TheChek News Flow

That’s up from about $10 million in 2015.

Probably not the comparison investors are looking for.

• Snap lost $514 million in 2016. Twitter lost $79 million the year before its IPO. Facebook, on the other hand, was bringing in $1 billion in profit.
• Snap had revenue of $404 million in 2016. Twitter had revenue of $317 million the year before its IPO. Facebook was already a moneymaking machine, with revenue of $3.7 billion the year before its IPO.
• Snap has 158 million daily active users. Twitter, which only reports monthly active users, had 218 million. Facebook dwarfed them both, with 845 monthly active users, and 483 million daily active users.
• Snap has 1,859 employees. Twitter had 2,000. Facebook had 3,200.

- Bonds: largest inflows in 7 months ($11.5bn)

- Equities: largest inflows in 7 weeks ($12.7bn) ($15.5bn ETF inflows vs $2.8bn mutual fund outflows)

- Precious metals: $0.6bn inflows (only second week of inflows in almost 3 months)

- Money-markets: $16.4bn outflows

- EM: largest inflows since Oct’16 ($1.4bn)

- US: $7.8bn inflows (largest in 7 weeks)

- Japan: $0.6bn inflows (inflows in 5 of past 6 weeks)

- Europe: $0.7bn inflows

- By sector: largest financials inflows in 11 weeks ($1.4bn); inflows to materials in 12 of past 13 weeks ($0.6bn); inflows to energy in 8 of past 9 weeks ($0.4bn)

- Inflows to HY bond funds in 9 of past 10 weeks ($2.2bn)

- Inflows to EM debt funds in 4 of past 5 weeks ($1.7bn)

- 6 straight weeks of IG bond inflows ($5.3bn – largest in almost 6 months)

- 12 straight weeks of inflows to bank loan funds (big $2.4bn)

- 8 straight weeks of inflows to TIPS funds ($0.2bn) $0.7bn outflows from govt/tsy funds

Attractive valuations versus the US are and a gloomy consensus are drawing funds

With their rivals distracted by the drama of US politics a small but growing number of hedge funds are increasing their exposure to one of the least fashionable markets in the world — continental Europe.

“American investors have pretty much given up on Europe,” says Joseph Oughourlian, founder of the $1.5bn activist hedge fund Amber Capital. “Europe is seen as the big loser in the current geopolitical trend. People feel [Donald] Trump is almost openly in favour of the disintegration of the European Union and that Brexit is just the beginning”.

As nimbler alternative asset managers seek to increase their exposure to European assets, with early buyers having booked big gains for 2016, a broader base of mainstream fund managers appear unconvinced. The most recent Bank of America Merrill Lynch’s monthly fund manager survey, which polls investors controlling a total of $547bn of assets, shows that Europe remained significantly less favoured than the US. The survey’s measure of sentiment towards the single currency remained at rock bottom.

Fundamental valuations, however, suggest that consensus opinion on Europe may well be too negative. European equities have rarely been as cheap when compared to the rest of the world, according to Northern Trust. With many fearing the political risks hanging over Europe while embracing the idea of the so-called “Trump trade” the valuation gap between stock markets in the US and Europe has remained wide. The US S&P 500 index currently trades at a forward price to earnings multiple of over 17 times, compared to less than 15 times for the pan-European Euro Stoxx 600 index.

This gap has spurred concentrated, bottom-up equity-focused investors to buy up shares in European-listed companies, especially those in Southern Europe, that have large amounts of their business based in North America, but are still arguably penalised for being “European companies” by the market.

For early buyers, who have already benefited from identifying very profitable opportunities, the outlook still remains attractive. Mr Oughourlian‘s Amber activist fund generated returns of 17 per cent last year, and he has continued to build positions in companies across Southern Europe. “I personally think these fears about Europe are being overplayed and are offering up some compelling investment opportunities,” he says.

US value investor Southeastern Asset Management’s Concentrated Value Europe-focused fund, backed by Egyptian billionaire Nassef Sawiris, returned 30.5 per cent in 2016. These gains were helped by a large stake in the industrial testing company Applus, which although is listed in Spain derives over a third of its revenues from the Americas and a quarter of sales from Asia, the Middle East and Africa.

The Applus investment followed a pattern of searching out bargains in Europe, which eventually revert to trade at valuations closer to their US peers. At the start of 2015 Southeastern began building up a large position in Adidas, which traded at a significant discount to US rival Nike, with the German company’s shares tripling in value in just over two years.

