(WP) Greece’s government has an unlikely ally: a Turkish politician

Greece’s government has an unlikely ally: a Turkish politician http://wapo.st/1JmY0Yw


Greece's imminent economic collapse has polarized political opinion in Europe and elsewhere. Some have little sympathy for the indebted nation's unwillingness to play by the rules of the euro zone; others have expressed solidarity with an embattled government that's placing the struggles of its people over the mandates of technocrats in Brussels.

The chaos and wrangling has placed the small Mediterranean nation on the center stage of global politics, and sent jitters through world markets.

On Tuesday, support for Greece and its leftist government led by Prime Minister Alexis Tsipras came from a rather unlikely place. Across the Aegean Sea in Turkey, one member of parliament urged his government to help bailout their neighbors.

"It is the biggest help that Turkey can do for its neighbor when times are tough," said Ertugrul Kurkcu, of the opposition Peoples' Democratic Party, known by its Turkish abbreviation HDP.

Kurkcu, who hails from the western Turkish port city of Izmir, urged Ankara to extend a 1.6 billion-euro "zero interest loan" to Greece to help repay its debts to international creditors, according to the Daily Sabah.

"Turkey's humanitarian help in 2013 was $1.9 billion. Turkey's resources are sufficient enough to make this aid to Greece," Kurkcu said.

Kurkcu's party, a motley coalition of leftists and feminists that has found common cause with the country's once oppressed Kurdish nationalist movement, is still flush with its dramatic electoral success earlier this month. It won an unprecedented 80 seats in Ankara's Grand National Assembly, much to the dismay of the ruling party of the country's President Recep Tayyip Erdogan, which lost its parliamentary majority.

In the months prior to the election, the HDP celebrated the January victory of Syriza, the leftist Greek coalition led by Tsipras, and the two parties have since shared a very public affection over social media.

It's a cute alliance that likely won't reshape matters of regional policy. It also flies in the face of recent history.

Through an armed insurrection, Greece won its independence from the Ottomans -- from Istanbul rule -- in 1821. A century later, amid the bloody struggles that followed the collapse of the Ottoman Empire and the birth of the modern Turkish republic, hundreds of thousands of people on both sides of new national borders would be forced to quit their homes and relocate. The Mediterranean island of Cyprus also has been a source of territorial dispute between Greece and Turkey since the 1960s, with a Turkish-Cypriot republic in the northern part of the island recognized only by Turkey.


In the decades since, relations have been tetchy. Far-right nationalist groups in both Turkey and Greece direct invective and hate at the other. HDP and Syriza's joint surge into the political mainstream -- at a time of widespread uncertainty -- presents something of a riposte to the divisions of the past.

Turkish aid to Greece, argued Kurkcu, "will earn the friendship of Greek people" and "turn the Aegean Sea into a sea of peace." Too bad it's not going to happen.

