BRITAIN’S CONSERVATIVES GET HEDGE FUNDS’ VOTE | The British elections are on Thursday, and members of one constituency, the financiers, have already made their preference extremely clear, Danny Hakim writes in DealBook. Britain’s Conservative-led government has been a staunch supporter of hedge funds and banks, battling at home and in the European Union on their behalf, and some hedge fund managers have written “eye-popping checks” to the party. More than $2.3 million came from Michael Hintze, an Australian billionaire who lives in London, where he founded the hedge fund CQS; Michael Farmer, another hedge fund manager, has donated roughly $2.2 million over the same reporting period; and Stanley Fink, who once ran the Man Group and has been party treasurer, has donated $1.3 million since the 2010 election.
The Labour Party, the main opposition party, has called the Conservatives “the political wing of the hedge fund industry.” It wasn’t that long ago that the financial industry drew bipartisan
support in Britain, which has a global financial center in its capital, but Labour has “tacked left under Ed Miliband, its current leader, in keeping with the politics of inequality” that
emerged after the global financial crisis, Mr. Hakim writes. The Labour Party said that out of the roughly $51 million the party took in last year, 27 percent came from labor unions.
PRIVATE EQUITY’S HIDDEN FEES | Private equity’s main fees are well known – management typically charges investors
1 to 2 percent of assets and about 20 percent of portfolio gains. In her Fair Game column,
Gretchen Morgenson takes a closer look at the fees that aren’t so well known, like transaction fees, legal costs, taxes monitoring or oversight fees, that are being charged to state pension funds.
“Those undisclosed charges are a meaningful drag on returns,” she writes, citing
a recent report by CEM Benchmarking that estimated
that more than half of private equity costs charged to United States pension funds were not being disclosed.
The basis of the analysis by CEM, a Toronto-based consulting firm, came from its work with South Carolina, which has been far ahead of other states in trying to identify all the fees its $30 billion Retirement
System Investment Commission is incurring in its private equity holdings. While not a complete assessment, costs identified by the state last year were $468 million, or 1.56 percent of assets, Ms. Morgenson
writes, compared with the 0.57 percent of assets paid by the median pension fund. “I wish every treasurer would speak up or every investment commission would speak up,” Curtis M. Loftis
Jr., the state treasurer of South Carolina, told Ms. Morgenson. “Every pension plan in the nation is paying too much, and it’s being hidden.”
ON THE AGENDA | Companies reporting earnings today include Comcast, Cablevision Systems, Sysco, Tenet Healthcare and Tyson Foods. McDonald’s is expected to announce its turnaround plan in a video that will go up at investor.mcdonalds.com at 8 a.m. E.D.T. Data on factory orders for March is out at 10 a.m. Four Federal Reserve officials will be speaking today: Eric S. Rosengren, president of the Federal Reserve of Boston, and Daniel K. Tarullo, a Federal Reserve governor, at a Boston conference starting at 9 a.m.; Charles Evans, president of the Chicago Fed, in Columbus, Ind., at 12:25 p.m.; and John Williams, president of the San Francisco Fed, at a conference in San Francisco at 3:10 p.m. E.D.T. William A. Ackman, chief executive of Pershing Square Capital Management, is on Bloomberg TV at 1:45 p.m. E.D.T.
A WRAP-UP OF ‘WOODSTOCK FOR CAPITALISTS’ | On Saturday, the rest of the world was eagerly awaiting the Mayweather-Pacquiao fight, but for 40,000 people in Omaha, the main attraction was Buffett, not boxing. Michael J. de la Merced of DealBook live blogged “Woodstock for Capitalists,” also known as Berkshire Hathaway’s annual meeting in Omaha, where Warren E. Buffett, Berkshire’s chief, and his longtime business partner, Charles T. Munger, fielded questions from shareholders, analysts and journalists, including Andrew Ross Sorkin of DealBook. A few of the highlights from the day:
A Tough Question on Clayton and 3G Capital: The first question was from Mr. Buffett’s longtime friend, the journalist Carol Loomis, who asked about Mr. Buffett’s association with both Clayton Homes and 3G Capital, the investment firm that worked closely with Mr. Buffett on big deals. Clayton has faced questions about its lending practices, while 3G has been criticized for its ruthlessly efficient cost-cutting and layoffs. Mr. Buffett offered a spirited defense of Clayton, which Berkshire has owned for more than a decade. “I make no apologies whatsoever about Clayton’s lending terms,” he declared. He was similarly resolute about 3G Capital.
