FT : Saudi Arabia : $3.5bn fraud

Saudi Arabia : $3.5bn fraud
case set to define crown prince’s anti-graft campaign
Is the legal action against Saad al-Jabri, a former top security official, evidence of the kingdom stamping out corruption or silencing its critics?

Once one of the most powerful security officials in Saudi Arabia, Saad al-Jabri was feted by western powers. He was integral to multibillion-dollar counter-terrorism efforts and advised senior members of the Saudi royal family before falling foul of Crown Prince Mohammed bin Salman’s rise to power and going into exile in 2017. He would later accuse the prince of sending a hit squad to Canada to kill him, an allegation with echoes of the 2018 murder of the journalist Jamal Khashoggi in Istanbul.

But in the latest twist of a bitter dispute that goes to the heart of Saudi power, al-Jabri is the one who now stands accused. In January, 10 companies owned by the Public Investment Fund, the sovereign wealth fund that Prince Mohammed chairs, filed a civil lawsuit in Canada accusing the former interior ministry official of masterminding a $3.5bn fraud using front companies that were established more than a decade ago as cover for Saudi Arabia’s covert counter-terrorism operations. The Ontario court issued a worldwide freeze on al-Jabri’s assets. In March, it rejected an attempt to have the order lifted.

Supporters of the crown prince insist the case is part of a broader anti-corruption campaign designed to break down systems of patronage. Others view it as a blatant effort to silence someone who knows many of the kingdom’s deepest secrets.

It is a struggle that goes to the heart of Prince Mohammed’s brash and autocratic rule. To his loyalists, the anti-corruption drive, backed by his father, King Salman, is necessary to cleanse a rotten system and fulfil the crown prince’s pledge to modernise an economy addicted to state petrodollars and riddled with patronage networks. To others, the dispute with al-Jabri epitomises the young royal’s ruthless pursuit of rivals and perceived opponents as hundreds of Saudis, including princes, businessmen and civil servants, have been detained.

“There has been corruption and there is still corruption, and this is like a mafia eliminating competitors within the whole regime,” says Madawi al-Rasheed, a Saudi professor at the London School of Economics. “This used to happen with every king in Saudi Arabia in the past, but not in this kind of violent, obvious, blunt way.”

Whatever the merits of the al-Jabri cases, they provide a rare glimpse into workings of the Saudi patronage system that has for decades enriched royals, their lieutenants and connected businessmen. The conservative kingdom is being forced to air its dirty linen in public like never before, creating anxiety among western intelligence officials about the treatment of someone they considered a credible and respected ally. 

A senior Saudi official insists that the anti-corruption drive had to be given “teeth” because previous campaigns were not taken seriously. “We needed a very significant shock to the system to get it to shift, because people weren’t changing,” he adds. “And in some cases there were huge amounts of money being taken out of the system.”

An ‘existential threat’ to Riyadh
The al-Jabri case is one of the most high-profile in the kingdom’s crackdown. He was the right-hand man of Prince Mohammed bin Nayef, often referred to as MBN, the former interior minister and crown prince who has been detained in Saudi Arabia for the past year. 

Western intelligence officials credit the pair with transforming the kingdom’s security apparatus into a modern system that has been crucial in the fight against terrorism. 

A former senior western intelligence official says “intelligence agencies have a memory,” and operate in a world where “we look after people who work with us. Those friendships are very deep and involve a huge amount of trust.” 

But, he adds, Saudi Arabia remains an important security partner. “A lot of the people we work with at the next level down are very good, and are still there . . . but Saad al-Jabri played a really important role and that won’t be forgotten,” says the former official. “The way compensation systems work in Saudi Arabia you could probably nail anyone.”

The al-Jabri family claim he became a target after MBS replaced Prince Mohammed bin Nayef as crown prince in June 2017. MBN supporters described the shake-up as a palace coup designed to neuter one of the heir apparent’s rivals for the top job.

In his US lawsuit against the crown prince, al-Jabri claims he is “uniquely positioned to existentially threaten” Prince Mohammed’s standing with the US government. It adds that he “was privy to sensitive information” about the crown prince’s “covert political scheming within the royal court” and “corrupt business dealings”.

The alleged assassination plot against al-Jabri is said to have occurred in October 2018 — the same month Khashoggi was murdered, an operation that was authorised by MBS, say US intelligence agencies. The alleged attempt on al-Jabri failed after Saudi agents “aroused the suspicion of Canadian border security officials,” according to his US lawsuit against MBS. 

When MBN was deposed in June 2017, al-Jabri was outside the country and decided it was best not to go home. Instead he moved to Canada, claiming that he made the move to protect himself and his family from the crown prince’s clutches. Two of his children, Sarah and Omar, who were in the kingdom, were barred from leaving, say the family.

