>>> Europe : Brokers Upgrades & Downgrades - 11th of March 2020

>>> Up
* Adecco Raised to Hold at Deutsche Bank; PT 43 Swiss francs
* Axa Raised to Buy at Berenberg
* Bakkavor Raised to Buy at HSBC; PT 120.30 pence
* Clinigen Raised to Buy at Liberum; PT 780 pence
* Derwent London Raised to Add at Peel Hunt
* Enagas Raised to Buy at SocGen; PT 24.50 euros
* E.On Raised to Buy at SocGen; PT 11.20 euros
* Eurofins Scientific Raised to Equal-Weight at Morgan Stanley
* Ferrari Raised to Buy at HSBC; PT $181.30
* Hamburger Hafen Raised to Buy at MainFirst; PT 22 euros
* Hella Raised to Neutral at Oddo BHF; PT 31 euros
* Iberdrola Raised to Buy at HSBC; PT 11.50 euros
* InterContinental Hotels Raised to Sector Perform at RBC
* Lenzing Raised to Hold at Berenberg; PT 55 euros
* Mail.ru Group GDRs Raised to Neutral at JPMorgan; PT $21
* Polymetal Raised to Overweight at JPMorgan; PT 1,500 pence
* Randstad Raised to Hold at Deutsche Bank; PT 36 euros
* Sanofi Raised to Buy at Goldman; PT 104 euros
* Software AG Raised to Overweight at Morgan Stanley; PT 30 euros
* Unite Group Raised to Overweight at Morgan Stanley
* Unum Raised to Neutral at Credit Suisse; PT $18

>>> Down
* ACS Cut to Hold at Grupo Santander; PT 25.50 euros
* Capita Cut to Sector Perform at RBC; PT 60 pence
* DNO Cut to Neutral at SpareBank; PT 8 kroner
* Genel Cut to Neutral at SpareBank; PT 160 pence
* Glencore Cut to Sector Perform at RBC
* Gulf Keystone Petroleum Cut to Neutral at SpareBank
* IMI PT Cut to Street-Low, Risks Skewed to Downside: Berenberg
* Intl Petroleum Cut to Neutral at SpareBank; PT 35 kronor
* Maha Cut to Neutral at SpareBank; PT 20 kronor
* OKEA Cut to Neutral at SpareBank; PT 17 kroner
* Panoro Energy Cut to Neutral at SpareBank; PT 17 kroner
* Tethys Oil Cut to Neutral at SpareBank; PT 65 kronor

>>> Initiation
* Carmat Rated New Buy at Oddo BHF; PT 27 euros

>>> Call
* Glencore Cut at RBC on View Caution Warranted Amid Volatility
* Software Sector Can Outperform in Volatile Times: Morgan Stanley

FT : How many funds make an ideal portfolio?

How many funds make an ideal portfolio?
Most investors will find that more than 20 or 25 funds is way too many

If you’re an Isa investor, here’s a dilemma you may not yet have considered.

It relates to an essential pillar of investing — that of diversification, the art of not putting all your eggs in one basket, famously dubbed “protection against ignorance” by investment guru Warren Buffett.

Diversification is common sense. By investing in a variety of assets you spread your investment risk and increase your exposure to more opportunities that could see your money grow. But in practice it throws up some difficulties.

Many seasoned investors are adamant that they can create a diversified portfolio of shares by buying holdings in 20-30 stock market-listed companies and that ordinary DIY investors can do so too. The number is small enough to make the portfolio manageable — they call this “relatively concentrated” — but large enough to allow a wide spread of sectors, company sizes and regions.

It’s fine as a strategy if you know what you’re doing and have the time to do the monitoring and research required. But how does this approach to diversification translate for Isa investors who prefer to delegate investment decisions to the professionals, buying 20 or so collective investments such as funds, investment trusts and exchange traded funds (ETFs)?

Each fund, investment trust or ETF that you hold will invest in at least 20-30 stocks and maybe many more. If you hold 20 funds, you will be holding at least hundreds and maybe thousands of underlying stocks.

I call this the concentration conundrum. It may feel like a concentrated portfolio, but in terms of the underlying holdings across the portfolio you’re not concentrated at all.

