Gapping up
In reaction to earnings/guidance:
- JEF +2.8% (also increases quarterly dividend by 33%; increases stock buyback authorization to $250 mln), .
Other news:
- BPFH +26.3% (SIVB to acquire BPFH)
- GRTS +19.7% (EcoR1 Capital discloses 9.99% stake)
- CERC +17% (announced results from its exploratory Phase 2 trial of the human anti-LIGHT (TNFSF14) monoclonal antibody CERC-002)
- CHU +13.6% (NYSE Regulation no longer intends to move forward with the delisting action)
- CHL +10.4% (NYSE Regulation no longer intends to move forward with the delisting action)
- CHA +9.1% (NYSE Regulation no longer intends to move forward with the delisting action)
- BTAI +8.1% (announced that BXCL501 met the primary and secondary endpoints of the TRANQUILITY trial at the 60 mcg dose level)
- ARAY +5.9% (Receives 510(k) FDA clearance for ClearRT Helical kVCT imaging for the Radixact treatment delivery system)
- JAMF +4.9% (ends 2020 running on more than 20 mln Apple devices globally)
- AIH +4.7% (terminates deal to acquire a 51% equity interest in Guangdong Hanfei)
- MYOV +4.7% (announces that ORGOVYX is now available through authorized specialty distributors)
- OESX +4.7% (entered into a new and expanded five-year $25.0 mln revolving credit facility effective December 29, 2020)
- DRNA +4.3% (announced Novo Nordisk (NVO) has nominated its first candidate under the existing agreement between the two companies for the discovery and development of novel therapies for the treatment of liver-related cardiometabolic diseases using Dicerna's proprietary GalXC RNAi platform technology)
- IDEX +3.4% (to acquire 100% of privately held Wireless Advanced Vehicle Electrification for cash and stock consideration)
- CO +2.4% (announces NHC policy update)
- MRNA +1% (receives authorization of its COVID-19 vaccine in Israel)
- MTZ +1% (MasTec's Precision Pipeline has been awarded a contract from TC Energy (TRP) for the construction of the Keystone XL Pipeline in Montana and South Dakota) .
Analyst comments:
- BBCP +5.2% (upgraded to Outperform from Neutral at Robert W. Baird)
- MU +3.2% (upgraded to Buy from Sell at Citigroup)
- JD +2.3% (upgraded to Buy from Sell at Citigroup)
- RJF +2.1% (upgraded to Buy from Sell at Goldman)
- CE +1.9% (upgraded to Outperform from Market Perform at BMO Capital Markets)
- PLAN +1.7% (upgraded to Overweight from Equal Weight at Wells Fargo)
- DIN +1.7% (upgraded to Buy from Hold at Deutsche Bank)
- ENPH +1.7% (upgraded to Buy from Neutral at Goldman)
- HUBS +1.7% (upgraded to Overweight from Equal Weight at Wells Fargo)
- THC +1.5% (upgraded to Buy from Neutral at BofA Securities)
- DOCU +1.4% (upgraded to Overweight from Neutral at Piper Sandler)
- IQ +1.4% (upgraded to Buy from Neutral at New Street)
- ALB +1.2% (upgraded to In-line from Underperform at Evercore ISI)
2020 SPAC Boom Lifted Wall Street’s Biggest Banks
Underwriters earn fees helping create blank-check companies whose backers include celebrities and hedge funds
Big banks earned billions of dollars in fees setting up so-called blank-check companies in 2020, highlighting how booming capital markets are helping Wall Street weather the coronavirus.
U.S.-listed special-purpose acquisition companies, or SPACs, raised $82 billion in 2020, a more-than-sixfold increase from the year before and a figure greater than all of the money previously raised, according to Dealogic. They even attracted a star-studded group of backers, ranging from basketball legend Shaquille O’Neal to former House of Representatives Speaker Paul Ryan.
As celebrities and well-known institutions entered the sector, the biggest banks also increased their activity. Two— Credit Suisse Group AG CS 0.70% and Citigroup Inc. C -2.47% —together accounted for nearly 30% of the underwriting, followed by Goldman Sachs Group Inc. GS 0.49%
A SPAC is a public firm that uses the money raised from an initial public offering to merge with another company, typically within a few years. That target company then gets the SPAC’s position on a stock exchange, allowing it to tap public markets. The pandemic has sparked a record run, with hot startups in areas such as electric vehicles and cannabis seeking to capitalize on investors’ burgeoning enthusiasm.
