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Archive for May, 2012

Facebook struggled to raise equity, so the equity cult is dead, says the FT. Really!?

So the FT think that Facebook struggled to raise equity? Funny, I thought the raising part went very well. It was the trading part that broke down. FB managed to raise $16bn at $38, or 65x earnings. I call that a success. I think Mark and his bankers do to.

John Authers and Kate Burgess argues in today’s FT that the six decade equity cult is dead and that bonds will now seriously take over as the investment of choice. The FT continues to say that companies don’t issue equity anymore but raise cash through the credit markets instead because equity financing is too expensive. It think the FT needs a little Finance 101.

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Risk management at JP Morgan

Today’s news that JP Morgan lost $2bn on trading credit derivatives looks like a particularly nasty story and is likely to go on for some time. According to some estimates JP Morgan has a position of $100 billion in credit derivatives, with what appears to be little or no risk management.

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