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Bayer (BAYN TH) +4.2%
- Bayer’s Roundup Challenge: Avoid Another ‘Nuclear’ Jury Verdict
- Evraz (EVZ TH) +3.8%
- Evraz Reader Interest Increases; Option Volume High
- Hochtief (HOT TH) +1.7%
- Shares fell 8% yesterday
- HelloFresh (HFG TH) +1.5%
- Hermes International (HMI TH) +1.4%
- Infineon (IFX TH) +1.3%
- Watch Europe Chip Stocks After Intel Reports Data Center Boost
- Total (TOTB TH) +1.2%
- Wirecard (WDI TH) +1.2%
- Tomra (TMR TH) +1.1%
- Pernod Ricard (PER TH) -0.7%
- Remy, Pernod, Carlsberg, ABI at Risk From New Virus: Citi
- Centrica (CENB TH) -1.1%
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Ericsson (ERCB TH) -2.1%
- Ericsson Takes a Hit From T-Mobile-Sprint Deal Delay (1)
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Nokian Renkaat (NRE TH) -2.6%
- Nokian Renkaat Sees 2020 Op. Profit ‘Significantly’ Below 2019
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NMC Health (0N1 TH) -7.1%
- Emirates NBD Sells 2.16m NMC Shares at Price of GBP12.50/Share
Drinking culture in legal world under scrutiny following scandals
Changing attitudes at top firms driven by fear of misconduct
One junior lawyer in London says a key feature of life at his elite City law firm is the eagerness of senior colleagues to make sure everyone “drinks up” at certain events.
He can recall “a few nights out that got pretty wild, some of them work-sponsored” and even threw up in his office after the Christmas party.
But he says the firm’s attitude to such behaviour is shifting — and that partners have grown increasingly nervous about joining in.
“Partners [senior lawyers] are terrified of going drinking with associates now,” he says. “And there’s basically an informal policy now that partners should never go drinking with female associates.”
Law is in the middle of a crisis over its drinking culture. The largest global groups are scrambling to clamp down on firm-sponsored drinking following a string of sexual misconduct scandals exacerbated by the prevalence of heavy drinking in the industry.
“Law firms aren’t alone but we’ve seen some high-profile problems recently,” says a London-based partner at a US firm. “The days of big p*ss-ups are gone and if law firms still want to turn a blind eye to it, then they should expect trouble.”
Alcohol has traditionally played a prominent role in the legal world, particularly in the high-octane domain of corporate law, where it acts both as a social lubricant when winning new clients and as a pressure valve for those working long hours. Parties and expensive wine are ways of knitting together young lawyers on intensive placement schemes and new hires poached from rival firms.
However, as the #MeToo movement spreads from Hollywood to the corporate world, the role alcohol plays in alleged misconduct issues at top-tier firms has come under scrutiny.
“The #MeToo [anti-sexual harassment] movement was a seismic shift and has moved into all areas where there’s the ability to abuse power — that of course includes law firms,” says another senior partner in the City.
Senior male lawyers at UK firm Freshfields and Baker McKenzie were last year accused of sexual harassment and hauled in front of the UK lawyers’ regulator.
Ryan Beckwith, a former restructuring partner and insolvency partner at Freshfields, was fined £35,000 after following home and engaging in sexual activity with a heavily intoxicated junior lawyer. He was also ordered to pay £200,000 in legal costs and has resigned.
Gary Senior, the former London boss of Baker McKenzie, has been accused of attempting to kiss a junior colleague in his hotel room after a recruitment event, and then trying to influence an investigation into his conduct. He denies the allegations against him and the case is ongoing.
The hearings exposed lurid details in which senior lawyers bankrolled all-day drinking sessions in Michelin-starred restaurants and paid for alcohol in bars and hotels.
They have triggered a rethink in attitude among firms and partners in the City, who have moved to detox their cultures.
“We have seen alcohol involved in many cases of sexual harassment and misconduct so the profession really needs to face up to this,” said Kieran Pender, senior legal adviser at the International Bar Association.
One partner at a large US firm confessed to feeling nervous about whether he could justify ordering wine at a lunch with more junior lawyers. “I just thought: no actually, let’s not,” he said. “It’s not worth it.”
