TheChek News Flow

Cover story: Japan's corporations, which have long "worked to protect market share, head count, and influence while hoarding cash at the expense of profits and and shareholder returns," are beginning to change as they face pressure from government, investors, and peers; Investors should look for Japanese companies with the potential for fast profit gains following reform, such as Hitachi, Nippon Telegraph & Telephone, TM, Mitsubishi Heavy Industries, and MTU.

Features: 1) Positive on MSI: Amid growing demand, cost-cutting initiatives, and buybacks, public-safety communications company's shares could deliver a total return, including dividends, of more than 45%; 2) Cautious on TOT, Royal Dutch Shell, Eni, Statoil: European oil companies have worked in Iran, and are likely to return when sanctions are lifted, but the country's oil industry needs billions of dollars in investment to get back up to speed; 3) Positive on ODFL: Trucking company has hit some bumps, but it continues to gain market share, and its strong focus on customer service sets it apart from rivals; with the share price down 17% from a 52-week high in early December, now is the time for investors to buy; 4) Story looks at how the Bureau of Labor Statistics calculates unemployment numbers, noting that a close look reveals the rate may be over-counting rather than undercounting the unemployed.

Tech Trader: Cautious on INTC: Chipmaker's recent announcement that the next generation of its most advanced chips won't be ready until summer 2017 has prompted concern it could be losing its legendary manufacturing lead; But if rivals TSM and Samsung, which face similar challenges, stumble, Intel could become more powerful; Intel's delay could also "fuel the fire of competitors" such as QCOM and ARMH.

Trader: "Although U.S. economic data released last week were a mixed bag, many companies reported Q2 results that beat expectations, albeit lowered expectations," says Jack Ablin of BMO Private Bank; Cautious PG: Consumer product giant needs to create products that entice consumers to pay up for the brand name, but in the near term, without a market correction, the company is unlikely to outperform; Positive on WYNN: Amid turmoil in the Macau casino market, company's shares look cheap, with most of the bad news incorporated into the price, and long-term investors may see a payoff.

Small Caps: Positive on ENR: Company's shares have jumped 22% since the July 1 spinoff of its consumer products brands, and more gains could be ahead. 

Profile: John Maxwell, portfolio manager, Ivy International Core Equity fund (top ten holdings: Svenska Cellulosa Aktiebolaget, Fresenius SE, Dai-ichi Life Insurance, Mitsubishi Heavy Industries, SoftBank, WPP, TEVA, China Construction Bank, ING Groep, Tokio Marine Holdings).

- Differences of opinion are part of democracy. "Angela Merkel is chancellor, I am finance minister. Politicians derive their responsibility from their functions. No one can force them. If someone tried I could go to the president [Gauck] and ask him to dismiss me."

- Athens Chamber of Commerce and Industry (EBEA) says some 4,500 containers with raw materials and finished products are blocked at customs. Additionally, €6B in business transactions were frozen by the bank shutdown.

And now for some good news from Europe: Euro-zone GDP could rise 1.5% this year and 1.7% next as the euro loses value and exports rise.

After months of torpor, the euro zone’s economic outlook is suddenly and unexpectedly improving.

That’s not because Greece’s financial problems have been solved, although a deal with creditors, one that will allow Athens to negotiate its third economic bailout package in little more than five years and avoid an unseemly exit from the euro zone, helps.

Rather, Europe is getting a leg up from macroeconomic factors. In addition to persistently weak oil prices, the euro is retreating in value once again, as the monetary policies of the European Central Bank and Federal Reserve diverge.

Friday, the euro traded at $1.084, down 2.3% on the week. As the timing of an anticipated Fed interest-rate hike nears—the Fed is expected to act later this year—the dollar is likely to strengthen further against the common currency.

A weaker euro is good news for euro-zone manufacturers, as it makes their goods cheaper when denominated in other currencies.

Trade data also are encouraging. Euro-zone exports were up 5% in the first five months of 2015 compared with the same period a year earlier.

Even the International Monetary Fund seems upbeat on the euro area’s prospects. In a July report, it confirmed its projections for 1.5% growth this year in gross domestic product, and 1.7% growth in 2016. At the same time, it reined in forecasts for U.S. growth.

INVESTORS WELCOMED the agreement that gave Greece a third bailout, contingent on both the implementation of wide-ranging reforms and further austerity measures. The Stoxx Europe 600 index gained 4.3% last week, closing at 405.68, just 2% below its record high.

While the financial health of Greece remains parlous, the path ahead for the country and its creditors in the euro zone is much clearer now than it was just a couple of weeks ago. And, importantly, Greece has more control over its own destiny.

Euro-zone partners are offering a three-year rescue program worth as much as 86 billion euros ($93.3 billion). The Greek economy is shrinking, and the government is effectively bust. It failed to stick to the terms of two previous bailouts, valued at €245 billion, so the hardline approach from its neighbors isn’t surprising.

