Filed under: Market matters, Economic data, Presidential elections, Headline news, Federal Reserve, Recession

With economic reports and earnings numbers being released this week, we’ve been on a financial roller coaster. With regard to earnings numbers, we had General Electric disappoint, but IBM beat expectations and gave positive guidance for the future. Inflation numbers are high, but core inflation seems to be under control. The economy continues to deteriorate but does not seem to be falling off the cliff. How does an investor interpret all this? Is the glass half-full or half-empty?

The economy is clearly experiencing pain from the credit crisis. Even if we’re not in a recession, it sure feels like one to the average person. Pessimism is the watchword of the day.

However, the huge question is how much of this is already discounted by the equity market? I believe that the answer is that much of this is already built into market expectations. Unless we have another run on a major financial institution, the economy goes into freefall, or major oil supply disruption occurs, the market is already discounting most of the negative information.

In addition, we are approaching the November election. With a Republican in the White Home and Democrats in control of Congress, no one wants to be blamed for a bad market or economy. The Fed is injecting a large amount of liquidity into the system, and the tax rebates should be arriving shortly.

Does this mean a rally will arrive soon? It is a possibility. However, remember that the credit problems still remain. Any solutions will only be addressed after the election. The key variable is the rise in oil prices which is driving inflation. In the short term, it acts as a tax on the consumer and limits the Fed’s options. As long as oil prices continue to rise, any rallies are likely to be muted and short-term in nature.

Doug Roberts is the Founder and Chief Investment Strategist for ChannelCapitalResearch.com and the author of Follow the Fed to Investment Success: The Effortless Strategy for Beating Wall Street. He previously held executive positions at Morgan Stanley Group and Sanford C. Bernstein & Co.

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Filed under: Ripoffs and Scams, Consumer Complaints

I recently received a message from Reunion.com that looked like it was from a former employee who was searching for me on the site. Weird. Why would she look for me on a site targeted toward high school classmates? We grew up a country apart from each other.

Then I heard about the mess on a message board I frequent, and now the LA Times is writing about it… Reunion.com has found a sneaky way to email everyone in your address book without your permission.

The game goes like this: You get a message saying Bob Jones was looking for you at Reunion.com and you’re supposed to visit the site to see who else has been searching for you. Once you get to the site, you’re prompted to sign up for a free account. After you sign up, you receive a message like this: “We’ll find your friends and family who are already members and also automatically invite any nonmembers to join (it’s free!).”

The message itself isn’t all that unusual. But what Reunion.com does next is unusual. Instead of accessing your address book from your Yahoo, Gmail, or other world wide web based account and then showing you a list and letting you select who to contact or invite…. Reunion.com accesses your address book and immediately sends everyone an email without any warning or approval from you.

How humiliating, especially if you’ve got professional contacts in your address book! And this is even worse than your typical viral email. Suppose someone decides to go to Reunion.com based upon your email, signs up for their own account, and also gets conned into letting Reunion.com access their address book? The cycle starts all over again.

It’s sad when social networking sites get so desperate for members that they have to resort to these tactics to try to lure people in. This is dishonest and it is potentially damaging to consumers. A woman highlighted in the LA Times story stated she was getting a bunch of emails from the 250 people in her address book who got spammed. What if those were important business contacts who decided to not do business with her anymore? I realize that would be an extreme reaction, but it could happen.

So heed this warning: If you get an email from Reunion.com, don’t play into their little game and go to their site. Let’s send them a message by not signing up for free accounts or by even visiting the site.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Record-keeping, and is the author of Essentials of Corporate Fraud.

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Filed under: Ripoffs and Scams, Technology, Fraud

When you hear about a data breach at a credit card company or a retailer, do you immediately wonder why the company wasn’t more careful with the information of the customers? I bet most people do. But as concerned as they are about others protecting their information, many people don’t even take minimal steps to protect their own data.

A survey of 800 people in the U.S. and the U.K. found that 88% of people use one password for all of their online accounts. That’s right… one. The implications of that are insane. If a hacker gets your information on one site, he has the ability to possibly get into every site you’re on because he has that one password.I wonder if people consider how serious this is. While I think they recognize that criminals out there are trying to steal via the internet, I don’t think they really take their own password security very seriously. Just as bad as the “one password” policy is when that password is something like the dog’s name, a child’s name and birthdate, or some other simple to guess variation.

It’s ideal to have multiple passwords that you change often. The passwords should also be something obscure that can’t be guessed or linked to you or your family . Include both numbers and letters in your password for added security. And don’t keep them all on a sticky-note on your computer monitor. That’s like leaving the front door of your home wide open while you’re gone.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Record-keeping, and is the author of Essentials of Corporate Fraud.

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Filed under: Ripoffs and Scams, Consumer Complaints

Have you been cheated, scammed, or otherwise disappointed by a company? WalletPop wants your real life stories about consumer scams and complaints.

Email us with your story.… Did you receive horrible customer service? Did you pay for a product or service that you didn’t receive? Did a company refuse to honor a warranty? Were you scammed out of money?

What we want to hear the facts of your firsthand experience. If we’re interested in your story, we may email you to clarify some of the facts or to request your documentation. Don’t be offended if we ask you for more information… we just want to make sure that we get the story right. And while we won’t necessarily be able to fully investigate your claims or get your money back, we’ll at least be able to hold companies accountable for their behavior. And hopefully, they’ll even respond with some action to right their wrongs

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

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Filed under: Deals, Financials and analyticals, Private equity industry, Investments, Value and lack thereof, Public or private?

It was almost incredible that private equity funds never acquired many banks or other depository institutions, despite the lending woes that came to pass. For some time there was value there before the logic and rationale behind credit evaluations were tossed out the window. We’d discussed this with many groups last year and the answer was always that the private equity firms were sitting out to avoid the relative valuation erosion as peer-pressure drove down the value of the solid companies.

