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Half of this Italian beach town is on holiday and half is in exile
How Forte dei Marmi became an inconspicuous refuge for some of the world’s most conspicuous people
The boy looked dead. He was no older than 19, with modelesque features and dressed in designer clothes, sat on a bench on the Lungomare esplanade under pink dusklight. When we tried to shake him awake, his head flopped backwards. Someone called for help. Taupe bicycles with wicker baskets slow-motioned past us and women with fresh blow-drys and solid-gold jewellery strolled by carrying enormous raffia bags. Then a man searched the boy’s pockets and extracted something. A little girl, holding her mum’s hand, turned to stare at us. I had never seen so much cash in my life either. A bundle of €500 and €200 notes.
“You think he’s one of them?” I asked my friend.
“I suppose he works for them and the cash is payment?” he said.
We were in Forte dei Marmi. “Them,” everyone knew, meant Russians. As a doctor arrived, a waiter walked over from our restaurant to let us know our table was ready. It was July 18 2019, the night of my friend’s birthday dinner. We followed to a dining terrace where champagne was being chilled in plastic beach buckets, and the boy became just another legend to add to the pile. Sooner or later in Forte, everyone has a story to tell about the Russians.
A seaside village nestled under the Italian Alps, Forte emerges from a 20km strip of sand that stretches along the Tuscan coast. I know this place well. As a child, I loved being immersed in Forte’s fairy-tale-like architecture. I loved the wrought-iron window grates lacquered in milk-mint green, the impossibly pretty terraces, the marble-tiled squares with pink flowers on every corner. The complete absence of squalor and vulgarity made me feel safe. Although we lived in the next town over, I would ask my parents if we could holiday in Forte dei Marmi. And, years later, as a teenager, I periodically escaped there to wander along its promenades, Holly Golightly on a tenspeed.
Forte has a long history of attracting pleasure-seekers. In the late 19th century, artists such as Arnold Böcklin, John Singer Sargent and Isolde Kurz discovered it. Later, the Agnellis, the Siemens, Thomas Mann and Aldous Huxley, who wrote his first novel in Forte, holidayed here, ushering in decades of glitz. Ray Charles, Édith Piaf and Grace Jones all performed at Forte’s Capannina club where, local legend goes, the Negroni cocktail was first concocted for Count Negroni. (It is not the only place to claim this.) In more recent years, oligarchs and celebrities settled in: Silvio Berlusconi, Giorgio Armani, Oleg Deripaska and Oleg Tinkov among them.
Unlike Mediterranean playgrounds such as Monaco and Porto Cervo, Forte retains an air of mystery, an inconspicuous place for conspicuous people. Private security cars patrol the empty village centre at night. It’s not unusual to see armed guards in black ties standing in front of villa gates. Many of those villas are steeped in pine gardens so thick you can’t see where one estate ends and the next begins.
Naturally, the concentration of the super-rich in Forte, measuring a mere 9 sq km, has driven up prices. Villas are let for €400,000 for the summer season, hotel rooms average €900 per night and a spot on the beach can cost up to €500 a day. Datcha, the ultra-luxury residence owned by Tinkov, a Russian-Cypriot tycoon, is bookable for €100,000 per week or about €1mn for the season. Many of the clientele are Russian or eastern European.
When I was younger, the growing presence of Russians in Forte made its way back to us in tales of various embellishment. In school, there was a legend that a Russian driving a Porsche SUV had hit a kid’s Vespa. The driver, the rumour went, got out of the car and handed the boy €10,000 in cash to keep quiet. People my age who got seasonal jobs in Forte returned with anecdotes about being tipped with iPhones and getting to finish €500 bottles of wine. There was a story about a cleaner in one holiday villa being instructed by Russian tenants to flush the loo for them.
According to locals and reports in the Italian press both Vladimir Putin and Volodymyr Zelenskyy currently have villas here. “It’s true,” a local hotelier whispered when I asked about Putin’s rumoured home, though, when I put it to Kremlin spokesman Dmitry Peskov, he said: “This is complete nonsense.” San Tommaso SRL, a company which owns property in Forte, confirmed that the Ukrainian president’s family are shareholders. (Zelenskyy’s spokesperson did not provide a response to a request for comment.)
Last month, Alexei Navalny’s Anti-Corruption Foundation reported that relatives of Yevgeny Prigozhin, the founder of mercenary military organisation the Wagner Group and former Putin friend, own a mansion in Forte worth €3.5mn. The organisation has previously reported that some 2,500 of the 7,000 homes in Forte belong to Russians. When the war escalated in 2022, many of the Russophone elite retreated here permanently.
Elena Davsar is waiting for me at Principe hotel. A 41-year-old Russian business coach and Forte dei Marmi socialite, Davsar launched a Russian-language blog, My Forte dei Marmi, in 2017. That put her at the centre of Forte’s Russian community. We’re in the historic hotel bought by the oligarch Vladimir Yevtushenkov and inaugurated in 2012, as reported by Italian newspaper Il Messaggero. I’m excited about our dinner at Lux Lucis, Principe’s rooftop restaurant. “Isn’t it Forte’s only Michelin-starred place?” I ask. “There are five,” Davsar says, with a smile. “You can read about them in my guide.”
Davsar asked a lot of questions before agreeing to meet. But over the course of the meal, she slowly warms to me. We sip an aromatic aperitivo on the terrace, as the sun sinks into the Mediterranean. “Forte is my grande amore,” she says, taking in the view. On the roof of a nearby building, an elevator bulkhead has been painted the colours of the Ukrainian flag.
