TheChek News Flow

Mainfirst:
*ABERTIS-Ready to vote in favour of Atlantia bid says Expansion.....U/C

*AKZO-Q3 Ebit 383m(433.9),Rev 3.62b(3.68),FY Ebit i/l with '16......-1%

*ASML-Q3 GM 42.9%(43.3),Net Sales 2.45b(2.21),Sees Q4 Sales 2.1b....-2%

*HANDELSBANKEN-Q3 NII 7.59b(7.41),NI 4.17b(4.05),CET 23.6%(23.6)....+2%

*INTRUM-Q3 Ebit 977m(983.6),Net Rev 2.99b(3.067),NI 615m(615).......-1%

*BIOMERIEUX-Q3 Sales 540m(549.33),firmly on track for Ann tgts......+1%

*NOVARTIS-Revolade shows long term disease control for ITP..........+0.5%

*AXA/NATIXIS-Said to abandon Fund-Management tie-up talks...........-0.5%

*ELISA-Q3 Rev 454m(452.1),Ebitda 165m(167.2),FY Rev o/l unch........-0.5%

*AIXTRON/OSRAM-Read across from CREE -3.4% a/hrs on numbers.........-0.5%

*GRAMMER-Ningbo Jifeng looks to increase stake to 25% vs 20%........+2%

*ZALANDO-Q3 Rev 1.064-1.081m(1.061),Adj Ebit -5m to +5m,S/I 17.4%...-4%

*RECKITTS-Q3 Comp Rev -1%(0.5%),Rev 3.21b(3.28),Flat FY LfL(+2%)....-2%


Exane:
AkzoNobel -2%

ASML +1-2%

Banco BPM +2-3%

BHP Billiton -1%

bioMerieux +1%

Elisa -1%

Haulotte u/c

Heidelberg +0.5%

Reckitt Benckiser -3%

Salini Impregilo +1%

Svenska Handelsbanken +1-2%

Zalando -3%


CS:
AkzoNobel -2% Guidance reduced/Divi confirmed/Chems separation on track
AstraZeneca M/P FDA priority review for Lynparza in Breast Cancer
ASML -1% 3Q net sales EU2.45b, est EU2.21b, positive outlook
Barco M/P Q3 revs €266.7m, cons €260m, FY sales little changed
BHP Billiton UNCH Q1 production, iron ore shipments soft, FY inline
BMW +1% CS INITIATE with OUTPERFORM (most underowned)
Daimler M/P CS INITIATE with NEUTRAL
Elisa Corp M/P Q3 revs small ahead butEBITDA slightly light
Foxtons +1% Revs 35.1mln CS at 34.6mln, performance during qtr inline
Merlin Ent +1-2% CS UPGRADE to OUTPERFORM (following profit warning)
Miners UNCH Copper +0.20%, Brent +1.20%, Iron Ore +2.20%, China +0.45%
Oils UNCH US API showed a draw of 7.1m barrels vs a build of 3.1m
Peugeot M/P CS INITIATE with NEUTRAL
Porsche +1% CS INITIATE with OUTPERFORM (should reduce discount)
Reckitt Ben -1-2% Q3 LFL -1% versus cons of flat, outlook slightly light
Renault +1% CS INITIATE with UNDERPERFORM (Op leverage/cash generation)
Softcat +1-2% FY revs £832m vs cons £799m, pretax better
Spectris M/P Acquisition of The Omnicon Group, Inc for $29m
Svenska Hand +1% 5% bottom line beat vs cons, NII 2% better, fees miss
Volkeswagen +1% CS INITIATE with OUTPERFORM (efficiency programme)
Zalando -3% EBIT light, mixed sales guidance fine


