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Third Point discloses updated portfolio positions in 13F filing: New FPAC NXPI PYPL positions

Highlights from 2018 Q2 filing as compared to 2018 Q1 filing:

• New positions in: FPAC (~15.69 mln shares), NXPI (~10.75 mln), PYPL (~10 mln), CPB (~5.55 mln), FPACU (~4 mln), DE (~1.1 mln), DVMT (~2 mln), V (~1.7 mln), EGN (~1.35 mln)
• Increased positions in: MSFT (to ~2.25 mln shares from ~0.55 mln shares), MPC (to ~3.1 mln from ~2 mln), EA (to ~1.65 mln from ~1.25 mln), ADBE (to ~0.7 mln from ~0.4 mln), CRM (to ~0.63 mln from ~0.45 mln) SHY (to ~0.04 mln from ~0.03 mln),
• Maintained positions in: BAX (~36 mln shares), DWDP (~14.3 mln shares), UTX (~7.6 mln shares), BID (~6.66 mln shares), BABA (~4 mln shares), NFLX (~2 mln shares)
• Closed positions in: GRBK (from ~8.08 mln shares), ICE (from ~5 mln), PAGS (from ~4.55 mln), NEXA (from ~2.16 mln), GGAL (from ~1.79 mln), SUPV (from ~1.47 mln), BKI (from ~1.25 mln), PBF (from ~1.25 mln), PAM (from ~1.1 mln)
• Decreased positions in: WP (to ~2.9 mln shares from ~4.1 mln shares), FB (to ~3 mln from ~4 mln), BLK (to ~0.65 mln from ~1.09 mln), STZ (to ~2 mln from ~2.3 mln), SPGI (to ~1.3 mln from ~1.5 mln)

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Portfolio Ticker Matches:  INSID

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Closing Market Summary: Turkish Lira Rattles Investors Around the Globe

A plunging Turkish lira sent shock waves through global equity markets on Friday, causing concerns over the financial health of lenders with heavy exposure to the economically-struggling country. The S&P 500 lost 0.7%, dropping into the red for the week (-0.3%), and the Nasdaq (-0.7%) and the Dow (-0.8%) suffered similar declines.

The lira was down nearly 16% against the U.S. dollar at Wall Street's closing bell, weighed down by continued tensions between the U.S. and Turkey, which made no progress during talks this week regarding the detainment of American pastor Andrew Brunson, who is accused of supporting a group blamed for an attempted coup in 2016.

Trying to stop the bleeding, Turkey's president, Recep Tayyip Erdogan, encouraged citizens to convert their holdings of gold and foreign currencies into lira on Friday morning. However, President Trump swiftly responded by turning up the pressure, announcing that he's authorized a doubling of tariffs on Turkish steel and aluminum.

Stock markets in Europe and Asia ended Friday with sizable losses, although China's tariff-ridden Shanghai Composite finished flat. Investors in the U.S. flocked to the Treasury market, sending yields lower across the curve. The benchmark 10-yr yield, for instance, dropped eight basis points to 2.86%, a fresh three-week low.

The drop in yields -- and, more specifically, the flattening of the yield curve -- weighed on the financial sector (-1.2%), which finished with materials (-1.4%) at the bottom of the sector standings. 10 of 11 sectors finished in the red, with energy (+0.3%) being the lone exception, helped by a 1.3% rise in WTI crude futures ($67.67/bbl).

Within the tech space (-0.8%), chipmakers were particularly weak with Intel (INTC 48.85, -1.29) losing 2.6% after being downgraded to 'Sell' from 'Neutral' at Goldman, and Microchip (MCHP 87.41, -10.67) tumbling 10.9% after issuing disappointing revenue guidance. The PHLX Semiconductor Index declined by 2.5%.

Friday's batch of corporate earnings -- which also included results released Thursday evening -- was the last heavy batch of the Q2 earnings season. In addition to Microchip, Dropbox (DBX 31.05, -3.38) declined after reporting its results, losing 9.8%, but both Planet Fitness (PLNT 51.94, +3.15) and Overstock.com (OSTK 41.65, +3.05) rallied, adding 6.5% and 7.9%, respectively.

Looking ahead, next week's earnings lineup is retail-heavy with Walmart (WMT 90.18, +1.17), Home Depot (HD 196.30, -1.78), Macy's (M 39.97, -0.59), Nordstrom (JWN 52.58, +0.03), J.C. Penney (JCP 2.42, -0.01), Advance Auto (AAP 146.35, -1.44), and Dillard's (DDS 85.83, -2.34) all on the docket.