NY Post : Hedgie shrewdly pulled assets from Greece ahead of crisis

Desperate Greeks lined up at ATMs on Monday to withdraw up to the maximum $67 limit as the nation’s debt crisis careened towards disaster.
But at least one US hedge-fund manager was months ahead of them: Dan Loeb.
Loeb, whose Third Point hedge fund earned $500 million betting on Greek debt in 2012 — and was so bullish on the tiny nation in 2013 that he opened a separate “Hellenic recovery fund” — has pulled nearly all his assets out of the country, The Post has learned.
Loeb’s $17.5 billion fund sold all of its Greek bonds and public equities months ago, fearing the country could face a “liquidity” crisis after electing leftist Prime Minister Alexis Tsipras, according to an investor in Third Point.
The Hellenic fund, which raised an estimated $750 million on a draw down basis, still has at least two private Greek holdings: a $60 million stake in Energean Oil & Gas and a $3 million investment in insurer Hellenic Direct.
But some other hedge-fund managers, who were touting investing in Greek banks as a recovery play, weren’t as quick to jump ship.
John Paulson and David Einhorn both have small stakes in Greek banks Alpha and Piraeus, whose shares are down sharply.
Last October, Einhorn said at the Robin Hood investor conference that Greece’s problems were behind it and recommended Alpha, then trading at 57 euros, and Piraeus, at 1.06 euros.
The banks had been hard hit by years of financial woes and Einhorn thought they would take off with the economy.
Modal Trigger
A woman walks past a closed bank in Athens, Greece.
Photo: Getty Images
“Alpha can triple from here,” said Einhorn. But instead, the stock has fallen 44 percent since his presentation. Piraeus is down 62 percent.
Greek banks are now a smaller position in both Einhorn’s $12 billion Greenlight Capital and the $1 billion “special situations fund” in Paulson’s $20.2 billion hedge-fund complex.
Paulson’s special situations fund was up about 1.2 percent through May, according to an investor presentation that said Piraeus was a “detractor” from performance.
The hedgies appear to have miscalculated the Greeks’ willingness to endure the pain other Europeans were imposing on them.
“Greeks are now living within their means,” said Einhorn, just months before the country booted out the government that forced austerity upon it.
After weeks of unsuccessful bailout talks with creditors — other European Union nations, the International Monetary Fund and the European Central Bank — Tsipras announced Sunday night that banks would be closed all week pending a July 5 vote on the terms of the deal.
A “ no” vote will give him negotiating leverage, he said.
But if Greece defaults on its $1.7 billion debt payment due June 30, it may have no choice but to leave the eurozone, the so-called “Grexit” that would put the entire monetary union in jeopardy.

(Re/code.net) Microsoft Stops Collecting Own Map Data, Sells Part of Business to

Microsoft Stops Collecting Own Map Data, Sells Part of Business to Uber http://on.recode.net/1du5IVt

Microsoft confirmed on Monday that it will stop collecting its own map data, though it plans to continue to offer Bing Maps using data licensed from partners.

As part of the move, Microsoft is selling some of its technology to ride service Uber, which will also take on 100 workers who had been working for the software giant. Uber is also buying a data center near Boulder, Colo., as well as cameras and licenses to some Microsoft intellectual property.

Microsoft already gets much of its map data from Nokia and other partners, but had been collecting its own aerial, 3-D and street-level maps. It will now source those images from partners as well, focusing its Bing Maps work on the user experience that overlays the map data and imagery.

In a statement, Microsoft characterized it as a continued winnowing of the company’s far-flung product efforts.

“Over the past year, we have taken many actions to focus the company’s efforts around our core business strategy,” Microsoft said in a statement to Re/code. “In keeping with these efforts, we will no longer collect mapping imagery ourselves, and instead will continue to partner with premium content and imagery providers for underlying data while concentrating our resources on the core user experience. With this decision, we will transfer many of our imagery acquisition operations to Uber.”

Financial terms were not disclosed.

For its part, Uber highlighted the value of maps to making its service work.

“Mapping is at the heart of what makes Uber great,” Uber said in a statement. “So we’ll continue to work with partners, as well as invest in our own technology, to build the best possible experience for riders and drivers.”

Uber also recently hired Brian McClendon, a top Google mapping executive. The former Microsoft team will report to him as part of a newly formed advanced technologies unit.

The big question is whether Uber will make an even bigger investment in maps. The company is said to be one of several entities bidding on Nokia’s Here mapping unit, one of the leaders in overall maps along with Google and TomTom.

Nokia has said it is exploring a sale of the business and is taking bids from a group that is also said to include a consortium of car makers. Uber has declined to comment on its interest in Here.

However, the company does want to make clear it isn’t looking to get into the consumer maps game and instead just wants to improve its core service. It also plans to continue to use a variety of partners in addition to its own mapping technology.

>>> BofA Lists Top 10 EMEA Ideas for 3Q 2015

Lists 10 short-term stock recommendations for EMEA companies under coverage based on views of significant market, business-related catalysts that may affect the stocks in quarter ahead.
  • 3Q list consists of seven Buy-rated stocks, three underperforms:
    • Buys: Atlantia, Azimut, Just Eat, Randstad, Schneider, SKF, Vivendi
    • Underperforms: Metro, Statoil, Swatch
  • NOTE: As of June 26, BofA Top 10 EMEA Ideas Quarterly Total Return List has risen by 33.47% since inception on July 1, 2013 vs HFRXEHE Index, which increased 9.82%

(BFW) Gartner Cuts IT Spending Forecast for 2015 on Dollar Strength

Gartner Cuts IT Spending Forecast for 2015 on Dollar Strength
2015-06-30 07:00:00.4 GMT


By Kasper Viita
(Bloomberg) -- Worldwide IT spending will decline 5.5% this
year vs 1.3% drop seen in April, Gartner says in e-mailed
statement.

