Gapping down
In reaction to disappointing earnings/guidance:
In reaction to disappointing earnings/guidance:
- OREX -14.3%, (guidance)
- NHTC -10.1%, (guidance)
Other news:
- TGTX -16.4% (provides update on FDA meeting for genuine phase 3 trial, the FDA confirmed that accelerated approval based on Overall Response Rate would be a review issue; completes full enrollment in the UNITY-CLL Phase 3 trial)
- LPCN -2.3% (files for $150 mln mixed securities shelf offering)
- BBVA -1.5% (continued volatility in Spanish banks)
- SAN -0.6% (continued volatility in Spanish banks)
Analyst comments:
- MGA -2.8% (downgraded to Sell from Neutral at Goldman)
- ADBE -2.2% (downgraded to Hold from Buy at Deutsche Bank)
- LQ -1.6% (downgraded to Equal-Weight from Overweight at Morgan Stanley)
- OMC -1.5% (downgraded to Underweight from Equal-Weight at Morgan Stanley)
- CSX -1.1% (downgraded to Market Perform from Outperform at Wells Fargo )
- MIDD -1% (downgraded to Sector Weight from Overweight at KeyBanc Capital Mkts)
- BMY -0.9% (downgraded to Hold from Buy at Jefferies)
- C -0.5% (downgraded to Sell from Hold at Societe Generale)
Gapping up
In reaction to strong earnings/guidance:
In reaction to strong earnings/guidance:
- N/A.
M&A news:
- SHPG +2.2% (Sky News details that activists want Shire (SHPG) to be broken up)
- HSY +0.8% (reports that the company will be among bidders for Nestle's (NSRGY) confectionery unit)
Select metals/mining stocks trading higher:
- FCX +3.3%, CLF +2.8%, AKS +2.1%, BHP +1.9%, RIO +1.8%, BBL+1.1%, VALE +1%
Other news:
- TRXC +80.8% (FDA clears new robotically-assisted surgical device for adult patients)
- IBIO +30% (agreement with Aethlon Medical (AEMD) to support potential large-scale production of the Aethlon Hemopurifier blood purification device)
- LBIX +23.3% (continued strength)
- AGLE +21.4% (enters into clinical collaboration agreement with Merck)
- EXEL +18.2% (announces phase 3 CELESTIAL trial met its primary endpoint; FDA granted priority review to the sNDA for CABOMETYX)
- PETX +11.2% (announces they are making ENTYCE commercially available to veterinarians in the United States for appetite stimulation in dog)
- FENC +8.8% (announces data from its Phase 3 SIOPEL 6 study presented during the late breaker session on Saturday, October 14)
- VHC +8.6% (reportedly being awarded $344 mln from Apple (AAPL) dispute)
- CARA +4.7% (announces the successful completion of its End-of-Phase 2 Meeting with the FDA)
- ZKIN +3.9% (signs a $2 mln initial pipeline infrastructure contract with Huawei)
- EBIO +3.8% (appoints Richard Fitzgerald as Interim CFO effective October 20)
- KURA +3.3% (still checking)
- JD +3.1% (Barron's profiles positive view on JD.com)
- GORO +3.1% (reports prelim 3Q17 production)
- IMGN +3% (FDA has completed the safety review of its IND for IMGN632 in patients with CD123-positive hematological malignancies; co plans to open a Phase 1 study to enrollment before the end of the year)
- CATB +2.9% (entered Sales Agreement with Cowen to offer up to $10 mln of common stock)
- INO +2.2% (initiates phase 1b/2 immuno-oncology trial to evaluate Genentech/Roche's atezolizumab (TECENTRIQ) in combination with Inovio's INO-5401), .
