Bloomberg (Bloomberg) -- Hedge funds often measure their investments in minutes, not decades; but for Anchorage Capital Group, its long-held stake in Metro-Goldwyn-Mayer Studios Inc. is proving that patience can also be profitable.The New York-based money manager stands to make roughly $2 billion on its investment in the film and TV producer, one that began almost 11 years ago with MGM in bankruptcy court. Amazon.com Inc. agreed to buy the company for $8.45 billion Wednesday, a price that includes just under $2 billion in debt.The deal is in many ways a vindication for Kevin Ulrich, the former Goldman Sachs Group Inc. trader who co-founded Anchorage in 2003 and was part of a group of distressed debt investors that took control of MGM as it went through the restructuring process. In recent years the stake looked to be an albatross for the fund, one that came with significant drama in its own right.Ulrich brought in and later fired a high-profile chief executive officer, resisted efforts by activist investor Carl Icahn to take control, and held out for a bigger payday after years of considering various exit strategies. By selling now, as demand for media content from entertainment and technology companies alike is booming, he’s proving his long-held faith in the investment was justified.“There was a lot of maneuvering, a lot of financial engineering,” said Steven Azarbad, chief investment officer at New York’s Maglan Capital, an MGM investor who sold his shares four years ago. “But they’ve done great.”A representative for Anchorage declined to comment.When Ulrich first invested in MGM, he was new to Hollywood. He helped pick Gary Barber, a South African-born producer of films such as “Ace Ventura: Pet Detective” as chief executive officer of the storied but debt-laden studio. Barber brought to the table a shrewd business sense, and connections into a world Ulrich long admired from afar.Barber shepherded MGM’s development of “The Hobbit” franchise, a co-production with Warner Bros., that became a global smash hit. He helmed the release of the James Bond film, “Skyfall,” which generated over $1 billion at the box office, and he revived the studio’s work in television. Barber also brokered a deal to bring on TV super producer Mark Burnett, which gave MGM access to reality show hits like “Survivor” and “The Apprentice,” but would ultimately become personally troublesome.In 2012 the company bought back Icahn’s stock for $590 million. It also filed paperwork for a possible public offering of shares, and considered other options, such as a sale.As Barber boosted MGM’s film and TV pipeline, Ulrich was increasingly entranced by the allure of Hollywood. He became a regular at movie premieres in Los Angeles and New York, and frequented industry parties in the Hamptons and elsewhere. He became active in creative decisions after becoming chair of MGM’s board -- somewhat unusual for a non-executive lacking Hollywood experience -- even getting involved with business granularities like casting.Growing RiftBut over the following years a rift began to open up between Barber and Ulrich. When it was time to renew Barber’s contract in 2017, Ulrich conducted an extensive search for a new CEO. When it ended, he ultimately chose to sign Barber to a new five-year deal. Yet around the same time, the pair split on whether to sell the company, with Ulrich wanting to hang on to the studio and Barber saying it was time to find a buyer.The company would hold buyout talks with Apple Inc. as well as Chinese investors that would ultimately prove fruitless.Only months after renewing Barber’s deal, Ulrich fired him. The shock departure meant the company had to pay Barber for five years of salary and buy out his equity, a package totaling $260 million. In the three years since Barber left, Ulrich hasn’t replaced him, instead operating an “office of the chief executive officer,” comprised of various people that each have their personal vision for MGM.Barber declined to comment via his spokesperson.Bounce BackAfter the initial period of success following the restructuring, the gains became harder to come by, as they did in Anchorage’s overall credit-focused business. Two senior managers left the firm in January 2020, and another in November. Anchorage’s flagship strategy, with about $8.5 billion under management, returned just 0.6% in 2018, 1.5% in 2019 and 4.4% in 2020, according to people familiar with the matter.In December, MGM hired investment bankers for a potential sale.MGM only released one film in theaters in 2020. Its biggest potential hit, the latest Bond film, “No Time to Die,” was pushed from last year to this October as a result of the pandemic.Yet the value of MGM’s library rose as everyone from media companies to technology giants have sought to build video streaming platforms that can compete with industry leader Netflix Inc. Earnings jumped 48% last year, to about $307 million, even as sales declined.Anchorage holds a roughly 30% stake in MGM, worth about $2.5 billion in the sale, said people with knowledge of the matter. Anchorage invested around $500 million in the company more than a decade ago. Including the MGM stake, Anchorage’s flagship fund is up 18% this year, the people added. The fund has gained about 8% in 2021 not counting the studio.More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.