Cantor Morning News®
Today's Stories From Cantor Fitzgerald
Dogukan Aksoy (212) 610-2348
Nick Cernero (212) 610-3629
Monday, April 14th , 2014
o US STOCK FUTURES: S&P -.11%, Nasdaq -.18%, DJ -.08%
o U.S. stock-index futures fell, following the Standard & Poor’s 500 Index’s worst week since 2012, as investors awaited earnings and retail-sales data, while violence escalated in Ukraine.-BBG
o FX: The euro weakened versus the dollar and the yen after European Central Bank President Mario Draghi said a further appreciation in the currency would trigger more monetary stimulus.
o GOLD: Gold will resume a decline as U.S. economic growth accelerates, according to Goldman Sachs Group Inc., which reiterated a forecast for the metal to end the year at $1,050 an ounce.
o CRUDE: Brent crude advanced for the first time in three days and West Texas Intermediate extended gains as tension escalated between Ukraine and Russia, fanning concern that energy supplies in Europe may be disrupted.
o TREASURIES: Treasury yields were near a six- week low as U.S. stock losses bolstered speculation the Federal Reserve will hold interest rates down and with unrest in Ukraine spurring demand for safety.-BBG
o European Markets:FTSE 100 (0.53%), DAX (0.53%), CAC40 (0.47%)
o European indices are trading lower. On the geo-political front, Kiev has given Russian separatists until 9:00GMT to disarm and end their occupation otherwise it will carry out an anti-terrorist operation, whilst Russia's ambassador has asked the Ukraine government to start a "genuine dialogue" during an extraordinary UN Security Council session in NY.-SA
o Asian Markets:Nikkei (0.36%), Hang Seng +0.15%, Shanghai Composite +0.05%
o Asian markets ended mixed on Monday. Volatility was subdued as equities lacked broad directional drivers. Newsflow focused on overseas events, including a spike in tensions surrounding Ukraine over the weekend, US earnings, and the potential for ECB stimulus. News flow out of Asia was relatively light.-SA
BIG STORIES TODAY
o S&P 500 Posts Worst Week Since 2012 as Hedge-Fund Favorites Sink: The Standard & Poor’s 500 Index and Nasdaq Composite Index capped their worst week since 2012, with stocks most beloved by hedge funds plunging amid concern valuations have climbed too high as earnings season starts.-BBG
o Ukraine President threatens military operation as unrest grows: Ukraine's president on Monday threatened military action after pro-Russian separatists occupying government buildings in the east ignored an ultimatum to leave and another group of rebels attacked a police headquarters in the troubled region.-Reuters
o Draghi Euro Warning Looms as ECB Debates Policy Measures: “The strengthening of the exchange rate requires further monetary stimulus,” European Central Bank President Draghi told reporters in Washington on April 12. “That’s an important dimension for our price stability.”-BBG
o EU to agree bank rules before May election slows legislative machine: The European Union will sign off on a slew of major reforms this week to allow failing banks to be wound down without public money, clearing its desk before elections in May that may lead to a slower pace of legislation.-Reuters
o CME Gave High-Frequency Traders Peek at Market, Lawsuit Claims: CME Group Inc., owner of the world’s largest futures market, was sued by three of its users who alleged the company sold access to order information to high-frequency traders ahead of other market participants.-BBG
o C Citigroup reports 1Q at ~8am Monday; analysts see NIM compression and higher fee income q/q, drop in trading/investment banking rev. y/y; elevated, one-time expenses.-BBG
o Citigroup Said to Cut Up to 300 Jobs in Global Markets Division: Citigroup Inc., the third-largest U.S. bank, cut 200 to 300 jobs in its division handling stock and bond trades to shrink costs amid a slump, according to a person familiar with the matter.-BBG
o High-Frequency Traders Get Curbs as EU Reins In Flash Boys: European Union lawmakers are poised to approve some of the toughest restrictions in the world on high-frequency trading, the first crackdown in the aftermath of Michael Lewis’s latest book, “Flash Boys.”-BBG
o Minmetals Group Buys Glencore’s Peru Mine for $5.85 Billion: China Minmetals Corp., the state-owned metals trader, led a group that agreed to pay $5.85 billion for Glencore Xstrata Plc’s Las Bambas copper project in Peru as China seeks greater control over material supplies.-BBG
o AMZN Amazon.com to introduce smartphone in June: Amazon.com Inc. is preparing to release a smartphone in the second half of this year, according to people briefed on the company's plans, part of a broad push into hardware that would pit it against Apple Inc. and Samsung Electronics Co.-WSJ
o Japan Risks Public Souring on Abenomics as Prices Surge: Prime Minister Shinzo Abe’s bid to vault Japan out of 15 years of deflation risks losing public support by spurring too much inflation too quickly as companies add extra price increases to this month’s sales-tax bump.-BBG
o Peugeot pledges return to profit, tight cash control: PSA Peugeot Citroen's new boss Carlos Tavares vowed to halt losses and restore profitability at its core manufacturing division in 2018, as he set out a long-awaited recovery plan for the struggling French carmaker.-Reuters
o UBS Chairman Weber Sees Leverage-Ratio Rules Tightening Further: Swiss and international regulators probably will ask banks to hold more capital in relation to total assets after the U.S. raised leverage-ratio requirements for the biggest lenders, UBS AG Chairman Axel Weber said.-BBG
o GS Goldman Sachs Countersues Client Over Commodities Stocks Rout: Goldman Sachs Group Inc. and Lynne Ng Su Ling, an independent director at LionGold Corp., traded lawsuits in London over payment demands after shares owned by Ng and held by the bank as debt collateral plunged in an October stock rout.-BBG
o Apollo’s Momentive Files for Bankruptcy With Exit Financing: Momentive Performance Materials Inc., a maker of coatings and resins found in shampoos and auto parts, filed for bankruptcy after struggling to make payments on debt dating to its 2006 buyout by Leon Black’s Apollo Global Management LLC.-BBG
o Renewables, Nuclear Should Triple to Save Climate, UN Panel Says: The world needs to triple the energy it gets from renewables, nuclear reactors and power plants that use emissions-capture technology to avoid dangerous levels of global warming, United Nations scientists said.-BBG
o Tech insiders dumped shares ahead of slide: Insiders at some of the hottest private and publicly traded internet companies unloaded substantial personal stakes ahead of the slump in tech stocks that started at the beginning of March.-FT
o The stock market's health is still good: Even with the selloff in the highfliers, most look richly priced because of modest earnings or outright losses.