Just five months later — on November 4, 2017 — the anti-corruption campaign was announced to the world in spectacular fashion. Hours after Prince Mohammed was appointed chair of a newly established Supreme Anti-Corruption Committee, the authorities closed Riyadh’s private airport to prevent the rich and powerful from escaping a crackdown that was to rock the kingdom. In a co-ordinated operation, more than 300 princes, including sons of the late King Abdullah, and businessmen were rounded up and taken to the Ritz-Carlton in the capital, Riyadh.

Simultaneously al-Jabri’s Saudi accounts were frozen, and an investigation into his activities was placed under the SACC. For three years, the family kept silent, but after Sarah and Omar were detained in March 2020, family members spoke out. In November the children, both in their early twenties, were convicted at a closed trial of “attempting to flee” Saudi Arabia “unlawfully” and money laundering offences, according to court documents filed in Ontario.

In January 2021 the front companies — now owned by the PIF — filed their lawsuit alleging that al-Jabri used his position in the interior ministry to establish entities “to perform anti-terrorism activities” but that they were instead used in a fraudulent scheme to “steal” billions of dollars.

The plaintiffs claim he oversaw a scheme involving at least 21 co-conspirators across 13 jurisdictions to misappropriate at least $3.5bn, with the funds hidden across the world, including in the US, Canada and Europe. The other defendants include al-Jabri’s wife, sons, relatives, friends and companies affiliated to him. His lawyers have argued that if there was a fraud, “which al-Jabri denies and will refute, the victim of the fraud would be . . . Saudi Arabia, which is not a party” to the action.

A ‘valued partner’ to the US
The front companies were established after King Abdullah provided funding for the scheme to Prince Mohammed bin Nayef, then assistant for security affairs. Al-Jabri “directed” the creation of 17 companies, according to court documents. Neither MBN or al-Jabri held formal roles at the companies, which covered sectors ranging from technology to aviation, cyber security, real estate and security. But al-Jabri was to receive 5 per cent of the companies’ profits as compensation, according to court documents, which the plaintiffs say would be illegal under Saudi law.

In one deal cited in the court documents, Sakab, one of the plaintiffs, said it agreed to buy encrypted fax machines at artificially inflated prices, transferring $122m to al-Jabri’s brother, Abdulrahman, between 2008 and 2011 for products that “either did not exist or did not work”.

Although he is not a defendant in the US case the plaintiffs allege that MBN received at least $1.2bn from the fraudulent scheme. They also claim that al-Jabri, and Dreams International Advisory Services — an offshore entity he set up in 2007 — picked up direct payments of $480m from the front companies. In one transaction alone, Dreams International is said to have received $113.6m two months after al-Jabri was dismissed as state minister in September 2015. It is also alleged that al-Jabri appointed friends and relatives as nominee shareholders to the front companies.

Al-Jabri’s total compensation package from the state between 2008 and 2015 was $4.2m, according to court documents, but the plaintiffs allege he owns “luxury” properties in Canada, the US, the UK and elsewhere worth $83.2m.

The case could also prove embarrassing for HSBC, which appears to have been al-Jabri’s bank of choice for both his personal business — he opened multiple accounts — and entities he allegedly used to execute the fraud, according to court documents. HSBC said it would not comment on an ongoing legal case.

HSBC was also trustee of a $55m al-Jabri trust called Black Stallion which he set up in Jersey. According to the documents, it was involved in property transactions by the front companies, including the sale of a Geneva building — in which the bank is a tenant — in a $310m deal.

Al-Jabri gifted his assets to his son Mohammed in June 2017. Yet in a subsequent declaration to the court he listed assets of more than $63m held in bank accounts and trusts outside the kingdom, as well as a portfolio of real estate in Canada, Malta, Morocco, Saudi Arabia and Turkey, including a residence in Toronto purchased for $10.4m and a fleet of more than 20 vehicles including Porsches and Bentleys.

His defence team claims the plaintiff’s calculation understated his income during the period as it excluded “patronage” from senior members of the royal family, arguing that while Saudi civil servants have salary limits, “it is well known that, as a matter of custom, they receive lavish gifts as a sign of favour and reward for loyalty”.

After King Salman named al-Jabri a state minister in January 2015, the monarch gave the official a SR20m ($5.3m) cheque, Khalid al-Jabri, the former official’s son, told the court in Ontario. In 2015 alone, al-Jabri received gifts of about $14.7m, according to defence court documents.

His subsequent dismissal in 2015 is blamed by some on an unauthorised meeting between al-Jabri and John Brennan, the then CIA director, and or political manoeuvring by MBS to weaken MBN.