Analyst comments:
- XXII +8.2% (target raised to $11.50 at Chardan Capital Markets)
- CELC +6.2% (initiated with a Buy at Craig Hallum)
- AU +5.9% (upgraded to Overweight from Neutral at JP Morgan)
- ABEO +4.4% (target raised to $30 at H.C. Wainwright)
- BSTI +4% (initiated with a Buy at Goldman)
- GRPN +3% (upgraded to Market Perform from Underperform at Cowen)
- INFN +1.4% (upgraded to Neutral from Sell at Citigroup)
- AAPL +0.8% (upgraded to Overweight from Sector Weight at Pacific Crest)
- NVDA +0.7% (target raised to $220 from $180 at Mizuho)
- AZN +0.5% (upgraded to Outperform from Neutral at Credit Suisse)
Fund Management Strategy: What's trending in fund management? Exploration in charts
Active vs Passive, AI, Robo advisors and ESG. If we put all these keywords into the headline
it would make the most clickbait-worthy title ever. Over the past 2 years these topics have
attracted the most attention and interest from our clients. The broader public is interested
too – according to Google Trends search volumes on the above keywords are running at an
all-time high.
Passive share growth in the US has slowed considerably over the past 6 months. Using the
average growth rate over the past 2 years our new projection for the US 50% passive
milestone is not until Q1 of 2019.
However, we don't believe it marks a comeback of active management. There has been no
change in trend of persistent outflows from US active funds. We think the slowdown is a
result of the US market being generally out of investors' favour in 2017. There is a
background persistent trend flow from active to passive and additional transient flows
recognising that passive vehicles are investors' preferred route to taking tactical, regional
and asset class exposure.
Meanwhile, passive growth in Europe has accelerated over the same period and has been
particularly strong in the UK.
In terms of performance, active managers are enjoying a tactical revival this year. Our
sample of European fund managers have outperformed their benchmarks by around 3% so
far and the HFRI Equity hedge fund index is up by 8.2%.
As correlations remain subdued and intra-market valuation and ROE dispersion is still high,
our models suggest continued strong performance of both fundamental and quant fund
managers over the next 12 months.
Tesco is looking to pay down as much as £700m of its debt as the retailer tries to strengthen its balance sheet and regain its investment grade status.
The UK’s largest grocer launched a tender offer on Monday targeted at seven series of its sterling and euro notes, the company said. The tender expires on October 24, with pricing taking place the following day and settlement on October 30.
“The offers are being made in the context of Tesco’s continuing efforts to strengthen the balance sheet and are aimed at efficiently using surplus liquidity to reduce gross debt,” its statement said.
Tesco had its bonds downgraded to junk by Moody’s in January 2015, when its net debt stood closer to £8.5bn. Since then its net debt pile has more than halved — shrinking by one quarter in the 12 months to August — as the supermarket chain has undergone a turnround under chief executive Dave Lewis.
Earlier this month, Tesco reinstated its dividend for the first time in three years , delivered half-year pre-tax profits up almost half a billion pounds from a year earlier, and has cut net debt to £3.3bn.
“By maintaining a disciplined approach to capital and further reducing debt we can continue to strengthen the balance sheet, return to investment grade credit metrics and generate an increasing level of free cash flow,” the company said in the half-year results statement.
Tesco’s bonds are currently rated as the highest rung of junk by Moody’s, S&P and Fitch, with the outlook from each marked as stable.
One hedge fund investor described the tender offer as “very generous”. The prices of all the series targeted by the tender offer were up from yesterday’s close shortly before publication time.
Technology and bicycles transform sex and society
Taller French and fewer divorces come from broader connections in life and work
What do the bicycle and the internet have in common? One less than obvious answer is that they have both encouraged sex between strangers.
The introduction of new technologies can often result in dramatic, and largely unforeseen, effects on societies, disrupting established patterns of doing things and connecting people in unexpected ways.
In his book The Discovery of France, the historian Graham Robb describes how the sale of 4m bicycles before the first world war had a striking impact on French society. One consequence was probably to make the French taller. As Robb writes: “A boy with a bicycle could leave his pays in search of a job or bride and be back in time for dinner, which is why the bicycle has been credited with increasing the average height of the French population by reducing the number of marriages between blood relations.” The French love of the bicycle, it seems, encouraged passion of a different kind.
The internet may be having a similar effect as it broadens the social connections that people make. Steve Jobs once even described computers as bicycles for our minds, although their ability to facilitate amorous liaisons, like the pre-first world war velocipedes, was probably not what he had in mind.
