The US hedge fund manager, John Paulson, who famously backed Sino-Forest, before the Canadian business disappeared following short seller inquiries, recently took a large stake in UK-listed Jackpotjoy, a transatlantic transplant known in the Toronto market as Intertain.
As short sellers have already raised concerns about Jackpotjoy, this time, perhaps Paulson’s contrarian optimism is on to something? He did make a fortune by carefully selecting mortgage backed securities to bet against before the financial crisis, after all.
And yet a glance at full-year results released Wednesday may not offer much reason for confidence. Nor does a 5 per cent jump in the share price, to 560p, which fails to retrace the fall of preceding days.
Skip the first 9,000 or so words and go direct to the audited financial statements: Jackpotjoy lost £41m in 2016, on revenues of £269m.
The loss is less than the £115m recorded for the year before, but once foreign currency effects are added in the total comprehensive loss was a shade over £80m in each of the last two years.
In management’s commentary, the focus is instead on adjusted measures of profits in a strong year when “on a constant currency basis we achieved the high end of our market guidance.”
Jackpotjoy’s main asset, remember, is simply the Jackpotjoy brand. The company pays another to operate its online bingo site, and that third party holds the UK licence and is still owed large payments tied to the purchase of the brand.
The annual interest expense for serial loss-making Jackpotjoy, meanwhile, was £36m last year: 13 per cent of revenues.
Still, at number three in the shareholder list Mr Paulson is in good company. Odey Asset Management is at number six.
Gapping down
In reaction to disappointing earnings/guidance:
In reaction to disappointing earnings/guidance:
- QHC -29.4%, DCTH -20.8%, PTX -11.1%, CYCC -8.5%, OREX -6.8%
- DEPO -4.4%, (announces that Arthur J. Higgins has joined the Co as President and CEO and member of the Board of Directors, following the resignation of James Schoeneck as President and CEO and member of the Board of Directors; guides Q1 net sales of $95-$100 mln)
- IZEA -3.4%, SCWX -3.3%, PLAY -3.1%, SONC -1.1%, GLUU -0.9%, WLB -0.8%
Select EU financial related names showing weakness:
- PUK -3.2%, SAN -1.6%, BCS -1.2%, CS -1.1%, HSBC -1%, DB -1%
Other news:
- ALQA -36% (prices 9.375 mln common stock offering at $0.40/share)
- ATOS -29.4% (prices $4 mln public offering consisting of units, common stock and warrants)
- DFFN -7.2% (following 80%+ move higher following US PTO news)
- AEZS -5.9% (commences new 'at-the-market' offering of up to 3 mln common shares)
- CARB -3.8% ( to offer $125 mln aggregate principal amount of Convertible Senior Notes due 2022 in a private offering)
- BPMC -2.8% (commences underwritten public offering of $150 mln in shares of its common stock)
- HPJ -2% (following today's notable move higher / close at HoD)
- BAK -0.9% (extends timeframe to finalize its audited FY16 financial statements)
- ATH -0.7% (upsizes offering by 2.5 mln shares and prices secondary offering by selling shareholders of 27.5 mln shares of common stock at $48.50), .
Analyst comments:
- SKX -4.9% (downgraded to Negative from Positive at Susquehanna)
- FFIV -3.1% (downgraded to Sell from Hold at Deutsche Bank)
- DNKN -2.8% (downgraded to Sell from Neutral at Goldman)
- GRPN -1.8% (initiated with Underweight ratings at Barclays)
- USG -1% (downgraded to Neutral from Outperform at Macquarie)
- TWTR -0.6% (initiated with Underweight ratings at Barclays)
Gapping up
In reaction to strong earnings/guidance:
In reaction to strong earnings/guidance:
- RH +17.1%, SUNW +8.7%, VRNT +7.7%, OLLI +2.4%, UNF +2.2%, HOTR +0.5%
M&A news:
- EXAR +22.2% (to be acquired by MaxLinear (MXL) for $13.00/share in cash)
- CERU +17.2% (Pending merger partner Daré Bioscience discloses 20.7% active stake), .
