Gapping up
In reaction to strong earnings/guidance:
- EHTH +20.8%, DBX +14.4%, DCO +13.9%, NCMI +12.5%, AERI +12.4%, BAND +10.4%, SFM +8.8%, TXRH +7.6%, ZIXI +7.6%, DE +6.3%, CENX +5.4%, USM +4.4%, GLOB +4.4%, ITT +3.8%, TDS +3.2%, CNNE +2.5%, CATM +2.4%, GLPI +2.1%, SSRM +2.1%, RY +2%, HTGC +1.6%, CFX +1.6%, PRAH +1.4%, WPM +1.4%, CNK +1.3%, CASA +1.1%, VICI +1%, SBAC +1%
M&A news:
- AVX +5.4% (Kyocera to acquire all shares it does not own for $21.75 per share)
- S +2.6% (TMUS and S amend combination agreement)
Other news:
- BMRN +2.1% (announces FDA accepted for Priority Review BLA regarding valoctocogene roxaparvovec)
Analyst comments:
- CLDX +10.1% (initiated with an Overweight at Cantor Fitzgerald)
- CHWY +5.1% (upgraded to Outperform from Sector Perform at RBC Capital Mkts)
- WW +4.3% (upgraded to Buy from Neutral at DA Davidson)
- AIRG +2.6% (upgraded to Buy from Neutral at B. Riley FBR)
- REAL +2.6% (upgraded to Outperform from Mkt Perform at Raymond James)
- LB +2% (upgraded to Outperform from In-line at Evercore ISI)
The Meaning of Morgan Stanley’s Move Onto Main Street
A Wells Fargo settlement with the S.E.C. over abusive sales practices could be announced as soon as today, our colleague Emily Flitter reports. (Want this in your inbox each day? Sign up here.)
Masters of the universe pitch mom-and-pop investors
The most obvious conclusion to draw from Morgan Stanley’s $13 billion purchase of E-Trade yesterday is that it blurs the boundaries between Wall Street and Main Street, with an investment banking stalwart paying a big premium for a discount retail broker. Morgan Stanley’s traditional rival, Goldman Sachs, has made similar moves via its Marcus retail unit and credit-card partnership with Apple.
The chattering class:
• Eric Hagemann of Pzena Capital Management emailed our colleague Kate Kelly: “If they’re able to take out costs, then from a purely financial perspective buying E-Trade isn’t drastically worse than buying back their own stock, which is their main alternative use of capital.”
• Roger Altman of Evercore told CNBC: “Morgan Stanley has been leading the transformation from the wholesale side to the retail side, and this takes them further in that regard.”
• But Mike Mayo, a banking analyst at Wells Fargo, told Bloomberg, “After seeing so many of these marriages go afoul, we have more of a skeptical hat on.”
Who’s next? The deal is expected to stoke the urge to merge among other asset managers. After all, when commissions fall to zero, the only obvious ways to eke out a profit are via scale or cross-selling customers with a suite of fee-charging services.
• Interactive Brokers’ C.E.O., Tom Peterffy, told MarketWatch that his company held merger talks with E-Trade in November, suggesting that his brokerage could be up for sale.
• Wall Street players may also consider buying younger upstarts like Robinhood, the online brokerage that made its name with zero-commission trading, or Wealthfront and Betterment.
What about the regulators? Morgan Stanley’s takeover of E-Trade isn’t final until the Fed gives its blessing. The bank is betting that the Fed under the Trump administration is friendlier to post-crisis mergers than it was during the Obama years, when then-Fed governor Daniel Tarullo said in 2012 that there should be a “strong but not irrebuttable presumption of denial” for takeovers by big banks. Our colleague Jeanna Smialek caught up with Mr. Tarullo, now at Harvard, who he said his thinking remained the same. She sent us this snippet:
Mr. Tarullo said regulators needed to take into account the managerial capabilities of both firms, antitrust concerns and financial stability considerations. When it comes to stability, it matters both whether the merged company is more likely to run into trouble and whether such a stumble would cause broader problems because of the bank’s increased size.
“I’m sure people will make the argument that this is actually financial stability enhancing for Morgan Stanley,” he said, but it’s also a “big addition” to the banks’ balance sheet. So the challenge is combining both the arguable increase in resilience and any added systemwide costs of failure.
