TheChek News Flow

Tullow Oil plc (Tullow) announces that the Wisting Central II long reach horizontal well (7324/7-3S) has successfully explored and appraised the Wisting South & Wisting West segments of the field including a production test in the Stformation. The well was drilled approximately 5 kilometres south-west of the Wisting discovery well in the Barents Sea.

Results of drilling, wireline logs and samples of reservoir fluids show that the well has encountered an oil column of 22 metres in a 1,402 metres horizontal section with 1,250 metres of net light oil pay. The main reservoir encountered was thicker than expected pre-drill. A constrained production test was carried out in the StFormation with a flow rate of approximately 5,000 boepd which demonstrated excellent reservoir properties. The well results are expected to provide an increase of in-place volumes in the Central South and Central West segments and further reduce the overall uncertainty of resources in PL537.

The well was drilled by the semi submersible drilling rig Transocean Spitsbergen. The well was drilled to respective vertical and measured depths of 673 and 2,314 metres in a water depth of 402 metres. The Wisting Central Complex is located in PL537 in which Tullow has a 20% interest. OMV Norge are the operator with a 25% interest whilst Idemitsu (20%), Statoil (15%) and Petoro (20%) are also partners.

- Still expects to freeze oil output, not exports 

- Do not plan to curve production at new projects

Our FY16-18e EPS are upped +3% to +5% on deeper cost cutting (Veolia) and new assets (Suez). Veolia offers c.+20% EPS CAGR16-18e and 8% upside to consensus EPS. We are in line for Suez on an underlying basis (10% EPS CAGR16-18e). M&A should be a catalyst, with potential sizeable acquisitions at Suez (ACS’s Urbaser for instance, which we analyse) and bolt-ons at Veolia.

International (ex-Europe) demand for environmental services should remain largely de-correlated from GDP. European waste could suffer from a slower economy but trends look supportive in the UK and Benedelux, due to new asset commissioning and to pricing, including recyclates. The impact of a negative mix effect in France looks highly manageable.

Veolia and Suez shares have performed relatively well over the last four years despite receding inflation expectations, in large part due to accelerated self-help. We foresee a squeeze from subdued inflation at -EUR70m p.a. in FY16-18e for both companies (1-1.5% of the cost base of the concerned activities), but this should be more than offset by cost cutting of EUR150m p.a. at Suez. We raise our cost-saving assumption at Veolia to EUR220m p.a., above the EUR200m guidance.

Valuations appealing 

Thanks to sound FCF generation, Veolia’s balance sheet should provide increasing flexibility –– for instance to exceed the +10% pa DPS guidance. By FY18e, Veolia should trade at a steep -25% EV/EBITDA discount to the utilities sector versus its -7% historical average. Suez’s longer duration asset portfolio vs Veolia’s deserves a premium, as reflected in our unchanged target prices.

For hedge fund titan John Paulson, history may be repeating itself.

The billionaire investor lost an estimated $258 million on Tuesday when the share price of drug company Allergan Plc (AGN.N) tumbled nearly 15 percent on speculation new tax rules would scuttle its merger with Pfizer Inc. (PFE.N).

Research firm Symmetric.io calculated the hypothetical loss based on publicly disclosed stock holdings as of Dec. 31, 2015.

That estimated decline comes after Paulson lost money

in late 2014 when his Advantage fund dropped 13.6 percent in October of that year after U.S. pharmaceutical company AbbVie Inc (ABBV.N) backed out of a planned deal with Irish drug maker Shire Plc (SHP.L) after new tax rules made the deal less lucrative for the companies.

Merger-arbitrage specialists such as the $18 billion Paulson & Co bet on the outcome of mergers. Paulson's bet that the Allergan deal would go ahead has been rattled by the new tax rules, which were unveiled on Monday.

Reuters reported on Tuesday that Pfizer was leaning toward abandoning its $160 billion agreement to buy Botox maker Allergan.

Paulson, who made his reputation on bets against the U.S. housing market and said recently in a video interview how critical it was to stay the course in investing, did not comment.

The Paulson Partners fund, which bets on corporate events such as mergers, is down 7.7 percent in 2016 through February, according to a person familiar with the returns. The Paulson Advantage Plus Fund lost 11.24 percent in the first two months of the year. More recent figures were not available.

