TheChek News Flow

The Company accrued for the amount in the third quarter of 2017. The recorded amount (equivalent to approximately $9.5 million) relates to a discrete portion of the EC investigation relating to two specific car manufacturers, while the more significant portion of its investigation continues. Management does not believe the outcome of this discrete portion of the EC's investigation provides an indication of the total probable loss associated with the continuing portion of the EC's investigation, which the Company believes will probably materially affect operating results for the periods in which it becomes estimable.

Vantiv (VNTV): During the third quarter, funds such as Glenview Capital, Lone Pine Capital, and Third Point established stakes in Vantiv. The company is a payment processor that enables merchants to accept credit/ debit cards and other payments. 

Anheuser Busch Inbev (BUD): Lone Pine Capital, Farallon Capital, and Viking Global all established new positions in this alcoholic beverage giant. While ‘big beer’ has been declining in popularity in certain markets, the company is the dominant player in the industry and uses its scale to acquire smaller competitors, especially in the craft beer segment that has gained so much popularity over the years. It’s known for a solid management team via 3G Capital. 

Equifax (EFX): During the third quarter, this credit reporting agency was hit by a data breach. The massive hack led to huge public backlash as names, social security numbers, and other personal information was stolen. Shares plunged lower and funds such as Viking Global, Hound Partners, and Farallon Capital all dipped their toes in the water. While there’s still some uncertainty surrounding the exact liability the company will face, EFX is part of an oligopoly (along with TransUnion and Experian) and has an entrenched position in the financial lending space as issuing banks rely heavily on its independent services. It remains to be seen if these funds were using the volatility to make a quick trade in a potentially overblown situation, or if they’re looking to hold on longer term. Time will tell. 

DowDuPont (DWDP): This is listed as a’new’ buy in the quarter but in reality, the vast majority of the funds in this issue received DWDP shares due to their previous ownership stake in either Dow Chemical (former ticker DOW) or DuPont (former ticker DD), as the two companies merged to form DWDP. Now, while these funds may not have been buying DWDP in the open market, it’s definitely a consensus trade. Hedge funds like Omega Advisors, Maverick Capital, Third Point, and Glenview Capital all hold notable positions. If you weren’t counting DWDP on this list, the next consensus buy would be a tie between Bank of America (BAC) and Twitter (TWTR).

>>> Consensus Increased Positions

Alphabet (GOOG): Hedge funds such as Tiger Management, Hound Partners, SPO Advisory, Farallon Capital, and Maverick Capital all added to their existing stakes in Google’s parent company. Many managers have viewed shares as ‘cheap’ in recent months and their activity certainly backs that up. While its search engine generates the bulk of cashflow, they’re also working on many other promising fields such as machine learning, A.I., self-driving cars (Waymo), video content (YouTube), and more. 

Apple (AAPL): Jumping into shares ahead of the latest iPhone X product cycle were funds like Maverick Capital, Appaloosa Management, Coatue Management, and Berkshire Hathaway. The company’s latest smartphone should be a nice upgrade cycle and they’re pushing the envelope on pricing power, as these are the most expensive iPhones produced yet. 

Visa (V): This giant payment processor was bought by hedge funds including Maverick Capital, Blue Ridge Capital, and Viking Global. Many of these managers sizably increased their pre-existing stakes, which is notable. For Blue Ridge Capital in particular, Visa is now their largest holding. The company continues to benefit from a secular shift from paying with cash to paying with plastic (credit/debit cards). It benefits from huge network effects and continues its expansion overseas. 

Shire (SHPG): This is the second consecutive quarter this stock has graced this list. This time around, funds that accumulated more SHPG shares include Omega Advisors, Maverick Capital, and Glenview Capital. Shares have trended lower ever since late May of this year. They peaked around $191 and currently trade around $147.

Humana (HUM): This is the second quarter in a row that hedge funds have exited HUM shares. This time around, Farallon Capital, Flenview Capital, Third Point, and Viking Global all liquidated their stakes. 

ServiceMaster (SERV): Previously somewhat of a ‘hedge fund favorite,’ SERV seems to have fallen out of favor with this crowd. Hound Partners and Paulson & Co were some of the funds that exited their stakes entirely during the third quarter. 

Altice (ATUS): Patrick Drahi’s entrance into the US cable market via acquisition of Suddenlink and Cablevision attracted numerous shareholders who were familiar with his costcutting playbook in Europe. That said, ATUS shares have done nothing but go down since their IPO this year. Funds that threw in the towel include the likes of Lone Pine Capital and Maverick Capital. 