The sociologist Mark Granovetter theorised about the strength of weak ties. According to this idea, you are more likely to find a job through a loose acquaintance than a close friend because they can access a broader network of contacts. That is the appeal of LinkedIn.
But an academic paper published this month explores the potency of what it calls “absent ties” in the marriage market thanks to the rise of online dating sites. Whereas many of us still marry people we meet through friends of friends, colleagues or neighbours, more and more of us are now hitching up with complete strangers we first discover on the internet. The likes of Match.com, OKCupid and Tinder are the algorithmic matchmakers of our day.
In the US, one-third of marriages results from online dating. Tinder, which launched in 2012, has about 50m users and produces 12m matches a day.
One of the paper’s authors, Josué Ortega, who studies game theory, became intrigued by these dating sites while teaching at Columbia University and wondered how far they were responsible for breaking down racial segregation. Although many of his students were using Tinder for casual sex, he was also struck by how sometimes it led to more permanent relationships for older users, such as a professorial colleague in his 70s who met his second wife via the app. “New technology gives us more options,” says Mr Ortega. “And these options have unexpected effects on society.”
To explore how such networks might work in theory, Mr Ortega and his co-author Philipp Hergovich built a mathematical model of online connections. They came to two stark conclusions: these networks should result in markedly higher rates of inter-racial marriage and a lower rate of divorce (because of the greater compatibility of matches).
How do these findings match the observable data? Overall, according to the Pew Research Center, only 6.3 per cent of marriages in the US are inter-racial compared with 9 per cent in the UK (although it should be remembered that such marriages were illegal in parts of the US until 1967). But the number of inter-racial marriages has shot up in the US since the introduction of online dating sites. The authors also cite separate research showing that marriages initiated online result in fewer divorces. Absent ties may indeed make the heart grow fonder.
Of course, correlation is not causation. The relatively recent introduction of online dating sites (Match.com launched in 1995) means that the data are of short duration. And mathematical models have a hard time accounting for messy human emotions such as blind love.
Whatever the cause, the authors argue that the rise of inter-racial marriage is a good thing because it helps promote social integration. But those with a particularly strong sense of ethnic identity might not see it that way.
It may increasingly be the case that our societies will divide between some groups defined by ethnic identity and others bonded by social values. We obsess about white supremacists marching through Charlottesville while largely overlooking how seemingly trivial technologies, like Tinder, are reshaping our societies in more subtle and important ways.
Early premarket gappers
Gapping up:
- LBIX +13.7%, HBM +6.9%, CF +5.1%, AU +4.6%, BLDP +3.7%, M+3.5%, KURA +3.3%, FCX +2.6%, BBL +2.1%, SHPG +2.1%, JD +1.9%,BHP +1.8%, BHP +1.8%, RIO +1.4%, CLF +1.1%, NVDA +1%, TEVA+1%, VALE +0.9%, AKS +0.9%, AAPL +0.8%, AMD +0.7%
Gapping down:
- MGA -2.3%, BBVA -1.8%, MELI -1.6%, OMC -1.6%, SAN -0.9%, NOK-0.7%, BCS -0.6%, ALV -0.6%, FMS -0.5%
Board of Management decides on first steps to strengthen divisional structure; Mercedes Benz Cars & Vans and its Trucks unit may be transferred into independent entities
Daimler AG aims to further focus and strengthen the Group's corporate structure through the creation of legally independent entities. In addition to the existing legally independent division Financial Services, the divisions Mercedes-Benz Cars & Vans as well as Daimler Trucks & Buses may be transferred into two legally independent entities to take greater entrepreneurial responsibility.
This project intends to strengthen the future viability of the business units and better utilize the potential for growth and earnings in the various markets. Daimler AG does not plan to divest any of its divisions.
Based on the positive results of a feasibility study, the Board of Management today decided, subject to the approval of the Supervisory Board, to continue with the project and in this context to take preparatory measures. Daimler will invest a three-digit million euro amount for these first steps.
