Short squeezers could end up strangling themselves 27 Jan 2021 Heavily shorted European stocks like Pearson, Cineworld and Ambu surged on Wednesday morning. The craze of trying to force hedge funds and market makers to cover their bearish positions has spread beyond the U.S. It increases the risk of the squeezers ending up with a dud.
Brexit is a flawed gift for Scottish secessionists 27 Jan 2021 Britain’s departure from the EU may encourage remain-voting Scotland to quit the UK. Yet the main lesson from the divorce is that a big economic bloc can force its view on a smaller one. “Scoxit” makes more sense than in 2014, but the risks are harder to brush under the carpet.
Corona Capital: UK’s quarantine, U.S. prisons 27 Jan 2021 Concise views on the pandemic’s corporate and financial fallout: Britain’s new quarantine rules are weak, but will still hurt the travel industry; and for-profit prisons lose business to the U.S. government.
China’s BYD builds sleek concept car factory 27 Jan 2021 The $100 bln electric-vehicle maker’s chip unit is in the spotlight with an upcoming IPO. BYD also produces batteries, giving it an edge over rivals grappling with supply-chain woes. Such vertical integration only looks feasible with generous government support, however.
Hidden U.S.-China stakes become passive-aggressive 27 Jan 2021 Despite geopolitical tension, investors from the two countries own securities in each other worth some $3.3 trln, or double official sums, new research estimates. A shift from foreign direct investment to tradeable stocks and bonds portends a more volatile financial relationship.
Microsoft nears dot-com valuation in Gen-Z world 26 Jan 2021 The rise of rapidly growing cloud software has underpinned the firm’s advance to a $1.8 trln market cap. That implies a valuation that approaches a 20-year high. Yet it is downright quaint based on comparable companies like Amazon. Even so, warning bells are ringing.
Banker pay clawbacks would help Yellen make a mark 26 Jan 2021 The new Treasury chief could revive an unfinished 2016 rule on pay intended to discourage excessive risk-taking. Some banks use clawbacks already, but they differ widely. Ambitious watchdogs will spy a chance to please progressives, but a consistent approach makes sense anyway.
LVMH is doing just fine with or without Tiffany 26 Jan 2021 The pandemic wiped 16% off sales at Bernard Arnault’s conglomerate last year. Even so, its shares gained 21%, outperforming most rivals. Luxury bets from handbags to hotels will help it recover. That should keep investors sweet while LVMH gets to work on the U.S. jeweler.
Orcel gets second chance with UniCredit top job 26 Jan 2021 The Italian lender is set to pick the former UBS banker as its new chief executive. It gives Orcel an opportunity for redemption after a pay row cost him the chance to be Santander CEO. The former dealmaker’s first task will be to resist a rescue of state-owned Monte dei Paschi.
Leon Black report shoves Apollo in right direction 26 Jan 2021 The private equity firm unveiled shareholder-friendly changes following an investigation into its co-founder’s ties with Jeffrey Epstein. Plans to eliminate supervoting rights and separate Black’s CEO and chairman roles boosted shares. His full retirement would be better still.
Clean-shaven GE finally heaves into view 26 Jan 2021 Larry Culp is targeting the kind of cash flow the U.S. group was making two years ago, only with fewer workers and $30 bln less debt. Success depends on the still-grounded aviation division. But the chief executive’s revamped bonus plan means he’s well motivated to hit his goal.
Larry Fink flexes what green muscles he has 26 Jan 2021 The BlackRock boss will require companies to show how they will eliminate carbon emissions by 2050. The $9 trillion asset management giant’s largely passive funds cannot dump climate laggards. But Fink’s latest letter makes clear his active managers will show more strength.
The Exchange: Too much stimulus stores up big risk 26 Jan 2021 That’s the view of Oliver Baete, CEO of Allianz. Markets are pricing in vaccination perfection, as they’ve grown dependent on central bank and government largesse, he tells Rob Cox. But for the $97 billion German insurer, there’s still opportunity to be had in the year ahead.
Corona Capital: Music deals 26 Jan 2021 Concise views on the pandemic’s corporate and financial fallout: Warner Music may take a stake in the music business owned by Saudi Arabian Prince Alwaleed bin Talal.
EU strikes oafish first blow in new vaccine fight 26 Jan 2021 Brussels attacked drugmaker AstraZeneca for low deliveries of Covid-19 jabs and will impose checks on exports from the bloc. The move masks flaws in Europe’s inoculation rollout, and may do little to speed it up. It could trigger a new battle for access to coronavirus treatments.
