Lloyds CEO leaves everything but a good valuation 28 Apr 2021 António Horta-Osório is departing after a decade at the UK lender. He cut costs and expanded fee-based units to offset low rates. Yet the shares trade at 80% of tangible book value, the same as rivals. Changing that requires big ideas, and maybe M&A, from successor Charlie Nunn.
Capital Calls: Jerome Powell, Shopify 28 Apr 2021 Concise views on global finance: The clock is ticking on the Fed boss’s taper timeline; the e-commerce firm grew even as it warns of a post-pandemic lull.
Australia’s border strength morphs into weakness 28 Apr 2021 Strictly banning outsiders has been a big factor in stopping the spread of Covid-19. Fiscal stimulus and low rates have helped compensate, but can’t replace the annual 1% growth delivered by immigrants. Absent bold policy changes, the age of economic miracles may be past.
Chinese medical-cosmetics firm gets high on acid 28 Apr 2021 Imeik has built a near-monopoly on products for smooth neck skin. Nicknamed "Moutai for women", after the liquor brand, the $19 bln maker of hyaluronic acid-based fillers has similar high margins and few rivals. Shares are up 400% since listing. This model could age beautifully.
Microsoft edge is not being one of its big rivals 27 Apr 2021 Regulatory scrutiny is holding back consumer-focused competitors Apple, Amazon and Alphabet. Microsoft is freer to do deals and promote software like Teams. Quarterly results show the benefits. Even so, a $2 trillion market cap makes it hard to keep out of the spotlight.
Alphabet optimizes search for diversified revenue 27 Apr 2021 Google’s $1.6 trln parent is firing on all cylinders. Search ad sales surged 30% in the first quarter; YouTube and its cloud unit grew even faster. With search rebounding but slightly less significant to total revenue, the company is building defenses beyond its core business.
Running Wells Fargo just got even more thankless 27 Apr 2021 Just 57% of shareholders approved CEO Charlie Scharf’s pay at the U.S. bank’s annual meeting, a level so low that it’s tantamount to failure. While Wells Fargo could have been more parsimonious, Scharf is also a victim of a culture that tends to reward success more than risk.
Fed’s Jay Powell picks the road less travelled 27 Apr 2021 The American and Canadian economies are both rebounding. Yet the U.S. central bank boss isn’t about to copy Canada’s bond purchase taper. It’s the difference between traditional and new-school monetary policy, which waits to see sustained inflation rather than anticipating it.
Self-help is still the best support GE can expect 27 Apr 2021 The $119 bln industrial group is hacking away at inefficiencies and lumps to create something more predictable and cash generative. What’s missing are customers, especially for jet engines. The recovering share price banks on CEO Larry Culp being as good at offense as defense.
Tech lions circle fattened-up U.S. consumer 27 Apr 2021 Google and Facebook stand to rake in ad revenue as consumer-facing businesses jostle for Americans’ pent-up savings. Amazon should benefit as a retailer and a rising power in advertising. The result could be Silicon Valley predators gobbling up an ever-bigger share of the market.
The Exchange: Becoming “Richer, Wiser, Happier” 27 Apr 2021 That’s the title of a new book looking at how some of global finance’s top investors, such as Howard Marks, Matthew McLennan, Charlie Munger and Mohnish Pabrai, crushed it. The author, William Green, tells Rob Cox what he learned from writing about these “practical philosophers.”
Capital Calls: Hella/Hueck, Evolution Gaming, 3M 27 Apr 2021 Concise views on global finance: A big block trade is good news for investors of German car parts maker Hella if it presages industry consolidation; Swedish gaming group enjoys a double whammy from locked-down punters and states jonesing for casino cash; 3M could use a pruning.
UBS’s benchmark is across Atlantic not across town 27 Apr 2021 Ralph Hamers’ bank is more profitable and valuable than rival Credit Suisse. His strategy for the $55 bln group is heavy on verbiage and light on specifics, though. Investors might prefer him to take a second look at the cost base, which looks bloated compared with U.S. peers.
HSBC’s sparrow hardly makes it spring 27 Apr 2021 The UK bank hit a medium-term 10% return target after a big jump in quarterly profit. It was flattered, however, by the release of $400 mln set aside for bad loans. Growth in Asia also was sluggish. The steep discount to book value suggests there’s a lot of convincing yet to do.
Danish shipping raid heralds consolidation wave 27 Apr 2021 DSV Panalpina is loading Kuwait’s Agility into its hold in return for $4.1 bln in new shares. With its flotilla of medium-sized players, the global freight sector is ripe for M&A. Disruption from the pandemic and recent Suez blockage present a window for bigger players to pounce.
