MAJOR PAPERS:

• The Wall Street Journal reported that after years of rapid grows, many hedge funds are shutting their doors or merging with others, as expansion has dramatically slowed. As a result, the industry is being dominated mostly by big firms, such as Och-Ziff Capital Management Group LLC (NYSE: OZM), D.E. Shaw & Co., and Paulson and Co.
• Shares of Ctrip.com International Ltd (NASDAQ: CTRP), China's major Internet travel booker with about 58% of the country's online travel business, have dropped about 30% in the last six weeks alone creating a possible buying opportunity, according to the Wall Street Journal's "Heard in Asia". Travel in China is expected to grow solidly in the long-term and Ctrip.com said it expects revenue to grow 30% for the three months ending June 30 from a year earlier.
• In a move that could potentially usher in a new phase in the credit crunch, the Financial Times reported that The Goldman Sachs Group Inc (NYSE: GS) is said to be close to finalizing a plan to restructure a $7B investment vehicle formerly run by Cheyne Capital, a London-based hedge fund.

OTHER PAPERS:

• The Washington Post reported the proposed merger between XM Satellite Radio Holdings Inc (NASDAQ: XMSR) and Sirius Satellite Radio Inc (NASDAQ: SIRI) was under fire yesterday by senior members of the Congressional Black Caucus, who said the deal does not provide enough opportunities for minority-owned programming.

Bloomberg News reports that 10 of the biggest names in investment banking are blocking investors from getting their hands on their share of the $330 billion Auction Rate Securities (ARS) that they were told was as safe as a money market fund.

I first posted about this back in February and now it has 4,325 comments from people trying to get at their money. Bloomberg quotes one victim of frozen ARS syndrome: Franklin Biddar, a 65-year old real estate investor who can't get his $100,000. "I can't do anything," said Biddar, who was so eager to unlock his money that he was willing to accept 11 percent less than what he paid for the securities. "Bank of America (NYSE: BAC) got me into these securities that are supposed to be as safe as a money market, and now they won't get me out."

Here's a list of the banks involved in this money blocking operation and the volume of municipal ARSs they issued between 2001 and 2007:

Since I have been a shareholder of Berkshire Hathaway (NYSE: BRK.A), I have enjoyed reading with great interest the musings of company chairman Warren Buffett as he gives almost a play-by-play review of the year in his letter to shareholders. He writes in a tone I would compare to Will Rogers, the writer, actor, comedian, cowboy and former mayor of Beverly Hills.

"My pal Warren" highlights both the triumphs and disasters of the year and his own perspective of the State of the Union and the economy like only he can. I strongly recommend investors take the time to read his letter(s).

One of the most often referred to items in Buffett's letters is regarding the quality of the management at each of the companies that Berkshire owns, or has major stock holdings in. There are many shrewd investors who will make a convincing argument that the quality of management is the highest priority.

He glowingly speaks of the wisdom, integrity and hard work of his management partners. He openly states that one reason that most of Berkshire acquisitions tend to work so well is the mutual appreciation of these character traits they all share. Unlike many companies that look to make money by shaking up the management structure, Buffett bases his investment strategy on keeping the strong management that built the enterprise in place.

MAJOR PAPERS:

• Troubled savings and loan giant Washington Mutual Incorporated (NYSE: WM) will receive a $5B investment from private equity firm TPG and other investors, the Wall Street Journal reported. For now, this eliminates the possibility that it will be acquired by another financial institution such as J.P. Morgan Chase & Co (NYSE: JPM).
• The Wall Street Journal also reported that music downloading copyright infringement lawsuits against Baidu.com Inc (NASDAQ: BIDU) and Sohu.com Inc (NASDAQ: SOHU) may be heard by a Chinese court.
• People close to the situation said that Delta Air Lines Inc (NYSE: DAL) and Northwest Airlines Corporation (NYSE: NWA) have revived merger talks. It is speculated, the Financial Times reported, that weak demand and high fuel costs are urging the airliners back to the table to work out a merger arrangement.

OTHER PAPERS:

• Evergreen Solar Inc (NASDAQ: ESLR) is expected to announce today that it will double the size of its manufacturing facility in Massachusetts and add about 350 new jobs as part of its ongoing expansion, according to the Boston Globe.

WEB SITES:

• Bloomberg reported that The Goldman Sachs Group Inc (NYSE: GS) has been the only major investment bank that has refused to reduce its leverage. In fact, Goldman's adjusted leverage ratio of assets rose to 18.6 at the end of February, from 17.5 at the end of November.

After yesterday's selloff, stocks opened higher in anticipation of additional rate cuts by the Fed later today. Better-than-expected quarterly earnings from Goldman Sachs Group Inc. (NYSE: GS) relieved investors who have been dealing with a lot of negative news lately in the financial sector.

The world's largest investment bank reported this morning that its first-quarter profit dropped 53% to $1.47 billion. The company's quarterly numbers were dragged down by higher writedowns and lower fees from investment banking. Deterioration in the credit markets came with $1 billion in losses related to residential mortgage loans and securities and nearly $1 billion in losses on credit activities.

But despite its deep losses, Goldman Sachs managed to beat analysts' predictions, helped by stronger asset management and commodities performance. The company posted first-quarter profit per share of $3.23 per share, down from $6.67 per share reported in the same period a year ago. Analysts, on average, expected the company show quarterly earnings of $2.58 per share.