It’s sensible to spread your risk between investment firms, the professionals that manage your money are human and can make errors. But most investors will find that more than 20 or 25 funds is way too many to keep track of — and it may not be necessary.

In our own interactive investor model growth and income portfolios, we believe that we can achieve enough diversification with between 8 and 10 funds. And that’s covering all the major asset classes, such as shares, bonds and commercial property, plus different stock markets around the world. Our method involves choosing one fund for each asset class.

Investors may be feeling very cautious. Some, after all, were trapped in star manager Neil Woodford’s fund or in property funds, and may not be willing to take much risk on fund managers. Nevertheless, if you had held Woodford as part of a balanced diversified portfolio, you probably wouldn’t be suffering a huge loss.

Think carefully about the maths of monitoring your portfolio. Once you have holdings that are worth 2 per cent or less of your portfolio, they aren’t adding much value to your investment strategy. If you have a tail of funds that are only worth 1 per cent of the total Isa portfolio, this absolutely needs cutting back.

It’s worth doing an X-ray of your fund portfolio — where you look at its underlying stocks — to see where your main exposures lie. You may find that you have overlap between funds that makes your portfolio particularly bloated in one sector or company.

There are a few tools online that will help you do an X-ray and your Isa investment platform may have one too. But you could also simply look at the top ten holdings in your funds to spot any overlap. I’m guessing UK dividend stocks will be present for many portfolios. The process may lead you to cut your number of funds.

Be realistic about the time demands of monitoring your chosen funds. Have you got enough time to monitor them properly? You should really check in with your fund portfolio once or preferably twice a year to make sure that the asset allocation — the balance of the funds — is correct. At the same time, check for warning flags. Has the manager moved, has the fund underperformed its benchmark or its peer group, has its strategy changed? It’s not a particularly onerous check but worth putting in your diary.

You could also risk suffering a bout of “di-worsification” where you pay extra for active management of your funds with the aim of beating average stock market performance, but in reality you create an expensive tracker fund that replicates market performance, or maybe slightly underperforms the market because of the fees. If you have a UK focus, then don’t collect 10 UK funds — you’ll be replicating a small pool of shares and could just be constructing an expensive tracker fund.

There are many ways to think about structuring a fund portfolio and there’s no right and wrong. The key is to have a plan that works for you, your time commitment and your appetite for investment risk.

Have a picture of your end portfolio and work out how to get there, whether you’re investing £50 a month, have a lump sum to invest at the end of the tax year or have recently come into a windfall or bonus that you want to stash away.

Moira O’Neill is head of personal finance at Interactive Investor and a former winner of the Wincott Personal Finance Journalist of the Year award. @MoiraONeill

FT : Investors pursue Deutsche Bank and Bayer boards in US court

Investors pursue Deutsche Bank and Bayer boards in US court
Two shareholders seek damages for directors’ alleged personal responsibility for corporate misconduct

US shareholders hope to take more than 70 current and former board members of Deutsche Bank and Bayer to court in two civil lawsuits seeking damages for their alleged personal responsibility in allowing corporate misconduct.

Among the named defendants in the lawsuits, which have been filed to the Supreme Court of the State of New York, are Deutsche and Bayer’s respective chief executives Christian Sewing and Werner Baumann, and their chairmen Paul Achleitner and Werner Wenning.

The lawyers also named Deutsche’s former chief executives Josef Ackermann, as well as Anshu Jain, Jürgen Fitschen and John Cryan.

The lawsuits have been filed by two small US-based shareholders in the companies. The plaintiffs are not seeking damages for themselves but are demanding that the board members compensate Deutsche and Bayer for the alleged harm caused by their actions.

“The lack of proper governance at Bayer and Deutsche Bank allowed management and the supervisory board to saddle the companies and their shareholders with billions of dollars in losses,” said Michelle Ciccarelli Lerach, plaintiff attorney in both cases.

In Deutsche case, the lawyers point to an “unprecedented litany of wrongdoing by Deutsche Bank’s managers and supervisors” which left the lender’s finances “gravely impaired and its long-term survival in doubt”.