Paulson is not the only fund that got burned: Symmetric.io estimated that hedge funds in total lost $3 billion on Allergan on Tuesday. Research from Goldman Sachs shows that 80 hedge funds counted Allergan as one of their top 10 holdings at the end of the fourth quarter, making the company one of the most popular stocks in the hedge fund industry.

The pain appears to have been particularly acute for four large hedge fund firms. Viking Global Investors, Paulson & Co, Third Point and Pentwater Capital Management each lost more than $200 million on Tuesday, the Symmetric.io data show, according to year-end holding disclosures.

It is possible that positions have since changed. The firms mentioned either declined to comment or did not respond to a request for comment.

Less than a year ago, Daniel Loeb's Third Point invested with Allergan and praised the company's management team, including Chief Executive Brent Saunders. In a July 2015 letter to clients, Loeb was particularly happy to hear Saunders talk about the opportunity for a transformational transaction.

That was after Allergan had already merged with Actavis but before the Pfizer deal was announced late last year.

The risk of the deal being scuttled also hurt players who had made smaller bets on Allergan.

Scott Ferguson who runs Sachem Head Capital Management, is invested with Allergan and lost an estimated $78 million on paper, according to Symmetric.io. Ferguson was not available to comment. Similarly, Keith Meister's Corvex Management lost an estimated $33.6 million, while Philippe Laffont's Coatue Management lost an estimated $38.4 million, the Symmetric.io data show. The firms were not immediately available to comment.

ML

ENI - Announces EUR 500m offering of convertible bonds (equity neutral)....

ARCELORMITTAL - We REINSTATE coverage as Buy, with a PO EUR 4.80..........+2%

MINERS - China Services & PMI higher @ 51.3, BHP OZ +1%, RIO OZ +1.1%...+1-2%

H&M - Gross margins better at 52% v cons 51.6%. Sales already reported..+1-2%

CRH - Stock was a bit drag yday, raised to overweight by another broker.+1.5%

SHIRE - Pfizer/Allergan terminate merger post tax inversion clampdown.....+1%

ALLIANZ - Anbang buys cos Korean life insurance business for c.USD 216mn..+1%

EDF - CEO says may sell as much as 50% of French grid operator RTE........+1%

ITALIAN BANKS - Italy considering setting up state backed fund; Reuters...+1%

VALLOUREC - Preannounces Q1 rev EUR671m, EBITDA to be better. Reits FY16..u/c

REPSOL - Sacyr plans to sell 2% stake (owns 8.5%) to cut debt; Expansion..u/c

FERROVIAL - Broadspectrum rejects Ferrovial's final $580m raised bid......u/c

KERING - Cutting Gucci #s, looking for +5.5% org growth (was +6.7%).......u/c

AUTO TRADER - CFO/CEO sell c.1/3 of their holdings, 16.2m shrs at 370p/shru/c

GN STORE NORD - We DOWNGRADE to Neutral, PO 140. Cautious on hearing aids.-1%

PHILIPS - Cree reports prelim Q3 $0.13-0.15 v $0.24e, -19% aft hours......-1%

FORTUM - Goes ex div €1.10, we think div could be cut by >60% & reit SELL.-1%

EASYJET - March Traffic Stats marginally light on load factor -1.3%.......-1%

AIR FRANCE - CEO Juniac to step down by Aug 1 to run a lobby group IATA.-1-2%

OSRAM - Cree reports prelim Q3 $0.13-0.15 v $0.24e, -19% aft hours......-2-3%

UK MAIL - Yr end update shows weak mail pricing with vols +5% but revs -3%-3%

CS

Air France -3-5% CEO stepping down to take CEO role at IATA

Aixtron -1-2% Peer Cree warned in the US last night, down 19% after hours

Allianz M/P Anbang Signs Contract to Buy Allianz Life Korea Unit

Barry Call +2% Sales 2% beat, EBIT 4.5% beat, confirmed mid-term guidance

Easyjet UNCH passeneger +4.3%, load factor lower

Electrocomp M/P CS upgrade to NEUTRAL (Operational improvements)

Eurocastle +2% CS initiate with OUTPERFORM (Attractive Italy NPL exposure)

