Co. would obtain liquidity through issuance of convertible bond, Corriere reports without saying where it got the information.• Cap. increase may be as much as EU300m: Corriere • Carrier may get total EU500m of funding: Corriere • NOTE: Alitalia board meeting at 5 pm tomorrow • NOTE: Italy Said to Seek State Funds to Ease Alitalia Combination
The city’s public pension funds are stepping up the pressure on Oracle CEO Larry Ellison. New York City Comptroller John Liu is part of the drive by activist shareholders to rein in Ellison’s pay package and unseat directors who oversee executive compensation. Ellison, the billionaire co-founder of the business software maker, made $78.4 million in the fiscal year ended May even as performance lagged. “The city’s pension funds are among the many share owners that have repeatedly sought to rein in Oracle’s persistently outrageous CEO pay and to hold accountable those directors most responsible,” Liu told The Post. “Faced with an unresponsive board, we have no choice but to once again vote against pay, against the three directors on the board’s compensation committee, and for our shareowner proposal to require the board to adopt and disclose multiple performance metrics for incentive compensation.” The city’s pensions own 10.3 million shares of Oracle, worth $330 million. Although shareholders rejected the company’s pay practices in a non-binding “say-on-pay” vote last year, Oracle blew off their concerns. This year, shareholders are hoping to increase the heat on Oracle despite Ellison’s 34 percent stake in the company. The organization Change To Win, which labor unions pay to represent their causes, is leading the charge against the tech company ahead of its Oct. 31 shareholder meeting.
After months of fighting the government’s insider trading case tooth and nail, the hedge fund SAC Capital Advisors is leaning toward admitting criminal wrongdoing and agreeing to pay a record financial penalty to resolve the charges, according to two people briefed on the deliberations. Federal prosecutors, led by Preet Bharara, the United States attorney in Manhattan, have taken an aggressive stance in settlement talks with SAC, said these people, who were not authorized to discuss the negotiations publicly. Prosecutors have offered the fund a deal to resolve the case by pleading guilty and paying a penalty of about $2 billion. If SAC does not accept the deal in the coming weeks, the government has threatened to pursue a much larger fine against the fund.
In agreeing to have SAC plead guilty and pay the hefty fine, SAC’s owner, Steven A. Cohen, would be seeking to put his legal woes behind him in the hopes of salvaging his business. Once he resolved the government’s case, Mr. Cohen would look to transform SAC into a “family office” that would manage Mr. Cohen’s own wealth. Prosecutors have applied financial pressure on SAC using civil forfeiture laws. Alongside its criminal insider-trading case against the fund, the government filed a lawsuit that accused SAC of mixing its illegally obtained insider-trading profits with the rest of its money, thus tainting all of its funds. The lawsuit seeks “any and all” of SAC’s assets, meaning that the government believes it can pursue all of the company’s money. SAC managed about $15 billion at the beginning of the year, but virtually all of its outside investors have asked for their money back. After returning that money in installments over the coming months, SAC would be left managing about $9 billion of Mr. Cohen’s own money. SAC has already agreed to a protective order that requires it to keep most of its money in the fund, a deal that allows it to continue operations while under indictment while preserving the government’s interest in any money that it might seize. In July, the government brought criminal charges against SAC, citing the many prosecutions of SAC’s former employees and calling the fund “a magnet for market cheaters.” Six former SAC employees have pleaded guilty to insider trading while at the fund. Two others, Michael S. Steinberg and Mathew Martoma, are fighting the charges and have trials scheduled. Legal experts say it would be nearly impossible for SAC to defend itself in a trial. Under the law of corporate criminal liability, an entity like SAC would be held responsible for the acts of its employees. And the employees who have admitted to insider trading are cooperating with prosecutors and would probably testify at a trial, providing powerful evidence for the government. Mr. Cohen, 57, also has to resolve a separate lawsuit brought against him individually by the Securities and Exchange Commission that accused him of failing to reasonably supervise his employees. The S.E.C. could seek a variety of penalties in that case, including banning him from the business. In settling with the government, Mr. Cohen would probably seek to resolve both the criminal case against SAC and the lawsuit against him. It is unclear whether a resolution would insulate Mr. Cohen from any criminal charges, and the government continues to examine SAC’s trading activity. Mr. Cohen has said he acted appropriately at all times. Leading the defense team for SAC and Mr. Cohen are Theodore V. Wells Jr. and Daniel J. Kramer at Paul, Weiss, Rifkind, Wharton & Garrison, and Martin Klotz of Willkie Farr & Gallagher. News of the government’s ultimatum was reported earlier by The Financial Times. SAC has already agreed to pay a $616 million penalty to the S.E.C. related to the civil insider trading cases brought against Mr. Martoma and Mr. Steinberg. That money would come out of Mr. Cohen’s pocket. Mr. Cohen gained acclaim on Wall Street by producing a nearly unparalleled investment track record, posting returns that have averaged nearly 30 percent a year over the last two decades. Those returns, and market rumors about questionable conduct inside the fund, drew the attention of federal authorities. Investigators have examined Mr. Cohen’s business on and off over the last 10 years. He has privately expressed the view to friends and colleagues that the government has long had a bull’s-eye on his back. Mr. Cohen has begun to reorganize his business during the settlement talks with the government. Among other moves, the firm has put on the block SAC Re, a reinsurance company that it started last year with $500 million. SAC joined a number of prominent hedge funds in forming these businesses, which provide the firms with permanent sources of capital from the premiums paid on reinsurance policies.