The lawsuit also mentions “price fixing, sanctions violations, money laundering, critical deficiencies in its capital planning practices, financial reporting failures, inadequate . . . controls and procedures, bribery and . . . other breaches of fiduciary duties”.

Deutsche’s share price has fallen nearly 90 per cent over the past decade and the bank has paid billions of euros in fines and settlements relating to other legal cases.

In Bayer’s case, its 2016 takeover of US seedmaker Monsanto has exposed the German group to close to 50,000 claims from cancer patients over the alleged carcinogenic effects of Monsanto’s weedkiller Roundup.

The plaintiffs focus on the Monsanto takeover, arguing that Bayer’s due diligence was flawed and accuse executives and supervisors of ignoring red flags that indicated how risky the transaction would be.

The plaintiffs are trying to invoke German capital markets law but want the cases to be heard in New York City.

“It is not uncommon that foreign courts apply German law and vice versa,” said Thilo Kuntz, a securities law professor at Bucerius Law School in Hamburg, adding that “the first big hurdle in this case will be to convince the New York court to accept it at all”.

Michael Beurskens, professor of international business law at the University of Passau, said “it seems unlikely but not impossible” that the court would take the cases.

If the New York court agrees to hear the lawsuits, they could become landmark cases with wider repercussions for corporate Germany. “This would be disastrous for all [listed] German companies,” said Mr Beurskens.

Bayer told the Financial Times that the complaint was “without merit, both as a matter of fact and law”, and that it would defend the claim “vigorously”.

Deutsche Bank said: “This is a German corporate law issue regarding a German corporation which the German courts are best equipped to properly consider. Respectfully, we believe it does not belong in the New York courts.”

FT : Occidental’s $55bn Anadarko deal turns into a nightmare

Occidental’s $55bn Anadarko deal turns into a nightmare

M&A is tough. Mega deals are even tougher. Sometimes they are so hard they end up being disastrous. That’s turning out to be the case for Occidental Petroleum’s $55bn takeover of Anadarko. 

On Tuesday, Oxy, as the company is known, said it would slash its dividend by almost 90 per cent, the first payout cut since 1991, in a dramatic move aimed at saving the explorer as it seeks to manage the sharp collapse in oil prices following the Saudi-Russia price war. 

That’s a massive contrast to the euphoria of nearly a year ago. 

In May 2019, with the backing of billionaire investor Warren Buffett, the Houston-based company successfully managed to fend off its larger rival Chevron in one of the most memorable takeover battles in recent years. 

It was a huge victory for Oxy’s chief executive Vicki Hollub. Not only did she gatecrash Chevron’s deal, she got the deal done against the wishes of one of the company’s largest individual shareholders, the activist investor Carl Icahn. 

The promise then, in the company’s own words, was “to realise the full potential of the transaction while maintaining a strong balance sheet, investment grade credit rating and its current dividend”.

That promise has now been solemnly shattered. 

Investors welcomed Tuesday’s move, as Oxy’s stock moved up more than 14 per cent to about $14 a share. But that doesn’t cancel the fact that the overall equity value of Oxy has been gravely hit since the deal with Anadarko was announced in May. Before Oxy publicly approached Anadarko its shares were trading at close to $70 a share. 

What’s even more dire is the state of the company’s bonds, which plummeted on Monday. A $750m bond maturing in 2049 fell from 88 cents on the dollar to just 64 cents, before staging a muted recovery on Tuesday, rising to 72 cents on the dollar.

The change in dividend payout, from $0.79 to $0.11, means the annual payment will shrink from $2.8bn to $400m. Who won’t be affected by all this is Buffett. 

The 89-year-old investor from Omaha was given preferred shares last year in exchange for $10bn to help Occidental finance the takeover of Anadarko. As part of the financing deal, Buffett was guaranteed that his shares would receive an 8 per cent dividend, and a warrant to buy up to 80m shares of common stock, about 11 per cent of its equity. That means that Buffett will continue to get annual preferred dividends of $800m.

Hollub’s plan has been designed for a world where the price of oil goes as low as $30 a barrel. It’s not clear what could happen if the situation gets any worse. 