Wilbur Ross may soon be making a change to this approach of avoiding the group. Last week there many reports out of Reuters, Crains, and others discussing Ross’s intent to go after depository institutions.

The past articles discussed and pondered different aspects that Ross and his new backers might pursue, but new information from this day might shed a bit more light on Ross intends to invest this money and how sovereign wealth funds may be involved in this.

Continue reading the full article at 24/7 Wall St.

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Filed under: Deals, Management, Raising money, Apax Partners, Bain Capital, Private equity industry, Investments, Value and lack thereof

An article by South-African based Business Report summarizes private equity trends this year amidst the crunched credit markets and slowing U.S. Economy. While it isn’t exactly 2007 or 2006, the numbers are still impressive.

According a Private Equity Intelligence Study cited in the article, in the first three months of 2008, private equity funds have raised $163.5 billion.

Last year, leveraged buyouts tripled the $73 billion posted in the same period this year. This article is also confirming what we have started seeing in many such private equity trends for the begin of 2008, as it notes that leveraged buyouts are being replaced with distressed debt. That’s amounting to $40 billion being raised by 31 firms so far. For example, Bain Capital’s hefty $13.5 billion fund targets distressed debt, as well as venture and property.

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Filed under: Management, Raising money, Venture capital industry, Private equity industry, Investments

IndexAtlas has announced the launch of the $50 million Art Industry Fund, an alternative private equity fund targeting only businesses that serve the art industry.

This will include such operations as auction houses, advisory services, financial and security firms, software and media companies. Each investment is intended to last four years and will range from $3 to $8 million. The fund is expected to shut by December 31, 2009.

CEO and founder of IndexAtlas, Sergey Skaterschikov, believes the fund will generate an IRR of 35% and bases his investing strategy on his book, “Skate’s Art Investment Handbook.” Skaterschikov established IndexAtlas in 2001 and manages $400 million in fully invested funds and has advised on $2.4 billion in transactions.

There have been many such reports in here showing how there has been a convergence of private equity and venture capital. If this isn’t a prime example of that, then nothing else is.

If I didn’t know superior, it almost sounds a lot like a Sotheby’s (NYSE: BID) incubator fund, even though it’s not.

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Filed under: Engagements, Private equity industry, Investments

Dubai International Capital and Chinese private equity First Eastern Investment Group have announced a new joint fund, China Dubai Capital.

The fund will focus on China’s growing economy in sectors such as infrastructure, health care, and resources and will attempt to capitalize on the growing ties between the UAE and China. Companies with strong growth possibilities and the potential to eventually trade on Dubai national securities markets will be primary recipients of the fund. The first closing of the fund will tag at least $500 million and will close this May. By the final closing expected in October, the fund is expected to reach $1 billion.

First Eastern currently manages over $1.5 billion for direct Chinese investments and is the first Chinese financial company to be established in the Dubai International Financial Center. Dubai International Capital manages Jordan Dubai Capital, a $300 million fund, and plans to launch a fund focused on Saudi Arabia.

$100 per barrel oil is increasing the face amounts of funds being committed. As high oil prices remain, expect more and more from Middle Eastern private equity and sovereign wealth funds to purchase up infrastructure projects. That’s the new world.
If you think this is a massive deal for private equity or sovereign wealth funds, check out the Dubai $54 billion proposed eco-project.

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Filed under: Deals, Venture capital industry, Private equity industry, Investments

Altira Group LCC, a player in energy technology venture capital and private equity funding, has announced an investment in Evolutionary Genomics (EG). Evolutionary Genomics sounds a little misleading in name because the company is focused on developing improved biofuel feedstocks. The funding will come out of Altira’s $176 million Altria Technology Fund V.

Evolutionary Genomics developed a patented gene discovery technology platform to screen gene adaptations in biofuel feedstocks, which it hopes to improve yields and make biofuel a more viable and sustainable alternative energy solution.

Altira noted its belief that biofuel production is moving toward long-term commercial viability. the company will support and accelerate that direction as these two note that the in-house technology is among the most promising bioscience in this area.

Money is still heading into this direction, particularly as oil has stayed over $100 per barrel. There’s just a large difference between businesses that are subsidized and those that are not. When these are profitable with no subsidy and profitable with energy prices at much levels, that’s when they’re interesting. That’s also why you are starting to see private equity firms compete with venture capital firms in the sector.

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Filed under: Apollo Management, Private equity industry, Public or private?

Sometimes brilliant people armed with spreadsheets screw up badly. Sometimes, as in the case of Linens n’ Things, they screw up really badly.

In February of 2006, Apollo Management agreed to take Linens n’ Things private for $1.3 billion. Now, less than two years later, the company is poised to file for bankruptcy, according (subscription required) to the Wall Street Journal. The company employs 17,000 people, with 590 stores in 46 states. The company lost $242 million in 2007.

The Journal reports that “Linens also is working to avoid or delay filing for bankruptcy protection by meeting Monday with its lenders and largest vendors to work out an agreement, but a deal is unlikely.”

Linens n’ Things is a victim of two of the economic woes generating the most media attention: the housing downturn and the credit crunch. In addition, lower-cost suppliers of similar products like Wal-Mart (NYSE: WMT) are taking market-share. People who are having trouble paying their mortgages tend not to obsess over thread count.

On another note, housewares retailer Pier 1 Imports (NASDAQ: PIR) appears to be making strong progress on its turnaround, with its first comparable sales gain in 17 quarters and a return to profitability — its first quarter in the black in 12 quarters.

But its large debt load makes it tough for Linens n’ Things to weather economic storms.

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