Facebook priced its IPO, and journalists ponder how retail investors can get in on the “people’s company.” Goldman Sachs is working on a plan to undercut its own commission and the T-Men are plotting a new course to closing TARP. First, the investing legend who’s beaten Warren Buffett’s returns by nearly 2 to 1 since 1998 heeded the angel on his shoulder and opened up.
Conscience Call: This is James Tisch’s dilemma. Since taking over as CEO of Loews Corp. in 1998, he’s returned an annualized return of 8 percent, almost double the 4.3 percent return from Class A stock in Warren Buffett’s Berkshire Hathaway. And yet his market value is trading at nearly 30 percent discount to the book value of the conglomerate’s parts.
The angel on his right shoulder tells Tisch to let the world know his stock his undervalued. The devil on his left tells him to just file his 10-Ks, let the price languish and keep buying back stock. “I’m taking the view that we’re a failure at promoting the stock,” Tisch told Bloomberg Markets magazine in a timely profile of the man who’s family name New Yorkers know well.
The story of the Tisch family, which was ripe for an update, dates back to 1946 when Jim Tisch’s father Larry and uncle Bob convinced their parents to buy a faded hotel in Lakewood New Jersey. By 1959, the brothers had generated enough cash by buying and operating run-down vacation properties to seize the chance to buy an underpriced company: Lowe’s Theatres, owner of 100 or so movie houses and a New York City radio station. And with that, the dynasty—the name of which graces New York institutions such as the Tisch Hospital at the NYU Langone Medical Center, the Tisch School of the Arts and the Tisch Galleries at the Metropolitan Museum of Art—was just about fully formed.
So you want to buy Facebook? Facebook will offer shares $28 to $35, the company said in a regulatory filing yesterday, and now you’ve seen the roadshow, you’re wondering whether you should get in on the action. Journalists are here to help! First problem: You’re neither a mutual fund nor a preferred client of the retail brokerage of the firm’s whose investment banks are underwriting the offering. Solution: Dealbook reports the “people’s company” added E*Traded to its ranks of underwriters, and still talking about upping the number of shares it allocates to retail investors.
Second problem: You’ve given up on getting in on the offering until after trading opens, but you don’t want to wind up on the wrong end of the price pop. SmartMoney advises that you cash in small gains for early profits—after all, it’s not like you’re getting in on the ground floor.
In case you were wondering, Zuckerberg would be worth as much as $17.6 billion at the upper end of the range, placing him between Iris Fontbona and Azim Premji on the Bloomberg Billionaires Index.
G thing: Goldman Sachs is among firms working on electronic bond-trading platforms that would allow investors to trade with each other more directly, the Journal reports. The platform, called GSessions, could be rolled out by the end of the month, and would let investors save on commissions paid to the middle man (i.e. Goldman) and trade with each. Before we applaud this piece of client-friendly behavior, let’s see the platform in action. And remember: BlackRock, UBS and Morgan Stanley are said to be at varying stages of implementing similar plans.
TARP, Go: With the largest U.S. banks paid up, and straggling regionals mostly settled, the Treasury is ready to shift strategies in efforts to bring bank bailouts to a close. The idea, according to Dealbook: Auction the government’s preferred stock in 343 smaller banks that have not yet exited the bailout program to private investors. The Treasury tested the plan by selling its investment in six banks last month, and while the T-men didn’t recover the full value injected, it was pleased with the results and plans to proceed.
In the U.K., the Royal Bank of Scotland said it would complete the repayment of 164 billion pounds in emergency government loans by the end of next month, clearing the way for the lender to return to private ownership.
Going Public: Speaking of Goldman, Dealbook considers the firm’s (comparatively) warm and fuzzy approach to the press in recent weeks, and points to the hiring of former Clinton press secretary Jake Siewert, who took over Goldman’s P.R. efforts in March, apparently on the same day that Greg Smith’s op-ed appeared in the Times.
Farm Fun(d): To return to a favorite subject, hedge fund manager Stephen Diggle plans to raise a new $150 million fund to invest in farm’s, adding to his existing $35 million investment in cattle, sheep, corn and avocado. “I got the idea in 2008 when I thought the world was falling apart,” Diggle told Bloomberg.