Silver Lake-led group to buy UFC

An investor group that includes Silver Lake, KKR and Michel Dell’s investment firm have agreed to buy UFC. Financial terms weren’t announced by press reports pegged the deal at $4 billion. UFC is a premier mixed martial arts organization that produces more than 40 live events annually. Paul, Weiss, Rifkind, Wharton & Garrison LLP, Kirkland & Ellis LLP, Simpson Thacher & Bartlett LLP and Proskauer Rose LLP served as legal advisors to the buying group and Freshfields served as legal advisor to MSD Capital. Barclays, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc, Goldman, Sachs & Co. and KKR Capital Markets LLC are acting as the buyers’ financial advisors and are providing financing for the transaction. The transaction was led for the sellers by UFC CFO Nakisa Bidarian, with Milbank, Tweed, Hadley & McCloy LLP as legal advisors, and The Raine
Continue reading "Silver Lake-led group to buy UFC"

WME|IMG to buy Professional Bull Riders

WME|IMG said Wednesday that it has agreed to buy the Professional Bull Riders Inc. Financial terms weren’t announced. Pueblo, Colorado-based Professional Bull Riders is a bull riding circuit that features more than 300 bull riding events globally. WME|IMG is backed by Silver Lake. PRESS RELEASE BEVERLY HILLS, CA–(Marketwired – April 15, 2015) – WME|IMG announced today that it has signed a definitive agreement to acquire the Professional Bull Riders, Inc. (PBR), the world’s premier bull riding circuit, furthering the company’s foothold in live event productions.
With more than 300 bull riding events globally each year, attended by over 3 million people, the PBR is the fastest growing sport in the United States. Headquartered in Colorado, PBR reaches more than 550 million households in more than 40 countries, and is led by Chairman and CEO Jim Haworth.
WME|IMG co-CEOs Ari Emanuel and Patrick Whitesell said, “We’ve worked closely with the PBR for the last several years and share their passion for expanding the sport of bull riding globally. The resources across WME|IMG make the partnership a perfect match, combining top quality event production and broadcast rights.”
“We are thrilled to join the WME|IMG family,” said Haworth. “The acquisition will allow our organization to continue its expansion worldwide, and bring our top-quality events to the masses. I look forward to broadening our reach and continuing as America’s fastest growing sport.”
Bull riders from all over the globe compete on the elite PBR Built Ford Tough Series, the BlueDEF Velocity Tour, the Touring Pro Division, and the PBR international circuits in Australia, Brazil, Canada and Mexico. The PBR was founded in 1992 by a group of 20 visionary bull riders who sought mainstream attention for the sport.
This comes on the heels of other recent acquisitions by the global sports and entertainment company, joining recently announced additions Global eSports Management, Dixon Talent, Icon Sports Management, MADE Fashion Week and Artist Voice. It will also further WME|IMG’s footprint in owned and operated properties, which include Formula Drift Racing, Miami Open, New York Fashion Week, Rio Open, Taste Festivals and the U.S. Open of Surfing.
The transaction is subject to customary closing conditions, including antitrust regulatory approval, and is expected to close in May 2015. Terms of the transaction were not disclosed. WME|IMG is purchasing the PBR from the controlling shareholder, Spire Capital Partners, a leading private equity firm based in New York, as well as other shareholders. The Raine Group and Paul, Weiss, Rifkind, Wharton & Garrison LLP served as WME|IMG’s financial and legal advisors, respectively, and the PBR was advised by financial advisors Evercore and legal advisors Dentons.
About WME|IMG
WME|IMG is the global leader in sports, entertainment, media, and fashion. Operating in more than 25 countries around the world, the company specializes in talent representation; commercial marketing and endorsements; brand strategy, activation and licensing; media production and distribution; and event management. Formed in 2014, when WME acquired IMG, WME|IMG’s nearly 5,000 employees work across businesses including IMG Academy, Art
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STTG Market Recap April 11, 2014

The selloff continued Friday as we hit short term oversold levels.   The S&P 500 fell 0.95% and the NASDAQ 1.34%.  For the week, the S&P 500 fell 2.6% and the Nasdaq lost 3.1%, the biggest weekly decline for both indexes since June 2012.  The market ignored a U.S. consumer sentiment reading that was a nine month high, with the Thomson Reuters/University of Michigan's preliminary April read on confidence coming in at 82.6 versus 80.0 in March.