It also reflects a change in attitude among members of the euro club. Instead of trying to keep the currency union intact, seemingly at any cost—a sentiment that Greece played on in the past—Germany and a group of other nations have been openly talking up the chances of Grexit, or Greece’s exit from the euro zone.

France has been vocal in countering that skepticism and pushing for an agreement, but Greece can be under no illusion that it is drinking at the last-chance saloon.

“The Greeks have been shown the stick,” says Holger Schmieding, chief economist at Berenberg Bank in London. “But the carrot is very attractive.”

To secure the deal in the next few weeks, Greece needs to pass some far-reaching reforms. It has taken the first steps, passing some legislation, but the price is high in political terms, and there is much more to do.

Prime Minister Alexis Tsipras’ coalition shows signs of fracturing. If he can’t secure enough support to push through further reforms, Greece could be out of the euro zone in no time. Right now, domestic politics look to be the most serious and immediate threat to a new bailout.

ARM HOLDINGS ’ SHARES (ticker: ARM.UK) appear ready to add a little muscle.

The chip designer’s stock has underperformed in 2015. The shares, which closed Friday at 10.18 British pounds ($15.91), have added less than 3% in value since Jan. 1. The Stoxx Europe 600 technology sector has returned almost 15% in that time.

But ARM can could climb as it recovers from a blip in royalties, the result of slower growth in the market for smartphones, ARM’s main end market. Analysts’ consensus price target of £12.20 points to upside of about 20% in the next 12 months.

ARM’s shares look expensive, at 27 times forecast 2016 earnings of 38 pence per share. But in the past five years they have traded at an average multiple of about 40 times. That could make ARM relatively good value.

The company designs chips that run gadgets such as sensors, servers and tablets. It licenses manufacturing to customers, which pay royalties.

ARM could benefit from rising demand for its 64-bit processors—power-efficient, high-performance chips that generate higher royalties than other chips. Group sales are projected to reach £1.11 billion in 2016, up from an estimated £977 million this year.

SEOUL, South Korea — Samsung fended off the challenge of a big activist investor on Friday as the founding family tightened its grip over the sprawling South Korean conglomerate.

But the public fight, a rare bout of activism in Asia, also exposed broader concerns about shareholder rights and succession planning in a country dominated by family-controlled conglomerates known as chaebols.

The battle centered on the $8 billion merger of two Samsung affiliates, Samsung C&T and Cheil Industries.

The restructuring would allow Samsung to transfer more power to Lee Jae-yong, the son of the conglomerate’s chairman, Lee Kun-hee, who has been incapacitated since a heart attack in May 2014.

The New York hedge fund Elliott Associates wanted to scuttle the deal, saying it grossly undervalued Samsung C&T and represented an unlawful attempt by the Lee family to consolidate its hold.

For weeks, both sides tried to drum up support through fierce campaigns that featured lawsuits and front-page newspaper ads. Samsung depicted Elliott, which owns 7.12 percent of Samsung C&T, as a vulture capitalist, out to disrupt an orderly generational change and make a quick profit. Elliott, which is run by Paul E. Singer, filed and lost a pair of lawsuits in South Korea seeking to block the shareholder meeting.

In the end, it was close. The merger was backed by 69.53 percent of the shareholders who voted on Friday, narrowly above the amount needed.

Investor activism like the Samsung fight is relatively uncommon in Asia.

Publicly traded companies often remain under the control of close-knit family groups or state-backed shareholders, and legal protections for minority investors can be patchy. In many cases, activism in Asia plays out over a longer horizon, with players favoring persistent behind-the scenes lobbying over public campaigns.

The hedge fund Oasis Management, which built a small stake in the Japanese video game maker Nintendo, spent more than two years arguing that the company needed to move beyond its struggling console business.

In March, Nintendo announced a new partnership to push into mobile games, and in May, it announced plans to bring its video game characters to Universal Parks and Resorts. The company’s shares have risen about two-thirds since the start of this year.

“With Nintendo, I got a ‘no’ for a year, and then I got ‘yes,’ and then it took 10 months for them to execute the ‘yes,’ ” Seth Fischer, Oasis’s founder and chief investment officer, said in an interview. “The answer in Japan is that it works, but it takes time.”

The Wall Street activist investor Daniel S. Loeb of Third Point took on Sony two years ago, pressing for a board seat. He also pushed the company to spin off part of its entertainment arm, which includes a Hollywood film studio and a music label. Mr. Loeb was largely rebuffed and eventually sold his Sony stake.

He later invested in Fanuc, the Japanese robot maker, where he was better received. After a recent meeting with the company’s management, Fanuc agreed to double its dividend. “Nobody thought this could be done,” Mr. Loeb told the audience at an investment conference in May.

