FT : Odey fund loses 31 per cent in four months


A brutal start to 2016 for Crispin Odey, the outspoken British investor, has wiped out almost half a decade of trading profits in his flagship hedge fund in less than four months.
The value of the €729m Odey European Fund has now fallen 31.1 per cent to the middle of April, dragging it back to its lowest level since January 2012. His large bets against currencies and equities have gone awry, making his stockpicking fund one of the worst performers among large vehicles this year.

Mr Odey, who has been among the most prominent British financiers to back the country voting to leave the EU, has held strongly bearish views on emerging markets and China for more than a year.
In a letter to investors dated March 31, Mr Odey wrote that years of ultra-low interest rates had resulted in a wave of misallocation of capital spending and investment across the world. He believes that continued quantitative easing will result in a grand reckoning for the global economy.
“QE is merely encouraging misdirected investment,” Mr Odey wrote. “Remember it was Keynes, the architect of [central bank] thinking, who said, ‘It is good for people to travel, goods to travel but not for savings to travel.’ The disconnect between travelling and arriving may be coming home to roost. It will make the retreat from Moscow appear painless.”
The latest fall comes after his fund lost 19 per cent of its value in April 2015 while speculating on the value of the Australian dollar. That loss meant that Odey European ended 2015 down by 12.8 per cent, one of the worst performances among large hedge funds in the world that year.

>>> Visa: Color on Quarter -> V-4% & MA-3% pre open

Visa: Color on Quarter

  • V down 4% premarket testing support near the $78 level; peer MasterCard (MA) is down 3%.
  • Compass Point notes The quarter was in line given V's operating leverage, though a combination of a more cautious macro outlook and the delayed closing of the Visa Europe deal will temper enthusiasm and likely push estimates lower. They are Hold-rated on V for the following reasons: (1) a mixed global spending backdrop that could temper volume and transaction growth in many markets, (2) full valuation vs. historical levels that suggests limited near-term upside in the stock, and (3) potential estimate upside driven by FX and the pending Visa Europe acquisition that could offset some of the near-term negatives.
  • RBC notes that while Visa reported FQ2/16 results that were essentially in line on the top line and above on the bottom line ($0.02 in EPS or 3% of forecast), mgmt reduced guidance due to continued pressure on cross-border growth and economic conditions in certain countries. Additionally, the co amended its agreement to acquire Visa Europe in response to comments from the European Commission and cautioned that closing could extend beyond management's original timeline; $87 tgt.

>>> US Gapping up

Gapping up

In reaction to strong earnings/guidance: AMD +20.2%, (also upgraded to Neutral from Underperform at Exane BNP Paribas, upgraded to Buy from Hold at Craig Hallum), SKX +8.9%, UIS +5.7%, (light volume), HBI +5.4%, PACB +5.1%, NSC +4.7%, (also was upgraded to Outperform from Neutral at Credit Suisse; upgraded to Buy from Neutral at UBS), PFPT +4.3%, MXIM+4.2%, (light volume), SWN +3.6%, SYF +1.2%, AAL +0.7%, HON +0.1%, (light volume).

Select silver related stocks/ETF trading higher: PAAS +2.2%, SLV +0.9%, SLW +0.5%.

Other news: ONTX +18% (announces the publication of a study describing the novel RAS-targeted mechanism of action for rigosertib), NGL +11.7% (light volume, NGL Energy Partners announces $200 mln private placement of 10.75% Class A Convertible Preferred Units, reduces quarterly distribution, updates FY16 guidance, details recent sales of interests in TransMontaigne ; upgraded to Neutral from Underperform at BofA/Merrill), ALIM +11.4% (continued strength following yesterday's intraday spike), SHLD +8.8% (Sears Holdings to close stores to accelerate its transformation and its return to profitability), CTMX +7.8% (CytomX Therapeutics enters into a collaboration to co-develop and co-commercialize Probody Drug Conjugates against CD71 w/ AbbVie), CXRX +7.5% (following 25% surge higher into the close -- confirmed after hours that it has formed special committee to consider various strategic alternatives), XON +5.5% (closed yesterday at multi-month lows - down 20%+; provided update this morning regarding recent trading activity in its common stock, states a 'false & misleading' report was published on Seeking Alpha), SRPT +5.1% (light volume - modestly rebounding), VRX +4.9% (Valeant Pharma looking to name Perrigo Chairman and CEO Joseph Papa as its next CEO to replace J. Michael Pearson, according to the WSJ), EBIO +4.5% (following 20% move higher yesterday), CHK +1.3% (Casillas Petroleum Resource Partners closed on the purchase of certain oil and gas assets owned by Chesapeake Energy Corporation in the SCOOP play for a price of $106 million), FCX +1.3% (Black Stone Mineral to acquire an oil and gas mineral asset package from Freeport-McMoRan Oil & Gas for $102 mln), ERIC +1% (after yesterday's 15% earnings related stock decline), CHL +1% (light volume, continued strength), DB +0.7% (not seeing anything specific).

