FT : Bovis Homes buyers hit out at quality of new houses

Bovis Homes buyers hit out at quality of new houses
Hundreds of disgruntled customers plan protest outside housebuilder’s HQ


UK housebuilder Bovis Homes has received complaints from hundreds of buyers over the quality of its new homes, increasing pressure on the company whose chief executive resigned on Monday.

The outcry follows production problems that forced Bovis to issue a profit warning in late December, saying completions of about 180 homes would be delayed until 2017. That was followed by the departure of chief executive, David Ritchie, on Monday.

Members of a 650-strong Facebook group for disgruntled customers, the Bovis Homes Victims Group, are planning a protest outside the company’s Kent headquarters this spring.

Marc Holden, a spokesman for the group, claimed his £490,000 home in Milton Keynes had about 100 flaws when he moved in last March, including an en suite shower room that remained a building site and seven separate flaws in the gas supply installation.

“This is happening across the country, and as a group we’re saying we are not going to stand for it,” he said. Other members of the group complained of faults including flooding and faulty electrical installations, as well as slow customer service in addressing defects.

A spokesperson for the FTSE 250 company said: “Bovis Homes is fully aware of the customer group and their complaints, and we take these issues very seriously. We recognise that in some of these cases we have not provided our best standard of customer service and have taken too long to rectify customer issues, for which we apologise.”


Build standards are a long-running issue for the industry. A 2013 survey by the Royal Institute of British Architects found widespread dissatisfaction among buyers of new homes, while MPs last year called for a series of changes including giving buyers the right to carry out a full survey before completion.

Dave Howard, founder of the Facebook group for Bovis customers and the owner of a £400,000 home in Oxfordshire, said he had had an “extremely acrimonious” relationship with the company since he attempted to address build flaws in 2014.

Mr Holden said the problems of some unhappy Bovis customers were linked to a rush to complete before the end of the financial year. Some were offered financial incentives, for example £2,000, to complete purchases before the end of December although building work was ongoing.

Bovis said it had met and apologised to Mr Holden and was in the process of addressing his problems.

In Bovis’s profit warning last month, which echoed a similar one a year earlier, it blamed “slower than expected build production across the group’s sites” for the delay to some completions. It said it would finish 3,950 to 4,000 homes by the end of the year.

The company said a “limited number of customers” had been offered financial incentives “in line with industry practice”.

“All homes were habitable with the requisite CML industry certification, with a timetable for outstanding finishing works to be carried out in the new year,” it added.

Bovis said it set up a dedicated team in November to respond to the ongoing complaints, while “taking actions across all of our sites to put in place robust procedures and practices to prevent issues such as these from occurring again”.

In an annual survey of customer satisfaction by the Home Builders Federation, an industry group, Bovis scored three out of five stars in 2014-15 — but among the 35 builders surveyed it was one of just four that failed to score four or five stars. Buyers of new homes normally have a two-year warranty period in which to report flaws.

Charlie Campbell, analyst at Liberum, said: “If we went back in time 10 or 20 years, it was fairly commonplace to see a rush to get everything done late in the financial year. But over the past decade most companies have been fairly good at moving away from that.

“It’s probably in part because of social media and people being able to grumble about bad experiences more than they did back in the day.” He said Bovis “has a good land bank but historically the problem has been building that out quickly enough”.

WSJ : Snapchat Parent Moves to Book Revenue Where It Is Earned

Snapchat Parent Moves to Book Revenue Where It Is Earned
Messaging company Snap makes London its international headquarters; booking change to boost potential tax liabilities

Snapchat owner Snap Inc. will make London its international headquarters and start booking overseas revenue in all the countries where it has offices, breaking from other tech firms whose headquarters in smaller European countries help them shift profit and lower their taxes.

Snap, which is gearing up for a public offering that could value the company at as much as $25 billion, said Tuesday that it would immediately start booking all of its international revenue in London, where it already employs 75 people. A spokeswoman added that the company plans to shift soon to collecting revenue from foreign clients in any country where it has a local branch, boosting its potential tax liabilities.

Snap currently has foreign offices in Canada, France, Australia and Ukraine, in addition to the U.K.