Commerz:
AIR +0.1% NoldLB raises to Hold (Sell) – PT €75 (70)
BMW +0.7% CS starts with Outperform – PT € 126
DAI +0.1% CS starts with Neutral – PT €79
HEI –2.1% JPM cuts to Underweight (Neutral) – PT €83 (86)
FME +0.1% And NxStage Antitrust issues ’solvable’ (UFP)
G1A –0.1% Liberum starts with Hold
GMM +2.9% Ningbo Jifeng Auto Parts said to boost stake above 25% (Reuters)
LIN –0.1% Linde shares almost half tendered as extension deemed ‘likely’
OSR –0.5% Cree Q2 sales in line, EPS 8% ahead; Q2 sales/EPS outlook below
PAH3 +0.8% CS starts with Outperform – PT €96
SPR -0.1% SpringerNature is said to prepare for listing in 2018 (Reuters)
TKA –0.1% MOL signs another contract with TKA for Polyol project
VOW3 +0.8% To build budget cars for China, India; CS starts with OutP – PT €212
WCH +0.6% Akzo Nobel profit warning as Q3 misses, sees only flat FY EBIT
ZAL -4.2% Q3 prelims in line, entering Beauty Care in 2018


Citi:
UK
*Astra's -FDA priority review for Lynparza in breast cancer u/c
*Conviviality-CFO Humphreys leaving to be replaced by Mark Moran +1%
*Foxton's -Q3 rev £35.1m,strong balance sheet, no debt,but up 9% y'day! -1%
*Hochschild -Q3 production to be on track to achieve record production +5%
*Purplebricks-Positive ruling on TV adverts u/c
*Reckitt's -Q3 net rev £3.21bn,est £3.28bn,sees flat LFL,challenging mkt -2%
*Softcat -FY revs £832.5m,looking to replace CEO co. on track +1%
*Spectris -Aquisition of Omnicom Grp for $29m u/c

EURO
*Akso Nobel -Q3 ebit misses est. Sees fy ebit inline with '16. -3%
*ASML -Q3 sales 2.45bn vs est 2.21bn. Sees fy 25% up on prev yr. -2%
*Handelsbank -Q3 net inc 4.17bn vs 4.05bn. Tier 1 ratio 23.6% inline. u/c
*Biomerieux -3m sales +5.7% to €540mn. firmly on track for annual targets. +2%
*Novartis -Revolade shows disease control for immune thrombocytopenia. +1%
*Intrum -Q3 net rev 2.99bn, ebit 977m, net inc 615m. +1%
*Axa -Natixis abandoned talks on combining asset-management arms. u/c
*CGG -Bpifrance will vote for resolutions on restructuring plan. u/c
*Elisa -Q3 rev 454m vs 452.1m. Keeps fy outlook for revenue. +1%


Macquarie:
* Arrow Global ARW- CFO Rob Memmott stepping down, Paul Cooper will take over in Jan 2018. Unch

* Atlantis Res ARL- Meygen now fully on stream and connected to the Grid. Unch

* Billiton BLT- Weaker than expected Iron Ore & Coal, partially offset by slightly better Copper & Petroleum. -1%

* Foxtons FOXT- Total Q3 Rev’s £35.1m, Sales £10.3m & Lettings £22.5m. -1%

* Hochschild HOC- Q3 production inline, costs under control and keeps FY cost guidance, keeps FY production guidance; +1%

* Inmarsat ISAT- Signed partnership agreement with Mackay Communications to distribute Fleet Xpress; +1-2%

* Purple Bricks PURP- ASA dismisses one issue, upholds the issue on clarity of what they charge the customer. Unch

* Rathbones RAT- Total FuM up 2.5% to £37.5bn (Macq est £38bn). -1%

* Spectris SXS- Acquisition of The Omnicon Group for $29m. Unch

George Soros Transfers $18 Billion to His Foundation, Creating an Instant Giant

The pioneer of hedge-fund investing has transferred the bulk of his wealth to Open Society Foundations

George Soros, who built one of the world’s largest fortunes through a famous series of trades, has turned over nearly $18 billion to Open Society Foundations, according to foundation officials, a move that transforms both the philanthropy he founded and the investment firm supplying its wealth.

