$ES_F MOC SELL $650mil $$
$ES_F SPX moc implied imbal $1.3B for SALE $$
$ES_F 02:34:26 TRADINGDATA2: (bshepard) ESM moving the the favored direction of the imbalalce meter ... down $$
$ES_F 81% sell side $$
John_Monaco (13:41:50): 75% sell side on the close
This is our best attempt at playing clueless propaganda cheerleaders also known as economists:
Q. Why did new home sales crash in all regions except the traditionally coldest, wettest, and snowiest Northeast, where sales rose?
A. Uhm, because it obviously snowed everywhere except in the Northeast.
And there you have it: spin 101 for braindead zombies and vacuum tubes.
Source: Bullshit Bureau
New Home Sales collapsed 14.5% month-over-month to its lowest since July 2013. A mere 384k versus 450k expectations is the biggest miss since July. So much for the Spring buying season... This is a 7 standard deviation miss against the smart economists' estimates! Whocouldanode that when the free-money sponsored fast money leaves the game that real people with real debt and real wages are simply priced out of buying a new home? Supply of unsold new homes jumps to 6 months, its highest since Oct 2011 (as once again the visible hand's interference has produced yet another mal-investment boom as the 'if we build it, they will come' builders face an ugly reality).
The Economists nailed it... (Deutsche's Joe Lavorgna was above consensus at 460k)
That February spike that was the catalyst for oh so much aggressive JPY selling and US equity buying and "see, we told you so, here comes the post-weather pent-up-demand exuberance" has been crushed by the sad and painful truth of reality. For the 2nd month in a row, Markit's US PMI dropped and missed expectations... despite weather being a thing of the past. Sadly the story gets worse, as Markit notes "on the inflation front, manufacturers experienced a
further solid increase in average cost burdens in April," adding that pricing pressures, "will feed fears that the
recovery remains on a weak foundation of intense price competition." Need moar snow...
And the full breakdown...
As we reported yesterday, Bill Ackman bought up only $76 million in Allergan stock knowing well in advance Valeant would submit a bid for the company, guaranteeing (as in absolutely no risk at all) that the stock would soar, with the rest of the purchase comprising of AGN calls. It is unclear just how much actual capital at risk he put up but indicatively May $150 call options that cost $1.55 per contract on Monday were trading at $15.53 in midmorning trading on Tuesday, a roughly ten-fold increase in one day.
In other words, Ackman not only used material public information to frame his trade - perfectly legally, thank you SEC - but, as is to be expected of a hedge fund manager whose recent track record has been spotty at best, applied massive leverage in the form of calls to make up for any residual humiliation. That said, Ackman may want to consider selling his calls to the primary (and very unhappy because no amount of delta hedging could have offset all the losses) broker he bought them from while they are still solidly in the money, because Allergan may have a very different opinion on promptly selling itself to Valeant than what Ackman thought.
Specifically, Allergan on Tuesday night said that its board of directors had adopted a one-year stockholder rights plan to give it more time to consider takeover proposals. The Valeant offer was made with Pershing Square Capital Management hedge fund, which built up a stake in the company.
The chief executive officer of Valeant Pharmaceuticals, which made a $47 billion unsolicited offer for competitor Allergan Inc. on Tuesday, said during an interview on CNBC that he was "disappointed" with Allergan's so-called poison pill.
"We are disappointed but on the other hand, I think this deal will get done," Valeant CEO Michael Pearson said on Wednesday.
So besides accepting or outright rejecting Valeant's bid, what other options does Allergan have? Here is Bloomberg with the full menu:
Valeant’s proposal currently stands at $48 billion, or almost $161 a share. Sterne Agee Group Inc. said the offer is too low because Allergan has appealing growth prospects as a stand-alone entity. Shareholders may demand a price closer to $180 a share, said Cowen Group Inc. Valeant could face competition. Sanofi, Nestle SA or GlaxoSmithKline Plc could swoop in as white knights, said Shibani Malhotra, a New York-based analyst at Sterne Agee. “They will do everything they can to fight this.” Morningstar Inc. sees Novartis AG and Johnson & Johnson as possible counterbidders.
Valeant is offering Allergan investors $48.30 in cash and 83 percent of a Valeant share for each one of Allergan. The offer was worth about $47 billion, after subtracting Allergan’s net cash, at the close of trading yesterday.
Valeant has teamed up with Bill Ackman’s Pershing Square Capital Management LP, which has a 9.7 percent stake in Allergan. Based on stock prices before the announcement, the transaction valued Allergan at 21 times trailing 12-month Ebitda, data compiled by Bloomberg show. The last time Allergan had that multiple was more than six years ago.
Ackman told a conference yesterday that he is contractually committed to support Valeant’s deal, “unless and until there is a superior offer that Valeant chooses not to respond to.” If Allergan’s shareholders deem a competing bid superior and Valeant chooses not to participate, “I guess we’d be cashed out in that deal,” he said.
