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Hedge Funds Turn Against OPEC After Oil Gains Slip Away

Traders tally up losses as cartel falls short in its effort to boost prices and reduce global glut

OPEC is trying harder than ever to woo big investors, but the cartel is finding that falling oil prices are making that a tough sell.

Dozens of hedge-fund managers and oil traders attended a series of closed-door meetings in recent months with OPEC leaders—the first of their kind, according to Ed Morse, Citigroup ’s global head of commodities research, who helped organize some of the events.

Cartel officials made the case for how OPEC supply cuts would reduce the global glut and boost crude prices, according to people familiar with the meetings. Instead, oil prices are down more than 10% from their February high, and some prominent hedge-fund traders are reeling.edf fp Equity gip

Pierre Andurand, a French hedge-fund manager with a history of double-digit returns, met with a Saudi official from the Organization of the Petroleum Exporting Countries just before the Nov. 30 decision to cut production, said people familiar with the meeting. After a series of bullish bets, his main fund at Andurand Capital is down around 16% this year through May 5, according to a person who had seen the performance numbers.

Oil rose 2.1% on Monday after Russian and Saudi Arabian energy ministers said they would support another nine months of production cuts. That helped crude rebound from recent five-month lows and paved the way for an extension of the output cuts when the cartel meets on May 25.

But the rally fizzled on Tuesday when U.S. oil prices fell 0.4% to $48.66. Many traders see any extension as OPEC’s acknowledgment that the first round of cuts haven’t been effective. Some are starting to wonder whether OPEC’s ability to influence the market is waning.

OPEC officials couldn’t immediately be reached for comment.

Saudi Arabia’s energy minister Khalid al-Falih said Monday that while “there has been a marked reduction to the inventories, we’re not where we want to be.” Mr. Falih, speaking after a meeting of the G20 countries in China, said that a “general consensus” was emerging that extending the cuts “is the right approach and the right thing to do.”

“In my view, it’s the wrong response,” Doug King, chief investment officer at RCMA Asset Management and manager of that firm’s $200 million Merchant Commodity hedge fund, said of extending the current cuts. “We’re not seeing what we needed to see.”

Mr. Morse said he arranged introductions between OPEC Secretary-General Mohammad Barkindo and more than 100 hedge-fund managers and other oil buyers who met with Mr. Barkindo in Washington, D.C., New York and London since October.

The coordinated outreach was a new effort by the cartel to build bridges between its members and Wall Street, aiming to convince investors that producers were serious about reining in supply, say people close to the matter. After asking what OPEC planned to do boost prices, fund managers came away impressed, Mr. Morse said, adding that some still text with the OPEC leader.

OPEC’s cuts started in January, and oil prices jumped 8.7% in December as traders anticipated an easing supply glut. Bullish bets by money managers hit a record for the 10 years of data from the Commodity Futures Trading Commission early this year.

Many analysts agreed with the upbeat mood, forecasting that crude prices would hit $60 a barrel or higher by the end of 2017.

U.S. oil inventories have declined since OPEC’s output cuts, but they remain near historic highs. That is in part because U.S. production has increased by more than 200,000 barrels a day during the past two months. If output continues to ramp up at that pace, U.S. producers could end the year producing 800,000 barrels-a-day more than at the end of last year. That would replace much of what OPEC has taken off the market, analysts say.

In recent weeks, hedge funds have cut their bullish position on oil prices to the lowest level since November as a gasoline glut raised worries that demand could falter.

Mr. Andurand informed investors in an April 24 letter reviewed by The Wall Street Journal that oil prices “will reach new highs.” But three weeks later, he had abandoned most of his bullish bets, said a person familiar with the matter.

Veteran oil trader Andrew Hall also bet heavily that OPEC’s strategy would work. A fund managed by his Astenbeck Capital Management LLC, a Southport, Conn., hedge-fund firm, lost 17.3% this year through April, said a person familiar with the matter.

