FT : Melvin Capital, GameStop and the road to disaster

Melvin Capital, GameStop and the road to disaster
Hedge fund faces questions over risk management after losing half its money in a Reddit trading frenzy

It was a routine regulatory filing, the kind hedge funds must make every three months, where Melvin Capital first showed its hand.

The “Form 13F” filing that landed on August 14 last year listed 91 positions it held at the end of the second quarter, including shareholdings in household names from Microsoft and Amazon to Crocs and Domino’s Pizza. Halfway down the list: an apparently innocuous bet against GameStop, a struggling video game retailer.

That the New York hedge fund should think GameStop’s shares were going lower was hardly remarkable — many others were betting the same way. Wall Street analysts had sell ratings on the stock and the retailer’s prospects looked grim as gamers switched to downloads. But by using the options market for the bet, which forced it to disclose the position, Melvin had put a target on itself.

An eagled-eyed Reddit user called Stonksflyingup was not the only one to spot Melvin’s position, but they might have been the most prescient. In an October 27 video posted on the WallStreetBets message board — titled “GME Squeeze and the Demise of Melvin Capital”, using GameStop’s three-letter stock market ticker — the Redditor used a scene from TV show Chernobyl to portray Melvin as a nuclear reactor that would blow up when its bet against GameStop went wrong.

Within six months, half of Melvin’s $13bn fund had been wiped out.

The David-and-Goliath narrative of the events, in which retail investors organised on Reddit overwhelmed the short-sellers who had bet against GameStop, has captured the imagination far beyond Wall Street. To many in the hedge fund industry, however, the tale has raised the more prosaic question of why Melvin left itself so exposed and why it didn’t reverse out of the trade earlier — questions it will ultimately have to answer to its clients. 

“I don’t get why Melvin were there, I just don’t get it,” said one prominent short seller who had looked at GameStop but decided not to bet against the company.


GameStop had been a favourite target of short-sellers for some time. The proportion of shares borrowed to back those short positions had been between 50 and 100 per cent of the company’s total stock over the first half of last year, according to IHS Markit. The shares traded between $3 and $6.

“We get really uncomfortable if one of our shorts has a 10 per cent short interest ratio,” the short-seller said. The higher the short interest, the higher the risk, since if everyone rushed to exit their positions at once, a sudden surge in demand to buy back stock would push the price up further — a classic short squeeze. “That’s the part where the retail people got it right, to their credit.”

Melvin declined to comment.

That Melvin was caught in such a squeeze is particularly surprising given the reputation of Gabe Plotkin, who founded the fund in 2014 after years working for Steve Cohen at SAC Capital Management. Cohen viewed him as one of the best traders he had ever worked with, and put money into Melvin early on. Plotkin was able to be picky about which investors’ cash he took, and would lock up money for longer than most other equity hedge funds.

At SAC and at Melvin, Plotkin was known as a low-profile but aggressive trader. He did not focus solely on short selling, and often ran bigger bets on rising share prices. Nevertheless, he had a reputation for punchy short positions. Melvin was running two of the five biggest short positions in Europe last month, for example, as measured by short interest in a company’s stock, according to data group Breakout Point.

Melvin’s August filing showed it owned put options for 3.4m GameStop shares, instruments that rise in value as the stock goes down. Buying puts is typically seen as lower risk than traditional shorting. Puts give you the right to sell shares at what you hope is an advantageous price, but do not commit you to doing so, capping losses at the cost of the option, whereas losses from shorting can be unlimited. But a 13F provides only partial details from which it is not possible to calculate a fund’s total short exposure, and Wall Street continues to speculate about the full extent of Melvin’s position. It was enough to tip its hand.

The next quarterly filing revealed something else: Plotkin was doubling down. Melvin’s options position had grown to 5.4m shares over the third quarter, according to the 13F published on November 16, even as the share price had risen by 135 per cent, to $10.20.

The posts about Melvin on Reddit became more frequent as traders on the forum declared war on the hedge fund by promising to drive the shares “to the moon”. GME next to rocket emojis became a frequent sight on WallStreetBets and users referred to GameStop as “the real greatest short burn of the century”.

The growing riskiness of the short positions had also not gone unnoticed among professional traders.