It is worth showing the longer term charts for the indexes for the second time this week to show where we are, and why it matters.   As we noted this very long term trend on the NASDAQ finally broke a pattern it has been repeating last week.  With that change in pattern we are quickly looking at the 200 day moving average which the index has not sniffed in a long time.

nasdaq

With the S&P 500 the two purple trend line are easier to comprehend on the long term chart - the one that is higher on the page now connected the major lows of last summer/fall.  That was where the market rallied to Wednesday on an oversold bounce before being stymied.    The lower trend line (which is more horizontal) connects the highs of the summer/early fall.  It was punctured briefly in early February but a sharp V shaped rally happened right after.  A retest of this level is just above 1800.

spx

Here is the NYSE McClellan Oscillator which is in oversold stage.  However there are really two levels of oversold - the main one in the -40 to -60 range which hits a handful of times in a year.  But if that level breaks, usually you have a flush of panic selling which can take it down to the -90 range.  That might happen just a few times a year - the last time was summer 2013.

nymo

The volatility index is creeping back into the upper teens - lately a reading around 20+ indicates a near term bottom.

vix

Bellweather financial JPMorgan (JPM) posted lousy results this morning which turned the mood sour.

jpm

Shares of Herbalife (HLF) fell 1after the Financial Times creporterd the U.S. Department of Justice and the FBI were investigating the multi-level marketing company that hedge fund manager Bill Ackman has alleged is a pyramid scheme.  After burning short sellers last year who followed Ackman into the stock, we see a clear downtrend in 2014 with a series of lower highs.

hlf

Scanning the stocks holding up well today - aside from the type of names we have been discussing this week such as consumer staples and large cap oil such as Conoco, quite a few Brazilian stocks are moving well - there are not that many on U.S. exchanges but their main energy company Petrobras (PBR) and banks such as Banco Bradesco (BBD) are doing well.  We have noted that emerging markets changed their pattern a few weeks ago so if you want to take on risk, and like buying relative strength it seems you have to go outside the U.S. right now.  That said these particular names have had big runs in a short amount of time.

bbd pbr

Have a good weekend and we'll see you next week.

Original post: STTG Market Recap April 11, 2014

An Investor’s Guide to ADRs

Individual investors have more resources than ever to manage their portfolios. However, buying foreign stocks is still mostly left to institutional investors, such as mutual funds and hedge funds, or professional traders.

Currency conversion, different reporting standards and higher transaction costs are among the barriers to buying international equities.

So, how can you buy stocks of overseas companies with relative ease?

American Depositary Receipts (ADRs) may be a practical solution.

What is an ADR?

An ADR is a certificate that represents ownership in shares of foreign stock. The underlying security is held overseas by an American depositary bank. Denominated in dollars, ADRs trade on U.S. stock exchanges and also the OTC (over the counter) market.

Types of ADRs:  3 levels of ADRs have different degrees of transparency.

Level 1: Level 1 has minimal SEC reporting requirements and compliance with GAAP (Generally Accepted Accounting Principles) is not required.

Reasons companies issue Level 1 ADRS include:

  • Gauge trading interest but not raise capital.
  • Build brand identity in the U.S. without GAAP or regulatory compliance
  • Company doesn’t qualify for listing on formal exchanges
  • Start at Level 1 then move on to 2 or 3 once requirements are met.

Level 2: With higher reporting, Level 2 ADRs offer more visibility and trading volume. Partial compliance with GAAP is required, which helps better analyze stocks across borders.

Reasons why companies may issue Level 2 ADRs:

  • Move up from Level 1 after confirming interest in the OTC market.
  • More regulatory and GAAP requirements have been met.
  • Stepping stone to raising capital at Level 3

Level 3: ADRs at this level meet SEC reporting and fully comply with GAAP. The depositary bank floats the ADR on a major exchange. Level 3 ADRs give foreign companies easy access to U.S. capital markets.

Reasons for issuing Level 3 ADRs include:

  • Raise capital
  • Prestige
  • Heavier Trading Volume

Considerations for ADR Investors:

Currency Risks: While ADRs are quoted in dollars, ADR returns and dividend payments still reflect the foreign currency. Your dollar adjusted returns can be positively or negatively affected based on the greenback’s relative strength.