Nomura’s Archegos response buys a little time 27 Apr 2021 The Japanese bank’s full-year net profit halved following the $2.3 bln hit from the U.S. fund’s blowup last month. The lender may win some points for otherwise strong results, but more losses are still in the pipeline. Rebuilding its investment bank’s standing will take a while.
Ant’s shadow obscures glowing Lufax results 27 Apr 2021 The Chinese fintech firm quietly raised $2 bln in New York the week before its rival’s $35 bln IPO imploded last year. On Monday it reported first quarter earnings up 19% and doubled some forecasts. Share performance remains unfairly darkened by Ant’s regulatory woes.
Tesla finally justifies its year-ago valuation 27 Apr 2021 Elon Musk’s carmaker posted record quarterly earnings despite selling few high-margin models. It’s boosting production and investment, growing revenue faster than costs, and has pots of cash. That supports last April’s $140 bln of market worth, not the near fivefold jump since.
Darktrace’s cut-price IPO still looks risky 26 Apr 2021 The cyber firm’s $2.6 bln float values it at around 10 times 2020 revenue, well below listed CrowdStrike and Zscaler. But the loss-making business is vulnerable to rivals. Close links with investor Mike Lynch, who’s facing U.S. fraud charges, could also leave investors exposed.
Time is biggest foe of Draghi’s big plan for Italy 26 Apr 2021 Prime Minister Mario Draghi pledged reforms, like faster legal trials, to obtain some 200 bln euros of EU funds. This complements a big budget deficit he’s running up during the Covid-19 crisis. A short tenure means he must act fast as his successors may be less keen on change.
Eleven-digit cyber LBO looks sober in crazy world 26 Apr 2021 Thoma Bravo is paying $12 bln for Proofpoint, a 34% premium. It’s the largest U.S. buyout this year, and the biggest software LBO on record. The target boasts low debt and strong growth, and the multiple isn’t crazy. Even in toppy markets, good deals still exist.
Capital Calls: Betway, U.S. banks, Vaccine feud 26 Apr 2021 Concise views on global finance: Another online betting group goes public by merging with a special-purpose acquisition company; some financial firms are racing to capture nearly-free funding from American depositors; Europe faces a long and costly fight for AstraZeneca vaccines.
EQT spins Micro Focus misfortune into gold 26 Apr 2021 The Swedish buyout firm may float software group SUSE for up to $10 bln, having paid its struggling UK owner $2.5 bln in 2018. It’s a classic corporate carveout on steroids. One lesson is that CEOs should put more effort into retaining possible upside when selling their castoffs.
Blackstone gamely reboots Indian IT deal 26 Apr 2021 The investor is selling control of Mphasis within its own funds. Sovereign money will join, validating a $2.8 bln commitment that includes a public offer. With U.S. cloud migration gaining pace even as the virus spikes in the company’s home, it may be a crafty self-passed parcel.
Lagardere breakup can trade power for premium 26 Apr 2021 The Paris Match owner may unwind a legal structure which lets eponymous boss Arnaud keep control. Selling its publishing arm or travel retail stores could add more than 50% to the group’s 3 bln euro value. Investors like Bernard Arnault and Vincent Bolloré are ready-made buyers.
Beleaguered Aussie duo careen into dizzying spin 26 Apr 2021 Carving out businesses is meant to unearth buried value for shareholders. Wealth manager AMP and energy giant AGL, though, are doing so as a last resort of sorts after other strategies failed, and with CEO upheaval to boot. Starting from such a weak position does not bode well.
China puts $200bln twist on Groupon for the masses 26 Apr 2021 Giants like Meituan are putting a creative spin on group buying, designating part-time neighbourhood representatives to distribute deals to their communities. Shoppers get cheap groceries, online outfits cut costs and the reps make money. Alas, price wars risk ruining the model.
Shock at Biden capital-gains tax plan looks staged 23 Apr 2021 A plan to double the rate for the richest to nearly 40% has brought criticism from wealthy investors. But it has been in plain sight for months. It would also raise needed revenue for Washington and bring taxes on investment and regular pay closer with little risk to the economy.
Oil service firms are digging out of big hole 23 Apr 2021 Schlumberger joined Halliburton and Baker Hughes in predicting a slow recovery for the industry. Yet fossil fuels’ dimming prospects mean the picks and shovels may be worse off. Revenue probably peaked in 2014. Carbon capture and geothermal don’t make up the growing gap.
Latest Hertz saviors put hope over history 23 Apr 2021 The rental-car firm may exit bankruptcy covering some $6 bln in debt and, unusually, with something left for equity holders. An industry shortage of cars has helped valuations. Even so, new private equity owners would have to reinvent Hertz, yet again, to make the plan add up.