Mr. Hall is one of a few still preaching patience. He recently wrote to investors predicting that inventory excesses would be eliminated, said the person familiar with the matter.

Astenbeck and Mr. Hall didn’t respond to a request for comment. It isn’t clear if he or anyone at his fund attended meetings with OPEC.

Oil reclaimed some momentum last week after the U.S. Energy Information Administration reported the biggest stockpile decline of the year and prices rose more than 3%.

Qualcomm Inc filed a complaint against Foxconn Technology Group and three other Apple Inc contract manufacturers for not paying royalties, firing the latest salvo in its fight with the iPhone maker.

The other manufacturers listed by Qualcomm were Pegatron Corp, Wistron Corp and Compal Electronics Inc.

Apple sued Qualcomm in January, accusing it of overcharging for chips and refusing to pay some $1 billion in promised rebates.

Qualcomm said in the complaint that Apple is trying to force the company to agree to a "unreasonable demand for a below-market direct license".

Apple could not immediately be reached for a comment.

Qualcomm said last month that Apple had decided to withhold royalty payments to its contract manufacturers that are owed to the chipmaker, for sales made in the first quarter of 2017, until the dispute is resolved in court.

"While not disputing their contractual obligations to pay for the use of Qualcomm's inventions, the manufacturers say they must follow Apple's instructions not to pay," Qualcomm said in a statement on Wednesday.

Apple has agreed to indemnify the manufacturers for any damages resulting from breaching their agreements with Qualcomm, the chipmaker said in the complaint filed in the United States District Court for the Southern District of California.

Qualcomm said it sought an order that would require the manufacturers to comply with their long-standing contractual obligations to the company, as well as declaratory relief and damages.

The chipmaker slashed its current-quarter profit and revenue forecasts in April, saying it excluded revenue receivable from the four contract manufacturers.

Qualcomm did not disclose the quantum of royalty owed to it by the manufacturers.

Qualcomm, the largest maker of chips used in smartphones, is a major supplier to Apple and Samsung Electronics Co Ltd for modem chips that connect phones to wireless networks.

Foxconn Technology Group is the trading name of Taiwan's Hon Hai Precision Industry Co, the main assembler of Apple devices.

Qualcomm's shares were marginally lower at $55.66 in premarket trading.

(Satellite Business News) — In a deal that could link up two of the richest chief executives in the world, Dish Network and Amazon are in talks that would make the giant internet retailer a foundational customer of the wireless network Dish Network hopes to launch within the next few years, Satellite Business News has learned. How close the two companies are to a definitive agreement was not certain as of press time Tuesday night.

It was also not immediately clear if the discussions also involve an investment by Amazon in Dish Network and/or its potential wireless business. By some accounts, Dish Network hopes to make an announcement regarding its wireless relationship with Amazon this week in Dallas during its annual trade show for its independent satellite retailers.

That event begins tonight, though the main session for the show is not scheduled until tomorrow morning. However, Dish Network, it should be noted, has been down to the final strokes of major agreements with other firms in the past, only to see the deals get scuttled at the last minute.

As such, it is possible a Dish Network-Amazon deal might not be consummated. If it is, it could give Dish Network’s much talked about — and some would argue, struggling — wireless spectrum fortunes a huge boost. As reported, Dish Network has spent $21 billion to acquire wireless spectrum but has no customers, and only a vague outline of a business plan centered on the idea that countless machines and devices will be connected one day under the general term, “the Internet of things.”

Amazon has repeatedly mentioned its interest in introducing new services for its existing and future devices, and maybe looking for a bigger role in determining its wireless fate rather than depending on companies like AT&T and Verizon to connect to its devices and sell its services — such as its streaming offerings.

Amazon is also believed to be interested in developing an online video service which includes live channels, and recently announced an agreement with the NFL to distribute Thursday Night Football games to its best customers on-line next season.