Al-Jabri’s reach was highlighted after the family went public about the detention of his son and daughter last year. Four US senators wrote to Donald Trump urging the then president to secure their release, saying the former Saudi official had “been a valued partner to the US government”.

‘We’re not swimming in cash’
The investigation into the front companies began after they were incorporated into Tahakom Investments Company, a newly established subsidiary of the PIF, following a royal order in December 2017. EY was hired to do due diligence on some of the entities. After the auditor reported irregularities, Deloitte was engaged to conduct a forensic review, which is at the core of the case against al-Jabri. Its investigation is continuing.

A motion filed in the US in December, to dismiss the al-Jabri case against the crown prince, alleged that of $19.7bn allocated by the Saudi authorities to combat terrorism after the September 11 2001 attacks in the US, $11bn had been “misspent or outright stolen by al-Jabri and his associates”.

It is not just the defence and security sectors — long viewed as the most vulnerable to large-scale corruption — that have been the subject of the crown prince’s campaign. Nazaha, a Saudi anti-corruption watchdog, has initiated criminal cases against dozens of employees of the central bank, health ministry, a meteorology agency, local government workers, a retired judge, National Guard members and policemen since the start of 2021.

The Saudi official says a new procurement law and processes are designed to improve transparency in the awarding of state contracts. “It [anti-corruption] is very important because we’re not swimming in cash the way we used to, so right now everything we spend is important,” he adds. “We have no choice but to do things differently.”

Some Saudis say the clampdown has had a dramatic impact in reducing corruption, especially in government procurement. “Things are generally getting done much faster at government offices as there are no delays for bribes,” says one Saudi industrialist.

Other businesses, however, complain about officials being paralysed with fear that they will be accused of corruption. “I’ll probably end up in the Ritz” has become a common phrase among Saudi bureaucrats, says one of them.

Most of the Ritz detainees were released, but only after many bought their freedom by transferring assets and cash over to the state. Reports of maltreatment — denied by the government — accompanied the operation, which Riyadh said would net at least $100bn for the state coffers.

The anti-corruption drive, says one Saudi analyst, is popular among many Saudis, adding: “[But] it’s very unpopular among the business elite.”

“They are reluctant to invest in future Saudi projects, their culture has been that they have connections to royals or government departments, and this is how many get large projects,” the Saudi analyst says. “Now there’s a sort of monopoly that is concentrated, or associated, with MBS.”

Prof Rasheed, at the LSE, says a lack of transparency has undermined the anti-graft message.

“If there was an independent judiciary in Saudi Arabia, you could put those arrested or held hostage, on trial,” she says. “But we can’t consider what MBS is doing [as positive], when all the negotiations with the detainees are done in secret. Then we have a figure released that he has received $100bn from that. On what basis?”

David Rundell, a former US chief of mission in Riyadh and author of Vision or Mirage, Saudi Arabia at a Crossroads, disagrees that the campaign has been used as part of a “power grab,” arguing that corruption has been on King Salman’s radar for a “very long time”.

Yet he questions whether one group is simply being replaced by another. “It’s not clear whether [MBS] is cleaning up the sea or whether he’s just creating a new crew of pirates, it’s probably a bit of both,” he says. “We’d be naive if we didn’t think he was rewarding those closest to him.”

NYP : Elon Musk posts tweet that Tesla could soon be bigger than Apple — then de

Elon Musk posts tweet that Tesla could soon be bigger than Apple — then deletes it

Elon Musk made a bold prediction on Twitter about his electric car company on Friday — and then he deleted it.

The Tesla CEO tweeted he thought there was a greater-than-zero chance that Tesla “could be the biggest company” — adding in a subsequent reply to a follower that Tesla could surpass Apple “probably within a few months.”

Musk has since deleted the tweet, without making it clear whether it was a complete joke or based on a genuine, unspoken reason for bullishness. Nevertheless, screenshots of the tweet were widely circulated on Twitter.

The now-deleted tweet appeared to imply that Tesla, whose market capitalization currently stands at $583 billion, is poised to leapfrog Apple’s market cap of $2 trillion — a jump that would require Tesla’s stock to jump nearly fourfold.


Such tweets have gotten Musk into trouble before with the Securities and Exchange Commission, which in September 2018 filed securities fraud charges after he tweeted that he was planning to take Tesla private at $420 a share, and had secured funding to do so.

Tesla’s stock price had risen more than 6 percent that day, but on Friday the shares recently were off more than 5 percent at $607.41.

In the case of the famous $420-a-share tweet — reportedly a pot joke to amuse Musk’s girlfriend — Musk and Tesla reached a settlement with the SEC, with each paying a $20 million fine and Musk surrendering his role as chairman.