Linklaters now asks lawyers to designate sober team members at events, a scheme it launched last year in advance of the Christmas party. The firm said the scheme was designed to “assist the smooth running of our social events”.
Baker McKenzie has enacted a drinking curfew at its events — a policy that began before last year’s Christmas party, according to an individual at the firm. The firm said it was “making a conscious effort to review and reduce the time over which alcohol is served, particularly for internal events”.
Baker McKenzie remains under investigation for an alleged cover-up into the accusations against Mr Senior, who allegedly tried to sway the outcome of the case. The firm denies there was a cover-up.
“Generally I think that health choices are for us all to make individually,” said a litigation partner at a rival firm. “But whether you like it or not we’ve seen so many problems becoming public that have arisen from alcohol.”
Meanwhile Slaughter and May has cancelled subsidised ski trips due to fears over heavy drinking. The decision followed an allegation of sexual harassment, but the firm said it was taken as part of a regular “risk management review”.
Freshfields has taken a tougher approach to potential misconduct. Last year its partners voted to establish a conduct committee with the power to fine partners who receive final warnings about their behaviour up to a fifth of their profit share for the year.
The legal sector is not alone. Insurers at Lloyd’s of London were banned from consuming alcohol during working hours in 2017. Accountancy group BDO, like Linklaters, has introduced a “sober chaperone” scheme at its Christmas party.
But some lawyers warned that obsessing about alcohol risked missing the real issue. “I am concerned that increasing the focus on alcohol and committing guidance to policy documents may be nothing more than easy window-dressing for firms,” said Amanda Cowell, a partner at White and Case. “Unless firms become healthier places to work, instances of such conduct will not reduce in number or seriousness.”
Mason Morfit takes charge at ValueAct — 13 years after being tipped
Son of a diplomat has reputation as activist hedge fund manager companies can love
Becoming chief executive of the activist investing fund ValueAct Capital has not been without its physical challenges for Mason Morfit. The firm’s founder, Jeff Ubben, tried to make him swim in a glacier lake in Montana to make him partner. James Gorman, Morgan Stanley’s chief executive, challenged him to a rowing fitness contest, after the fund took a stake in the bank.
The 44-year-old has become accustomed to being challenged.
“Mason walked in off the street when he was 25,” Mr Ubben said. “He was a Princeton friend of an analyst who worked with me before ValueAct, and . . . I was just looking for a warm body. I got about three months of free work from him.”
Mr Morfit spent the following years travelling around the country with Mr Ubben to “crash analyst meetings together” and helping to run the business when Mr Ubben was forced to spend much of his time focusing on ValueAct’s sizeable investment in Martha Stewart Living when its founder was charged with insider trading.
This week Mr Morfit took the reins for real, as Mr Ubben relinquished the chief executive title to become chairman. The moment had been a long time coming. As early as 2007, Mr Ubben told Mr Morfit he would be his eventual successor, and a decade later, he handed over daily oversight of ValueAct’s portfolio, giving Mr Morfit the chief investment officer title.
“In 2007 he was the youngest person on the team but he was also the one who was going to take the reins because he was very comfortable with risk,” Mr Ubben said. “And the funny thing is, everybody saw it, too. We weren’t huge back then, we probably had four investment partners, five analysts. When I said that Mason was the successor, [there was] just zero pushback.”
Mr Morfit, the son of a US diplomat, was raised in India and Indonesia before his family moved to Washington when he was in junior high. He attended Sidwell Friends, a Quaker school that counts the children of former presidents from Theodore Roosevelt to Barack Obama as alumni, then Princeton University. He was working in New York as a research analyst at Credit Suisse when he was introduced to Mr Ubben.
Mr Morfit’s influence can be seen in the fund’s four biggest current stakes: Morgan Stanley and Citigroup, private equity giant KKR and Seagate Technology, a data storage company, said Mr Ubben. The firm’s Master fund was up about 32 per cent last year, roughly in line with the return on the S&P 500, enough to make ValueAct one of the best-performing shareholder activists.
“It’s a bull market so everyone feels smart, but I think the stocks we own are going up for a reason,” Mr Ubben said. “And this was his call, it’s his portfolio. And he made those choices and I think ValueAct would be in a very different place without him.”