Now holding the bulk of Mr. Soros’s fortune, Open Society has vaulted to the top ranks of philanthropic organizations, appearing to become the second largest in the U.S. by assets after the Bill and Melinda Gates Foundation, based on 2014 figures from the National Philanthropic Trust.

Soros Fund Management LLC’s 87-year-old founder now shares influence over the firm’s strategy with an investment committee of Open Society. Mr. Soros set up the committee and is its chairman, but it is meant to survive him, people familiar with it said.

A new chief investment officer at the Soros firm is less a trader than an allocator of capital to various internal and external asset managers. Unlike past investment chiefs, the official, Dawn Fitzpatrick, doesn’t report to Mr. Soros or others at his firm but to the philanthropy’s investment committee.

Mr. Soros doesn’t plan to trade the billions that now belong to Open Society, according to the people familiar with the situation. Mr. Soros was trading his own money, held separately within the Soros firm, as recently as last year, when he bet—wrongly, it turned out—that stocks would slump after Donald Trump was elected president.

“It’s an ongoing process of migration from a hedge fund toward a pool of capital deployed to support a foundation over the long term,” said Bill Ford, a committee member and the chief executive of General Atlantic LLC, a firm that invests in growth-stage companies.

Though the $26 billion Soros Fund Management was a pioneering hedge fund, it returned outside investors’ money several years ago and became a family office—a type of structure, largely free of regulation, that is increasingly popular with wealthy clans.

Mr. Soros began his giving in 1979 and stepped it up to fight communism across Eastern Europe. In 1984, he set up a foundation in Hungary, the country of his birth, that distributed photocopiers to universities and libraries to break the government’s hold on information.

Having lived under both communism and a Nazi occupation in Hungary, Mr. Soros hoped to foster “open societies” in places where authoritarian governments held power. He named his foundation after a book by the philosopher Karl Popper, one of his teachers, that defended liberal democracies.

Open Society today has a broad mandate driven largely by its founder’s values. It operates through a network of more than 40 foundations and offices in countries from Afghanistan to South Africa. It has funded refugee relief, public-health efforts and programs including a mobile court for gender crimes in the Democratic Republic of the Congo. The philanthropy also advocates for rights of the Roma, one of Europe’s largest ethnic minorities.

Open Society’s activism has sometimes angered nationalist governments, such as the current one in Hungary, which targeted a university Mr. Soros founded and which has run poster campaigns singling him out for his support of refugees. Mr. Soros has urged developed countries in Europe and elsewhere to share the burden of increased migration from conflict-ridden countries. Anti-Soros politicians in Macedonia, Poland and some other European countries have attacked foreign-funded groups, including Open Society, for what they see as outside interference in their affairs.

In the U.S., where Mr. Soros is a major contributor to liberal and Democratic causes, he is a lightning rod for conservatives. Open Society has supported efforts to overhaul immigration policies and the criminal-justice system, including prisons, and funded mentoring programs for black and Latino young men. It has supported activists working on issues raised by the Black Lives Matter movement.

Mr. Soros funded Latino get-out-the-vote efforts last year and donated to largely Democratic district-attorney candidates around the country. A Hillary Clinton supporter, he was an outspoken critic of Mr. Trump, whose campaign cited Mr. Soros in a closing ad as part of a “global power structure” the ad said disadvantaged the working class. After the election, Open Society said it would spend $10 million to fight hate crimes, a problem Mr. Soros said had been inflamed by the Trump campaign.

In all, Mr. Soros and Open Society have given $14 billion so far, said a foundation spokeswoman.

When it comes to investments, philanthropic foundations typically focus more on preserving capital than maximizing returns, unwilling to tolerate the losses that can accompany high-risk, potentially high-reward trading. Now that Soros Fund Management’s main client is a philanthropy, several people close to the firm say they expect it to curtail its tradition of large “macro” trades—wagers on the direction of currencies, stocks, commodities or interest rates.