Close consultation is taking place with the employee representatives; an agreement has been reached on the cornerstones of a balance of interests to secure Daimler's employees' future. Major elements are the extension of the agreement on safeguarding employment until the end of 2029 (»Zukunftssicherung 2030«), increasing the funded status of pension obligations and an extension of the common profit-sharing bonus of Daimler AG. In connection with the balance of interests, Daimler plans a contribution of EUR3.0 billion from liquid funds to the German pension fund of Daimler AG in the fourth quarter 2017, subject to the approval of the Supervisory Board. For full-year 2017, Daimler expects the free cash flow of industrial business, excluding the mentioned pension contribution, to be slightly above prior-year's level.
Until now, neither the Board of Management nor the Supervisory Board of Daimler AG has made a final decision on implementing the new structure for the Daimler Group. Both boards will come to a final resolution after the ongoing assessments and negotiations have been completed. Should the Board of Management and Supervisory Board decide to finally implement the new Group structure, those measures would require the approval of a shareholders' meeting of Daimler AG. Such a motion could be voted on at the earliest at a shareholders' meeting in the year 2019.
How Cheniere Energy Decided to Take a Gamble on Liquified Natural Gas
Every few days, a 900-foot long tanker sails from Cheniere Energy’s mammoth new Sabine Pass terminal on Louisiana’s Gulf Coast, loaded with natural gas for destinations around the world.
Everything about the operation is oversized. The terminal straddles 1,000 acres on the Texas-Louisiana border and cost about $18 billion to build. Each shipment contains enough liquefied natural gas, or L.N.G., to heat 45,000 homes for a year.
“This is a generational opportunity for us,” said Michael Wortley, Cheniere’s chief financial officer. “We’re not talking about the next couple of years, we’re talking about the next 50 years.”
Much as hydraulic fracturing, or fracking, helped drillers extract vast quantities of oil from once-inaccessible shale formations in states like Texas and North Dakota in the last decade, natural gas production has quietly traced a similar trajectory. Soaring L.N.G. exports are changing how natural gas is priced around the globe and opening new markets overseas for American drillers.
While Cheniere is the only exporter of L.N.G. from the continental United States, by 2020, new domestic L.N.G. export terminals are expected to open, “transforming the global energy market and making the United States a global gas superpower,” said Jason Bordoff, director of Columbia University’s Center on Global Energy Policy.
But before Sabine Pass delivered its first cargo in February 2016, it wasn’t clear where all of the natural gas would go. “We have a huge amount of cheap gas as a result of the shale revolution, and we are going through a real transition since it can now be exported as L.N.G.,” said Mr. Bordoff.
For Cheniere, and for the broader global L.N.G. market, it’s a remarkable turnaround. Sabine Pass had originally been designed as an L.N.G. import terminal, but with domestic prices falling and overseas demand rising a decade ago, executives realized the natural gas needed to go out, not come in.
We thought that if we’re going to make this thing work, we’re going to have to go all in and literally turn the plant around,” said Mr. Wortley.
At the time, Cheniere’s stock was trading at less than $3 a share, and the company had $2 billion in debt and only $50 million in cash on hand.
However, the company’s former chief executive, Charif Souki, was able to convince foreign companies like Britain’s BG Group (acquired by Shell last year) to sign long-term contracts for future deliveries, reassuring lenders and bond investors that his vision would eventually pay off.
“People thought they were crazy, but domestic gas production kept growing, and Cheniere reinvented themselves,” said Faisel Khan, an analyst at Citigroup who follows the company.
Tens of billions of dollars in investment later, the infrastructure to make that happen is coming on line. In addition to Sabine Pass, Cheniere plans to open a second facility in Corpus Christi in 2019. Before the two plants are completed, Cheniere expects to spend about $30 billion.
Cheniere’s bet has paid off for patient investors. Its stock now trades at about $47 a share.
Companies like Sempra, Dominion Energy and Kinder Morgan are working on several additional plants, which will help lift total L.N.G. export capacity to about nine billion cubic feet per day by late 2019 from a little under two billion today, Mr. Bordoff said.
“We’re at a breakthrough point for America’s L.N.G. exports and its influence in global energy markets,” said Agnia Grigas, author of “The New Geopolitics of Natural Gas.”