Early premarket gappers
- Gapping up:
- EHTH +18.4%, AERI +14.4%, NCMI +12.5%, DCO +12.5%, DBX +12%, BAND +10.4%, DE +8.5%, TXRH +7.2%, SFM +6.9%, ZIXI +6.4%, CENX +5.4%, USM +4.4%, GLOB +4.4%, CASA +3.5%, S +3.2%, TDS +3.2%, RY +3.2%, PRA +3.1%, AVX +3.1%, PRA +3.1%, SSRM +3%, CNNE +2.5%, CATM +2.4%, BMRN +2.1%, GLPI +2.1%, SBAC +1.8%, HTGC +1.6%, CFX +1.6%, PRAH +1.4%, CORT +1.1%, WPM +1%, CNK +1%
- Gapping down:
- EYPT -22.1%, AGRX -18.2%, LTHM -16.5%, FSLR -16.3%, ZS -12.7%, CWST -12%, APPN -10.7%, PBYI -10.3%, CNDT -9.5%, VAL -8.8%, TMST -8.4%, HBM -8.3%, UTI -6.8%, BOOM -6.5%, FSLY -6.5%, NGVT -6%, CUBE -5.2%, BLDR -5.1%, ROG -5.1%, PSO -4.9%, ENV -4%, BJRI -3.9%, BYD -3%, COG -2.9%, VICI -2.6%, DT -2.5%, CVA -2.4%, OLED -2.2%, NBR -2.2%, COLD -2.2%, PPC -1.6%, EBS -1.6%, TMUS -1.5%
Lloyd Blankfein: ‘I don’t hate the tiger. I feel sorry for the antelope’
The former Goldman chief executive on the crash, the criticism — and sparring with Bernie Sanders
Lloyd Blankfein has not had far to travel. As we take our table, Goldman Sachs’ former chief executive points to his apartment block across Columbus Circle, the Upper West Side vantage point overlooking Central Park. “Not a long commute,” he says.
It has taken a while to persuade him to do this. Since retiring from Goldman 17 months ago, he has avoided the media. Aside from the occasional tweet — more often than not to needle Bernie Sanders, the socialist Democratic presidential candidate — he has been keeping a low profile.
During his final years at Goldman, he underwent 600 hours of chemotherapy to treat an aggressive form of lymphoma. It worked. The 65-year-old is anxious ahead of our lunch that I will not misquote him. He seems to have lingering trauma from an interview he gave to a British newspaper in 2009 in which he quipped that Goldman Sachs was “doing God’s work”. His aside was taken out of context, he says. The ensuing uproar fuelled the outcry over the hefty bonuses his bank was paying out just a year after the bailout of Wall Street. “Some of you guys in the media are doing God’s work too,” Blankfein told me on the phone. Thank you, I replied. “That was also a joke,” he said.
Goldman earned its role as a lightning rod for popular rage over the 2008 meltdown. Insiders spoke of a culture in which Goldman would sell its most sophisticated products — often riddled with disguised subprime mortgages — to the most unsophisticated investors, including small pension funds, whom they dubbed “muppets”. Then they shorted their own products, leaving Goldman a winner either way. Rolling Stone described the bank as a “great vampire squid wrapped around the face of humanity”. Blankfein was paid $54m in 2007, the year before the crash. In late 2008, his bank received at least $10bn worth of taxpayers’ money.
Since its heyday as the world’s most profitable group of insiders, Goldman has morphed into an almost — I stress, almost — dull bank holding company, chafing against post-crash restrictions on its leeway to trade on its own account. Goldman’s profit margins have shrunk: its market capitalisation is less than a quarter of JPMorgan’s and it has underperformed its peers. Partly because of its search for new sources of profit, the bank became embroiled in the Malaysian 1MDB scandal. Malaysia’s former prime minister, Najib Razak, was part of a group that allegedly looted $4.5bn from the state investment fund and spent it on yachts and artworks. On Blankfein’s watch, Goldman helped arrange a series of 1MDB bond sales, much of the proceeds of which vanished. For legal reasons, he says he cannot talk about 1MDB. Goldman’s role is still under US federal investigation.