Ferrovial M/P Broadspectrum rejected a final, sweetened offer of A$769m

Fidessa M/P Ongoing takeover speculation in the Daily Mail

Glencore +2-3% Glencore nears $2.4B sale of stake in agriculture business

H&M +1% 1Q Pretax Profit Meets Ests.; March Sales Rose 2%

Hss M/P FY revs £312.3m vs cons 312.25m, Outlook reads fine

Kone +0.5% Wins order from SHANGHAI Metro Extention

Miners +1% Copper +0.45%, Brent +2.25%, Iron Ore -2.50%, China -0.35%

Norway Air +1% Traffic stats, Passengers rose 27%, load factor up to 87.9%

Oils +1% WTI +3% vs Europe close. US API showed draw of 4.3m barrels

Philips -1-2% Peer Cree warned in the US last night, down 19% after hours

Telefonica +1-2% CS upgrade to NEUTRAL (Balance sheet potential)

Topps Tiles +1% H1 revs +4% y/y, +4.7% LFL, enters H2 in "good shape"

Thyssen +1-2% Tata Steel Said to Be in Advanced Talks W/ Thyssen

UK Mail M/P Revenues slightly light, PBT expected inline

Vallourec +3% Trading statement, EBITDA better, targets confirmed

commerzbank
AB1 –0.9% Considers sale of NIKI
DAI +1.0% Commits to building electric car with 500km range
FNTN +0.4% CBK cuts to Hold (Buy), PT €28 (36) – Sun setting
HAW -0.4% Proposes dividend of €1.30 vs. €1.22 consensus
HEI -0.4% Executing Italcementi synergy targets
MOR –0.2% Starts phase 2 trial for MOR208
OSR –1.0% Cree profit warn for 3Q16 looks largely homemade, -17% in after-hours
TKA +0.8% And Tata Steel rumoured to be in advanced talks on a a 50/50 JV

Shore
EASYJET-March load factor 91.3%v92.6.Passengers 70.8m v 66m.................+1%
TOPPS TILES-H1 total rev 108m.Sales +4.9%.Says enters H2 in good shape......+2%
HSS-Says Q1 rev ahead of last year.Op pft 15.4m.Divi 0.57p.................UNCH
BATM-Wins $4m new cyber security contract..................................UNCH
CITYFIBRE-First capacity deal on acquired long-haul network.................+2%
STYLES&WOOD-Fy pbt 3.2m.Eps 25.4p.Net cash 5.6m.Order book robust...........+2%
UK MAIL-Fy revs -1%.Sees year ptp in line with forecasts....................-2%
AUTO TRADER-Directors sale 16.2m shares post lock up @370p..................-4%
ACCESSO-Announced secondary block placing late yest.Directors stock.........-2%

mf
*THYSSEN-Tata Steel in advanced talks with Thyssen - CNBC...........+1% *PEUGEOT-Aims to boost China car sales to 1m units by 2018..........+0.5% *GLENCORE-May sell as much as 40% of Ag Unit to CPPIB - WSJ.........+2% *REPSOL-SACYR plans to sell 2% stake in Repsol to cut debt..........-1% *KONE-Wins escalator order for Lanzhou Metro in China...............+0.5% *AIR FRANCE-CEO De Juniac to step down to take IATA job,1st Aug.....-2% *FERROVIAL-Increases offer for Broadspectrum & is rejected..........-1% *BARRY CALLEBAUT-H1 Rev 3.42b(3.36),Ebit 200.7m(191),o/l tough......+1% *A2A-FY Net 73m,Tgts Ebitda €1.3b in 2020,Divi 41c,overall +ve......+1% *VALLOUREC-Rev 671m,Ebitda s/better vs Q4,Q2 better,2020 confirmed..-1% *H&M-PT 3.33B(3.37),GM 52%(51.5),NI 2.55b(2.51),March Sales +2%.....+1% *EASYJET-March Load Factor 91.3%,Passengers 5.7m,12m Load 91.5%.....-1% *AIXTRON-Read across from CREE stock -18% a/hrs,post Q3 weak no's...-2.5%

- Expects China growth to oupace overall market in 2016

- Q1 results were weighed down by e-class, weakness in core truck markets

Billionaire investor William Ackman is set to face close questioning on Wednesday when he details his hedge fund's biggest-ever quarterly loss and explains how he plans to handle the investment that led to the fall - Valeant Pharmaceuticals International.