Such an agreement would also bring together not only two of the wealthiest people on the planet, but two of the most controversial chief executives who are nevertheless viewed by most as among the most visionary, self-made, and hard-driving executives in recent business history: Dish Network co-founder and Chairman Charles William Ergen and Amazon founder and Chairman Jeffrey Bezos. Both also have a reputation as being difficult to negotiate with, which could complicate their discussions.

And, interestingly enough, Dish Network and Amazon have also been labeled as having very rough workplace environments.

The Dish Network retailer event is slated to take place at the Gaylord Texan hotel in Dallas the next three days. For the first time in over a decade, Satellite Business News is not being permitted to cover the show. If some sort of wireless alliance is announced during the convention, satellite dealers and distributors will no doubt want to know if they will play any role in that, but also in Dish Network’s wireless business in general.

At Dish Network’s dealer show a year ago, Ergen urged the retailers to invest into becoming installers of home wi-fi equipment and networks, off-air TV antennas and similar products that would allow them to move away from being solely reliant on the company’s DBS service for their income. But in the months that followed, Dish Network shut its dealers out of participating in several new, related initiatives it launched — such as the program to sell and install its Air TV video player and an off-air antenna, and its repair of its Samsung washing machines.

That left many dealers bitter, particularly as Dish Network’s DBS service continued to hemorrhage customers and the company’s focus on its Sling TV online video service intensified.

Dish Network does not comment on corporate matters. Amazon has never responded to a single inquiry on any subject from Satellite Business News.

The global economic, financial and political landscape has never been shakier, but the world's rich are confident they can steer through the fog of uncertainty in the coming year "without so much as a dent in their finances", a survey showed on Wednesday.

The findings of UBS Wealth Management's survey of more than 2,800 millionaires in seven countries show a high degree of worry about the global financial system on the one hand, and supreme self-confidence and optimism on the other.

Some 82 percent of those surveyed said this is the most unpredictable period in history. More than a quarter are reviewing their investments and almost half said they intend to but haven't yet done so.

But more than three quarters (77 pct) believe they can "accurately assess financial risk arising from uncertain events", while 51 percent expect their finances to improve over the coming year compared with 13 percent who expect them to deteriorate.

More than half (57 pct) are optimistic about achieving their long-term goals, compared with 11 percent who are pessimistic. And an overwhelming 86 percent trust their own instincts when making important decisions.

"Most millionaires seem to be confident they can steer their way through the turbulence without so much as a dent in their finances," UBS WM said.

"They identify economic and financial risks as their big concerns and they have serious doubts about the world's corporate and financial system. And yet, they stride into the future with assurance," the report said.

Among the other findings, 68 percent say they suffer from "information overload" as they make their investment decisions, and nearly three quarters (72 pct) say short-term distractions get in the way of their financial plans.

Still, the report highlighted some aspects of their investment behavior that could ultimately work against them. For instance, 75 percent of those surveyed see cash as a safe option, "even though it will perform poorly compared with other asset classes in the context of rising inflation."

Perhaps surprisingly, younger millionaires are more risk-averse than their older peers. Nearly half of the 18-34 year old group are less willing to take risks after the financial crisis, compared to less than 30 percent of the over-65 bracket.

The study surveyed 2,842 millionaires, with investable assets of at least $1 million, in Hong Kong, Japan, Singapore, Mexico, Italy, Switzerland and Britain.

Disney’s Iger Isn’t About to Let Go as CEO

Succession at world’s largest media conglomerate is up in the air as inside candidates leave, outsiders lack interest; four different retirement dates

Robert Iger owns a license-plate frame printed with the question: “Is there life after Disney DIS -1.05% ?”

The chairman and chief executive of the world’s largest media conglomerate, Walt Disney Co. DIS -1.05% , doesn’t keep the frame on his car anymore. “I decided it’s not worth it,” Mr. Iger said in March at a conference sponsored by the University of Southern California. “I’d get stopped every once in a while by people who asked what it means.”

