>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance: HSC +2.1% (expects that its Q3 above the guidance ranges previously provided), YUM +1.8%, (sales in China continue to be difficult to forecast-- now estimates that China Division same-store sales for Q4 could range from 0% to 4%, with positive same-store sales growth at KFC and negative same-store sales at Pizza Hut Casual Dining; near conclusion of strategic review), WAL +1.3%, CMA +0.9%, STI +0.8%, HON +0.4% .

M&A news: SFXE +44.2% (CEO Robert F.X. Sillerman discloses a 39% active stake in 13D filing; sends letter to the Board offering to acquire all shares he doesn't already own for $3.25/share), YOKU +22.4% (Youku Tudou confirms receipt of the non-binding 'going private' proposal from Alibaba, will form special committee to evaluate the offer)

Select oil/gas related names showing strength: BP +0.6%, RDS.A +0.5%, TOT +0.5%, .

Other news: YGE +15.4% (still checking), PTCT +13.1% (reports results from its Phase 3 ACT DMD clinical trial of Translarna, with results showing clinically meaningful benefits for treated patients), DY +6.3% (still checking), NBG +4.3% (still checking), ARQL +3.8% (reports the publication of a paper detailing the pre-clinical profile of ARQ 092 and ARQ 751), TTM +1.6% (continued strength), OXY +1.4% (Reuters discusses that OXY plans to exit North Dakota with sale of oil fields for $500 mln), AFMD +1.3% (following 25% move higher yesterday), BABA +1.3% (Youku Tudou confirms receipt of the non-binding 'going private' proposal from Alibaba (BABA), will form special committee to evaluate the offer), NVO +1.3% (still checking), MBLY +1.3% (continued strength on Tesla collaboration rumors), SHPG +0.9% (still checking), WBAI +0.7% (after making notable move higher yesterday on speculation that China provinces will soon approve lottery sales), VRX +0.7% (modestly rebounding), ESPR +0.5% (following 10%+ move higher yesterday), GOLD+0.4% (Bloomberg reports that Rangold (GOLD) Congo mining deal might close by the end of this year), BIIB +0.3% (favorable commentary on Thursday's Mad Money), STX +0.2% (following 13% pullback yesterday on disappointing guidance; downgraded to Sector Weight from Overweight at Pacific Crest), UPS +0.2% (reports 2016 rate increases; ground rates and accessorial charges to increase by an average net 4.9%).

Analyst comments: LULU +0.7% (upgraded to Outperform from Neutral at Credit Suisse), DECK +0.4% (initiated with Buy at Brean), FEYE +0.3% (initiated with a Buy at DA Davidson)

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance: WYNN -9.2%, EXAC -6.8%, MAT -2.4%, SYRG -1.9%, GE -1.5%, SLB -0.7%, AMD -0.5% (also signs JV with Nantong Fujitsu Microelectronics, who is paying AMD $371 mln).

WYNN casino / gaming peers are under pressure: LVS -2.9%, MGM -2.9%, MPEL -2.5%.

Select metals/mining stocks trading lower: VALE -1.2% (announces on its website that its Board approved the payment of the second installment of the 2015 dividends of $500 mln, or ~$0.097 per share),RIO -1% (reports Q3 production, global iron ore shipments were +17% y/y), ABX -1%, SLV -0.8%, GDX -0.7%, GLD -0.3%.
Other news: ZFGN -28.6% (receives verbal notice from the FDA that beloranib has been placed on partial clinical hold; patient who died was receiving beloranib), CRZO -5.4% (announces estimated q3 production and raises 2015 crude oil production growth target; Estimated Q3 crude oil production of 23,573 Bbls/d, 4% above the high-end of the guidance range; announces public offering of 5.3 mln shares of common stock; prices the upsized offer of 5.5 mln shares of its common stock for gross proceeds of ~$211.8 mln), MYCC -4% (prices secondary offering of 8,968,922 shares at $20.80 per share), SAVE -3.8% (reaffirms prior Q3 revenue guidance, increases operating margin guidance; however, prices are low, capacity growth in 2016 now expected at lower end of prior guidance range; downgraded to Equal-Weight from Overweight at Morgan Stanley), SLRC -3.7% (Solar Capital reports that Voya Financial has agreed to invest in its Senior Secured Unitranche Loan Program), RDUS -2.4% (up ~20% yesterday on Shire M&A speculation), AZN -1.9% (receives a Complete Response Letter from the FDA regarding the NDA for the investigational fixed-dose combination of saxagliptin and dapagliflozin for the treatment of adult patients with type 2 diabetes), JAH -0.7% (prices the underwritten public offering of 10 mln shares of its common stock at $49.00/share).