Ackman's Pershing Square Capital Management has blocked off one hour on Wednesday morning for him and his analysts to walk investors through exactly how one of its funds lost 25 percent in the first three months of 2016, including bets on Platform Specialty Products, Herbalife and Valeant.

The losses are a severe blow for one of the hedge fund industry's most closely followed investors and come on top of a record 20.5 percent drop in 2015.

He has already told investors that he plans to take a far more active role in Valeant and last month joined the company's board, cementing his commitment to the company for some time. The board is looking for a new chief executive and is committed to filing a long-delayed annual report by the end of April.

Ackman is sure to be pressed for details on all those issues in the call, which is a regular quarterly update with investors.

A spokesman for Ackman declined to comment.

Five months ago Ackman held a call that lasted nearly four hours as he tried convince investors that Valeant was still a good buy. That message seemed to fall on deaf ears as the stock price has tumbled nearly 70 percent since then.

Ackman lost roughly $1 billion on his Valeant investment in one day last month when its stock fell 50 percent on fears it could default. That prompted even long-time Valeant supporters such as Brave Warrior Advisors' Glenn Greenberg to liquidate half of his stake.

"This is going to be a badly scraped knee that may even require stitches but it is not life threatening," one Ackman investor said about the losses and Valeant situation.

The structure of Pershing Square shields it from a sudden sharp loss of capital - investors can only withdraw their money gradually and some of them can only exit by selling shares to another investor.

In a rare piece of good news, Valeant said on Tuesday that it has finished an internal review and found no additional problems that would require further restatements of its financial statements. Its shares climbed 10 percent.

Macro :

- Italy Said to Consider State-Backed Fund for Banks: Reuters

- Clinton Says She Would Go Further Than Treasury on Inversions

- The Coming Default Wave Is Shaping Up to Be Among Most Painful

- SocGen’s Bokobza Says He Doesn’t Expect Brexit: Echos

- Oil Capex Declines Will Be Worse This Year, Morgan Stanley Says

Keep an eye on :

- A2A IM : A2A FY Net EU73m, Targets Ebitda of EU1.3b in 2020

- AF FP : Air France-KLM: CEO De Juniac to Step Down to Take IATA Job

- AF FP : Air France’s De Juniac Says French Govt. Always Behind the Co.

- BARN SW : Barry Callebaut 1H Revenue, Ebit Beat; Reiterates M/T Outlook

- DAI GY : Daimler in Talks With Microsoft on HERE Mapping Service: WSJ - http://on.wsj.com/1SzwucF

- DAI GY : Daimler Commits to Building Electric Car With 500km Range

- DBK GY : Deutsche Bank Suspends 5 Private Bankers Amid Probe: Le Temps

- EDF FP : EDF CEO Says Company Musn’t Delay U.K. Nuclear Plant Project

- FCC SM : Slim’s CEC Seeks Authorization for Bid For FCC

- GLEN LN : Glencore May Sell as Much as 40% of Ag Unit to CPPIB: WSJ

- HMB SS : *H&M 1Q PRETAX PROFIT SK3.33 BLN; EST. SK3.37 BLN

- IHG LN : Anbang Won’t Slow Down Overseas Expansion This Yr: Sec. News

- UG FP : Peugeot Aims to Boost China Car Sales to 1m Units 2018: Xinhua

- PFE US : Pfizer Said to Terminate $160 Billion Merger With Allergan

- RNO FP : Renault Says It Has Found Ways to Reduce Azote Oxyde Emissions

- SAF FP : Not seeing any delays in deliveries of A4000M engines - A400 gearbox issue will take several weeks to several months too resolve

- SBMO NA : SBM Offshore Says Judge Confirms January Settlement

- SHP LN : Shire May Become Target If Pfizer-Allergan Deal Blows Up: BofAML

- SIE GY : Siemens Building Unit Won’t Rule Out Acquisitions: Handelsblatt

- TEVA IT : Teva Focused on Completing Allergan Deal After Treasury Ruling

- VK FP : Vallourec Prelim 1Q Rev. Down Y/y, Qtr Hurt by Adverse Oil Mkt

- DG FP : Vinci, Cube, Changi Said to Be Interested in Lyon Airport: AFP