Wells Fargo (WFC): Funds like Appaloosa Management and Blue Ridge Capital liquidated their stakes during Q3. The company has been dealing with negative publicity surrounding a scandal in which accounts were opened without customers’ permission. And while banks are benefiting from an environment where interest rates are slowly increasing, funds seem to prefer to play that trend via Bank of America (BAC) and JPMorgan Chase (JPM). 

Dow Chemical (DOW): This stock no longer trades as Dow merged with DuPont to form the new DowDuPont (DWDP). And as highlighted earlier, the vast majority of funds that previously owned DOW continue to own the new DWDP entity, as it’s been an event-driven play with catalysts. 

Mobileye (MBLY): This stock is also listed for informational purposes. The company was acquired by Intel (INTC) in a $15 billion deal during the quarter so shares no longer trade. The arbitrage focused funds in the newsletter (Farallon and Paulson) were the main owners of these shares.

Facebook (FB): This is the second consecutive quarter this stock graces this list. Shares of the social media giant have performed extremely well, so it’s likely just been a case of profit-taking and reducing position sizes back down as they’ve increased. This time around, Bridger Management, Farallon, Blue Ridge, Maverick, Third Point, Viking, and Lone Pine all trimmed their stakes. 

Charter Communications (CHTR): This is now the seventh straight quarter that hedge funds have been trimming their CHTR positions. As the company integrates its merger with Time Warner Cable and Bright House, managers have taken profits and reduced their swelling position sizes. Hedge funds that were trimming their CHTR stakes this time around include Bridger, Farallon, Hound, Lone Pine, and Berkshire Hathaway. There have been concerns surrounding the company’s loss of video subscribers as of late, but the company has also received a lot of interest from potential merger partners, though none of the overtures have approached what CHTR feels is fair value. 

Huntsman (HUN): This chemical company’s shares were sold by Paulson & Co, Maverick, Pennant Capital, Farallon, and Appaloosa during the third quarter. 

Liberty Global (LBTYA & LBTYK): Both the voting shares (LBTYA) and non-voting shares (LBTYK) were consensus reductions this quarter. LBTYA was sold by Brave Warrior, Coatue, Farallon, and Glenview, while LBTYK was sold by Farallon, Coatue, Glenview, and SPO Advisory. The European cable giant has had some operational issues on the continent and shares have languished over the past few quarters. Previously a ‘hedge fund favorite’ just a few years ago, managers are definitely allocating less capital to this play these days.

Japanese group in talks to buy Tiger Global’s stake in Ola, Uber’s India rival

Masayoshi Son is looking to strengthen his grip on the global ride-hailing market, with SoftBank entering talks to become the dominant shareholder in Ola, Uber’s local rival in India.

The Japanese conglomerate that Mr Son founded is in negotiations to buy some or all of the 13-14 per cent stake held by US hedge fund Tiger Global in ANI Technologies, Ola’s parent company, according to three people close to the talks. SoftBank already holds about 25 per cent of ANI’s shares so this would make it by far the largest backer of the Indian company.

A deal would further concentrate SoftBank’s power in the car-booking market worldwide. The company is negotiating a $10bn investment in Uber and also has invested in Didi Chuxing in China as well as Grab, which operates across Southeast Asia.

“Ola is a strategically important investment in our global portfolio,” SoftBank said. “We are confident that our support will help them grow and become one of India’s most valuable companies.”

Referring to Mr Son, one venture capitalist remarked: “He wants to control the whole ride-sharing space.”

Ola and Tiger Global declined to comment.

SoftBank’s attempt to buy more of Ola comes a month after the company took part in a funding round in which the Indian company raised $1.1bn.

It also underlines SoftBank’s renewed commitment to backing Indian technology companies, having made large investments in 2014 and 2015 but then holding back last year amid signs the market might have become overvalued.

In the past financial year the Japanese group has written down the value of its Indian investments by $1.4bn. But in the past six months it has also poured $2.5bn into ecommerce group Flipkart and a further $1.4bn in digital payments provider Paytm. This has helped make 2017 a record year for funding into Indian technology start-ups.

The potential deal between SoftBank and Tiger Global is creating some nervousness however, both in the technology industry and among those who have invested in it.

None of the companies involved would say what valuation the purchase would place on Ola, but one person close to the talks said it was likely to be at least double the $3bn at which it was valued following a funding round a year ago.

