WSJ : TravelCenters of America to Add Hydrogen Fueling Sites for Big Rigs

TravelCenters of America to Add Hydrogen Fueling Sites for Big Rigs
Truck-stop operator working with electric-truck maker Nikola to start rollout in California; forms new unit to deliver alternative energy across its U.S. network

Truck-stop operator TravelCenters of America Inc. is stepping up its alternative-energy game as tougher regulations push the commercial transport sector to look beyond diesel fuel.

TravelCenters, the largest publicly traded U.S. truck-stop company, said Thursday it is forming a new business unit called eTA that aims to eventually supply drivers with alternative energy across much of its nationwide network of 270-plus locations.

The rollout is starting in Southern California, where TravelCenters will work with electric-truck maker Nikola Corp. to install hydrogen fueling sites for heavy-duty trucks at two locations. The company also plans to install FreeWire Technologies Inc. electric-vehicle charging stations for automobiles at some facilities in the state along Interstate Highway 5.

TravelCenters’ alternative-fuels push comes as California regulators are requiring truck manufacturers to sell at least some zero-emissions models by 2024, and as the Biden administration is proposing a $174 billion plan to boost the electric-vehicle industry.

“We were already working on some of this,” TravelCenters Chief Executive Officer Jon Pertchik said. “We’re just trying to pay attention to demand.”

Mapping a plan for commercial transport is trickier than for passenger vehicles because auto makers are already investing heavily in electric-vehicle technology while the alternative-energy side of the trucking business is less developed.

Mr. Pertchik said he expects hydrogen fuel cells to emerge as a leading alternative energy source for trucking fleets over battery-electric technology, although natural gas is also a contender. Battery-powered vehicles can drive only limited distances before stopping to recharge, a challenge for long-haul transport, and heavy lithium-ion batteries limit the amount of cargo that can be carried.

The issue is “storage limitations on battery and weight,” Mr. Pertchik said.

The two hydrogen fueling stations will be built at existing TravelCenters locations and are targeted to be commercially operational in 2023, Nikola said.

TravelCenters is also leading a test project funded in large part through a $4 million grant from the California Energy Commission to develop charging stations and on-site energy storage for electrified medium and heavy-duty trucks.

The truck-stop operator will closely track plans among its big fleet customers as the market for alternative-fuel commercial trucks develops.

“To me adaptability is important,” Mr. Pertchik said. “We need to make some bets, we can’t sit around on the periphery.”

FT : Jack Ma/Ant Group: a disrupter who is no longer good for business

Jack Ma/Ant Group: a disrupter who is no longer good for business
The billionaire and his businesses may have been too freewheeling for Beijing’s tastes

In China, disruption does not have positive connotations as it does in Silicon Valley. The woes of Jack Ma, founder of Alibaba and financial services affiliate Ant Group, illustrate that. Ma has already lost the title of China’s richest man. He could be about to lose much more.

Ant would be grievously damaged if it lost control over valuable customer data. The group’s ability to collect and analyse massive amounts of credit information has given a competitive edge to businesses ranging from insurance to consumer lending.

The People’s Bank of China wants Ant to pass this data to a state-controlled credit scoring company, run by former central bank executives. The requirement would be the latest incursion against a group whose much-ballyhooed flotation was stalled by the state last November.

The pressure was registered this week by Ant’s asset management division. Funds in Ant’s flagship product have shrunk 18 per cent, down to a more than four-year low in the first quarter. A Beijing crackdown forced Ant to encourage users to switch to other providers. A minimum deposit of just Rmb1 ($0.15) and the freedom to withdraw cash anytime had made the money market fund Yu’E Bao the world’s largest at one point.

Ant’s market power is far from being Beijing’s only concern. Ma’s control over the group is another.

That may not seem a problem, given he has just a 10 per cent stake. But Ma controls Ant through two investment partnerships — Hangzhou Junhan and Hangzhou Junao. These are Ant’s largest shareholders. Their combined shareholding exceeds 50 per cent. Ma also has the power to veto important decisions directly.

