Archive for June, 2010

CALPERS purchases 12.7% stake in U.K.’s Gatwick Airport Through Global Infrastructure Partners

Sunday, June 20th, 2010

CALPERS purchased a 12.7% stake in U.K.’s Gatwick Airport yesterday.  Gatwick is the U.K.’s 2nd busiest airport with 200 destinations.  This looks like an opportunistic bid for U.K. based cash flows as the pound is discounted and the U.K. economy may take years to rebound.

According to Reuters, “Calpers, the biggest U.S. public pension fund, said on Friday it had committed up to roughly $155 million to Global Infrastructure Partners for a 12.7 percent equity stake in London’s Gatwick Airport.

The commitment marks the first direct infrastructure investment foray by Calpers, the $200 billion California Public Employees’ Retirement System.

It covers the equity purchase price and provisions for bridge costs and future administrative expenses, Calpers said in a statement.

“We are looking for opportunities to invest directly in high-quality infrastructure assets. We see it as a good fit for our burgeoning infrastructure program,” said George Diehr, chairman of Calpers’ investment committee.

Earlier this year, Global Infrastructure Partners, founded by Credit Suisse (CSGN.VX) and General Electric (GE.N), sold stakes in Gatwick to the Abu Dhabi Investment Authority, the world’s largest sovereign wealth fund, and to South Korea’s National Pension Service.”

Adebayo Ogunlesi, Chairman and Managing Partner of GIP commented: “We are delighted that CalPERS, one of the world’s largest and most sophisticated public pension funds, is investing alongside GIP in Gatwick. We look forward to working with CalPERS over the coming years as partners in what we believe will be an outstanding investment for all stakeholders.”

Michael McGhee, the GIP Partner leading the acquisition of Gatwick and now a Director at the airport, added: “This is an exciting time at Gatwick as we work on updating and modernizing the airport to transform the passenger experience. We are pleased that CalPERS has joined GIP and our existing partners as investors in Gatwick as we introduce improved operating procedures and performance enhancements throughout the airport.”

About Global Infrastructure Partners

GIP is an independent infrastructure fund that invests worldwide in infrastructure assets and businesses in both OECD and selected emerging market countries. GIP has offices in New York and London with an affiliate in Sydney and portfolio business operations headquarters in Stamford, Connecticut. For more information, visit www.global-infra.com.

About CalPERS

The California Public Employees’ Retirement System (CalPERS) provides retirement and health benefits to more than 1.6 million public employees, retirees, and their families and more than 3,000 employers in the state of California, United States of America. The CalPERS fund invests in a range of asset classes, with a current market value of approximately $206 billion.

About Gatwick Airport

Gatwick is the UK’s second-largest airport and the world’s busiest single runway airport. It is currently handling approximately 32.5 million passengers a year through its two terminals, on a mix of short and long-haul scheduled, low-cost and charter services. The airport currently serves around 80 airlines flying to over 200 destinations.

Ninety-Three Page Bullish Outlook Report on S&P500 – Goldman Sachs

Thursday, June 3rd, 2010

Goldman Sach’s recently issued a bullish outlook for the industry, with overweight ratings on technology, energy, and basic material stocks.  Especially after the beating energy shares have taken over the past five weeks, the time may be right to buy.  This link was provided by ZeroHedge.

The report highlights GS’s investment process and ranking methodology.

Monthly Chartbook

BP Loses 15% in One Day, 41% from 2010 Peak After Devastating Underwater Oil Spill

Tuesday, June 1st, 2010

Since the BP oil spill, oil drillers and energy stocks have taken a pummeling.  Today, BP fell nearly 15%, extending peak to trough losses from Jan. 2010 to 41%.  Oil prices also fell today in reaction to weaker manufacturing numbers from China, as a result of government tightening measures.

According to ZeroHedge, the largest BP shareholder daily losers of June 1st include: #1: State Street, with 43.4 million shares has lost $260 million today, #2: Wellington, 34.8mm, $209 million, #3: Barrow Hanley, 16.7mm, $100mm; #4: Bank of America, 13.9mm, $83mm; and #5: State Farm, 13mm, $78 million. “That’s half a billion in losses for the top 5 holders today alone. And this list doesn’t even include Anadarko, Transocean, or Halliburton.”

To make matters worse, the Associated Press just released the following: “Attorney General Eric Holder said Tuesday that federal authorities have opened criminal and civil investigations into the nation’s worst oil spill, and BP lost billions in market value when shares dropped in the first trading day since the company failed yet again to plug the gusher.

Investors presumably realized the best chance to stop the leak was months away and there was no end in sight to the cleanup. As BP settled in for the long-term, Holder announced the criminal probe, though he would not specify the companies or individuals that might be targeted.

