>>> US Gapping Up

Gapping up
In reaction to strong earnings/guidance:

  • NAV +10.2%, DRI +2.7%, SOL +2.3%,

M&A news:

  • CBI +9.8% (To merge with MDR; Settles agreement with Cameron LNG)
  • VIPS +2.4% (Continuation following Monday announcement that Tencent is investing in the company)

Other news:

  • OTIV +22.7% (Following Monday's 120% move higher),
  • CLNT +15.8% (Enters into share and purchase agreement with AnyWorkspace to expand coworking space business),
  • RIOT +9.3% (Continued strength after 28% move higher on Monday),
  • CARS +9.3% (Jumps on Starboard 9.9% active stake disclosure),
  • NXTD (Subsidiary Fit Pay & Australia and New Zealand Banking Group (ANZBY) reach agreement to extend contactless payment capabilities to a range of new devices)
  • AMPE +8.1% (Continued strength after 25% move higher),
  • SCMP +6.6% (Initiated with Buy and $43 tgt at Nomura / Instinet),
  • KTOS +6.2% (Announces its Unmanned Systems Division recently received a single award IDIQ contract, with a $27 million ceiling from a U.S. Government Agency related to unmanned drone systems),
  • NMM +4.2% (Still Checking),
  • MDGL +2.3% (Prices public offering of 1,506,025 shares of its common stock at a public offering price of $83.00 per share)
  • ESRX +0.7% (Board adds 45 mln shares to repurchase authorization). 

Analyst comments:

  • SCMP +6.6% (Initiated with a Buy at Nomura; tgt $43),
  • MTCH +3% (Upgraded to Buy from Neutral at Guggenheim),
  • GM +1.4% (Upgraded to Outperform from Sector Perform at RBC Capital Mkts),
  • KORS +1.3% (Initiated with a Buy at Needham; tgt $69),
  • NSA +1.1% (Upgraded to Outperform from Market Perform at Wells Fargo),
  • CL +0.7% (Upgraded to Outperform from Neutral at Macquarie).

>>> US Gapping Down

Gapping down

Other news:

  • AKER -62% (Prices $6 mln offering of units, Shares fall to $0.15 from $0.40),
  • LFIN -23.5% (after surging 200%+ higher; CEO gave a disappointing interview on CNBC Fast Money),
  • NVAX -11.4% (continues Phase 3 trial of the RSV F Vaccine for infants via maternal immunization and provides update on Phase 1/2 Trial of the NanoFlu Vaccine; Also downgraded at Citigroup),
  • YTEN (Announces 6.03 mln stock offering),
  • MARA -9.3% (to sell 1,354,546 shares of common stock for gross proceeds of approximately $7,450,000),
  • DPW -4.5% (files for $100 mln mixed securities shelf offering),
  • CIO -3.8% (commences 4 mln common stock offering),
  • MB -3.2% (lower following block trade pricing ),
  • OSTK -3% (Overstock.com's blockchain subsidiary tZERO commences $250 mln Token Sale; announces pre-sale for institutional investors),
  • TNDM -1.5% ( files for approx $10.7 mln mixed securities shelf offering),
  • MON -1.2% (Early weakness being attributed to reports that EU may seek further concessions tied to review of pending BAYRY merger).

Analyst comments:

  • FNKO -3.1% (Downgraded to Market Perform from Outperform at BMO Capital Markets),
  • AAPL -0.9% (Downgraded to Neutral from Buy at Nomura; tgt lowered to $175 from $185).

>>> US Early premarket gappers

Early premarket gappers

Gapping up:

  • OTIV +22.7%, CLNT +15.8%, NAV +10.2%, RIOT +9.3%, CARS +9.3%, AMPE +8.1%, SCMP +6.6%, KTOS +6.2%, DRI +2.7%, MDGL +2.3%, SOL +2.3%, KORS +1.3%.

Gapping down:

  • AKER -62%, LFIN -23.5%, NVAX -11.4%, MARA -9.3%, DPW -4.5%, CIO -3.8%, MB -3.2%, OSTK -3%, TNDM -1.5%, MON -1.2%.