Fund managers who specialise in investing in undervalued stocks often look at the most heavily shorted companies to identify potential candidates, since if they are right and the stock eventually goes up, a rush to the exits by the short-sellers can help drive the price up further and faster.

Senvest, another New York hedge fund, noted the short interest when it bought into GameStop in September, for example, according to an interview its founders gave to The Wall Street Journal, which revealed their $700m gain on the stock.

An important aspect of short selling involves closely monitoring trading volume in targeted stocks, said Brad Lamensdorf, a long-short hedge fund trader who runs Active Alts. 

“All investors need to create some kind of process to monitor the market. Volume precedes price action,” he said, and the trading history of GameStop contained signs of heavy buying back in November and December.

“When you see that kind of heavy sponsorship and accumulation of a stock, it represents a dangerous signal for short sellers,” said Lamensdorf.


As Reddit day traders and others piled in, longtime short sellers like Melvin had to decide which way to jump. Those who got out their positions before the end of the year, as the stock soared towards $20, suffered heavy losses — but not as heavy as those who waited until the middle of January, when the founder of Chewy.com joined GameStop’s board promising to bring it into the digital era, after which the share price went parabolic. 

The temptation to stay the course was obvious, since GameStop shares had become detached from the reality of its business prospects and would one day tumble. But with the level of short interest going up, not down, the risks were mounting. Meanwhile, investors started trying to squeeze short sellers out of other popular positions, too, such as the cinema chain AMC, the tech group BlackBerry and more. Many of Melvin’s shorts sustained losses in the melee.

“The stocks in question are, from a market cap perspective, little guys,” said Brian Barish, president of Cambiar Investors. “What the Reddit crowd have gotten right is that this ecology was ripe for being upset by a sudden surge in trading. Even if GameStop has very poor long-term viability, shorting it this much to express this opinion is just too damn dangerous.”

When Plotkin was forced to exit his bet against GameStop last week and crystallise its losses, the shares peaked at $483 on the day, a rise of 11,000 per cent since the second quarter of last year. Melvin took an emergency cash injection of $2.75bn from two other hedge funds — $750m from Cohen’s Point72 Asset Management and $2bn from Ken Griffin’s Citadel — to deal with the losses and top up the fund. It had lost 53 per cent of the $13bn it was managing at the start of January over the course of just one month.

Melvin is now faced with the task of picking itself up from the debacle, with the eyes of the industry upon it but at least with two powerful endorsements. “I’ve known Gabe Plotkin since 2006 and he is an exceptional investor and leader,” Cohen said last week as he doubled down on his protégé. Griffin, too, was public in his praise. “We have great confidence in Gabe and his team.”

Barrons : Hilton’s ‘Asset Light’ Focus Primes Shares for Postpandemic Upside

Hilton’s ‘Asset Light’ Focus Primes Shares for Postpandemic Upside

To an infrequent traveler, hotel chains can look pretty much the same, with their various rewards, loyalty programs, and more recently, virtual check-ins.

There is a credible investment case, however, that Hilton Worldwide Holdings (ticker: HLT) stands out among the chains for its ability to weather the pandemic and emerge in good shape—and that its shares should have more upside.

With a relatively small number of owned hotels in its portfolio, Hilton runs a so-called asset-light portfolio and relies heavily on recurring, long-term franchise fee agreements. The company is a little less tethered to luxury brands, overseas locations, and big cities than its rivals—and favorably positioned to ride out a storm. And its hotel development pipeline, though slowed by Covid-19, should fare well versus its peers.

“It’s an extraordinarily well-managed global franchise company with top-notch brands at the very, very early stages of what should be a multiyear recovery in the hotel industry,” says Bill Crow, managing director of real estate research at Raymond James.

Crow has rated Hilton a Buy for a while now, but in January he raised his price target to $125 from $105. Although Hilton’s stock has rallied recently to about $110, it is still roughly 5% below its 52-week high set in November, and down a bit over the past 12 months.


Still, the stock looks pricey compared with its historical valuation, and it has a lot of Hold ratings. Lodging fundamentals still remain weak, and business travel in particular.

While the company has taken a big hit from the pandemic—it’s expected to post a loss for 2020 of $1.92 a share based on generally accepted accounting principles, according to FactSet—the vast majority of its global hotel properties were open at year end.