Elliott has previously gone up against powerful Asian tycoons.

Last year, it built up a 2.5 percent stake in the Bank of East Asia, one of Hong Kong’s biggest local banks, which is controlled by the family of David Li. But the hedge fund’s stake was diluted after the bank sold new shares to the Sumitomo Mitsui Financial Group of Japan.

Elliott sought to challenge the decision, which some analysts described as a defensive move by the Li family, asking a Hong Kong court to order Bank of East Asia to disclose the reasons for the share placement. But the hedge fund has so far stopped short of suing the bank or its directors.

The face-off over Samsung loomed large in South Korea.

Samsung’s 70 subsidiaries, engaged in businesses as varied as shipbuilding, home appliances, apartment buildings and mobile phones, generate revenue equaling a quarter of South Korea’s gross domestic product. The group’s influence is so pervasive that the country is often referred to as “Republic of Samsung.”

As the fight raged between Samsung and Elliott, editorials in leading domestic newspapers suggested that the country allow top companies to adopt dual-class stocks, “poison pills” and other shields against hostile moves by foreign hedge funds.

“Samsung’s battle should not be a lonely fight,” Lee Chul-ho, the chief editorial writer of the local mass-circulation daily JoongAng Ilbo, wrote in a recent column. “If Samsung loses, other companies could fall prey to outside predators.”

Going into the Samsung vote, Elliott did drum up support from big international investors like the Canada Pension Plan Investment Board and outside advisory firms like Institutional Shareholder Services and Korea Corporate Governance Service. Thousands of small local shareholders also rallied online to support Elliott’s activist strategy as a catalyst for better corporate governance at the chaebol.

To win over investors, Samsung dispatched executives on overseas trips and rank-and-file employees on door-to-door visits at home. Samsung won the backing of domestic institutional investors, including South Korea’s National Pension Service, which was the single largest shareholder at Samsung C&T, with an 11.9 percent stake.

“Elliott is disappointed that the takeover appears to have been approved against the wishes of so many independent shareholders and reserves all options at its disposal,” the hedge fund said in a statement.

Although it lost the vote, Elliott’s activism appeared to have some effect. Cheil and Samsung C&T have promised to bolster corporate governance by increasing dividends and creating a shareholder rights committee.

“We will listen to those who opposed the deal and pledge to better engage with our shareholders and be more open to their input and feedback,” Cheil and Samsung C&T said in a joint statement.

Tesla Motors is souping up its Model S electric sedans with an upgrade it calls “Ludicrous Mode.”

The supercharged option will enable lead-footed Tesla drivers to go from zero to 60 mph in 2.8 seconds — a blistering pace that’s faster than most high-performance models from the likes of Ferrari, Lamborghini and Porsche.

“It’s just like having your own roller coaster,” Tesla CEO Elon Musk said Friday, sidestepping any comparison to other automobiles. “You can’t hide that light under a bushel.”

In addition, Musk unveiled a $3,000 battery pack upgrade that will allow lower-end Tesla models to increase their driving range by about 5 percent, or 15 miles per charge.

Asked on a hastily convened conference call what kind of sales boost he expected from the hot-rodding and range enhancement, Musk sounded nonchalant.

“I have no idea,” he said. “We are just trying to make awesome cars.”

The Ludicrous option, which employs new circuitry to pour a staggering 1,500 amperes into the Model S’s electric motor, will cost $10,000.

Indeed, Musk said the pricey option is a high-margin upgrade aimed at well-heeled owners of Tesla’s higher-end models, which sell for upwards of $130,000.

As such, Musk said Ludicrous will help offset costs of another new product announced Friday: a cheaper version of the Model S that will cost $70,000, or $5,000 lower than the previous entry-level model.

Musk said a new version of the Tesla Roadster, which is due to launch in four years, will get an even faster mode, called “Maximum Plaid,” a reference from “Spaceballs,” the 1987 “Star Wars” spoof by Mel Brooks.

NCR shareholders might end up cashing out after all.

After a rocky start, suitors are preparing to make binding bids Monday for the world’s biggest ATM maker, The Post has learned.

NCR had pushed back the final bidding deadline from July 8 after potential buyers expressed frustration at not getting enough financial information to pull offers together.

But now the auction appears to be back on track, with Chicago-based buyout shop Thoma Bravo emerging as the new front-runner, sources said.

Shares of NCR, which had fallen 15 percent over the past month due to sale skepticism, closed up 7.39 percent to $31.66 on Friday after Reuters reported Thoma Bravo’s interest.

A deal for NCR, which is valued at more than $8 billion including debt, would be a bit of a stretch for Thoma Bravo’s $4.7 billion fund. It would need to put down at least $3 billion in a leveraged buyout. On top of that, PE firms generally can’t invest more than 20 percent of their fund in any one deal, which means Thoma Bravo likely needs sizable co-investors.

