Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-62998 Tue, 19 Sep 2017 17:33:25 GMT Toys R Us -- crushed by debt -- files for bankruptcy http://implode-explode.com/viewnews/2017-09-19_ToysRUscrushedbydebtfilesforbankruptcy.html Toys R Us been spiraling toward bankruptcy for years as it failed to keep up with competitors. Analysts cited many reasons for the company's demise: Lousy in-store customer service, a second-rate website and prices that are often higher than at many of its big-box competitors. Add to that piles of mounting debt -- much of it dating to a 2005 leveraged buyout -- and it was clear, many said, that the 60-year-old brand was in trouble.

"When you're cursed with all this debt, there's no way you can compete anymore," said Howard Davidowitz, a retail consultant who worked with Toys R Us in the 1980s and 1990s. "Now they're running up and down the halls trying to pick up the pieces, but there's no way around it: This is a very bad situation, and it will weaken the company forever."

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The Wayne, N.J.-based company was for decades the country's preeminent toy retailer, with a towering flagship in New York's Times Square and a ubiquitous icon, Geoffrey the Giraffe. In 2009, it purchased competitor FAO Schwarz but eventually closed its New York store on Fifth Avenue, citing high costs.

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iehi-feed-62868 Sat, 26 Aug 2017 23:25:25 GMT Feierstein: Systemic banking fraud means next crisis will be worse http://implode-explode.com/viewnews/2017-08-26_FeiersteinSystemicbankingfraudmeansnextcrisiswillbeworse.html Recently, the Official Monetary and Financial Institutions Forum think-tank revealed that global central banks have speculated with $29 trillion (£23 trillion) in global markets, including stock markets.

I may have been absent that day but since when were central banks given discretion to trade and speculate to such an extreme? How effective can they be at managing the risk of others?

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The Fed's 1913 charter needs immediate, drastic revision. And a transparent independent audit is essential, to include the Fed's activities in the physical gold, swaps and derivatives markets.

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Too big to fail, jail, bail or prosecute is simply too big to exist. Unregulated, systemic banking fraud, a lack of enforcement and failure to properly manage counterparty risk will soon cause the next collapse.

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"Insanity: doing the same thing over and over again and expecting different results." Well, Einstein, here's a new theory: relatively speaking, the risk is 40% bigger than it was in 2008, bigger institutions, bigger transgressions, bigger fines. And this time, the central banks want a slice of the pie, making this an exponentially larger feeding frenzy that can only end with indigestion.

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iehi-feed-62774 Mon, 14 Aug 2017 14:47:41 GMT Stock Market Warning Siren is Blaring http://implode-explode.com/viewnews/2017-08-14_StockMarketWarningSirenisBlaring.html Aggregate earnings per share (EPS) for the S&P 500 companies on a trailing 12-months basis rose for the second quarter in a row. That's the foundation of the Wall Street hype. But here's the thing with these EPS: they're now back where they had been in... May 2014. Yep. More than three years of earnings stagnation. No growth whatsoever, even for "adjusted" earnings... And yet, over the same three-plus years of total earnings stagnation, the S&P 500 index has soared 34%.

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And there's another thing: these earnings per share are heavily influenced by the share count. Companies have been on a huge borrowing binge over these years, fueled by historically low interest rates, and a big part of that borrowed money wasn't used to create new things, expand, invest, or invent, but to buy back their own shares.

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iehi-feed-62694 Fri, 28 Jul 2017 23:35:29 GMT Apollo Sets Record With $24.6B Capital Raise For New PE Fund (PEAKY??) http://implode-explode.com/viewnews/2017-07-28_ApolloSetsRecordWith246BCapitalRaiseForNewPEFundPEAKY.html Apollo Global Management has raised an extraordinary $24.6 billion in capital commitments for its ninth buyout fund, according to regulatory filings with the U.S. SEC.

The new fund, named Apollo Investment Fund IX, L.P., will reportedly invest in North American and Western European buyout opportunities. In the market only seven months, it significantly crested its original $23.5 billion hard cap and expects to amass $24.7 billion in total, the filing said. 