The designation of the U.K. as an international headquarters is a vote of confidence in Britain’s effort to attract foreign investment after its vote to leave the European Union. Executives at both tech giants and startups had said in the wake of the Brexit vote that they were concerned about their ability to keep hiring EU citizens, but companies including Apple Inc. have since announced London expansion plans. Snap says the size of the U.K. advertising market, and the company’s 10 million users in the U.K., drove its decision.

Snap’s plan to start collecting revenue from clients locally wherever it has an office is the latest sign of how governments, particularly in the EU, are pressuring technology companies to change their tax structures. Traditionally, many companies funneled much of their EU revenue through smaller countries including Ireland and Luxembourg on their way to tax havens like Bermuda.

The EU has proposed new rules to divide multinationals’ profits among EU countries and has made examples of companies like Apple, which it accused of benefiting from a sweetheart tax deal in Ireland worth as much as €13 billion ($13.75 billion). Both Apple and Ireland dispute the charges.

As pressure has mounted, some companies have started shifting their practices. In 2015, Amazon.com Inc. began to collect customer revenue from subsidiaries in several EU countries where it does business—instead of collecting it all in Luxembourg. Facebook Inc. followed suit last year for clients in the U.K.

Snap, which doesn’t make a profit, isn’t likely to be posting a big overseas tax bill for now. Non-U.S. ad revenue totaled just $18.3 million, or 5% of its total, in 2015, according to eMarketer. But that figure is expected to rise to $440 million, or 25% of the total, in 2018, eMarketer says.

>>> Lionsgate invests in e-sports franchise Immortals

Lionsgate invests in e-sports franchise Immortals

Lionsgate (NYSE: LGF.A, LGF.B), the Santa Monica, California-based entertainment company, has invested in leading eSports franchise Immortals, joining a consortium of partners including Michael Milken and Steve Kaplan in eSports.
Press release follows:
Reflecting its continued focus on the potential of the eSports market, Lionsgate (NYSE: LGF.A, LGF.B), a premier next generation global content leader, announced today that it has invested in leading eSports franchise Immortals. The Company joins a consortium of world-class investors that includes financier and philanthropist Michael Milken and previous investors Steve Kaplan, co-founder of Oaktree Capital and co-owner of The Memphis Grizzlies and the Premier League's Swansea City, investor Gregory Milken, Third Wave entrepreneur Allen DeBevoise and CrossCut Ventures, among others.
The Immortals currently compete worldwide for over 200 million fans in League of Legends, Counterstrike GO, Overwatch and Super Smash Brothers. The eSports market is projected to grow to over USD 1bn by the end of next year, and the League of Legends World Championships were played at a sold-out Staples Center in Los Angeles this past year.
"We're delighted to be an early mover in a market that has the potential to transform the face of sports entertainment," said Lionsgate President of Interactive Ventures & Games Peter Levin. "Our involvement in eSports creates tremendous opportunities to develop new content and utilize our suite of distribution platforms for a coveted consumer demographic with compelling engagement metrics. Collaborating with an elite group of partners, the combination of the Lionsgate and Immortals brands will be formidable."
"Lionsgate joins a dream team of media, tech and traditional sports partners who share our vision of building a dynamic Immortals organization and a strong e-sports foundation," said Immortals Chairman and CrossCut Ventures Managing Director Clinton Foy. "What we're doing today in eSports is like the early days of building the NFL and NBA. It's not the evolution of games – it's the evolution of sports, technology and media."
"Lionsgate is the perfect entrepreneurial partner for our Immortals family," said Immortals CEO Noah Whinston. "Immortals and Lionsgate are both focused on developing new entertainment formats, and we're thrilled to collaborate with them at the cutting edge of eSports media."
Lionsgate's investment in Immortals is the latest step in the Company's eSports initiative. Last year Pilgrim Media Group, in which Lionsgate is a majority investor, announced that it was partnering with ESL, the world's largest eSports promoter, to create original eSports entertainment content for television and digital platforms. Their first collaboration, in partnership with Microsoft, will be centered around the iconic gaming brand Halo. Lionsgate was also an early investor in live streaming mobile gaming platform Mobcrush.