Beijing’s unrelenting displeasure with the man behind Ant justifies a steep haircut to the valuation of $316bn mooted before the listing was suspended. Using a multiple of 15 times forward earnings — closer to a traditional regulated lender than a tech group — points to a worth of about $160bn.

In the past, shares in Alibaba fell when Ma did not appear to be present to guide the business. Now the reverse applies: the best outcome for the share price would be for the entrepreneur to further distance himself from the companies he set up. The signal that would send about the dwindling autonomy of the Chinese private sector would be a terrible one.

>>> US After Hours Summary: INTC -2.8%, STX -2.5% fall on earnings; MAT +7.5%, S

After Hours Summary: INTC -2.8%, STX -2.5% fall on earnings; MAT +7.5%, SKX +7.3%, SAM +6.8%, SNAP +4.6% up big on earnings; OLED +11.1% extends long-term supply deal;

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: MAT +7.5%, SKX +7.3%, SAM +6.8%, SNAP +4.6%, BJRI +4.1%, VICR +3.3%, WWE +2.9%, CE +2.6%, KN +1.7%, VRSN +1.2%, USX +1.2%, HTH +1%, OZK +0.3%, CSL +0.2%, EIG +0.2%, FE +0.1%

Companies trading higher in after hours in reaction to news: EBSB +15% (INDB to acquire EBSB), SLAB +12.4% (SWKS to acquire the Infrastructure & Automotive business of SLAB for $2.75 bln), OLED +11.1% (extends long-term OLED agreements with Visionox), DMTK +8.8% (launches DermTech PLAplus for early detection of melanoma), SWKS +4.7% (SWKS to acquire the Infrastructure & Automotive business of SLAB for $2.75 bln), SD +4.6% (acquires overriding royalty interest assets of SandRidge Mississippian Trust for $4.85 mln), ANAB +2.1% (FDA approves GSK's Biologics License Application for JEMPERLI), XEL +1.2% (files mixed securities shelf offering), GSK +0.8% (FDA approves GSK's Biologics License Application for JEMPERLI), AMD +0.7% (in sympathy with INTC earnings), DAL +0.3% (to exercise purchase rights for 25 A321neo aircraft), OLO +0.2% (OLO and DASH agree to terms on a new multi-year agreement, also resolve contract dispute), TSN +0.1% (to expand production capacity at Arkansas facility), WDC +0.1% (in sympathy with STX earnings)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: QDEL -15% (issues downside Q1 rev guidance; also completes distribution agreement with MCK), INTC -2.8%, STX -2.5%, CAMP -1.7%, FFBC -0.6%

Companies trading lower in after hours in reaction to news: EDAP -12.3% (ADS offering), THC -1.8% (Glenview Capital lowers stake to 9.99% from ~12.9%), VRT -1.1% (to restate 2020 financials as a result of recent SEC guidance for all SPAC-related cos on accoutning of warrants), ADVM -0.4% (files new investor presentation in connection with 2021 Annual Meeting), CCS -0.2% (plans to build over 400 homes in Houston area), MOH -0.1% (MOH to acquire CI's Texas Medicaid and Medicare-Medicaid Plan contracts)

>>> US Close Dow -0.94% S&P -0.92% Nasdaq -0.94% Russell -0.31%

Closing Stock Market Summary

The S&P 500 declined 0.9% on Thursday, ostensibly due to reports that President Biden will propose increasing the capital gains tax rate for wealthy Americans. The Nasdaq Composite (-0.9%) and Dow Jones Industrial Average (-0.9%) declined in-line with the benchmark index. The Russell 2000 declined just 0.3%.

Specifically, the S&P 500 went from a 0.2% gain to a 1.2% decline in about an hour after Bloomberg reported that the tax plan would boost the capital gains rate to 39.6% from 20.0% for those earning $1 million or more. The rate would be bumped to 43.4% when including the 3.8% tax on investment income that funds the Affordable Care Act. It would be even higher when including state taxes. 

It was interesting to see a visceral reaction in the market considering The New York Times published a similar report earlier in the day and that the president campaigned on raising taxes on the wealthy. The one caveat, to be fair, was that the Bloomberg report indicated the ACA-tax would remain in place while the NYT report did not make that clear. 

