Partners, Thoma Bravo and CVC declined to comment. An iPayment official did not respond to a request for comment.


China’s appetite for pork spurs $4.7 billion Smithfield buy

NEW YORK, Thu May 30, 2013 — Shuanghui International Holdings is buying Smithfield Foods Inc., the world’s biggest hog producer, for $4.7 billion to feed a growing Chinese appetite for U.S. pork, in a deal that has stirred concern among U.S. politicians.
Announced on Wednesday, the takeover would be China’s biggest of a U.S. company, with an enterprise value of $7.1 billion, including debt, and follows a call by Smithfield’s largest shareholder, Continental Grain Co, to break up the company. Continental could not be reached for comment on Shuanghui’s proposal.
The deal highlights China’s growing appetite for protein-rich food, particularly pork, as its middle class expands, making China more reliant on foreign producers.
“I think this is a move by China to make sure their population is going to get fed in a cheaper manner. It’s the right move for them,” said Brian Bradshaw, a pig producer with operations in Illinois and Indiana, who has sold hogs to Smithfield. “Time will tell whether it’s the right move for the rest of the pork industry.”
The deal will face scrutiny by the Committee on Foreign Investment in the United States, a government panel that assesses national security risks. At least one member of Congress said the deal raised alarms about food safety, noting Shuanghui was forced to recall tainted pork in the past.
“I have deep doubts about whether this merger best serves American consumers, and urge federal regulators to put their concerns first,” U.S. Representative Rose DeLauro, a Democrat from Connecticut, said in a statement.