Banks find buyers for a company’s shares and backstop the stock price. In return, they typically get a fee of 2% of the money raised in the initial listing, then another 3.5% when the company completes its deal with the target. While those fees can be lower than the money that banks raise in traditional IPOs, Wall Street firms also can earn extra fees by advising a company on its SPAC deal or raising more money for the purchase.
The whole process can result in a windfall, explaining in part why the biggest firms on Wall Street are muscling into an area previously dominated by a small group of players, analysts said. Morgan Stanley, MS -0.29% JPMorgan Chase JPM -0.95% & Co. and Bank of America Corp. BAC -0.92% rose into the top 10 underwriters last year. Meanwhile, larger firms Credit Suisse, Citigroup and Goldman wrested the lead in SPAC underwriting from Cantor Fitzgerald & Co., which topped Wall Street in the category the previous two years and fell to fourth in 2020.
The spree was part of a broader capital-markets bonanza, through which companies issued huge amounts of equity and debt to make it through the pandemic.
The rising underwriting fees have coupled with higher trading revenue to help keep big banks profitable, even as they set aside billions of dollars to cover future loan losses caused by the economic slowdown. Some analysts expect SPACs to keep contributing to that trend moving forward, driven by near-zero interest rates and recent gains in companies that went public through SPACs, including DraftKings Inc. DKNG -3.65% and Virgin Galactic Holdings Inc. SPCE -2.19%
“This has really been a very helpful shot in the arm for Wall Street,” said Michael Goldberg, head of U.S. equity capital markets at RBC Capital Markets, a unit of Royal Bank of Canada.
Executives at Goldman and Citigroup cited rising underwriting activity as a boost for their investment-banking businesses on their most recent earnings calls in October. Investors will get a look at how underwriting affected fourth-quarter profits when the largest lenders begin reporting results next week.
Ultralow interest rates make SPACs more appealing to investors by reducing the returns they can expect from safe assets like government bonds, pushing them toward alternatives. Investors also are drawn to SPACs because they have the option to redeem their shares, plus interest, before a deal goes through. And blank-check companies make it easier for startups to tout their long-term growth projections, due to regulatory differences between SPACs and traditional IPOs.
The surge in SPAC issuance highlights a reputational shift after these firms were associated with penny-stock frauds and dismal returns in the past. Their share of capital raised through all IPOs doubled last year to nearly 50%.
“If you’re an investment bank, you can’t ignore that,” said Doug Adams, global co-head of equity capital markets at Citigroup.
Citigroup, UBS Group AG UBS 1.13% and Jefferies Financial Group Inc. JEF 0.89% were the lead underwriters for hedge-fund billionaire William Ackman’s Pershing Square Tontine Holdings Ltd. PSTH -2.89% , which raised $4 billion last July in the largest blank-check IPO to date. Other underwriters included banks either owned or run by minorities, women or veterans.
Citigroup also has led SPACs run by a former banker at the company, Michael Klein. Mr. Klein’s Churchill Capital Corp. has created several SPACs, and his Churchill Capital Corp. III merged with health-care company MultiPlan Inc. MPLN -0.88% in an $11 billion deal last summer. MultiPlan shares have tumbled after short seller Muddy Waters Capital LLC in November said the company manipulated its financial statements to mask a crumbling business. Short sellers borrow stock, sell it, then attempt to buy it back at a lower price. MultiPlan called the allegations false on its most recent earnings call.
Credit Suisse, meanwhile, has been the sole underwriter for SPACs led by former Facebook Inc. executive and venture capitalist Chamath Palihapitiya. His first SPAC, Social Capital Hedosophia Holdings Corp., in 2019 merged with Virgin Galactic to take the space-tourism firm founded by British business mogul Richard Branson public. Two of his other firms were among the largest SPACs last year.
Virgin Galactic shares more than doubled in 2020, while sports-betting firm DraftKings added 335%, adding to excitement in the sector and pushing banks to bolster their SPAC businesses.
“Even the firms that wouldn’t touch the product a couple of years ago all of a sudden want to be part of the game,” said Alysa Craig, managing director for mergers and acquisitions and head of SPACs at Stifel Financial Corp.
Deutsche Bank AG DB -1.47% and Goldman were the underwriters of Diamond Eagle Acquisition Corp., the SPAC that late in 2019 agreed to merge with DraftKings. The executives behind Diamond Eagle, former MGM Holdings Inc. movie studio chief Harry Sloan and film producer Jeff Sagansky, said recently they aim to raise $1.5 billion for a new SPAC called Spinning Eagle Acquisition Corp. If that company doesn’t use all of the money raised for an initial deal, it could use some of the remaining funds to spin off a new SPAC and pursue another deal.