Does Chevron come back to buy parts of Oxy? DD’s sources say that is highly unlikely now. 

To get more on this read the news in the FT here, smart analysis from Lex here and a good Bloomberg opinion on the deal here.

Private equity: supersize me
While we’re on the subject of megadeals, let’s take a look at private equity. 

After the 2008 crisis, European private equity lost its appetite for them for a long time (and the US was a bit more cautious, too). Take a look at the chart below: the biggest deals in Europe are clustered in the run-up to the crisis or in the past couple of years. 

Now, the industry is hungry again. The clearest sign is a €17.2bn deal to buy Thyssenkrupp’s lifts business last month, led by Advent and Cinven. (Side note: dealmakers realised in the final stages of the sale process that the company was still servicing lifts in downtown Wuhan with the city in lockdown over coronavirus. If that’s not resilient revenue, they figured, what is?)

Big deals have worked out better since the crisis than before it, the chart on the left below shows. But the biggest deals haven’t always equated to the best returns. In the past decade, deals for companies valued at more than $10bn have returned $1.81 to investors for every dollar they put in, compared to $1.92 for targets below $5bn, according to figures from Cepres. 

Megadeals have a mixed history. In 2007 a consortium including TPG and KKR bought the Texas power company TXU in a $45bn deal — but it filed for bankruptcy in 2014. On the other hand, Blackstone’s $26bn purchase of hotel chain Hilton Worldwide in 2007, after a rocky path, ended up being one of its most profitable deals. 

This time round, it’s hard to see the appetite for big deals falling even after a crisis. Buyout groups have raised record-sized funds and have to put them to use. As Bain & Company’s Brenda Rainey puts it: “A small deal, even if it goes really well, is just not going to move the needle.” 

Market volatility is good news for some hedge funds
It’s still too early to tell how long the wild market swings of the past few weeks will last. But it is already shaking up the investment industry, leaving those that bet on bonds or volatility with some big wins.

Among the winners are Roy Niederhoffer’s New York-based computer-driven hedge fund, which tries to calculate when markets have become too fearful or too greedy. 

RG Niederhoffer Capital Management’s flagship diversified fund — one of the world’s oldest quant hedge funds — has gained 37 per cent this year, after losing 28 per cent in 2019 when markets rose.

“This is a sad situation that has created the ultimate in conditions for our strategy,” Niederhoffer told the FT. “This is the kind of volatility we haven’t seen since the [global financial crisis].”

(AOC Media) Coronavirus ou le retour à la normale

Coronavirus ou le retour à la normale - Link : http://bit.ly/3aHoxCP


Si pendant cinquante ans les antibiotiques, les vaccins et le pétrole nous ont sortis de notre condition naturelle, ils nous ont aussi ôté la conscience de la matérialité de notre existence. L’épidémie de coronavirus et le réchauffement climatique participent d’un « stupéfiant retour du réel » qui impose de repenser notre rapport à l’environnement.

ans un article publié dans le New York Times le 18 avril 1999, le sémiologue italien Umberto Eco prenait la mesure de l’extraordinarité de son époque où si l’on était malade, il suffisait de prendre un antibiotique durant une semaine pour s’en sortir ; si l’on avait froid, il suffisait de monter le radiateur pour avoir chaud et quand on avait faim, de prendre sa voiture et d’aller au supermarché. Car tout était différent avant les années 1950.

publicité
Depuis les débuts de l’humanité, on avait une chance sur deux d’y rester si l’on attrapait une maladie virale ou bactérienne. On avait froid chaque hiver à en mourir et les périodes de disette avaient lieu avant l’arrivée de chaque printemps, quand elles ne se transformaient pas en famine. Pour Umberto Eco, il fallait saluer l’invention des antibiotiques qui se diffusent après la seconde guerre mondiale, la vaccination obligatoire qui commence au même moment, et le pétrole qui booste la production agricole permettant de nourrir une humanité qui en profite pour accroître exponentiellement son nombre et doubler son espérance de vie.