The new fund ranks as the largest private equity vehicle ever raised, besting Blackstone's $21.7 billion pool that closed in 2007... Fund IX comes in a year likely to smash the previous $249 billion fundraising record set in 2007

Does this... um... look peaky to anyone else?

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iehi-feed-62685 Fri, 28 Jul 2017 03:51:20 GMT Amazon: Ugly Q3 Guidance Easily Predicted (& STOCK GUT-CHECKED -6%(+) FROM DAY'S HIGH) http://implode-explode.com/viewnews/2017-07-27_AmazonUglyQ3GuidanceEasilyPredictedSTOCKGUTCHECKED6FROMDAYSHIGH.html Amazon guided to a potential Q3 operating loss of up to $400 million. Somehow, analysts were up at a consensus operating income of $950 million despite the historical knowledge that the company expands retail growth at the costs of profits.

Maybe even worse, sales guidance for the quarter wasn't all that strong either, with mid-point guidance of only 24%. Clearly, the Prime Day event stole sales from the rest of the month versus generating a boost to revenues for the quarter.

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The key investor takeaway is that Amazon is the FANG stock that doesn't belong with the others. The ugly Q3 guidance should dent the stock for a while, but the market will probably brush off the weakness heading into Q4. The stock really isn't appealing at any price, but the momentum play likely remains intact, though much better opportunities exist elsewhere.

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iehi-feed-62674 Thu, 27 Jul 2017 14:48:28 GMT Howard Marks Sounds the Alarm on Tech, Cryptocurrencies and Private Equity http://implode-explode.com/viewnews/2017-07-27_HowardMarksSoundstheAlarmonTechCryptocurrenciesandPrivateEquity.html iehi-feed-62659 Tue, 25 Jul 2017 23:27:11 GMT Och-Ziff Bets On Camp-Counselor Wunderkind Who Cut Teeth in Mortgage Collapse Aftermath for Redemption http://implode-explode.com/viewnews/2017-07-25_OchZiffBetsOnCampCounselorWunderkindWhoCutTeethinMortgageCollaps.html ... in the wake of a bribery scandal that spooked clients and blew away a third of its assets, the fund's fate is in many ways now in the hands of a little-known 34-year-old named Jimmy Levin... Back in February, Och shocked many on Wall Street by elevating Levin, the star of the firm's credit business, to co-chief investment officer and handing him an incentive package of $280 million. It's the kind of crazy pay you don't hear about in the industry much these days, and Och wagered a small personal fortune to make it happen, relinquishing 30 million of his own shares.

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Levin, who began working at Och-Ziff in 2006, is a largely unknown quantity beyond the firm's immediate universe. But he has a reputation there for something of a golden touch. His rise started in the aftermath of the financial crisis, as he persuaded the man who's now his co-CIO, David Windreich, to gamble on the rubbles of structured credit assets tied to the U.S. housing market and, later, on similarly roughed up securities in Europe, including Spanish regional debt that paid off.

The firm's main credit fund has turned in average gains of 13 percent since its 2011 inception, including an 18 percent return last year that made it one of the top performing funds in the industry. Back in 2012, credit trades guided by Levin notched $2 billion, accounting for more than half of the firm's total gains that year. The credit unit was pulling in such outsize returns that Levin was named global head of credit in 2013.

That growth, in fairness, came in the middle of a bull market -- junk-rated corporate bonds, for example, have returned more than 185 percent since the end of 2008 -- that lifted all credit assets for an extraordinary run, so much so that it can be argued it would've been hard not to make a lot of money.

"Was it luck? I don't know, maybe, I'm not sure it really matters," said Mike Rosen, chief investment officer at Angeles Investment Advisors, who has put money into Och-Ziff's credit-opportunities fund. "I do want to invest in lucky people -- that's better than investing with unlucky people."

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Och and Levin met when Levin was a counselor and water-skiing coach at a camp in Wisconsin where Och's children spent part of their summer. At first, Och sidestepped the younger man's pleas for a job at the hedge fund. After graduating from Harvard University with a degree in computer science, Levin worked for Sagamore Hill Capital Management and then Dune Capital, the now defunct hedge fund founded by Treasury Secretary Steve Mnuchin. Och finally hired Levin as a distressed analyst.

