Wall Street Journal
Activist investors have been getting a little help from their new friends at mutual funds. There was once a time when mutual funds wouldn't even pick up the phone when activists called; they worried that even associating with activists would jeopardize their access to management at their portfolio companies.
Now mutual funds are teaming up with activists, even though they're not playing a leading role. ValueAct, which last week disclosed a $1 billion stake in American Express, was able to nab a board seat at Microsoft in 2013 through the behind-the-scenes assistance of Capital Research & Management and Franklin Templeton Investments.
ValueAct's investment in American Express may not be such a good thing, however, opines "Heard on the Street." Since activists only want capital to be returned to shareholders, ValueAct will push Amex to cut costs and implement stock buybacks and higher dividends. Instead, Amex needs to spend on reinventing itself.
It needs to "disrupt its own costs" via higher spending on marketing and innovation to counter disprutors that are looking to upend the world of traditional credit cards and fight back against the forays of Apple and Google into payments.
Financial Times
The news that ValueAct had taken a stake in Amex drove up the credit card issuer's shares last week. Since Amex is one of Warren Buffett's Berkshire Hathaway's four largest stock investments (it owns 15% of Amex), the surge produced a $700 million paper profit for Berkshire in a matter of minutes, the paper pointed out.
The rest of Berkshire's stock portfolio didn't perform as well during the second quarter, and that helped drive down the company's quarterly profit.
New York Times
The Securities and Exchange Commission is trying to respond to its critics. The SEC has taken heat from the likes of Sen. Elizabeth Warren, D-Mass., who says the agency isn't doing enough to make parties admit wrongdoing; and the U.S. Chamber of Commerce, which doesn't like the SEC's use of administrative courts where the SEC's own appointed judges hear cases. The SEC is trying to show it's pursuing more enforcement actions, such as looking into potential insider trading in Dean Foods shares by golfer Phil Mickelson and a professional gambler; and the hiring of the children of China's elite by Wall Street banks.
Elsewhere ...
Los Angeles Times: The paper looks at the unusual business model (unusual for an FDIC-regulated bank, that is) of Silicon Valley Bank. The bank has been what the paper described as a "nursemaid" to startups like Airbnb, Fitbit, Pinterest and TrueCar. It once was the case that when these startups grew to a certain size, they'd abandon Silicon Valley Bank for larger financial institutions, but an RBC Capital Markets analyst said that's not necessarily always the case now. Another analyst, at D.A. Davidson, said rivals like City National in Los Angeles and Comerica in Dallas, have tried to make a play for the same type of client that is Silicon Valley Bank's specialty and they haven't made a dent.
Charlotte Observer: Bank of America has agreed to sell its LandSafe Appraisal business to CoreLogic. B of A inherited LandSafe through its 2008 acquisition of mortgage lender Countrywide Financial. It's the latest move by CEO Brian Moynihan to dispose of noncore businesses. B of A did not disclose the financial terms of its sale of Dallas-based LandSafe.
San Antonio Business Journal: The $8.3 billion-asset Security Service Federal Credit Union, the seventh-largest credit union by assets, has named Thomas Martin chief financial officer.