She points to something behind me. A perfect rainbow has appeared, and an American couple with identical sets of unnaturally white teeth asks us to take their picture. Behind the Americans, our corner table awaits. Staff prop our handbags on handbag-sized leather ottomans, and we sit down. Before I start recording, Davsar informs me she isn’t going to comment on the political situation. By that I suppose she is talking about Russia’s occupation of Ukraine. “Also,” she adds, “I don’t refer to our community as Russian. It’s ‘Russophone’.”
Davsar moved here from Milan seven years ago. Her childhood dream had always been to live by the sea. One day, an Italian friend handed her the keys to her house in Forte. “And just like that, my dream came true.” Davsar’s descriptions of her life in Forte evoke a Mediterranean remake of Emily in Paris. When she details how she spends her time off — morning runs on the Lungomare, five o’clock teas, art vernissages in pine gardens, boutique openings, parties in private villas, days exploring the Ligurian coast by sail boat — I feel a small wave of envy. Davsar doesn’t consider herself that social: “I get a thousand invitations, but I only go so I can see my friends.”
After the war started, Davsar rebranded her blog “to erase any political imprint,” she tells me, and changed its name and URL (previously Fortedeimarmi.RF) to lose all references, however minor, to Russian nationalism. The site is also an Instagram account with some 5,000 followers, which covers cultural happenings and posts pictures of beach parties and hikes.
Davsar’s Italian is flawless and more idiomatic than mine. She also forgives frequent slips into English. Over a conceptual eggy broth, I wonder why, with such excellent command of Italian and English, she decided to start a website in Russian. “In Forte, there are many people who speak Russian,” she says. “I created my website for them.” And has their presence intensified since the start of the war? Her dainty, ponytailed head makes an almost imperceptible nod. “There are many families who’ve fully relocated here and now spend the whole year in Forte,” she says. “More than 300 families.” (According to Il Messaggero, there are more than 500.) “Forte’s penchant for discretion is an element that attracts a certain breed,” says Davsar.
She tells me she can’t reveal her readers’ names. But as we drink a Tuscan Riesling, she specifies with a touch of pride that they are “very successful businessmen, famous internationally”. She describes them as a low-profile group who feel no desire for ostentation and favour private events in their villas to raucous beach parties. Beyond relaxation, this select crowd understands Forte is a place where they can network, “sign contracts under beach umbrellas” and operate a bit like in “an exclusive business club”. I remark they must be an exclusive club if the likes of Zelenskyy own villas here. “I would rather we didn’t discuss that,” she says.
I notice she’s been studying a large dining party nearby. “They’re Russians,” she says in a hushed voice. I comment that many Russians in Forte prefer to say they’re Ukrainian these days. “Recently, people really want to specify where they were born,” she continues, as I try to rescue some clams drowning in a pool of vanilla. Davsar herself was born in Kyiv, and raised in Moscow. “But here in Forte dei Marmi, we gather for lunch and for dinner. Here, we live together, in peace.” She then utters a sentence which in Italian would be called lapidaria, which is to say as concise as a lapidary inscription: “I was born during the Soviet period, we were all one big family.”
On my first day in Forte dei Marmi, Russian missiles are hitting cities across Ukraine, killing civilians. As I walk barefoot along Forte’s near-empty beach, all I see is a sleepy town waking up for a new season. A lifeguard repaints a wooden gazebo. Two young men divide portions of sand with long strings, preparing to plant colourful beach umbrellas in symmetrical arrangements.
Real estate agent, Filippo Mariani (not his real name) picks me up in his Renault. Wearing Persol sunglasses, a Winston Blue pack in his jeans back pocket, car volume turned up and windows rolled down, he’s treating me to a villa-watching tour of Forte. The first on our list is Zelenskyy’s house.
Neat and modern-looking, the house is in the newly affluent neighbourhood of Vittoria Apuana that only became expensive when the most sought-after quarters of Roma Imperiale “ran out of plots for sale,” says Mariani. For Vittoria Apuana, it’s a perfectly decent villa but relatively unassuming by Forte standards. I peek through the thick hedges and notice a pool. “He rents it,” Mariani shouts from the car.
After another short drive, Mariani says, “I’m going to show you La Rosa dei Venti, the Wind Rose.” He pulls over in front of a large structure with three grey gates. Behind the central gate are a pool and a villa. The two lateral gates open on to a cobbled driveway that seems to be tracing a wrap-around U encircling the villa. One of them is open slightly. I look at it, then at Mariani. “I’m not trespassing,” he says.
Then he hands me his phone, opened to Google Maps. I see the spot we’re standing clearly, from a satellite view. La Rosa dei Venti is, in fact, an oblong folding fan of nine villas arranged like spectators in an amphitheatre. They’re sitting around a central, more imposing villa. “They’re all owned by Russians.”
Next, we drive to a big favourite of my Holly Golightly days, Roma Imperiale, a residential “garden village”. Its postcode, with Capri, includes Italy’s most expensive real estate. Forte’s oldest villas, some of which have protected historical heritage, feature frescoed ceilings and wide, welcoming porticos. But most houses you find here today are strategically concealed, some by impossibly tall hedges, others by heavy-duty fences and gates, equipped with cameras. The custom of Russian buyers in this area is to either purchase historical estates and completely re-do them, or build new ones from scratch that “look straight out of Miami,” according to Mariani. “Inside some of these I saw a lot of gold, really heavy gold, marble and pillars,” he says. “It’s stuff that just doesn’t fit here.”