>>> Bitcoin Scam: Man Arrested After Making Over $1 Million Selling Chuck E. Che


Bitcoin Scam: Man Arrested After Making Over $1 Million Selling Chuck E. Cheese Tokens As “Bitcoins”
Marlon Jensen, 36, was arrested a Sunday morning when NYPD stormed his home. NYPD received calls from the fraud victims that someone had sold them “Bitcoins”, only to find out there actually was no tangible bitcoin currency available. NYPD found $1.1 Million of cash inside Marlons home. According to police, Marlon had scratched off most of the Chuck E. Cheese engravements on the coins, and would write “B” on each coin with permanent marker.
As many should know already, Bitcoin is a crypto currency and payment system that has recently received unprecedented popularity and value, with each bitcoin currently worth $18,950 USD. Although Bitcoin isn’t actually a tangible form of currency, that hasn’t stopped some people from successfully selling “bitcoins” to people using irrelevant gold coins, in this case Chuck E. Cheese Tokens.

“People are retarded haha”, said NYPD Officer Michael West, “My 8 year old son would know those weren’t bitcoins and lord knows he’s not the brightest”.

Marlon is currently being charged with fraud and can face up to 5 years in federal prison.

>>> SCMP : Initiating with Buy Rating, $43 Target Price

Initiating with Buy Rating, $43 Target Price
VTS-270 for Ultra-Rare Niemann-Pick Disease
Repositions SCMP for Even More Upside
We are initiating coverage of Sucampo (SCMP) with a Buy rating and a $43
target price. Our analysis suggests SCMP has been fundamentally mismodeled
and misunderstood by the Street with respect to the near-term Phase
3 readout for VTS-270 in Niemann-Pick Disease Type C1 (NPC1). We believe
that SCMP’s current valuation primarily reflects cash flows derived from the
company’s marketed drug, Amitiza, neglecting potentially newer pipeline
orphan and oncology products that could double revenues to $500mn by 2020
and $1bn by 2023 by our estimates. We anticipate re-rating of the stock in the
next 12 months as valuation shifts from an Amitiza DCF focus to multiples on
potential peak sales of VTS-270, an ultra-orphan and high-margin NPC1 drug,
and CPP-1x/Sulindac, a potentially preventative therapy for colorectal cancer.
• VTS-270 Potentially the First Approved Treatment for NPC1 in the
U.S.: Phase 2/3 Data Mid-2018, Approval 2019. We believe that SCMP’s
current valuation fails to ascribe sufficient value to VTS-270 for NPC1,
which we estimate at $29/sh, despite the low clinical, regulatory, and
commercial risks. A similar dynamic of underappreciation was applied to
Spinraza (BIIB) and Exondys-51 (SRPT), two comparable orphan-disease
drugs with difficult-to-interpret data and high unmet need that were
ultimately rapidly approved and launched. We estimate VTS-270 peak sales
at more than $670mn.
• Prior VTS-270 Studies Support Efficacy Across Multiple Endpoints,
Portending Pivotal Trial Success. We believe the debate on VTS-270
fails to account for the drug’s Cmax-driven activity and recently discovered
MOA. Further, the drug could reap benefits from increased regulatory
flexibility should Phase 3 data highlight trends vs. stat sig efficacy.
• CPP-1X/Sulindac Combo for Familial Adenomatous Polyposis (FAP), a
Genetically Driven Disease That Develops into Colon Cancer if
Untreated. SCMP acquired the sole option for an exclusive license to
commercialize CPP-1x/Sulindac in North America, under a 50% net profit
split. We conservatively estimate that FAP represents a $300mn market
opportunity in the U.S. alone.
• Legacy Amitiza Provides Valuation Support. SCMP’s shift to innovation
from Amitiza may not match current shareholders’ appetite for risk/reward
vs. consistent Amitiza revenue streams. However, ex-U.S. growth and label
expansion into the pediatric constipation market may support moderate
single-digit growth of this mature asset despite increasingly competitive
constipation markets. We estimate Amitiza is worth $11/sh.