Grâce aux antibiotiques, aux vaccins et au pétrole, l’humanité avait triomphé de son sort animal, s’était extraite largement de sa fragile condition naturelle et avait ouvert une nouvelle ère, celle que le philosophe Jean-François Lyotard avait qualifié de « post-moderne », où triomphèrent les sciences humaines sur les sciences naturelles, les interprétations sociales sur les faits naturelles, la subjectivité sur l’objectivité.

Cette explosion du pouvoir humain sur la terre et sur son corps, la transformation de notre environnement en conséquence – en notre faveur d’abord et en notre défaveur aujourd’hui à cause de la pollution et du réchauffement climatique – a une histoire très courte, de l’ordre d’une cinquantaine d’année, une goutte d’eau dans l’histoire humaine qui a débuté il y a des milliers d’années, et qui n’était largement faite jusqu’alors que de faim, de froid et de maladie. Aujourd’hui pourtant, face au réchauffement climatique et à l’épidémie de coronavirus, cette extraordinaire période de l’histoire humaine semble derrière nous.

Ces dernières années, la philosophie post-moderne née dans les années 1950 a pris elle aussi un sérieux coup de vieux. Dans « Why Has Critique Run Out of steam » (Pourquoi la pensée critique s’essouffle) un article séminal paru dans en 2004 dans la revue Critical Inquiry de l’Université de Chicago, le philosophe Bruno Latour nous interrogeait déjà sur la validité du credo nietzschéen à la base de la pensée postmoderne, « Il n’y a pas de faits, il n’y a que des interprétations », qui faisait le terreau des climatosceptiques lesquels mettaient en doute les faits scientifiques et cherchaient d’autres interprétations que les émissions anthropiques de CO2 pour expliquer le réchauffement climatique.

Plus fondamentalement, Bruno Latour questionnait le déni de la pensée française dominante d’alors, celle des structuralistes, à attribuer au non-humain (climat, maladie principalement) une part de responsabilité dans le déroulé de l’histoire humaine. Refuser que l’homme puisse modifier le climat, refuser que le climat puisse modifier l’histoire humaine, n’étaient pas seulement le point de vue de quelques complotistes marginaux.

Dans les années 1980, un grand historien structuraliste comme Emmanuel Le Roy Ladurie déniait au climat toute véritable ingérence dans l’histoire humaine et se moquait de son collègue anglais Hubert Horace Lamb qui, au même moment, prédisait avec une exceptionnelle justesse le phénomène du réchauffement climatique. Selon le chercheur anglais, la guerre de Cent Ans, qui voyait régulièrement les Anglais envahir la France et particulièrement le Bordelais, était dû au surgissement du Petit Âge glaciaire qui, à partir du XIVe siècle, avait rendu impossible la culture de la vigne en Angleterre, poussant ce peuple en quête vitale de vin (les boissons non alcoolisées étant à l’époque souillées) à conquérir le Bordelais.

Dans la lignée de H.H. Lamb, l’historien américain Jared Diamond marque la fin de la vision structuraliste anthropocentrée de l’histoire humaine en ajoutant virus et animaux comme actants primordiaux de notre histoire.

Aujourd’hui, un moment nouveau de la philosophie se déploie sous les termes de « réalisme » ou de « nouveau réalisme » et s’éloigne du relativisme post-moderne, des décryptages culturalistes du structuralisme qui ne cherchait plus à comprendre les causes des faits humains mais seulement leurs significations sociales. Maurizio Ferraris en Italie, Markus Gabriel en Allemagne, Jocelyn Benoist en France, chacun prend la mesure de l’existence des choses hors de la conscience humaine, et d’une certaine manière, réintroduit dans la philosophie l’importance de la part non-humaine, dans notre vie et plus généralement sur notre Terre.

Il pleut, que nous soyons là ou pas. Il fait froid en hiver, que nous le voulions ou pas. Le changement est important et déjà la radicalité de cette pensée commence à poindre aux États-Unis où un historien comme Timothy J. LeCain, constate que 80% des cellules composant le corps humain ne sont pas humaines (ce sont celles de bactéries qui nous peuplent), et renverse les hiérarchies en décrivant l’être humain comme un simple moyen de locomotion pour les microbes.