Most houses are strategically concealed, some by impossibly tall hedges, others by heavy-duty fences
Forte’s property market, which has more than 150 real estate agencies, means a house’s size is of secondary importance. Everything is valued a corpo, non a misura — by body, not by measurement. “This makes things easier for those trying to clean money,” Mariani explains. When Russians arrived, they would notice villas owned by Italian retirees who’d been holidaying here for 50 years. “They would just buzz the door and offer them €3mn. People always sold,” he says.
Many local estate agents believe Russian buyers in Forte behave like “colonisers”. “They’re buying the whole place,” Mariani says. I think of the lady hotelier who spoke to me anonymously over a breakfast of cappuccino and fig jam tart. She described the Russians like “an elephant walking, there’s no fighting against it”. Her tone was the same as many I spoke with in Forte, a mix of circumspection and acquiescence. I ask if Mariani, whose family has worked in Forte’s hospitality industry for decades, feels that estate agents like him are enabling the same people they describe as colonisers. Not exactly. “There’s a degree of awareness,” he says. “I have seen situations at the edge of legality — but you just do it. The whole world revolves around that.”
Anastasia Voznovych is late. While I wait for her at Bagno Dalmazia for lunch, a waiter insists I have some champagne. A 30-year-old Ukrainian store assistant at a Forte fashion boutique, Voznovych arrives in sunglasses and a blazer, sits down and lights a cigarette. In her 10 years working here, Voznovych has become an expert at discerning the types that make up the village’s Russophone community. “There’s a bit of everything in the summer,” she says. “But in November, at Christmas, you recognise them, the Russian permanent residents.” This winter, she says while flicking through the menu, she saw more than ever. Some used to go to her boutique and create loyalty accounts, using UAE, British or Swiss passports. Now, they have stopped registering.
Status is something members of the Russophone enclave grapple with warily, according to Voznovych. They have always been concerned with not being mistaken for what she terms “Russian trash” and would much rather pass for other Europeans. She tells me about a customer who once reprimanded her for talking to her in Russian, demanding to be spoken to in English. Her impression is that the majority of them aren’t benefiting from the war. “Although, if we’re talking about Forte,” she adds, beheading a prawn, “nobody cares if you’re pro-Russia or pro-Ukraine. What matters is: do you have money?”
Then Voznovych tells me a story. A long-time Russian customer of hers opened up about her concern for her 18-year-old nephew in Russia, who might be sent to the front line. “She had tears in her eyes,” Voznovych says. “It made me reflect on how we’re in the same boat. They are invaders. We are invaded. But the grief is the same.” Still, the Russian’s tears touched a nerve. “She only spoke to me about it because Putin was looking for new recruits. ‘Now that they want my kid to go to war, now it’s a real problem!’”
Over the course of 36 hours in Forte, this is the second story I hear of a Ukrainian shop assistant who had to soothe a rich Russian’s anxiety. The official line from the local government is that tensions in Forte dei Marmi have been carefully contained. At least since April 2022, when the gate of a Russian-owned villa in Roma Imperiale was painted the colours of the Ukrainian flag. Umberto Buratti, Forte’s former mayor, commented that Russian and Ukrainian residents in Forte dei Marmi cohabitate in peace. It would be wrong, he added, to blame any Russian citizen for the war waged by their country.
I drive home on the country roads I pedalled over as a child behind my father, when Forte was still a real-life Barbie land to me. Today, I find myself pondering whether my aspirations were part of a fantasy that itself attracted the foreigners now ruining the place, or simply misplaced. I think of the rumours that circulated in the schoolyard and the motionless boy on the bench on Lungomare. I think of the Kardashians’ Capri weddings, the Taormina of the White Lotus. But also Hydra after Leonard Cohen, the Côte d’Azur of F Scott Fitzgerald and the myriad Mediterranean places that had been unspoiled repositories of legend until the moneyed landed there with their elephant feet. “They would just buzz the door and offer them €3mn,” Mariani had said. “People always sold.” Wasn’t it us who invited them in?
It’s a perfect Versilia evening. As I pass under canopies of pines, I hear some turtledoves above me and suddenly it’s 1996. Maybe even 1925. Tonight, like every night, the light is pink. It makes the mountains look as if they’re blushing, like a naughty child who might be up to something.
A Freight Glut Is Coming. Shippers Are in for a Long Haul.
Remember the supply-chain snarls? Cargo ships anchored for weeks outside the ports of Long Beach and Rotterdam?
That all seems so 2021 now—not least to the shareholders of big shipping companies such as A.P. Moeller-Maersk (ticker: MAERSKA.Denmark) and Hapag-Lloyd (HLAG.Germany).
Oceangoing container freight is an unsung hero of the globalization age. Before its invention in 1956, shipping could account for half or more of the price of international goods, says John McCown, a senior fellow at the U.S. Center for Maritime Security. Today it’s more like 2%.
Shipping costs were also an underestimated factor in postpandemic inflation. Container rates jumped sevenfold in the 18 months prior to September 2021, which notionally added 1.5 percentage points to global inflation in 2022, according to the International Monetary Fund. Not a small number.
Shippers’ bottom lines and stock prices rode the boom. “The industry made unfantasized-about profits,” McCown says.
The bust followed just as swiftly. Rates are back down to 2019 levels. Maersk shares have fallen 40% from a peak in January 2022.
Worse is probably yet to come, with durable goods spending flattening in the U.S. and Europe and merchants looking to unload inventories before placing fresh orders to Asia. China’s exports plunged more than 14% in July from a year ago.
