>>> Viking Global (Andreas Halvorsen) discloses updated portfolio positions in 1

Viking Global (Andreas Halvorsen) discloses updated portfolio positions in 13F filing: New BAC RUN XPEV positions
Highlights from 2021 Q1 filing as compared to Q4 2020:
  • New positions in: BAC (~31.31 mln shares), RUN (~4.4 mln), XPEV (~4.17 mln), OHPAU (~3.64 mln), EWTX (~3.35 mln), PHVS (~2.42 mln), COUP (~1.79 mln), WBA (~1.72 mln), THC (~1.46 mln), GRCL (~1.35 mln)
  • Increased positions in: GE (to ~60.65 mln shares from ~29.2 mln shares), FTV (to ~11.19 mln from ~7.96 mln), BMY (to ~5.2 mln from ~2.51 mln), AVTR (to ~15.51 mln from ~13.36 mln), EQH (to ~5.99 mln from ~3.87 mln), TMUS (to ~10.29 mln from ~8.71 mln), CB (to ~4.18 mln from ~2.71 mln) OTIS (to ~6.83 mln from ~5.4 mln), FB (to ~2.35 mln from ~1.03 mln), ACHC (to ~1.65 mln from ~0.34 mln)
  • Maintained positions in: APG (~33.33 mln shares), ADPT (~29.99 mln shares), BBIO (~26.62 mln shares), ABCL (~19.08 mln shares), V (~4.04 mln shares), ZBH (~3.82 mln shares), AIZ (~2.78 mln shares)
  • Closed positions in: TSM (from ~5.6 mln shares), MCFE (from ~5.25 mln), AXP (from ~5.22 mln), HLT (from ~4.72 mln), DIS (from ~4.27 mln), AMD (from ~4.02 mln), LVS (from ~2.83 mln), MU (from ~2.75 mln), EHC (from ~2.64 mln), GOCO (from ~2.6 mln)
  • Decreased positions in: BSX (to ~17.9 mln shares from ~29.99 mln shares), JPM (to ~0.87 mln from ~8.46 mln), HIG (to ~2.55 mln from ~8.07 mln), NUAN (to ~11.09 mln from ~16.38 mln), MSFT (to ~8.52 mln from ~11.84 mln), FIS (to ~9.6 mln from ~11.84 mln), CNC (to ~10.98 mln from ~13.09 mln), HZNP (to ~2.12 mln from ~3.66 mln), CI (to ~0.58 mln from ~1.95 mln), GOOGL (to ~0.45 mln from ~0.62 mln)

WSJ : Apollo Hires Craig Farr to Head Capital-Markets Business

Apollo Hires Craig Farr to Head Capital-Markets Business
Move signifies the firm’s push to expand the array of companies whose businesses it finances

Apollo Global Management Inc. APO 2.17% has hired Craig Farr as a senior partner to lead its capital-markets business, a sign of the investment giant’s push to expand the array of companies whose businesses it finances.

In the newly created role, Mr. Farr will oversee the origination of new debt- and equity-financing opportunities, the structuring of deals and the distribution of pieces of those deals to different investors through a process known as syndication. He will report to Apollo Co-Presidents Scott Kleinman and James Zelter.

Private-equity firms initially hired capital-markets professionals, often from banks, to help them arrange financing for their own deals as they grew in size and complexity.

In the years since the 2007-08 financial crisis, capital-markets businesses have become major sources of fee revenue for big publicly traded firms as they finance more transactions in areas where banks no longer operate because of regulatory hurdles. These can include lending to deals for rival buyout firms and financing

Mr. Farr was a senior adviser at Carlyle Group Inc. CG 2.50% from 2017 to 2019, helping the firm’s credit business grow and assisting it with its own expansion into capital markets. Before that, he was head of credit and capital markets at KKR & Co., helping to build the firm’s capital-markets business into a global, full-service debt-and-equity shop and a major source of fee revenue.

Before joining KKR, Mr. Farr spent 12 years at Citigroup Global Markets Inc. where he was a managing director and served as co-head of North American equity capital markets.

