The WSJ reprots, citing ppl familiar with the matter, that Avenue Capital Group, a hedge fund specializing in distressed debt, is in advanced talks to sell almost 20% of itself to the asset-mgmt arm of Morgan Stanley (MS) in a deal that values Avenue at between $1.5-2bn. Avenue, with assets under mgmt of $12bn, is apparently the latest hedge fund to sell a piece of itself to a Wall Street firm, part of the transformation of hedge funds from small, one-man shows to institutionalized organizations.
The WSJ’s “Heard on the Street” column discusses Wachovia (WB), which now owns Golden West Financial. But the pressure is building on the expansion-hungry bank to demonstrate that it can gracefully digest the gargantuan deal. Early clues will emerge Mon, when Wachovia reports 3Q results. Many investors remain skeptical, despite 5 months of sweet-talking led by CEO G. Kennedy Thompson. One concern: Signs of the deflating real-estate bubble are increasingly evident at
Barron’s Online suggests that no matter how divided Congress is after the Nov election, Democrats and Republicans already agree on one thing: guzzling expensive foreign oil is dangerous business. That's why investors in fuels other than oil, from coal to wind, are bound to be long-term winners unless oil prices fall well below $50 per barrel. Sen. Barack Obama has been an outspoken advocate of turning coal into liquid fuel, writes Kevin Book, of FBR. Committees in the House and Senate support expanding loan guarantees for coal-to-liquid technology. Among the co’s that would benefit if loan guarantees are extended: Rentech (RTK), which develops technology that converts hydrocarbons, coal and natural gas, into alternative fuels. One small co that should benefit, Mr. Book says: Fuel Tech (FTEK), which develops air pollution control technologies that utilities and industrial facilities can use to cut nitrogen oxide emissions. "More emissions requirements means utilities have to retrofit and spend more money, which is good for contractors, good for co’s that make flue gas scrubbers and catalytic converters," Book says.
“Inside Scoop” section reports that Richard C. Perry, the co-founder and president of Perry Capital, bought a total of 33K shares of Sears Holdings (SHLD) for his hedge fund. Mr. Perry is also a director at Sears. Perry Capital's transactions in Sears Holdings shares have accurately predicted the stock's movement in the past, says Ben Silverman, director of research at InsiderScore.com.