“The destocking cycle will go on into Q1 or Q2 of next year,” says Sathish Sivakumar, head of European transport research at Citi. “That means more downside in freight rates.”
Panama Canal’s Jam
The industry gave way to irrational exuberance during its boomlet, commissioning new ships on an unprecedented scale. Vessels on order will add 30% to global container freight capacity over the next three to four years, says Niels Rasmussen, chief shipping analyst at Copenhagen-based trade group Bimco. Two privately owned companies, Swiss-based Mediterranean Shipping Company and CMA CGM in France led the extravagance—but everyone will struggle with the glut.
Bulk shipping, which carries commodities, boasts a different cast of characters than container freight. Price trajectories have been similar.
Container shippers do have ways to staunch their financial bleeding. The lucrative trans-Pacific routes are dominated by three alliances, which can informally coordinate on trimming the number of sailings or “slow steaming,” reducing ships’ speed to save on fuel and cut the frequency of deliveries. Vessels could slow down by up to 25%, infuriating customers but bolstering finances, Rasmussen estimates.
“It’s a cartel that has great appreciation for what can happen when capacity becomes constrained,” McCown summarizes.
Most of the new ships in the pipeline are cost-efficient monsters of the deep, larger than an aircraft carrier and carrying up to 18,000 20-foot containers. They’ll replace smaller, fuel-guzzling craft. Shippers normally mothball 5% of their fleet every year, offsetting the coming supply bulge, McCown says.
Still, no less an authority than Maersk CEO Vincent Clerc sees choppy seas ahead. “Most of the orders are still in the shipyard, so we have a long haul in front of us,” he told journalists while reporting a 70% drop in year-over-year earnings before interest, taxes, depreciation, and amortization, or Ebitda, for the second quarter of 2023. “We will need to adapt to the new market situation over the next 18 months.”
Bad news for Maersk and its competitors is good news for most of the world, which waits with bated breath for inflation to fall and central banks to cut rates before they cause recessions. Powell, Lagarde & Co. can at least count shipping costs as cooled for a while yet.
NextEra Offers a Smart Bet on Green Energy and a Rising Payout
Wall Street has been captivated by the growth potential of green energy, from wind and solar power to hydrogen, renewable fuels, and carbon sequestration. NextEra Energy offers a relatively low-risk green play, with a 2.7% dividend yield that’s rising.
The largest U.S. electric utility, with a market value of $138 billion, NextEra (ticker: NEE) has two businesses: It owns the leading portfolio of wind- and solar-power assets in the U.S., and one of the country’s biggest, best-run utilities, Florida Power & Light.
NextEra’s shares have outperformed the S&P 500SPX –0.11% index in the past 10 years, a rarity among utilities. But the stock, which peaked in late 2021 at $93 a share, has lagged behind more recently, falling 18% this year, to a recent $68.
NextEra trades at a premium to peers such as Southern Co. (SO) and Duke Energy (DUK), but that gap has contracted as the stock’s forward price/earnings multiple has fallen from a high around 30. Shares now fetch 22 times projected 2023 earnings of $3.12 a share and 20 times next year’s estimated income of $3.40 a share.
The company sees 6% to 8% annual earnings growth in 2025 and ’26, and said last month in its second-quarter earnings slide deck that it would be “disappointed if we are not able to deliver financial results at or near the top of our adjusted EPS [earnings per share] expectations ranges through 2026.” That implies roughly $4 a share in earnings in 2026. Most peers are aiming for earnings growth of closer to 6% annually. NextEra’s 2024 earnings are expected to rise 9%.
“[NextEra] owns one of the fastest-growing utilities in the country and has some of the most constructive regulation,” says John Bartlett, president of Reaves Asset Management, which runs the Reaves Utility IncomeUTG +0.33% closed-end fund (UTG). Bartlett says the Inflation Reduction Act and its raft of subsidies and incentives for renewable energy is another positive for the company.
Wolfe Research analyst Steve Fleishman recently wrote that NextEra has the “best-in-class, high-growth utility,” the “dominant” renewables development in the U.S., and one of the strongest balance sheets in the sector. He rates the stock Outperform and has an $89 price target, based on a sum-of-the-parts analysis.
NextEra’s dividend is low relative to Duke Energy and Southern, which yield about 4%. The industry average is 3.5%. But the payout has risen by an industry-beating 10% annually since 2007, and the company sees 10% yearly growth at least through 2024.
NextEra’s Florida Power & Light has 5.8 million customers. Florida’s favorable population outlook bodes well for growth. The utility is spending heavily to decarbonize its generating fleet and build related infrastructure. Capital expenditures are projected to be about $9 billion this year.
One of FP&L’s big initiatives is to deploy solar to replace natural gas, which now accounts for 71% of its generation capacity. It aims to have carbon-free generation by 2045, in part by pairing battery storage with solar.
Under former CEO Jim Robo, NextEra was early in developing wind and solar energy and now has about 27 gigawatts of clean-energy generating capacity, ahead of No. 2–ranked Berkshire Hathaway (BRK.A, BRK.B). The renewables business is housed in an unregulated unit, NextEra Energy Resources, and a portion sits in NextEra Energy Partners (NEP), more than 50% owned by NextEra.
Most of the company’s renewable generating capacity is in wind, but much of its current backlog of 20 gigawatts is in solar and energy storage.
Robo never warmed to developing offshore wind power on the East Coast, citing lengthy development timelines and uncertain permitting, among other drawbacks. It is “terrible energy policy” and expensive, he said in 2018, comments that look smart given the deteriorating economics of offshore wind. NextEra sees its advantage in renewables stemming from its 20 years of experience, a superior land position, better supplier relationships, and a strong balance sheet.