* Spending to reach $3.5t, mkt seen growing 2.5% in constant-
currency terms vs 3.1% seen previously
* Decline “is not a market crash,” yet rising USD means
vendors have to raise prices to protect margins

For Related News and Information:
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First Word newswire: NH BFW<GO>

To contact the reporter on this story:
Kasper Viita in London at +44-203-525-9219 or
kviita1@bloomberg.net
To contact the editor responsible for this story:
James Ludden at +44-20-3525-2645 or
jludden@bloomberg.net

FT : Bond proxies: Can you afford not to own them?

Bond proxies: Can you afford not to own them?

Close your ears to those who fear interest rate rises

“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price,” Warren Buffett once said.

I agree with Mr Buffett’s description of a good company. To quote from his 1979 annual chairman’s letter: “The primary test of managerial economic performance is the achievement of a high earnings rate on equity capital employed (without undue leverage, accounting gimmickry etc) and not the achievement of consistent gains in earnings per share.”

What Mr Buffett is describing is return on equity capital and despite this guidance more than 35 years ago from one of the world’s most successful investors, his advice continues to be ignored by most.

One of the objections levelled at investors who attempt to invest along the lines which Mr Buffett suggested — and I would count myself as one of them — is that the sort of companies with these characteristics may be too expensive. This concern has reached fever pitch recently, with myriad warnings about what will happen to so-called “bond proxies” when US interest rates rise.

A “bond proxy” is shorthand to describe equities such as consumer staples and utilities with safe, predictable returns, but have higher yields than much of the bond market (and, crucially, yields which can grow over time).

Bond markets have experienced a bull run since the financial crisis and the onset of quantitative easing, which has seen central banks pump billions into buying their own governments bonds, and a disinflationary environment which has led to the sister policy of zero interest rates. Faced with seemingly ever-lower yields, investors have crowded into equities in general and especially those which are considered “bond proxies”.

The obvious problem is what happens if — or when — interest rates rise. Bond yields then rise and those equities which have been used as bond proxies will surely fare badly.

I would suggest a slightly less simplistic approach.

Let’s start with the assumption that interest rates will rise. Eventually that must be true, but when and by how much is less easy to predict. The “when” has some bearing on the matter. There are a number of fine fund managers who have had their performance shredded by attempting to time this and other events.

The “how much” also matters. In my view we remain in a disinflationary environment with a mostly weak economic recovery, so the rise when it comes may not be anything like the gradient which we have come to expect from previous recoveries. Short-term interest rates may be at or close to zero and may rise, but they are of less significance in valuing bonds and equities than long-term rates, and US 30-year Treasuries already yield over 3 per cent. This yield may not budge much.

If you are worrying about bond proxy equities in this scenario, you might also like to ask yourself where you will put the money that you realise from selling them. Into cash? Good luck with your timing. Into bonds? I think not. Into other equities? Maybe, but the S&P 500 Index’s price/earnings ratio is 19x, so it’s not that they are obviously cheap, and most of the Index is much more heavily cyclical than the bond proxies, making it an interesting choice if you are seeking safety in a rising rate environment. One thing we can be sure of is that the stocks in the index are not of the same quality as the so-called bond proxies.

There is another quote from Mr Buffett’s business partner, Charlie Munger, on this subject: “Over the long term, it’s hard for a stock to earn a much better return than the business which underlies it earns. If the business earns 6 per cent on capital over 40 years and you hold it for that 40 years, you’re not going to make much different than a 6 per cent return — even if you originally buy it at a huge discount. Conversely, if a business earns 18 per cent on capital over 20 or 30 years, even if you pay an expensive-looking price, you’ll end up with one hell of a result.”

I agree with them both about this. Let’s take two examples of potential investments which you can make and hold for 40 years — from when you start work in your 20s until you retire.

