TheChek News Flow

Gapping up

In reaction to strong earnings/guidance: MG +12.7%, CALD +12.2%, ATEC +11.9%, ADTN +8.4% (light volume), ZEP +5.1% (light volume), AA +3%.

M&A news: MW +32.2% JOSB +12.5% (Jos. A. Bank confirms proposal to acquire Men's Wearhouse for $48 per share in cash), STP +11.8% (Suntech Power gapping up 12% on reports of potential bids), HRB +-5.7% (Republic Bancorp disclosed it is withdrawing application to merge with H&R Block).

Select financial related names showing strength: IRE +3.0%, NBG +2.9%, DB +1.9%, SAN +1.8%, BCS +1.2%, GS +0.5% (Berkshire Hathaway disclosed 2.8% passive stake in amended 13G filing out last night after the close; filed to report that it has ceased to be the beneficial owner of more than 5%) .

Select China internet stocks trading higher: YY +3.1%, DANG +2.5%, RENN +1.9%, QIHU +1.5%.

A few India related names are trading higher (India Sept Trade Balance registers its lowest deficit in 2 1/2 years): INFY +4.3%, HDB +3.2%, TTM +1.6%,

Other news: CGEN +3.7% (drug candidate demonstrates high effectiveness in Type I Diabetes Animal Model), DRYS +3.2% (still checking), JCP +3% (J. C. Penney announces Saks (SKS) Chairman/CEO Stephen Sadove to join Board of Directors), KYTH +2.8% (Kythera Biopharma prices 2,622,950 shares of common stock at $45.75 per share), VVUS +2.7% (announced Qsymia shown to reduce progression to Type 2 diabetes in high-risk overweight or obese patients), GAIN +2.2% ( increases monthly distribution 20% to $0.06 from $0.05 per share ), ORCL +1.9% (still checking), TSL +1.8% (up with STP), S +1.1% (announces consent solicitations by its subsidiaries, Clearwire Communications and Clearwire Finance, with respect to their 14.75% senior secured notes due 2016 and 8.25% exchangeable notes due 2040), AAPL +1% (Apple will have an iPad event on Oct 22, according to reports), TOT +0.9% (still checking), CCI +0.8% ( AT&T (T) is close to tower sale to CCI for $5 bln, according to reports ), AMD +0.8% (NVIDIA offers price cuts to compete with AMD, according to reports ), NSRGY +0.3% (Nestle is considering plans to sell Jenny Craig, according to reports).

Analyst comments: KORS +2.1% (upgraded to Overweight from Neutral at Piper Jaffray), XONE +0.6% ( initiated with a Buy at Janney; tgt $70)

Gapping down

In reaction to disappointing earnings/guidance: LRN -24.1%, (also downgraded to Neutral at Robert W. Baird, downgraded to Market Perform from Outperform at BMO Capital Mkts), YUM -7% (reports China same store sales for September; revises Q4 same store sales expectations), KNX -5.8%, CAS -5.5%, FAST -5%, FDO -3.1%, COST -1.3%.

M&A news: HRB -5.7% (Republic Bancorp disclosed it is withdrawing application to merge with H&R Block).

Other news: ARIA -60.1% (Ariad Pharm announces changes in the clinical development program of iclusig; patient enrollment in all clinical studies of iclusig is being paused), CYTR -16.1% (announces proposed public offering of common stock, size not disclosed), LXRX -15.1% (completes pilot study of telotristat etiprate in Ulcerative Colitis; In this pilot study of mild to moderate ulcerative colitis, telotristat etiprate achieved the primary objective of demonstrating safety and tolerability), LPTN -9.8% (provides update on plans for iSONEP option: Pfizer (PFE) seeking to divest option for a worldwide license to develop and commercialize Isonep), CGIX -4% (files form S-1 for IPO; registration amount of $46 mln ), DYAX -3.8% (announces proposed public offering of common stock; size not disclosed), TKMR -2.8% (announced the key programs and goals into 2014 for its RNAi therapeutic product pipeline; financial guidance remains the same), ICPT -2.6% (prices 1.5 mln shares of common stock by selling shareholders at $62.50 per share), ARMH -2.4% (still checking), VISN -2.4% (modestly pulling back), SWFT -1.3% (still checking), ASML -1.1% (still checking), DEO -1% (still checking), WERN -0.6% (following KNX guidance), YGE -0.5% (Yingli Green Energy responds to Energy Conversion Devices' antitrust litigation).

Analyst comments: PSUN -2.3% (downgraded to Neutral from Overweight at Piper Jaffray), CJES -2% (Cdowngraded to Market Perform from Outperform at Cowen ), RL -0.7% (downgraded to Neutral from Overweight at Piper Jaffray), HES -0.3% (downgraded to Neutral from Buy at Citigroup)

Yoox SpA Not in talks with Richemont regarding possible merger wiht Net-a-Porter - press

Men's Wearhouse Inc Jos. A Bank confirms proposal to buy company at $48/shr or $2.3B in cash (approx 36% premium to prior close) - Confirmed that it has made a non-binding proposal to acquire all of the outstanding shares of Men's Wearhouse for $48 per share in cash, representing a total equity value of approximately $2.3 billion, in a negotiated transaction. The proposal represents an approximate 42% premium to the closing price of Men's Wearhouse common stock on September 17, 2013, the day before Jos. A. Bank made the proposal to Men's Wearhouse in a telephone call and follow-up letter, which is below, from Robert N. Wildrick, Chairman of the Board of Jos. A. Bank, to Douglas S. Ewert, Chief Executive Officer of Men's Wearhouse. Men's Wearhouse has advised Jos. A. Bank that it is reviewing the proposal. - The transaction is expected to be funded by a combination of cash on Jos. A. Bank's balance sheet, new equity capital and debt financing. The new equity will be provided by Golden Gate Capital, a leading private equity firm. Goldman, Sachs & Co. has informed Jos. A. Bank that, subject to customary terms and conditions, it is highly confident that the debt financing can be obtained in the capital markets.

Ihave sent this article this week end with this impressive chart from Citi...have a look to the note attached and to the s&P Chart...page 2

Sent by bbg on the 5th of Oct :

Citi Warns US Equities Are A Cocktail of 2011, Slice Of 1998, Dash Of 2000

{http://bit.ly/1hrPuYg}

Looking at the equity market and some of the background dynamics Citi's FX Technical group cannot help but be reminded of 2011. They also warn, despite the constant hope-driven rallies this week, there are also some aspects of what we saw in 1998 and similarities with 2000 that are worth noting. The bottom line, we have had the view for some time that we would see a much deeper correction in the equity market (in excess of 20%). Recent price action and developments might (just might) be suggesting that it is time to revisit that theme.

Worth reading and having a look to the charts...

NH Hoteles (NHH SM): The company has hired JP Morgan, Deutsche Bank and UBS to seek €300 Mn through a convertible bond issue (El Confidencial).

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)