Mr. Soros declined to be interviewed. Ms. Fitzpatrick, the new investment chief, said the firm isn’t backing away from macro investing but expects future opportunities to be more fleeting and smaller. “There are fewer currencies, [and] central banks are savvier and more coordinated now,” she said.

Mr. Soros immigrated to Britain as a youth, studied philosophy and then became a stock trader, before moving to the U.S. and setting up what became Soros Fund Management in 1969.

In a trade that brought him wide attention, he made a giant “short” wager against the British pound in the early 1990s, which paid off when Britain devalued its currency and withdrew from that era’s European Exchange Rate Mechanism. Mr. Soros’s firm earned roughly $1 billion and he was dubbed the man who broke the Bank of England.

A run of rich annual returns hit a pothole in 2000, when the firm’s flagship Quantum fund lost heavily on cratering technology and biotech stocks. Discord with Mr. Soros over the soured tech bets factored in the departure of his investment chief of 11 years, Stanley Druckenmiller, to whom Mr. Soros credited the idea for the pound trade.

That marked the start of continued change atop the firm as chief investment officers cycled through. Some operations also were rejiggered, which ex-employees said was partly to make way for Mr. Soros’s eldest sons. At one point in 2003 Mr. Soros hired Steven Mnuchin, now U.S. treasury secretary, to run a credit business.

Despite regularly telling others he was retired, Mr. Soros occasionally stepped back into active trading, such as during the financial crisis, when he helped guide his firm to big gains. Former employees say some past investment chiefs bristled at how Mr. Soros inserted himself in operations, judging them critically on what they felt was short-term performance.

The longest-serving investment chief of recent years, Scott Bessent, stopped by Mr. Soros’s estate in Southampton, N.Y., one July weekend in 2015 and said he was thinking of leaving to start a hedge fund of his own, adding he would want more authority were he to stay. He didn’t get it. Mr. Bessent soon left, ending a strong run of 4 1/2 years with a $2 billion investment in his new fund from Mr. Soros.

The departure, the fifth by a Soros investment chief in 15 years, coincided with a stepped-up pace of change at the firm. Mr. Soros decided that year to form the Open Society investment committee that now wields power, and his wealth transfers to the philanthropy accelerated around the same time.

That most of his fortune would eventually go to Open Society has long been known, but Mr. Soros previously funded it with annual donations. He plans to give it most of the rest of his wealth in his lifetime or upon his death, said people familiar with the matter, pushing its assets above $20 billion.

Soros Fund Management’s annual returns have averaged around 11% in the past 10 years, according to a person familiar with the figures, well below the 30% of its early decades.

Ms. Fitzpatrick, who began as investment chief in April, is an options trader by background who arrived from UBS Asset Management, where she oversaw teams managing more than $500 billion in client money across a wide range of strategies.

Her priority isn’t making her own trades but moving money as opportunities shift, said people familiar with the Soros firm. They added she is whittling the number of managers given money to invest and is seeking to build a more collaborative approach, such as by linking employee pay more closely to returns of the firm as a whole.

The firm has about $6 billion in private-equity and related investing, from African cellphone towers to a stake in a restaurant chain called Dinosaur Bar-B-Que. The overseers of this chunk of money report to Open Society’s investment committee.

Ms. Fitzpatrick, 47 years old, recalled how one Sunday morning shortly before she started, an unfamiliar number lit up her phone as she was walking out of church with her young daughter. It was Mr. Soros, wanting to share an observation on the markets. “I recognize his number now and pick up on the first ring,” she said.

The two speak regularly, with Mr. Soros sharing his view of the markets but so far refraining from interfering in her decisions.

