Dan Primack points me to an interesting article by James Surowiecki of The New Yorker discussing the inherent conflict of interest in buyouts of public firms. Surowiecki claims that LBOs present a conflict of interest between management and shareholders. The thought is that management is not incentivised to sell the company at a low price since they’re participating as shareholders in the new acquisition vehicle. This is a thought-provoking piece.
Rumour has it that Ford Motor Company may be taken private. With a market cap of about $15 billion, current long-term debt at $150 billion, and a credit rating in the dumps, it would be a really brilliant idea to take this company off the market and help it refocus it's business. The divestiture of several key assets could raise a substantial amount of cash to fund the company to viability. Let's see who steps up. Nasser, possibly?
Bret Swanson hits the Wall Street Journal with a testy commentary on the reasons behind the skyrocketing price of oil in the US. He states: "Today, commodity prices across the board, from coffee to carbon fiber, remain near 25-year highs. High oil prices are not a unique phenomenon, but just another commodity whose price is determined primarily by the value of the dollar. Expensive oil isn't exclusively a monetary event, of course: Risk and demand matter, too. But in comparing oil to other commodities, especially gold, we find that elevated risk and demand explains only $10-$15 of the higher oil price; $30 of the price is explained by a weak, inflationary dollar. The entity most responsible for expensive oil is thus the Fed." Read this article.
Pluto was demoted to dwarf status. That's just flat out sad.