Unlike KKR, whose big balance sheet recently helped it to play a significant role in the initial public offering of entertainment company Endeavor Group Holdings Inc., EDR 4.55% Apollo isn’t likely to be leading big IPOs anytime soon. With a credit business that accounts for about 70% of its $461 billion in assets under management, it will continue to focus on providing creative financing solutions—be they debt, equity or some combination of the two—tailored to meet the needs of the companies it partners with, Apollo officials said.

Apollo already has more than 3,500 financing relationships, with only a relatively small portion of those being companies its private-equity funds own. The firm has provided loans to finance sizable deals, such as the $1.4 billion merger of newspaper publisher Gannett Co. with GateHouse Media parent New Media Investment Group Inc. GCI 6.98% in 2019.

Apollo has also formed partnerships with big corporations to help meet their needs, including leading a group of investors that earlier this year took a 49.9% interest in Anheuser-Busch InBev BUD 0.93% NV’s metal container plants in the U.S. for roughly $3 billion. The deal allowed AB InBev to satisfy its shareholders by paying down debt while retaining control of the plants. Apollo got a stake in assets with long-term, stable cash flows, something its insurance clients, and other institutional investors, crave.

Last September, Apollo led a group that took a 49% stake in a large real-estate portfolio from Abu Dhabi National Oil Co. The deal gave Apollo and its co-investors access to long-term rental-income streams and resulted in $2.7 billion in proceeds for ADNOC to invest in its core business and strategic-growth initiatives.

In an example of its reach, Apollo said at the time that the transaction required no borrowing and was placed entirely with insurance and pension-fund investors.

>>> US Gapping down

Gapping down
In reaction to earnings/guidance:

  • ZNTL -1.4%, TWNK -0.5%

Other news:

  • KLXE -9.4% (files for $75 mln common stock offering)
  • CGAU -9.2% (initiates arbitration proceeding against the Kyrgyz Republic)
  • NOVA -7% (proposes private offering of $500 million of convertible senior notes)
  • GTHX -1.8% (following study presentations)
  • ADS -1.5% (provided an update on its Card Services segment)
  • PCT -0.9% (announced a corporate update)

Analyst comments:

  • CWK -3.7% (downgraded to Underperform from Neutral at BofA Securities)
  • NYMT -1.6% (downgraded to Underperform from Neutral at BofA Securities)
  • ZION -0.9% (downgraded to Underperform from Neutral at Robert W. Baird)

>>> US Gapping up

Gapping up
In reaction to earnings/guidance:

  • PRPL +6.3%, HIMS +2.9%, CLVT +2%

Other news:

  • DISCA +15% (AT&T's WarnerMedia and Discovery (DISCA) creating standalone company by combining operations to form new global leader in entertainment); T +4.9%,
  • MNMD +8.7% (announces receipt of Type C Meeting Responses from FDA)
  • APLS +8.3% (receives FDA approval for EMPAVELI)
  • ACIU +4.7% (announces that the Company and its strategic partner Janssen Pharmaceuticals, have expanded the ongoing Phase 1b/2a clinical trial of the Companies' first-in-class anti-phosphorylated-Tau vaccine candidate ACI-35.030 for the treatment of Alzheimer's disease)
  • AKTS +4.1% (secures WiFi 6E reference design with third SoC maker)
  • LEV +4% (receives order for 260 buses from First Student)
  • SEEL +3.9% (presented study of SLS-002)
  • VIAC +2.9% (Soros Fund disclosed new position)
  • LABP +2.6% (Landos Biopharma and LianBio announced an exclusive collaboration and license agreement for the development and commercialization of omilancor and NX-13 in Greater China)
  • VIPS +2% (Soros Fund disclosed new position)
  • TME +1.8% (Soros Fund disclosed new position)
  • GRTX +1.7% (announces first patient dosed with GC4711 in phase 2b GRECO-2 trial in patients with pancreatic cancer)
  • INCY +1.4% (announces "positive" topline results from its pivotal Phase 3 TRuE-V clinical trial program evaluating the safety and efficacy of ruxolitinib cream, an investigational, nonsteroidal, anti-inflammatory, JAK inhibitor, topical therapy, in adolescent and adult patients with vitiligo)
  • KVHI +1.3% (issued a letter to shareholders in connection with the Company's upcoming annual meeting of shareholders to be held on June 17, 2021)
  • NVT +1.2% (announces $300 mln share repurchase program)
  • BYND +1.1% (expands partnership with Pizza Hut)
  • ONDS +1% (to acquire American Robotics for approximately $70.6 mln)
  • BIDU +0.9% (Soros Fund disclosed new position)