<doc-sep>U.S. hiring rebounded in May after two months of lackluster gains as employers added 223,00 jobs and the labor market continued to defy widespread worker shortages and global economic troubles. The unemployment rate fell from 3.9% to 3.8%, an 18-year low, the Labor Department said Friday. Economists surveyed by Bloomberg expected 190,000 job gains. President Trump suggested the report would be strong early Friday. At 7:21 a.m., he tweeted, "Looking forward to seeing the employment numbers at 8:30 this morning." Normally a president doesn't foreshadow the totals so as not to affect financial markets. Snowstorms and cold weather curtailed job growth in both March and April, according to Goldman Sachs. Milder temperatures were expected to bolster hiring in May. Economists said another tepid showing could indicate that the low unemployment rate is making it even harder for employers to find workers. Also, political turmoil in Italy has roiled markets and is likely to modestly dampen economic growth in the euro area, according to Nomura. Economists thought manufacturers that depend on overseas sales could pull back on hiring in response to both the weakness abroad and U.S. trade fights with other nations. The strong performance eases those concerns and likely solidifies another Federal Reserve interest hike in mid-June. "The economy and labor market appear to be firing on all cylinders," says Paul Ashworth, chief U.S. Economist of Capital Economics. Wage growth picks up Average hourly earnings increased 8 cents to $26.92, pushing up the annual increase to 2.7% from 2.6%. Pay gains have not accelerated as much as anticipated amid the historically low jobless rate. Still, other measures of wages have revealed faster advances, and many economists expect Labor’s monthly reading to pick up to 3% by the end of the year. The 2.7% rise in May was in line with the moderate salary increases investors are seeking that lift household income without feeding concerns about faster inflation that prompts the Federal Reserve to raise interest rates more rapidly. Measurement quirks may also skew wage figures. For example, Labor’s May employment survey was conducted early in the month, and that timing tends to understate wage growth, according to Goldman Sachs. More:Sears, Kmart parent company to close another 63 stores as sales crisis continues More:Let’s get real about planning: What an average retirement costs Industries that are hiring Employment gains were broad-based as the private sector added 218,000 jobs and federal, state and local governments added 5000. Education and health care led the gains with 39,000. Retailers added 32,000 jobs; professional and business services, 31,000; and leisure and hospitality, 21,000. Construction added a healthy 25,000 jobs as the spring home building season got underway. And manufacturers added 18,000 jobs despite jitters over trade and the political crisis in Italy. Unemployment plunges for less educated While the jobless rate fell for people of all educational backgrounds, it tumbled more dramatically for those without bachelor’s degrees. The rate plummeted from 5.9% to 5.4% for those with less than a high school diploma, from 4.3% to 3.9% for people with only a high school diploma, and from 3.5% to 3.2% for those with some college or an associates degree. For Americans with a bachelor’s or higher, unemployment dipped from 2.1% to 2%. As employers increasingly struggle to find workers, they’ve become more willing to bring on people with less education and skills, who are typically available in greater numbers, and then train them to fill in any gaps in qualifications. What it means The report was encouraging all around, with strong job gains, unemployment falling to the lowest level since April 2000 and wage growth picking up moderately. What’s more, payroll increases for March and April were revised up by a total 15,000. Monthly job growth has averaged 207,000 so far this year, up from 182,000 in 2017. That’s not likely to last, economists say, because the low unemployment rate will make it increasingly challenging for employers to find workers. Some analysts say the strong report increases the odds that the Fed will hike rates four times this year rather than the three that central bank policymakers forecast. But Leslie Preston, senior economist of TD Economics, says the risk that further U.S. trade skirmishes will hobble the economy could keep the Fed from lifting rates more aggressively.