The SEC sued Musk for breaching that agreement after he tweeted about Tesla production numbers in early 2019, which the agency said was a violation of terms.

The SEC and Tesla did not immediately respond to requests for comment.

Barrons : Here Are the Stocks to Buy Now That the Easy Money Has Been Made

Here Are the Stocks to Buy Now That the Easy Money Has Been Made

Traders make trades, while investors are in it for the long haul, or so we’re told. The former is likened to gambling, while the latter is a thoughtful, mature approach. Still, long-term investing is a bet just like any other, a bet that the stock market will be higher than the price we paid for our shares—and hopefully better than that.

But what can investors truly expect from the long haul? The past decade’s returns have been fantastic, with U.S. stocks returning an annualized 11.3% after inflation from 2010 to 2021, according to the Credit Suisse Global Investment Returns Yearbook 2021, despite one massive bear market and a number of near misses. Yet the previous decade’s performance was a disaster, with U.S. equities losing an annualized 2.3% after inflation from 2000 to 2010.

And the worst part is that investors don’t know which kind of decade they are going to get. “Looking in isolation at the returns over the first two decades of the 21st century tells us little about the future expected return premium,” write Elroy Dimson, Paul Marsh, and Mike Staunton, the yearbook authors.

The good news is that the odds of the next decade producing a negative return are low. The S&P 500 index has dropped just 6% of the time over 10-year periods going back to 1929, according to BofA Securities data. The bad news is that with price/earnings valuations where they are—over 20 times—the S&P 500 is expected to gain just 2% annually over the next decade, while dividends could add another 2%, putting the total return at a scant 4%.

But even during previous low-return periods, holding for 10 years instead of one lowered the risk of losing money from over 45% to around 10%. “For US stocks in particular, lengthening one’s time horizon is a recipe for loss avoidance,” Bank of America strategist Savita Subramanian writes.

If limiting losses is the goal, there’s also something to be said for the type of stocks investors own. The past year’s recovery has been led by so-called low-quality stocks, those rated single-B or lower in S&P’s quality rankings, which outperformed high-quality stocks by 48 percentage points.

Yet low-quality stocks now trade at 1.2 times the broad market, while high-quality stocks trade at just 0.9 times. “High-quality stocks remain neglected,” Subramanian explains. “Valuation, positioning, and history lessons suggest that quality may be one of the better investment strategies for the next month, year and decade.”

The simplest way to play high-quality stocks is with an exchange-traded fund like Invesco S&P 500 Quality (ticker: SPHQ), comprised of the companies with the highest-quality scores based on return on equity, financial leverage ratios, and accruals, or iShares Edge MSCI USA Quality Factor (QUAL), which holds large- and mid-cap companies with low leverage, high ROEs, and stable earnings growth. Both feature stocks like Merck (MRK) and Mastercard (MA). These ETFs did well—the Invesco ETF returned 54%, including reinvested dividends, off the March 23 low, while the iShares ETF returned 59%—but not nearly as well as the S&P 500, which returned 75%. Either would suffice as a way to bet on quality in the year ahead.

Applied Materials (AMAT), a maker of semiconductor manufacturing equipment, also appears in both ETFs, and it got a boost this past week when Intel (INTC) announced plans to increase capital spending to as much as $19 billion while investing $20 billion to build two semiconductor foundries in the U.S.

But there’s more to Applied Materials, which trades at $119.72, than just that. It recently announced a new product that uses artificial intelligence to determine if newly manufactured chips have serious defects. And though an earlier deal to acquire semiconductor equipment maker Kokusai Electric didn’t get approved by Chinese officials, the company plans to use the money—some $7.5 billion—for buybacks instead. Its investor day on April 6 could also be a catalyst for a move higher if it lays out a path to $9 a share in earnings power, writes BofA Securities analyst Vivek Arya.

Read more Trader: Here Are the Stocks to Buy Now That the Easy Money Has Been Made

At 18 times 2022 earnings, Applied also looks cheap, Arya explains, especially relative to industrial stocks, which trade at 24 times. That’s despite the fact that free-cash-flow margins are expected to hit 26%, or double the typical S&P 500 industrial stock. “We see AMAT as a high(er) quality industrial-like vendor which should at-least trade inline with industrial stocks,” Arya writes. He believes the valuation gap will close as investors become more comfortable with the investment case.

That sounds like a stock for the long run.

WWD : Banks Trading American Dream Debt for Mall of America Stock

Banks Trading American Dream Debt for Mall of America Stock
A group of lenders is set to take a 49 percent stake in the mega mall, which was put up as collateral for the troubled American Dream.