Analyst comments:

  • PLCE +3.2% (upgraded to Outperform from Neutral at Wedbush)
  • TCOM +2.8% (upgraded to Overweight from Equal-Weight at Morgan Stanley)
  • AMWL +2.7% (upgraded to Buy from Neutral at Guggenheim)
  • PAAS +1.9% (upgraded to Outperform from Sector Perform at National Bank Financial)
  • TXRH +1.7% (upgraded to Buy from Hold at Deutsche Bank)
  • CMI +1.5% (upgraded to Buy from Neutral at BofA Securities)

FT : EU signals US trade detente by shelving planned tariffs increase

EU signals US trade detente by shelving planned tariffs increase
Brussels says decision lets both sides ‘reboot the transatlantic relationship’

The EU has agreed to shelve plans to boost tariffs on a range of US products as the two sides seek a resolution to a longstanding stand-off over the steel and aluminium sectors. 

Brussels said in a joint statement with the Biden administration that the EU and US had agreed to avoid changes that “negatively affect bilateral trade” as they open discussions to address global excess capacity in the two sectors. 

The move means the EU will no longer go ahead with a planned increase in tariffs on a range of US products that was previously scheduled for the start of next month. The two sides have now given themselves until the end of the year to engage in discussions about the oversupply of steel resulting from production in countries including China.

The EU’s move relates to a dispute running since 2018 when former president Donald Trump imposed duties on aluminium and steel from Europe and other economies, saying the measures were needed for national security reasons.

The EU retaliated with its own tariffs on a range of products, which it was preparing to boost on June 1. In its first round the EU hit high-profile US products including bourbon, clothing and motorcycles. 

Monday’s move comes ahead of a planned summit between the EU and US President Joe Biden next month which will aim to improve transatlantic relations following the tumult of the Trump years. Valdis Dombrovskis, executive vice-president at the European Commission, said the decision to suspend the automatic increase of the retaliatory tariffs showed the EU was taking steps to “reboot the transatlantic relationship”. 

He announced the truce on Monday in a joint statement with US Trade Representative Katherine Tai and Secretary of Commerce Gina Raimondo. 

The two sides said they had agreed to discuss “steel and aluminium excess capacity and the deployment of effective solutions, including appropriate trade measures, to preserve our critical industries”, the statement said. 

“To ensure the most constructive environment for these joint efforts, they agreed to avoid changes on these issues that negatively affect bilateral trade.”

Dombrovskis added: “By suspending our measures, we are creating the space to resolve these issues before the end of the year. 

“The EU is not a national security threat to the US. But the distortions created by global excess capacity — driven largely by third parties — pose a serious threat to the market-oriented EU and US steel and aluminium industries and the workers in those industries.”

Earlier this month Dombrovskis told the Financial Times he was also increasingly hopeful of securing a deal with the Biden administration to end a 16-year feud over subsidies for Airbus and Boeing.

The EU and US were engaging “very intensively” on resolving their trade disputes, he said, as he hailed a “very welcome shift” since Biden’s administration took office in January.

WWD : China, U.S. Rebound, Online Driving Luxury Goods Market Recovery

China, U.S. Rebound, Online Driving Luxury Goods Market Recovery
According to the latest Bain & Company study with Fondazione Altagamma, the outlook for 2021 remains uncertain, based on two possible scenarios playing out in 2021, which would drive sales to amount to between 250 and 295 billion euros.