Reviewing Friday's economic data, which included the Consumer Price Index for July and the July Treasury Budget:

• Total CPI increased 0.2% (consensus +0.2%) in July, and core CPI, which excludes food and energy, also rose 0.2% (consensus +0.2%). On a year-over-year basis, total CPI is up 2.9% (vs +2.9% in June) and core CPI is up 2.4% (vs +2.3% in June).
  • The key takeaway from the report is that consumer inflation trends are running above the Federal Reserve's longer-run inflation target, which will keep the Federal Reserve inclined to raise the target range for the fed funds rate.
• The Treasury Budget for July showed a deficit of $76.9 billion versus a deficit of $42.9 billion for July 2017.
  • The Treasury Budget data is not seasonally adjusted, so the July deficit cannot be compared to the $74.9 billion deficit registered in June.

Investors will not receive any economic data on Monday.

• Nasdaq Composite +13.6% YTD
• Russell 2000 +9.9% YTD
• S&P 500 +6.0% YTD
• Dow Jones Industrial Average +2.4% YTD

Samsung Electronics shares were on track for the worst day in more than two months on Friday following a report from Morgan Stanley warning over rising inventory in the semiconductor industry. Samsung shares were down 3.3 per cent after Morgan Stanley said “elevated inventory levels and stretched lead times leave no margin for error” cutting their outlook for the chip sector to cautious from in-line. The broker said it was monitoring demand-related data such as the purchasing managers’ index in Asia “as any slowdown in demand could result in an inventory correction in the semiconductor supply chain, similar to what occurred in the summer of 2015”.  Morgan Stanley also pointed to a slowdown in global manufacturing in 2018 suggesting more caution around trade tensions.  The fall in Samsung shares also comes after the South Korean electronics maker launched its Note 9 smartphone.  Fellow South Korean chipmaker SK Hynix was also down 3.5 per cent at a five-month low. Taiwan Semiconductor Manufacturing Company was down 0.6 per cent.

 

After Hours Summary: TTD +19%, PBYI +17%, OSTK +16.3%, OLED +8% are higher, while CORT -20%, AVLR -11%, DBX -9.2%, MCHP -7% following earnings/guidance, semi names lower

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: CDNA +22.9%, TTD +19.1%, PBYI +17.2%, OSTK +16.3% (also announces that GSR Capital will invest up to $374.55 mln in exchange for common equity in blockchain subsidiary tZERO and common equity in Overstock.com; files mixed securities shelf offering), IIIV +12.8%, OLED +8.4%, ICUI +8.3%, PLNT +5.8%, ROAD +5.6%, SPPI +5.4% (light volume), SA +4.5% (ticking higher), LGF.A +3.2%, WOW +3.2% (also files ~55.91 mln share common stock offering by shareholders), PVG +2.4%, OMER +2.3% (light volume), EPAY +1%

Companies trading higher in after hours in reaction to news: MCC +10.9% (Medley Capital, Sierra Income and Medley Management to merge), LEDS +5.5% (following OLED results), TSLA +2.1% (Tesla Board to meet with bankers next week regarding going private talks, according to CNBC), ATHN +1.9% (attributed to UNH bid speculation), SFIX +1.4% (initiated with a Buy and $38 tgt at SunTrust)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: CORT -19.9%, XONE -17.9%, AVLR -11.4%, BW -11.2% (also Covanta to purchase subsidiary of Babcock & Wilcox with operating and maintenance contracts for two Energy-from-Waste facilities for $45 mln), RUN -10%, WTTR -9.6%, DBX -9.2%, RDFN -8.4%, MCHP -7.2%, XON -7.1% (also delays 10-Q filing as it reassess ASC 606), FSCT -5.6%, JCOM -5.1% (ticking lower), CHUY -4.7%, KODK -2.9% (also plans to sell Flexographic Packaging Division), ACXM -2%,

Companies trading lower in after hours in reaction to news: WATT -3.8% (files $75 mln mixed securities shelf offering), NYMT -2.4% (commences 12.5 mln common stock offering), CI -1.3% (CIGNA issued letter to stockholders in response to the second letter released by Carl Icahn, reiterates support for Express [ESRX] merger), MCD -0.5% (FDA, CDC, along with state and local officials are investigating a multi-state outbreak of cyclosporiasis illnesses likely linked to salads from McDonald's restaurants)

Microchip (MCHP) results/cautious commentary is weighing on semi names (ETFs SMH -0.7%,  SOXX -0.4%): ON -2.4%, TXN -1.9%, CY -1.4%, NXPI -0.7%, AVGO -0.6%,INTC -0.3%, SWKS -0.3%, MU -0.3%

