>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance:
  • CIE -14.4%, TLYS -12.5%, PN -12.3%, AMPH -10.1%, RYI -8.4%, PETX -6.5%, APRI -6.4%
  • GBT -4.5%, PPHM -3.1%, TPVG -2%, COUP -1.9%, HDS -1.7%, BLCM -0.6%
Select EU financial related names showing weakness:
  • RBS -4.5%, LYG -3.5%, BCS -2%, PSO -1.4%, DB -1.6%, HSBC -1.4%, SAN -0.9%
Select metals/mining stocks trading lower:
  • MT -1.6%, RIO -1.4%, VALE -1.3%, BHP -1%, HMY -0.9%, FCX -0.9%, AU-0.8%, AUY -0.8%, GFI -0.6%
Select oil/gas related names showing early weakness:
  • WLL -1.9%, SWN -1.7%, ESV -1.4%, MRO -1.3%, TOT -1.2%, RDS.A -1.1%,DVN -1.1%
Other news:
  • ANTH -32.3% (To offer and sell shares of its common stock and warrants to purchase shares of its common stock in an underwritten public offering)
  • AUPH -23.3% (Commences common stock offering)
  • ADPT -20.3% (Amends credit agreement, hires chief restructuring officer and financial advisor to advise the Board and management as they explore various strategic alternatives)
  • CBIO -16.4% (Files for $12 mln offering of Class A Units consisting of common stock and warrants and Class B Units consisting of shares of Series A Preferred Stock and warrants)
  • VRX -11% (Ackman's Pershing Square sells its stake)
  • KNDI -10.3% (Determines that some previously issued financial statements should no longer be relied upon)
  • LNTH -9.6% (To sell 3 mln shares of its common stock to be offered by certain of its existing stockholders)
  • DOC -3.8% (prices offering of 15 mln shares of common stock at $18.20 per share)
  • CORT -3.6% (Files for $200 mln mixed securities shelf offering, as well as 349k share offering by selling stockholders)
Analyst comments:
  • GLW -1.5% (downgraded to Neutral from Buy at Goldman)

>>> US Early premarket gappers

Early premarket gappers
Gapping up: DRWI +43.5%, TDW +27.4%, ETRM +19.8%, SBOT +17%, WAC +9.3%,EARS +7.1%, CIE +7%, CBR +6.9%, RTTR +4.7%, YY +4.5%, EGY +3.8%, COKE+3.5%, DSW +3.4%, REN +3%, SCYX +2.3%, PUK +2.2%, F +1.2%, ATRS +1.2%,GRBK +1.2%, GEO +1%, ENOC +0.9%, TRHC +0.8%, VALU +0.8%, HDS +0.7%

Gapping down: ANTH -31.5%, ADPT -22.4%, AUPH -16.5%, CBIO -16.4%, VRX-12.9%, TLYS -12.5%, LNTH -11%, PPHM -8.9%, RYI -8.4%, KNDI -8%, PETX-7.9%, APRI -6.4%, AMPH -5.2%, DOC -4.5%, RBS -4%, CORT -3.6%, BLCM -3.5%,GBT -3.2%, LYG -2.9%, PSO -2.2%, TPVG -2%, ON -1.7%, HMY -1.7%, BCS -1.7%,DB -1.6%, AU -1.2%, RIO -1.2%, HSBC -1%, GFI -1%, MT -0.9%, SAN -0.9%, TWTR-0.9%, COUP -0.9%, AUY -0.8%, BHP -0.8%

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance:
  • WAC +9.3%, EARS +7.1%, YY +4.5%, ALBO +4%, EGY +3.8%, DSW +3.3%,REN +3%, SCYX +2.3%
  • PUK +2.2%, ATRS +1.2%, GRBK +1.2%, ENOC +0.9%, VALU +0.8%, TRHC +0.6%
M&A news:
  • MGI +23.5% (Euronet Worldwide (EEFT) has made competing proposal to acquire MGI for $15.20/share)
  • CBR +10.2% (confirms receipt of non-binding letter of interest from Ameri Holdings to acquire co for $0.75 per share)
  • LCUT +5.8% (receives takeover offer for $20.00 per share from Mill Road Capital)
Other news:
  • DRWI +34.8% (Signs new Master Sales and Services Agreement with Ingram Micro Australia)
  • TDW +27.4% (Receives additional limited waiver extensions from its lenders and noteholders)
  • ETRM +21.5% (Announced that its vBloc Neurometabolic Therapy for the treatment of obesity will be featured on the March 14 episode of the Emmy Award-winning syndicated daytime talk show The Doctors)
  • SBOT +17% (Enters into a technology transfer and purchase agreement with Matrivax Inc related to Stellar's proprietary Clostridium difficile technology)
  • TNXP +7.8% (announces that the U.S. Patent and Trademark Office has issued a Notice of Allowance for U.S. Patent Application covering composition and manufacture of tnx-102 sl)
  • RTTR +4.7% (Discloses holding a a Type C informational meeting with the FDA)
  • COKE +3.5% (To join the S&P SmallCap 600)
Analyst comments:
  • ARRS +5.1% (upgraded to Buy from Neutral at Goldman)
  • OPK +1.3% (initiated with a Buy at Guggenheim; tgt $25)
  • LADR +0.9% (upgraded to Outperform from Market Perform at Wells Fargo)
  • WMT +0.6% (added to US 1 List at BofA/Merrill)