ValueAct pioneered a constructive style of activism, shunning public battles in favour of gaining board seats and working with management to turn round companies they think are undervalued. The fund may be pushing even harder away from the “activist” label with Mr Morfit at the helm.
John Thompson, the chairman of the board at Microsoft, said that when ValueAct became a shareholder in 2013, the technology group’s then chief executive Steve Ballmer was trying to negotiate his departure privately and “the last thing we wanted was an activist investor joining our board”.
Mr Thompson got in touch with a former director at Valeant, the pharmaceuticals company where ValueAct was then a shareholder, to ask about their experience with the firm.
“They said it’s not about the firm but it’s about who from the firm becomes involved,” Mr Thompson recalled. “And he said the person from the firm you want is Mason Morfit.”
The Microsoft board negotiated a deal with ValueAct that they could join the board after Mr Ballmer’s successor was decided, and that the seat would go to Mr Morfit.
In one of his early meetings with ValueAct, Mr Thompson said he was “pleasantly surprised” to find Mr Morfit “less violently opinionated” than Mr Ubben. Mr Thompson was also impressed that when the new director started lobbying for changes around capital allocation early on in the tenure of Mr Ballmer’s successor, Satya Nadella, Mr Morfit agreed with Mr Thompson’s request to be patient first.
In a recent interview, Mr Morfit said he wants ValueAct to be viewed as a shareholder that companies which are going through change want to have on their share register.
Executives at some of the companies ValueAct is invested in said they have appreciated Mr Morfit’s input.
Mike Corbat, chief executive of Citigroup, said he first spoke to ValueAct when the fund got in touch to say they were building up a position in the bank.
“We did our homework around ValueAct and Mason in particular and his reputation,” said Mr Corbat. “I think he’s a good listener, I think he’s been very good and fair. He doesn’t waste our time on things, and he’s not only wanted to know about our business but he’s gone out of his way to learn about our people and our leadership.”
Scott Nuttall, the co-president and co-chief operating officer of private equity giant KKR, said he and Mr Morfit have bonded over growing up in founder-led organisations where the reins are slowly being handed over to them.
“One of the early meetings we had was with him, Henry [Kravis, KKR’s co-founder], Jeff [Ubben] and me,” Mr Nuttall said. “We were both navigating similar circumstances, trying to figure out how to build and lead a talent-based organisation where the founders were still part of the organisation.”
“We’ve developed a separate relationship about how do you do that,” Mr Nuttall added. “We’ve been through a lot of what they’re going through.”
Mr Morfit encouraged KKR to consider becoming the first of the major private equity firms to ditch its partnership structure in favour of becoming a corporation, a move that has helped boost its share price. KKR shares are up about 85 per cent since ValueAct first disclosed their stake.
Mr Ubben conceded that handing over to new leadership could be rocky for a hedge fund. Investors have been “watching” through the handover to see how it would work out, and it has seen shrinkage in its assets.
“Most firms don’t go through a transition, they tend to convert to a family office, so I would say the investor response is generally patient but certainly not willing to increase their bet with us,” he said.
Stocks in Asia struggled for traction as investors mulled the situation arising from the deadly coronavirus outbreak. Oil steadied after its recent slide.
U.S. equity futures were steady, while shares closed little changed in Tokyo and Sydney, and ticked higher in Hong Kong. As officials in China widened their travel ban beyond the epicenter of the outbreak, the World Health Organization stopped short of calling the virus a global health emergency, saying it remains a local crisis. The yuan edged up and the yen held Thursday’s rise. Treasuries were little changed.
Markets in mainland China and South Korea are shut, and Hong Kong closed early, for lunar new year holidays.