Valeant’s proposal may need to be raised to about $180 a share to win over Allergan shareholders, according to Ken Cacciatore, a New York-based analyst at Cowen.
That would be great news for Ackman whose calls will only raise in value. In fact the only worst case scenario for Pershing Square is if there is a sudden cooling in the pharma M&A bubble, ostensibly driven by a market tumble, which would not only result in a pulling of the Valeant offer which is so massively reliant on cheap and easy debt, but a crash in Allergan stock. Of course, there is the possibiliy that Allergan will simply say no, and no other bidders will appear.
There’s a high likelihood that Allergan will rebuff the unsolicited offer as is, which may force Laval, Quebec-based Valeant to raise it or may create an opportunity for other interested suitors, said Michael Waterhouse, an analyst at Morningstar.
“Allergan is seen, in the specialty pharmaceuticals space at least, as probably one of the best managed and one of the best opportunities,” Waterhouse said in a phone interview. “It could stir a little bit of thought from J&J and Novartis that maybe they don’t want this one to get away.” J&J said earlier this month that that it is ending development of PurTox, a potential competitor for Botox. That may make an acquisition of Allergan even more compelling for the company, Waterhouse said. Novartis may be tempted to bid to gain Allergan’s ophthalmology assets, which include Restasis eye drops, he said. Allergan, which also makes products to treat acne and psoriasis, would be a good fit for European drugmakers Sanofi and Glaxo, as well as Nestle, which said in February it’s taking full control of its Galderma skin-care joint venture with L’Oreal SA, Malhotra said.
Sure, Allergan is valuable. But at what price? And how much leverage is any strategic buyer willing to take on in exchange for onboard a cash flow stream that may or may not last for more than a few years.
In either case, keep a close eye on this one: Ackman expected a 10x return on JCP, instead he lost half his investment. In AGN he has already made his profit which means at this point the deal is his to lose.
"I will pursue Herbalife to the end of the earth," is the threat Bill Ackman made and the hedge fund manager acknowledges spending more than $20 million in a lobbying and media campaign against the health product company. But on the heels of his non-front-running non-insider-trading transactions in the Allergan deal, details about the Herbalife whistleblower's "deal" raise more questions about ethics. Giovanni Bohorquez has now been named as Ackman's inside-man and the $3.6 million secret deal he will receive for spilling inside information about Herbalife's actions is raising significant questions about conflicts of interest. Having flatly denied being paid, "I'm not getting any benefit," during an on-camera ABC interview, ABC now reveals that Ackman agreed to the deal after Bohorquez balked at going public because he feared his disclosures could make it difficult for him to find work at an executive level.
It seems $3.6 million promptly relieved any fears of not being able to get a job.
In his year-long campaign against the embattled Herbalife company, Wall Street hedge fund manager Bill Ackman secretly promised a disgruntled former company executive as much as $3.6 million over 10 years if he lost his job after providing information to government investigators and the media.
“It was the right thing to do,” Ackman told ABC News.
The agreement between Ackman and the former executive, Giovanni Bohorquez, was signed in June 2013 but required both sides to keep it confidential.
Two months later, the New York Times published a critical article about an alleged problem in 2011 at an Herbalife manufacturing plant based on internal documents provided by a person described only as a “former employee, who was granted anonymity out of fear of retribution from the company.”
Herbalife says the former employee is Bohorquez and that any alleged manufacturing problems were quickly and safely resolved.
But the story just gets more and more dirty...
In December, after extensive discussions with his attorney, Bohorquez agreed to be interviewed on camera by ABC News for a report about his experience inside the Herbalife executive offices.
During the on-camera interview, which Ackman’s public relations team helped to arrange and which Bohorquez’s attorney attended, Bohorquez flatly denied he was being paid anything by Ackman or receiving any benefit other than his travel expenses and lawyers’ fees and legal costs.
“I’m not getting a benefit,” he said.
Asked last week why he did not disclose the additional arrangement with Ackman during the interview, Bohorquez said his answers were truthful because he had not invoked the provisions at the time and so had not yet collected any money.
“I didn’t tell you because I was not looking at using it,” he said.
His lawyer, Stephen D. Alexander, said ABC News did not ask “the right questions” and should have assumed there was more to the indemnification arrangement for Ackman to cover legal costs than Bohorquez said.
Ackman's side of the story stinks too...
Ackman said he thought Bohorquez and his lawyer had disclosed the deal.
“He should disclose it, absolutely. Absolutely,” said Ackman.
But Ackman’s own public relations team also failed to reveal the secret arrangement prior to the interview.
Ackman said he agreed to the deal after Bohorquez balked at going public because he feared his disclosures could make it difficult for him to find work at an executive level.
“Giovanni could not afford to take the company on. We thought his story was important,” Ackman told ABC News. “Being a whistleblower is a very dangerous thing to do if you want to get a job."
Taken together, the total value to Bohorquez over 10 years could be as much $3.61 million.
Of course, the question is - how much is Carl Icahn willing to pay another employee to say it's all lies... or perhaps pay someone at Allergan to spill their guts?
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