Analyst comments: NAV -4.2% (downgraded to Neutral from Buy at Longbow)

>>> US Early premarket gappers

Early premarket gappers
Gapping up: SFXE +44.2%, YOKU +22.4%, YGE +15.4%, PTCT +13.1%, DY +6.3%, NBG +4.3%, ARQL +3.8%, HSC +2.1%, YUM +1.8%, OXY +1.4%, AFMD +1.3%, BABA +1.3%, NVO +1.3%, MBLY +1.3%, WAL +1.3%, SHPG +0.9%, CMA +0.9%, STI +0.8%, VRX +0.7%, HON +0.4%

Gapping down: ZFGN -28.6%, WYNN -8.5%, EXAC -6.8%, CRZO -5.4%, SAVE -3.8%, SLRC -3.7%, LVS -2.9%, MPEL -2.5%, RDUS -2.4%, MAT -2.4%, SYRG -1.9%, GE -1.5%, FCAU -1.3%, VALE -1.2%, AZN -1.1%, RIO -1%, SLB -0.7%, JAH -0.5%, AMD -0.5%

>>> General Electric reports messy Q3 report with EPS above estimates as co cont

General Electric reports messy Q3 report with EPS above estimates as co continues to divest GE Capital assets

  • Reports Q3 (Sep) operating earnings of $0.32 per share, with industrial operating + verticals earnings $0.29, may not be comparable to the Capital IQ Consensus of $0.26; industrial plus GE Capital on an equity basis rev fell 2.1% year/year to $26.55 bln, industrial + verticals rev fell 2% to 27.9 bln, may not compare to vs the $28.66 bln Capital IQ Consensus. Last quarter the industrial + GE Capital on an equity basis figures appeared to be comparable but co has continued to divest Capital assets and now there is even less confidence in which number compare.
    • Industrial segment operating profit +5%, +9% organic, 5 of 7 segments growing earnings, Oil & Gas flat organically
    • Industrial segment organic revenues +4%
    • Industrial segment operating margins +100 bps, gross margins +80 bps
    • Reaffirms 2015 Industrial + Verticals EPS guidance ($1.13-1.20)
    • GE plans to launch Synchrony share exchange next week, expects to retire 6--7% of GE float
    • Regulatory approval for acquisition of Alstom power & grid; deal close expected within weeks

>>> US Early premarket gappers

Early premarket gappers
Gapping up: SFXE +44.2%, YOKU +22.4%, YGE +15.4%, PTCT +13.1%, DY +6.3%, NBG +4.3%, ARQL +3.8%, HSC +2.1%, YUM +1.8%, OXY +1.4%, AFMD +1.3%, BABA +1.3%, NVO +1.3%, MBLY +1.3%, WAL +1.3%, SHPG +0.9%, CMA +0.9%, STI +0.8%, VRX +0.7%, HON +0.4%

Gapping down: ZFGN -28.6%, WYNN -8.5%, EXAC -6.8%, CRZO -5.4%, SAVE -3.8%, SLRC -3.7%, LVS -2.9%, MPEL -2.5%, RDUS -2.4%, MAT -2.4%, SYRG -1.9%, GE -1.5%, FCAU -1.3%, VALE -1.2%, AZN -1.1%, RIO -1%, SLB -0.7%, JAH -0.5%, AMD -0.5%

>>> General Electric reports messy Q3 report with EPS above estimates as co cont

General Electric reports messy Q3 report with EPS above estimates as co continues to divest GE Capital assets

  • Reports Q3 (Sep) operating earnings of $0.32 per share, with industrial operating + verticals earnings $0.29, may not be comparable to the Capital IQ Consensus of $0.26; industrial plus GE Capital on an equity basis rev fell 2.1% year/year to $26.55 bln, industrial + verticals rev fell 2% to 27.9 bln, may not compare to vs the $28.66 bln Capital IQ Consensus. Last quarter the industrial + GE Capital on an equity basis figures appeared to be comparable but co has continued to divest Capital assets and now there is even less confidence in which number compare.
    • Industrial segment operating profit +5%, +9% organic, 5 of 7 segments growing earnings, Oil & Gas flat organically
    • Industrial segment organic revenues +4%
    • Industrial segment operating margins +100 bps, gross margins +80 bps
    • Reaffirms 2015 Industrial + Verticals EPS guidance ($1.13-1.20)
    • GE plans to launch Synchrony share exchange next week, expects to retire 6--7% of GE float
    • Regulatory approval for acquisition of Alstom power & grid; deal close expected within weeks

WSJ : McDonald’s Close to Deciding Whether to Change Structure of U.S. Real Esta

McDonald’s Close to Deciding Whether to Change Structure of U.S. Real Estate
Some investors, analysts call for fast-food chain to spin off the holdings

McDonald’s Corp. is close to deciding what, if anything, to do with its vast U.S. real-estate holdings, board member Miles D. White said in an interview Thursday.

