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Bloomberg Markets Magazine

Bloomberg Markets Magazine June 2015

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Bloomberg Finance LP
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in this issue

2 min
king of the mountain

OF U.S. COAL-FIRED POWER CAPACITY WILL VANISH IN THE NEXT FEW YEARS, SOME 7.5 PERCENT THIS YEAR ALONE. Source: Bloomberg New Energy Finance WHEN ROB KATZ, CEO of Vail Resorts, bought Podunk ski areas outside of Detroit and Minneapolis in 2012, some people in the business thought he was nuts. They probably knew better than to underestimate him as he added another obscure bump in March: Australia’s Perisher, where much of the snow is man-made and half the lifts are T-bars, J-bars, and rope tows. Katz, 48, has a plan. The former investment banker (Drexel Burnham Lambert) and buyout guy (Apollo Global Management) now has 11 resorts in his portfolio, including Park City and Heavenly . That’s up from five when Katz became Vail’s boss in 2006. What’s more, you can ski at…

4 min
unmet expectations

METHODOLOGY: Our survey of 1,280 Bloomberg terminal subscribers was conducted April 14 and 15 by Selzer & Co. of Des Moines, Iowa. The margin of error is plus or minus 2.7 percentage points. ASK MAIN STREET about Wall Street and you probably won’t hear this: Banker pay is surprisingly low. But that’s what financial professionals say. Asked whether they earn more or less than they expected when they decided to pursue a finance career, 48 percent of those polled in a Bloomberg survey say compensation is less or much less than they had hoped for. Just 14 percent say their pay exceeds expectations. A third say they earn about what they thought they would. ARE YOU BEING PAID MORE OR LESS THAN YOU EXPECTED WHEN YOU DECIDED ON A FINANCE CAREER? And that’s not…

1 min
rich list

As of April 17. Price estimates are taken from published reports. Source: Bloomberg 1 When Will You Marry? (1892) PAUL GAUGUIN $300 million SOLD IN 2015 Buyer: QATAR MUSEUMS 2 The Card Players (1892-95) PAUL CÉZANNE $250 million SOLD IN 2011 ROYAL FAMILY OF QATAR 3 No. 6 (Violet, Green and Red) (1951) MARK ROTHKO $186 million SOLD IN 2014 DMITRY RYBOLOVLEV 4 The Dream (1932) PABLO PICASSO $155 million SOLD IN 201 1 STEVEN A. COHEN 5 Three Studies of Lucian Freud (1969) FRANCIS BACON $142.4 million SOLD IN 2013 ELAINE WYNN 6 No. 5, 1948 (1948) JACKSON POLLOCK $ 140 million SOLD IN 2006 UNKNOWN 7 Woman III (1952-53) WILLEM DE KOONING $137.5 million SOLD IN 2006 STEVEN A. COHEN 8 Portrait of Adele Bloch-Bauer I (1907) GUSTAV KLIMT $135 million SOLD IN 2006 RONALD LAUDER 9 Salvator Mundi (ca. 1490-1519) LEONARDO DA VINCI $127.5 million SOLD IN 201 3 DMITRY RYBOLOVLEV 10 The Scream (1895) EDVARD MUNCH $119.9 million SOLD IN 2012 LEON BLACK 11 Reclining Nude With…

15 min
the elizabeth warren effect

Let's assume that when he woke up on the morning of Dec. 12, Michael Corbat, CEO of Citigroup, was feeling pretty good. The day before, the House of Representatives had passed a bill that would save his bank and others lots of money and headaches. The trouble was, Elizabeth Warren, the senior senator from Massachusetts, was getting ready to speak on the Senate floor. She had his bank on her mind. What Warren wanted to talk about was an item tucked into page 615 of a 1,603-page spending package: the repeal of section 716 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Known as the swaps push-out rule, section 716 required banks to set up separate subsidiaries, not backed by the government, to trade certain derivatives. If the…

1 min
a rigged game

In September 2007, Brazilian President Luiz Inácio Lula da Silva broke ground on the Abreu e Lima oil refinery on the country’s northeast coast. Prosecutors say an illegal cartel rigged the bidding for construction contracts, pushing costs to $18.5 billion, eight times the original budget. Here is the scheme, as described by prosecutors and in court testimony. 1 The alleged cartel meets in the São Paulo offices of one of its members, the engineering firm UTC, to develop plans to divvy up contracts at inflated prices.¹ (UTC denies being part of a cartel.) 2 A representative for Odebrecht, Brazil’s biggest builder, secretly asks Petrobras to restrict bidding to members of the alleged cartel.² (Odebrecht denies being part of a cartel.) 3 Petrobras formally limits bidding to the companies on the list.² Petrobras executives…

5 min
looking under the hood

WHEN THE MANAGERS of the Hennessy Focus Fund invest in publicly traded shares, they try to think like business owners. Instead of trading in and out of a stock to rack up small gains, David Rainey and his co-managers, Brian Macauley and Ira Rothberg, look to buy companies they can hold—for years. The low churn of the $1.7 billion fund backs them up on that. “Our turnover in the fund averages less than 15 percent a year,” Rainey says. That implies a holding period of 6½ years, he says. The managers add only three or four stocks to the fund in a normal year and sell out of three or four others, Rothberg says. The fund held shares of only 21 companies at the end of March. “Our sweet spot is 20 to 30…