The same question transfixes people throughout Disney and the entertainment industry, who wonder how much longer Mr. Iger, 66 years old, will keep his grip on the company behind Snow White, “Star Wars” and “SportsCenter.” Twelve years into his tenure as CEO, the question of who will succeed Mr. Iger is more uncertain than it has been for nearly a decade. He isn’t about to let go.

The strongest internal candidates have left, and the most frequently mentioned external candidates are uninterested. Some people who know Mr. Iger believe he simply doesn’t want to retire yet, despite stating repeatedly that he intends to. A contract extension signed in March runs through July 2, 2019. That is the fourth date he has announced for stepping down as CEO.

Disney ’s board of directors and investors seem happy to back Mr. Iger for as long as he wants to stay. Under his widely acclaimed leadership, the Burbank, Calif., company’s share price has nearly quintupled, increasing the stock-market value of Disney to about $170 billion. Disney is the most successful entertainment company in modern history.

The longer Mr. Iger stays, though, the harder it gets to imagine the future of Disney without him—or who could possibly replace him.

Mr. Iger has led the company for so long and with such hands-on attention that he and Disney now seem inseparable to many employees and outside partners. That dynamic also occurred with founder Walt Disney and Mr. Iger’s predecessor as CEO, Michael Eisner. Mr. Eisner left following strife among Disney shareholders and its board, a problem Mr. Iger isn’t facing.

Mr. Iger’s ever-extending leadership might be just what Disney needs to keep thriving where it is strong and solve problems looming on the horizon, such as declines in viewership at ESPN and the company’s other television networks. If the problems worsen, though, Disney shareholders might turn less sanguine about succession questions.

On a conference call with analysts last Tuesday, Mr. Iger said that “more has been made about our succession than it really deserves.” He and the board are trying to ensure “we have enough time to not only consider the right candidates but to make the right decision and to craft a handover of sorts of a transition that should be successful,” added Mr. Iger.

Five-year bake-off

Two years ago, the succession question seemed to be settled. After a five-year bake-off during which Mr. Iger’s retirement as CEO was delayed from 2015 to 2016 and then to 2018, Disney promoted Tom Staggs, head of its parks and resorts division and former finance chief, to operating chief.

The move positioned Mr. Staggs, a 26-year Disney veteran, as the natural successor to Mr. Iger.

In March 2016, Mr. Iger told Mr. Staggs that they needed to talk.

Mr. Staggs’s first year in the No. 2 job was bumpy. Because the chief operating officer had few solo responsibilities and no business units reporting directly to him, Disney employees were uncertain how much authority he carried.

Still, many people inside the company assumed those obstacles would be surmountable. Messrs. Iger and Staggs were longtime friends who had similar leadership styles and whose children attended the same school. But Mr. Iger had a very different message during their meeting in March 2016.

Disney’s board of directors, led by Mr. Iger as chairman, had lost confidence in Mr. Staggs’s ability to ascend to the top job, the CEO said, according to people familiar with the discussion.

Without citing any shortcomings that emerged during Mr. Staggs’s year as operating chief, Mr. Iger said the board would expand its search process for a new chief executive. Mr. Staggs felt he had no choice but to resign.

When his exit was announced, Disney said the board would “broaden the scope of its succession-planning process to identify and evaluate a robust slate of candidates for consideration.”

Throughout Hollywood and Disney, some executives, producers, agents and other business associates believed Mr. Iger had decided he wasn’t ready to step down.

Building a boat

Those people pointed to issues ranging from professional, including his desire to conquer the challenges at ESPN from cord-cutting, to personal, such as the failure of a bid he chaired to build a National Football League stadium near Los Angeles that might have been an anchor of post-Disney life.

In private conversations, Mr. Iger has discussed possibly running for office, serving in a Democratic presidential administration or spending time on a sailboat he is building, say people who have worked at Disney and spoken with him. Those people say they weren’t sure how seriously to take Mr. Iger.

A person close to Mr. Iger says he wanted to retire in 2018 but felt he had to stay longer after the plan for Mr. Staggs to succeed him failed. This person adds that if Mr. Iger’s goal was simply to extend his tenure as CEO, he could have kept Mr. Staggs as operating chief past 2018.

