Reuters - Loeb's Third Point funds erase all losses, now up for the year

Loeb's Third Point funds erase all losses, now up for the year - https://reut.rs/3gO9kCG

BOSTON (Reuters) - Billionaire investor Daniel Loeb told clients that his funds have wiped away all of the year’s earlier losses and are now in positive territory again after he overhauled the portfolio a few months ago, studding it with fast-growing technology companies.

The Third Point Offshore Fund is now up 4.4% for the year after gaining 8.4% in August and the Third Point Ultra Ltd fund is up 3.6% after a gain of 10.6% last month, Third Point told investors in a performance update seen by Reuters.

At the end of March the Offshore fund was down 16% and the Ultra fund was off 21%. Third Point funds were still in the red at the end of July and August’s gains pulled them back into positive territory.

The gains were fueled largely by gains in technology-oriented stocks, including Amazon (AMZN.O), Disney (DIS.N), and Alibaba, as well as gains in the firm’s credit portfolios, an investor (BABA.N) in the firm said.

Loeb, who founded Third Point a quarter of a century ago, took back the reins as sole chief investment officer at his hedge fund in May and pivoted toward trading the portfolio more actively after a disappointing first quarter that left the firm with double digit losses, the investor said.

Third Point’s biggest position remains Prudential Plc where the firm had pushed for the insurer to separate its U.S. and Asian businesses. Last month the company said that it would split off its U.S. business Jackson, planning a public listing for the unit next year. The company could then focus more on its fast-growing Asia business.

The hedge fund, whose assets have swelled to $16 billion thanks in part to strong returns, has always had a flexible investment mandate and now appears to be moving more toward long or short and possibly shorter term investments than the activist bets it can also make.

Last month Loeb told investors that he had taken new positions in Amazon, the Walt Disney Company, where streaming services are creating the company’s “biggest market opportunity ever,” Alibaba and JD.com.

FT : Continental warns another 10,000 jobs at risk

Continental warns another 10,000 jobs at risk
Unions accuse car parts supplier of using coronavirus crisis to justify cuts


Continental, the German car parts maker, deepened its cost-cutting programme and warned that a further 10,000 jobs were at risk, as the coronavirus crisis hammered the global auto industry.

The Hanover-based company, whose customers include the world’s largest carmakers, announced last year that 20,000 positions would be affected by its restructuring plan, as it sought to identify savings to fund an expensive technological shift to electric vehicles.

On Tuesday, the group almost doubled the number of roles at risk in Germany, from 7,000 to 13,000, and cautioned that the strategy “will probably lead to the relocation or closure of facilities and operations at locations where costs are persistently too high”.

Continental, which employs more than 230,000 people worldwide, and almost 60,000 in Germany, has already axed 3,000 roles as part of its 10-year plan, which it says will save the company €1bn annually from 2023.

“The entire automotive industry is currently faced with enormous challenges,” said Elmar Degenhart, chief executive.

“It will demand a lot from us in the short term and push us to our limits in the coming years,” he added. “After roughly a decade of fast, profitable growth and workforce expansion in line with the growth model of the automotive industry at that time, we are now gearing our operations to a new kind of growth with future technologies.”

In July, the company said it did not anticipate global car sales recovering to 2017’s record of more than 95m vehicles until at least 2025.

But on Tuesday workers’ representatives in Germany accused the company of exaggerating the effects of the current downturn to justify job cuts.

“Under the guise of the corona crisis, everything that no longer meets the profitability requirements is apparently now to be swept away,” said Francesco Grioli of the IG BCE union, who is also a member of Continental supervisory board.

Mr Grioli added that IG BCE was open to “creative solutions” such as a temporary reduction in working hours or retraining schemes.

Continental said investments in its software divisions and in electric vehicle technology will lead to new jobs, but declined to predict how many of the 30,000 staff whose roles are currently at risk would be able to find further employment at the company.

Earlier this year, Continental came under fire for continuing to pay a dividend of €3 a share, totalling €600m, despite having put several thousand workers on furlough.

WSJ : AT&T Explores Potential Sale of Xandr Digital Ad Unit

AT&T Explores Potential Sale of Xandr Digital Ad Unit
The telecom giant had hoped to use its scale and AppNexus deal to build up an advertising business

AT&T Inc. T -0.94% is exploring the potential sale of its digital advertising operations, a sign the telecommunications company is curbing its ambitions to become a force on Madison Avenue, according to people familiar with the matter.

AT&T acquired the biggest component of those operations, AppNexus, for about $1.6 billion in 2018 under a plan to challenge heavyweights such as Google owner Alphabet Inc. for a piece of the multibillion-dollar digital ad marketplace. Executives planned to expand the business into a leading exchange for TV ads as the medium moved to online streaming services.

Discussions are at an early stage and may not ultimately result in a sale, which is unlikely to fetch more than the amount AT&T paid for AppNexus in 2018, the people said. An AT&T spokesman declined to comment.