Mr. Soros now spends about half the year on the road in connection with Open Society’s work and rarely visits his office at his firm’s Manhattan headquarters. He still gets a daily copy of its profit-and-loss statement.

Cost cutting and acquisitions are delivering results, but there is more to do

Healthy food fads reached their natural conclusion this year with the Silicon Valley trend for eating nothing at all. The world’s biggest consumer goods companies might be excused for not seeing an obvious profit in extreme fasting. Far harder to forgive their inertia when faced with the boom in gluten-free, lactose-free diets.

Danone, the world’s largest yoghurt maker, bore the scars of these in last year’s financial performance. This year it is looking far healthier. Third-quarter results on Tuesday showed sales topping expectations at 4.7 per cent. Shares, already up on news of US activist interest, are at a record high.

The French company’s expensive acquisition of US health-food company WhiteWave gives it access to plant-based alternatives to the dairy products that are losing favour. Plans to cut fat from the balance sheet are also in progress.

It is too soon to declare a turnround. Growth is still patchy; sales in the US and Europe, collectively 60 per cent of the group total, were broadly flat. The driver is China, where the relaxation of the one-child policy helped increase sales of infant formula by a startling 50 per cent. Relying on one country for growth is precarious.

More promising is the focus on raising operating margins, already up 81 basis points over the year to 14 per cent. Danone could afford to be lazy about costs when emerging markets propelled the top line. As sales slowed, that was no longer the case. Plans to cut €1bn of costs by 2020 fit with the aim of raising the operating margin to 16 per cent. The target is shy of Nestle’s plan to reach 17.5 per cent or more, but it is a step in the right direction.

One question: where is hedge fund Corvex in all this? The changes preceded news of the activist’s $400m stake. That sum may be small for a €44bn group, but Third Point’s noisy interest in Nestlé set a tone some expected to be echoed. Corvex may see nothing to shout about. Unlike a diet, Danone’s health kick has a good chance of achieving lasting results.

Lululemon plans to have $4 billion in annual volume by 2020 through four categories — men's, women's, international and digital sales.

As Alibaba Group explores “New Retail” and how to leverage its digital marketplace into the physical world, Lululemon Athletica Inc. could play a role in that vision.

According to Laurent Potdevin, chief executive officer of Lululemon, whose products are sold on Alibaba’s Tmall, the Chinese marketplace platform is in the “early stages” of exploring what the retail makeup could look like in a physical setting. He confirmed that he’s had preliminary discussions with Alibaba executives, including founder and executive chairman Jack Ma. They took place in Canada during the last week in September while Ma was the keynote speaker at Gateway Canada, a program aimed at helping brands and small businesses either sell directly to China’s consumers or through distributors.

“What does a physical marketplace look like and how will it benefit consumers?” Potdevin said are some questions raised as the Chinese firm explores options with its Canadian marketplace partners on a possible go-forward strategy. Besides Lululemon, Ma said during his keynote address that Canada Goose is also sold on one of Alibaba’s sites.

While Potdevin indicated there’s no conclusion yet on what the final physical format could entail, he said a huge venue similar to the Mall of America might be a good starting point.

But Potdevin, who also believes that there’s no longer a distinction between off-line and online, said a series of shops as most malls are now configured isn’t the answer. Instead, he spoke about huge spaces dedicated solely to experiences and services. In Lululemon’s case, the dedicated area would most likely incorporate space for yoga classes. That fits in with the brand’s history of how it has built its network of loyalists via local, grassroots yoga groups, one community at a time.

“People still crave human connection, especially in the active sector,” Potdevin said, adding that the connection and discussions around yoga have evolved the brand to represent an “athletic and mindful lifestyle.”

Alibaba has been vocal about its efforts to create a new infrastructure for retail in China that it calls “New Retail.” A spokesman declined comment on the conversation between Potdevin and Ma, but noted that with just 18 percent of retail consumption in China occurring online and the balance in traditional brick-and-mortar stores, “there is an even more interesting opportunity to help traditional brick-and-mortar brands and retailers leverage the technology and consumer insights Alibaba can provide to transform how they engage consumers and give consumers new, more digitally integrated ways to shop. We call this drive our ‘New Retail’ strategy.