Nevertheless, the tax news was viewed as a convenient excuse to take profits from a market that had been resilient to selling pressure. Every sector in the S&P 500 closed in negative territory, led lower by the materials (-1.8%), energy (-1.4%), information technology (-1.2%), and consumer discretionary (-1.2%) sectors with losses over 1.0%. 

Earnings reports continued to come in mostly better than expected, but many stocks had disappointing reactions, including Lam Research (LRCX 614.54, -26.71, -4.2%) and Dow Inc. (DOW 60.93, -3.89, -6.0%). Union Pacific (UNP 217.98, -5.45, -2.4%) had an appropriate reaction after missing top and bottom-line estimates. 

AT&T (T 31.36, +1.25, +4.2%) and Equifax (EFX 221.41, +28.78, +14.9%), on the other hand, were some of the more notable earnings winners, with EFX rising 15%. 

In other developments, weekly initial claims fell to a new post-pandemic low at 547,000 (Briefing.com consensus 600,000), existing home sales decreased 3.7% m/m in March to a seasonally adjusted annual rate of 6.01 million (Briefing.com consensus 6.15 million) amid historically low supply, and the ECB kept interest rates/asset purchases unchanged. 

U.S. Treasuries finished little changed in a relatively muted session. The 2-yr yield was unchanged at 0.14%, and the 10-yr yield decreased one basis point to 1.55%. The U.S. Dollar Index increased 0.1% to 91.26. WTI crude futures increased 1.2%, or $0.10, to $61.45/bbl.

Reviewing Thursday's economic data:

  • Initial jobless claims for the week ending April 17 decreased by 39,000 to 547,000 (consensus 600,000). That is the lowest initial claims have been since the week of March 14, 2020. Continuing claims for the week ending April 10 decreased by 34,000 to 3.674 million. That is the lowest continuing claims have been since the week of March 21, 2020.
    • The key takeaway from the report is that the absolute level of claims is still high, yet there are clear signs of relative improvement that continue to support favorable recovery-minded views for the labor market and the economy.
  • Existing home sales decreased 3.7% m/m in March to a seasonally adjusted annual rate of 6.01 million (consensus 6.15 million) from an upwardly revised 6.24 million (from 6.22 million) in February. Total sales in March were up 12.3% from a year ago.
    • The key takeaway from the report is the same as last month: the supply of existing homes for sale remains near all-time low levels. That is driving up the pace of price increases well beyond the pace of income gains, which is going to create affordability pressures for prospective buyers along with rising mortgage rates.
  • The Conference Board's Leading Economic Index (LEI) increased 1.3% m/m in March (consensus 0.6%) following a downwardly revised 0.1% decline (from +0.2%) in February. That revision marked the end of a string of nine consecutive months of increases for the LEI.
    • The key takeaway from the report is the recognition that all ten components made positive contributions, which is a testament to the recovery/reopening momentum that is being aided by increasing vaccine adoption rates.

Looking ahead, investors will receive New Home Sales for March and the preliminary IHS Markit Manufacturing and Services PMIs for April on Friday.

  • Russell 2000 +13.1% YTD
  • Dow Jones Industrial Average +10.5% YTD
  • S&P 500 +10.1% YTD
  • Nasdaq Composite +7.2% YTD

WSJ : Nestlé Is Both Teacher and Threat to Danone

Nestlé Is Both Teacher and Threat to Danone
Two of Europe’s biggest food companies had very different first-quarter results despite common problems

Nestlé NSRGY 0.91% could be a role model for troubled peer Danone DANOY -0.98% as it deals with an activist campaign. Unfortunately for the latter, a resurgent Nestlé also poses the biggest competitive threat it has in years.

On Thursday, the Swiss maker of Nespresso coffee and Purina dog food said comparable sales increased 7.7% in the first three months of the year, stripping out the impact of portfolio and currency changes. This was double what analysts expected and the company’s best quarter in almost a decade. Nestlé’s pet-food brands, confectionery, dairy products and powdered drinks all sold well.