FT : Ocado: short shrift

Ocado: short shrift
The online supermarket is among the most shorted stocks in London

Any company touting artificial intelligence, big data and robotics should thrill the average trader. Ocado, the UK’s online supermarket, ticks all these boxes. Its distribution centres are filled with specialised “bots” ordered about by specially written algorithms parsing customer data. Yet speculators have increasingly sold its shares short. Despite a healthy jump in earnings in recent years, the market clearly thinks it will need more money soon.

Ocado has the second-largest proportion of short positions in the UK market — 18 per cent of issued shares, according to the Financial Conduct Authority. Although that proportion has been higher, the short selling has resumed since the turn of the year. Bears proffer a number of theories on Ocado. Two key ones are that it will never make any money partly because of the threat from margin-killer Amazon. Another reason: Ocado has repeatedly promised it could license its AI, robotics-driven distribution systems to other supermarkets internationally. To date it has failed to do so.

To all this supporters say: so what? Trading volumes have consistently climbed at a rate in the low teens, as Tuesday’s trading statement reiterated. Operating profits have quadrupled since 2012 and free cash flow turned positive two years ago, although not if one includes the costs of software licenses. And that may be the rub. The company does still leak cash, a lot less than years ago but still some. Meanwhile, Amazon Fresh has arrived in the UK delivering to just over 200 postcode areas. A company with plenty of pre-paid customers (Prime) and cash could do a lot of damage to the supermarket sector. On the other hand Amazon could leapfrog its development time by buying Ocado.

The fact that its shares have travelled nowhere over nearly four years suggests Ocado’s chances are slim. Yet any good news would send shorts scurrying to buy back. Its 4 per cent rally on Tuesday may be telling. Only robots stick blindly to their scripts.

>>> Don’t Turn Safran Into Volkswagen, TCI Partner Ben Walker Says (bbg)

Don’t Turn Safran Into Volkswagen, TCI Partner Ben Walker Says
A merged Safran/Zodiac Aerospace will have corporate governance similar to Volkswagen, a co. “generally thought to have the worst corporate governance in Europe,” TCI partner Ben Walker says in emailed comments.
  • Message to other Safran shareholders is “do not turn Safran into Volkswagen": Walker
  • Reiterates that TCI, and other shareholders would just like a vote on the merger before the cash tender offer
    • Adds that this is the only way to have a ‘‘free, open and fair vote on the merger’’
      • TCI had said in letter dated Feb. 27 that Safran governance will get worse after the deal, as Zodiac founding families, French state, Peugeot family and FSP fund will sign an agreement giving them effective control
  • The deal structure, with the merger vote taking place after the tender offer, is ‘‘specifically and intentionally designed to disenfranchise Safran shareholders’’: Walker
  • TCI is acting independently and does not seek to work in concert with any other shareholders, Walker says
    • Don’t see a reason why any of the large Safran shareholders, would like the price paid, deal structure/sequencing or the negative impact it would have on corporate governance: Walker
  • Reiterates Zodiac price being paid is too high, especially when considering the undervaluation of Safran stock, the real price being offered to the Zodiac family is EU49
  • TCI Fund holds 4% of Safran shares, and has a small holding in Zodiac
  • Note that VW holds capital markets day today, short interest has been rising ahead of meeting
    • May 6: TCI called for Volkswagen to cut management pay

>>> What to look at today - 14th of March 2017

Dow -0.10% S&P +0.04% Nasdaq +0.24% Russell +0.37%
US Market closed lower, but very close from the flat line again. The energy sector (unch) closed just above its flat line following crude oil's fifth consecutive retreat. WTI crude finished Monday trading at $48.40/bbl. INTC agreed to pay $15.3 billion, or $63.54 per share, in cash for Mobileye, which represents a 34.0% premium over MBLY's closing price on Friday.
The technology sector (+0.1%) profited from the chipmakers' solid performance, finishing the day with the financials (+0.1%), consumer discretionary (+0.2%), materials (+0.3%), utilities (+0.2%), telecom services (+0.2%), and real estate (unch) groups in the green. The remaining sectors--industrials (-0.1%), health care (-0.2%), and consumer staples (-0.1%)--closed with modest losses. US After Hours Ruby Tuesday (RT) +20% on strategic alternatives exploration, Valeant (VRX) -10% as Ackman closes out position Asia equity markets are seeing compressed volatility as the quiet before the Wednesday FOMC decision envelops sentiment. Oil remains under pressure near 3-month lows, while US airline stocks hit some turbulence ahead a massive snowstorm bearing down on the northeast. Dollar majors were similarly contained in narrow ranges - AUD/USD saw the most notable decline after a retreat in NAB business confidence/conditions from multi-month highs last month.

