Reuters : Segantii hedge fund insider trading case moved to higher court in Hong

Segantii hedge fund insider trading case moved to higher court in Hong Kong

HONG KONG, June 12 (Reuters) - An insider trading case against Asian hedge fund Segantii Capital Management, its high-profile British founder Simon Sadler and a former trader has been moved to a higher court in Hong Kong, a local court ruled on Wednesday.

The Eastern Magistrates' Court approved the prosecution’s request to transfer the case to a district court. The next hearing is scheduled to take place at the district court on July 2, the court ruled without providing reasons.

The maximum prison term a district court judge can impose is seven years, versus two to three years for the magistrate's court.

The case marks a turning point for one of Asia's biggest and oldest hedge funds, which has said it will refund investors, and a step toward heightened scrutiny of trading activities in the region.

The Hong Kong Securities and Futures Commission said last month it had started criminal proceedings against Segantii, its founder and chief investment officer Sadler and former trader Daniel La Rocca on suspicion of insider dealing in the shares of a Hong Kong-listed company before a block trade in June 2017.

Sadler, dubbed Asia's "block trade king", is also the owner of his hometown soccer team, Blackpool Football Club.

Sadler, La Rocca and Segantii CEO Kurt Ersoy declined to comment on the charges on Wednesday outside a court hearing room. The company said last month it planned to "defend itself vigorously against the charges".

Segantii was established in 2007. Its flagship Asia-Pacific Equity Multi-Strategy Fund was up 2.5% in the first quarter, after a 1.6% decline in 2023, according to a source who received data on the fund's performance.

The fund managed about $4.8 billion at the end of March, according to a monthly letter from the fund seen by Reuters.

FT : Ukrainian agricultural group boss warns Kyiv against export feud with EU

Ukrainian agricultural group boss warns Kyiv against export feud with EU
Country risks losing bloc’s support for Russian war effort by prolonging dispute, says founder of Kernel

The owner of one of Ukraine’s largest agricultural companies has warned Kyiv against prolonging its dispute with the EU over food exports, saying it risks losing the bloc’s support in the war with Russia.

Andriy Verevskyi, the Switzerland-based founder of Kernel, the world’s biggest exporter of sunflower oil, said feuding with EU member states at such a critical time was unwise.

“I think Ukraine should not fight with Poland or other European countries over import duties and the protection of the European market,” he told the Financial Times in his first face-to-face interview with a media group.

“We have enough [other export] markets for Ukraine: I’m talking about India, Africa, Asia, China et cetera and I don’t think we should fight and escalate the relationship between Europe and Ukraine because of agricultural supply.”

He added: “If part of eastern Europe wants to protect their market from Ukrainian production, I would say let it go . . . let’s co-operate on more important things for Ukraine. Many people will disagree with me but that’s what I believe.”

The trade dispute started in April last year when Poland led a handful of EU countries to impose unilateral bans on imports of Ukrainian cereals in response to protests from their farmers about unfair competition.

This followed the EU lifting restrictions on Ukraine’s exports in 2022 to help its war-ravaged economy stay afloat. Poland, Slovakia and Hungary kept bans in place despite violating EU common trade policy.

The EU is levying new tariffs on foodstuffs ranging from poultry to maize if quantities exceed the annual average imported between July 2021 and December last year.

Ukraine has also introduced licences to avoid exports of sugar and other crops hitting levels that would trigger an EU “emergency brake” on imports.

Although Polish Prime Minister Donald Tusk has pledged full support for Ukraine’s war effort, he has promised to protect his farmers.

Verevskyi, 49, who controls Kernel through a Cyprus holding company Namsen, is entangled in a bitter courtroom fight with minority shareholders after he launched a tender offer to delist the group from the Warsaw Stock Exchange because of what he says was a lack of liquidity.

The businessman, who said he had 94 per cent of Kernel’s equity, is being sued by some investors for reclaiming ownership of the company without their consent. They accuse him of buying the group on the cheap after taking advantage of a sharp drop in its valuation following Moscow’s full-scale invasion of Ukraine in February 2022.

Verevskyi had sold shares in a float on the Warsaw exchange in 2007, which after further transactions had reduced his holding to 37 per cent before the Russian invasion.

Last month a judge in Luxembourg, where Kernel is registered, opened court hearings into the shareholders’ complaints.

Verevskyi said he was sympathetic to investors who complained that the delisting was approved by Kernel’s board instead of a general assembly of shareholders. But he insisted it was compliant with Luxembourg’s laws.