The New York Post reports on Corporate Leader magazine's poll of the top CEOs based on a survey of analysts and investors. Here's my assessment of the top five:

• Steve Jobs, Apple Inc. (NASDAQ: AAPL). With its stock up 94.4% in the last year -- though 13% below its 52-week high -- Apple's new products this year have been outstanding. But it's a pretty pricey stock; it trades at a Price/Earnings to Growth (PEG) ratio of 1.56 on a P/E ratio of 42.3 and Earnings Per Share (EPS) growth of 27.2% to $6.26 in fiscal 2009.
• Eric Schmidt, Google Inc. (NASDAQ: GOOG). With its stock up 27.8% in the last year -- though 15% below its 52-week high -- Google continues to take share from traditional advertisers while struggling somewhat to profit from all its innovations. But it's a somewhat pricey stock; it trades at a PEG ratio of 1.39 on a P/E ratio of 49.6 and EPS growth of 35.8% to $18.19 in 2008.

TheStreet.com's Jim Cramer says if any of your holdings in this sector have too much of any one kind of credit, use current market strength to sell.

Getting our arms around the problem. That's the real way we get closure on this credit problem. That's why the market was able to rally Tuesday, even though no one says the problem is getting better.

At last we're just trying to figure out how bad it can be because we know it is worse than the $42 billion that has already been charged off in subprime. By the way, even that figure, which seems staggeringly high, is only a fraction of the $250 billion minimum number I am using.

What's so maddening is that there isn't one kind of debt problem. There are three kinds of debt, with a subset for the worst kind. You have to run the gauntlet of all three kinds if you are going to be blessed by the market. And so far, only Goldman (NYSE: GS) (Cramer's Take) has done that.

DealBook reports that companies and private equity firms paid $8.5 billion for mergers and acquisitions (M&A) advice from Wall Street banks last year. The typical bank gets a $20 million fee for providing its client with an assessment of whether to pursue a deal, how to value it and how to negotiate the best structure. But I think it's up to the buyer's CEO, not the adviser, to create value.

That's why the study from Capital IQ, which tries to assess which M&A adviser provides the most valuable advice, seems flawed to me. Capital IQ found that Deutsche Bank, a relatively minor player in terms of market rank, offered its clients the best M&A advice. Comparing the stock price of Deutsche Bank's clients 30 days before a deal with that price 18 months thereafter, Capital IQ found that Deutsche Bank's acquiring clients saw their stock prices outperform other companies in their sector by 28%, while clients of The Goldman Sachs Group (NYSE: GS), for example, outperformed their peer group by only 6%.

In my view, Capital IQ has picked a good way to measure the performance of an acquiring CEO. That's because the CEO should be accountable for the four tests of a successful merger:

Private equity is not only hot in the U.S. Things are also bubbling in Europe.

For example, in the UK, the supermarket chain, J. Sainsbury Plc, is in play. The deal could be in excess of $20 billion -- making it Europe's largest buyout.

Interestingly enough, it's the who's-who of American private equity that may be making the bids, such as Blackstone, KKR, Goldman Sachs (NYSE:GS), and the Texas Pacific Group.

The problem? Well, the buyout buzz has resulted in a much higher stock price. Actually, it may be too high to get a deal done.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Jim Cramer featured another SELL BLOCK on CNBC tonight. This is where he reviews some of his past buy stocks and says to take profits or apologizes for being wrong. Tonight wasn't a normal SELL BLOCK: He says to keep some and only take some money off the table.

Cramer's first stock was Goldman Sachs Group (NYSE:GS), and he's made a lot on it. Even though he is way up and close to his first target of $225 (it is now at $213), he said he is NOT SELLING. Earlier today he noted $300 as the target. He thinks the $15 per share earnings is too low and it could hit $25 per share this year.

On Blockbuster Inc. (NYSE:BBI), which is up 48%, and Rite-Aid (NYSE:RAD), which is up 45% from his original picks, Cramer said you can sell some but not all. BBI was part of his favorite speculative stocks for 2007.

eBay Inc. (NASDAQ:EBAY) is up big since his December recommendation and he's scared to do fresh money and take part of it off the table.

He wants to eat crow over Constellation Brands (NYSE:STZ) after it was his call at $27 because of red wine; he says it's a Triple Sell because he got it so wrong. Here is what he said in November about it; it seemed odd for a Cramer pick.

Jon Ogg is a partner in 24/7 Wall St., LLC; he does not own securities in the companies he covers.

In New York, it's all about the money. Having walked past the headquarters of The Goldman Sachs Group (NYSE:GS) several times this week, I could feel the buzz and energy among the people walking in and out of the building. And with yesterday's announcement that its quarterly profits were up 93%, bonuses of $25 million for bankers and $50 million for traders are going to flow into New York retailers of art, high end real estate, jewelry, and fast cars.

One of my business school classmates is reaping those rewards. Before school he had been CFO of a utility and joined Goldman as a trader. He was a good person with exceptional skill in finance. After toiling for years, he made partner and profited handsomely from Goldman's initial public offering and continues to reap the rewards.

Goldman's secret, as I noted in Value Leadership, is its ability to hire and manage brilliant team players. Goldman asks Harvard Business School professors to recommend the brightest students who work well with other people. Goldman scrutinizes each person with reviews from everyone the person worked with. Playing favorites to please a powerful partner can delay advancement or lead to dismissal. And all this emphasis on teamwork leads to better answers for clients; higher fees and market share; and less turnover of top talent.

Yesterday, I walked past ground zero on the way to a meeting on Wall Street. It's a testament to the power of its long term greedy credo that just a few blocks from the attack site, Goldman Sachs is making more money than ever. It's hard to imagine it could top 2006's performance next year. But over the long-run it doesn't make sense to bet against Goldman.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm, and a Professor of Management at Babson College. He has no financial interest in Goldman Sachs.