Gapping up
In reaction to strong earnings/guidance: DRI +4.5%
M&A news: ARLZ +12.1% (acquires AstraZeneca's (AZN) rights to Toprol-XL; expected to be EBITDA accretive and to move profitability forward to 2017), .
Select metals/mining stocks trading higher: MT +2%, RIO +1.9%, BHP +1.7%, BBL +1.6%
Select oil/gas related names showing strength: RDS.A +1.6%, BP +1.4%, BT +1%, TOT +1%
Other news:
In reaction to strong earnings/guidance: DRI +4.5%
M&A news: ARLZ +12.1% (acquires AstraZeneca's (AZN) rights to Toprol-XL; expected to be EBITDA accretive and to move profitability forward to 2017), .
Select metals/mining stocks trading higher: MT +2%, RIO +1.9%, BHP +1.7%, BBL +1.6%
Select oil/gas related names showing strength: RDS.A +1.6%, BP +1.4%, BT +1%, TOT +1%
Other news:
- SDRL +33% (attributed to report that 23% shareholder John Fredriksen could provide a loan to help co restructure debt)
- CNAT +8.7% (higher in after hours after announcing acceptance of emricasan abstracts for AASLD Annual Meeting November 11-15)
- SDLP +6.6% (rising with SDRL)
- OLLI +5.2% (to join S&P SmallCap 600)
- XGTI +5.1% (following 65% move higher on Monday)
- PKY +5% (to join S&P SmallCap 600)
- BIOD +3.4% (ticking higher, Biodel confirms Albireo announced positive top-line results from a pivotal Ph 3 clinical trial of its product candidate, elobixibat, in chronic constipation conducted in Japan)
- VHC +1.2% (after 30% move higher on Apple news)
- GSK +1% (still checking)
- TASR +0.9% (announces the receipt of an order for a total of 900 TASERX2 Smart Weapons for the Kentucky State Police)
Analyst comments:
- SHOP +3.4% (initiated with a Buy at Goldman)
- P +3.4% (added to Conviction Buy List at Goldman)
- VSAR +2.8% (initiated with a Overweight at Piper Jaffray)
- RIG +2.3% (upgraded to Sector Outperform at Scotia Howard Weil)
- CBOE +1.6% (upgraded to Outperform from Market Perform at Wells Fargo)
- LVS +1.6% (upgraded to Buy from Neutral at BofA/Merrill)
Gapping down
In reaction to disappointing earnings/guidance: IRMD -3%
Select metals/mining stocks trading lower:
In reaction to disappointing earnings/guidance: IRMD -3%
Select metals/mining stocks trading lower:
- HMY -4%, AG -1.7%, NEM -1.4%, AUY -1.4%, ABX -1.3%, GDX -1.3%
Other news:
- VSM -7.9% (following late spike higher into the close)
- VOXX -2.9% (Parkway will replace VOXX in the S&P SmallCap 600)
- ACRX -1.3% (amended Loan Agreement; reduced the exercise price of the existing warrants held by the Lenders
- AZN -1.0% (reports top-line results from the Brilinta EUCLID trial; Brilinta did not demonstrate a benefit over clopidogrel in a symptomatic peripheral artery disease patient population)
Analyst comments:
- SPLK -1.3% (downgraded to Neutral from Buy at Guggenheim)
- DPS -1.1% (downgraded to Hold from Buy at Evercore ISI)
- FITB -1% (downgraded to Mkt Perform from Outperform at Keefe Bruyette)
Over the past decade or so, more and more hedge fund managers have joined the ranks of the richest Americans. But in 2016, the number of hedge fund managers on the Forbes 400 list shrunk by more than 10%. Twenty-eight members of 2016’s Forbes 400 derived their fortunes primarily by operating hedge funds, representing 7% of the richest Americans, down from 32 hedge fund managers a year ago.
Many prominent hedge fund managers have been battered in the financial markets over the last year, suffering losses and redemptions from investors. In addition, many hedge fund managers have been unable to keep up with the rising stock market for a number of years, meaning the assets of ultra-rich Americans operating in other fields have been outpacing hedge fund performance and wealth.
William Ackman, David Einhorn, Marc Lasry and Nelson Peltz are four of the nation’s most well-known hedge fund managers. All four are billionaires. But they are no longer among the richest 400 Americans. Some other big-name hedge fund managers remain on the Forbes 400 list of richest Americans, but they have slid down the list after suffering some punishing months in the markets. For example, John Paulson is now the 52nd richest American; last year he was the 41st richest American. Larry Robbins is ranked 374 this year compared to 293 last year.