MILAN – The appetite of China and Chinese nationals for luxury, which remains “insatiable,” together with a “robust” online business and the “unexpected” rebound of the U.S. market, are driving a recovery in the luxury goods market, according to the Bain & Company Luxury Study 2021 Spring Update released today in collaboration with Fondazione Altagamma.

The luxury market has started to recover from the impact of the COVID-19 pandemic last year, returning to growth in the first quarter of 2021, reporting a flat to 1 percent gain in revenues compared with 2019, viewed as the last comparable year, stated the study. At constant exchange rates, sales grew 2 to 3 percent.

However, the outlook for 2021 remains uncertain, based on two possible scenarios playing out in 2021, which would drive sales to amount to between 250 billion and 295 billion euros.

The first scenario, which has a 30 percent probability according to the study, sees the recovery path to continue throughout 2021, winning back the 2019 market level as early as this year, forecasting a flat to 5 percent gain in 2021 compared with 2019. This would translate into sales of between 280 billion and 295 billion euros in 2021.

In the more probable scenario, despite the strong momentum of the first quarter, full-year growth is seen stifled by slower domestic luxury purchases and limited intra-regional tourism. In this case, the full recovery to 2019 levels and sales of between 265 billion and 295 billion euros are expected only in 2022. In 2021, sales are forecast to reach between 250 billion and 265 billion euros, down 5 to 10 percent compared with 2019.

“It’s clear that consumers still want to buy luxury goods, and this, along with the brands’ ability to adapt and innovate, is driving a return to growth in the market,” said Claudia D’Arpizio, a Bain & Company partner and lead author of the study.

“Brands have been forced to rip up the playbook and innovate rapidly in light of the crisis, as the pandemic drove luxury brands into the age of digital at an unforeseen pace over the past 15 months,” concurred Bain & Company partner and report co-author Federica Levato in an interview with WWD.

Bain estimated that more than 85 percent of luxury purchases were digitally influenced in 2021. Luxury customers are more knowledgeable in the use of digital tools, which has caused a spike in transactions but also in the conversation with the brands, said Levato, who underscored that “the human touch in luxury remains needed and, whether in store or remotely, these interactions will play a critical part in maintaining customer loyalty.”

A re-balance with physical will continue, but the mindset has evolved, she explained. “Digital tools are the new normal but only if enabled by the human touch and interaction. Winning brands will need to stay closely in touch with the key trends shaping the new normal lifestyle – all while remaining differentiated and creating a narrative that is true to their own culture.”

Levato also pointed to what Bain defined as the “Roaring 20s” in the U.S. – an unforeseen rebound in that market due to a renewed consumer confidence, a dynamic stock market, a multi-trillion-dollar investment plan to upgrade infrastructure and increase employment, and a rapid vaccine rollout. Bain pointed to the rise of new shopping hubs as people move to suburban areas, and seek more diverse and inclusive cultural exchanges, in tune with the next generation’s mindset.

“These shifts are impacting the channel mix, with a more diverse and active customer base with a clear voice and point of view as department stores are rethinking their formula,” said Levato.

Europe is still lagging behind, dented by a slower vaccination campaign and the lack of international tourism.

China will lead growth in the next decade through key luxury hubs in cities as Shanghai and Beijing, but also tier-2 and tier-3 cities and local resort venues such as the island of Hainan. Bain also underscored the arrival on the scene of the Alpha female – not only in China – who is independent, has an increased purchasing power and a strong influence on other women, Millennials and Gen Z.

Shoes, bags, jewelry and accessories led the growth in 2020, as apparel shifted more into leisure wear, and Bain expects “dynamism in apparel as people want to dress up again. Levato cautioned that it was too early to predict the performance of this category.

She did underscore, however, that “the hero product is overtaking the brand, you can have the best brand ever but you are missing out if you don’t have a strong hero product. Customers are more driven to a single product. A single model of a sneaker, for example, can be stronger than the brand itself.”

