Entries in Investors (10)


Winklevoss Twins Back ‘Facebook’ for Investors with $1 Million

Noah Berger/Bloomberg via Getty Images(NEW YORK) -- The Winklevoss twins, made famous by their connection to the Facebook start-up, are back in the Internet game with a $1 million investment in a social media site for investors.

Tyler and Cameron Winklevoss had agreed to a settlement last year with fellow Harvard alum Mark Zuckerberg over their claim that they were behind the premise of Facebook, reportedly at least $65 million in cash and Facebook stock, according to the Wall Street Journal.

In February, the twins created Winklevoss Capital and their first investment was in SumZero, which describes itself as the “world’s largest community of hedge fund, mutual fund, and private equity professionals.”

Divya Narendra, CEO of Sum Zero and a Harvard classmate who had sided with the Winklevoss twins in the legal suit with Facebook, and another alum, Aalap Mahadevia, founded the company in 2008.

The company revealed this weekend that the twins had invested in the startup.

Narendra said involving Tyler and Cameron is “fantastic purely from an investment perspective” and he has the “utmost confidence in bringing them on-board.”

“But more important: They have tremendous knowledge about the Internet, the media and how to run a top-notch website, which will help SumZero evolve as a business,” he said in a statement. “They are ready, willing and able to get involved in the nitty-gritty of SumZero’s operations.”

The company calls itself a “reciprocity-based platform, meaning that members are required to share certain pieces of information in order to draw from the intellectual product of thousands of SumZero members.”

The site also allows for members to expand their networks and “further professional opportunities within the industry,” according to the company description on its website.

The Winklevoss brothers said SumZero, which is based in New York City, is “precisely the type of business around which Winklevoss Capital will be built.”

“SumZero is making serious inroads in capturing a previously untouched segment of the marketplace (i.e. buyside investment research), Divya has hired a dedicated and talented team around him to accelerate the product, and the sky is the limit in terms of potential,” they said in a statement.

SumZero has about 7,500 members who have to be on the “buy side” of the investment business and whose applications are vetted by Narendra personally. He rejects about 75 percent of them, the Journal reported.

Members use the site for free, but if they do not submit trading ideas for six months, they lose access to the site’s database. Investors who are not members of the site can pay $129 a month for a “small number of investment ideas” that Narendra chooses after getting permission from their authors, the Journal reported.

Being consumed in litigation with Zuckerberg for the past several years, was not the only activity of the brothers.

The two were also competitive rowers who had also tried to compete in the London Olympics, up until late last year when they gave up their attempt.

Almost exactly one year ago, the twins, who had become famous through their depiction in the film, The Social Network, starred in a commercial for Wonderful Pistachios.

Copyright 2012 ABC News Radio


Investor Concern for Eurozone Brings Stocks Lower

Hemera/Thinkstock(NEW YORK) -- New worries about the shaky financial situation in Europe kept the markets down to end the week. Trading Friday was light ahead of the Memorial Day Weekend.
The Dow closed down 75 points, or 0.6 percent, to 12,455. The Nasdaq lost 2 points to close at 2,838. The S&P gave up three points, closing the week at 1,318.
Reports that Spain's Catalonia region is having trouble financing itself added to investor worries out the eurozone crisis Friday.  Officials in Spain say that the region "will honor all of its financial commitments," according to The Wall Street Journal.  

Still, shares of Bankia -- Spain's largest bank -- were suspended for allegedly trading before a meeting to approve a plan to recapitalize, according to WSJ.  Madrid, however, has offered up a $24 billion bailout package to Bankia, which would be the largest bank bailout in Spain's history, WSJ reports.
Meanwhile, the price of oil is holding near the lowest levels of the year at just over $90 a barrel. The decrease has also brought gas prices down in time for the Memorial Day weekend.
Copyright 2012 ABC News Radio


Some Investors Call for Rupert Murdoch to Step Down as News Corp Chair

WILLIAM WEST/AFP/Getty Images(LOS ANGELES) -- A chorus of investors is calling for a house-cleaning of the board at Rupert Murdoch's News Corp. ahead of the company's annual meeting in Los Angeles later this week.

The Murdoch family owns 40 percent of the media conglomerate, though some shareholders have urged others not to re-elect Rupert Murdoch, founder, chairman and CEO, and his sons who sit on the 15-person board.

Murdoch's son, James, oversees the company's operations in Europe and Asia. The company has been under investigation regarding phone-hacking scandal allegations against its former tabloid newspaper in London, News of the World, which closed on July 7 amid the headline-making scandal.

Proxy advisory firm Institutional Shareholder Services (ISS), whose clients are investors including pension and mutual funds, recommended that shareholders vote against the re-election of 13 News Corp. board members at the board meeting Friday in Los Angeles.

ISS said in its report: "The company's phone hacking scandal, which began its public denouement in July 2011, has laid bare a striking lack of stewardship and failure of independence by a board whose inability to set a strong tone-at-the-top about unethical business practices has now resulted in enormous costs."

ISS also made negative recommendations against certain members of the News Corp. board in 2005, 2008 and 2009.