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iehi-feed-62539 Fri, 07 Jul 2017 14:13:54 GMT Pricey jeans maker True Religion files for bankruptcy protection http://implode-explode.com/viewnews/2017-07-07_PriceyjeansmakerTrueReligionfilesforbankruptcyprotection.html The Manhattan Beach-based firm, which employs 1,900 people, sells its jeans and other clothing in 140 stores with the True Religion and Last Stitch brand names, and through other boutiques and department stores. The company said it closed 20 of its stores last year to cut costs.

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The company formerly was publicly held, but it went private in 2013 when it was acquired by TowerBrook Capital for $835 million.

Also starting in 2013, True Religion "began experiencing declining sales caused by the general trend of consumers [moving] away from traditional retail to online shopping," Dalibor Snyder, True Religion's chief financial officer, said in a filing with the U.S. Bankruptcy Court in Delaware, where the company filed its Chapter 11 petition.

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iehi-feed-62212 Mon, 08 May 2017 23:48:49 GMT The Best Hedge Fund Trades From The 2017 Ira Sohn Investment Conference http://implode-explode.com/viewnews/2017-05-08_TheBestHedgeFundTradesFromThe2017IraSohnInvestmentConference.html iehi-feed-62016 Tue, 04 Apr 2017 22:38:16 GMT Payless Shoes Files For Bankruptcy (SHOCKER: 2012 PE BUYOUT DIDN'T "WORK") http://implode-explode.com/viewnews/2017-04-04_PaylessShoesFilesForBankruptcySHOCKER2012PEBUYOUTDIDNTWORK.html Payless plans to immediately close 400 stores in the U.S. and Puerto Rico and will also "aggressively manage" the rest of its real estate portfolio. That will mean closing additional stores and seeking to modify existing lease terms. The retailer currently has 4,400 stores in more than 30 countries.

Payless was founded in the 1950s as a no-frills destination for fashionable shoes at affordable prices. However, in recent years it has suffered from flat and declining sales and a staggering amount of debt, as shoppers shun malls and instead opt for online or other discount stores. In 2012, Payless was purchased by several private equity companies as part of a $2 billion buyout of its parent company.

The retailer said it has entered into an agreement to reduce its existing debt load by almost 50%. It has also negotiated up to $385 million of debtor-in-possession financing from existing lenders to help it keep the business running and successfully emerge from bankruptcy.

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Revenues slid 4% to $2.3 billion in the twelve months ending in October 2016, according to Moody's.

Payless said it is also pursuing bankruptcy so that it can invest in areas that it believes will deliver growth, like expanding in places like Latin America, bolstering its online presence and shaking up its product offerings.

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iehi-feed-61636 Sat, 04 Feb 2017 00:22:45 GMT J. Crew sues lenders over capital restructuring plans (VULTURE CAPITAL STRIKES AGAIN) http://implode-explode.com/viewnews/2017-02-03_JCrewsueslendersovercapitalrestructuringplansVULTURECAPITALSTRIK.html iehi-feed-60385 Fri, 05 Aug 2016 18:45:57 GMT Strong U.S. employment report brightens economic outlook http://implode-explode.com/viewnews/2016-08-05_StrongUSemploymentreportbrightenseconomicoutlook.html iehi-feed-60333 Sat, 30 Jul 2016 17:17:18 GMT US Consumer Defaults Are Soaring http://implode-explode.com/viewnews/2016-07-30_USConsumerDefaultsAreSoaring.html iehi-feed-60253 Tue, 19 Jul 2016 14:12:58 GMT Calpers Earns 0.6% as Long-Term Returns Trail Fund's Target (FED LOVE FAILS TO SPREAD AROUND WELL?!) http://implode-explode.com/viewnews/2016-07-19_CalpersEarns06asLongTermReturnsTrailFundsTargetFEDLOVEFAILSTOSPR.html The California Public Employees' Retirement System, the largest U.S. public pension fund, earned a return of 0.6 percent on its investments last fiscal year, trailing its long-term target as holdings in stocks and forestland lost money.

The pension's public equity portfolio lost 3.4 percent in the year through June 30 and forestland assets declined 9.6 percent, Chief Investment Officer Ted Eliopoulos said Monday. Fixed-income holdings rose 9.3 percent and infrastructure investments gained 9 percent.