NextEra’s stock has fallen as interest rates have risen, dimming investors’ interest in utilities. The sector’s dividend yields look less attractive relative to cash than they did a year ago. In renewable power, there are fears about rising costs and regulatory barriers, and growing local opposition in many parts of the country that has slowed deployment in the past year.
In addition, Florida Power & Light has been the subject of news articles that its executives funneled money to Florida politicians to protect its interests. The former CEO of FP&L retired in January, and NextEra has launched two investigations into the matter. NextEra CEO John Ketchum said on the January earnings call that there was no connection between the executive’s departure and the company’s probes. NextEra declined to comment for this story.
Rate and regulatory risks are largely reflected in NextEra’s valuation. At its current, depressed price, the stock offers an attractive play on two industry-leading companies under one corporate roof, both with significant growth potential.
Starboard Value (Jeffrey Smith) discloses updated portfolio positions in 13F filing: Confirms new AQN ABCM positions, Increased WIX, Exited ENOV ON LZM
Highlights from Q2 2023 filing as compared to Q1 2023:
- New positions in: AQN (~34.1 mln shares), ABCM (~4.59 mln)
- Increased positions in: WIX (to ~3.79 mln shares from ~1.97 mln shares), HUM (to 885K from 800K)
- Maintained positions in: GEN (~18.9 mln shares), GDDY (~10.0 mln), LPSN (2.36 mln)
- Closed positions in: ENOV (from ~0.35 mln shares), ON (from ~0.2 mln), LZM (from ~0.48 mln)
- Decreased positions in: ACM (to ~3.8 mln shares from ~5.4 mln shares), CVLT (to ~0.12 mln from ~1.6 mln), WTW (to ~0.5 mln from ~1.8 mln), MRCY (to ~2.8 mln from ~3.8 mln), VRT (to ~15.9 mln from ~16.8 mln), CRM (to ~2 mln from ~2.5 mln), SPLK (to ~4.1 mln from ~4.6 mln), PZZA (to ~0.2 mln from ~0.6 mln), ROG (to ~0.77 mln from ~1 mln)
Baupost Group (Seth Klarman) discloses updated portfolio positions in 13F filing: New AMZN DG UNP CRH positions
Highlights from Q2 2023 filing as compared to Q1 2023:
- New positions in: AMZN (~964K), DG (242K), UNP (175K), CRH (~57K)
- Increased positions in: FIS (to ~6.8 mln shares from ~4.8 mln shares), ATRA (to ~9.8 mln from ~9.1 mln), STX (to 600K from ~137K), SSNC (to ~3.7 mln from ~3.3 mln), JAZZ (to ~674K from ~479K) WTW (to ~902K from ~859K)
- Maintained positions: VSAT (~16.3 mln shares), LSXMK (~14.9 mln), VRTV (~3.3 mln)
- Closed positions in: DBRG (from ~1.2 mln shares), SWKS (from ~0.7 mln), FI (from ~0.5 mln), LAD (from ~0.07 mln)
- Decreased positions in: TBPH (to ~7.4 mln shares from ~10.4 mln shares), LBTYK (to ~45 mln from ~47.5 mln), QRVO (to ~2.6 mln from ~4.65 mln), FNCH (to ~0.07 mln from ~2 mln), GOOG (to ~4.1 mln from ~5.85 mln), EDU (to ~4.1 mln from ~5.4 mln), ADV (to ~10.7 mln from ~11 mln)
Soros Fund discloses updated portfolio positions in 13F filing: New GM CRH RNR BABA MBLY positions; Exited FHN BOWL FRSH CRM positions
Highlights from Q2 2023 filing as compared to Q1 2023:
- New positions in: GM (~0.45 mln shares), CRH (~0.35 mln), RNR (~0.19 mln), BABA (~0.18 mln), MBLY (~0.12 mln), SVV (~0.1 mln), BFH (~0.09 mln), PYPL (~0.08 mln)
- Increased positions in: LQD (to ~3.17 mln shares from ~2.4 mln shares), RIVN (to ~4.2 mln from ~3.6 mln), KWEB (to ~1.17 mln from ~0.82 mln), AER (to ~0.84 mln from ~0.54 mln), BGC (to ~2.7 mln from ~2.5 mln), APTV (to ~0.33 mln from ~0.18 mln), RKT (to ~0.3 mln from ~0.2 mln) DASH (to ~0.14 mln from ~0.07 mln), AMZN (to ~0.77 mln from ~0.71 mln), TMUS (to ~0.09 mln from ~0.03 mln)
- Closed positions in: FHN (from ~7.31 mln shares), BOWL (from ~3 mln), FRSH (from ~1.43 mln), AWK (from ~0.32 mln), CRM (from ~0.17 mln), EL (from ~0.16 mln), FRPT (from ~0.1 mln), PR (from ~0.1 mln)
- Decreased positions in: FIGS (to ~0.2 mln shares from ~2 mln shares), INDI (to ~2.99 mln from ~3.24 mln), FSLY (to ~1 mln from ~1.2 mln), CSX (to ~0.3 mln from ~0.36 mln), UBER (to ~0.75 mln from ~0.82 mln), GOOS (to ~0.1 mln from ~0.15 mln), LPLA (to ~0.13 mln from ~0.18 mln), QCOM (to ~0.07 mln from ~0.1 mln)
Closing Stock Market SummaryThe stock market closed out the first full week of August on a mixed note in a lightly traded session. Market rates jumped in response to a hotter than expected PPI report for July, which created an excuse for investors to continue consolidation efforts that started this month following the stellar start to the year.
