Apparently All That Glitters Is Gold!



Wasn’t Expecting This: CIBC offloads American Century stake

Canada’s CIBC today announced it was selling its stake in wealth manager American Century Investments to Japan’s Nomura Holdings for about USD$1B after acquiring the 41% stake for about USD$848M from financial behemoth JPMorgan Chase in 2011. The bank indicated the reason for the sale was the unlikelihood of it acquiring majority control of the wealth manager…I guess Nomura is content with a minority stake or believes the status quo could possibly change. CIBC is expecting a gain of about USD$170M net of taxes from the sale.

Thankfully, the sale does not appear to signal a shift in strategy away from expanding the Bank’s private banking and wealth management presence, but does mean there will be some drag on earnings going forward until cash from this disposal is deployed (redeployment may take a while since demand for wealth management businesses had led to increased prices).



Make Room Manny, Moe and Jack?

Billionaire investor Carl Icahn today raised his offer to acquire automotive parts and services chain Pep Boys (NYSE: PBY) to $16.50 per share in cash, trumping a rival offer of $15.50/share by Japanese tire giant Bridgestone.

Both Icahn and Bridgestone have very deep pockets and while its left to be seen how this battle plays out (Bridgestone has until December 23rd to propose a higher offer), those investors who bought into Pep Boys towards the end of last year as part of a long-term plan or short-term trading strategy are looking at a sweet gain of more than 60% should Icahn’s deal go through.

The long-term attractiveness of the automotive parts and services business together with potential synergies from each bidder’s respective existing businesses business undoubtedly led them to knock on Manny, Moe and Jack’s door, and while I did not make a call to go long Pep Boys, this whole scenario makes me feel more confident on the prospects of Genuine Parts Company (NYSE: GPC) as an attractive long-term investment.


The Week That Was

The Week That Was Image

Bargain hunters went shopping last week as all but one of the indices I tracked finished higher; last week’s 2.9% gain in the S&P/TSX composite made it the top performer. Major oil-field services company Schlumberger also went shopping last week when it announced a deal to acquire smaller rival Cameron International in a cash and stock deal valued at approximately USD$12.7B.   Germany’s DAX, France’s CAC 40, and Japan’s Nikkei 225 are still posting decent positive YTD numbers.

Add another dish to the Buffett

Warren Buffett’s Berkshire Hathaway wrote its biggest check – a whopping $37B including debt – in history last week with a deal to acquire industrial parts maker Precision Castparts. This deal is another step in what looks, to me, like a deliberate strategy to remake Berkshire into a more industrially focused business as opposed to its current form known for its massive insurance operations and equally massive stock portfolio.

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