“I’ve been made to look like a big, bad aggressive guy who is selfish and doesn’t care about anything. Perhaps partially it’s true, but it’s not that simple and there are many things that I’m doing for the company and for its people and for our position in Ukraine,” he said.

Verevskyi also stressed the plaintiffs were mostly small retail shareholders, with big institutions that still hold the stock including Vanguard, Artemis, Raiffeisen, Morgan Stanley and UBS staying on the sidelines in the court battle.

On President Volodymyr Zelenskyy, the businessman said his government needed to strengthen the rule of law and reduce corruption in order to get foreign investors involved in the country’s postwar reconstruction. “I am a supporter of the president because I believe he has done a pretty good job and he was at the right place when the war started. But if you ask if Zelenskyy did economic and legal reforms in the country: No, he didn’t.”

Zelenskyy only had two years in office before Russia’s invasion, “so I don’t know if he had the chance to change anything dramatically, but I’m totally sure that more things could have been done”, he added.

Verevskyi was a member of Ukraine’s parliament from 2002 until 2013, when a court stripped him of his seat for simultaneously holding public office and running a commercial business.

FT : Golden Goose is stretching the limits of luxury

Golden Goose is stretching the limits of luxury
Growth runway for ‘distressed’ trainer firm strewn with obstacles

The line between fad and fixture is so fine as to be almost invisible to the naked eye. Yet isolating those trends which have staying power from those that don’t is precisely the task facing luxury investors as they attempt to evaluate the sector’s brands. 

See, for instance, the debate around Golden Goose, seller of used-looking trainers (‘distressed’, in fashion parlance) at €500 a pop to well-heeled customers including Taylor Swift and Selena Gomez.

Owner Permira is targeting an IPO at an enterprise value of around €2.2bn — or about 10 times this year’s expected ebitda. That is below expectations but still a luxury-like multiple: factoring in a typical IPO discount that puts Golden Goose within reach of Moncler, Prada and even LVMH. Yet its growth runway is strewn with potential obstacles. 

The group’s main issue is that it is a one trick farmyard animal. Over 90 per cent of its revenues come from selling trainers. It does this well, of course, managing net sales growth of 18 per cent last year at a plush 25 per cent ebit margin. And it can point to “casualisation” — the long-standing trend towards less formal clothing — as a tailwind.

It is also attempting to harness the luxury trend towards increasing personalisation by letting customers co-create their shoes in store. But footwear lovers are a fickle bunch. Dr Martens — another Permira IPO — can testify to what happens when trends change. 


Meanwhile, pricey trainers likely have a capped addressable market. Half of Golden Goose’s sales go to repeat buyers. While customer satisfaction and loyalty are positives, that does suggest it may be bumping up against the limits of its fan base.

For the group to grow sales from last year’s €587mn to €1bn by 2029, as it is targeting, it will probably need to expand into clothes and handbags. That is a difficult proposition at any time, let alone in the context of luxury spending that is returning to earth following the pandemic. Gucci’s and Burberry’s turnaround travails suggest that customers concentrate tighter budgets on tried and tested luxury staples. 

Golden Goose reckons it has the wherewithal to step out of its niche, helped by its presence on three continents, a network of almost 200 stores, and a strong following among younger consumers. That is not impossible, of course. Moncler, for instance, has managed to escape its down jacket straitjacket. But Golden Goose’s reliance on trainers — as distressed, personalised and on trend as they may be — means it is stretching the definition of a credible luxury brand.

FT : US regulators have vertical integration in their sights

US regulators have vertical integration in their sights
For years, enforcers focused mainly on horizontal deals, but now that is changing

Vertical integration is all the rage as companies scramble to compete in artificial intelligence and decarbonisation. They believe that exerting more sway over suppliers and sales channels will help them speed innovation and cope with geopolitical disruption. But is it better to buy the necessary supplies and smarts, develop them in-house or find some way to strike a partnership?

Last year, General Motors purchased a lithium mine to secure crucial minerals for its electric vehicles. Chinese rival BYD already controls most of its supply chain, down to the ships that transport its cars and it is reportedly on the hunt for acquisitions as it looks to expand.

Apple this week announced a partnership with OpenAI to integrate ChatGPT into its devices. It is seeking to catch up with rival Microsoft, which got in early with the AI start-up and has now put in $13bn and incorporated its technology into multiple products. Meanwhile, Google owner Alphabet, an early AI leader because of its 2014 purchase of DeepMind, is building its own large language models and recently bumped up development of proprietary chips to power its offerings.

Many companies have very good reasons for vertical combinations beyond seeking to command and profit from cutting-edge technology. Tight connections often increase efficiency and the ability to recover from supply chain disruptions. Direct ownership also makes it easier to monitor for labour abuses, overseas bribery and other regulatory violations, while simplifying the calculation of carbon emissions.