We meet at Porter House Bar and Grill, a steak house. Blankfein is in a chipper mood. His only complaint is that he has lost feeling in his left thumb after a minor operation. He needs no persuading to order wine.
“What the hell, I’m retired,” he says. He selects a Californian Pinot Noir. I take a glass of Sancerre. “You know this conversation would be a lot more fun if it was off the record,” he says. I have a hunch it will make no difference.
Blankfein became a senior Goldman executive in 1994, around a decade after the bank acquired his previous employer, the commodities trading firm J Aron & Co. Before long, he was heir apparent to Hank Paulson, Goldman’s then chief executive. In the past few years, globalisation seems to be going into reverse. I ask whether he looks back on his early years at the bank as the golden age of globalisation.
“We have two poles right now,” he says. “The first is integration — that’s uncorked. We’re not going to get the cork back in. But then there’s also nationalism and tribalism. There are cycles to history. The Roman empire integrated the world, then we went through the dark ages and feudalism.”
That analogy sounds unsettling, I say. Are we now entering the new dark ages? Blankfein, who majored in history from Harvard, tends to see things in cycles. “There are patterns. People forget. People die,” he says. “People repeat these cycles. It’s in the nature of things.”
After some banter with the server — “You guys know me: what should I have?” — Blankfein orders a Bibb salad with chunks of bacon. I follow suit. Blankfein dispatches his with gusto.
As Goldman’s chief executive from 2006 to 2018, he was arguably the world’s most influential financier. He was also one of its richest. His net worth today is estimated at $1.1bn. Unlike many of his peers, Blankfein came from the wrong side of the tracks. He was born in the Bronx in 1954 and grew up in public housing. His father worked night shifts at the post office. He was always conscious of his background. “If I’m in an elevator [with other bankers], I am thinking about the elevator operator, or thinking of the taxi driver’s name, and where his kids are from,” he says. “I’m not trying to be cute. I feel a little bit outside looking in.”
Does he worry the elevator that enabled his rise is breaking down? Today is hardly a great time to be middle class in America. “People sentimentalise the past,” he says. “Every time someone waxes nostalgic about how much better it was when America was really great, before we felt the need to make it great again — joke! Not God’s work — I remind them of what it was like.”
He explains that the schools were only good because the women who staffed them were blocked from jobs in business and industry. Half the country was segregated when he was born. “When I went to school you couldn’t go to the bathroom because you were afraid of getting knifed. My high school was on triple session: three shifts a day. We didn’t have airconditioning, either.”
I remind him that Sanders sees things differently. “Did you see my tweet exchange with Bernie?” he asks. I did indeed. Last summer, Sanders published a list of “anti-endorsements” of plutocrats who disliked him, which included Jamie Dimon, JPMorgan’s chief executive, and Blankfein. The latter tweeted at Sanders: “He’s always looked down on me because he grew up in a fancier neighbourhood in Brooklyn.” Sanders responded: “Actually, my concern has to do with the fact that you had no problem getting bailed out by working Americans.”
Blankfein also played a starring negative role in an advertisement by Elizabeth Warren, the other left-leaning Democratic candidate, to which he again reacted on Twitter. He clearly enjoys getting under their skin — and vice versa. Blankfein says he is a life-long Democrat and donated to Hillary Clinton’s 2016 campaign.
Our main courses have arrived. Blankfein has ordered a filet mignon, medium-rare — “I feel guilty because I know you guys are paying,” he says. Mine is a salmon steak. I mention that Sanders is now favourite to be the nominee. Blankfein does a mock frown. “I’m not sure Bernie likes people — he’s ideological,” he says. “But who am I to characterise these things? It’s like Hamlet with Rosencrantz and Guildenstern: ‘You can’t play this flute, how could you play me?’ In my view Bernie could talk to a six-year-old kid and he is looking over their heads out to the great expanse.”
We are meeting just two days after Trump was acquitted by the Senate. Many Democrats are warning that a second Trump term would jeopardise the US republic, I say. Some, including Michael Bloomberg, the former mayor of New York and a friend of Blankfein’s, have pledged to support whoever becomes the nominee — even if it’s Sanders. Removing Trump is their overriding priority.