Before the pandemic, Hilton was a fee-generating machine. But it’s the composition of those fees that sets it apart and bolsters the bull case for the stock.

In 2019, for example, Hilton generated some $2.2 billion in fees, with about three-quarters coming from franchising agreements. Franchisees pay a royalty fee that is generally based on a percentage of the hotel’s gross room revenues and, in some cases, gross food and beverage revenues.

Some 15% of that $2.2 billion are what’s known as base management fees, typically a percentage of the hotel’s monthly gross revenue. The remaining 10% are incentive management fees, which are usually calculated as a percentage of the hotel’s operating profits and can be more volatile, depending on the environment.

In contrast, Marriott International’s (MAR) 2019 fees totaled about $3.8 billion, roughly half from franchising. “The Street tends to put a greater multiple on franchise-fee income than it does on the management business,” says Crow. “Managing a hotel is a very difficult process.”

Hilton’s road to becoming an asset-light company—it owns only about 60 hotels worldwide—didn’t occur overnight. Blackstone Group (BX) took Hilton private in 2007, made changes, and spun it off in 2013. Although there continues to be demand for Hilton to manage properties, especially overseas, it has steadily expanded its franchise business.

In 2017, Hilton spun off Park Hotels & Resorts (PK) as a real estate investment trust, and its timeshare business, which now operates as Hilton Grand Vacations (HGV).

Jefferies analyst David Katz gives plaudits to Hilton Worldwide’s “management team just in terms of overall execution and of creating value,” avoiding unnecessary acquisitions, and “growing its footprint.”

As of Sept. 30, Hilton’s footprint consisted of 18 brands stretching across more than 6,300 properties with nearly one million rooms in 118 countries and territories. Marriott International recently said it had a portfolio of more than 7,500 properties under 30 brands in 132 countries and territories.

Despite a smaller footprint than Marriott’s, Hilton enjoys several marginal advantages, at least for now. One is that Hilton is less exposed to luxury properties than some of its peers.

As of Feb. 3, first-quarter revenue per available room, or revpar, for the U.S. luxury hotel segment was down 69.3% compared with a year earlier, versus a 35.5% decline for upper-midscale properties, according to hotel-industry tracker STR and Raymond James.

Although Hilton operates several luxury brands, including Waldorf Astoria Hotels & Resorts, it has greater exposure to upper-midscale brands, including Hampton by Hilton and Home2 Suites by Hilton, as well as other market tiers.

“We’re talking about subtleties between these companies, but globally right now I prefer the footprint that Hilton has,” says Crow.

Michael Bellisario, an analyst at Baird who has Hilton at Outperform, says the company is “a lot more exposed to Hilton Garden Inns [and] Hampton Inns” in smaller markets.

Another advantage, at least during a time of international travel restrictions stemming from the pandemic, is that Hilton is more domestically focused and less dependent on big cities. For the 12 months ended on Sept. 30, 84% of Hilton’s adjusted earnings before interest, taxes, depreciation, and amortization, or Ebitda, came from the U.S.

Hilton earned six cents a share on an adjusted basis in the third quarter, down from a profit of $1.05 a year earlier, as revenues fell about 60%, to $933 million. However, the company doesn’t have any big debt maturities until 2024 and no plans to add more debt, Chief Financial Officer Kevin Jacobs tells Barron’s.

As of Dec. 31, Hilton held nearly $3.3 billion in cash, providing what the company says is sufficient liquidity to get through the crisis. The company has had a junk rating on its debt since it returned to public markets, most recently BB from S&P Global Ratings. As of Sept. 30, its long-term debt totaled $10.4 billion.

One concern: As of Sept. 30, the company’s net debt to Ebitda ratio was a lofty 5.8 times. The company aims to get that ratio back to the prepandemic range of three to 3.5, a realistic goal once travel picks up.

Hilton also was burning cash last year, including about $100 million in the third quarter. But “we’re not that far away from break-even,” says Jacobs. “We need occupancy to get up a little higher systemwide to generate a little bit more revenue.”