>>> NH Hotel main shareholders reject all aspects of Barcelo's offer - reported

NH Hotel main shareholders reject all aspects of Barcelo's offer - reported rumour (translated)
19 DEC 2017
NH Hotel Group [BME: NHH], advised by Bank of America Merrill Lynch, believes that none of the preliminary aspects of the proposed offer by hotel peer Barcelo are minimally satisfactory to advance negotiations, El Confidencial reported. The report cited sources from NH shareholders.
The board of directors of NH Hoteles has its last meeting of the year tomorrow (20 December) to analyse the unsolicited offer from Barcelo, the Spanish-language report noted.
NH Hoteles main shareholders -- the Chinese HNA (29%), Hesperia (9%), and Oceanwood (12%) -- have agreed on the basic points to be reviewed, as revealed on 14 November, if they were to consider pursuing negotiations, El Confidencial said citing sources close to the shareholders. Although their objections differ, they agree on the matters of price and the model proposed: that Barcelo is not offering cash but paper, seeks a majority stake without paying a premium for control and wants to solve illiquidity problems among its shareholders by accessing the stock exchange.
The transaction would allow Barceló to become a listed company and give liquidity to some of its shareholders who disagree with the current management. The Barceló family, divided into two branches, would obtain the majority of the board without having to launch a takeover bid for it.
NH also believes that becoming a national champion would not add any operational value to the resulting company, given that a higher volume of rooms is no guarantee of higher profitability, the report said.
Moreover, while the sum total of the companies' urban and vacation businesses is complementary, not all of Barceló's international geographic areas fall into this category. Likewise, the underlying real estate assets of both companies have different valuations, with urban hotels leading Caribbean resorts.
Finally, NH Hoteles’ three-year plan aims to double its EBITDA by 2020 to EUR 300m. Barceló's offer does not contemplate this projection, so NH's shareholders are encouraged to renounce this growth plan.
Barceló has tabled an all-paper offer at EUR 7.08 per share, or a 27% premium on NH’s average stock value for the last three months.

TheVerge.com : WhatsApp ordered to stop sharing user data with Facebook

WhatsApp ordered to stop sharing user data with Facebook

France’s ultra-strict privacy watchdog CNIL has ordered WhatsApp to stop sharing user data with parent company Facebook. The app has a month to comply with the order, according to a public notice posted to the French website.

The query began after WhatsApp added to its terms of service last year that it shares data with Facebook to develop targeted advertising, security measures, and to gather business intelligence.

Upon investigating these claims, the CNIL ruled that while WhatsApp’s intention of improving security measures was valid, the app’s business intelligence reason wasn’t as acceptable. After all, WhatsApp never told its users it was collecting data for business intelligence and there’s no way to opt out without uninstalling the app. That violates “the fundamental freedoms of users,” said the CNIL.

European regulators have attempted to police Facebook in the past, especially when it comes to data-sharing. Germany ordered Facebook to stop collecting data from WhatsApp users in September of last year, and in the UK, Facebook agreed to stop collecting WhatsApp user data in November of last year.

Then this May, Facebook was fined $122 million by the EU for providing “misleading information” about its acquisition of WhatsApp, when the company claimed that it would be unable to link profiles of users from WhatsApp to Facebook. And in September, the EU asked social media platforms including Facebook to crack down on hate speech — with the looming threat of legislation if the companies didn’t comply.

WSJ : Tax Plan Strikes at Tech Giants’ Foreign Profits

Tax Plan Strikes at Tech Giants’ Foreign Profits
Firms such as Microsoft pay low taxes overseas, but their rates might go up

While most U.S. businesses would pay lower taxes under congressional Republicans’ proposed tax overhaul, some of the world’s richest technology companies might actually see their rates rise.

A window into how Microsoft Corp. currently pays a disproportionately larger portion of its taxes overseas shows how the legislation could offset the benefits of returning cash home.

The software giant saves billions of dollars in taxes by holding software licensing rights at facilities in Puerto Rico, Ireland and Singapore, where it stockpiles profits and pays low foreign rates. Puerto Rico, while a U.S. territory, is treated as a foreign country under current tax law.

