Tag Archives: S&P

Activist Investors Call For McGraw-Hill Divestitures

McGraw-Hill shareholders have met with the company to discuss breaking the business apart and selling less profitable divisions. Jana Partners LLC, founded by Barry Rosenstein, and the Ontario Teachers’ Pension Plan jointly own about 5.2% of McGraw-Hill. These two shareholder groups are pushing hard for McGraw-Hill to split its 4 divisions into different companies. Jana Partners is a hedge fund once associate with the Carl Icahn group and has already attempted to dismantle 40 companies in order to make greater profits for its shareholders.

According to McGraw-Hill spokeswoman, Patti Rockenwagner, “McGraw-Hill’s portfolio review is well advanced.” The McGraw-Hill Chairman and CEO, Harold W. McGraw III, has said that McGraw-Hill is planning to make an important announcement in the second half of 2011.

According to Goldman Sacks analysts the sum value of the parts of McGraw Hill is greater than the value of the entire company as a whole. According to analysts at Piper Jaffray, if McGraw-Hill spun off some businesses, its share price would be trading closer to $53 rather the low $40’s.

One of the advantages of economic recessions is that it forces businessmen and investors to review the health of their companies and to push for improvements where possible. I think that we are seeing this business review and improvement process now. Its all for the best!

Warren Buffett Still Believes

warren BuffettWarren Buffett still believes the USA has a AAA rating. “If anything, it may change my opinion on S&P,” Buffet said. Yet, despite the great respect many in the investment arena gives to Buffett, he may be a little influenced.  Buffett happens to be a big shareholder in Moody’s, the rating agency that did not downgrade the US debt.

Overconfident?

Warren Buffett is so confident that the US will dig itself out of its debt driven economic mess that he still has a most of his money in T-Bills. “I wouldn’t dream of putting it anywhere else,” he affirms. Yet, despite Buffett’s legendary status, analysts like Nouriel Roubini and Peter Schiff who correctly predicted the crash of 2008-2009 don’t see the USA climbing out of this mess any time soon.

Nouriel Roubini wrote the following in the Financial Times:

“America’s recent data have been lousy: there has been little job creation, weak growth and flat consumption and manufacturing production. Housing remains depressed. Consumer, business and investor confidence has been falling, and will now fall further.”

At the end of the day the facts are the facts and more and more investors are believing that the US and most of the world is entering another recession, one with long standing implications.