"The longer-term returns of the fund -- the three-, five-, 10-, 15- and 20-year total returns of the fund -- are now below the assumed rate of 7.5 percent for the fund," Eliopoulos said. "That's a significant policy issue for us."

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In fiscal 2015, Calpers earned 2.4 percent. The pension lost a quarter of its value in 2009. Two years later, it earned a record 20.7 percent, only to see the gain drop to 1 percent the following year. Since the recession, the fund has sought to better gauge its risks from market volatility.

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Assets totaled $301.9 billion as of June 30, 2015, and have been reduced as benefit payments outpaced the combination of employee contributions and investing returns. Calpers serves more than 1.7 million members in its retirement system and administers benefits for nearly 1.4 million members and their families in its health program.

The fund was large enough to cover about 76 percent of its liabilities as of June 2014, according to its website, based on assumptions such as employee life expectancy and historical returns on investment.

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iehi-feed-59808 Tue, 17 May 2016 15:19:08 GMT The Longest Uninterrupted Smart Money Selling Streak In History Extends To 16 Weeks http://implode-explode.com/viewnews/2016-05-17_TheLongestUninterruptedSmartMoneySellingStreakInHistoryExtendsTo.html iehi-feed-59774 Sat, 14 May 2016 01:08:46 GMT Trump's Chief Fundraiser Schmoozes Hedge Fund Execs, Seeking Donations http://implode-explode.com/viewnews/2016-05-13_TrumpsChiefFundraiserSchmoozesHedgeFundExecsSeekingDonations.html Fresh off being named Donald Trump's chief fundraiser, longtime financier Steven Mnuchin headed to Las Vegas for the nation's largest hedge fund conference with one task: target elite donors to raise the $1 billion the candidate seeks for his general election campaign. From the first day of the SkyBridge Alternatives Conference, or SALT, attendees roaming the conferences and halls of the Bellagio hotel traded sightings of Trump's representatives mingling with the crowd of hedge fund managers and investors. There were even whispers that Trump might show up himself.

On Wednesday night, Mnuchin, a hedge fund manager at Dune Capital, wearing a dark tailored suit, dined with former House speaker John Boehner, billionaire hedge fund manager Kenneth C. Griffin, and former CIA director David H. Petraeus--a gathering hosted by Anthony Scaramucci, hedge funder and SALT organizer.

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Mnuchin also reportedly met with former Massachusetts Senator Scott Brown, oil tycoon T. Boone Pickens, and cosmetic business exec Georgette Mosbacher. The attitude from the financial industry was a lot more welcoming than in February, when Luke Thorburn, the sole Goldman Sachs employee who donated to the Trump campaign ($534.58), was put on leave due to his association with a website that sold hats that tweaked Trump's "Make America Great" catchphrase.

Despite all of the handshaking and potential money-passing, support for Trump at the conference felt shaky. Pro-Trump comments were often met with awkward silences from the crowd--and even gasps. Pickens's support for Trump's ban on Muslims in the U.S. for vetting purposes drew loud gasps from the crowd.

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iehi-feed-59768 Fri, 13 May 2016 14:43:54 GMT Stephen Schwarzman And Blackstone: Wall Street's Unstoppable Force http://implode-explode.com/viewnews/2016-05-13_StephenSchwarzmanAndBlackstoneWallStreetsUnstoppableForce.html EVER SINCE THE FINANCIAL crisis, risk--the fuel for Wall Street's astonishing profitability--has been forbidden fruit. The Volcker Rule, for example, means that today the mightiest trading firm, Goldman Sachs, is effectively blocked from proprietary trading. Capital restrictions have likewise limited the lending and merchant banking activities of big banks, like JPMorgan Chase JPM -0.06% and Deutsche Bank , that would have ordinarily drooled over the GE deal. The power has shifted to the so-called "buy side," to asset managers, and among them none is better positioned than Schwarzman's largely unregulated $344 billion private equity conglomerate, Blackstone Group.