Company A (the bond proxy) generates a return on capital employed (ROCE) of 20 per cent per annum throughout this period. It has ample opportunities to grow and can reinvest all of its earnings each year at the same rate of return. That’s the good news. The bad news is that its shares are not cheap and to buy them you have to pay four times book value. That’s not all — when you come to sell them in 40 years’ time the rating has halved and you can only sell them for two times book value.

Company B (the market) earns a 10 per cent ROCE over this period and reinvests all its earnings at that rate of return. Moreover, the investors who take this option have better luck in terms of timing, as they can buy B’s shares at two times book value and when they come to sell them in 40 years, they can sell them for four times book value — their rating has doubled.

So if these were the alternatives on offer for your investment career, which would you take?

Company A would produce compound returns of 18 per cent per annum and Company B 12 per cent per annum.

If you plan to hold a share for the long term, the rate of return on capital it generates and can reinvest at is far more important than the rating you buy or sell at.

That’s why if you are a long-term investor you should own the high-quality bond proxies and close your ears to the siren song of those who say a rate rise will cause you problems. If you are not a long-term investor, I wonder what you are doing in the stock market at all and so will you one day.

WSJ : Trian Urges Buildup, Not Breakup

Trian Urges Buildup, Not Breakup

Activist investor accrues stake in Pentair, asks firm to consider deals to acquire rivals

Trian Fund Management LP is known for pushing companies to shrink. But the activist investor wants its latest target to get bigger.

Trian has built a stake of 7.24% in Pentair PLC, a maker of pumps and valves used in everything from oil refineries to backyard pools, and is asking the company to consider buying up rivals in an effort to consolidate the fragmented market for the specialized parts, according to people familiar with the matter.

The firm has been in talks with Pentair Chairman and Chief Executive Randall Hogan for more than a month, and they broadly agree about the company’s future potential, the people said. Mr. Hogan has spoken publicly about his desire to expand the company through acquisitions.

“Pentair is committed to maintaining an active, engaged dialogue with all of our shareholders, and we welcome constructive input toward our common goal of enhancing shareholder value,” a Pentair spokeswoman said in an email on Monday.

Activist investors, which typically take stakes in companies and push for strategic or financial changes, have been encouraging companies to break up or sell assets in recent years in a bid to unlock value and better focus them on their core strengths.

Trian, an $11 billion fund co-founded by Nelson Peltz, has been among the most vocal advocates of this strategy, pushing for splits at giants including DuPont Co. and PepsiCo Inc.

But as activists build larger funds and look for new ways to spur stock gains, they are expected to press for more deals. Some investors have generated big returns through alliances with deal-making executives such as Valeant Pharmaceuticals International Inc. CEO Michael Pearson.
Pentair’s CEO appears to be on board with the idea. Mr. Hogan has said he is looking to put the company’s hefty cash flow to work on deals that will increase each of its four business lines.

At a conference last month, Mr. Hogan said he wants to increase the company’s market capitalization to $20 billion from about $11.6 billion and boost sales to more than $10 billion from the $6.47 billion projected for 2015. The company’s market cap stood at around $1 billion when Mr. Hogan became CEO in 2001.

Pentair has around $800 million in cash to spend on acquisitions, Mr. Hogan has said, but would consider using stock to fund a deal. He has pledged to remain a disciplined buyer.


Pentair has an advantage over some U.S. rivals because it is based in Ireland and the U.K., giving it a lower corporate tax rate. The desire to decrease taxes has spurred a spate of deals in the past year, as companies look for ways to boost profits in a slowly growing economy. Mr. Hogan is based in Minnesota, where the firm was founded in 1966.

In recent years, Pentair has been focused on integrating Tyco International PLC’s former pump-and-filter maker, which it merged with in 2012. The company exceeded the cost savings it expected to pull out of the combination but has fallen short of the earnings goals it set.

Earnings were expected to be $5 a share this year, but the company dropped that target and now anticipates $3.80 a share amid a slowdown in orders thanks to the decline in oil and natural-gas prices, general sluggishness in client spending and currency fluctuations.