Analyst comments: GLNG +1.2% (upgraded to Buy from Hold at Jefferies)

>>> US Gapping down

Gapping down

In reaction to disappointing earnings/guidance: LAKE -17.7%, SAM -10%, BGG -6.7%, (light volume), NSU -5.8%, (ticking lower), GOOG -5.4%, V -4.7%, MSFT -4.4%, CAT -4%, SBUX -4%, AN -4.3%, TRN -1.5%, KMB -1.3%, SLB -1.2%, HA -1.1%, (light volume), GE -1.1%, ETFC -0.6%, (light volume).

Auto supplier/service related names are seeing continued weakness with AutoNation earnings weighing on the group today: ABG -1.9%, KMX -1.2%, PAG -1.1%, GPI -1.0% .

Other news: EYES -6.9% (following amended S-1 filing; reports earnings next week), PRGO -5.2% (Perrigo responds to reports concerning its Chairman and CEO Joseph C. Papa but it is company policy not to comment on speculation; WSJ reported that Valeant Pharma looking to name Perrigo Chairman and CEO), JOY -2.6% / DE -1% (following CAT earnings/guidance), BREW-2.4% (light volume following SAM earnings/guidance), MA -1.9% (Visa sympathy), TRXC -1.3% (after yesterday's 50% decline on SurgiBot System FDA determination), FB -1.3% (lower following disappointing MSFT/GOOG earnings), BIDU -1.3% (GOOG sympathy), RIG -1.2% (provides update on fleet), SA -0.5% (Seabridge Gold announces a cross-border public offering of common shares and a concurrent C$10.8 mln bought deal flow-through equity financing at a price of C$24.08/share), CEQP -0.4% (following 40%+ move higher yesterday), SNE -0.2% (Sony to postpone the release of its consolidated results forecast for the Fiscal Year ending March 31, 2017 due to the impact of the 2016 Kumamoto Earthquakes).

Analyst comments: NUE -1% (downgraded to Sell from Outperform at Credit Agricole ), URI -1% (modestly pulling back from yesterday's earnings related strength; downgraded to Underperform from Neutral at BofA/Merril), AXP -0.9% (downgraded to Hold from Buy at Deutsche Bank, also Visa sympathy), JWN -0.5% (light volume, downgraded to Sell from Hold at Evercore ISI), UAL-0.2% ( downgraded to Neutral from Buy at Sterne Agee CRT).

>>> Alphabet: Color on Qtr --> -5% in premarket

Alphabet: Color on Qtr
--> Shares of GOOG are down approx 5% in pre-market.
  • Mizuho Securities is reiterating Buy rating as the core business remains healthy. Net revenue of $16.5b was slightly below consensus' $16.6b estimate. Non-GAAP EPS of $7.50 was below the Street's $7.96 est., but due to greater investment losses - adjusting for this, EPS would have been in-line. Alphabet impressively grew gross revenue (ex-FX) 23% YoY, operating income of $6.8b beat expectations of $6.7b and margins expanded YoY to 41.5%. Given continued runway in mobile search, YouTube, programmatic, and Cloud revenue, GOOGL remains firms #1 stock pick for 2016 Large Caps.
  • Stifel Research notes Alphabet missed revenue growth targets / profitability estimates as the company continues to navigate the long-term transition to mobile, programmatic, and video advertising while simultaneously ramping up investments in its core and Other Bets businesses. Firm believes mobile monetization initiatives have a long runway and Alphabet's video / cloud initiatives may be in the midst of climbing an S-curve of growth.Reiterate Buy, $888 tgt.
  • Needham Research notes Alphabet reported mixed 1Q16 results with revenue (ex-FX) exceeding expectations with 23% y/y growth, but higher TAC pushed operating income below expectations. Alphabet's core Google Websites continued to perform solidly and firm expects this trend to continue given the strong secular growth of mobile search and YouTube (video). However, Network revenue remains sluggish despite the strong growth in programmatic. While firm is modestly reducing estimates due to the slower Network growth and higher TAC, it continues to recommend Alphabet shares given its dominant market position and opportunities to reaccelerate growth and improve leverage.