Current valuations continue to imply cost of equity in mid-teens on normalized basis, Citi says. • Highlights considers regulatory and asset quality risks as manageable • Cites potential for capital return and normalized RoTE above CoE • Suggests buying BNP Paribas (most Preferred), SocGen (further rerating), Credit (paradigm shift) • Keeps neutral rating on Natixis with “an eye on investor day” (Nov. 14)
Up
*BARRATT DEVELOPMENTS RAISED TO BUY VS NEUTRAL AT GOLDMAN *BOVIS HOMES RAISED TO BUY VS NEUTRAL AT GOLDMAN *CELESIO RAISED TO NEUTRAL VS SELL AT UBS *CHEMRING GROUP RAISED TO OVERWEIGHT VS EQUALWEIGHT AT BARCLAYS *DOMINO PRINTING RAISED TO OVERWEIGHT VS EQUALWEIGHT AT BARCLAYS *HALKBANK RAISED TO OUTPERFORM VS NEUTRAL AT CREDIT SUISSE *QINETIQ RAISED TO OVERWEIGHT VS EQUALWEIGHT AT BARCLAYS *KENTZ CORP RAISED TO BUY VS HOL DAT LIBERUM *OGK-2 RAISED TO NEUTRAL VS SELL AT GOLDMAN *WEIR GROUP RAISED TO MARKET PERFORM VS UNDERPERFORM AT COWEN
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*AIR LIQUIDE CUT TO NEUTRAL VS OUTPERFORM AT CREDIT SUISSE *BOLIDEN CUT TO HOLD VS BUY AT PARETO SECURITIES *ENAGAS CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN *FEDERAL GRID CUT TO SELL VS NEUTRAL AT GOLDMAN *HALMA CUT TO EQUALWEIGHT VS OVERWEIGHT AT BARCLAYS *IMI CUT TO EQUALWEIGHT VS OVERWEIGHT AT BARCLAYS *MORGAN ADV MAT CUT TO EQUALWEIGHT VS OVERWEIGHT AT BARCLAYS *SAINT-GOBAIN CUT TO UNDERWEIGHT AT MORGAN STANLEY *VEDANTA CUT TO UNDERWEIGHT VS EQUALWEIGHT AT MORGAN STANLEY *YAPI KREDI CUT TO NEUTRAL VS OUTPERFORM AT CREDIT SUISSE
PT Change
Initiation
*CREST NICHOLSON RATED NEW BUY AT GOLDMAN *LAND SECURITIES EXITS JPMORGAN EUROPEAN ANALYST FOCUS LIST *LSL PROPERTY SERVICES RATED NEW BUY AT GOLDMAN *SAVILLS RATED NEW NEUTRAL AT GOLDMAN *SONOVA RATED NEW HOLD AT BERENBERG; PT CHF119 *ST. MODWEN ADDED TO JPMORGAN EUROPEAN ANALYST FOCUS LIST *WILLIAM DEMANT RATED NEW BUY AT BERENBERG; PT DKK605
Country Sector Stock Call
*DEUTSCHE BOERSE EXITS UBS MOST PREFERRED DIVERSIFIED FINANCIALS *LSE EXITS UBS LEAST PREFERRED DIVERSIFIED FINANCIALS *PHOSAGRO ADDED TO EMEA MOST PREFERRED AT UBS *TAYLOR WIMPEY ADDED TO CONVICTION BUY AT GOLDMAN * BofAML Selects Picks Among European Chemicals Before 3Q Results : Cautious on Sector...Top picks (DSM, Solvay for portfolio change), Croda, JMAT, Syngenta for margin growth, Most overvalued: K+S, Umicore * Berenberg Lists Top Picks in German, Austrian Small and Mid-Caps : Bechtle, CEWE Stiftung & Co KGaA, Gerresheimer, Tipp24, United Internet, Zumtobel * Swedish Banks Set to Underperform in Nordic Region, BofAML Says