Total PPI increased 0.3% month-over-month in July (Briefing.com consensus +0.2%) following a downwardly revised 0.0% (from 0.1%) for June. Excluding food and energy, the index for final demand was also up 0.3% month-over-month (Briefing.com consensus +0.2%) following a downwardly revised 0.1% decline (from +0.1%) for June.
On a year-over-year basis, the index for final demand was up 0.8%, versus 0.3% in June, and the index for final demand, excluding food and energy, was up 2.4%, unchanged from June.
The 2-yr note yield, at 4.80% just before the release, rose six basis points to 4.89%. The 10-yr note yield, at 4.08% just before the release, rose nine basis points to 4.17%.
Weak mega cap stocks acted as a drag on the major indices, leading the S&P 500 and Nasdaq to close with losses while the Dow Jones Industrial Average registered a gain. The Vanguard Mega Cap Growth ETF (MGK) fell 0.6% while the Invesco S&P 500 Equal Weight ETF (RSP) closed flat.
Apple (APPL 177.79, +0.06, +0.03%) eked out a slim gain, but weakness from the likes of Tesla (TSLA 242.65, -2.69, -1.1%), Meta Platforms (META 301.70, -4.04, -1.3%), and NVIDIA (NVDA 408.55, -15.33, -3.6%) kept the broader market in check.
The S&P 500 declined 0.1%; the Nasdaq Composite fell 0.7%; and the Dow Jones Industrial Average rose 0.3%. Market breadth also reflected mixed action under the index surface. Advancers led decliners by a slim margin at the NYSE while decliners led advancers by a 4-to-3 margin at the Nasdaq.
Only four of the 11 S&P 500 sectors closed with a loss. Information technology (-0.9%) was the worst performer by a decent margin while energy (+1.6%) led the pack.
- Nasdaq Composite: +30.4% YTD
- S&P 500: +16.3% YTD
- S&P Midcap 400: +9.5% YTD
- Russell 2000: +9.3% YTD
- Dow Jones Industrial Average: +6.3% YTD
Reviewing today's economic data:
- July PPI 0.3% (consensus 0.2%); Prior was revised to 0.0% from 0.1%; July Core PPI 0.3% (consensus 0.2%); Prior was revised to -0.1% from 0.1%
- The key takeaway from the report is that wholesale inflation has come down sharply from its peak in 2022, although with the recent increase in oil and gasoline prices, there will be some concern that further improvement is going to be delayed.
- August Univ. of Michigan Consumer Sentiment - Prelim 71.2 (consensus 70.9); Prior 71.6
- The key takeaway from the report is that it reflected little overall change in sentiment, due in part to largely steady inflation expectations, as year-ahead and five-year expectations decreased by ten basis points apiece.
There is no U.S. economic data of note on Monday.
L’arrivée de Daniel Kretinsky chez Atos soulève l’opposition de parlementaires et d’actionnaires
Des sénateurs s’inquiètent de l’entrée de l’homme d’affaires tchèque au capital de la division de cybersécurité du groupe d’informatique, très liée à la défense française.
Pour ces 82 sénateurs et députés, c’en est trop. Ayant encore en tête la vente, en janvier, de la société de défense Exxelia à l’américain Heico, ces élus, tous issus du parti Les Républicains, craignent que le projet de rachat par Daniel Kretinsky (actionnaire indirect du Monde) des activités infogérance d’Atos et son entrée au capital de sa division de cybersécurité, Eviden, entaillent un peu plus la souveraineté française. « Cette entreprise qui demeure clé pour notre autonomie stratégique actuelle, au travers des capacités de calcul, et de demain, avec les enjeux liés au quantique, doit être absolument maintenue sous le giron français », ont-ils écrit le 2 août, dans une tribune au Figaro.
Eviden assure plusieurs missions pour la défense nationale. Par exemple, son logiciel Digital Battle Management System sert de base au système d’information du programme Scorpion de modernisation des capacités de combat au contact de l’armée de terre. Elle a également créé Athea, une coentreprise avec Thales, pour travailler sur la future « infostructure » régalienne du ministère des armées. Quant à ses supercalculateurs, fabriqués dans son usine d’Angers, ils servent au programme de simulation des essais nucléaires. « L’hypothèse de voir un acteur étranger si puissant s’approcher de nos capacités militaires ultrasensibles mérite toute notre attention », écrit le groupe de parlementaires.
« Cessons de brader nos fleurons et de nous fragiliser », poursuit Cédric Perrin, vice-président de la commission des affaires étrangères et de la défense du Sénat, à l’origine de la tribune. Sénateur du Territoire de Belfort, bastion d’Alstom, il reste marqué par la vente de la branche énergie de l’industriel à l’américain General Electric en 2015, avant que l’Etat ne se rende compte de son erreur et rachète en 2022, par l’intermédiaire d’EDF, ses activités nucléaires, dont les turbines Arabelle qui équipent les centrales françaises.
Pas de passage devant le contrôle des investissements étrangers
Après Casino, et en plus de ses activités dans les médias et l’énergie, M. Perrin s’étonne que le gouvernement laisse M. Kretinsky « racheter le tissu économique français par appartement ». En ne prenant que 7,5 % du capital d’Eviden, l’homme d’affaires tchèque s’évite le passage devant le contrôle des investissements étrangers, le seuil déclenchant un examen des services du ministère de l’économie étant fixé à 10 % du capital.
