Brief: Billionaire hedge fund investor David Tepper told CNBC on Wednesday the stock market is one of the most overpriced he’s ever seen, only behind 1999. His comments sent stocks to a session low. He also said some Big Tech stocks like Amazon, Facebook and Alphabet may be “fully valued.” Before Wednesday’s sell-off, it was “maybe the second-most overvalued stock market I’ve ever seen,” Tepper said on CNBC’s “Halftime Report.” “I would say ’99 was more overvalued.” “The market is pretty high and the Fed has put a lot of money in here,” the founder of Appaloosa Management said. “There’s been different misallocation of capital in the markets. Certainly you are seeing pockets of that now in the stock market. The market is by anybody’s standard pretty full.” The S&P 500′s forward price-earnings ratio based on estimates for the next 12 months has ballooned to above 20, a level not seen since 2002.
Brief: Carlyle Group Inc. and Singapore sovereign-wealth fund GIC Pte. are using fake excuses to renege on buying a 20% stake in American Express Global Business Travel, according to a lawsuit unsealed in the U.S.A unit of Centares Management LLC claims Carlyle’s losses from the coronavirus left it with a whopping case of buyer’s remorse and prompted its attempt to scrap the stock purchase, which had valued the travel entity at $5 billion when it was announced in 2019. Centares leads a group of investors in the deal, including the Qatar Investment Authority and several Carlyle entities. “The Carlyle Group’s losses do not provide defendants with a basis to withdraw from the transaction,” Juweel Investors Ltd., a subsidiary of New York-based Centares, said in the lawsuit unsealed Monday in Delaware Chancery Court. The investment fund “cobbled together a series of pretextual and transparently false excuses to justify their refusal to close” the deal, Juweel said.
Brief: The UK government’s plans to ease lockdown restrictions may have caused confusion and criticism, but some of the world’s largest investment banks have a clear message to their London employees — stay at home. According to internal memos seen by Financial News and people familiar with the matter, banks including Citigroup, Goldman Sachs, HSBC, JPMorgan and Morgan Stanley have told employees that their current remote working arrangements, which have forced them to radically overhaul their staff base, will remain in place for the foreseeable future.Others including Barclays and Deutsche Bank will ask a small proportion of staff to return in the coming weeks. Investment banks with huge, global operations are grappling with how to get their employees back into the office safely as various local authorities loosen restrictions on their populations, but Prime Minister Boris Johnson’s lockdown exit plan has largely failed to prompt any changes at finance firms.
Brief: Wall Street bonuses for 2020 could fall by as much as 25%-30% due to the deep cuts to revenues recorded by banks and hedge funds earlier this year as a result of the novel coronavirus, according to a report published Wednesday by compensation consulting firm Johnson Associates Inc. While most compensation is expected to be down, 2020 is likely to be a year with “wide, wide variations in incentive outcomes between stronger and weaker competitors,” according to the report by Alan Johnson, whose predictions are closely watched by financial professionals. The outbreak of the novel coronavirus has led to widespread shutdowns in the U.S. economy, causing gross domestic product to decline at a 4.8% annualized rate in the first quarter and forcing some 33.5 million Americans to file for unemployment benefits.
Brief: One of my favourite memes recently is the one where the world is sending us back to our rooms to reflect on what we’ve done. The act of being sent back to our rooms, to a place where we have to reset and reprioritise is an opportunity that many business leaders are seizing. Although you might think that the “nice to have” of inclusion and diversity would drop off the business agenda in a time of crisis, it is gaining more traction at firms that want to ensure they innovate and reposition themselves for recovery. Decades of research has shown that diversity brings greater levels of innovation, fosters creativity and improves financial performance. Multiple voices lead to new ideas, services and products and encourage out-of-the-box thinking.
Brief: BDT Capital Partners raised $9.1 billion for its third investment fund, exceeding the amount it had initially sought, according to a regulatory filing Tuesday. The fund has about 200 investors and will focus on buying stakes in family-owned businesses, said a person familiar with the strategy who asked not to be identified because the information is private. More than 90% of the investors have their own businesses or significant family office operations, and about a third are based outside the U.S., the person said. Byron Trott founded Chicago-based BDT in 2009, after an investment-banking career that included working with Warren Buffett and the Pritzker and Koch families, as well as other prominent investors. The firm has about $25 billion under management. So far, the coronavirus pandemic hasn’t stopped private equity firms from raising fresh funds. On Monday, U.K.-based Hg said it would stop accepting new money after bringing in $11 billion for three buyout funds, and KKR & Co. said last week that it had raised $10 billion over the past two months. In all, private equity firms are sitting on about $1.5 trillion of capital to invest…