Things were less rosy at Paris-based Danone, which reported a 3.3% drop in first-quarter sales earlier this week. The Dannon yoghurt maker is looking for a new boss after an activist campaign by Artisan Partners and Bluebell Capital Partners ousted the company’s chief executive last month. The new hire will be under pressure to sell weak brands, speed up innovation and raise profit margins that are low by industry standards.

Mimicking Nestlé is a good place to start. Almost four years ago, the Swiss food giant faced an activist campaign when Daniel Loeb’s Third Point took a stake in the business. Since then, it has overhauled its portfolio of brands with 75 acquisitions and disposals and cut the time needed to get a new product onto supermarket shelves from 18 months to 12 or less. The business invested in high-growth categories like pet food and coffee that have boomed during the pandemic. Since Third Point’s campaign kicked off, Nestlé has delivered total annual shareholder returns of 12% in dollar terms, FactSet data shows.


The downside for Danone is that it also has to compete with Nestlé’s slicker business. In tough product categories that both companies are exposed to, Nestlé appears to be recovering more quickly from the pandemic. Sales in its waters business, hit by restaurant and hotel closures, fell 5.6% in the quarter, compared with a 12% slump for Danone’s. Artisan said the French company should ditch some of its mass-market water brands that face competition from private label products—a maneuver Nestlé completed last month.

In baby food, a category that the two companies dominate, Nestlé’s sales fell 4.4% in the first quarter even as they returned to growth in the crucial Chinese market. Danone’s “specialized nutrition” division fell 7.7% and its China baby-food business is still negative. Birthrates have fallen during the pandemic. While this may prove temporary, the business of feeding fewer babies will be intensely competitive for a few years. In other potentially bad news for Danone, Nestlé is pushing into plant-based foods, traditionally the former company’s stronghold.

Danone’s shares trade at a 30% discount to its Swiss rival’s as a multiple of forward earnings. Nestlé provides the best road map to closing that gap, as well as the biggest obstacle.

FT : Olaf Scholz defends German government’s record on Wirecard

Olaf Scholz defends German government’s record on Wirecard
Berlin bore no responsibility for worst corporate fraud in country’s postwar history, says finance minister

Olaf Scholz, Germany’s finance minister, said the government bore no responsibility for the Wirecard scandal, in testimony that marked the high point of a six-month parliamentary inquiry into the worst case of corporate fraud in the country’s postwar history.

He also dismissed the idea that his ministry had tried to protect Wirecard as an “absurd fairytale”.

Scholz is the most senior politician to be questioned by the Wirecard committee of inquiry so far — a probe that has exposed profound weaknesses in Germany’s system of financial oversight.

A key focus of the inquiry is why authorities failed to intervene to stop the fraud at Wirecard, despite a profusion of warning signs. Instead, the German financial watchdog BaFin banned short selling in Wirecard shares and filed criminal complaints against the FT reporters who first reported irregularities at the company. 

Opposition MPs say the responsibility stops with Scholz, who as finance minister oversees BaFin, as well the Financial Intelligence Unit, Germany’s anti-money laundering agency — another body faulted for failing to adequately deal with suspicious activity at Wirecard.

But Scholz, who is the left-of-centre Social Democrats’ candidate for chancellor in September’s Bundestag elections, dismissed the suggestion that he or his ministry were to blame. “The government does not bear responsibility for this large-scale fraud,” he said in an opening statement to MPs. 

Instead he pointed the finger at Wirecard’s auditor, EY, which gave the disgraced tech group unqualified audits for more than a decade and failed to pick up on flaws in its accounting practices.

Wirecard announced last June that €1.9bn was missing from its accounts and soon afterwards collapsed into insolvency. Prosecutors in Munich accuse its former chief executive, Markus Braun, of having run a criminal racket that conducted “fraud in the billions”. Braun, who has been in police custody since last summer, denies wrongdoing.

Scholz defended BaFin’s actions in the course of the Wirecard affair, saying it had acted correctly in early 2019 when it asked Germany’s accounting watchdog FREP to investigate the payment company’s accounts. “My impression was all that was necessary had been started,” he said.