But competition watchdogs are growing concerned that vertical integration can also further less laudable goals. In areas where technology is still developing, powerful companies may try to steal a march on rivals — and independent entrepreneurs — by using their power over key inputs or sales channels to foreclose competition.

For years, US enforcers primarily focused on horizontal deals, where harm to competition is easier to prove because they involve combinations of direct rivals. To the extent that they expressed concern when big companies moved up or down the value chain, these were largely allayed by promises not to abuse market power, as with concert promoter Live Nation’s 2010 purchase of Ticketmaster.

But that has begun to change. Under chair Lina Khan, the Federal Trade Commission tried to stop Microsoft, which makes gaming consoles, from buying game group Activision, and block Meta from taking over Within, a virtual reality company. Those challenges failed, but the FTC had more success when it sought to block biotech group Illumina from buying Grail, which makes cancer screening tests.

A federal appeals court agreed the FTC was right to worry that Illumina’s dominance in DNA sequencing tests gave it too much power over potential competitors to Grail in the still nascent screening market. EU enforcers were even tougher, hitting Illumina with a €432mn fine for completing the merger without Brussels’ OK. Illumina’s chief executive lost his job and the company plans to spin Grail back out again in an initial public offering this month.

More cases are in the works, including some that reconsider earlier leniency. The justice department last month sued to break up Live Nation, saying it now suffocates competition because it manages musical acts and controls arenas while also dominating concert ticketing.

Corporate executives should be wary of seeing this as a brief Biden administration blip that will go away if Donald Trump retakes the presidency in November. His justice department started this trend when it brought the first vertical merger court case in more than 40 years, seeking to block AT&T’s purchase of Time Warner.

Although that lawsuit failed, Republican-appointed judges have proved to be sympathetic to some of the other claims. The Illumina decision author was appointed by George HW Bush. “Courts are a lot more receptive . . . than people think they are. This is not only a right-left issue,” says Rebecca Allensworth, a Vanderbilt law professor. “I don’t see this all going away.”

Chief executives hoping to stay out of the regulatory crosshairs would do well to remember a simple rule: not all vertical integration is the same. Companies that innovate generally avoid criticism unless they abuse existing power by illegally tying two products together. And buying an already successful business to deny access to competitors is quite different than licensing the technology.

Total control has its advantages. Freedom from antitrust scrutiny is not one of them.

>>> US After Hours Summary: ORCL +10.5% higher on earnings and partnerships; CAS

After Hours Summary: ORCL +10.5% higher on earnings and partnerships; CASY +6.4% higher on earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: ORCL +10.5% (also forms form multi-cloud partnership with Google Cloud; also OpenAI selects Oracle to extend Microsoft Azure AI platform), CASY +6.4% (also increases dividend), ESI +2%, RBRK +1.8%, ADSK +0.7%

Companies trading higher in after hours in reaction to news: BTOC +7.6% (MAMO and BTOC announce strategic partnership), RTO +6.2% (Trian Fund amasses significant stake, according to Bloomberg), MYPS +4.8% (to purchase the 11,677,398 shares held by MSFT), RC +2.3% (acquires Madison One Capital), VCTR +1.8% (reports May AUM), SAVE +0.4% (negotiations with bondholders are progressing as expected; co also delays Analyst Day), GOOG +0.3% (Google Cloud forms multi-cloud partnership with ORCL), O +0.3% (increases dividend), BEN +0.2% (reports May AUM), MSFT +0.2% (OpenAI selects Oracle Cloud Infrastructure to extend Microsoft Azure AI Platform), NCLH +0.2% (CEO appears on Bloomberg TV, says consumer demand continues to be very robust), VRTS +0.1% (reports May AUM)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: MAMA -3.9%

Companies trading lower in after hours in reaction to news: NVGS -3.5% (selling shareholder commences 2 mln share offering; also concurrent repurchase of shares by NVGS), ACN -2.1% (CFO retires, names new CFO; makes other mgmt changes), TTWO -1% (stock offering by selling shareholder), ALK -0.6% (expands partnership with British Airways), AJX -0.3% (two stock offerings by selling shareholders, one relates to warrants), APAM -0.2% (reports May AUM), AB -0.1% (reports May AUM), HOOD -0.1% (reports May operating data)

Reuters : Elon Musk withdraws lawsuit against OpenAI

Elon Musk withdraws lawsuit against OpenAI

June 11 (Reuters) - Billionaire entrepreneur Elon Musk on Tuesday moved to dismiss his lawsuit in California state court accusing ChatGPT maker OpenAI and its CEO Sam Altman of abandoning the startup's original mission of developing artificial intelligence for the benefit of humanity and not for profit.