Another plus for Hilton is its development pipeline, a key growth driver for hotel companies. Net unit growth, which measures the number of rooms added, minus any removals, grew by about 6.5% in 2019. But even as Covid-19 halted construction on some projects in the pipeline—many of them in growing overseas markets such as China—Hilton managed 5.1% last year.

The company has said that it can boost its net units by 4% to 5% for the next several years. Bellisario wrote recently that he expects Hilton’s 2020 net-unit growth and its forecast to lead the sector, supporting “our positive view of the shares.”

Perhaps the toughest part of the bull case for Hilton is valuation, which has to be viewed through the prism of a once-in-a-century pandemic and lower-than-normal earnings estimates over the next few years. Hilton recently traded at nearly 17 times enterprise value to estimated 2022 Ebitda, according to Bloomberg.

That’s expensive, but “we’ve never come through stuff like this,” says Crow. His price target of $125 assumes an enterprise value to Ebitda multiple that is stretched but uses “trough earnings,” as he puts it.

Then there’s business travel, which in more normal times accounts for about 70% of Hilton’s business. If that doesn’t start to claw back this year, the stock is likely to sell off sharply.

Still, Covid vaccines are being rolled out, and there are signs of pent-up demand for business travel.

Katz of Jefferies remains optimistic. Hilton, he says, is a “high-quality name” that “you can just own forever and you will continue to wind up in better and better places.”

Barrons : Activist Investor Takes Aim at French Food Group Danone. What That Cou

There is something to be said in Emmanuel Faber’s defense. The 57-year old chairman and chief executive of Danone, who took the helm of the French food company in October 2014, has been restrained on his compensation. He presides over a gender-balanced board of directors, and has been keen to refocus his company’s brands on “healthy” food and products.

Has he been too focused on sustainable development to the detriment of shareholder value? That is what an activist fund, Bluebell Capital Partners, thinks, and said as much in a letter sent in November to Danone’s (ticker: BN.France) board. The letter suggested that Faber should be replaced with someone who will pay more attention to investors’ concerns.

The numbers show that Bluebell has a point. Since the month Faber took over, Danone’s stock price has risen by 8% to about 55 euros ($66). Compare that with the performance of rival Nestlé (NESN.Switzerland), whose shares are up 50% over the same period, or Unilever (UL), which is up 73%. Danone is also trailing the competition on other financial metrics, such as price/earnings ratio.

Bluebell’s letter became public when it was published in January in Challenges, the French business magazine. That is when markets realized that Faber’s announcement late last year—that he would restructure the group by selling some assets and shedding 2,000 jobs over time—may have had something to do with hints back then that Bluebell had started agitating.

Danone’s main activities—in baby food, dairy products such as Activia and its eponymous yogurt, and mineral water such as Evian—remain untouched.

In Faber’s defense, Danone points to the 3% organic growth since he took over and a healthy jump in earnings per share. But it is little consolation to investors who are beginning to feel that it isn’t only Danone, but its CEO who needs to focus.

In the French business world, Faber has long been one of the most vocal advocates for the need of companies to embrace sustainable development and promote business as a force for good. Danone last year became the first of a new legal category of companies, allowed by a recent French law, called “enterprise with a mission,” based on the model of the benefit corporations in the U.S.

It is now part of Danone’s statutory charter to “improve health through a healthier portfolio of products and brands,” protect the planet, “create new futures” for its staff, and “promote inclusive growth.” Maybe that doesn’t square well with an activist fund’s concern about shareholder value.

Danone has been protected against takeovers by the French government since a failed attempt by beverage company Pepsi more than 15 years ago, so a threat of a hostile bid can’t force the CEO to care about his investors’ interests. Meanwhile, as Bernstein analysts have noted, the risk is that Bluebell’s intervention will distract the group, since instead of being about “ ‘can this work’...the debate will shift toward ‘how long can the CEO last/what does he need to do to push this away.’ ”

Danone’s water division has been hit hard by the Covid-19 pandemic, with sales down 20% in the second quarter of 2020 and 13% in the third. And maybe those focused on ESG should start wondering about the carbon footprint in shipping Evian water bottles to the U.S. or Asia. In any case, Danone’s focus on becoming a better company may appeal to long-term investors ready to sacrifice a bit of value for the greater good.