Some investors believe SoftBank is crowding out other backers with overly high valuations. One Mumbai-based venture capitalist with ties to Ola said: “SoftBank is spoiling the whole eco system. Entrepreneurs are only focused on chasing valuations because of them.”

Meanwhile others worry that individual companies will lose control as SoftBank increases its grip on key parts of the technology market.

Earlier this year the Japanese group tried to engineer a merger between Snapdeal, the Indian ecommerce site it had backed at an early stage, and its biggest rival Flipkart. When those efforts collapsed, SoftBank decided to invest heavily in Flipkart anyway, leaving Snapdeal to pursue a future as an independent but much smaller company.

Earlier this year, Ola moved to prevent a similar thing happening by imposing a rule that shareholders could only buy out other stakeholders with prior approval from the company’s founders, Bhavish Aggarwal and Ankit Bhati.

Ola would not comment on whether its founders would consider vetoing a deal between SoftBank and Tiger Global.

SSP, the travel food retailer behind outlets like Upper Crust and Ritazza, was the best-performing large company on European stock markets on Wednesday morning, after reporting a sharp jump in pre-tax profits.

The company topped the Europe-wide Stoxx 600 index in early trading, with a 5.1 per cent increase to 638p per share.

Revenues in the 12 months to September 30 increased 19.5 per cent, helped along by currency moves, while margin improvements meant pre-tax profits jumped even further, up 37.1 per cent to £144.8m.

SSP reported steady like for like sales growth of 3.1 per cent, with further growth coming from new businesses in North America and Asia.

The company increased its total dividend per share for the year by 50 per cent, to 8.1p per share, bringing its payout ratio to the top end of the range promised ahead of its 2014 IPO. On top of that, SSP also said it would pay a special dividend of around £100m.

Shares in the company have now risen 190 per cent since it joined the market, and Liberum analyst Anna Barnfather said a decent start to the new financial year and lower guidance on tax rates “keeps earnings upgrade momentum going”.

Cryptocurrencies push deeper into mainstream investment world

A small Paris-based asset manager has launched Europe’s first bitcoin mutual fund in a move intended to draw institutional investor interest in the volatile cryptocurrency that has surged from $1,000 to more than $8,300 this year.

The unregulated Tobam bitcoin fund is the latest evidence that cryptocurrencies are pushing deeper into the mainstream, and comes ahead of the Chicago Mercantile Exchange’s plans to start listing bitcoin futures with a centralised clearing mechanism.

There are significant regulatory hurdles for asset managers to buy bitcoin and other cryptocurrencies, which are often associated with money-laundering and cyber theft. Unlike other currencies, bitcoins are strings of computer code, not securities. This means they are not regulated by many financial watchdogs, including the US Securities and Exchange Commission and the UK’s Financial Conduct Authority, and cannot be held by traditional mutual funds or most exchange traded funds.

Tobam’s fund is classified as an alternative investment fund, is not traded on an exchange and does not fall under the European mutual fund structure known as Ucits. However, it has daily liquidity based on market closing prices, as is the case in most Ucits mutual funds. Tobam said it required the approval of France’s financial regulator, the Autorité des Marchés Financiers, to launch the fund.

Yves Choueifaty, the founder of Tobam, said the $10bn asset manager had to convince the AMF that the bitcoin fund’s “framework is protective of investors”. PwC is the fund’s auditor and Caceis, Crédit Agricole’s asset-servicing banking group, is its custodian.

“How to run the money and invest in cryptocurrencies is quite elaborate,” he said. “We found some investors to launch the fund and we have had a lot of interest from an intellectual point of view.”

Mr Choueifaty said he would be disappointed if the bitcoin fund had not grown to a size of more than $400m in the next two to three years.

Adrian Lowcock, investment director at Architas, the multi-manager investor, said the bitcoin fund as well as investment trusts invested in the cryptocurrency underlined interest from mainstream investors. “Obviously there is an appetite for this type of investment,” he said.

Boudewijn Rooseboom, a co-founder of Cyber Capital, a specialist in cryptocurrency investment, said there was a lot of confusion about the nature of cryptocurrencies.

“But from a portfolio diversification perspective, cryptocurrencies could be an interesting proposition for institutional investors,” he said.

Trading in bitcoin remains hugely volatile. The currency crashed 27 per cent in the first three weeks of September, down from $4,950 to $3,612 for one bitcoin, only to go on to trade above $5,000 by mid-October, figures on Coindesk, the website providing news about digital currencies, show.