Goldman is the sole underwriter for Spinning Eagle and has even added to the flurry of activity by launching a pair of SPACs itself in recent years.
“There’s a growing acceptance of this way of going public,” said Carlos Alvarez, head of permanent capital solutions at UBS, the sixth-largest SPAC underwriter last year.
Early premarket gappers
- Gapping up:
- BPFH +25.7%, CHU +18.2%, GRTS +15.5%, CHL +10.3%, AIH +9.8%, CHA +7.5%, JAMF +4.9%, JEF +4.4%, MRNA +1.6%, EQT +1.4%, LMT +0.7%, SU +0.6%, IP +0.5%
- Gapping down:
- VRAY -12.9%, SRAC -12.1%, AHCO -5%, GBIO -4.4%, FATE -4.1%, NGM -4%, SBTX -3.9%, DPW -2.9%, PRLD -2.2%, TRGP -1.6%, SIVB -0.5%, ATH -0.5%
South Korean tanker seized by Iran highlights $7bn dispute
Banks in South Korea say US approval needed to unfreeze cash for coronavirus vaccines
South Korea has lodged a formal protest with Iran, calling for the immediate release of five nationals aboard an oil tanker seized by Tehran in the Strait of Hormuz.
Saeed Badamchi Shabestari, the Iranian ambassador to South Korea, was called into the foreign ministry in Seoul on Tuesday after Iran’s elite Revolutionary Guards seized a tanker for alleged environmental violations.
Mr Shabestari told local reporters in Seoul that the South Korean nationals were safe. He did not comment further.
The tanker seizure has highlighted the simmering dispute between South Korea and Iran over $7bn in Iranian cash held by South Korean banks.
South Korea, home to a massive refining industry, is the world’s fifth-largest oil importer. Before the latest US-led efforts to restrict Iranian oil revenues, Tehran’s suppliers accounted for almost 15 per cent of Seoul’s oil imports.
According to a commerce ministry official in Seoul, after the US restricted the use of dollars for transactions with Iran, Tehran’s central bank created new accounts with South Korean commercial banks to facilitate trade in Korean won.
Those accounts were frozen after the Trump administration tightened sanctions on Iranian oil exports in 2019, the official said.
Accounts with Woori Bank and Industrial Bank of Korea hold some of the $7bn in frozen Iranian funds, the banks told the Financial Times. They did not provide exact figures.
Iran last month complained it had been unable to transfer €180m out of South Korea to buy vaccines, despite the worsening crisis in the country wrought by the pandemic.
An IBK spokesman said that the bank believed the money could be released for humanitarian purposes but such a move required approval from the US Treasury.
“There is nothing an individual bank like us can do about it,” the spokesperson said.
South Korea’s foreign ministry declined to answer questions about the frozen funds.
“We are trying to secure the release of our sailors and the ship as soon as possible,” Choi Young-sam, foreign ministry spokesperson, said.
The commerce ministry official said no legal proceedings, including arbitration, were under way over the cash, adding: “This is about bilateral relations.”
The stand-off comes amid renewed tensions between Washington and Tehran as concerns rise over advances in Iran’s uranium enrichment programme.
South Korea’s vice-foreign minister will travel to Iran in a bid to negotiate the release while a South Korean destroyer with 300 troops has been dispatched to waters near the Strait of Hormuz, officials said. The vessel usually operates on anti-piracy missions in the region.