Others, in the meantime, might prefer to support Danone by eating its yogurt while staying away from its stock.

Barrons : Toshiba Targeted by Two Hedge Funds as Activism in Japan Rises

Toshiba Targeted by Two Hedge Funds as Activism in Japan Rises

Activist investors are increasingly setting their sights on Japan.

Consider Japanese conglomerate Toshiba (ticker: 6502.Japan), which is facing demands from two hedge funds to hold an extraordinary general shareholders meeting, or EGM. The funds control a combined 15% of the shares but aren’t working together.

In mid-December, Effissimo Capital Management requested an EGM to investigate whether shareholders’ voting rights were compromised at last year’s meeting. About a week later, Farallon Capital Management called for a meeting for Toshiba to explain a shift in growth strategy made without consulting shareholders.

Toshiba set a record date of Feb. 1 but has yet to announce the actual date, though it said a meeting would occur before May 1. Toshiba reports earnings on Feb. 12, when it could announce settlements with the funds or a meeting date.

In response to a request for comment, Toshiba said it’s “examining the details of the demand and will announce its decision in due course.”

Such challenges in Japan have been rare, but recent changes to make its companies more competitive have eased things for activists.

In 2019, Japan was the largest center for activism outside of the U.S., with 19 campaigns launched and $4.5 billion in capital deployed, according to Lazard. Last year, momentum increased even as global activism slowed: Japan saw 24 campaigns with $7.7 billion deployed.

The outcome of the Toshiba showdown will suggest just how willing corporate Japan is to changing the way it does business.

>>> US Close Dow +0.30% S&P +0.39% Nasdaq +0.57% Russell +1.40%

Closing Stock Market Summary

The S&P 500 (+0.4%), Nasdaq Composite (+0.6%), and Russell 2000 (+1.4%) set intraday and closing record highs on Friday to cap off an impressive week for the stock market. The Dow Jones Industrial Average (+0.3%) underperformed with a 0.3% gain.

Prior to the open, investors received the January employment report, which was underwhelming but painted the case in Washington for more fiscal stimulus. Briefly, nonfarm payrolls increased by 49,000 (Briefing.com consensus 50,000) following a 227,000 decline in December, and the unemployment rate improved to 6.3% (Briefing.com consensus 6.7%) from 6.7% in December.

Right out of the gate, the cyclical sectors and small-cap stocks assumed the early leadership, partly due to stimulus-induced growth optimism and positive momentum, but the gains were relatively broad-based. The S&P 500 materials (+1.7%), communication services (+1.0%), and energy (+0.9%) sectors finished atop the leaderboard. 

The information technology (-0.2%) restrained the broader advance and was the only sector that closed lower today. 

Earnings reports for the fourth quarter continued to exceed expectations, with shares of Snap (SNAP 63.64, +5.33, +9.1%), Activision Blizzard (ATVI 101.61, +8.93, +9.6%), and Estee Lauder (EL 272.81, +19.76, +7.8%) reacting positively to the good news. T-Mobile US (TMUS 125.28, -5.32, -4.1%) and Peloton (PTON 148.30, -9.23, -5.9%) closed lower following their reports. 

Separately, the House passed a budget resolution that unlocks a budget reconciliation process for the next stimulus package. The stimulus bill would only need a simple majority to pass, and lawmakers will reportedly spend the next few weeks drafting its contents. 

The U.S. Treasury yield curve continued to steepen, caused by selling pressure in the longer-dated maturities and demand for shorter-dated ones. The 10-yr yield increased three basis points to 1.17%, while the 2-yr yield decreased two basis points to 0.09%. The U.S. Dollar Index fell 0.6% to 90.99. WTI crude futures increased 1.2%, or $0.69, to $56.89/bbl.

