FT : John Elkann/Exor: shrewd steward breaks from cover

John Elkann/Exor: shrewd steward breaks from cover
Holding company of Italian industrial dynasty confirms sale of PartnerRe for $9bn

The good timing that took the Agnelli family into car production in 1899 has stayed with them. They are getting out of insurance as falling rates hurt the sector’s prospects. Exor, the holding company of the Italian industrial dynasty, confirmed the sale of PartnerRe for $9bn on Wednesday.

Exor bought the Bermuda-based reinsurer at a valuation of $6.9bn in 2016. The disposal, to French mutual insurer Covea, will net a tidy return. No surprise there. Covea’s bosses were eager buyers, on the rebound from a fumbled attempt to buy rival Scor. John Elkann, the boss of Exor, is a shrewd operator.

Gianni Agnelli, in his day the quintessential Italian tycoon, chose his grandson as his successor. That bequest could have been a poisoned chalice. But Mr Elkann has balanced family legacy with a modernising instinct. Exor has produced ten-fold returns during his decade at the helm. 

This has reflected the protracted turnround of Fiat Chrysler Automotive by Sergio Marchionne, who died in 2018. Last year, Mr Elkan orchestrated a merger agreement between FCA and Peugeot, bringing much-needed consolidation in a weakening industry.

Once PartnerRe is disposed of, Exor’s key remaining assets will be a one-third stake in FCA and a similar holding in sports car maker Ferrari. Exor’s mix of assets remain eclectic. They include Juventus football club, alongside holdings in The Economist and the business that owns newspapers La Repubblica and La Stampa. 

This diversity gives some investors the jitters. Like conglomerates, holding companies usually trade below the value of underlying assets. Exor’s discount was a quarter of its net asset value in November. Lex calculates that has widened to about 35 per cent.

The influx of cash from the PartnerRe sale should help narrow that gap. The challenge for Mr Elkann is to win a better rating once proceeds have been reinvested or spent on a special dividend.

Investors should remember a simple rule when buying the shares of a dynastic business: you are hitching a lift in the family limo, not hailing a taxi whose destination you can dictate. Mr Elkann deserves credit for the stylishness of his driving. He is worth backing.

>>> Regeneron expects coronavirus med to be ready by August; shares up 4%

Regeneron expects coronavirus med to be ready by August; shares up 4%

In an interview with CNBC, Regeneron Pharmaceuticals (REGN +4.1%) CEO Leonard Schleifer said that the company should have its coronavirus treatment ready for human testing by August. It expects to be producing 200K prophylactic doses by then.

Over the next few weeks, company scientists will screen a range of antibodies to identify the best ones to block the virus.

He also said that it is "committed" to an affordable product for patients

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance:

  • CDLX -27.6% (also names new CEO), JWN -7.9%, URBN -6%, AVAV -4.6%, DLTR -3.5%, HPE -2.7%, ROST -2% (also increases dividend), NAV -1.4%, PLAB -0.8%

Other news:

  • CDLX -27.6% (appoints various management transitions; names Lynne Laube as CEO, effective May 15)
  • FFIC -0.5% (files for $400 mln mixed securities shelf offering)

Analyst comments:

  • CVE -1.3% (downgraded to Neutral from Overweight at JP Morgan)

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance:

  • YEXT +11.9%, CVET +10.8%, CNC +9.1% (updates guidance to include WellCare acquisition), FOXF +8.5%, AMBA +6.5%, HIIQ +6.4% (also plans to change name and ticker), BNFT +6.4%, ANF +6%, OSPN +4.5%, VEEV +3.9%, CPB +3.5%, GE +3% (reaffirms FY20 guidance) CNR +1.2%

Other news:

  • NCNA +12.1% (EMA COMP has issued a positive opinion for orphan drug designation of Acelarin for the treatment of patients with biliary tract cancer)
  • KPTI +4.6% (prices offering of 6.25 mln shares of common stock at $24.00 per share)
  • AMAG +4.6% (announces changes to its medical development organization; effective March 31, 2020, Julie Krop, Executive Vice President and Chief Medical Officer, will be leaving the Company)
  • OGI +4.2% (announce that effective today Paolo De Luca, the Company's current CFO has been appointed Chief Strategy Officer and Derrick West, currently on the Company's Board of Directors, is joining the Company as its CFO)
  • LMNX +2.9% (updates on the company's plans, progress, and capabilities in assisting laboratories to detect and diagnose cases of' COVID-19)
  • EHTH +2.6% (prices 1.8 mln shares of common stock at $115.00 per share)
  • ACAD +2.4% (announces that the FDA granted Rare Pediatric Disease designation to trofinetide for the treatment of Rett syndrome)
  • BMY +2.3% (Bristol-Myers and Voluntis announce collaboration agreement to develop digital therapeutics for oncology)
  • T +1.6% (recaps shareholder updates from conference; enters $4 bln ASR agreement)
  • PTEN +1.5% (Feb drilling update)
  • MKTX +1.3% (announces monthly trading volume for February of $592.1 bln)
  • EXAS +1.3% (completes acquisitions of Paradigm Diagnostics and Viomics)

Analyst comments:

  • FATE +8.5% (initiated with an Overweight at Barclays)
  • CRON +4.5% (upgraded to Buy from Neutral at MKM Partners)
  • AA +3.2% (upgraded to Neutral from Underperform at BofA/Merrill)
  • CMG +2.8% (upgraded to Overweight from Equal Weight at Wells Fargo)
  • ANET +2.6% (upgraded to Neutral from Underweight at JP Morgan)
  • HD +2.6% (upgraded to Buy from Neutral at Nomura)
  • AGNC +2.6% (upgraded to Outperform from Neutral at Wedbush)
  • PFPT +2.4% (upgraded to Strong Buy at First Analysis Sec)
  • WM +2.4% (upgraded to Buy from Neutral at UBS)
  • TGT +2.1% (added to Conviction Buy List at Goldman)
  • MS +2% (upgraded to Buy from Neutral at Citigroup)
  • ORCL +1.6% (upgraded to Buy from Hold at Societe Generale)