Another Defense of 3G: Mr. Sorkin posed a question from a shareholder about 3G: Is the investment firm’s cost-cutting management style in step with Berkshire’s? Mr. Buffett again offered a strong defense of 3G as doing what is needed to make its companies stronger performers.
Career Advice for a Budding Buffett: A seventh-grader asked the two men,
“How do you make lots of friends and get people to like you and work with you?” Mr. Munger: Get rich and be generous. Mr. Buffett had a longer answer but essentially said: Find people whose
qualities you admire. Get to know them. Copy them.
Mergers & Acquisitions »
Charter Said to Contact Time Warner Cable for Friendly Talks | John Malone, the chairman of Charter Communication’s largest
shareholder, Liberty Broadband, called Time Warner Cable’s chief executive in recent days to express Charter’s interest in pursuing friendly deal talks, The Wall Street Journal reports,
citing people familiar with the matter.
THE WALL STREET JOURNAL
Goldman Sachs Said to be Selling Coal Operations | Goldman Sachs is in talks to sell its coal mines in Colombia at a loss and get
out of raw materials production, The Wall Street Journal reports, citing people familiar with the negotiations.
THE WALL STREET JOURNAL
The Philosophy of Warren E. Buffett | Berkshire Hathaway shows how intangible values like thrift and autonomy can translate into
economic gain, Lawrence A. Cunningham writes in the Another View column.
Another View »
INVESTMENT BANKING »
Chase Website Issue Said to Be Caused by Heavy Customer Use | The first day of the month, which happened to land on a Friday, is
said to have led to overwhelming traffic.
NYT »
Breakingviews: Bitcoin Comes Out of the Shadows and Into Wall Street’s Sights | Why Goldman’s investment in a Bitcoin
start-up is a sign of a pivotal change.
NYT »
Mixed Verdicts in Second Trial of Aleynikov, Ex-Goldman Sachs Programmer | A jury convicted Sergey Aleynikov on a charge of stealing
confidential computer trading code from his former employer, but acquitted him of a second charge and deadlocked on a third.
NYT »
PRIVATE EQUITY »
Chinese Firm Offers to Buy Rest of U.S. Insurer for $1.8 Billion | Fosun International, an investment company controlled by the
Chinese billionaire Guo Guangchang, said it had offered to buy the 80 percent it does not already own in the American insurer Ironshore for $1.8 billion, Reuters reports.
REUTERS
VENTURE CAPITAL »
Dave Goldberg, Head of Web Survey Company and Half of a Silicon Valley Power Couple, Dies at 47 | Mr. Goldberg was a serial Silicon
Valley entrepreneur and venture capitalist who was married to Sheryl Sandberg, the chief operating officer of Facebook.
NYT »
| Dave Goldberg Was Lifelong Women’s Advocate
Andreessen Horowitz, Deal Maker to the Stars of Silicon Valley | The venture capital firm operates much like a Hollywood talent
agency, and in the process it has the potential to inflate a technology bubble.
The Upshot »
Want a Steady Income? There’s an App for That | A Silicon Valley start-up wants to put workers on an even keel.
NYT »
Tidal, Music Streaming Service, Seeks Footing After a Stumble | Music and technology executives say that it is far too early to
judge Tidal, particularly given the expected arrival of Apple’s new streaming service.
NYT »
LEGAL/REGULATORY »
A Woman-Led Law Firm That Lets Partners Be Parents | The Geller Law Group is determined to show that parents can nurture their professional
ambitions while being fully present in their children’s lives.
NYT »
DuPont’s Battle With Nelson Peltz May Confound Shareholders | The proxy advisory firm Institutional Shareholder Services
has endorsed Mr. Peltz, a setback for DuPont, but both sides make a compelling argument, Steven Davidoff Solomon writes in the Deal Professor column.
Deal Professor »
A.I.G. Considers How to Act With Sifi Tag | Peter Hancock, the chief executive of the American International Group, did not rule
out strategic changes to escape heightened regulatory scrutiny.
NYT »
What to Do When a Large Financial Failure Starts With a Bank | There is a potential problem with orderly liquidation authority when
it comes to depository banks, Stephen J. Lubben writes in the In Debt column.
In Debt »
Backlog Delays S.E.C. Whistleblower Awards | Of the 297 whistle-blowers who have applied for awards from the Securities and Exchange
Commission since 2011, about 247, or 83 percent, haven’t received a decision from the commission, according to data obtained by The Wall Street Journal.
THE WALL STREET JOURNAL