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So while regulators wring their hands over restricting compensation at firms such as Citigroup C -1.06%, UBS and Morgan Stanley MS -0.49%, Schwarzman happily counts the $800 million in dividends and gains he personally took home in 2015, 34 times the $23 million that Goldman's chief, Lloyd Blankfein, earned and almost 30 times the $27 million paycheck for JPMorgan Chase CEO Jamie Dimon. Schwarzman's net worth stands at $10.2 billion, making him one of five billionaires Blackstone has produced--more than any other Wall Street firm in history.

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In the past eight years Blackstone's footprint and influence under Schwarzman have become nothing short of breathtaking. Since the financial crisis Blackstone's assets have nearly quadrupled. More than 85% of its 2,070 employees have joined since 2007, and the firm has introduced dozens of new products. Blackstone has major stakes in 92 companies, from Hilton Hotels and Michaels Stores to iconic brands like Versace and Leica Camera; it owns thousands of pieces of commercial real estate, including Manhattan's Stuyvesant Town and Chicago's Willis Tower, and more single-family homes in the U.S. than any other private entity. In nearly every business in which it operates, including hedge funds and credit, Blackstone is the leader.

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In its core private equity business, Blackstone hasn't had a single fund lose money since it launched its first one in 1987. The average annual returns realized by its private equity funds (19%), real estate funds (20%) and credit funds (14%) have all trounced the S&P 500, which has delivered an annualized return of 9.7% over the past 30 years.

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At 5-foot-8 with an unassuming posture and a penchant for conservative, loosely fitting suits, Schwarzman is not someone you'd expect any flashiness from. But in 2007 he ignited populist anger with a $3 million birthday bash held in New York City's Park Avenue Armory, featuring Rod Stewart, Patti LaBelle and Martin Short. He made matters worse later by comparing President Obama's threat to end the carried-interest tax preference--which lets private equity types pay capital gains rates on their income, perhaps the most indefensible tax loophole in America--to a Nazi invasion (he later apologized).

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iehi-feed-59723 Fri, 06 May 2016 20:32:27 GMT Panama Papers alleged source breaks silence, denies being a spy http://implode-explode.com/viewnews/2016-05-06_PanamaPapersallegedsourcebreakssilencedeniesbeingaspy.html iehi-feed-59722 Fri, 06 May 2016 20:26:40 GMT World's rich families put private equity firms on notice http://implode-explode.com/viewnews/2016-05-06_Worldsrichfamiliesputprivateequityfirmsonnotice.html Wealthy families are embracing their inner Warren Buffett, albeit on a smaller scale. They used to hand most of their assets to managers to invest. Now, following the likes of Buffett, Michael Dell and Bill Gates, many are acting like private equity firms, buying large stakes in companies or acquiring them outright. Families can exert tighter control over their money, give the kids something to do and cut their deal fees.

But the trend has meant that private equity shops have been forced to scramble to make sure they don't lose a critical source of money for their buyout funds.

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"After a decade of direct investing we found that we actually saved millions, which were reinvested in companies and assets -- huge, huge savings," said Chad Hagan, whose family built its wealth in private health-care and financial businesses... Almost 70 percent of family offices engage in direct investing, according to an April survey of 80 offices by the Family Office Exchange. And in 2015 they outperformed buyout firms. Direct deals returned them 15 percent on average, the survey showed -- more than double private equity results that year.

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iehi-feed-59693 Tue, 03 May 2016 19:30:41 GMT NYC Icon Fairway Falls to Private Equity, Hip New Grocer Competition http://implode-explode.com/viewnews/2016-05-03_NYCIconFairwayFallstoPrivateEquityHipNewGrocerCompetition.html New York City supermarket Fairway, an icon of the Upper West Side of Manhattan, known for its meats, cheeses and smoked fish, in addition to its branded black & white cookies, has filed for bankruptcy. The grocer's downfall can be traced to a 2007 sale of the company from the founding Glickberg family to private equity firm Sterling Investment Partners, and a recent expansion from its flagship on 74th street and Broadway across the tri-state area.

Sterling Partners listed Fairway on the Nasdaq at a $536 million valuation three years ago, raising$177 million for a nationwide expansion. However, Fairway struggled on public markets, saddled with hundreds of millions of dollars in debt and rising competition in its New York City backyard from the likes of Trader Joe's , Whole Foods, West Side Market, and Eataly.

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