“We will closely examine the actions of those involved in the spill. If we find evidence of illegal behavior, we will be extremely forceful in our response,” Holder said in New Orleans.

With the ambitious “top kill” abandoned over the weekend, BP’s hope to stanch the leak lies with two relief wells that won’t be finished until at least August. The company is, however, trying another risky temporary fix to contain the oil and siphon it to the surface by sawing through the leaking pipe and putting a cap over the spill.

Coast Guard Adm. Thad Allen, the national incident commander, said Tuesday that BP was making its first major cut with super shears that weigh 46,000 pounds and resemble a giant garden tool. The company will also use a powerful diamond-edged cutter the resembles a deli slicer to try to make a clean cut above the blowout preventer, then will lower a cap over it with a rubber seal.

After several failed attempts to divert or block the well, BP’s latest attempt involves cutting the broken riser pipe, making it spew as much as 20 percent more oil into the water for days while engineers try to position a cap over the opening.

Eric Smith, an associate director of the Tulane Energy Institute, said the strategy had about a 50 to 70 percent chance to succeed. He likened it to trying to place a tiny cap on a fire hydrant.

“Will they have enough weight to overcome the force of the flow?” he said. “It could create a lot of turbulence, but I do think they’ll have enough weight.”

BP Chief Operating Officer Doug Suttles said there was no guarantee the cut-and-cap effort would work. He did say the company has learned from past efforts to contain the leak, which gives them a better shot at success.

“I’m very hopeful,” Suttles said. “I think we’ll find out over the next couple of days.”

The cleanup, relief wells and temporary fixes were being watched closely by President Barack Obama’s administration.

The president gave the leaders of an independent commission investigating the spill orders to thoroughly examine the disaster and its causes, and to follow the facts wherever they lead, without fear or favor.

The president said that if laws are insufficient, they’ll be changed. He said that if government oversight wasn’t tough enough, that will change, too.

Meanwhile, BP spokesman Graham MacEwen said the company was awaiting analysis of water samples taken in the Gulf before making a final determination on whether huge plumes of oil are suspended underwater. CEO Tony Hayward said Sunday there was “no evidence” of the plumes even though several scientists have made the claims.

Billy Nungesser, president of Plaquemines Parish, fired back at Hayward.

“We ought to take him offshore and dunk him 10 feet underwater and pull him up and ask him ‘What’s that all over your face?’” said Nungesser.

On the business side of things, the company’s share price, which has fallen steadily since the start of the disaster, took a turn for the worse Tuesday, losing 15 percent to $6.13 in early afternoon trading on the London Stock Exchange.

That was the lowest level in more than a year. The shares have now lost more than a third of their value, wiping some $63 billion off BP’s value, since the explosion at the Deepwater Horizon oil rig six weeks ago.

BP said early Tuesday it had spent $990 million so far on fighting and cleaning the spill, with multiple lawsuits for damages yet to be tallied.

The Coast Guard also announced that it was replacing the admiral who has been the federal on-scene coordinator since the oil rig exploded, though the agency said the change was previously planned. Rear Adm. Mary Landry will now return to duties as commandant of the 8th Coast Guard District in New Orleans to focus on hurricane season preparations.

BP failed to plug the leak Saturday after several attempts with its top kill, which shot mud and pieces of rubber into the well but couldn’t beat back the pressure of the oil.

The spill has already leaked between 20 million and 44 million gallons, according to government estimates.

The National Oceanographic and Atmospheric Administration also announced that almost one-third of federal waters — or nearly 76,000 square miles — in the Gulf were closing to commercial and recreational fishing because of the spill.

The relief well is the best chance to stop the leak. A bore hole must precisely intersect the damaged well, which experts have compared to hitting a target the size of a dinner plate more than two miles into the earth. If it misses, BP will have to back up its drill, plug the hole it just created, and try again.

“The probability of them hitting it on the very first shot is virtually nil,” said David Rensink, incoming president of the American Association of Petroleum Geologists, who spent most of his 39 years in the oil industry in offshore exploration. “If they get it on the first three or four shots they’d be very lucky.”

The trial-and-error process could take weeks, but it will eventually work, scientists and BP said. Then engineers will then pump mud and cement through pipes to ultimately seal the well.

On the slim chance the relief well doesn’t work, scientists weren’t sure exactly how much — or how long — the oil would flow. The gusher would continue until the well bore hole collapsed or pressure in the reservoir dropped to a point where oil was no longer pushed to the surface, said Tad Patzek, chair of the Petroleum and Geosystems Engineering Department at the University of Texas-Austin.”