“More and more cryptocurrencies have been created in recent years, with bitcoin gaining the largest market capitalisation and the longest record, while also being the most liquid,” Mr Choueifaty said. “Despite growing interest for the digital currency, the current solutions available to access bitcoin pose numerous difficulties for investors.”

He added: “While bitcoin is prone to significant risks, including a very high level of volatility, it also provides diversification benefits.”

Mainstream portfolio managers and financial advisers have said recently that most institutional investors are far from considering bitcoin investments

Dow +0.69% S&P +0.65% Nasdaq +1.06% Russell +1.03%

Nikkei +0.48% Hang Seng +0.53% CSI -0.08% Shanghai +0.28% Shenzen -0.51%

Eur$ 1.1751 CNH 6.6151 CNY 6.6168 JPY 1121.14 GBP 1.3257 CHF 0.9902 RUB 59.1289

S&P +0.09% EuroStoxx +0.17% FTSE +0.10% DAX +0.17% SMI +0.10%

Macro :

- S&P 500 Mini Index Options Active on Downside Puts

- Le Maire Says Energy, Defense, Communications Could Be Strategic

- EU Regulators Can Do Fast Merger Approvals, Vestager Says

- Russian Billionaire Kerimov Detained by Police in Nice, RIA Says

Keep an eye on :

- ACKB BB : Ackermans 3Q Net Cash EU49.9 Mln Vs. Profit EU57.2 Mln Q/Q

- AKZA NA : AkzoNobel and Axalta End Merger Discussions

- AKZA NA : Axalta Gains After Reuters Report of Nippon Paint Offer

- AAPL US : Apple’s New IPhone SE to Be Assembled by Wistron: Eco Daily News

- AAPL US : Apple Said to Buy Headset Startup Vrvana for ~$30m: TechCrunch

- ATC NA : Altice Names Fonseca as Head of Portuguese Unit

- ACA FP : Credit Agricole Is Said to Inject EU120M Into BforBank: Echos

- FGR FP : Eiffage Sells Majority Stakes in 4 PPP Companies for EU240M

- FRE GY : Fresenius CEO Says Review of Akorn Deal Might Take Past Year-End

- GKN LN : GKN Stake of 5.4% Held by Deutsche Bank

- HDD GY : Heidelberger Druck Eyes Further Takeovers, Platow Boerse Says

- PSM GY : ProSiebenSat.1 CEO’s early departure could prompt bids from Comcast, Discovery - Reuters

- RFRG NA : Refresco Says Bidders, Co. Making Timely Progress on Offer

- RYA LN : Ryanair Available to Work With Alitalia, O’Brien Tells Corriere

- SKY LN : Sky to Spend Over $9b on Content in 2018: Deadline

- UBER IPO : Uber Sued Over Massive Data Breach in Los Angeles Class Action

- UN01 GY : Uniper says time for discussions with Fortum starts now

An independent survey of more than 2,000 companies in China pointed to enduring contraction for the industrial sector in the third quarter as overcapacity persisted and rising raw material costs threatened to undermine recovery.

The Cheung Kong Graduate School of Business’s quarterly Report on China’s Industrial Economy indicated that although China’s official growth rate came in ahead of the government’s full-year target in the third quarter, contraction of its industrial sector continued.

The report’s headline business sentiment index came in at 47, up from 46 in the second quarter but still below the 50-point mark that separates growth from contraction.

Professor Gan Jie, who who heads up the survey, wrote that although the industrial economy had shown some signs of recovery, “due to the persistent severity of overcapacity, there is still a need to reduce production capacity. In addition, persistent rises in raw material costs and the resulting price inflation may hinder the recovery of the industrial economy.”

Investment trends exerted a particularly heavy drag on the headline figure, with only 1 per cent of firms surveyed saying they considered it a good time to invest and only 10 per cent actually making any fixed-asset investment during the period. A sub-index tracking FAI came in at 37 for the period.

Overcapacity remained severe, with 59 per cent of firms reporting a lack of orders and 64 per cent reporting oversupply in the domestic market. The share of firms reporting severe excess capacity was 53 per cent in the third quarter, compared to 52 per cent in the previous quarter.

Costs represented the second most prominent issue as raw material and labour costs were cited by 25 per cent and 14 per cent of companies surveyed, respectively.

State-owned enterprises once again expanded, with a sub-index for government-run firms coming in at 55, while a sub-index for their privately-run counterparts came in at 46 for the period, indicating sustained contraction – though this reflected a slight improvement from 45 in the second quarter.