George Soros remains the nation’s richest hedge fund manager with an estimated net worth of $24.9 billion. He retired from the hedge fund business, but is still an investment force through Soros Fund Management, his family office. He is currently searching for a new chief investment officer for the second time in two years after Ted Burdick stepped down from the role a few months after taking it on. A longtime supporter of liberal causes, Soros has thrown his support behind Hillary Clinton this election cycle, giving $7 million so far to her Priorities USA Action super-PAC.
James Simons is the nation’s second-richest hedge fund manager. The quantitative trading genius behind Renaissance Technologies retired from his $32 billion hedge fund firm in 2010, but he has continued to benefit from its well-performing funds, particularly the mythical Medallion. Renaissance’s biggest fund, Renaissance Institutional Equities, was up 13.96% in the first half of 2016 and its Renaissance Institutional Diversified Alpha fund was up 11.4%. Simons’ net worth has hit $16.5 billion. He has been one of the top political contributors this presidential election season, giving $11.5 million to Democratic causes. The co-CEO of Renaissance, Robert Mercer, has given some $20 million to Republicans.
With a net worth of $15.9 billion, Ray Dalio is the nation’s third richest hedge fund manager. He is the founder of the world’s biggest hedge fund firm, Bridgewater Associates, which manages $150 billion. His firm has been posting mix results in recent years. In the first half of 2016, Dalio’s big Pure Alpha hedge fund was down by 11.8% while his All Weather fund, which seeks to perform well in good markets and bad, was up by 10%. At the same time, Dalio continues to rearrange management at the top of his hedge fund empire. Greg Jensen, long seen as Dalio’s heir apparent, has given up his co-CEO title while remaining Bridgewater’s co-chief investment officer. Dalio has hired Jon Rubinstein, a former executive at Apple, as Bridgewater’s co-CEO. Dalio had been working for years to institutionalize the firm he founded, reducing his stake in Bridgewater and putting others in leadership roles.
One of the most successful hedge fund managers ever, Steve Cohen now presides over his $11 billion family office, Point72 Asset Management, after the firm formerly known as SAC Capital was forced to return outside money in the wake of an insider-trading scandal that cost Cohen $1.8 billion in penalties. Cohen has a net worth of $13 billion and he might soon be back in business. He opened a London office to prepare for January 2018, when a two-year regulatory ban on managing non-family money expires.
David Tepper is one of the few hedge fund managers who has delivered strong performance returns in the years since the financial crisis. His funds were up slightly in the first half of 2016 as the often bullish Tepper took a more cautious approach. The former Goldman Sachs trader recently moved to Miami from northern New Jersey, which was seen as a big tax blow to the Garden State. Tepper also moved his $19 billion hedge fund firm, Appaloosa, to Florida. His net worth is $11.4 billion.
Fed's Lacker Speaks- Makes case for rate increase
- Now that employment and inflation are running at or very close to mandate-consistent rates, what does that imply for monetary policy? One way to address this question is to look at the Fed's behavior during periods in which monetary policy is generally viewed as having been effective -- for example, much of the period since the mid-1980s, particularly the period since the early 1990s. Where would interest rates have been set in the past for inflation and unemployment rates like we are seeing now? The answer is "much higher." Even adjusting for the possible evolution of key parameters in those benchmark relationships, our policy rate should be 1 ½ percent or more by now. This is the basis for the strong case I have articulated for raising our interest rate above its current low level.2 I will return to the subject of monetary policy later in my remarks.
- I'd like to close with some thoughts on the strategy of monetary policy. We did not drift into a low-inflation environment by accident. Instead, the Federal Reserve, under the leadership of Paul Volcker and Alan Greenspan, made the difficult decisions that were needed to push inflation down and keep it low. A pertinent example is the beginning of 1994. Core inflation for January 1994 was relatively low at 2.2 percent, year-over-year, and had drifted lower over the previous three years. Rather than wait to see inflation pick up, the FOMC began raising the target for the federal funds rate in February 1994 and increased the funds rate by 2 ½ percentage points over the next nine months. This pre-emptive action was successful and inflation continued to move lower. In November 1995 the two-year inflation rate moved below 2 percent for the first time in over 30 years, and it has averaged close to 2 percent ever since. And while some observers were fearful that the rate increases would derail the economic recovery, in fact the economy continued expanding until 2001. One could argue that the FOMC's pre-emptive moves in 1994 laid the foundation for the price stability we've enjoyed over the last 20-plus years.