Naturgy offers cut-price route to green transition 26 Jan 2021 IFM is spending 5 bln euros on 23% of the Spanish utility. Naturgy’s depressed shares and the Australian fund’s use of debt will juice its returns. Moreover, it’s a cheaper way of surfing the renewable energy wave than boarding rivals like Iberdrola.
UBS strength risks stifling new CEO’s reform zeal 26 Jan 2021 Ralph Hamers inherits a bank with a respectable valuation, tons of capital and healthy returns. Such performance could make him less likely to effect major changes at the $54 bln lender. That could be a problem given long-term weaknesses like slow growth and high costs.
EQT puts runaway share price to good use 26 Jan 2021 The $28 bln Swedish private equity firm linked to the Wallenbergs is issuing $800 mln of equity to the founders of Exeter, an American property investor. The deal expands its U.S. presence and helps diversify away from lumpy buyouts. While risky and expensive, it may just work.
Tencent rally rests on froth and fundamentals 26 Jan 2021 A 30% share surge this year puts the Chinese web giant within reach of a $1 trln market capitalisation. Global stock euphoria is a factor, but Tencent’s video-games dominance has increased. Unlike rivals Ant and Alibaba, it has evaded the worst of regulatory crackdowns so far.
Chinese vaping IPO leaves risk factors up in smoke 26 Jan 2021 Rlx shares surged in their debut, delivering a $46 bln valuation that tops Japan Tobacco’s. Revenue is growing fast, despite an earlier ban of domestic online sales. A wider backlash also singed Altria’s bet on Juul. Overlooking regulators can be hazardous to investors’ health.
GameStop turns short-bashing debate on its head 25 Jan 2021 An army of option-toting armchair investors turned the U.S. video-game retailer from uber-short to overbought, its shares quadrupling in a week. Regulators and executives often blast short-sellers for profiting from corporate misery. The opposite phenomenon is just as unhealthy.
Buyout shops make SPACs pass-the-parcel besties 25 Jan 2021 Blackstone is selling benefits service provider Alight to a blank-check firm for $5.4 bln, a second such transaction in two months. The market for private equity firms offloading companies to SPACs increased sixfold in 2020. In frothy conditions, deals won't always be sensible.
Tishman unlocks key to sweet SPAC deal with Latch 25 Jan 2021 The real estate giant is taking the smart-lock maker public through its blank-check company, whose shares leapt some 70%. Latch gets a strategic partner and fresh capital to meet pandemic-spurred demand for modernizing buildings. Investors reap the benefits. It’s a textbook SPAC.
Hedge fund backers must pick winners twice over 25 Jan 2021 Equity-heavy hedge funds did well in 2020. Industry-wide, though, the top 20 managers made half the $127 bln of gains in the 8,000-strong industry. Stock pickers may thrive again this year, but there is no guarantee. Investors’ double bet is choosing both the game and the player.
Activists kick open lab doors at pharma laggards 25 Jan 2021 AstraZeneca’s $39 bln takeover of Alexion highlights the growing influence of pushy shareholders such as Elliott in healthcare. Drugmakers are tricky targets, but waste and inefficient markets create opportunities. Medical technology groups, like Fresenius, could be next.
Corona Capital: Food delivery, Video games 25 Jan 2021 Concise views on the pandemic’s corporate and financial fallout: Hedge fund Tiger Global gets a taste for food-delivery investments; and Jagex, developer of fantasy game “RuneScape,” is flipped to Carlyle less than a year after its last sale.
Chip deal price bump shifts spotlight to Berlin 25 Jan 2021 Taiwan’s GlobalWafers raised its offer for Siltronic to $5.3 bln and cut the acceptance threshold to 50%. It’s probably enough to get the bid over the line. The next question is whether Germany will give up control of a semiconductor supplier. Investors may be too sanguine.
Higher yields are small comfort for Europe’s banks 25 Jan 2021 Shares in BNP, Santander and others have recovered as government bonds yields rebounded in recent months. Higher long-term rates would boost bank earnings, but only partly undo the damage of Covid-19. The onus remains on cost cuts, M&A and fee-based income to offset low returns.
ByteDance casts shadow over rival Kuaishou’s IPO 25 Jan 2021 The Chinese video app is eyeing a valuation of up to $62 bln, over 30 times forecast EBITDA. Top sovereign funds have backed the premium multiple, about three times that of smaller peers. But a costly battle with TikTok-owner ByteDance looms large over its future prospects.
Reliance’s shop window distorts India view 25 Jan 2021 The $185 bln conglomerate led by Mukesh Ambani grew quarter-over-quarter net profit by 40%, partly reflecting the country’s rebound. The bottom line also was flattered, however, by lower interest costs after selling stakes in its digital business. That masks gaps in the recovery.