The proposed law lowers the corporate tax rate to 21% from 35% but at the same time puts a minimum tax on profits overseas. That setup would likely force Microsoft to pay a minimum 10.5% tax on future offshore profits, removing some of the benefit from the company's offshore facilities, tax experts say. Yet, Microsoft and other tech giants could still have an incentive to shift profits abroad.

Microsoft doesn’t disclose its foreign tax rates. But it does say it would owe about 32% if it repatriated all foreign profits.

The statutory tax rate, including state taxes, is between 35% and 39%, suggesting Microsoft has paid between 3% and 7% in tax on the company’s foreign profits.

Tech executives and industry groups largely support the tax package, partly because it promises a one-time tax at a discounted rate for the estimated $2.6 trillion in profits American businesses have accumulated overseas—a rate of 15.5% on liquid cash or 8% on illiquid assets, including factories and equipment. Companies currently pay as much as 35% to bring back some of that cash to pump into operations or return to investors.

But tech giants could be pinched by provisions in the new tax code aimed at curbing the use of low-tax foreign jurisdictions. “Those firms that have been the world leaders in avoiding taxes will find their tax rates going up,” said Edward D. Kleinbard, a former U.S. tax official who is now a tax professor at the University of Southern California law school.

Under current law, American companies owe the U.S. taxes of as much as 35% on world-wide income. They get tax credits for payments to foreign countries, and don’t owe the U.S. the remainder immediately. But they face the residual U.S. tax if they repatriate profits.

So companies book profits in low-tax countries, and leave them there. This is easy for high-tech and pharmaceutical companies, which put so-called intangible assets, such as patents, in foreign countries and book non-U.S. profits through there.

That is why most tech companies pay a much lower effective tax rate than the standard 35% for American businesses. Tech firms paid an average tax rate of 24% over the 10-year period through 2016, below the 29% average tax rate for all companies in the S&P 500 for that period and lower than any other industry, according to an analysis of corporate filings by Zion Research Group.


U.S. companies with the lowest tax rates include tech firms such as eBay Inc., Cisco Systems Inc. and Alphabet Inc., whose effective tax rates averaged under 20% over the past decade, filings for all three companies show. Microsoft’s average effective tax rate was 23.3% over the 10-year period through 2016.

Microsoft opened its first Puerto Rico facility in 1991 after the U.S. established a tax break on new businesses there. The island subsidiary buys the rights to Microsoft’s intellectual property, makes copies of its Windows and Office software and sells that software to the company’s North American distributors, according to the findings of a U.S. Senate investigation into corporate tax maneuvers in 2012.

“The structure is not designed to satisfy any specific manufacturing or business need,” the Senate investigators wrote. “Rather, it is designed to minimize tax on sales of products sold in the United States.”

The Puerto Rico facility was previously used to produce physical copies of software discs. In recent years, Microsoft’s business model has shifted to digital subscriptions, a change that could let it shift more sales to the U.S., according to Bernstein Research. Under the existing tax regime, Microsoft can keep 47% of profits in Puerto Rico, where it is taxed at a prenegotiated rate of 2%.

The company also reduces its tax liability through similar intellectual-property arrangements in Ireland and Singapore. Those two countries, together with Puerto Rico, accounted for 64% of Microsoft’s income before taxes in the year ended June 30. In the same period, about half of its revenue was in the U.S.

Microsoft could bring cash home after the tax law is passed without much penalty beyond the initial one-time tax on accumulated foreign profits. The company keeps 95% of its cash, or $132 billion, outside of the U.S., a larger offshore cash pile than any company except Apple Inc., which holds 94% of its cash, or about $252 billion, overseas. Microsoft has actively lobbied lawmakers on tax-code changes, paying at least 18 lobbying firms to work on the issue this year, according to Senate records.

What is less clear is whether the tax changes would give Microsoft enough incentive to stop sending profits to places such as Puerto Rico. Representatives from the U.S. territory have voiced concern that a tax-policy change could push companies out of Puerto Rico and further hurt its economy as it recovers from hurricanes and a debt crisis.