Two PE giants, Blackstone Group and Carlyle Group, that teamed up on a bid for NCR are still in the auction but their interest has waned, according to sources.

Ayatollah Khamenei vows no change in US and Israel relations

Iran’s supreme leader and ultimate decision maker Ayatollah Ali Khamenei vowed on Saturday that there would be no change in the country’s hostile relations with the US or its anti-Israel approach in regional policies, regardless of the fate of the breakthrough nuclear deal with world powers.

In a move clearly intended to appease hardliners — his main popular base who feel demoralised with the compromises Iran has made in the nuclear agreement — he highlighted Iran’s achievements such as retaining around 6,000 centrifuges.

Iran and major world powers — US, UK, France, Russia, China and Germany — made one of the most significant diplomatic breakthroughs of the post-cold war era last Tuesday reversing economic isolation for the Islamic republic in return for limits on its nuclear programme.

“Whether the agreement is approved [by the US Congress and Iran’s parliament] or not, we will not stop backing our friends in the region including the oppressed nations of Palestine, Yemen, Syria, Iraq, Bahrain and Lebanon who will continue to enjoy our support,” the Ayatollah said in a speech to mark the end of holy fasting month of Ramadan. “Our policies against the US will not change.”

He said that holding nuclear negotiations with the US had been justified by reasons of “expediency” but that there could be no similar talks on crises in the Middle East or mutual relations that have been severed for more than three decades.

Although Iran’s hardliners are largely quiet over the nuclear agreement, they are upset with compromises the Islamic regime has made during talks with the “Great Satan” — the US — which they consider the country’s arch enemy.

Ayatollah Khamenei assured his supporters that he had not bowed to US pressure.

“Five US presidents since the revolution have wished to see Iran submit to them but they either died with those dreams or are lost [in US politics],” he said. “You [President Barack Obama] will also fail to materialise this dream of making Iran bow.”

The Islamic regime believes the US has pursued an unspoken policy of regime change since the 1979 Islamic revolution and continues to do so by provoking domestic dissent.

“No exploitation of the [nuclear] agreement will be allowed,” Ayatollah Khamenei said, in comments which echo his concerns about Iran’s reformist opposition feeling emboldened to demand more political freedom after the deal.

The supreme leader is, however, a strong supporter of the nuclear accord and for the third time since Tuesday thanked centrist president Hassan Rouhani and the nuclear negotiating team led by foreign minister Mohammad Javad Zarif.

He has not commented on the details of the deal but keeps the route open for Iran’s retaliation if the US Congress blocks the agreement. He reiterated that the agreement should be thoroughly studied and go through legal channels.

The US Congress must vote on the deal within two months following a measure passed this year to give the legislature a greater say in the landmark agreement. Mr Obama has vowed to veto any effort by Congress to block the agreement. Opponents would need to ensure a two-thirds majority in both the House and the Senate to overcome the threat of a veto.

Should that happen, Iran’s legislative body — dominated by conservative forces — is expected to voice its opposition to Iran’s compromises and respond to what would be seen as sabotage by the Congress.

Iranian analysts think it unlikely that any political or military faction would be able to intervene to stop implementation of the agreement thanks to the strong support Ayatollah Khamenei has thrown behind the agreement which the country’s economy direly needs.

Under the deal, by early 2016 all the major economic sanctions against Iran would be lifted, breathing life into its financial system and energy market.

Sanctions relief will be triggered by Iran’s verified compliance with measures to wind back its nuclear programme and introduce close international monitoring.

“Thanks to God’s blessings, I can tell the nation that the Islamic Republic of Iran is strong and powerful and is getting stronger day by day,” Ayatollah Khamenei said.

“We do not welcome any war and will not embark on a war but in case there is a war the one who has to leave the scene with shame is the aggressive US.”

Obese shareholders of Syngenta making demands. The hedge fund investor John Paulson could become the catalyst.

The pressure increases, and Syngenta is silent. "No Comment", the answer of Syngenta officials on the question of its findings from the meeting with investors. Their feedback has been recently obtained. Meanwhile the criticism weighty Syngenta shareholders is getting louder. You can also directly contact the Syngenta leadership. So far, they made the fist in the pocket and voiced their displeasure primarily indirectly.

Last week, critical shareholders letter appealed to the Board of Directors of Syngenta. "Finanz und Wirtschaft" white directly from three letters - written by one of the five largest shareholders Syngenta among others. It urges these Syngenta, Monsanto's first take on a renewed offer consultation with the shareholders, before decisions are taken. Another fund manager has invited in writing to explain why the matter should remain strategically meaningful than a merger with Monsanto, Syngenta. Emphasizes a top ten investor to have expressed his displeasure in a direct conversation with Syngenta that leaked from Monsanto ball going left there.