He also stressed that he had played no role in BaFin’s short selling ban, saying the regulator was independent. But he said that there were now “significant doubts” as to whether the ban had been a good idea.

Scholz admitted weaknesses in Germany’s system of regulation, saying: “With the knowledge and insights we have today, it’s clear that the state supervisory and regulatory structures are not adequately equipped for such an attack.”

But he said the authorities had moved quickly to rectify the situation, driving through a sweeping reform of BaFin that would give it greater powers. Scholz recently poached the head of Swiss regulator Finma, Mark Branson, to head the beefed-up watchdog.

“My goal is a financial watchdog that can play globally in the premier league,” he said. “The most important task is to restore confidence in Germany as a financial centre.”

MPs appeared unconvinced by Scholz’s arguments. Matthias Hauer of the ruling CDU asked him whether he bore “personal responsibility” for the fact that the scandal did not come to light earlier. Scholz answered: “No.” Questioned about the role of his colleagues at the finance ministry, he said: “They are very good people who have done sterling work.”

Scholz also faced questions from MPs over three emails about Wirecard that he sent from his private account, having previously asserted that all communication about the company had been conducted from his work account.

The minister said he used his private email to forward newspaper articles to others because it was “easier”.

Hans Michelbach, an MP for the centre-right CSU, described Scholz’s failure to provide all private email correspondence regarding Wirecard to the inquiry as an “extremely serious matter”.

Reuters - French defence group Thales to sell signalling business sources

EXCLUSIVE-French defence group Thales to sell signalling business -sources - Reuters News
22-Apr-2021 15:12:31

By Arno Schuetze and Gwénaëlle Barzic

PARIS, April 22 (Reuters) - Thales TCFP.PA is putting its rail signalling business up for sale in a potential deal worth 1.5 billion euros or more ($1.8 billion) as the French defence and aerospace group seeks to streamline operations, people close to the matter said.

Thales, partially owned by the French state, makes equipment ranging from anti-jamming devices for fighter jets to airliner navigation beacons, and investors have often questioned the diversity of its portfolio of assets.

Proceeds from the divestiture would help bolster Thales' finances after the COVID-19 crisis dented sales and profits last year. (Full Story)

Thales is working with Lazard LAZ.N on the divestiture and is expected to shortly send out information packages to potential buyers including Alstom ALSO.PA, Hitachi Rail 6501.T, Stadler Rail SRAIL.S, Spain's CAF CAF.MC and private equity groups, they said.

Thales and Lazard declined to comment.

Siemens SIEGn.DE is unlikely to bid for the unit due to likely antitrust issues it would face if it tried to buy the unit, the people said. Alstom, which earlier this year completed the acquisition of Bombardier's BBDb.TO rail business, may face similar problems, they added.

The signalling business sits in Thales' transport division, which also supplies fare collection systems and cybersecurity solutions for railway infrastructure.

The transport unit last year saw order intake shrink by 6% to 1.6 billion euros as customers delayed rail projects on weak demand during the pandemic. Its EBIT margin improved to 5.3% on cost cuts but still fell short of an 8% target.

JP Morgan analysts said last month that the unit seemed on track. "The H2 2020 margin of 9.1% was encouraging and management seem confident that Transport can achieve high-single digit margins over a full 12 month period, something that hasn't happened since 2013", the bank said in a note to clients.

The unit is small compared to competitors and its margin is lower than that of other Thales businesses and rivals.

While Thales has finished putting together a so-called vendor due diligence on its signalling business, prospective buyers will only be able to make their own assessments on the unit at a later stage, the sources said.

Valuation estimates range from 1.5-2.5 billion euros due to the unclear stage of its restructuring and future growth prospects.

FT : ‘Quant winter’ thaw ends long spell of drab returns for funds

‘Quant winter’ thaw ends long spell of drab returns for funds
AQR among the big names on the rebound as new phase of pandemic shakes up asset markets

Computer-driven investment funds are rebounding from a painful stretch, with big firms such as Clifford Asness’s AQR posting dramatic rebounds after several years of struggles, cutbacks and multibillion-dollar redemptions.