>>> Up
* Bank of Ireland Raised to Outperform at KBW; PT 4.70 euros
* Borr Drilling Raised to Neutral at SpareBank; PT 7.50 kroner
* Continental AG Raised to Overweight at JPMorgan; PT 140 euros
* Delivery Hero PT Raised to 158 euros from 140 euros at Citi
* ElringKlinger Raised to Neutral at JPMorgan; PT 9 euros
* Infineon PT Raised to 38 euros from 35 euros at Liberum
* LVMH Raised to Buy at China Renaissance; PT 590 euros
* Permanent TSB Raised to Market Perform at KBW; PT 1.20 euros
* Royal Mail Raised to Hold at Berenberg; PT 280 pence
* SCA Raised to Hold at Jefferies; PT 131 kronor
* Solvay Raised to Buy at Berenberg; PT 125 euros
* Spire Healthcare Raised to Hold at Jefferies; PT 159 pence
* Uniper Raised to Hold at SocGen; PT 28 euros
>>> Down
* AIB Group Cut to Market Perform at KBW; PT 2.50 euros
* Aixtron Cut to Hold at M.M. Warburg; PT 14 euros (+)
* Aker Solutions Cut to Sell at Arctic Securities; PT 12 kroner
* BMW Cut to Neutral at JPMorgan; PT 85 euros
* British Land Cut to Underweight at Morgan Stanley
* Codemasters Cut to Hold at Shore Capital
* Great Portland Cut to Equal-Weight at Morgan Stanley
* HSBC Cut to Hold at Investec; PT 390 pence
* Jost Werke Cut to Hold at Stifel; PT 47 euros
* Jost Werke Cut to Neutral at JPMorgan; PT 42 euros
* Land Sec. Cut to Underweight at Morgan Stanley
* Norsk Hydro Cut to Neutral at SpareBank; PT 42 kroner
* Orange Belgium Cut to Hold at KBC Securities; PT 22 euros (+)
* Petrofac Cut to Hold at Investec; PT 150 pence (+)
* Pirelli Cut to Underweight at JPMorgan; PT 4 euros
* TI Fluid Cut to Neutral at JPMorgan; PT 260 pence
* UPM-Kymmene Cut to Underperform at Jefferies; PT 25 euros
* YIT Cut to Reduce at Inderes; PT 5 euros (+)
>>> Initiation
* E.On Reinstated Neutral at JPMorgan; PT 10 euros
* Nagarro Rated New Buy at Jefferies; PT 110 euros
* Nordnet Rated New Buy at Berenberg; PT 145 kronor
* Nordnet Rated New Buy at Citi; PT 155 kronor
* Nordnet Rated New Neutral at JPMorgan; PT 137 kronor
* Thermador Groupe Rated New Buy at Oddo BHF; PT 75 euros (+)
>>> Call
* Dialog Semi Update ‘Positive,’ Smartphone Units Improved: RBC (+)
* Spire Healthcare Raised to Hold at Jefferies on New NHS Contract
* Office Outlook Tough to Call, MS Downgrades Three U.K. Landlords
* Royal Mail Risks More Balanced, Cautious Longer-Term: Berenberg
* Solvay Raised to Buy; Berenberg Sees Re-Rating Potential
* Stora Enso Preferred Pulp/Forest Stock, UPM Cut at Jefferies
From: Laurent Chekroun (MAKOR SECURITIES LO) At: 01/04/21 22:07:58
Subject: >>> S&P 500 Return in First Five days vs the Full yearA look back at 2020 and outlook for 2021, in charts
full pdf attached
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DAX:
- Delivery Hero (DHER TH) +1.4%
- Delivery Hero PT Raised to 158 euros from 140 euros at Citi
- Continental AG (CON TH) +1.2%
- Continental AG Raised to Overweight at JPMorgan; PT 140 euros
- BMW (BMW TH) -0.6%
MDAX:- MorphoSys (MOR TH) +2.6%
- DGAP-News: MorphoSys and Incyte Announce the Acceptance of the Swissmedic Marketing Authorization Application for Tafasitamab
- Fraport (FRA TH) +2.2%
- Evotec SE (EVT TH) +1.7%
- Deutsche Lufthansa (LHA TH) +1.5%
- Shop Apotheke (SAE TH) -1%
SDAX:- VERBIO Vereinigte (VBK TH) +1.5%
- Nordex (NDX1 TH) +1.3%
- Schaeffler (SHA TH) +0.8%
- ADVA Optical (ADV TH) +0.7%
- Grenke (GLJ TH) +0.7%
- Grenke FY Leasing New Business Volume EU2.03B Vs. EU2.85B Y/y
- Dermapharm (DMP TH) -0.7%
- CropEnergies (CE2 TH) -1%
- Jost Werke (JST TH) -2.4%
- Jost Werke Cut to Hold at Stifel; PT 47 euros
- Delivery Hero (DHER TH) +1.4%
- Dialog Semi (DLG TH) +2.8%
- Dialog Semi 4Q Revenue Forecast Beats Estimates
- Glaxo (GS7 TH) +1.7%
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Evotec SE (EVT TH) +1.2%
- Statement: Evotec achieves milestone in its neurodegeneration collaboration with Bristol Myers Squibb
- BP (BPE5 TH) +1.2%
- Repsol (REP TH) +1.2%
- Delivery Hero (DHER TH) +1.2%
- Delivery Hero PT Raised to 158 euros from 140 euros at Citi
- Fiat Chrysler (2FI TH) +1.2%
- Anglo American (NGLB TH) +1%
- HeidelbergCement (HEI TH) -0.8%
- CTS Eventim (EVD TH) -0.9%
- TeamViewer (TMV TH) -0.9%
- Siltronic (WAF TH) -1%
- Philips (PHI1 TH) -1.1%
- Stock gained 4.3% yesterday
- CD Projekt (7CD TH) -1.6%