Reviewing Friday's economic data:

  • January nonfarm payrolls increased by 49,000 (Briefing.com consensus 50,000). January private sector payrolls increased by 6,000 ( consensus 60,000). January unemployment rate was 6.3% (consensus 6.7%), versus 6.7% in December. The average workweek in January was 35.0 hours (consensus 34.7), versus 34.7 hours in December.
    • The key takeaway from the report is that it will paint the case in Washington for more stimulus.
  • The December Trade Balance Report showed a narrowing in the trade deficit to -$66.6 billion (consensus -$65.7 billion) from a downwardly revised -$69.0 billion (from -$68.1 billion) in November.
    • The key takeaway from the report is found in the annual summary for 2020, which indicates the goods and services deficit widened to $678.7 billion from $576.9 billion in 2019. Exports of goods decreased by $217.7 billion while imports decreased by $166.2 billion, underscoring the global demand drop-off amid the pandemic.
  • Consumer credit increased by $9.7 bln in December after increasing a downwardly revised $13.9 bln (from $15.3 bln) in November.
    • The key takeaway from the report is that revolving credit decreased for the ninth time over the last ten months dating back to February, which preceded the initial pandemic lockdown period taking hold in the U.S.

Investors will not receive any notable economic data on Monday.

  • Russell 2000 +13.1% YTD
  • Nasdaq Composite +7.5% YTD
  • S&P 500 +3.5% YTD
  • Dow Jones Industrial Average +1.8% YTD

>>>US Gapping down

Gapping down
In reaction to earnings/guidance:

  • TWST -17.5%, NEWR -16.3%, U -13.5%, GPRO -9.8%, YRCW -7.3% (also changes name to Yellow Corp. new ticker YELL), PTON -7.2%, SNAP -7.2%, PRO -4.4%, SXI -4.3%, SKX -4.2%, SKYW -4.2%, WWE -3.9%, FLT -2.5%, ARWR -2.3%, NBIX -2.2%, TMUS -1.6%, UNM -1.4%, LGF.A -1.3%, PFPT -0.9%, ROAD -0.9%

Other news:

  • PTCT -5% (hosts call to review results from clinical study of Translarna)
  • OPEN -3.5% (prices offering of 28,536,888 shares of its common stock at $27.00 per share)
  • UEPS -3.1% (sells remaining stake in Bank Frick for $30 mln, also reports earnings)
  • GOL -2.9% (Jan traffic data)
  • SBNY -2.9% (prices offering of 3,500,000 shares of common stock)
  • RYTM -2.9% (prices offering of 5 mln shares of common stock at $30.00 per share)
  • VCYT -2.4% (prices offering of 7,432,433 shares of its common stock at $74.00 per share)
  • OCX -1.1% (stock offering)

Analyst comments:

  • CGC -1.4% (downgraded to Neutral from Overweight at Piper Sandler)
  • CTSH -0.7% (downgraded to Hold from Buy at HSBC Securities)

>>> US Gapping up

Gapping up
In reaction to earnings/guidance:

  • TDC +29.4%, SIEN +22.1%, PLT +14.1%, VREX +13.6%, SYNA +12.3%, UI +11.5%, PINS +10.7%, BILL +10.1%, ATVI +8.4%, DLX +7.4%, OTEX +7.2%, NWSA +6.8%, COLM +6.7% (also increases share repurchase program by $400 mln), ENVA +5.5%, EL +5.1%, HRC +4.8%, LESL +4.3%, CCS +3.8%, ESS +3.8%, REGN +3.7%, AOSL +3.6%, EXPO +3.6% (also increases dividend), ADNT +3.6%, ZEN +3.5% (also CFO to depart company), EAF +3.1%, BERY +3.1%, DXC +2.9%, SNY +2.7%, ZBH +2.7% (also will spin off Spine and Dental businesses) SPB +2.7%, GILD +2.6% (also increases dividend), WYNN +2.4%, F +2.2%, PFSI +1.8% (also approves stock repurchase increase), CAH +1.8%, AON +1.7%, FTV +1.6%, MCHP +1.5%, MTD +1.4%, HIG +1.2%, CSL +1%, DECK +1%

Other news:

  • TTOO +51.3% (announces ability of T2SARS-CoV-2 panel to detect Brazil variant of SARS-CoV-2 virus)
  • MGNI +23.1% (to acquire SpotX for $1.17 bln in cash and stock; sees Q4 revs above consensus)
  • YI +10.8% (111, Inc. and Jilin Baiyi Doctor Group Management entered into a strategic partnership)
  • MDGL +9.4% (Jefferies Managing Director highlights name as one with high short interest - CNBC interview)
  • KPTI +8% (Jefferies Managing Director highlights name as one with high short interest - CNBC interview)
  • NCTY +7.6% (unit signed a strategic cooperation framework purchase agreement on the purchase of bitcoin mining machines)
  • CORR +7% (acquires Crimson Mistream's California pipeline assets; announces internalization of REIT manager)
  • CVAC +5.6% (CureVac and UK Government to collaborate on development of vaccines against SARS-CoV-2 variants)
  • DAN +5.1% (Carl Icahn discloses 7.45% passive stake)
  • RCKT +5.1% (Jefferies Managing Director highlights name as one with high short interest - CNBC interview)
  • NBLX +5.1% (Chevron (CVX) offers to acquire Noble Midstream Partners LP in exchange for shares of common stock valued at $12.47 per common unit)
  • GME +5% (Robinhood removes trading limits)
  • AMC +3.8% (Robinhood removes trading limits)
  • CLOV +2.6% (discloses SEC investigation)
  • SDC +2.3% (prices offering of $650 mln of 0.00% convertible senior notes due 2026)
  • JHG +2.2% (prices secondary offering of 30,668,922 shares of common stock by its largest stockholder, Dai-ichi Life Holdings, at $29.25 per share)
  • PLTR +1.9% (Palantir Technologies and BP (BP) deepen partnership, accelerate energy transition)
  • VLRS +1.8% (Jan traffic data)
  • JNJ +1.6% (announces submission of EUA application for investigational single-shot Janssen COVID-19 vaccine candidate)
  • SLM +1.4% (President Biden considering forgiving student debt through executive order, according to WSJ)
  • NOG +1% (prices 12.5 mln share offering at $9.75/sh)
  • NVAX +1% (starts rolling review process for authorization of NVX-CoV2373 by multiple regulatory authorities)

Analyst comments:

  • INFI +7% (upgraded to Neutral from Underweight at JP Morgan)
  • ZG +3% (upgraded to Buy from Neutral at Goldman)
  • RDFN +2.5% (upgraded to Neutral from Sell at Goldman)
  • GOOS +1.3% (upgraded to Neutral from Sell at Goldman)
  • CTVA +0.9% (upgraded to Overweight from Neutral at JP Morgan)
  • SBUX +0.9% (upgraded to Buy from Hold at Gordon Haskett)

>>> US Early premarket gappers

Early premarket gappers

  • Gapping up:
    • TTOO +52.5%, SIEN +23.5%, PLT +16.1%, KPTI +15.1%, BILL +14.4%, MDGL +14.1%, SLM +14%, TDC +13.5%, COLM +13.1%, VREX +11.9%, PINS +11.1%, YI +10.2%, MGNI +9.8%, GME +9.8%, SYNA +9.4%, ATVI +9%, NWSA +8.9%, RCKT +7.5%, NBLX +7.4%, DLX +7.4%, ENVA +7.4%, ESS +7.3%, OTEX +7.2%, CORR +7%, AMC +4.9%, LESL +4.3%, AOSL +3.6%, EXPO +3.6%, CLOV +3%, PFSI +3%, ZEN +2.9%, PLTR +2.8%, JNJ +2.4%, NNDM +2.2%, DAN +2.1%, BBBY +2.1%, CCS +2.1%, DXC +1.9%, SNY +1.9%, VLRS +1.8%, GILD +1.8%, JHG +1.7%, FTV +1.6%, MTD +1.4%, WYNN +1.3%, OHI +1.2%, HIG +1.1%, CSL +1%
  • Gapping down:
    • NEWR -14.8%, TWST -14%, YRCW -11.3%, GPRO -10.3%, WWE -10%, U -9.2%, PTON -6.8%, SNAP -6.6%, UEPS -5.9%, PTCT -5.3%, PCTY -4.5%, PRO -4.4%, SXI -4.3%, SKYW -4.2%, NBIX -3.9%, GOL -2.9%, ARWR -2.9%, SBNY -2.6%, FLT -2.5%, BLI -2.1%, RYTM -1.9%, OPEN -1.7%, VCYT -1.4%, UNM -1.4%, LGF.A -1.3%, SKX -1.1%, NOG -1%, PFPT -0.9%, NLOK -0.9%, PLMR -0.8%