Few firms were hit as hard as AQR in the “quant winter” that chilled the performance of quantitative investment strategies in recent years, with the firm shedding $86bn in assets from its 2018 peak.

But AQR’s $1.4bn Absolute Return fund — which combines a lot of its strategies in one wrapper — climbed 21.6 per cent in the first quarter, and is now up by a third since the end of September. About 65 per cent of quant mutual funds have surpassed their benchmarks in 2021, according to Nomura. If sustained, that would be the second-best beat rate in at least a decade.

Industry insiders are cautious about declaring a definitive “quant spring”, but the rebound suggests that the long winter might be fading, and that many flagship strategies are regaining some of their mojo. For Asness — who turned to violent video game Doom Eternal to relieve stress last year — the signs are heartening.

“While 2018 to 2020 was actually the toughest period I’ve seen yet, the first three months of 2021 have made for one of the strongest starts to a year we have had in our history,” Asness said. “I wouldn’t be surprised if this recovery was the biggest and the longest.”


Quant investing is a broad field. Some engage in highly complex and ultrafast trading based on faint statistical patterns. Others, including AQR, seek to exploit long-term trends known as “factors”, such as the tendency of smaller stocks to do better than bigger peers over time.

Just a few years ago, AQR was riding high on the wave of interest in quant investing, systematically mining these factors to become one of the biggest hedge fund groups in the world. It managed as much as $226bn by mid-2018. Many of its strategies then started spluttering, and AQR’s assets slumped to about $140bn today.

AQR is also going through an internal shake-up. Ronen Israel, one of its top executives, is now leaving to help start a biotechnology company after 22 years at the firm, while Lars Nielsen, his fellow co-head of portfolio management, is shifting to a more client-focused role, according to people familiar with the matter. That means all of AQR’s investment teams will now report directly to Asness and fellow AQR founder John Liew.

Industry insiders offer myriad explanations for why many quant strategies have fizzled in recent years. It has been a particularly nightmarish stretch for the “value” factor, which takes advantage of how cheap securities in the long run tend to beat more loftily valued, glamorous counterparts. Value has done so badly that the strength of other factors has been insufficient to buoy overall performance for quants that exploit multiple factors simultaneously.

The pain was particularly evident last year. In the annual Barclays survey of hedge fund investors, 70 per cent said they had pulled out some or all of their money from “risk premia” funds — as factor strategies are also often called — and not one out of 240 respondents managing a total of $5tn said they planned to increase their allocations. 


However one of the biggest drivers of the tentative quant spring is the renaissance enjoyed by the value factor since last November, and AQR’s brighter fortunes now are echoed among other factor-oriented hedge funds.

Systematica’s Risk Premia fund dropped 13 per cent drop last year but has rebounded 5.5 per cent this year, while Two Sigma’s Risk Premia Strategy lost more than 7 per cent in 2020 but is up slightly this year, according to people familiar with the returns. JPMorgan’s Diversified Risk fund lost around 23 per cent last year, but is up around 4.7 per cent this year. The companies declined to comment.

The question is how durable the revival is. Anthony Morris, head of quantitative strategies at Nomura, argues the performance of many major factors is linked to movements in bond yields, and that the industry therefore has to evolve.

“The whole industry is deceiving itself and others that these are independent, systematic factors,” he said. “We need to move on. Using new data sources is a way to rescue the quant world from the shackles of fixed income, whether those shackles are recognised or not.”

Not all quant funds are enjoying strong recovery either. AQR’s Global Risk Premium hedge fund, which was up just 1 per cent last year, is down almost 3 per cent this year, according to performance numbers seen by the Financial Times. Moreover, a rebound “is cold comfort for investors who suffered through years of underperformance [and] then redeemed”, said Andrew Beer, managing member at Dynamic Beta Investments.

Jaime Lee, head of quant equity investing at PanAgora, agrees that the industry will in the future have to lean on the more sophisticated signals they are now unearthing with the help of new data sets and artificial intelligence, rather than the basic factors used for the past few decades. 

“The quant spring is coming because of the favourable market environment. However the outperformance that we’re seeing from new-generation factors is large,” she said. “I think that’s the future of quant.”