US After Hours EHTH +16.6%, TEAM +9%, INTC +6%, HSC -15%, DFS -5.6% among notable earnings/guidance movers
Nikkei +0.13% Hang Seng +0.15% China Closed Lunar New Year - Year of the Rat {U6} {CH}
Eur$ 1.1050 CNH 6.9227 CNY 6.9426 JPY 109.53 GBP 1.3134 CHF 0.9703 RUB 61.8813 TRY 5.9301 WTI$ 55.78 +0.34%
S&P +0.10% EuroStoxx +0.72% FTSE +0.72% Dax +0.88% SMI
Macro :
- China Locks Down 30 Million People as Anger Grows Over Virus
- Pound Traders Braced for PMI Friday After Rate-Cut Pricing Swing
Keep an eye on :
- ABI BB : Ambev Extends Losses as Guedes Reportedly Mulls ‘Sin Tax’
- AIR FP : Ryanair Considering Up to 100 Airbus Aircraft Orders: WiWo
- ATC NA : Altice Simplifies Capital Structure With EU2.1b New Notes
- ALO FP : CAF, Stadler, Alstom Bid for Renfe’s EU2.7b Contract: Expansion
- ATL IM : Atlantia Seeks Deal With Italy on Autostrade, CEO Tells Stampa
- BAYN GY : Bayer Is Said to Discuss $10 Billion Roundup Settlement --> +2.8% After Hours
- BYW6 GY : Credit Suisse in Talks on BayWa Renewables Stake: Rtrs (Earlier)
- BOI FP : Boiron Still Expects Strong Decline in 2019 Operating Result
- CA FP : Carrefour 4Q Sales Meet Estimate Despite Dip in France
- EVD GY : CTS Eventim Buys Majorty of Two Swiss Entertainment Firms
- DAI GY : Mercedes Mulls More AMG Hybrids for Clean Growth at Premium Unit
- DEZ GY : Deutz Shares Fall for Third Day After Customer’s Profit Warning
- ECONB BB : Econocom Full Year Revenue 3.9% Above Estimates
- EDPR PL : EDP Says Offshore Venture With Engie to Be Operational During 1Q
- EXM BB : Exmar Sees Sinosure Freeing $40m From FLNG Account ‘Within Days’
- ENGI FP : Engie in JV Agreement With EDPR for Offshore Wind Power
- ENI IM : Italian Tax Police Search Eni Offices For Obstruction Case: Rtrs
- ERICB SS : Ericsson Keeps FY Targets as 4Q Sales Meet Estimates
- ERICB SS : Ericsson’s U.S. Sales Hit By T-Mobile-Sprint Deal Hiatus, Results Weak, North America Growth Soft: Handelsbanken
- GNFT FP : Genfit Drop ‘Unwarranted’ With NASH Data on Track, B Riley Says
- GIVN SW : Givaudan Full Year Ebitda 1.5% Below Estimates
- HELN SW : Helvetia to Buy Majority Stake in Spanish Caser for ~EU780m
- HEX NO : Hexagon Composites Client Cancels Order Worth $120m-$150m
- IPN FP : Ipsen to Pause Dosing in Global Phase III Palovarotene Study
- LEO SS : Leovegas Says Chairman Mårten Forste to Become COO in Malta
- MOWI NO : ISA Suspected at Mowi Farm, Norway Food Safety Authority Says
- NMC LN : Emirates NBD to Sell 1% of NMC Health as Part of Infinite Loan
- TYRES FH : Nokian Renkaat Sees 2020 Op. Profit ‘Significantly’ Below 2019
- NOS PL : NOS Says Pereira, Silva and Oliveira Step Down as Board Members
- NZYMB DC : Novozymes Departing CEO Gets DKK18.8 Mln in Shares
- POLN SW : Polyphor Names Gökhan Batur CEO
- RBGP LN : RBG Holdings PLC Sees Earnings in Line With Market Expectations
- RCO FP : Remy Cointreau 3Q Sales Miss Estimates, Puts Targets ‘On Hold’
- SGO FP : Saint-Gobain U.S. Affiliate Files for Bankruptcy on Asbestos
- SANN SW : Santhera Names Andrew Smith as New CFO
- SFSN SW : SFS Full Year Sales 1.1% Below Estimates
- SSO NO : Scatec Solar Fourth Quarter Ebitda Misses Lowest Estimate
- SO FP : Somfy FY Revenue Meets Estimate
- TKWY NA : Takeaway.com Says CMA to Conduct Probe on Just Eat Deal
- TSCO LN : Tesco to stop sale of plastic-wrapped multipacks in stores