Nikkei -0.12% Hang Seng -0.20% CSI -0.04% Shanghai +0.07%

Eur$ 1.0644 CNH 6.9076 CNY 6.9191 JPY 115.14 GBP 1.2137 CHF 1.0092 RUB 58.9850 WTI$ 48.35 -0.10%

S&P -0.07% EuroStoxx +0.06% Dax-0.05% FTSE +0.2% SMI +0.01%

Macro :
- FOMC Expected to Meet as Planned Tues.-Wed. Amid Snowstorm

Keep an eye on :
- ABI BB : AB InBev Chief Integration Officer Almeida Buys $9.15m of ADRs
- ANTO LN : Antofagasta FY 2016 Ebitda $1.63b, Beats Estimate of $1.59b
- CTXS US : Citrix Said to Work With Goldman Sachs on Potential Sale Process
- CBK GY : Commerzbank Loses Case Over Dresdner Bank Cum-Ex Trades: HB
- DIREN FP : Direct Energie FY Net Jumps; Sees Higher 2017 Operating Income
- ILD FP : Free Says Roaming to Be Included in EU15.99/Month Plan
- INTC US : Intel Should Buy Its Own Stock Rather Than Mobileye: Street Wrap
- IGY GY : Engie Said to Eye Bid for $19.8 Billion Green Utility Innogy, RWE Doesn’t Comment on Innogy Interest, Can Cut Stake to 51%
- KPN NA : KPN to Swap 6% of Telefonica Deutschland for Stake in Telefonica
- NOVN VX : Novartis Kisqali Gets FDA Approval for Metastatic Breast Cancer
- OCDO LN : Ocado 1Q Sales Meet Estimates, Sees Change in U.K. Food Pricing
- P1Z GY : Patrizia Raises 2017 Operating Income Guidance to EU60m-EU75M
- PUB FP : Publicis Groupe Has Put In Place a Share Repurchase Agreement
- RWE GY : RWE’s Net Income Guidance May Lead to Re-Rating, Goldman Says
- SAN FP : Sanofi’s Gaucher Disease Pill Is Too Expensive: U.K.’s NICE
- SY1 GY : Symrise Profit Beats Estimates; Raises Dividend for 7th Year
- UHR VX : Swatch Sales Have Been Gaining This Year, Hayek Tells L’Agefi
- TEF SM : KPN to Swap 6% of Telefonica Deutschland for Stake in Telefonica
- UCG IM : UniCredit Says Marina Natale Leaving Bank

>>> Europe : Brokers Upgrades & Downgrades - 14th of March 2017

>>> Up
*Acacia Mining Raised to Hold at Peel Hunt
*Akzo Nobel Raised to Neutral at BofAML, PT EU76
*BASF Raised to Add at AlphaValue
*Clariant Raised to Hold at HSBC, PT CHF17.30
*Lonza Raised to Buy at Baader-Helvea
*Rexel Raised to Overweight at Morgan Stanley, PT EU19
*UniCredit Raised to Equal-Weight at Barclays, PT EU13
*VIEL & Cie Raised to Add at AlphaValue

>>> Down
*ACEA Cut to Neutral at MainFirst, PT EU12
*Amec Cut to Neutral at Citi, PT 580p
*CIR IM Cut to Hold at Kepler Cheuvreux
*Lundin Mining Cut to Equal-Weight at Morgan Stanley, PT SEK48
*Rubis Cut to Hold at Portzamparc
*Standard Life Cut to Hold at Jefferies, PT 398p
*Virbac Cut to Neutral at MainFirst, PT EU170

>>> Initiation
*BMW Rated New Market Perform at Bernstein, PT EU85
*Continental Rated New Outperform at Bernstein, PT EU240
*Daimler Rated New Outperform at Bernstein, PT EU85
*Ferrari Rated New Underperform at Bernstein, PT EU50
*Fiat Rated New Market Perform at Bernstein, PT EU11
*Peugeot Rated New Outperform at Bernstein, PT EU24
*Renault Rated New Underperform at Bernstein, PT EU75
*Strax Rated New Buy at Fondsfinans, PT SEK7.50
*Valeo Rated New Outperform at Bernstein, PT EU75