Brands are also widening their price ranges with more entry-level products but also more high-end items and new categories to reach more customers. “Our lifestyles have changed and pet accessories, for example, have become a strong category because people have been buying more pets [during the pandemic],” said Levato.

Brand ethics rather than aesthetics have also emerged as key for customers. “Sustainability, affiliation and belonging are pillars now more than before the pandemic,” continued Levato. “Gen Z is the most severe in how to evaluate a brand and much more aware of how a company behaves toward equality and environment, so this is a call to action to companies. Customers are watching you and comparing you with other industries, which have been working on these pillars for more years.”

This also leads to efforts to curb waste and Bain estimated that the second-hand market for luxury was worth 28 billion euros in 2020, up from 26 billion euros in 2019. The market for pre-worn luxury items comprises not only entry-level younger consumers who are mainly buying aspirational categories and products, but also top spenders and collectors who are searching for high-end or collectible products.

>>> US Early premarket gappers

Early premarket gappers

  • Gapping up:
    • APLS +10%, LEV +6%, AMRN +5%, VIAC +4.8%, TME +3.7%, NVT +3.2%, VIPS +2.6%, SCVX +1.8%, BIDU +1.1%, QDEL +0.7%
  • Gapping down:
    • CGAU -12.6%, KLXE -9.4%, SEEL -4.8%, TMQ -0.7%

Barrons : Bill Ackman’s SPAC Is Preparing a Deal. Investors Can Play It Cheaply

Bill Ackman’s SPAC Is Preparing a Deal. Investors Can Play It Cheaply Through His Closed-End Fund.

Bill Ackman made news last week with the disclosure that his investment firm had bought a roughly 6% stake in Domino’s Pizza and that he was “cautiously optimistic” that his special-purpose acquisition company would reach a deal to merge with what he called “an iconic, phenomenal, great business.”

Investors can play alongside Ackman through his chief investment vehicle, Pershing Square Holdings (ticker: PSH. Netherlands), an overseas closed-end fund that continues to trade at a big discount to its asset value despite solid gains in 2021 and huge returns in 2019 and 2020.

A deal for Ackman’s SPAC could boost investor interest in the fund, which trades around $36 a share, or a 26% discount to its most recent weekly net asset value of $48.78 a share.

The fund has traded at a persistently wide discount to NAV in recent years even as a revived Ackman has produced outsize returns. The fund gained 70% last year after a 58% return in 2019. The fund’s net asset value was up 7.5% year-to-date through May 11.

The fund also trades on the “pink sheets” (PSHZF) and on the London Stock Exchange, where it was added to the FTSE 100 index last year. It accounts for about 90% of the funds run by Ackman’s Pershing Square Investment Management. Barron’s has written favorably on the fund, including an article in late 2020.

The fund, with net assets of nearly $10 billion, has a concentrated equity investment portfolio that includes Lowe’s (LOW), Hilton Worldwide Holdings (HLT), Chipotle Mexican Grill (CMG), Restaurant Brands International (QSR), Howard Hughes (HHC), and Domino’s (DPZ).

The fund also offers a play on Ackman’s SPAC, Pershing Square Tontine Holdings (PSTH), because it has the opportunity to invest roughly $1 billion or more in any deal reached by the SPAC. It’s also entitled to potentially valuable sponsor warrants on the newly merged company’s shares if Ackman finds a target.

WSJ : Companies Weigh Price Increases, Other Options as Costs Rise

Companies Weigh Price Increases, Other Options as Costs Rise
CFOs say raw materials, energy and transportation have become more expensive

Finance chiefs across industries are facing a classic problem that comes with economic growth: rising costs of raw materials, energy and transportation. Company executives now have to decide how to offset these increases to protect margins and whether or not to pass the extra costs on to customers.

Purchase prices for a range of products—from steel and copper to lumber and plastics—have gone up in recent weeks on the back of a resurgent U.S. economy. Bottlenecks around global production, supply chains and logistics are exacerbating the issue, resulting in shortages of key components such as computer chips.