Look, I am a Democrat, but they said those things in a shrill way to raise the stakes on the outcome,” Blankfein says. “I don’t think it’s unreasonable or cynical for a legislator to have said that what Trump did was wrong, and showed bad character, but it was not at a level where we’re going to overturn an election nine months before the next one.”
But Trump is already taking revenge on those who testified against him, I protest. “Bill Clinton, who I supported, perjured himself,” Blankfein replies. “That’s a literal crime. And he was acquitted.” Just to be clear, I press, you do not share the Democratic party’s fears about Trump’s autocratic leanings? “Look, it’s crazy not to acknowledge the economy has expanded under Trump,” Blankfein says. “Some of this is related to tax reform. The cheapest stimulus is getting rid of dopey regulations [including on Wall Street]. All I’m saying is that Democrats would have a far stronger case if they conceded what was good.”
Though Blankfein remains as cheerful as when we sat down, I can feel the thermometer rising a little. Who would you pick if it boiled down to Trump or Sanders, I ask. For the first time in our exchange, he pauses. “I think I might find it harder to vote for Bernie than for Trump,” he says. “There’s a long time between now and then. The Democrats would be working very hard to find someone who is as divisive as Trump. But with Bernie they would have succeeded.” But you would say that, I reply, because you are a billionaire. Sanders is proposing a wealth tax on people like you. “I don’t like that at all,” says Blankfein. “I don’t like assassination by categorisation. I think it’s un-American. I find that destructive and intemperate. I find that just as subversive of the American character as someone like Trump who denigrates groups of people who he has never met. At least Trump cares about the economy.”
Having demolished our entrées, we both order coffee. Blankfein asks me to add milk to his — his dead thumb is giving him trouble. “It’s the nerve agent,” he says. He weighs up whether to order more wine and decides against. “I can’t imagine how all this is going to come out when you publish,” he says, looking fleetingly concerned. “If I tried to educate people, and said these things in public, people would go batshit.”
I am not sure how to respond to this. It has been almost 12 years since the Wall Street bailout, I say. Some people argue that today’s populism is partly an after-effect of that moment. Was the fact that Barack Obama chose not to prosecute senior Wall Street figures a factor in the populist backlash? “Look, you have to commit a crime to go to jail,” says Blankfein. People accuse Wall Street both of “being too clever by half” and of complete stupidity, he says: “Which is it? I think they [bankers] were stupid,” he continues. “Stupidity isn’t a crime. In fact, it’s a defence. Evil intent is necessary in criminal law. If you’re stupid, how did you have intent?”
Many don’t see it that way at all, I reply. They think Wall Street did very well for itself by exploiting the gullibility of others — the poor, the credit rating agencies, less well-connected investors, and finally the taxpayer. “I had a thick skin vis-à-vis the press,” Blankfein says. “But people misrepresent things. I don’t hate them [the media]. People have their job to do. I watch videos of tigers eating antelopes. I don’t hate the tiger. I feel sorry for the antelope. I don’t use the word ‘unfair’ like Trump does. But I think some of it was disproportionate.” It feels like a good moment to do something uncharacteristic — quote Queen Elizabeth: why did no one see this coming?
“If something goes right, people will say they saw it coming,” says Blankfein, before switching to a very different analogy. “You are like the samurai and you walk the streets and then you have a war and the samurai lose. We drive the risk, people lavish praise on us, then it blows up on your watch. What are people supposed to think about you?”
I am still trying to digest the image of Blankfein and his peers as antelopes. The idea that they are unfairly dishonoured samurai is a mental leap too far. But if all the world’s a stage, as Shakespeare says, doesn’t society need the closure of justice, I press? “People need culprits,” says Blankfein. “Who was responsible for this earthquake? Maybe earthquakes just happen. They [post-crash investigators] went through 250,000 of my emails and they found nothing. If I had had my druthers I would have bought more [of what Goldman was selling].”
What does having so much money do to your head, I ask? Blankfein confesses that he remains an “obsessive” investor, but insists money is not an end in itself. Though he has set up a family foundation, he is increasingly fidgety about his lack of a full-time job.