McDonald’s board and management haven’t made a decision yet, but “we have had a lot of review and a lot of debate,” said Mr. White, chief executive of Abbott Laboratories and head of the corporate-governance committee for McDonald’s board.

McDonald’s long has emphasized the importance of owning its property. But with its sales slumping recently, some investors and analysts have called for it to spin off the U.S. holdings—likely as a real-estate investment trust, or REIT—saying it would benefit shareholders.

McDonald’s has examined options for its real estate before. The current review began before Steve Easterbrook became chief executive in March and involved an evaluation by outside consultants and financial advisers, Mr. White said. Mr. Easterbrook is also on the board.

McDonald’s executives in recent months have said they are studying all financial options to boost shareholder value. Finance Chief Kevin Ozan in July said the company will update investors on its plans in November.
Mr. White said directors and executives have evaluated “the long-term role of real estate” in sustaining McDonald’s performance and its context in a global business model. “Regardless of where we come out, somebody is going to be unhappy,” Mr. White added.

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Investors often like REITs because they tend to trade at higher multiples than retail companies and pay little or no tax on earnings as long as they distribute most profits through dividends. Hedge fund chief Larry Robbins, of Glenview Capital Management, said in a March letter to investors that McDonald’s could unlock at least $20 billion in value if it were to spin off its U.S. real estate.

But some Wall Street analysts say the odds of McDonald’s spinning off its real estate are slim. McDonald’s derives a huge and growing part of its revenue from its real estate. Rent payments from franchisees have risen 26% over the past five years to $6.1 billion in 2014, accounting for more than a fifth of McDonald’s $27.4 billion in total revenue in a year when overall sales and profit fell.

That distinguishes McDonald’s from other companies that have spun off real estate, such as Darden Restaurants Inc., which doesn’t franchise its U.S. restaurants. The owner of Olive Garden in June became the first major restaurant chain to announce plans to transfer properties into a REIT.

Morgan Stanley analyst John Glass in a recent note called the possibility of McDonald’s forming a REIT “remote,” and said that doing so “does not create as much value as one might initially think.”

‘Regardless of where we come out, somebody is going to be unhappy.’
—McDonald’s board member Miles D. White
He estimated that McDonald’s U.S. real estate is worth $16 billion to $18 billion and said the combined value of a McDonald’s U.S. REIT and the company itself likely would be around $103 a share—the same as its current price. He also said companies seeking to spin off real estate could be hindered by a recent Internal Revenue Service announcement that it will stop preapproving such deals amid concerns they can be used to avoid paying taxes.

A major change to McDonald’s corporate structure also could distract from turnaround efforts, other analysts have argued. Mr. Easterbrook has been working on initiatives including simplifying the menu, adding customizable items, and switching to more natural and humanely raised meat.

This month, McDonald’s embarked on its biggest operational change in years when it began offering breakfast all day in the U.S. Early signs indicate the move is starting to pay off, though it is too early to know how long the benefits will last. All-day breakfast could boost same-store sales growth in the fourth quarter by 1.5 percentage points and by 1 percentage point over the next 12 months, according to a recent survey of 29 U.S. McDonald’s franchisees by Nomura Securities analyst Mark Kalinowski.

(SkyNews) Chinese Eye Biggest F1 Stake In $8.5bn Bid http://bit.ly/1MH9klW

Chinese Eye Biggest F1 Stake In $8.5bn Bid

China Media Capital is in talks to invest hundreds of millions of pounds in a takeover bid for Formula One, Sky News learns.

Chinese investors are in pole position to shape the future of Formula One motor racing as one of the country's largest investment firms backs an $8.5bn (£5.5bn) takeover bid for the sport.


Sky News can reveal that China Media Capital (CMC) is leading a group of Chinese firms who want to invest roughly $1.5bn (£970m) in an offer being assembled by Stephen Ross, owner of the Miami Dolphins American football team.

Mr Ross’s consortium is understood to be planning to write in the coming days to CVC Capital Partners, F1's controlling shareholder, to seek a 90-day period of exclusivity during which it would hold detailed talks with Bernie Ecclestone, F1's chief executive, and undertake due diligence.

CMC is among a group of Chinese media investors – which also include Fosun and Wanda – pursuing rapid global expansion, recently unveiling a partnership with the Hollywood studio Warner Bros Entertainment to produce Chinese-language films for distribution around the world.

The proposed takeover of F1, which remains far from certain to take place, still requires roughly $2bn in additional equity from other investors.

CVC has not yet decided whether to grant the exclusivity request, insiders said.

Sky News understands that Qatar Sports Investments, which owns the Paris Saint-Germain football team and had been tipped as a partner of Mr Ross, is now on the periphery of the deal and may not participate at all.

Sources said that Mr Ross's vehicle, RSE Ventures, plans to invest approximately $500m (£323m) to buy a significant shareholding in F1's parent company.