<doc-sep>The U.S. economy continued to add jobs at a solid clip in May, with nonfarm payrolls up 223,000 and the unemployment rate falling to an 18-year low of 3.8 percent, the Bureau of Labor Statistics reported Friday. Economists had been expecting payroll growth of 188,000 and the jobless rate to hold steady at 3.9 percent. The unemployment rate was last this low in April 2000. A separate level of unemployment that adds in discouraged workers and those holding part-time positions for economic reasons fell to 7.6 percent, the lowest since May 2001. A 0.1-point decline in the labor force participation rate to 62.7 percent, tied for the lowest level in 2018, contributed to the headline unemployment rate decline. The closely watched average hourly earnings metric rose 0.3 percent, as expected. That translates to an annualized rate of 2.7 percent, up 0.1 point from April. "The employment this month really underscores, once again, the robust strength of the labor market," said Steve Rick, chief economist at CUNA Mutual Group. "May showed steady momentum in jobs and certainly hit back at any worries among economists who thought hiring was beginning to finally slow after seeing last month's report." In addition to the better-than-expected payrolls for May, March's count was revised up from 135,000 to 155,000 while April ended lower from 164,000 to 159,000, for a net gain of 15,000.<doc-sep>
Businesses hired robustly in May, reversing the slowing trend of the preceding two months, the Labor Department reported Friday. Here's what you need to know. Some 223,000 jobs were added. This beats economists' expectations of about 190,000 jobs added, and reverses the somewhat disappointing growth over the previous two months (155,000 jobs added in March and 159,000 in April, after revisions.) Unemployment dropped to 3.8 percent, its lowest figure in 18 years. The unemployment rate is now solidly below what most economists consider sustainable in the long term, and is likely to keep falling, some analysts say. "You have to go back to 1969 to find an unemployment rate lower than May's, and with job growth running much faster than the rate of increase of the labor force - participation remains resolutely flat - unemployment is set to keep falling," Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a note. The labor force grew modestly in May and labor force participation stayed flat. The president hinted ahead of the release the numbers would be positive. President Donald Trump tweeted at 7:21 a.m. ET that he was "looking forward to seeing the employment numbers at 8:30 this morning." It is highly unusual for a president, who is briefed on the report ahead of time, to telegraph whether it will be positive before its release. Looking forward to seeing the employment numbers at 8:30 this morning. — Donald J. Trump (@realDonaldTrump) June 1, 2018 Wages grew somewhat faster, increasing 2.7 percent year-over-year. That beats the middling wage growth of about 2.5 percent seen so far in this economic cycle. Other evidence also shows workers are getting hired faster. Among hourly employers, who make up about half of all jobs, one-quarter are getting filled in the same day, according to Peter Harrison, CEO of job-search site Snag. "The speed with which employers need to respond has changed a lot in the past year or year and half," he said. "In the past, employers would probably dip into their applicant pool once a week. Now they find that if they don't get back to workers within 24 to 48 hours, those workers have moved on." Black unemployment dropped to 5.9 percent, the lowest figure on record. That figure is usually double the unemployment rate for whites. It was 6.6 percent last month, also a record low at the time. Unemployment also dropped for less-educated groups. The unemployment rate for those with less than a high-school degree is now 5.4 percent, while unemployment for high-school grads is below 4 percent. "People with high school degrees or less than a high school diploma have been doing quite well in recent months," said Cathy Barrera, chief economist at ZipRecruiter. "Over the past year they have been rebounding faster than people with some college or with a college degree." "At the same time, that means that the jobs being added are sort of on the lower end of the pay scale, so that dampens overall wage growth," she added. An imminent interest-rate hike appears almost certain. The Federal Reserve seems set to increase interest rates another quarter-point at its June 12-13 meeting, and some analysts are predicting that this year will see a total of four hikes instead of three.