Unlike oil, which has been moved around the world for decades in supertankers, natural gas, as a vapor, is much more complicated — and expensive — to transport.
While pipelines carry natural gas over long distances, the only way to move it across oceans is through the L.N.G. process.
Natural gas vapor is chilled to 260 degrees Fahrenheit below zero, turning it into a liquid that can be pumped aboard specially designed ships that keep it under pressure with minimal change in temperature. Upon arrival, the liquid is slowly warmed and converted back into conventional natural gas that can be delivered to customers.
The Trump administration backs opening new areas to oil exploration and reducing regulations on coal to help miners, but the president has also emerged as a strong supporter of L.N.G. exports. In July, he praised the exports during a visit to Poland, a few weeks after the country took delivery of its first L.N.G. shipment from Cheniere.
The Obama administration backed L.N.G. exports as well, but the Trump administration has linked this development more closely to trade policy, especially as a way of countering Russia’s influence in Europe. “The Trump administration has tried to create L.N.G. diplomacy,” said Ms. Grigas.
Even if the administration lives up to its promise to reduce regulations, cheap natural gas means utilities will likely be reluctant to move back to coal.
“The rising L.N.G. supply has put consumers of natural gas in the driver’s seat, minimized the oil link and maximized competition,” Edward L. Morse, global head of commodities research at Citigroup, said. “This is a really revolutionary change.”
Halloween spending projected to set record at $9.1B
And you thought the retail outlook was scary.
As Halloween approaches, Americans from all walks of life are in the process of spending billions on costumes, candy, decorations and other paraphernalia to celebrate this most frightening of holidays, marking one of the brighter spots on a challenging retail calendar.
According to the National Retail Federation, Halloween 2016 saw ghosts and goblins of all ages plunk down a record $8.4 billion for the occasion, a figure that is projected to rise a further 8.3 percent this year, to $9.1 billion — a growth rate far in excess of both US gross domestic product and overall retail.
According to NRF, Halloween ranks eighth in holiday spending, just ahead of St. Patrick’s Day. The Christmas holiday period ranks No. 1, with $656 billion spent last year.
“It’s like a big, sexy party with a lot of vampires,” says Tony Bianci, who manages Halloween Adventure, an East Village purveyor of costumes, makeup, wigs and props. “You can dress up as Superman and get a date.”
Bianci, whose store is open year-round, says he does 60 percent to 70 percent of his business in September and October, a time during which his staff mushrooms to 100 from the usual 35.
The most in-demand costumes are not necessarily the scary ones: Wonder Woman is currently flying off the shelves for trick-or-treaters of all ages, while characters featured in Disney’s “Descendants” TV movie are the most popular with kids, he says.
Owing at least in part to its location, which is not far from where the Village holds its annual Halloween parade, Bianci says that Halloween Adventure is less affected by the Halloween aisles featured in large stores like Kmart or the “pop-up” stores that spring up for this and other holidays, but is “more affected by Amazon.”
Another New York retailer handles the sweeter side of the holiday.
Dylan’s Candy Bar, founded by Dylan Lauren and inspired both by Willy Wonka’s chocolate factory and the fashion sense of her father, designer Ralph Lauren, is also a year-round operation and offers shoppers “quite a unique experience,“ says Tushar Adya, president and chief operating officer.
The Candy Bar, which Adya proudly says is selling “candy as a lifestyle,“ began 16 years ago at what is now its flagship location on Third Ave and 60th Street and has since expanded to other locations in the city and to outlets in the Hamptons, Chicago and Miami Beach.
“Actually, our customers who come for Halloween buy their trick-or-treating candy in supermarkets but come to us mainly for gift candy to bring to parties and so forth,” he says, explaining that while “Halloween is a short window, we do see a nice uptick in sales.”
But some retail analysts are more subdued when it comes to the effect of Halloween spending and what it may do tide retailers over, at least until Christmas spending kicks in.
According to Robert Schulz of Standard & Poor’s, retailers may have timing working against them this year.
“Halloween is a growing kind of holiday spend, so it has more prospects to go up rather than down,” he says, adding, “But since it’s on a Tuesday this year, that’s not providing a tailwind.”