In response, News Corp. issued a note to stockholders on Oct. 11 defending the 15 directors, re-elected annually, and the other proposals in the company's proxy statement for 2011.

News Corp. said ISS' "disproportionate focus on the News of the World matter is misguided."

"Our litigation exposure to the News of the World matter could affect News Corporation's results of operations and financial condition, and we are taking this matter very seriously," News Corp. stated to shareholders. "However, our broad, diverse group of businesses across the globe is extremely strong today."

According to published reports over the weekend, The California State Teachers' Retirement System (CalSTRS) as well as the California Public Employees' Retirement System (Calpers) have called for the Murdoch family to step down from the board.

Glass Lewis & Co., another proxy advisory firm, said shareholders should vote against James and Lachlan Murdoch and four other directors, adding that the company needs a more independent board.

Britain's Local Authority Pension Fund Forum is also asking that Rupert and James leave.

A spokeswoman for News Corp. and a spokesman for ISS declined to comment.

Despite the clamor, David Joyce, analyst with Miller Tabak + Co., said it is "highly likely" shareholders will re-elect Rupert Murdoch.

"His sons James and Lachlan are more of a question mark," Joyce said.

Jeffrey Logsdon, analyst with BMO Capital markets, said he agrees there is a high probability Murdoch will be re-elected because he controls over 40 percent of the vote and "the opposition has been fairly civil." He said some investors have for years resisted the notion that a family member will succeed Rupert Murdoch as chairman one day.

"Some have looked at the issues out of the U.K. as a last straw," Logsdon said. "Some just don't line up well politically with Mr. Murdoch or the Fox News perspective. Perhaps the compounding effect might make it "closer"?"

Logsdon said investors do not usually show their concern about management through elections.

"They vote by selling their stock," Logsdon said.

Copyright 2011 ABC News Radio


Investors Flee Stocks, Embrace Cash

Adam Gault/Thinkstock(NEW YORK) -- Investors are fleeing the stock market's scalding volatility for the cool, calm comfort of cash, analysts say. Contrary to likely expectations, it's the youngest investors -- the ones who supposedly have the greatest tolerance for risk -- who are fleeing fastest.

Monday's market drop, the sixth biggest in the history of the Dow Jones Industrial Average, vaporized $2.3 trillion in investor wealth. The VIX index, a measure of market fear, soared to levels not seen since 2009.

Jacob Barr, 28, a technology consultant, cashed out all his investments Friday, after watching the stock market take a 513-point dive the day before. "It seemed like a good time to sell," Barr told the Tennessean newspaper.

As for getting back in at some point, he told the newspaper he would, but not until, "I get my feet back on the pavement. Then I'll be able to buy at a better price."

Adam Bruno, 28, of River Vale, N.J., said he lost more than $1,600 last week, just when he thought his portfolio was finally starting to turn around. "Monday was OK," he told the Newark Star-Ledger. "Tuesday was a slow decline. And Thursday, obviously, it fell off a cliff."

The experience, he said, left him worried he was witnessing "a repeat of 2008."

Fears rooted in the financial collapse of 2008, experts say, are prompting not just youngsters but investors of all ages and levels of experience to bolt stocks for cash.

A recent survey by MFS showed that investors of all ages are moving into cash. MFS said the trend, which it first detected last fall, "appears to be a deliberate and fundamental change in investing," with investors being "driven by protect their assets."

Most surprising, the MFS survey found that Generation Y (investors between the ages of 18 and 30) have abandoned stocks for cash sooner and more aggressively than their older peers.

Generation Y is now 30 percent invested in cash, compared with 26 percent for investors overall, according to the MFS survey.

Copyright 2011 ABC News Radio


Debt Ceiling Deal Didn't Inspire Investors

Comstock/Thinkstock(NEW YORK) -- The buzz on Wall Street before the opening bell Monday was that it was going to be a good day, thanks to the announcement by President Obama the evening before that a deal had been struck to raise the nation's $14.3 trillion debt ceiling.

Investors needed a lift too, given that the Dow Jones Industrial Average had fallen more than 500 points the week before due to uncertainty about the Treasury Department being able to pay its bills after August 2.

Unfortunately, there wasn’t much of a change on Monday.

The euphoria that resulted from the good news out of Washington evaporated in a matter of minues, quashed by the reality that the economic recovery is still tepid and shows no signs of quick improvement.

One sign that America's financial state is still woeful was a report from the Institute for Supply Management that showed American manufacturing in July growing at its slowest pace since 2009. At the closing bell, the Dow, which only showed a little life at the beginning of the trading day, wound up down 11 points.

Copyright 2011 ABC News Radio


Will U.S. Default? $4.8 Billion Investment Says Yes

Comstock Images/Thinkstock(WASHINGTON) -- Investors are spending $4.8 billion to hedge against the possibility that credit rating agencies will downgrade U.S. debt -- or worse, that the U.S. actually will default. Doomsayers predict these and other dire consequences if Congress fails to act by August 2 to raise the nation's debt ceiling.

Rating agency Standard & Poor's earlier in July warned the U.S. that it risks a downgrade of its top AAA rating to AA status, unless Congress lifts the $14.3 trillion ceiling and reduces total debt by $4 trillion over 10 years. In April, the agency lowered its rating outlook for the U.S. from "stable" to "negative."