Chief financial officers are facing a delicate balance as they weigh potential consumer-price increases against cost cuts and technology investments to respond to these inflationary pressures. Their course of action is dictated, among other things, by their industry, and by how the coronavirus pandemic has affected their businesses.

Inflation is a known problem, said Kofi Bruce, the CFO of cereal maker General Mills Inc. “There is an action plan for it,” Mr. Bruce said.

The Minneapolis-based food manufacturer has raised prices of some products already, and expects price increases for more of its food items over the next couple of months, according to a spokeswoman.

“It’s not just us feeling the effects of rising inflation,” Mr. Bruce said. “We are all likely looking at the same headwinds…and are planning to take action,” he said, referring to other packaged food companies.

While it is “somewhat easy” for consumer products companies, home builders and pharmaceutical firms to pass on higher costs, retailers and restaurants are facing “some difficulty” doing so, analysts at ratings firm S&P Global Inc. said in a recent report. Airlines may hesitate to raise ticket prices too quickly, despite higher fuel costs, as international travel remains depressed, the analysts said.

“Companies are…tracking what competitors are doing,” said Tim Ryan, U.S. chairman at professional services firm PricewaterhouseCoopers LLP, referring to price increases. “In certain markets [and] certain segments, they’re testing elasticity and what they’re able to do.”

Companies are likely to report lower profits despite these pricing actions and cost cuts in the coming quarters. Many businesses have regular annual cost-reduction programs in place, but inflation is outpacing the gains made through such efforts. Some businesses are renegotiating prices with their suppliers, investing in automation or delaying new hires to keep costs down.

Clorox Co. , the maker of antiseptic wipes and other household products, in July plans to increase some prices for its Glad brand, which makes trash bags and food wrappers. The company incurred additional expenses during the pandemic as it rushed to boost production and is now faced with higher materials and transportation costs, Chief Financial Officer Kevin Jacobsen said.

Clorox also has other levers it can pull, including reviewing what it pays retailers to promote its products in stores, improving its processes and investing in product innovation to increase revenue, Mr. Jacobsen said.

Clorox’s margin for earnings before interest and tax usually goes up by about 1.75% a year through its standard cost-savings programs, according to the company’s CFO. Clorox has reduced over $100 million in annual costs going back to its 2008 fiscal year.

“In a normal year, that would be enough to offset moderate cost inflation,” Mr. Jacobsen said.

This year however, Clorox expects to announce in August if it needs to take further steps to mitigate cost pressures, which could include further pricing actions. The company, after revenue increases of more than 20% last summer, reported flat sales, lower margins and smaller profits in the latest quarter compared with the same period last year.

Whirlpool Corp. in recent months has faced higher costs for steel, computer chips and plastics, finance chief Jim Peters said. The February winter storm in Texas affected chemical refineries in the state for weeks, resulting in shortages of resins that are used to make plastic.

The maker of KitchenAid and other household electronics recently raised prices between 5% and 12%, depending on the country. “That covers the raw material cost inflation,” Mr. Peters said, referring to the price reset.

The company also is battling higher operating expenses on other fronts, including from having to switch over its production lines more frequently to account for shortages of key components. “You don’t want to flex them as often as we do,” Mr. Peters said, referring to Whirlpool’s factories and the fact that they have to adjust more quickly. “This isn’t ideal.”

Whirlpool last year reduced costs by furloughing and laying off workers and offering voluntary retirement in response to the pandemic, similar to many other businesses.

Even if companies raise prices that customers pay now, it takes time to recoup the increase in costs. Emerson Electric Co. , which sells tools and home products, as well as climate technology and automation services, is facing a $75 million headwind from inflation this year, CFO Frank Dellaquila said. He expects to recover a portion of the amount through cost pass-through arrangements with the company’s customers.

“We would see the cost impact this year, but then over the next…two, three, four quarters, we’d start to get relief,” Mr. Dellaquila said.

Emerson is also looking to reduce costs and increase productivity to mitigate the impact of higher raw material prices, he said.