Most of his peers at Goldman ended up in public service. Robert Rubin was Bill Clinton’s Treasury secretary. Hank Paulson did the same job in George W Bush’s administration. Gary Cohn was economic adviser to Donald Trump. Hence the moniker “Government Sachs” — or “Death Star of political influence”, as Rolling Stone put it. I imagine Blankfein would be an obvious pick for a Bloomberg administration. “I know Mike, I was a customer of his [for Bloomberg terminals],” he says. “I played golf with him. I like him and admire him. We are lucky Mike is paying the personal price of running.”
Wouldn’t life be simpler if you were just able to enjoy being rich, I ask. Even with a wealth tax he would have enough money to ensure his descendants can be full-time philanthropists in perpetuity. Blankfein insists he is “well-to-do”, not rich. “I can’t even say ‘rich’,” he insists. “I don’t feel that way. I don’t behave that way.” He says he has an apartment in Miami as well as New York. But he abjures most of the trappings. “If I bought a Ferrari, I’d be worried about it getting scratched,” he jokes. “Ken Griffin [the Chicago-based hedge fund billionaire] buys all these houses. He’s out there every minute, calling the office. It can’t make any sense to people outside.”
Since I have a train to catch, I suggest Blankfein’s time must be running short. He laughs: “You’re the one with the job.” After settling the Goldmanesque-sized bill, I squeeze in a last question. Does Blankfein share Bloomberg’s view that global warming matters more than anything else? “I’m not so worried,” he shoots back. “I live on the 16th floor.” After a pause he adds: “That was a joke.” I protest that I had already acknowledged that. “Just wanted to be sure,” says Blankfein.
Then, like a gazelle — or is it a nimble medieval warrior? — he vanishes.
>>> Consensus New Buys
* XP Inc (XP): First off, it’s worth pointing out that there really weren’t many consensus new buys in the last quarter of 2019. Not to mention, the few that appeared in numerous hedge fund portfolios were the result of either an initial public offering (IPO), like XP, or some other corporate transaction occurring. Funds that show new positions in XP include Hound Partners, Duquesne Family Office, Tiger Global, Third Point, Lone Pine Capital, and Maverick Capital. The company is a provider of brokerage, investment advisory, and asset management services in Brazil. It IPO’d at $27 per share in a $2 billion debut and now trades around $41. As with any IPO, some funds will merely flip the shares for a quick profit so next quarter’s filings will reveal if any of them are playing this as a longer-term holding.
* Unitedhealth (UNH): This was the only stock that funds bought in the open market with consensus. During Q4, Maverick, Brave Warrior Advisors, Sequoia Fund, and Viking Global all initiated new stakes. Healthcare stocks in general took a hit late last year on fears that Democratic presidential candidates on the far left would push Medicare for All plans that would hurt industry stalwarts. UNH is the largest health insurer in America.
* Bristol Myers Squibb Contingent Value Rights (BMY/R or BMYRT): Celgene (previous ticker CELG) was acquired by Bristol Myers Squibb (BMY) during the quarter and as a result of the transaction, CELG shareholders received 1 share of BMY, $50 in cash, and one tradeable Contingent Value Right (CVR) per each share of CELG owned. Per the deal’s press release, this CVR “will entitle the holder to receive a payment of $9.00 in cash if certain future regulatory milestones are achieved.” This is essentially a binary wager, as shareholders will get $9 or nothing. It’s dependent on whether three pipeline drugs are approved by certain dates. The drugs are ozanimod (multiple sclerosis), liso-cel (lymphoma), and bb2121 (multiple myeloma). The latter will have to receive approval from the FDA by the end of 2020, while the other two need to be approved by the end of Q1 2021.
>>> Consensus Increased Positions
* Facebook (FB): While the social media giant has faced all kinds of scrutiny regarding potential regulatory issues, data privacy issues, and more, the company continues to print money as an ad-targeting machine. Funds that bolstered their exposure to the name include Tiger, Duquesne, Lone Pine, Coatue, and Viking. Its Instagram platform has been stepping more into e-commerce, its messaging play WhatsApp will be rolling out WhatsApp Pay in various countries, while its legacy Facebook platform has been experimenting with things like dating.