Le 3 août, un porte-parole de M. Kretinsky a jugé « légitime la préoccupation des parlementaires, mais elle repose sur une hypothèse qui ne se vérifiera pas ». Selon lui, l’homme d’affaires entend maintenir une participation « minoritaire » et « passive » au capital d’Eviden. Pour Atos, le choix d’accorder 7,5 % du capital d’Eviden à M. Krestinky répondrait à la volonté de construire un bloc d’actionnaires de long terme. Il est prévu que Fimalac, la holding de Marc Ladreit de Lacharrière, qui épaule déjà M. Kretinsky dans le dossier Casino, entre aussi au capital d’Eviden. Atos et Bercy n’ont pas fait de commentaire.
Les actionnaires d’Atos mécontents
Les sénateurs ne sont pas les seuls mécontents : l’opération déplaît aussi à des actionnaires d’Atos, certains d’entre eux ayant décidé de former l’Udaac, l’Union des actionnaires d’Atos en colère. Depuis l’annonce de l’accord avec M. Kretinsky, le 1er août, l’action du groupe d’informatique a perdu près d’un quart de sa valeur. La transaction est jugée défavorable à la société : ses activités d’infogérance ne sont vendues que contre 100 millions d’euros. La holding de M. Kretinsky reprend à sa charge 1,9 milliard d’euros d’engagements mais toute la dette d’Atos, soit 2,3 milliards d’euros, sera conservée par Eviden.
Avant même l’annonce de cette transaction, la société de gestion Sycomore AM, qui avait tenté d’obtenir le départ du président d’Atos, Bertrand Meunier, lors de l’assemblée générale du 28 juin, avait jeté l’éponge en vendant toutes ses actions. Déçu de ne pas avoir obtenu gain de cause, Sycomore regrettait aussi que la détérioration de la génération de trésorerie d’Atos, information importante révélée aux actionnaires lors de l’annonce des résultats semestriels, le 28 juillet, n’ait pas été communiquée plus tôt.
Weight-loss drugs: will health systems and insurers pay for ‘skinny jabs’?
A new study bolsters the case that semaglutide is not merely a vanity drug but has a key role to play in treating obesity
When Jimmy Kimmel hosted the Academy Awards this year, the comedian opened by telling the audience how great they looked. Then he stung: “When I look around this room, I can’t help but wonder, ‘Is Ozempic right for me?’”
Kimmel was needling Hollywood for its newfound dependence on the diabetes medication that spurs weight loss, which has reportedly become de rigueur among the wealthy and famous.
Novo Nordisk, the company behind semaglutide — branded as Ozempic for diabetes and Wegovy for weight loss — has benefited from a surge in demand from patients inspired by celebrities’ transformations. But the drug’s reputation as a “skinny jab” has not helped persuade health systems and insurers, or payers, to cover the cost of it.
This week, the Danish drugmaker published headline trial data that it believes will make the difference. In a trial of patients with obesity and cardiac conditions, Wegovy was shown to cut the risk of serious events such as heart attacks and strokes by 20 per cent, proving that the drug improves heart health — and has the potential to reduce high healthcare costs.
Lars Fruergaard Jørgensen, Novo Nordisk’s chief executive, tells the Financial Times that the “whole reason” the company did the trial was to help win the argument with payers.
Shares in the company and its main rival, the US pharma group Eli Lilly, shot to record highs, as investors hoped that payers would not be able to refuse to cover the drugs for much longer. Evan Seigerman, an analyst at the Canadian investment bank BMO, added tens of billions of dollars to his sales estimates for the weight loss and diabetes drugs after the announcement. He now forecasts the entire market will one day be worth $130bn to $140bn.
Drugmakers believe the medicines will help save on the healthcare costs related to obesity, which add up to about $170bn a year in the US, according to the Centers for Disease Control and Prevention.
However, health insurers and public payers argue that they have no way to magic up the money to pay for the drugs that would be needed to cater to a potential market of tens of millions of patients in the US alone, at a list price of about $1,300 a month, for the rest of their lives.
James Gelfand, president of the ERISA Industry Committee, which represents large US employers that provide health benefits, says the conflict is taking over his LinkedIn feed.
“It’s a war zone between patient advocates and doctors who are extolling the virtues of these drugs, and then plan sponsors, administrators, actuaries, etc, who are saying these drugs are a massive profiteering scheme,” he says.
Health effects
After decades of drugs that either offered lacklustre weight loss, or serious side effects, semaglutide was a breakthrough for the treatment of obesity.
First developed to treat diabetes, the compound was trialled by Novo in patients with obesity who were not diabetics. Results published in 2021 showed participants taking the weekly injection lost an average of about 15 per cent of their body weight, compared to about 2 per cent with just diet and exercise.
The next year, a trial showed that Eli Lilly’s similar drug tirzepatide could help patients on the highest dose lose an average of 22.5 per cent of their body weight. Tirzepatide is not yet approved for obesity, though the same active ingredient is available branded as Mounjaro, for diabetes.
The drugs have side effects — most commonly nausea and gastrointestinal problems — and in animal studies, Wegovy increased the risk of thyroid cancer. But many people frustrated with not being able to lose weight solely through diet and exercise were prepared to put up with these risks to finally see an impact on their size and their health.
While many clinicians presumed the drugs would improve heart health because obesity is a major risk factor for heart disease, Novo Nordisk invested in its largest ever trial — following over 17,000 people since 2018 — to obtain proof.