- UNIR IM : Unieuro Chairman, 2 Directors Resign After Holder Exited Holding
- VOW GY : VW Is Said to Struggle With Sale of MAN Energy Solutions Unit
>>> Up
* Amigo Holdings Raised to Buy at HSBC; PT 100 pence
* Hellenic Telecom Raised to Buy at VTB Capital; PT 16 euros
* J. Martins Raised to Buy at Jefferies; PT 19.40 euros
* Krones Raised to Buy at UBS; PT 84 euros
* OMV Raised to Overweight at Morgan Stanley; PT 57.50 euros
* Rathbone Brothers Raised to Outperform at RBC; PT 2,240 pence
* RWE Raised to Buy at Oddo BHF; PT 33 euros
* TT Electronics Cut to Hold at Jefferies; PT 265 pence
* Unilever Raised to Buy at Jefferies; PT 59 euros
* Volution Raised to Buy at Berenberg
>>> Down
* Autoliv Cut to Neutral at UBS; PT $84
* CCC Cut to Underweight at JPMorgan; PT 88 zloty
* Cyfrowy Cut to Sell at Goldman; PT 27.70 zloty
* Daimler Cut to Hold at Deutsche Bank; PT 50 euros
* Dino Polska Cut to Neutral at JPMorgan; PT 178 zloty
* EQT Cut to Neutral at JPMorgan; PT 133 kronor
* Nestle Cut to Hold at Jefferies; PT 107 Swiss francs
* Rightmove Cut to Underweight at Morgan Stanley; PT 560 pence
* Orange Polska Cut to Sell at Goldman; PT 6.50 zloty
* Schroders Cut to Sell at Citi
* Standard Life Aberdeen Cut to Neutral at Citi
* Topdanmark Cut to Sell at ABG; PT 310 kroner
* Topdanmark Cut to Sell at SEB Equities; PT 328 kroner
* Trainline Cut to Hold at Panmure Gordon; PT 517 pence
>>> Initiation
* 3i Rated New Neutral at Citi; PT 1,225 pence
* Ashmore Rated New Neutral at Citi; PT 560 pence
* EQT Rated New Neutral at Citi
* Intermediate Capital Rated New Buy at Citi; PT 1,966 pence
* Komax Rated New Hold at MainFirst; PT 192 Swiss francs
* Landis + Gyr Rated New Outperform at Cowen; PT 118 Swiss francs
* Man Group Rated New Neutral at Citi
* MTU Aero Rated New Buy at Bankhaus Metzler; PT 330 euros
* Partners Group Rated New Buy at Citi; PT 1,079.70 Swiss francs
* SMA Solar Rated New Market Perform at Cowen; PT 36 euros
* Tikehau Capital Rated New Buy at Citi; PT 33.20 euros
>>> Call
* Carrefour Guidance May Reassure Despite French Miss: Bernstein
* Ericsson Results Weak, North America Growth Soft: Handelsbanken
* Nestle Turnaround Already in Price, Prefers Unilever: Jefferies
* Remy, Pernod, Carlsberg, ABI at Risk From New Virus: Citi
After Hours Summary: EHTH +16.6%, TEAM +9%, INTC +6%, HSC -15%, DFS -5.6% among notable earnings/guidance moversAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: EHTH +16.6%, TEAM +9.3%, INTC +6.1%, NXGN +4.2%
Companies trading higher in after hours in reaction to news: MTNB +4% (initiated with a Buy at SunTrust), AVGO +2.8% (Broadcom subsidiaries entered into two separate multi-year statement of work agreements with Apple), TRIL +0.7% (extending today's nearly 30% move higher), PYPL +0.5% / SQ +0.4% (initiated with a Outperform at Credit Suisse)
Semi names are higher with Intel (INTC) leading the way following earnings (ETFs SMH +1.2%, SOXX +0.9%): NVDA +1.3%, MU +1.3%, ON +1.3%, WDC +0.7%, XLNX +0.7%After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: HSC -15.1%, DFS -5.6%, OIS -3.4% (light volume), ISRG -2.9%, ETFC -2%, SWKS -1.7%
Companies trading lower in after hours in reaction to news: IIPR -3.1% (announces public offering of 2.0 mln shares of common stock), KURA -2.1% (announces departure of Chief Medical Officer Antonio Gualberto, M.D., Ph.D.)