After bulking up with large acquisitions, the media-and-telecom conglomerate is exploring alternatives for several of its assets to bolster its debt-laden balance sheet, some of the people said. The Wall Street Journal reported Friday that AT&T is discussing selling most of its shrinking DirecTV satellite business with private-equity firms.

AppNexus operates one of the largest online ad exchanges, automated marketplaces that allow advertisers to buy space across thousands of websites, targeting their desired audiences. AT&T executives hoped to appeal to marketers by combining the unit with TV ad space on channels such as TNT and CNN as well as its data about wireless subscribers.

The Dallas company put a high priority on the ad operations, which the company carved out into a separate division called Xandr in honor of the original AT&T’s progenitor, Alexander Graham Bell. But the unit failed to yield the explosive revenue growth its owners hoped to generate and often struggled with technical problems familiar to tech companies that invest billions of dollars a year in their ad exchange technology.

Xandr generated about $2 billion of revenue in 2019, up 16% from the previous year.

The unit’s business focused mostly on nonvideo display ads, and was slow to acquire video-ad inventory. Premium streaming-TV publishers were reluctant to sell their ad inventory in Xandr because they regarded AT&T’s streaming assets as competition, one of the people said. AT&T launched its own HBO Max streaming service in May.

Xandr chief Brian Lesserquit the unit earlier this year as AT&T folded its assets into WarnerMedia. The longtime advertising executive joined AT&T in 2017 to launch and run the advertising unit. Interim ad-tech chief Kirk McDonaldleft the unit in August for ad giant WPP PLC. WarnerMedia still retains some ad-selling operations tied to its pay-TV channels.

Mike Welch, an AT&T veteran, became head of Xandr in August.

Rival Verizon Communications Inc. also has struggled to dent Google’s and Facebook’s dominance over the online ad market after acquiring both Yahoo and AOL. The digital business’s former leader, Tim Armstrong, left Verizon in 2018. Verizon has taken several large write-downs and scaled back the operations.

The latest AT&T deal talks were spurred by Chief Executive John Stankey, an AT&T veteran who took over in July from longtime boss Randall Stephenson, who remains chairman. Mr. Stankey has said the company should sharpen its focus on core connectivity services.

AT&T is also fielding bids for Crunchyroll, a Japanese anime streaming service with a cult following, from potential buyers including Sony Corp., according to a person familiar with the matter. The animated TV show library made some of its catalog available on HBO Max but remains a separate brand.

REuters - Engie holding out for higher Veolia bid for Suez - sources

PARIS, Sept 1 (Reuters) - French utility Engie is holding out for a higher bid price to sell its stake in Suez to rival utility Veolia, three sources close to the matter said, adding that the firm was envisaging other options too.
Late on Sunday, Veolia said it was offering to buy a 29.9% stake in Suez from Engie for 15.5 euros a share, or 2.9 billion euros ($3.45 billion), as a prelude to bidding for the whole firm.
Engie believes a higher price would be justified, three sources familiar with the company’s thinking said.
“It’s not high enough, Veolia has to go over its proposition,” said one of the sources, a company insider.
Asked whether 17 euros a share would be the right price, as reported earlier by BFM TV, another of the sources said it would be “closer to what Engie would expect”.

Executives at Engie, which holds 32% in Suez overall, have also reached out to Suez to see if the firm would envisage buying back the stake, two of the sources said. One of the sources added that Engie also remained open to examining any offers from other buyers that might emerge.
Engie, Suez and Veolia declined to comment.
On Monday, Suez reiterated its confidence in its project as an independent company and said the unsolicited takeover from Veolia carried “great uncertainties”, without however rejecting the proposal outright.
Veolia has argued that bulking up in this industry was the best way to prepare for intensifying competition from new rivals from China.
It said it had seized on the opportunity for an approach after Engie flagged earlier this year that it was preparing to shed assets to simplify its sprawling structure and refocus on its most profitable businesses.

Shares in Suez were up 1.55% at 1202 GMT.
The 15.5 euros per share price marks a 50% premium to the Suez share price as of July 30, when Engie said it was reviewing options for the holding, Veolia said when presenting the offer.

>>> US Gapping down

Gapping down

In reaction to strong earnings/guidance:

  • SCSC -9.4%

Other news:

  • ZSAN -14.1% (stock offering)
  • PRPL -3.6% (stock offering)
  • LINC -3.4% (files for $75 mln mixed securities shelf offering)
  • VNDA -2.9% (provides update on tradipitant development program)
  • VOD -1.7% (provides update on merger of Bharti Airtel)
  • CCL -1.5% (Seabourn unit announces additional voyage cancellations)
  • AFG -1.3% (new CFO)

Analyst comments:

  • EAT -2.8% (downgraded to Mkt Perform from Outperform at Raymond James)
  • DRI -1.9% (downgraded to Outperform from Strong Buy at Raymond James)

>>> US Gapping up

Gapping up

In reaction to earnings/guidance:

  • ZM +30%, GRAF +5.2%, RXT +3.7%, COHU +2.2%

Other news:

  • KODK +46.1% (D.E. Shaw discloses 5.2% passive stake)
  • PRTH +35.9% (to acquire Priority's RentPayment business; expected to close in the third quarter of 2020)
  • GOGO +24.1% (Intelsat to acquire Gogo's Commercial Aviation Business for $400 mln in cash )
  • ATNX +23.2% (FDA has accepted for filing the Company's NDA for oral paclitaxel and encequidar for the treatment of metastatic breast cancer and has granted the application Priority Review)
  • TTOO +14.1% (receives FDA Emergency Use Authorization for T2SARS-CoV-2 Panel)
  • WPRT +11.8% (awarded electronics supply contract from "tier one" automotive supplier)
  • MNOV +8.8% (provides update on development progress on intranasal formulation of SARS-CoV-2 vaccine for COVID-19)
  • FLR +3.3% (highlights US Nuclear Regulatory Commission design certification)
  • SVM +2.9% (reports 18% increase in silver resources at Ying property)
  • NVS +2.9% (reports it completed enrollment in the CAN-COVID Phase III clinical trial with expected readout in Q4)
  • WMT +2.7% (officially rolls out Walmart+)
  • LBRT +2.2% (Liberty Oilfield Services and Schlumberger (SLB) announce agreement for the contribution of Schlumberger's onshore hydraulic fracturing business in US/Canada)
  • UBX +1.9% (new CFO)
  • GME +1.9% (RC Ventures increased active stake to 9.6%)
  • OESX +1.9% (provided additional detail regarding a turnkey LED lighting retrofit project for a new customer, a large specialty retailer)
  • CPG +1.7% (raises FY20 production guidance)

Analyst comments:

  • NPTN +8.9% (upgraded to Buy from Neutral at B. Riley FBR)
  • BLMN +6.7% (upgraded to Strong Buy from Outperform at Raymond James)
  • GLOG +5.4% (upgraded to Buy from Hold at DNB Markets)
  • CMPI +3.9% (initiated with a Neutral at BofA Securities)
  • ZEN +3.8% (upgraded to Overweight from Neutral at Piper Sandler)
  • QCOM +2.4% (upgraded to Equal Weight from Underweight at Wells Fargo)
  • FRLN +2.4% (initiated with an Overweight at Morgan Stanley)
  • TGTX +2.4% (initiated with an Overweight at JP Morgan)

>>> US Early premarket gappers

Early premarket gappers

  • Gapping up:
    • PRTH +41.5%, KODK +39.2%, GOGO +29.6%, ZM +27%, MNOV +21.2%, WPRT +17.1%, TTOO +15.4%, RXT +8.6%, FLR +3.3%, NVS +3.1%, COHU +1.5%, WMT +1.2%, GRAF +1.2%, MDT +0.8%
  • Gapping down:
    • ZSAN -14.7%, SCSC -9.4%, VNDA -7.2%, UBX -3.8%, VOD -1.4%, CCL -1.1%, PRPL -0.6%

FT : Active funds fail to outperform passive rivals despite Covid-19 opportunity

Active funds fail to outperform passive rivals despite Covid-19 opportunity
Research shows only 44% of active UK large-cap equity funds outdid passive peers in first 6 months

Actively managed funds failed to outstrip their passively managed counterparts in the wake of the turmoil sparked by the pandemic, despite many active managers touting the turbulence as an opportunity, according to new research.

Dimitar Boyadzhiev, passive strategies senior analyst at Morningstar, which conducted the research, said: “In theory, one often posited by active fund managers, the early 2020 volatility caused by the Covid-19 pandemic should have been a once-in-a-decade opportunity for them to deliver excess returns, shielding investors from a vicious drawdown in global markets.

“In practice, only about half of active stock funds and one-third of active fixed income funds bested their average passive peer during the first six months of 2020.”

The findings in Morningstar’s active/passive barometer update showed that only 43.8 per cent of active UK large-cap equity funds managed to outdo their passive counterparts in the first six months of the year, while the success rate over the period for active global emerging market equity funds stood at 41.8 per cent.

The poorer performance was not the same across the board — active European small-cap equity and large-cap equity funds were more likely to beat their passive peers in the first half of 2020, with success rates of 81.8 per cent and 62.8 per cent respectively, according to Morningstar.

Fixed income fared worst. Morningstar pointed out that “actively managed stock funds typically hold more cash than their passive peers, which served to cushion the double-digit drawdowns experienced in the first quarter of 2020, and partly explained these funds’ relatively higher success rates versus active fixed income funds”.

For example, only about 20 per cent of active funds in the euro-denominated corporate bond category and global bond category beat their passive competitors over the first six months of 2020.

Over the 10 years to the end of June 2020, for all categories of ETF, the actively managed European fund success rate in outperforming passive peers was less than 25 per cent in nearly two-thirds of the categories surveyed.

Morningstar’s active/passive barometer measures the performance of active funds against passive peers in their respective investment categories. The researchers evaluate active funds against a composite of passive funds, meaning the benchmark reflects the actual, net-of-fee performance of the passive funds available to investors.