US market ended on the lows on Tuesday as no solution emerge from discussions; US Fut. Higher (30bps) after reports that ultra-dovish Janet Yellen will in fact be nominated to replace Fed Chairman Bernanke in 2014..Alcoa informally kicked off the earnings season with strong beat and upbeat comments on China demand (+2.3% after hours) ; Yum was a big disappointment however, as China SSS drop was much higher than expected -7% after hours...VIX @ 20.34 (+4.8%) Nikkei closed +1% on BoJ Minutes: recovery is on track; some concern on exports; QE is helping to lower upward pressure on yields, Shanghai +0.15% despite fresh round of warnings over ballooning shadow banking activity; Analysts continue to expect Q3 GDP on tap for next week to recover from Q2 levels.
Eur$ : 1.3565 European Futures indicated 15bps lower
Keep an eye on : - AF FP : French Court Confirms Ruling Vs. Air France’s Cityjet: Tribune - AM FP : FRANCE’S LE DRIAN: RAFALE CONTRACT TO BE SIGNED IN INDIA 2014 - AZA IM : Alitalia to carry out €300m capital increase under gov. plan - BAER VX : Julius Baer May Have Raised Too Much Capital for Merrill: FuW - BAYN GY : Bayer Lung Drug Wins U.S. Approval to Treat High Blood Pressure - BG/ LN : BG Group Near Deal on Brazil Barreirinhas Basin: Reuters Link - CE2 GY : Cropenergies 1H Sales Rise to EU372m From EU320m - CELS1 GY : Higher Bid May Emerge For Celesio at EU28-Shr, UBS Says - GETIB SS : Getinge CEO Sees Improving Margin in 2014, Dagens Industri Says - MC FP : Louis Vuitton Takes Legal Action Against Sogo HK - MOBB BB : Mobistar Aims to Offer Digital TV by End 2014, CEO Tells De Tijd - NESN VX : Nestle Looking to Sell Jenny Craig, Reuters Reports - RLIA SM : Bankia, FCC to Sell Realia Stakes This Year, Expansion Reports - SAN FP : Sanofi Makes New Proposal on French R&D Reorganization: Figaro - TECN SW : Tecan 2013 Sales Forecast Affected by Fewer Life Science Orders - TIT IM : MORE: Telecom Italia Cut to Junk by Moody’s; Outlook Negative, Telecom Italia Says It’s ‘Solid’ Industrially, Financially - UG FP : Dongfeng Plans to Buy 30% Stake in PSA Peugeot: Business News
Versace attracts seven bidders for minority stake
Versace, the Italian fashion group, has attracted seven bidders for the sale of a minority stake, Italian language daily Il Sole 24 Ore reported. The report cited market rumours as saying that the bidders include state-owned Italian strategic investment fund FSI, possibly in partnership with the Qatar Holding, private equity funds Permira, Axa, Clessidra, Blackstone and Investindustrial.
The item added that Investcorp is not believed to be among the bidders at present.
The report added that South Korean clothing group E-Land and Chinese group Fosun are not on the list of seven bidders.
The item claimed that the winning bidder will take a stake via a capital increase of EUR 150m. The report said that a further EUR 50m would be used to buy shares from the Versace family.
The report noted that Versace is estimated to have a value of EUR 1bn, based on multiple of 12-13 on its EBITDA of EUR 70m.