Other news:
- TNXP +51.9% (will present at The MicroCap Conference on April 4)
- CBIO +30.3% (continued strength following yesterday's 180% move higher)
- SNOA +19.9% (confirms FDA 510(k) clearance for Loyon Skin Descaler)
- VRTX +19% (confirms two Phase 3 Studies of the tezacaftor/ivacaftor combination treatment met primary endpoints with statistically significant improvements in lung function in people with cystic fibrosis)
- SGMO +16% (presentation of new human in vitro and animal model data demonstrating significant reduction of tau mRNA and tau protein expression using the Co's zinc finger protein transcription factor (ZFP-TF)-mediated gene regulation technology)
- DRWI +14.8% (DragonWave's Harmony Enhanced MC backhaul solution was selected by Knoxville Utilities Board )
- IDXG +12.8% (confirms earnings release date for March 29 after the stock market closes)
- ZSAN +9.4% (Amzak Capital Management disclosed increased passive stake to 13.51% (prior 3.61%))
- DRYS +8% (continued strength)
- VIAV +5.1% (AlphaOne Capital Partners' Daniel Niles mention on CNBC FastMoney)
- EGLT +5% (FDA does not object to Egalet's distribution of promotional materials and communications to healthcare professionals regarding the abuse-deterrent properties of ARYMO ER release tablets)
- LITE +2.4% (AlphaOne Capital Partners' Daniel Niles mention on CNBC FastMoney )
- WSM +1% (RH sympathy)
- ACOR +1% (announces results from two studies of CVT-30g)
- INOV +1% (enters into an agreement with Amgen (AMGN) focusedspecifically on rheumatoid arthriti)
Analyst comments:
- CC +3% (upgraded to Buy from Hold at Jefferies)
- EGO +2.8% (upgraded to Buy from Hold at Canaccord Genuity)
- NRG +2.2% (upgraded to Buy from Neutral at Goldman)
- FTNT +2% (upgraded to Outperform at Robert W. Baird)
- MS +1.1% (upgraded to Buy from Hold at Deutsche Bank)
- AMZN +0.5% (initiated with Overweight ratings at Barclays)
- BABA +0.5% (initiated with Overweight ratings at Barclays)
Early premarket gappers
Gapping up:
- ATHX +25.4%, CERU +21.4%, SNOA +20.1%, VRTX +17.9%, RH +15.8%,DRWI +14.8%, IDXG +10.8%, DRYS +10%, VRNT +7.5%, LITE +4.8%, VIAV +2.3%
- ESV +2.1%, CC +2.1%, SNE +1.7%, AU +1.4%, HMY +1.3%, MS +1.2%, GFI+1.1%, CHK +1.1%, OLLI +1.1%, WSM +1%, SCWX +0.6%, HOTR +0.5%
- AMZN +0.5%, RIG +0.5%
Gapping down:
- ATOS -31.2%, ALQA -29.6%, PTX -10.1%, SFUN -8.7%, CYCC -8.5%, OREX-6.8%, AEZS -5.9%, DEPO -4.9%, SKX -4.2%, CARB -3.8%, PLAY -3.6%
- IZEA -3.4%, PUK -2.6%, FFIV -2.2%, HPJ -2%, DFFN -1.6%, GOLD -1.5%,GRPN -1.3%, GRPN -1.3%, TWTR -1.2%, TWTR -1.2%, BCS -1.1%
- SONC -1.1%, RIO -0.9%, HSBC -0.9%, BAK -0.9%, FCX -0.8%, WLB -0.8%,SAN -0.5%, DB -0.5%
Syngenta and ChemChina deal to complete by summer, says chief
Chinese assure CEO Fyrwald financing in place to seal takeover and fund more growth
Syngenta chief executive Erik Fyrwald is confident the $43bn sale of the Swiss seed and chemical company to ChemChina will be completed by the summer, as he looks to “aggressively grow” the company in China.
US and European antitrust regulators will approve the Chinese offer to buy Syngenta in the next few weeks, said Mr Fyrwald, who will remain chief executive once the deal is complete.
He adds that he has been assured by the Chinese group that financing is in place to close the deal, maintain the company’s investment-grade credit rating and fund more growth.
“It’s nice to have a financial owner with capacity and commitment to the long term,” said the chief executive, who expects increased spending on internal investment as well as acquisitions with incremental investment primarily in China.
“There is a big opportunity in China,” he added. “We have an opportunity to bring our capabilities to help strengthen Chinese agriculture” using ChemChina’s domestic knowledge and funding to bring existing technologies to the market.
Mr Fyrwald also wants to boost new innovation in China and collaborate with local institutes to commercialise developments.
The Asia-Pacific region accounted for less than 15 per cent of Syngenta’s $12.8bn sales last year.
State-owned ChemChina’s cash offer for Syngenta in February last year was the largest outward-bound deal by a Chinese company and is part of Beijing’s desire to improve food security, reduce reliance on foreign seed makers and develop an agribusiness industry.
The deal is the second of a trio of mega mergers consolidating the global agribusiness giants.
Some farmers, consumer groups and politicians are concerned more concentration could increase prices or cut choice and innovation. The first deal, between Dow Chemical and Dupont, was approved by European regulators on Monday. The third, Bayer’s purchase of Monsanto, is in progress.
“Regulators are rightly concerned” that there needs to be price competition and enough competitors innovating to ensure science keeps advancing, said Mr Fyrwald.
“If two of the top five players come out of the market, I think that changes things,” he said, adding what regulators require companies to sell to obtain antitrust approval — so-called “remedies” — are important in determining the future of the industry.
Dow and Dupont promised Brussels they would sell off half of Dupont’s crop protection business and some of Dow’s petrochemical divisions to address these remedies and concerns of regulators.
Syngenta “are absolutely looking at remedies”, said Mr Fyrwald who wants “bolt-on” acquisitions that fill in gaps — seeds assets are “high on the list”.
Syngenta earns 8 per cent of revenues from genetically modified products — seeds that combine traits from different plants or organisms to modify their behaviour.
Proponents argue GM traits increase yields and decrease carbon emissions and water usage, but critics worry about health impacts, environmental risks or unintended consequences.
GM products are largely banned in the EU, but are an important part of Syngenta’s business in the US, Canada, Brazil and parts of Asia.
Concern about GM has grown in China, but the government is “moving carefully” to build consumer confidence, according to Mr Fyrwald, and “to the extent that [GM] technology can reduce greenhouse gas emissions and reduce water consumption, that’s highly valued by China”.