Dieter Hahn, a German media magnate whose company, Constantin Medien, sued Mr Ecclestone in relation to previous changes to F1's ownership, wants to invest a similar amount.

In addition to the Chinese investment, that would leave the consortium requiring another $2bn (£1.3bn) in equity, with the $4bn (£2.6bn) balance of the $8.5bn price tag consisting of debt.

Despite the recent legal history between Mr Ecclestone and Mr Hahn, insiders said the consortium was keen for the 84 year-old F1 chief to retain his role overseeing its racing operations, while a new commercial team would look to exploit the sport's media and sponsorship rights more aggressively.

"They believe they can double F1's profits," said a source close to the bid.


The takeover proposal from the consortium which involves CMC comes at a difficult time for F1, with a number of teams succumbing to or facing financial difficulties, and lingering concerns about the quality of the sporting spectacle.

One uncertainty facing the sport is the outcome of a complaint submitted recently by two of the smaller teams - Force India and Sauber - to the European Commission about the way prize money is distributed.

Nevertheless, people close to F1 say it is now closer to a change in ownership than at any time since CVC gained control a decade ago.

The sport has been a stellar investment for CVC, which has generated huge returns from frequent dividend payments and the rise in its value since 2005.

It is unclear whether CVC would sell out of F1 altogether, with City sources speculating that Donald Mackenzie, the private equity firm’s co-founder, would like to retain a small shareholding.

In 2012, CVC sold a series of minority stakes in Delta Topco, F1's parent, to international investors including Blackrock and Norway's sovereign wealth fund.

Waddell & Reed, a US-based fund manager, subsequently invested another $500m to increase its shareholding to almost 21%.

That deal placed an enterprise value on the sport of $9.1bn, although insiders said that after dividend payments, it would still recoup its investment if the sport was sold with an $8.5bn price-tag.

Goldman Sachs is advising CVC on the discussions, while Mr Ross’s consortium is being advised by Raine, a New York-based merchant bank.

CMC could not be reached for comment, while CVC declined to comment.

NY Post : Hedgies powerless as their portfolios go in the tank

Hotshot hedge fund activists have a big problem these days.
While they’ve been criticized for pocketing quick profits in the past, they are now seeing their portfolios battered as they stick around for a while — and the companies they’re invested in run headlong into controversy or other problems.
And as the stock prices of the companies they’re invested in tumble, the activists — Bill Ackman in Valeant, Carl Icahn in Hertz and Dan Loeb in Sotheby’s — are trapped and can do little but stand by and watch helplessly as their portfolios tank.
Case in point is Ackman’s 5.7 percent stake in Canadian pharmaceutical giant Valeant, which announced late Wednesday that it is under investigation by federal prosecutors in New York and Massachusetts regarding its pricing of drugs.
The news was just the latest in the controversy over high drug prices to hit Valeant, a hedge fund darling that has lost 36 percent of its value since Aug. 1.
Ackman, with 20 percent of his $16.5 billion Pershing Square fund in Valeant, is down nearly $600 million over that time.
“He’s stuck with that position,” says Stanley Altshuller of Novus Partners, a hedge fund consultancy. “If he tries to unload it, he will move the price [down] in a very major way.”
Ackman doesn’t disagree. “Activists give up some trading flexibility,” he told The Post.
“It’s inherent to our strategy,” he said. “We buy large stakes and we tend to own them over the long term.” Although Novus calls Pershing Square the best-performing activist hedge fund over time, it is down 7 percent this year through Oct. 13.
As for Icahn, he has lost 30 percent of his $1.4 billion, 11 percent year-old stake in Hertz — down 22 percent this year. Meanwhile, his new bet, Cheniere Energy, is down 20 percent since he announced a $1.8 billion, 12 percent position in August.
Icahn Enterprises, his holding company, is one of the five worst activist stocks this year, according to Novus. It has fallen 15 percent.
Then there’s Loeb’s bitter — and costly — battle with Sotheby’s. Loeb’s Third Point, with a 9.5 percent stake, gained three board seats, but the stock is down 22 percent since he bought it two years ago. Third Point is off 4.4 percent this year.
Another glaring example is Ackman protégé Mick McGuire of Marcato Capital, which has a 6.5 percent stake in, and a board seat on, the troubled ATM-maker NCR. The company has twice failed at selling itself.
Marcato has lost 11 percent on NCR and is off 12 percent this year through Sept. 30.
Board seats make things more difficult because the activists have inside information. The problem starts because activists taking a 5 percent “control” interest have to report any 1 percent change in their holdings.
That works well on the way up, as other investors follow them in — but not so much on the way down.
“The 1 percent rule broadcasts that a large holder is hitting the market with a large supply of stock,” says hedge fund manager Robert Chapman, who left activist investing in 2008.