Source Il Sole 24 Ore
Long-awaited European recovery led to solid stock mkt performance and re-rating with MDAX trading at almost 20% premium to historical P/E, Berenberg says. • However, says German mid-cap universe still attractive mkt because of favorable macro environment, high-quality mid-cap businesses • Bechtle, CEWE Stiftung & Co KGaA, Gerresheimer, Tipp24, United Internet, Zumtobel top picks (more defensive growth or stock-specific growth drivers, unlikely to suffer negative surprises linked to slower-than-expected growth going into 3Q results)
Asian Market Update: Yellen to be formally nominated on Wednesday; US govt gridlock still in place
***Observations/Insights*** - US cash equity markets ended on the lows on Tuesday as another round of remarks from Pres Obama and House Speaker Boehner was hardly indicative of any meaningful shift in their respective positions on the budget; Equity futures got an upward jolt in early electronic trade however after reports that ultra-dovish Janet Yellen will in fact be nominated to replace Fed Chairman Bernanke in 2014. - Alcoa informally kicked off the earnings season with a strong beat and upbeat commentary on China demand; Yum was a big disappointment however, as China SSS drop was much higher than expected. - Optimism from improved economic data from Australia overnight was dampened by disappointing forward-looking result from Westpac consumer confidence index, as it fell for the first time in 5 months. - BOJ minutes from early September meeting saw members agree that the virtuous cycle of production, income and spending is working steadily; One member warned of risk for large bond market volatility. - Shanghai Composite little changed despite fresh round of warnings over ballooning shadow banking activity; Analysts continue to expect Q3 GDP on tap for next week to recover from Q2 levels.
***Economic Data*** - (AU) AUSTRALIA OCT WESTPAC CONSUMER CONFIDENCE INDEX: 108.3 V 110.6 PRIOR; M/M: -2.1% V +4.7% PRIOR (largest decline in 5 months) - (NZ) NEW ZEALAND SEPT QV HOUSE PRICES Y/Y: 8.4% V 8.5% PRIOR - (NZ) NEW ZEALAND SEPT CARD SPENDING RETAIL M/M: -0.8% V +0.3%E (first decline since March); TOTAL M/M: -0.4% V +0.4% PRIOR - (KR) SOUTH KOREA SEPT BANK LENDING TO HOUSEHOLD (KRW): 472.0T V 471.8T PRIOR - (KR) SOUTH KOREA AUG MONEY SUPPLY L M/M: +0.8% V +0.5% PRIOR; M2 M/M: -0.1% V +0.4% PRIOR - (UK) UK SEPT BRC SHOP PRICES INDEX Y/Y: -0.2% V -0.5% PRIOR - (US) API PETROLEUM INVENTORIES: CRUDE: +2.76M v +1.5Me (2nd consecutive build)
***Fixed Income/Commodities/Currencies*** - (JP) BOJ offer to buy ¥110B in less than 1-yr JGB, ¥300B in 1-3yr JGB and ¥350B in 3-5 yr JGB - (AU) Australia MoF (AOFM) sells A$800M in 2.75% 2024 Bonds; avg yield: 4.0683%; bid-to-cover: 4.36x - (NZ) New Zealand issued NZ$2.5B in 2030 I/L Notes - SLV: iShares Silver Trust ETF daily holdings fall to 10,565 (lowest since Sept 18th) from 10,625 - update as of 10/7 - GLD: SPDR Gold Trust ETF daily holdings fall by 1.8 tonnes to 898.2.0 tonnes (lowest since Feb 2009)
- USD initially weaker on the Yellen nomination announcement, sending EUR/USD above $1.36 and USD/jpy below 96.90 before short-covering set in later in the day. Japanese yen is still widely offered across the board - USD/JPY up over 50pips above 97.40, EUR/JPY up 70pips above 132.10, AUD/JPY up 70pips to 91.90 session high.