Bankers are taking a minority stake in Triple Five Group’s Mall of America and West Edmonton Mall as a make good following a default on the firm’s American Dream mall complex, WWD has confirmed.

J.P. Morgan Chase, Goldman Sachs and a group of real estate investors are set to receive a 49 percent stake in the two mammoth malls after the New Jersey entertainment complex fell short.

The Mall of America and West Edmonton was used as collateral for a loan to build American Dream. J.P. Morgan and Goldman Sachs declined to comment and Triple Five could not immediately be reached over the weekend.

The Financial Times earlier reported the deal, which could close soon, but is complex.

American Dream, which has been 20 years in the making and has seen repeated changes in ownership, in 2019 finally opened some of its marquee entertainments, including the Big Snow Ski and Snowboard Park. But the coronavirus lockdowns delayed the long-awaited opening of the retailing component last year and when the mall did open, it was launching into the pandemic.

It cost more than $6 billion to build the 3.3 million square foot complex, which also includes the world’s largest indoor wave pool, encompassing 1.5 acres.

The very best “A” malls with established businesses appear to be holding on in the pandemic, but much of the rest of the mall world is struggling.

American Dream, once called Xanadu, is a massive project with huge debts and needed a steady flow of business to keep its books balanced.

The banks and lenders that bet on that dream are now going to be owners in other mega retail projects. The Mall of America features more than 520 stores, eight acres of skylights, an aquarium, events and more. And the West Edmonton Mall has more than 800 stores, two hotels and 100-plus dining venues.

(ZH) How Lockdowns Devastated The Cruise Industry

How Lockdowns Devastated The Cruise Industry

“I never thought I would be standing in a food line for hours. Just the degradation of it. You say to yourself, ‘Wow. I am really at this point.’” So said James Cox, a 50-year old porter in the cruise industry, to the Wall Street Journal’s Julie Byrowicz and Ted Mann.
Cox used to earn $27/hour, but since the lockdowns began last year his ability to earn in his chosen profession has been taken from him. As Byrowicz and Mann explain it, the “cruise industry is waiting anxiously for Washington’s go-ahead to sail again.” Lest readers forget, national politicians assigned to themselves the right to decide which industries would continue to operate as the coronavirus spread, and which ones wouldn’t. The cruise industry didn’t get the nod, hence Cox waiting in food lines.
Interesting and tragic about all of this is that Byrowicz and Mann were reporting from Port Canaveral, FL, and more specifically from “Terminal Three, a cavernous $135 million structure built for Carnival Cruises.” The previous detail is hopefully a reminder of how prosperous the cruise industry was before politicians panicked. In other words, the best and brightest of the cruise industry had plainly developed remarkable skills when it came to attracting customers, and having done so, meeting the needs of those same customers.
The above truth is crucially relevant to what happened to the cruise industry. The leading lights never got a chance to adjust. Despite knowing the needs of a huge customer base intimately, they never had the right to pivot at a time when a virus was rapidly spreading.
Instead, the political class that gave us the Post Office, Amtrak, Social Security and other would-be bankrupt entities absent the taxpayer decided on its own that cruise operators should not be allowed to adjust to a seemingly new corona-reality. How tragic.
Indeed, how tragic for all business sectors that a particularly prosperous one wasn’t allowed to show how it would meet customer needs during a notably fraught time. Information born of commercial leaps is so crucial to economic progress, businesses were and are starved for market-created information about the post-corona future, but some of the best never had the chance to serve their customers, and as a consequence we’re all a little or a lot more blind about what’s ahead. Politicians know what’s best for us, it seems.
To which some skeptics might reply that regardless of the federal government’s sick actions, the cruise industry was already dead. They’ll say that broad public fear about exposure to a rapidly-spreading virus was the cause of the industry’s death, so don’t blame politicians. Sorry, but such a response is insufficient, and really kind of mindless.
We know this from the aforementioned report penned by Byrowics and Mann. As they note, “the cruise industry is waiting anxiously” for the right to operate again. They wouldn’t be “waiting anxiously” to get back to serving customers if they felt they would have no customers, or if they felt they couldn’t adjust to new realities. Rather explicit in their desire to get their ships back in the business of ferrying passengers around the world is a belief that if allowed to serve customers, they would be serving customers.
How would they? The speculation here is that just as grocery stores and other retailers were “allowed” to remain in business so long as they limited the number of customers inside, so could cruise lines have operated in limited fashion. Important about the previous assertion is that they wouldn’t need laws or other government force to space out passengers. Precisely because the customer of 2020 was different from the customer of 2019, cruise companies would have adjusted capacity based on their intimate knowledge of their customer base.
In which case some cruise lines might have charged a great deal more (have readers seen the nosebleed rates charged by luxury hotels and resorts in the past year?) to fewer customers, some would have instituted “surge pricing” amid periods of high customer demand a la Uber, some would have limited capacity by requiring daily testing for the virus, and still others might have instituted strict age limits with an eye on protecting the vulnerable from crowds altogether.
About what cruise lines might have done, it should be made clear that these are mere speculations from an outsider possessing a tiny fraction of the customer-service knowledge that the various cruise companies possess. One guesses that if allowed to strut their stuff, Carnival, Crystal, Seabourn, and others would have thoroughly blown us away with their ability to effectively operate in pro-customer and pro-health fashion at a time when so many potential passengers were nervous.
Alas, they once again were not allowed to. Drunk-with-power politicians and experts lacking any kind of customer-service knowledge decided for them that they would not be allowed to try.
Which brings us back to people like James Cox, and the kinds of cruise operators he’s historically worked for. In split second fashion they had their dignity taken from them. Cox wasn’t expecting to stand in food lines, or presumably take unemployment, but the lockdowns were rapid in their destruction.
Just the same, businesses owned by prideful people likely never imagined government shutting them down, only for that same government to become the sole source of finance around for all-too-many businesses. It’s a long or short way of saying that while PPP has kept some businesses afloat, how awful. This wasn’t what they wanted; government help. Absent the use of force against them, they wouldn’t have needed it. There’s a descriptive word for what’s been done to businesses and workers, but it won’t be said here. Readers can guess.
Hopefully readers will also keep in mind how quickly politicians can wreck things, and how quickly their destruction robs people and businesses of dignity. Right now, the formerly soaring cruise industry is once again “waiting anxiously for Washington’s go-ahead to sail again.” Please think about that. And how wrong it is.