While shares in US companies exposed to greater government spending on infrastructure and higher inflation have been sought since the election of Mr Trump, the market appears less convinced this thesis will play out in Europe. CRH, the construction materials manufacturing company, is nearly flat since the US election, as is HeidelbergCement. Shares in the London-listed Ashtead, an equipment rental company with a significant business in the US, however have surged by a third since the vote.

Yet it is not only stock pickers that are seeking out opportunities in Europe but also debt specialists, some of whom are raising money from investors in the belief that the continent is less crowded than in North America, and attractively valued. Avenue Capital, the $10.6bn New York-based fund that focuses on distressed investing, is currently fundraising for a European-focused fund that will seek to buy up senior debt in Western European companies they deem financially sound while undergoing difficult periods.

Others are moving more of their assets away from the US and into European investments. Jason Dillow, chief investment officer of the New York-based $9.2bn Halcyon Capital Management which invests across equity and debt is another who is also increasing his fund’s exposure to European assets. Between 15 and 20 per cent of Halcyon’s credit exposure is in Europe at the moment and Mr Dillow expects that to rise this year. “I do expect us to go higher,” he says. “There are lots of these niche, under-loved and underfollowed opportunities in Europe today.”

Victor Khosla, founder of Strategic Value Partners, a $5bn fund with both private equity and hedge fund strategies, says he currently holds about 60 per cent of their exposure in Europe at the moment, compared to 40 per cent in the US. He believes that ongoing noise about politics in Europe could create attractive entry points for longer-term focused investors.

“When we invest in the US, it’s like fortress America but when you look at Europe, there are all these fissures, all these cracks running through the system, whether it’s the Scottish referendum, or Brexit, or Italy. There are always these breakpoints in Europe that create issues. If you’re an investor like us, it creates some really interesting opportunities.”

Macro :

- Trump to Halt Obama Fiduciary Rule, Order Dodd-Frank Review

- Uber CEO Quits Trump’s Business Advisory Council: Recode

- Spotify May Delay IPO to 2018: TechCrunch

Keep an eye on :

- ATLN VX : Actelion’s Uptravi Risk is ’Short Lived’: Piper Jaffray

- AENA IM : Aena to Cut Incentives for Airlines, El Confidencial Reports

- ANDR AV : Andritz Names Mark Von Laer New Chief Financial Officer

- AZN LN : AstraZeneca Patent on Diabetes Drug Onglyza Upheld by U.S. Court

- POP SM : Banco Popular 2016 Net Loss EU3.49B on Real Estate Clean-Up

- BPI PL : Banco BPI Says Four Investors Sued to Block Angola Stake Sale

- CPR IM : Campari Buys Bulldog Gin for $58.4 Million

- CEZ CP : CEZ May Sell Part or All of Skoda Praha Unit: Hospodarske Noviny

- CEZ CP : CEZ Owners May Seek Company Partition, CEO Tells Lidove Noviny

- DENERG DC : Dong Energy Says Goldman Sachs Will Sell More Shares

- FRE GY : Fresenius in Pact to Take 70% Stake in Cura Day Hospitals: AFR

- LOCAL FP : Solocal Sees 2017 Recurring Ebitda Falling to EU210m-EU225m

- MEO GY : Metro 1Q Adjusted Ebit Misses Estimates; Outlook Confirmed

- MMT FP : M6 to Assess Impact of RTL Audit of French Radio Business

- NRG FP : NRJ Group 4Q Revenue Slips 0.9% on Drop in Broadcasting Business

- RLIA SM : Santander, Caixabank, Bankia To Lend EU700m to Realia: Expansion

- RR/ LN : Rolls-Royce Paid $2.1m Bonus Fee for Late Parts, DOD Audit Says

- SAN FP : Regeneron Rises; Amgen’s Repatha Data Provides Read-Through

- SKAB SS : Skanska FY Rev. Misses Estimate, Adjusted Profit Beats

- UCG IM : UniCredit Says Florence Blazy Joins as Senior Banker in Paris

- YTY1V FH : YIT 4Q Rev. Beats Highest Est.; Sees Rev. Growth 0-10% in FY

*Aker BP Raised to Outperform at Macquarie, PT NOK188

*Aker BP Raised to Outperform at Macquarie, PT NOK188