Investors worried at the prospect of a U.S. downgrade or default could protect themselves several ways, say experts. Joe Magyer, senior analyst at the financial website Motley Fool, says an investor could go entirely to cash. Otis C. Casey, director of credit research for Markit, a financial information services company, says an investor could unload any U.S. debt he might own and move into some other safe-haven asset, such as gold, the price of which has recently hit record highs on fears over the debt fight.

A person also could invest in a mutual fund, the return for which goes up when U.S. treasuries go down. Such funds allow investors to bet against U.S. debt.

Big institutions and the most sophisticated investors use credit-default swaps (CDS), which act like insurance policies against the deterioration of debt, be it corporate or the debt of a sovereign nation. If the debt is downgraded or if the borrower defaults, a swap makes the debt-holder whole again.
The amount of money in U.S. credit-default swaps increased 57 percent this year to $4.8 billion, according to the Depository Trust & Clearing Corp, which provides clearing, settlement and information services.

Any increase in the price of a swap is a sign of investors' declining confidence in the soundness of the underlying debt. Casey, for that reason, calls swaps early warning indicators. As Congress has continued to wrestle over raising the debt ceiling, the price of U.S. swaps has risen.
Suppose that August 2 arrives, and that Congress fails to act. What happens then to holders of U.S. debt?

"Some people have speculated," says Casey, "that there are so few safe havens for investors that U.S. bonds might actually benefit if the debt ceiling isn't raised." Panicky investors, in other words, might flock to U.S. treasuries as their least-bad option. "That," says Casey, "would be the ultimate irony.”

Copyright 2011 ABC News Radio


Could Twitter Be Worth $7 Billion?

SAEED KHAN/AFP/Getty Images(NEW YORK) -- Twitter could be worth up to $7 billion, according to The Wall Street Journal.  The company is raising millions in a new financing move.

The new rounds of financing could yield hundreds of millions of dollars and value the company as high as $7 billion, but it remains unclear who is investing in Twitter.

Seven months ago Twitter, whose unique users have grown to 139 million from 90 million last year, raised $200 million from venture-capital firm Kleiner Perkins Caufield & Byers, which then valued it at $3.7 billion.

The Wall Street Journal reports that Twitter's effort to raise such a large sum of money will allow it more time to build up an ad-based revenue generator.

The fast-growing social media site is on-pace to generate $150 million in ad revenue this year, according to internet market researching firm, eMarketer.

Copyright 2011 ABC News Radio


Bank of America Investors to Challenge $8.5 Billion Settlement

PRNewsFoto/Bank of America(NEW YORK) -- A group of bond investors is fighting a proposed $8.5 billion settlement Bank of America struck last week with holders of mortgage-backed securities sold by Countrywide Financial Loans.

According to court documents, the group -- under the name Walnut Place -- is accusing Bank of New York Mellon, trustee on the mortgage securitizations for Bank of America, of having "serious conflicts of interest" that would compromise the fairness of the deal.

"Walnut Place has serious concerns about the secret, non-adversarial and conflicted way in which the proposed settlement was negotiated and about the fairness of terms of the proposed settlement," the court filing stated.  

Walnut Place wants investors to be able to opt out of the proposed agreement, should they choose, the court documents said.

The group of 11 investors argues that "the $8.5 billion that Countrywide and BofA have agreed to pay is therefore only a small fraction of the potential liability that they would have faced in litigation on half of the trusts."

Copyright 2011 ABC News Radio


Bank of America Agrees to $8.5 Billion Settlement with Investors

Davis Turner/Getty Images(NEW YORK) -- Bank of America reached an agreement Wednesday to pay $8.5 billion to settle claims by big investors who bought mortgage-backed securities and saw their value collapse when the U.S. housing market went sour.

The deal marks the biggest settlement so far from the collapse of sub-prime mortgages and could lead to others.

Mutual fund and other investors argue that they were misled about the true value of mortgage bonds.  Along with Bank of America, JP Morgan Chase, Citigroup and Wells Fargo all face big claims.

Copyright 2011 ABC News Radio


Bank of America Could Face Investor Lawsuit Over Soured Mortgage Loans

Photo Courtesy - Bank of America(NEW YORK) -- A group of investors has started a legal process that could force Bank of America to take back some mortgages that have been bundled and sold.

While the lead lawyer on the case would not identify the investors, Bloomberg News reports PIMCO, Blackrock and the Federal Reserve Bank of New York are part of the action.  Bloomberg also reported that the investors are hoping to force Bank of America to buy back $47 billion in bad mortgages.

No suit has been filed yet, but the investors' lawyers have reached out to Bank of America as part of a 120-day-long process that could lead to a lawsuit.

A Bank of America spokesperson responded to the action by saying, "We believe Bank of America has complied fully with its obligations in regards to these securities."

As shoddy documentation practices at the mortgage divisions of several large banks became public, there have been concerns that these banks may be forced to reconsider some sales of mortgage securities.

Bank of America stock closed down more than four percent Tuesday.

Copyright 2010 ABC News Radio

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