***Speakers/Political/In the Papers*** - (CN) China Premier Li Keqiang: Sees "strong momentum of steady growth" for China economy - press - (CN) China major cities property transaction volumes +17% y/y during National Day holiday - Soufun - (CN) China big four banks Sept new loans may be CNY276B; Overall new loans may be CNY840B v CNY711.3B m/m - Chinese press - (CN) China Anhui City tightens land transfer rules; Requires down payment equal to at least 50% land price - Chinese press - (CN) Chinese Academy of Social Sciences (CASS): China shadow banking size may have already reached CNY20.5T at the end of 2012, nearly half of China's GDP - Chinese press - (CN) Analysts see China Q3 GDP rising to 7.8% from 7.5% in Q2 - Shanghai Daily
- (JP) Japan BOJ Dep Gov Nakaso: Japan economy expected to continue moderate recovery; Low chance of emerging nations suffering late 90s style financial crisis; High possibility of reaching 2% inflation target in FY14/15 - press conf - (JP) Japan's consumption tax increase to bring in ¥3T less than initially estimated - Nikkei News - (JP) Japan Ministry of Economy, Trade and Industry (METI): Costs for Japan's 9 major utilities for fuel said to rise by ¥3.6T in FY13/14 without restart of nuclear power - Nikkei News
- (AU) Australia Treasurer Hockey: Downside risk to world outlook provides risks to Australia budget; Australia will need to appropriately manage risks - (KR) South Korea Ministry of Knowledge Economy: Q4 Business Survey Index (BSI) rose to 106 from 96 q/q - Korean press
- (IR) Iran said to be in plans to submit nuclear concessions; to propose dialing back nuclear program at discussions next week - financial press
- (US) President Obama: Reiterates government must reopen before negotiations begin, Congress cannot demand a ransom for doing its job - (US) US House Speaker Boehner: disappointed that Pres Obama and Democrats are unwilling to sit down and negotiate; Pres Obama wants an "unconditional surrender" - press conf
***Equities*** Market Snapshot (as of 03:30 GMT): - Nikkei225 +0.4%, S&P/ASX +0.1%, Kospi closed, Shanghai Composite -0.1%, Hang Seng -0.6%, Dec S&P500 +0.3% at 1,655, Dec gold -0.5% at $1,318, Nov crude oil -0.1% at $103.41/brl
US markets: - LRN: Guides FY13 Rev $905-925M v $987Me; -17.8% afterhours - YUM: Reports Q3 $0.85 (adj) v $0.93e, R$3.47B v $3.55Be; China Sept SSS -11% v -5.7%e; China Q4 SSS outlook no longer looking positive; -7.0% afterhours - KNX: Lowers Q3 guidance to $0.18-$0.20 v $0.23e (prior $0.22-0.24), Q4 guidance to $0.20-$0.23 v $0.24e (prior $0.22-0.25); -5.8% afterhours - CAS: Reports Q3 prelim -$0.28 to -$0.32 v -$0.04e, Rev $250-255M v $285Me; -5.4% afterhours - AAPL: Reports of iPad refresh event on Oct 22 (vs prior speculation of mid to late Oct); +0.6% afterhours - AA: Reports Q3 $0.11 (adj) v $0.06e, R$5.77B v $5.71Be; +3.0% afterhours
Notable movers by sector: - Consumer discretionary: Chongqing Changan Automobile Co Ltd 000625.CN +4.8% (Sept results); Dongfeng Motor 489.HK -3.8% (Sept results) - Industrials: Geely Automobile Holdings Ltd 175.HK -3.6% (block sale by Goldman Sachs); Trigiant Group Ltd 1300.HK -4.8% (share placement) - Materials: CSG Holding Co Ltd 000012.CN +3.1% (prelim Sept results); OceanaGold Corp OGC.AU -4.0% (announces acquisition); Newcrest Mining Ltd NCM.AU +1.1% (Q1 productions results; affirms FY14 gold production guidance) - Technology: Anhui Sun-Create Electronics Co Ltd 600990.CN +4.9%, China Spacesat Co Ltd 600118.CN +1.8% (China issues plan for satellite navigation industry); HTC Corp 2498.TW +2.4% (share repurchase); Wistron 3231.TW -1.6% (Q3 results) - Energy: China Longyuan Power Group 916.HK +5.3% (Sept power generation results); Shunfeng Photovoltaic International Ltd 1165.HK +16.4% (acquires stake in Suntech) - Utilities: Transurban TCL.AU +1.8% (Q1 results); TEPCO 9501.JP -1.1% (update to Fukushima leak) - Healthcare: Novogen Limited NRT.AU +6.1% (technology update) - Financials: Westpac Banking Corp WBC.AU +1.0% (bid for Lloyd's Australia assets); Mizuho Financial Group Inc 8411.JP -1.5% (criminal probe) - Telecom: Softbank 9984.JP -4.9% (analyst action)