WWD : Dealmaking Heats Up in Fashion

Dealmaking Heats Up in Fashion
Investors are looking beyond COVID-19 and have billions ready to be spent on companies with an eye on the future.

The world is only starting to reawaken from a year of coronavirus lockdown — but dealmakers are already running at full speed.

Despite the turmoil of the pandemic, lingering health and economic uncertainty, trouble at the ports and rapidly changing consumer interests, there’s real money to be put to work and deals to be made as companies reset for a new competitive landscape.

That has the lockdown-friendly innerwear category, for one, jumping — Victoria’s Secret and, according to sources, Tommy John and Saxx are all making the scene. Buyers have been busy consolidating in the U.K. and Italy. And the rumors that Kering is on the prowl for big game have resurfaced, with Compagnie Financière Richemont speculated to be the latest potential target (although Richemont’s founder and chairman Johann Rupert has publicly dismissed talk of a merger between Richemont and any company).

Some big deals have already come to pass. VF Corp. snatched up Supreme for $2.1 billion-plus and L Catterton reeled in Birkenstock.

Brick-and-mortar retail might not be the investment banking focus of the moment, but strong brands and tech-savvy concepts always have a place. And companies are looking to trim down and focus, making corporate carve-outs more common, from L Brands Inc.’s plans to spin off or sell Victoria’s Secret to Hudson’s Bay Co.’s move to separate the Saks Fifth Avenue store fleet and saksfifthavenue.com to Adidas’ plan to sell Reebok.

Along with a similar increase in activity in other sectors, the dealmaking system is working at full tilt, with bankers struggling to find lawyers to pore over their deals or analysts at big investment banks complaining about crushing workloads.

“There’s more activity than ever before,” said David Bassuk, coleader of AlixPartners’ retail practice.

That’s because there’s both more money and more ideas on how to spend that money, he said.

“Everybody’s been kind of locked down and a lot of money’s been on the sidelines because people have been waiting to see what the world looks like [after the pandemic],” Bassuk said.

And as investors have more conviction, they have more lines of dealmaking to follow.

“Right now, if you believe in a business and it’s down from its highs and it’s weathered the storm, now’s a good time to buy, reshape and really capitalize,” he said. “There’s a buy low, sell high strategy. There’s a lot of opportunity to do that.”

Meanwhile, other investors are looking to buy into more traditional businesses and reshape them for the future or make deals that expand the reach of a business by bringing in new customers, he said.

Some will look to dealmaking to solidify or take advantage of some of the consumer changes brought about by the pandemic.

“Everything easy is going to stick,” Bassuk said. “Easy is curbside pickup. Easy is delivery. Easy is, ‘This retailer knows me.’ We’ve gotten really comfortable and we’ve started to like the easy stuff. There are a lot of things that are going to stick. You can invest behind anything that’s making it easier for the consumer.”