NY Post : Chinese investors want to take over Hollywood’s talent agencies

Chinese investors want to take over Hollywood’s talent agencies

Yuan a piece of Hollywood?

Deep-pocketed Chinese media executives are circling Hollywood firms looking for more movie-industry deals, and the next one could involve an investment in a major talent agency, The Post has learned.

One of those executives is discussing having his company make an investment in Ari Emanuel and Patrick Whitesell’s WME/IMG, sources familiar with the situation said.

The agency, whose powerhouse stable of talent includes Ben Affleck and Gigi Hadid, already has extensive interests in China and operates the Mercedes-Benz China Fashion Week.

Plus, it has proven to be open to outside investments.

Just this week, WME/IMG took a $55 million investment from Fidelity Management — and in March announced that Japan’s Softbank Group ponied up $250 million for a piece of the agency.

Softbank’s deal valued the agency at $5.5 billion.

The cash infusion will help fuel WME/IMG’s expansion around the world.

A deal with a wealthy Chinese partner would further energize the agency’s expansion plans — and give the Beijing investor a high-profile toehold in Hollywood.

The most likely partners for WME might be Chinese digital companies, which include internet portal Tencent, shopping giant Alibaba and internet services firm Baidu, sources said.

Last weekend, Emanuel sounded bullish on China as he spoke at a Committee of 100 conference.

The agent told the conference, which brings together Chinese and US power brokers, that he’s visited China 10 times in the last three months.

“The market is probably not even half the size it’s going to be,” Emanuel said, according to a Variety report.

Even while the Chinese economy has soured, box office sales there increased 48.7 percent in 2015, to $6.78 billion.

Chinese companies are looking to tap Hollywood level product for the home market and gain expertise in creating a movie slate.

Another Chinese company trolling Tinseltown for deals, sources said, is real estate giant Dalian Wanda Group, which has a film arm.

It has quietly held conversations with private equity firm TPG Capital with an eye to acquiring a stake in WME rival, CAA, sources said.

CAA insiders poured cold water on that idea, saying they talk all the time about potential deals — for others.

Wanda, controlled by billionaire Wang Jianlin, recently snapped up Legendary Pictures for $3.5 billion.

In 2012, Wanda acquired movie exhibition firm, AMC Entertainment, for $3.6 billion.

AMC in turn acquired rival Carmike for $1.1 billion.

Another Hollywood deal would continue a pattern for Wanda of moving money out of China to expand its entertainment sector holdings.

One movie expert with a long history of dealing with China noted that the investors “are very analytical.”

“I don’t see them overpaying unless there is some strategic advantage to overpaying,” the source said.

Reps at CAA and WME/IMG declined comment.

>>> McDonald's beats by $0.06, beats on revs

McDonald's beats by $0.06, beats on revs
  • Reports Q1 (Mar) earnings of $1.23 per share, $0.06 better than the Capital IQ Consensus of $1.17; revenues fell 0.9% year/year (+3% ex-FX) to $5.9 bln vs the $5.82 bln Capital IQ Consensus.
  • Global comps +6.2% vs. ests near +4.5%
  • In the U.S., first quarter comparable sales increased 5.4%, fueled by the ongoing popularity of All Day Breakfast and the introduction of McPick 2 - a branded national value platform. Operating income for the quarter rose 15%, reflecting higher sales-driven franchised margins, comparison against the prior year's strategic charges, and higher gains from restaurant refranchising.
  • Comparable sales for the International Lead segment increased 5.2% for the quarter, led by strong performance in the U.K., Australia and Canada as strong execution of core menu, compelling value and convenience strategies continued to resonate with consumers. First quarter operating income increased 12% (18% in constant currencies), driven by higher franchised margin dollars. The segment delivered strong results despite ongoing economic and competitive headwinds in France and Germany.
  • In the High Growth segment, first quarter comparable sales increased 3.6%, led by strong comparable sales performance in China and positive performance across various other markets, including Russia. In the Foundational markets, first quarter comparable sales rose 11%, primarily due to sales recovery in Japan. Quarterly operating income increases for both segments reflected comparison against the prior year's strategic charges and recovery from the prior year's impact of the 2014 supplier issue - both of which negatively impacted China and Japan's results in first quarter 2015.
  • "The turnaround plan we announced last year is grounded in enhancing these critical customer-driven elements, and I'm pleased to report that our turnaround is taking hold. The ongoing investments we're making in running great restaurants and delivering what matters most to our customers are beginning to yield sustained positive results.