>>> US Close Dow -0.31% S&P +0.27% Nasdaq +0.88% Russell -0.36%

Closing Stock Market Summary
The S&P 500 (+0.3%) and Nasdaq Composite (+0.9%) climbed further into record territory today. A big jump in shares of Apple (AAPL 207.15, +14.03, +7.3%), which also hit a fresh record high today, provided a nice boost to index performance following yesterday's product/AI presentation at its Worldwide Developers Conference.

Other mega cap stocks also picked up steam in the afternoon trade, reacting to a drop in market rates. The Vanguard Mega Cap Growth ETF (MGK) settled 1.1% higher.

The 10-yr note yield fell seven basis points lower at 4.40% and the 2-yr note yield fell five basis points to 4.83% in response to a strong $39 billion 10-yr note sale. This price action is also ahead of the May Consumer Price Index, which is released at 8:30 ET tomorrow.

Wednesday's calendar also features the FOMC policy directive, which features an updated Summary of Economic Projections, at 2:00 p.m. ET followed by Fed Chair Powell's press conference at 2:30 p.m. ET. Hesitation in front of these market-moving events kept the broader market in check despite the outperformance in mega caps.

The Dow Jones Industrial Average fell 0.3% and the Russell 2000 closed 0.4% lower.
Only two S&P 500 sectors closed with gains -- information technology (+1.7%) and communication services (+0.5%) -- while the financial sector (-1.2%) saw the largest decline by a decent margin.

In other news, shares of Paramount Global (PARA 11.04, -0.94, -7.9%) settled sharply lower after news that National Amusements has failed to reach deal with Skydance.

  • Nasdaq Composite: +15.5% YTD
  • S&P 500:+12.7% YTD
  • S&P Midcap 400: +4.8% YTD
  • Dow Jones Industrial Average: +2.8% YTD
  • Russell 2000: -0.1% YTD

Today's economic data was limited to the NFIB Small Business Optimism survey, which rose to 90.5 in May from 89.7 in April.

Looking ahead, market participants will receive the May Consumer Price Index at 8:30 ET. Other data include:
  • 7:00 ET: Weekly MBA Mortgage Index (prior -5.2%)
  • 10:30 ET: Weekly crude oil inventories (prior 1.23 mln)
    14:00 ET: May Treasury Budget (prior $209.5 bln)

Reuters : MediaTek designs Arm-based chip for Microsoft's AI laptops, say source

MediaTek designs Arm-based chip for Microsoft's AI laptops, say sources

TAIPEI/SAN FRANCISCO, June 11 (Reuters) - Taiwanese chip design giant MediaTek (2454.TW), opens new tab is developing an Arm-based personal computer chip that will run Microsoft's (MSFT.O), opens new tab Windows operating system, according to three people familiar with the matter.

Last month, Microsoft unveiled a new generation of laptops that feature chips designed with Arm Holdings tech which provide enough horsepower to run the artificial intelligence applications executives said were the future of consumer computing. The MediaTek chip is geared toward this effort.

The software company's plans take aim at Apple (AAPL.O), opens new tab which has released its own Arm-based chips for Mac computers for roughly four years. And Microsoft's decision to optimize Windows for Arm could threaten Intel's (INTC.O), opens new tab longstanding dominance in the PC market.

MediaTek and Microsoft declined to comment.

The MediaTek PC chip is set to launch late next year after Qualcomm's (QCOM.O), opens new tab exclusive deal to supply chips for laptops expires, two of the people said. The chip is based on Arm's ready-made designs, which can significantly speed development because less design work is needed using ready-made, tested chip components.

It was not immediately clear whether Microsoft has approved MediaTek's PC chip for the Copilot+ Windows program.

Executives at Arm have said one of its customers used the ready-made components to build a chip in roughly nine months for a design that is already complete, which MediaTek's is not. For experienced chip design businesses, advanced chips typically take considerably more than a year to construct and test, depending on the complexity.

In 2016, Microsoft tapped Qualcomm to spearhead moving the Windows operating system to Arm’s underlying processor architecture, which has long powered smartphones and their small batteries. Microsoft granted Qualcomm an exclusivity arrangement to develop Arm-based Windows-compatible chips until 2024, Reuters reported last year.

Because the Qualcomm exclusivity arrangement with Microsoft is expiring, other designers have opted to build chips to help power Microsoft's latest push to use Arm designs. For decades, Windows machines have relied on chip architecture made by Advanced Micro Devices .