- The lesson I take from such episodes is that pre-emptive increases in the federal funds rate are likely to play a critical role in maintaining the stability of inflation and inflation expectations. While inflation pressures may seem a distant and theoretical concern right now, prudent pre-emptive action can help us avoid the hard-to-predict emergence of a situation that requires more drastic action after the fact. The current target range for the federal funds rate, at 25 to 50 basis points, is extremely low relative to the benchmarks I discussed earlier that capture historically successful policy. Careful attention to the lessons of history is likely to be crucial to preserving the important policy gains we have made.
- Full Speech
Early premarket gappers
Gapping up: BIOD +15.9%, CNAT +12.8%, PKY +5%, DRI +4.8%, OLLI +4.7%, P +4.2%, PSO +4%, CRH +3.5%, RIO +2.3%, MT +2.1%, GPRO +1.8%, LVS +1.6%,BBL +1.6%, MU +1.5%, RDS.A +1.3%, BHP +1.3%, VHC +1.2%, GSK +1.1%, BP +1%, BT +0.9%, TOT +0.9%, HSBC +0.8%, CS +0.8%
Gapping down: VSM -7.9%, VOXX -2.9%, HMY -2.6%, NVO -1.6%, ACRX -1.3%, FITB -1%, SAP -0.9%, NEM -0.8%, AZN -0.8%, ABX -0.6%, AG -0.6%, GDX -0.5%,AUY -0.5%
Gapping down: VSM -7.9%, VOXX -2.9%, HMY -2.6%, NVO -1.6%, ACRX -1.3%, FITB -1%, SAP -0.9%, NEM -0.8%, AZN -0.8%, ABX -0.6%, AG -0.6%, GDX -0.5%,AUY -0.5%
Hot weather, cold sales.
This fall’s unseasonable heat is messing with retailers’ plans to sell sweaters, pants, jackets and other cold weather clothing, according to a report.
As many parts of the country experienced the warmest September in 55 years or more, sales at specialty apparel stores — the kind that populate shopping malls — were down by $393 million in August and September, compared with a decline of $376 million over the same period last year, according to Planalytics, which tracks weather trends for retailers.
“If retailers panic, it’ll be a very promotional holiday season,” said Planalytics President Scott Bernhardt.
Foot traffic, for example, was down 5 percent at American Eagle Outfitters and down 6 percent at Burlington Coat Factory in September, according to the Planalytics report, while same-store sales at The Gap were down an estimated 3 percent or 4 percent, according to Wells Fargo analyst Ike Boruchow.
“We feel September was yet another month of choppy sales trends, slightly higher promotions and likely not a great month for retailers in general,” Boruchow wrote in a report.
Some retailers were bracing for a warm fall as early as July, when they asked their vendors to hold on to their fall merchandise until September rather than shipping it into stores in August, when most shops begin stocking up on cooler weather apparel.
“The summer was also way too hot to bring in that much fall inventory and the retailers still had a lot of summer clothing at that point,” said Gary Wassner, president of Hilldun, a fashion industry lender.
Still others point out that shoppers were willing to shell out big bucks for a hot, trending item like the $170 Tommy Hilfiger overalls that Urban Outfitters was selling in September that sold out, or the $300 Ugg knee suede boots that Nordstrom sold out of, according to Gabriella Santaniello, founder or retail consultancy A Line Partners.
RIMOWA 80% stake to be acquired by LVMH for EUR 640m
Dieter Morszeck, grandson of the founder of RIMOWA, has chosen to partner with the LVMH Group [EPA: MC], with a view to preserving the spirit of excellence and the long-term vision that have inspired his family and the company’s employees for over a century.
Under the terms of the agreement, Dieter Morszeck will sell a majority stake to the LVMH Group while continuing to hold equity in the business and maintaining his leadership functions. RIMOWA will then become the first German Maison of the LVMH Group. Upon completion of the transaction, Alexandre Arnault will be appointed co-CEO of RIMOWA.
Founded in Cologne in 1898, luggage and leather goods maker RIMOWA has become one of the quintessential houses for innovative, high-quality luggage over the course of the twentieth century. The business has built its reputation designing lightweight and easy to use luggage and RIMOWA suitcases today serve as the industry benchmark for German quality.
Since its creation by Paul Morszeck, innovation has been at the heart of RIMOWA’s strategy. In 1937, his son Richard launched the first aluminium suitcase available on the market. The aluminium structure comprising parallel grooves makes the luggage instantly recognisable and has played its part in building the reputation of RIMOWA among a sophisticated international clientele. His son Dieter designed the first waterproof metal case in 1976, since which time RIMOWA suitcases have become the travelling companion of choice for the greatest filmmakers, photographers and journalists.