Price Movements: ADRs shares do not move in lock step with the home country stock. This owes to supply and demand impact on stock price. However, ADR and domestic stock prices do move closely.

Political Risks: The politics and policies of foreign countries may be difficult to follow. Elliott Broidy is a venture capitalist who invested heavily in the now thriving tech economy of Israel. However, this took time and research typically found at the institutional level.

Changes in leadership or social instability may affect the outlook for some foreign companies. Tighter regulations may require costly compliance. Military conflicts or social unrest are also risks to consider.

Balancing stock analysis with your comfort level in the region should be considered.

Fees: Depositary Banks (DB) may deduct fees from ADR dividend payments. Along with brokerage commissions, you should fully understand DB fees before buying ADRs.

Investors may consider ADRs with diverse revenue sources across the globe to limit domestic risks.

How to Buy ADRs:

You can buy ADRs through most online brokers. A seamless transaction with straight forward commissions offers peace of mind over duties or other transaction costs.

Trade Settlement: There are no hassles with currency conversion or duty costs when buying ADRs. U.S. investors also enjoy familiar settlement and trade clearance.  Institutional and retail investors alike may buy ADRs to cut transaction expenses.

Example Strategies for ADR Investing

Dividend Yield:The American economy currently has low interest rates and a weak dollar. This poses challenges to many income investors.

Meanwhile, a weak currency has broad effects on purchasing power, wage growth and corporate profits. Each of these can put a damper on stock performance.

Buying ADRs with high dividend yields can offer:

  • Added income boost when converting payments to dollars.
  • Cushion against volatility.
  • Higher returns in dollar terms during periods of greenback weakness.
  • Adding some foreign exchange risk to portfolios may be appropriate.

Low Cost Diversification: You can take concentrated positions in promising stocks with ADRs. This includes:

  • Control over buy and sell decisions
  • More control over capital gains
  • Dollar Cost Average to build a cost effective ADR portfolio.
  • Potential cost savings over international mutual funds.
  • Invest in companies that benefit from separate market conditions.
  • The negative correlation of some foreign stocks to U.S. markets can lower portfolio risk.

Examples of ADRs:

Toyota Motor Company ADR (TM), NYSE - Market cap $172 Billion. Toyota primary listing is on the Nikkei in Japan.

TM 031914

Petroleo Brasileiro Petrobras ADR (PBR), NYSE - Market cap $141 Billion. Petroleo's home country is Brazil.

PBR 031914

Astrazeneca ADR (AZN), NYSE - Market cap $83 Billion. The pharmaceutical company’s home country stock is on the London Stock Exchange (LSE).

AZN 031914

Summary:

Promising investments are not limited to American companies. ADRs offer a convenient and cost efficient way to invest in the global economy, wherever stocks may be.

About the author: This was a guest by post Marc Walambe. Marc has over 13 years of experience in the asset management and financial services industry.

Original post: An Investor's Guide to ADRs

The Rise, Fall and Fate of Principles Based Regulation

Julia Black

London School of Economics – Law Department

November 21, 2010

LSE Legal Studies Working Paper No. 17/2010

Abstract:

The financial crisis has prompted a number of fundamental questions, not least of which is the relationship between financial institutions and regulators. In particular, the reputation of principles based regulation (PBR), lauded as a key example of ‘new governance’ techniques of regulation prior to the crisis, has taken a severe battering. Detailed rules did not fare much better, but advocates of ‘new governance’ techniques would not have expected them to: their failure was to be expected. It is the fate of PBR that should therefore cause us to look long and hard at what has become increasingly accepted wisdom amongst regulatory scholars and ‘better regulation’ practitioners over the last decade or so. This paper asks what lessons can be learned from the crisis as to the effectiveness and appropriate role of principles based regulation, and what future it may have. It sets out four ‘ideal types’ of PBR in the Weberian sense: analytical constructs that are rationalised abstractions of particular practices: formal, substantive, dyadic and polycentric PBR. It then charts the rise and fall of PBR in financial regulation over the last few years and offers some tentative predictions for its future.

 

Download This Paper

Date posted: December 14, 2010

Available at SSRN