* Uber Technologies (UBER): Shares of the ride-hailing, food delivery, and freight company were acquired by Duquesne, Lone Pine, Tiger Global, and Viking. Tiger and Viking in particular really ramped up their exposure in a big way and it’s now their 8th and 5th largest holdings respectively. The company has recently seen growth accelerate as it tries to become profitable by year-end.
* Fidelity National Information (FIS): Funds such as Maverick, Duquesne, Third Point, and Farallon all accumulated more shares of the financial services technology company.
* Monster Beverage (MNST): Coatue, Maverick, and Viking were among some of the hedge funds that sized up their position in this energy drink maker. The recent dip in shares was caused by Coca Cola’s (KO) entrance into the energy drink market with Coca Cola Energy. Coca Cola also owns 17% of MNST and part of the bull thesis has always been that KO could one day possibly acquire the rest of MNST. Their new beverage entry adds a new wrinkle to the relationship, though MNST has already faced competition from the likes of RedBull, Rockstar, and 5-hour Energy.
>>> Consensus Sold Positions
* Booking Holdings (BKNG): The online travel giant that houses entities like Booking.com and Priceline was sold by the likes of Farallon, Coatue, and Lone Pine. The travel space has always looked over its shoulder at Google, who they rely heavily on for advertising to generate leads. While Google makes a pretty penny from these companies (they’ve historically been the company’s biggest ad customers), that hasn’t stopped them from exploring ways to extract more value as the top of the funnel in travel searches.
* Mergers / Buyouts / Corporate Activity: Celgene (CELG), Sotheby’s (BID), Tiffany & Co (TIF), Altaba (AABA), & Fitbit (FIT): Funds throughout the issue will show ‘sold’ positions in all of the above names, but really this is a result of various corporate transactions closing. Celgene was bought out by Bristol Myers Squibb (BMY). Sotheby’s (BID) was taken private by Patrick Drahi. Tiffany & Co (TIF) will be purchased by Bernard Arnault’s LVMH Group. Altaba (AABA) – the former holding company that owned a large stake in Alibaba - no longer trades. And lastly, Fitbit was purchased by Google.
>>> Consensus Decreased Positions
* Microsoft (MSFT): This is now the third time in a row that MSFT lands on this list. The most likely explanation is risk management and position sizing, given that MSFT shares have performed so well and swelled position sizes. Funds that trimmed exposure before year-end included Tiger, Maverick, Hound, Viking, Duquesne, Lone Pine, and Tiger Global. Duquesne in particular cut its position in half after owning the software giant for many years. Despite this cut, it still remains their second largest position. While historically known for their Windows and Office software, Microsoft’s Azure cloud computing segment has been the real growth driver lately.
* Alibaba (BABA): Position sizes in the dominant Chinese e-commerce company were reduced by Sequoia, Duquesne, Viking, Farallon, Maverick, Tiger Global, and Lone Pine during the fourth quarter. While this didn’t affect the company at the time of their sales, BABA recently noted that it will see weakness from the spread of the coronavirus in the country as quarantines and fear have disrupted supply chains and caused economic activity to drop drastically in the first few months or the new year.
* Amazon (AMZN): Hedge funds that reduced exposure to Jeff Bezos’ e-commerce and cloud computing giant include Pennant Investors, Duquesne, Sequoia, Coatue, Lone Pine, Tiger Global, and Viking. There weren’t necessarily any big catalysts to trigger the selling during the quarter and AMZN shares largely traded sideways. Perhaps this was merely a case of locking-in some gains or freeing up some capital to deploy into new opportunities.
Oil trader Pierre Andurand suffers big hedge fund loss
London-based fund extends rough run in choppy period for energy markets
Pierre Andurand, one of the world’s best-known oil traders, has suffered a big loss in his hedge fund during a turbulent start to 2020 for energy markets.
Mr Andurand, founder of London-based Andurand Capital Management, one of the last few hedge funds specialising in oil, experienced a loss of about 8 per cent in his main fund in January, according to three people familiar with its performance.
The fund, which last year was managing about $1bn in assets, also lost money in 2018 and 2019, with January extending the streak of declines for a trader who used to pride himself on beating often-volatile oil markets.
The tough start to the year comes after many energy traders were caught out by a reversal in one niche part of the market affecting diesel and high-sulphur fuel oil. The fallout appears to have hit Mr Andurand’s fund. His firm declined to comment.