Oddly, a bad year for the world is flowing into a good year to invest. Governmental supports for the global economy have helped send stock markets sky-high, while COVID-19 also gave many companies a chance to cut costs, pivot and refocus.

Experienced buyers are looking anew at the market. Both Morris Goldfarb of G-III Apparel Group and American Eagle Outfitters’ Jay Schottenstein have hinted they could take advantage of the current climate to add to their portfolios, as has Fran Horowitz at Abercrombie & Fitch.

Goldfarb told WWD this month: “We might look for a brand with a stronger digital presence. That’s not off the table for us at all. We look for talented people. And today we look at geography. Historically, we would not have had a huge interest in a European company. Today, maybe. I’m not sure I need another department store brand to hang in the same areas that we do with our brands. I think we would look to diversify distribution.”

Asked earlier this month if A&F would seek a brand catering to a demographic or a category that it doesn’t already cover, Horowitz replied, “Most likely it would be in an adjacent category.”

A&F doesn’t sell wellness, home, or high-tech performance wear, and has limited footwear and active offerings. Asked if any of those categories would be targeted, Horowitz replied, “It’s hard to say at this point.”

“We see companies come across our desk all the time that are up for sale,” added Scott F. Lipesky, A&F’s chief financial officer.

There’s just too much money floating around to not go somewhere. Private equity buyers have $865 billion burning a hole in their collective pockets, according to EY.

And the boom in special purpose acquisition companies has SPAC management teams racing to cut deals and spend the $82 billion they raised last year and the roughly $90 billion raised so far this year, according to Dealogic.

This new SPAC money is targeted at mostly of-the-moment businesses that could stand as public companies.

“Retailers have been noticeably absent from the SPAC frenzy,” said David Shiffman, co-head of global consumer retail at investment bank PJ Solomon. “The money has flowed toward consumer, health, wellness and tech-centric businesses. It has flowed away from traditional retail. And private equity still hasn’t reactivated in the space. You basically have seen hybrid models evolve, replacing traditional retailers.”

That has investors looking for strong brands and strong categories, such as intimates or active or outdoors, and companies that are on the move, evolving to meet the emergent needs of the consumer.

“At the end of the day, good companies always have buyers,” said William Susman, managing director at Threadstone Advisors.

But there’s still the matter of price.

“How are you valuing your business in March of 2021 when you have a projection, but you have to base it off of what you actually did in 2020?” Susman said.

“I see a lot of catalysts for transactions with the exception of those traditional contemporary fashion brands that have historically been very aggressively bid by private equity,” he said. “Those deals will come back, but not for another nine to 12 months. The fashion cycle has not kicked in yet, people aren’t back to work yet, they’re not sure what clothes they’re going to replace yet. Accessories will lead apparel. There’s a sentiment of less risk, it’s a safer approach.”

For now, the spotlight seems to be companies in categories that thrived during the pandemic — like innerwear — or firms that were already eyeing a sale but had to put their plans on hold during the pandemic.

Two financial sources singled out innerwear brands Tommy John and Saxx as out in the market looking for investors. (A Tommy John representative declined to comment and several queries to Saxx were not returned Tuesday).

They join the much larger Victoria’s Secret in the market.

The boomlet in intimates makes sense.

With consumers stuck at home for months on end — and still in need of underwear and other comfortable work-from-home threads — revenues at a number of men’s and women’s direct-to-consumer basics and lingerie brands have surged since the start of the pandemic. Many people are shopping online. Others are using big-box retailers to fulfill their underwear needs.

At the same time, sales of ready-to-wear apparel and more structured fashions have fallen during lockdown. In women’s, total apparel revenues were down 19 percent in the second half of last year, according to The NPD Group’s Consumer Tracking data. Total intimate apparel sales were only down 1 percent during the same period.

That means consumers continued to stay in replenishment mode when it came to innerwear, said Todd Mick, executive director of The NPD Group’s fashion practice.

“This intimates industry is doing well,” Mick said, adding that the market research firm expects intimate sales to be roughly the same in 2021: down about 1 percent for the year.

Self-care and wellness were also big trends in the middle of a global health crisis. That could explain why, along with basic underpants and bras, sales of sexy lingerie have risen during the pandemic.

It’s a trend everyone seems to have noticed.

Zara, Karl Lagerfeld, Dia & Co. and swim and resortwear designer Miguelina added intimates looks in the last year. Others are expanding into new markets. Kim Kardashian West’s Skims just launched in the Middle East. Victoria’s Secret has plans to open in Israel in the back half of 2021. And brands like Rihanna’s Savage x Fenty and Frederick’s of Hollywood — traditionally known for women’s lingerie — have recently launched men’s wear collections.