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance:
  • HGG -51.9%, (HHGregg sees fiscal Q3 sales of ~$453 mln vs. $564.3 mln Capital IQ Consensus Est; co expects to incur a non-cash charge for asset impairment of $7-12 mln of certain locations in the quarter ended December 31, 2016), ASNA -20.1%, WDFC -8.6%, FRSH -7.1%, (issues downside Q4 revenue guidance), NSTG -6.4%, BOOT -5.3%, (Boot Barn Holdings reports light prelim Q3 results ahead of ICR conf), SHOO -4.9%, CRAY -4.2%, (anticipates 2016 revenue to be in previously provided range; believes it will be difficult to grow over 2016 in 2017 ), HALO -4.1%, (guides 2017 revenue below expectations), SCVL -2.3%, (sees FY17 $1.36-1.38 vs $1.49 Capital IQ Consensus Estimate; sees revs $1.000-1.003 bln vs $1.00 bln Capital IQ Consensus Estimate), ABMD -2.2%, (offers prelim Q3 rev results, reaffirms FY17 outlook ahead of presentation at the Annual J.P. Morgan Healthcare Conference), VTR -1.2%, HRC -1.1%, FLDM -1%, ( guides Q4 revenue below consensus ),
Other news:
  • AKER -29% (prices 1,667,000 shares of common stock at $1.20 per share, together with 833,500 five-year warrants to purchase common stock with an exercise price of $1.50)
  • WMB -10.3% (prices 65 mln shares of common stock at $29.00 per share)
  • ATW -5.9% (commenced an underwritten public offering of 13,500,000 shares of common stock)
  • WPZ -4.3% (announce financial repositioning for long-term, sustainable growth; Both cos announced an agreement to permanently waive payment obligations), CIO -3.3% (commences 4 mln common stock offering)
  • MACK -1.9% (modestly pulling back following yesterday's strength)
  • DM -1.5% (Dominion Midstream files for offering of 25,383,348 common units representing limited partner interests by selling unitholders ),
Analyst comments:
  • WRLD -2.3% (downgraded to Underperform from Hold at Jefferies)
  • EXPE -0.9% (initiated with a Sell at Citigroup)
  • GS -0.8% (downgraded to Sell at Citigroup)

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance:
  • PXLW +12.4%, (sees Q4 revs at high end of guidance, expects to report GAAP profitability ) CUDA +8.5%, MDRX +6.7%, (ticking higher; reaffirms Q4 guidance and provides initial outlook for 2017 ), ZBH +3.8%, CMG +2.5%, EXPR +1.8%, OFIX +1.8%, TACO +1.7%, (preannounces Q4 sales with comps +5.5%, just above estimates), VOXX +0.9%, ZLTQ +0.7%, (discloses commercial leadership transition, provides prelim Q4 results, FY17 guidance),
M&A news:
  • VRX +11.7% (divests its CeraVe, AcneFree and AMBI Skincare brands To L'Oreal (LRLCY) for $1.3 bln; also to divest Dendreon for $819.9 mln; )
Select metals/mining stocks trading higher:
  • RIO +5.1%, VALE +4.7%, BBL +4.7%, CLF +4.6%, MT +4.4%, FCX +4.1%, X +2.9%, AKS +2.3%
Other news:
  • NGNVC +44.5% (continued strength; extending late surge higher yesterday), XGTI +20% (regains full compliance with all listing requirements of the Nasdaq), ILMN +14% (confirms the introduction the NovaSeq Series, a new and scalable sequencing architecture expected one day to enable a $100 genome; Illumina and Bio-Rad Laboratories launch of the Illumina Bio-Rad Single-Cell Sequencing Solution), ARRY +8.1% (still checking), PTX +6.3% (continued strength), SSI +5.7% (modestly rebounding), KITE +3.5% (Kite Pharma enters into a strategic partnership with Daiichi Sankyo Co for axicabtagene ciloleucel) PSTI +3.4% (announced that its Phase III study of its PLX-PAD cells in the treatment of critical limb ischemia was cleared by the FDA; expects to begin enrolling patients in its Phase III study in both the U.S. and Europe during 1H17), BIO +3% (Illumina and Bio-Rad Laboratories launch of the Illumina Bio-Rad Single-Cell Sequencing Solution), PBR+2.8% (prices $4 bln in Global Notes), CNDT +2.4% (higher in after hours after Carl Icahn affirmed 9.77% active stake in the Xerox (XRX) spin-off ), ZIOP +2.4% (ZIOPHARM & Intrexon (XON) announce cooperative research and development agreement with the National Cancer Institute utilizing sleeping beauty system to generate T cells targeting neoantigens),FEYE +1.7% (in sympathy with CUDA), CYBR +1.1% (in sympathy with CUDA),
Analyst comments:
  • TIME +2.7% (upgraded to Outperform from Market Perform at Wells Fargo), ETFC +1.8% (upgraded to Buy from Neutral at Goldman ), VOD +1.7% (upgraded to Buy from Neutral at Goldman ), XRX +1.6% (upgraded to Buy from Neutral at Goldman ), BIDU +1% (upgraded to Buy from Hold at Stifel)