“Imagine a store where you can pick items from the shelf, and at the same time, purchase other items not from the shelf, but from your mobile phone while you are standing in the store. And then you tell the store to send everything you just bought to your home because you need to go catch a movie. This is already a reality in China today through Alibaba,” the spokesman said.

One individual close to Alibaba said the thesis behind “New Retail” is centered on “eliminating the distinction between physical and online.” And while there’s been speculation about a complex that is being built in Hangzhou across the street from company headquarters — and how it might be the future home of an Alibaba mall — this individual said the site “is not one of the malls we’re invested in.”

According to Potdevin, the brand’s sales in China through Tmall are up 350 percent year-over-year. Lululemon’s growing presence in China could help the athletic performance and yoga brand grow its international business to $1 billion by 2020.

International is one component of the overall business that Lululemon has said could grow to $4 billion in annual volume by 2020. The other three areas — all projected to grow to $1 billion each — that will help Lululemon reach its target are digital commerce, women’s and men’s.

Wells Fargo Securities analyst Tom Nikic last month cautioned about a possible slowdown in the athletic apparel/footwear space, noting the success in recent years of the category and how consumers have filled their closets with activewear over the past six to seven years as a possible cause for the sector “to take a breather for now.”

Potdevin considers the term “ath-leisure” both a “curse and a blessing.” While the term has helped the company grow and attract some brand followers, he insisted it has been “wrongly articulated” in the footwear and wholesale distribution channels. The ceo considers those channels “uninspiring, particularly with the shift to Amazon.” Potdevin also seeks to distinguish Lululemon from firms such as Under Armour and Nike, brands that sell into the wholesale channel and are often considered by Wall Street to be competitors because they all sell similar products. Potdevin said the problem with wholesale is that it forces brands to be defensive since “wholesale is a race to the bottom.”

“We do the local markets and communities. We have 2,500 brand ambassadors around the world who have their finger on the pulse. In Australia, triathlon is huge. In China, boxing is on the rise. In Hong Kong, it is spinning that is growing. We tailor our product line to the local marketplace. It is a unique opportunity for us to listen and be curious [about what consumers want],” the ceo explained. He added that the listening component allows the company to gain better traffic and a higher conversion rate due to the engagement with its studio partners.

The company is taking some of the learnings from the women’s business to men’s, which is about 20 percent of the overall business. Men’s as a category is about $500 million in annual volume and became a focus for growth 24 months ago.

Lululemon has different signage in its stores as design cues to differentiate product for men and women, although there’s a bit of cross over on the tech side for both lines.

“Ten years ago, it was more about fashion and now it is more about performance. In women’s, it was then more about fashion and nontechnical, and for men’s it has become more about style and fashion. Today he expects both, fashion and technology,” Potdevin said, adding that its competitors who “sell into the wholesale channel have to work within certain lead times that make it harder for them to focus on style.”

Wall Street seems to be giving Lululemon the benefit of the doubt. Matthew McClintock at Barclays Research has an “overweight” rating on shares of the company. He said, “We remain bullish on the Lululemon story as [the company’s second-quarter] results clearly demonstrate isolation from the pressures facing the broader athletic industry.”

The company last month said profits in the second quarter slipped 10 percent to $48.7 million, on a 13 percent gain in net revenues to $581.1 million. Comparable sales, including digital, rose 7 percent.

Earlier this month, Dana Telsey at Telsey Advisory Group said both near-term catalysts and long-range outlook can support an upside in the stock price. She also has an “outperform” rating on the shares. “We see strength of the brand, the control of distribution and the ongoing appeal of its specific category as allowing it to stand somewhat aside from the overall broader channel.”