Notable post-earnings movers

• Post-earnings gainers: OSTK +20.7%, PBYI +18%, IIIV +17.2%, TTD +15%, OLED +11.7%, ASYS +7.5%, ICUI +6.6%, SPPI +5%, LGF.A +3.7%, ACXM +2.9%, PLNT +2.3%
• Post-earnings losers: CORT -21.2%, RUN -12.6%, BW -9.1%, RDFN -4.9%, MCHP -4.6%, DBX -4.2%, AVLR -3.6%

Closing Market Summary: Slightly Lower Following Another Range-Bound Day of Trading

For the second straight day, the S&P 500 ended a range-bound session slightly lower, losing 0.1%. However, the S&P 500 remains within striking distance of its January 26 record high, closing Thursday about 0.7% from that mark. As for the other major averages, the Nasdaq eked out a slim victory, and the Dow shed 0.3%.

The S&P sectors finished Thursday evenly mixed, with decliners outnumbering advancers six to five. Financials (-0.6%), industrials (-0.6%), and energy (-0.9%) -- all of which are considered economically-sensitive sectors -- finished at the bottom of the standings, while the lightly-weighted telecoms space (+1.0%) finished at the top.

CenturyLink (CTL 20.97, +2.43) led the telecom space higher, rallying 13.1% after reporting in-line quarterly results.

Meanwhile, in other earnings news, Viacom (VIAB 30.34, +1.72) jumped 6.0% after beating both top and bottom line estimates, and Roku (ROKU 57.32, +10.07) and Yelp (YELP 48.33, +10.17) spiked 21.3% and 26.7%, respectively, after also reporting their quarterly results.

In general, the latest batch of corporate earnings -- one of the last big batches of the Q2 earnings season -- was met with cheers from investors. However, Canada Goose (GOOS 54.00, -1.91) was an outlier, dropping 3.4% despite beating both top and bottom line estimates.

Away from earnings, Tesla (TSLA 352.45, -17.89) declined 4.8% following reports that the SEC is intensifying its probe of the company after CEO Elon Musk tweeted on Tuesday that he is considering taking the company private. Seagate Tech (STX 51.02, -4.02) also tumbled, losing 7.3%, after Goldman downgraded the data storage company to Sell from Neutral, and Deere (DE 139.83, -4.98) lost 3.4% following cautious commentary from Cleveland Research.

Looking at other markets, U.S. Treasuries rallied on Thursday, sending yields lower across the curve; the benchmark 10-yr yield slid four basis points to 2.94%. The U.S. Dollar Index rose 0.5% to 95.44, touching a new one-year high, and WTI crude futures ticked down 0.2% to $66.81/bbl, marking a new seven-week low.

All three major stock indices will enter Friday's session with weekly gains, although some have more gains than others; the S&P 500 is up 0.5% week-to-date, while the Nasdaq and the Dow hold weekly gains of 1.0% and 0.2%, respectively. If the S&P 500 can hold on, it will mark its sixth straight weekly advance.

Reviewing Thursday's economic data, which included the Producer Price Index for July, weekly Initial Claims, and June Wholesale Inventories:

• Producer prices were flat in July (consensus +0.3%), and core producer prices increased 0.1% (consensus +0.2%). Year-over-year, producer prices are up 3.3% (vs +3.4% in June) and core producer prices have risen 2.7% (vs +2.8% in June).
  • The key takeaway from the report is that it showed a moderation in producer price pressures, which will help keep the market grounded in the idea that the Fed can maintain its gradual approach to raising interest rates.
• The latest weekly initial jobless claims count totaled 213,000, while the consensus expected a reading of 220,000. Today's tally was below the revised prior week count of 219,000 (from 218,000). As for continuing claims, they rose to 1.755 million from a revised count of 1.726 million (from 1.724 million).
  • The key takeaway from this report is the same it has been for some time: the low level of initial claims activity fits the framework of a tight labor market.
• June Wholesale Inventories rose 0.1% (consensus 0.0%). The May reading was revised to +0.3% from +0.6%.
  • The key takeaway from the report is that the pace of sales growth year-over-year continues to exceed the pace of inventories growth, which is a positive dynamic that can eventually help wholesalers regain pricing power if it persists.

Looking ahead, investors will receive both the Consumer Price Index for July and the July Treasury Budget on Friday.

• Nasdaq Composite +14.3% YTD
• Russell 2000 +10.1% YTD
• S&P 500 +6.7% YTD
• Dow Jones Industrial Average +3.2% YTD