Investors have already gotten in on the action, too.

Mindd Bras, founded by Victoria’s Secret alum Helena Kaylin, recently received a $1 million investment from Canadian financial platform The51 and investment firm WVL Capital. MeUndies secured a $40 million investment from Provenance.

Clearly, the getting is good and might only get better across the dealmaking world.

>>> Barron’s Weekend Summary: Dividend-based investing has sparked a movem

Barron’s Weekend Summary: Dividend-based investing has sparked a movement among investors of all types, and is proving a successful strategy for many retirees

* Cover story: The notion of using dividends in retirement, either as a way to complement other financial assets or for an even larger percentage of income, is increasingly drawing interest, spawning a movement among investors of all ages and levels of sophistication; Several retirement dividend-investing practitioners believe that it’s possible to actively manage a portfolio of dividend stocks for long-term capital return while minimizing the attendant risks; Ten picks that offer retirees durable dividends and potential growth include T, KO, ED, IBM, JNJ, K, PG, SLG, USB, and VZ.

* Tech Trader: “Tech stocks are still alarmingly expensive,” says columnist Eric Savitz. “The Nasdaq Composite index is down about eight percent from its peak earlier this year, and some well-known names have sold off by 20 percent or more, but tech’s losses generally have been modest—and many valuations remain stratospheric.”

* Trader: “After months of outperformance from stocks of economically sensitive and reopening-levered companies, investors felt compelled to play defense this past week; The rapid climb in bond yields paused, and utilities and consumer staples were the best-performing sectors in the S&P 500—but the long-term trend still favors value and cyclical stocks”; Positive on AMAT: At 18 times 2022 earnings, Applied Materials also cheap, especially relative to industrial stocks, which trade at 24 times

* Profile: Aditya Kapoor and Jonas Krumplys are co-managers of the $2.4B Ivy Emerging Markets Equity fund, which has beaten the benchmark and its category on an annualized basis for the past three, five, 10, and 15 years; To mitigate risks, they avoid entire countries, particularly if the currency tends to depreciate significantly, use a proprietary quantitative model to provide objective views on countries, and conduct qualitative research by visiting regions and firm (top 10 holdings: TSM, Tencent Holdings, Samsung Electronics, BABA, JD, ICICI Bank, Midea Group, Reference Industries, Hyundai Motor, Galaxy Entertainment Group).

* Interview: Marko Papic, chief strategist at Clocktower Group, sees a return to a 19th-century system in which nations act solely in their own interests, and allies become frenemies, a situation he called the “Race to Zero,” in which the Industrial Revolution’s attempt to achieve scale, which created waste and contributed to a changing climate, will be reversed.

* Features: 1) Positive on WBT: The restaurants the company supplies took a hit during the pandemic, but with vaccinations rising and locations reopening, investors should focus on what made Wellbilt attractive before the pandemic: growth, profitability, innovation, and an attractive industry structure, all of which make the stock look like a buy; 2) Investors are growing increasingly concerned about drugs that were about to gain FDA approval hitting roadblocks, a trend that initially seemed to affect only a few biotechs but which has developed into a broader pullback as worries grow of a tougher regulatory environment for drugmakers—though the FDA has announced no policy shift, saying only that it is responding more slowly to approvals during the pandemic; 3) Positive on HRB: The company has faced challenges during the past decade amid the growth of rival do-it-yourself tax preparers, but a new strategy focused on continuing to provide tax preparation for individuals and small businesses while expanding into products such as debit and savings accounts and year-round payroll and tax services for small businesses should pay off, and it is working to build a year-round suit of financial offerings for individuals.

* European Trader: Positive on STLA: Under the leadership of Chief Carlos Tavares, known for his unsentimental approach to cost-cutting, the company, created after the merger of Fiat and Peugeot, has two priorities: growth in the Chinese market, where neither automaker has so far succeeded, and a move to electric vehicles, both of which offer reasons for long-term optimism.

* Emerging Markets: The next worry for investors in Turkey following a currency slide that resulted from the firing of the head of the country’s central bank is what would happen if Turkish depositors realize banks don’t have their money—the state drained their coffers last year through more-or-less forced “swaps,” loans that the government squandered in a failed $80B campaign to prop up the lira currency.

* Commodities: Commodities have performed well so far this year, with energy among the biggest sector gainers, as overall expectations for a global recovery support a brighter outlook for demand.

* Streetwise: Europe is still worth a look despite the fact it lags the US on vaccinating its populace—Mutual fund positioning there is relatively low, and Europe is leading the US in returns because its stock markets are more tilted toward value such as banking and energy than the US, and less tilted toward growth areas like tech and consumer goods.