Cette pensée provocatrice, tout extrême qu’elle est, est néanmoins nécessaire aujourd’hui dans le débat qui réanime et renouvelle notre pensée face aux enjeux actuels du réchauffement climatique et de l’épisode révélateur d’épidémie de coronavirus. Car que sont ces deux phénomènes si ce n’est un stupéfiant retour du réel ? Nous aimerions même dire qu’il ne s’agit que d’un retour à la normale. Nous avons vécu effectivement un temps très bref où antibiotiques, vaccins et pétrole nous avaient exceptionnellement sortis de notre condition naturelle. Contrairement à certains qui accusent la modernité, et plus loin encore les Lumières, d’être responsables de la catastrophe actuelle, je crois au contraire que la modernité et les techniques n’y sont pour rien. Elles nous ont permis durant cinquante ans de vivre plus longtemps, de sauver de la mort nos enfants malades, nous ont donné à manger et permis de passer l’hiver.

Il faut rappeler ici rapidement que les Lumières et les Modernes, du XVIIIe siècle aux années 1950 ne connaissaient pas les antibiotiques, que l’espérance de vie était encore de 40 ans au début du XXe siècle et qu’en 1930 encore, un architecte comme Le Corbusier, ne proposait de raser les quartiers surpeuplés que l’on appelait insalubres de Paris que dans l’optique d’éviter la propagation du choléra et de la tuberculose que l’on ne savait pas guérir. Et pour ceux qui auraient quelques doutes sur la beauté possible des temps durs d’avant les années 1950, il faut se rappeler que la Villa Rotonda, chef d’œuvre d’Andrea Palladio, construite au XVIe siècle en Vénétie, ne doit ses formes qu’à des principes climatiques : les chaleurs estivales, l’évacuation de l’air chaud par son dôme et la mise à l’ombre de ses chambres par ses portiques.

Car l’homme est un singe nu qui ne survit que grâce à la technique, grâce au feu tout d’abord qui nous a réchauffé en hiver et a rendu possible l’habitation des climats naturellement inhabitables de la planète ; le feu qui a externalisé l’énergie qui nous épuisait lors de la digestion en permettant de précuire les aliments. La technique nous a donné des habits, des abris, des outils et nous a permis de vivre sur la Terre. Aujourd’hui, c’est encore grâce à la médecine moderne que les 15% des cas graves atteints du coronavirus sont sauvés en étant mis sous assistance respiratoire à l’hôpital. La catastrophe qui vient n’est pas nouvelle… Elle a été le quotidien des êtres humains depuis la nuit des temps, à l’exception de nos cinquante dernières années.

Plus que la modernité, je crois que c’est la postmodernité qui non pas est responsable de la crise actuelle, mais qui nous a ôté la conscience de la matérialité de notre existence, qui a retiré notre charge naturelle au profit d’une seule charge culturelle et avec cela, nos moyens d’agir dans un monde qui restera toujours aussi non-humain. Je ne sais pas exactement comment ce tournant « réaliste » se traduira dans les autres domaines, mais je sais comment il se traduit déjà en urbanisme et en architecture. Et il n’est en aucun cas réactionnaire mais au contraire ouvre de nouveaux champs d’émancipation, de liberté, d’imagination et figure un formidable débouché pour un nouveau contrat social à la fois entre les humains, mais aussi avec les non-humains.

Quand on ne parle plus de place en ville mais d’ « îlot de fraîcheur urbain », quand on ne parle plus de perspective pointant sur une statue de Louis XIV mais de brise urbaine pour rafraîchir et évacuer la pollution de l’air aux particules fines, quand on ne parle plus de la couleur d’un bâtiment selon un point de vue culturel (le rouge signifiant les pompiers, le noir le Rock n’ Roll pour faire rapidement) mais d’albédo, quand on ne conçoit plus les plans des appartements selon des principes privé-public, mais selon les taux d’humidité de l’air et des mouvements de convection atmosphérique, quand on conçoit le dessin d’une façade d’immeuble non plus pour le prestige et pour ce qu’elle signifie, mais pour isoler thermiquement l’intérieur de l’extérieur et réduire ainsi l’énergie consommée, tout cela n’est en réalité qu’un retour à la normale.