Mr Andurand, a kick-boxing devotee and former champion swimmer, has in the past recruited a number of Olympic gold medallists to his roster of analysts and traders, working out of offices overlooking the luxury department store Harrods in Knightsbridge, London.
The 43-year-old trader has a reputation for taking big directional bets on the oil price. That helped his fund gain 38 per cent in 2014, ranking it among the world’s top-performing funds, and 22 per cent in 2016.
Before launching Andurand Capital, the former Goldman Sachs and Vitol trader co-founded BlueGold Capital with Dennis Crema, an ex-Vitol and Amerada Hess executive. The fund made more than 200 per cent in 2008, as oil prices first spiked and then collapsed. BlueGold closed in 2012.
However, in addition to those big bets on crude movements, Mr Andurand also tries to profit from smaller inefficiencies by wagering on changes in the price of one oil contract against another.
In January, a popular bet had been that with the implementation of new rules on shipping emissions at the start of the year, known as IMO 2020, the price of diesel would rise while the price of high-sulphur fuel oil would fall, as vessels around the world switched to cleaner fuels.
But the expected tightness in the diesel market did not materialise as refiners proved adept at blending lower-sulphur fuel mixes to boost supplies.
At the same time, some ship owners were keen to keep using high-sulphur fuel oil, either because they had installed sulphur-stripping scrubbers on their vessels, or because they were concerned that the new fuel blends might damage their engines.
As refiners produced less high-sulphur fuel oil, an unexpected scramble for barrels ensued, sending prices spiking higher. The result was that diesel’s premium over its dirtier rival, rather than expanding, fell by almost a third in January.
Crude prices were also volatile, first jumping to near $70 a barrel after the US assassinated Iranian commander Qassem Soleimani, before falling back to near $55 by the end of the month as the coronavirus outbreak squeezed demand in China.
At Prada, it is business not as usual
Miuccia Prada turned out clothes for power dressers as the brand declined to comment on succession rumours
A great big question mark has hung over Prada in recent months. In October, news that the listed Italian company had wrested control of certain flagship stores from the Prada family fuelled speculation of an imminent takeover. At the menswear shows in January, the front row was abuzz with talk that Raf Simons was consulting for the brand and would soon be appointed creative director of the men’s collection, Miu Miu, or even the whole shebang.
Prada declined to comment on both counts, with one executive asserting there was “nothing on the table” with Simons (a designer Miuccia Prada said she would “love” to work with in a 2016 interview).
Against such a potent cocktail of will-they-or-won’t-they, Wednesday’s show, held at the Prada Foundation complex on the second day of Milan Fashion Week, was inevitably anticlimactic. At their best, Ms Prada’s collections challenge the conventions of good taste and alter the course of fashion; other times, she serves up saleable clothes and accessories that riff on her greatest hits. Her Autumn/Winter collection was the latter, with grey wool blazers and top coats belted over car-wash skirts, sporty sandals strapped over opaque rib-knit tights, and black nylon bags in rich supply. The problem here is that the Prada customer already owns most of these.
Clothes are rarely surveyed from above, Ms Prada observed backstage — least of all at fashion shows. And so she decided to turn her venue into an Italianate courtyard, with guests gazing down at a procession of models in Oxford shirts and suit ties layered under big-shouldered blazers and other paradigms of 1980s power dressing. These were juxtaposed with elements of classic femininity — a pencil skirt, a cinched waist, a shiver of jet fringe — and Art Nouveau florals flattened on to intarsia knits and top-and-trouser co-ords. (The Vienna Secession, Austria’s version of the Art Nouveau artistic movement, was a reference point.)
Lust-worthy were a pair of capacious patent gilets in black and bubblegum pink faced with faux shearling. Prada pledged last year to phase out fur starting with this collection — hence the faux.
Last year Prada also inked a deal with L’Oréal to launch a make-up line, and what looked like metallic tech accessories were actually cosmetics compacts and minaudières strung from necks and strapped to wrists, a spokesperson confirmed, promising that more details would be revealed on Friday.
Prada’s brand is far bigger than its business, and make-up presents a significant opportunity for a company with a strong reputation for colour. As for the rumours — let’s wait and see.