Disney’s board is now focused on hiring or promoting someone directly into the CEO job, rather than an evaluation or training period as operating chief, according to people close to the company. There have been no obvious signs of progress in the past year toward selecting such a person.

Orin C. Smith, Disney’s independent lead director, said in March that the board would continue its “robust process of identifying a successor.”

Speculation inside and outside Disney has centered on three widely respected outsiders: Steve Burke, chief executive of Comcast Corp.’s NBCUniversal, which includes cable and broadcast networks, film and TV studios and theme parks; Sheryl Sandberg, Facebook Inc.’s operating chief and a Disney director, and Peter Chernin, a producer and investor who was News Corp. president until 2009.

News Corp. later spun off its newspaper and book-publishing assets, including The Wall Street Journal, into News Corp and changed its name to 21st Century Fox Inc.

No interest

Disney hasn’t approached Mr. Burke, Ms. Sandberg or Mr. Chernin about the CEO job, according to people familiar with the matter. None of them is interested in taking it.

Some people at Disney believe the board should try to hire from the inside. Disney prides itself on a corporate culture that focuses obsessively on what it calls “franchises”—or entertainment juggernauts that live on for many years as theme-park rides, toys, videogames, television shows and merchandise.

No one already at Disney has emerged as a strong potential successor to Mr. Iger, either. The company’s theme-park chief for the past two years, Bob Chapek, is the only senior executive who has worked in multiple Disney divisions. He spent much of his career heading home video for Disney’s movie studio before taking over the consumer-products business in 2011.

Mr. Chapek has no experience in Disney’s television business, the biggest unit in terms of revenue and profit.

Finding a successor to Mr. Iger wasn’t supposed to come down to the wire.

Mr. Staggs and Jay Rasulo emerged as leading CEO contenders as far back as 2010, when they swapped jobs, with Mr. Staggs taking over the theme-park division and Mr. Rasulo becoming chief financial officer.

The idea of Mr. Iger and Disney’s board was that Messrs. Staggs and Rasulo would broaden their exposure and skill sets so that either one would become seen as qualified to rise to the CEO spot held by Mr. Iger.

Four months after being passed over in 2015 to be Mr. Iger’s second-in-command, Mr. Rasulo resigned from Disney.

Mr. Iger, Disney’s president since 2000, spent several years as the likely successor to Mr. Eisner before being promoted to the top job in 2005.

Mum until 2018

People close to the company say it appears that Disney’s board isn’t close to zeroing in on a successor to Mr. Iger and is unlikely to announce the company’s new chief executive until 2018 at the earliest.

Meanwhile, Mr. Iger is as hands-on as he has ever been. Initially cautious about getting involved in the film business because his background was in TV, he now reads scripts regularly and discusses release plans.

He tasted the food at Shanghai Disneyland before it opened last year. Mr. Staggs was heavily involved in the new theme park but exited Disney a month before the opening.

Mr. Iger also is leading the charge to figure out a new digital future for profit machine ESPN, which has lost 12 million subscribers in the past five years as consumers become less interested in pricey pay-TV packages.

Solving the ESPN problem is a top priority for Mr. Iger, a perfectionist who wants to leave Disney in as flawless shape as possible, people close to him say.

TV is the biggest challenge for Disney, which otherwise has been succeeding on all fronts. Mr. Iger engineered the purchases of Pixar Animation Studios, Marvel Entertainment Inc. and Lucasfilm, which cost more than $15 billion combined. They are largely responsible for Disney’s dominance of the movie business in the past few years and have helped generate growing profits for parks and consumer products.

Insiders and outsiders are split on whether Disney’s future would be brighter with a CEO from Silicon Valley who could guide the company’s digital transition, an expert in brand management or someone already in the creative bubble of Hollywood. Mr. Iger and the board have given themselves two more years to answer that question.