That target and a disappointing first quarter have weighed on Pentair’s stock, which is down 3% this year and underperforming the S&P 500, which is down 0.06% after a steep slide Monday. Pentair shares have shed about 11.5% over the past year, while the S&P 500 is up 4.9%.

That kind of underperformance typically leads activists to call for dramatic changes, but Trian has been impressed with Mr. Hogan’s work on the Tyco deal and believes he can do more, according to people familiar with the firm’s thinking.

Trian has suggested the company can continue to cut costs to improve margins and could alter its compensation plan to give management more incentive to expand the business, the people said. It believes Pentair is a bargain in an otherwise expensive stock market, even if it doesn’t make any big acquisitions, the people said.

The activist, which started buying the stock after the first-quarter results were announced in April, thinks Pentair’s management is focused on the same goals it pushes at companies, such as cutting costs and reducing complexity, the people added.

Trian co-founder and Chief Investment Officer Ed Garden first reached out to Mr. Hogan in the middle of May, after an introduction was made by Dennis Reilley, a member of Trian’s advisory board who served with Mr. Hogan on the board of medical-device company Covidien PLC, the people said.

While Trian often takes a board seat at companies, it hasn’t requested a seat at Pentair, though it may in the future, the people said.

The firm’s friendly talks with Pentair stand in contrast to its last public campaign: a high-profile, bitter fight with chemical giant DuPont.

The firm argued DuPont was too complex and spending too much, largely because of its far-flung structure. In May, Trian narrowly lost a hard-fought campaign to get on DuPont’s board in a vote that was widely viewed as a test of activism’s influence, as DuPont had beaten the broader market.

At Pentair, Trian appears to have found a CEO that shares its philosophy.

“Complexity is cost,” Mr. Hogan said at the conference last month. “Complexity is the enemy of serving customers as well.”

>>> Europe : Brokers Upgrades & Downgrades - 30th of June 2015

>>> Upgrade
*BUZZI UNICEM RAISED TO CONVICTION BUY VS NEUTRAL AT GOLDMAN
*ING GROUP RAISED TO BUY VS NEUTRAL AT BOFA
*LAGARDERE RAISED TO BUY VS NEUTRAL AT CITI
*PANDORA RAISED TO BUY VS NEUTRAL AT BOFA

>>> Downgrade
*CHRISTIAN DIOR CUT TO UNDERPERFORM AT BOFA
*COMPASS GROUP CUT TO SELL VS HOLD AT SOCIETE GENERALE
*HERMES CUT TO NEUTRAL AT BOFA
*HSBC CUT TO NEUTRAL VS CONVICTION BUY AT GOLDMAN
*HUGO BOSS CUT TO NEUTRAL AT BOFA
*K+S CUT TO HOLD VS BUY AT SOCGEN
*LVMH CUT TO UNDERPERFORM AT BOFA
*ORANGE POLSKA CUT TO REDUCE VS HOLD AT HSBC
*SAFT CUT TO HOLD VS BUY AT HSBC
*SODEXHO CUT TO HOLD AT SOCIETE GENERALE
*STANDARD LIFE CUT TO UNDERPERFORM AT RBC CAPITAL
*TOD’S CUT TO UNDERPERFORM AT BOFA
*ULTRA ELECTRONICS CUT TO SELL VS HOLD AT BERENBERG

>>> PT Change


>>> Initiation
*COUNTRYWIDE RATED NEW BUY AT CITI, PT 700P
*ELIOR RATED NEW BUY AT SOCIETE GENERALE, PT EU22
*FOXTONS RATED NEW SELL AT CITI, PT 215P
*HALMA RATED NEW BUY AT JEFFERIES
*LSL PROPERTY SERVICES RATED NEW BUY AT CITI, PT 545P

>>> Call
>> Stock
*CANCOM ADDED TO BANKHAUS LAMPE ALPHA LIST
*FINMECCANICA, SARAS NEW LONGS AT MEDIOBANCA; REPLACE ANIMA, FCA
*HSBC REMOVED FROM GOLDMAN DIRECTORS OF RESEARCH FOCUS LIST
*SAIPEM SET AS NEW SHORT AT MEDIOBANCA, REPLACING SNAM