FT : Investors spar over great rotation from bonds to equities

Investors spar over great rotation from bonds to equities
Long predicted by some, dismissed as fake news by others until stronger signs of US growth


The debate about “fake news” has gripped politics since the election of Donald Trump in November and has entered markets as investors spar over a “great rotation” from bonds into stocks.

Long predicted by some analysts, expectations of a pronounced rotation out of low yielding bonds and defensive share sectors into areas of the equity market that prosper from faster economic growth have been heightened by the prospect of the so-called “Trumpflation” trade.

Like many arguments about “fake news”, there is evidence to support both sides.

In the two months following Trump’s election win, $41.5bn was pulled out of bond funds, the largest redemptions since the taper tantrum of 2013, according to Bank of America Merrill Lynch.

In the same period, the bank said in a recent note, almost $70bn flowed into US equity funds, as expectations about higher growth and inflation hurt bond prices.

Not so fast say others. Analysts at Goldman Sachs likened chatter about a lasting rotation out of bonds and into equities to the “misinformation, half-truths, and political spin” seen during the 2016 US presidential election.

In a note this week “Debunking the ‘fake news’ of the imminent great rotation from bonds to stocks”, David Kostin, the bank’s chief US equity strategist, said: “The political rotation occurring in Washington DC will not be mirrored in financial portfolios”, arguing that too many holders of US debt are constrained as to what assets they can own.

Those that have more flexibility, such as pension funds and households, already “have debt allocations that are currently at the lowest level in 30 years”, Mr Kostin writes.

The argument does not convince Jim Tierney, chief investment officer of AllianceBernstein’s US concentrated growth fund, who says a rotation from bonds into equities has been “long overdue for two or three years”.

“I think if we get into an economic environment or scenario where investors have an expectation of low to no returns for a prolonged period of time, the vast majority of investors will find a way to get out of that asset class,” he says.



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The question now, he says, is whether or not Trump and the Republican-controlled Congress can deliver on investor’s expectations for tax cuts, deregulation and higher growth. With confirmation hearings for Trump’s cabinet appointments having started this week, investors are on the lookout for any signs that the president-elect will have a fractious relationship with Republicans in Congress.

“You’re hearing about a little bit of infighting, so investors are reassessing and thinking it won’t be as smooth a ride as we thought,” he says.

Indeed bond funds saw their strongest inflows in three months last week, according to Bank of America Merrill Lynch.

Michael Hartnett, chief investment strategist at the bank, says the big positioning shifts will not happen until “the Fed’s become more hawkish and the economy has shrugged its shoulders”.

He points to the extreme facts of economic conditions in recent history, noting $1.5tn of inflows to bond funds over the past 10 years, the lowest global interest rates in thousands of years, and, in particular, the moment last July when yields on even the 50-year Swiss government bond went below zero.

“Perhaps -0.035 per cent on a 50-year Swiss bond was an undershoot and will be corrected more violently than people give credit for in the early part of this year,” he said.

The result of this swing back from such extreme positions, he argues in a note this week, is that the shift from “Davos Man” to “Joe Six-Pack”, from secular stagnation, deflation and globalisation into growth, inflation and isolationism will be “violent, extreme and ultimately overshoot”.