The initial result was “out of this world”, says Martin Lange, executive vice-president of development for Novo Nordisk. The data from trials suggests the drug is not just having an impact by helping people lose weight, he says, but also by lowering blood pressure, changing the balance of lipids in the blood, and reducing inflammation.
He adds that this significant impact on people who already have heart disease suggests that the drug may also help cut the risk for people who have not yet developed it.
The full study, which will be released at an academic conference and is yet to be peer reviewed, will also show the drug’s impact on 28 other factors, including on other expensive conditions such as kidney disease.
Analysts believe the trial could also help build confidence that the benefits of the drug outweigh the risks, after the European regulator began investigating reports of patients having suicidal thoughts, and a US lawsuit claiming that Novo and Lilly’s diabetes drugs cause “stomach paralysis”. Lange says the heart trial showed no causal link with suicidal ideation or thyroid cancer. Novo and Lilly have said patient safety is their top priority.
Novo hopes that being armed with this data will help it overcome the competition when Lilly enters the obesity market with its own medication, which is in the same category of so-called GLP-1 receptor agonists.
But Lilly believes Novo’s data will also help it sell its weight loss drug, even though the results of its comparable trial won’t be ready until 2027. On an earnings call this week, Lilly’s president of diabetes, Mike Mason, declared it a “fantastic day for people living with obesity”.
“It is an important milestone in a long-term goal to get broad access for anti-obesity medications,” he said.
The question of coverage
Despite Wegovy’s sudden ubiquity in popular culture, less than half of all US commercial insurers cover the weight loss drug. Medicare, the government-backed insurance for seniors, is prohibited by Congress from paying for any obesity medications.
In Europe, where supply problems mean Novo Nordisk is only just slowly starting to launch the drug, public health systems are restricting who qualifies for it. The UK’s National Institute for Health and Care Excellence (Nice), for example, will pay for it for patients at the higher end of the body mass index, who already have at least one weight-related condition, and then for only two years, despite evidence showing that if you stop taking the drug, you regain weight.
After the heart trial data, financial analysts believe this reluctance will have to change. BMO’s Seigerman says not covering a drug that is potentially life-saving will be “unethical”.
“Before the data, a lot of these weight loss drugs were seen as vanity, no one was treating obesity as a medical condition, a precursor to negative health outcomes,” he explains. “If you have cancer, they are not going to deny you a cancer drug. Now, you’re going to treat obesity as a medical condition.”
Novo Nordisk’s Jørgensen says that with broader coverage, the company hopes to reach more patients with the highest BMIs and comorbidities, even though “some of the less fortunate individuals will not be able to pay out of pocket”.
Novo and other drugmakers have been lobbying Congress to pass a law reversing the ban on Medicare coverage of drugs designed to address obesity. Seigerman is optimistic that the new data will eventually help pass the law, because it will prove that it will save Medicare money in the long run, on hospitalisations for heart attacks and strokes.
Stacie Dusetzina, professor of health policy at Vanderbilt University, says it is “incredibly difficult” for legislation to pass through Congress at the moment. But she said the fact that Medicare does cover semaglutide for treatment of diabetes suggests that, after the new data, it could cover the drug for people with cardiac conditions. The Centers for Medicare & Medicaid Services did not respond to a request for comment.
In the UK, Jørgensen says Nice could be willing to expand coverage when a trial shows the health benefits go beyond two years.
Trained as a health economist, he says the drugs could help not just save healthcare costs but also get people back to work. “If you can turn them back from being consumers of healthcare services to consume less of those and actually be active in the workforce and taxpayers, that economic model would be very beneficial for most typical European societies where healthcare is funded by tax payments,” he says.
‘Very hard to justify’
But for insurers and health systems, the conundrum has barely changed.
David Rind, chief medical officer at the Institute for Clinical and Economic Review, a non-profit that estimates fair prices for the US health system, says he does not think the heart trial has changed the ethics of not covering the drugs.
ICER’s cost effectiveness assessment concluded they represented low long-term value for money — and it already assumed the obesity medications had some cardiac benefit.
The biggest problem is the sheer number of people who could qualify for the drug: at current prices, ICER estimated that only 0.1 per cent could be treated within five years without “major budget disruptions” for the insurers.
“The options are to move money away from other healthcare, raise premiums, or taxes if you’re the government, or manufacturers could lower the price to a cost effective price and still make enormous amounts of money because enormous numbers of patients want this,” Rind says.
Drugmakers will be reluctant to offer big discounts on such a popular drug, but the opacity of the US drug pricing system means they could do deals to offer larger rebates if volumes increase.
Gelfand, who represents large US employers that provide health benefits, says the price tag is still “very hard to justify”, particularly given patients have to take the drug for life. He expects employers to stick to covering very narrow patient groups, if any at all.
Otherwise, he says, premiums in the US could rise 15 to 20 per cent, increasing the likelihood that healthy people stop buying insurance, and making the remaining population riskier to cover.
A single heart trial was never likely to change payers’ position on the drugs overnight, and even if it had, Novo Nordisk would not have enough of the drug to supply the world.
But it could be the first in a series of data releases that proves how weight loss drugs prevent the serious consequences of obesity — eventually reshaping not just patients, but also the healthcare industry and the broader economy.
Emily Field, an analyst at Barclays, says that the benefits of the drugs are “only just starting to be understood” and eventually, doctors will become used to treating obesity before other health problems develop.
“This is like the smartphone, it is going to change society in a big way,” she says. “This trial is a huge validation that it is not just cosmetic.”