RIMOWA revolutionized the industry when it launched the first polycarbonate suitcase in 2000. A patented system of ball bearings ensures optimum stability. Since 2014, RIMOWA has also been developing its exclusive “Bossa Nova” range which combines lightweight polycarbonate with the elegance of leather. This suitcase is a tribute to the English artist and botanist Margaret Mee who devoted her life to painting and protecting plants from the Amazon. RIMOWA donates a portion of its sales to the Association Saúde e Alegria which supports social projects in the Amazon.
More recently, in partnership with Lufthansa, RIMOWA has launched the RIMOWA Electronic Tag. This innovative feature simplifies baggage check-in by matching, with the use of a smartphone, the boarding card with a Bluetooth electronic tag integrated only within RIMOWA suitcases.
For over 60 years, RIMOWA suitcases have been inspired by the remarkable story of commercial aviation and the fuselage of the first metallic plane, the Junkers F-13. Thanks to the financial support and pioneering spirit of RIMOWA, a seven year project made it possible to reconstruct this legendary aircraft. The inaugural flight took place on September 15, 2016, nearly a century after its first commercial use in 1919. This revival embodies the exceptional heritage of the House.
Dieter Morszeck said: “My grandfather founded RIMOWA more than a century ago and I joined the company 44 years ago. By entrusting this family venture to the LVMH Group, we are guaranteeing a promising future to all RIMOWA employees. Over the past two years I have had the opportunity to establish close ties with the Arnault family, and in particular with Alexandre. Alexandre and I have discussed at length the attractive development prospects available to us and the common values that we share. I am delighted that he is joining RIMOWA and I have full confidence in his ability to accelerate the development of the business by my side.”
Alexandre Arnault said: “RIMOWA is a superb business which I have followed as a loyal customer for many years. RIMOWA has revolutionised the luggage industry for over a century, its suitcases are renowned for their unique performance, quality and design. I am honored to join RIMOWA and to be working alongside Dieter.”
Bernard Arnault said: “RIMOWA is a brand with a unique heritage. We share with Dieter Morszeck the same passion for innovation and a common desire to offer very high-quality products derived from a European tradition of craftsmanship. What’s more, it brings me great pleasure that RIMOWA will be the first German house to join the LVMH Group. Germany is recognised all over the world for the vitality of its family businesses and for the quality of their products. I am glad that LVMH will now have an opportunity to be part of this thanks to RIMOWA.”
While working on this transaction, Dieter Morszeck has also created the RIMOWA Dieter Morszeck Foundation to which a substantial part of the sale proceeds will be donated. The RIMOWA Dieter Morszeck Foundation aims to support projects in scientific research, public health, education and humanitarian aid both in Germany and internationally.
The transaction, subject to the approval of the competition authorities, relates to 80% of the shares for a value of EUR 640m and is due to complete in January 2017. RIMOWA revenue for 2016 are expected to exceed EUR 400m.
ABB has met 300 investors ytd; receiving interest in assets – CEO
ABB’s (VTX:ABBN) management team has met about 300 investors in the year-to-date, according to CEO Ulrich Spiesshofer. A trio of active shareholders have increased pressure over the year for the company to spin off its Power Grids division.
Addressing a press conference at an ABB capital markets day in Zurich Tuesday (4 October), Spiesshofer said it was important to listen to all shareholders on the company’s strategy. While some might not agree on specifics, all agreed on the potential ABB has as a company, he claimed.
Cevian Capital has led a campaign for ABB to spin-off its Power Grids division, backed publicly in recent weeks by Artisan Partners and Nordea. ABB on Tuesday announced it would keep the division. The move was criticised by Cevian but supported by another major shareholder, Investor AB.
"Investor AB supports us. There are a lot of investors who clearly support our decision," ABB CFO Eric Elzvik told this news service on the sidelines of the capital markets day.
CEO Spiesshofer said he had met with Cevian partner Christer Gardell on 5 September 2016 and again Tuesday morning. ABB seeks active dialogue with investors, including Cevian, he said, adding, “it would be wrong to just close our eyes".
ABB’s management was working closely with the board and experts regarding Power Grids, Spiesshofer said. It had spoken to financial advisors regarding the unit’s value, but ultimately decided it was best to keep it, he said.
Meanwhile, ABB has received “very lively interest” for various assets it owns, Spiesshofer said at the event. He declined to disclose further details, but mentioned the interest did not mean assets would be sold off. ABB last week announced a EUR 836m sale of its high-voltage cable business, part of the Power Grids division.
ABB shares were trading up 1.5% at CHF 22.31 mid-morning, giving a market capitalisation of CHF 49.51bn.