o Stocks mentioned positively: JPMorgan (JPM), Morgan Stanley (MS), Cisco (CSCO), Apple (AAPL), Google (GOOGL), Microsoft (MSFT), Intel (INTC), Amgen (AMGN), Gilead Sciences (GILD), Celgene (CELG)
o Stocks mentioned cautiously: Facebook (FB), Twitter (TWTR), LinkedIn (LNKD), Zillow (Z), Salesforce (CRM), Netsuite (N)
o LE Lands’ End: The shares trade for 16 times the reduced level, above the specialty-retail industry's average of 14.6. Shares fell 17% last week, and could continue lower due to stagnant revenue, new expenses associated with being a stand-alone firm, and the company's enduring connection to beleaguered Sears. It also has significant debt, having borrowed $500M before its spin-off to pay a dividend to its parent.
o POST Post Holdings: Post shares have pulled back 15% in the past month after the St. Louis-based company sold $275 million of equity at $55 a share, and lowered its guidance for 2014 earnings before interest, taxes, depreciation, and amortization, reflecting softer cereal sales and higher costs. But more deals in the next year could push the share price higher. The market opportunity for Post is large. Active-nutrition and private-label foods are highly fragmented markets.
o CZR Ceasars Entertainment: Caesars Entertainment shares, at $19, are down 25% in the past month amid several concerns, including the bondholder move to void the asset sales and the possibility that a debt restructuring could significantly dilute Caesars equity holders. Another, more remote possibility is that the entire value of the company could be attached by Caesars' creditors. Given the risks, Caesars' shares look overvalued.
o LOCK Lifelock: At Friday's close of $15.06, the stock is up about 85% since 2012, far outperforming the market's 27% rise over the same period. LifeLock's (LOCK) market value is $1.4 billion. Shares have dipped from an all-time high of almost $23 in mid-February, but are still richly valued.
o DLLR DFC Global: It has stricter regulations on payday lending in several countries and fears that a higher bid for the company might not emerge.
o GREECE The successful bond offering is a moral victory for the Greek government, which has advanced unpopular austerity measures and structural reforms in accordance with a multilateral €240 billion aid package to shore up Greece's busted economy
o Piraeus Bank which is forecast to post a loss this year but return to profitability in 2015. The Greek banking sector has shrunk from a dozen players to just four that share more than 90% of the market.
o Hellenic Telecommunications Organization
o Coca Cola HBC looks attractive at about 18 times forecast 2015 earnings of 82 pence per share. It earned 67 pence last year and is projected to earn 72 pence in 2014. The stock closed Friday at £14.92, down about 15% since the start of the year, giving it a market value of 5.44 billion pounds.
o LafargeHolcim: Lafarge and cement and aggregates producer Holcim announced a merger of equals to create an industry leader, in a deal that highlights the upside in operational leverage from a pickup in demand. LafargeHolcim, which will be listed in Paris and Zurich, could generate synergies of €1.4 billion.
o AMZN Amazon: Amazon, writing, "Over the prior two weeks there was a rotation into IT hardware and [hard-disk drive] stocks. However, we believe that the relative underperformance of the Internet sector is about to end.
o PANW Palo Alto Network which serves up security gear for enterprises and service providers. "It is arguably the leading next-generation security-software company, with a portfolio of products to address the threats that have chief information officers, chief security officers, and boards of directors scared stiff," Ursillo says.
o Activist Filings
o DRI Darden Restaurants: Starboard Value, in an investor presentation, outlined its concerns about the proposed separation of Red Lobster from Darden Restaurants and called for a special meeting "to provide shareholders with a forum to express their views and influence the future of Red Lobster before it is too late." Starboard said that the plan to spin off Red Lobster is "the wrong spinoff, at the wrong time, for the wrong reasons," citing operational, valuation, and real estate concerns.
o APP American Apparel: FiveT Capital Holding disclosed that it owns 22 million shares (11.5%) after it purchased 28 million on March 26 and April 4 at 50 cents per share and sold six million from March 26 to March 31 at 50 cents and 51 cents apiece. FiveT did not disclose any plans or proposals.
o VSAR Versartis: New Leaf Ventures disclosed that it owns 3,371,930 shares (14.5%) after it purchased 60,000 in Versartis' March 27 initial public offering at $21 per share. New Leaf did not reveal plans or proposals.
o Increases in Holdings
o BSET Bassett Furniture Industries: Gamco Investors (ticker: GBL) increased its holdings to 891,812 shares (8.2%) after it bought 118,967 from March 12 to April 2 at prices in a range of $14.59 to $16.00 per share.
o JRN Journal Communications: Gamco increased its holdings to 8,220,992 shares (18.4%) by buying 331,793 from Feb. 10 to April 7 at prices ranging from $8.34 to $9.57. Gamco also sold 11,000 shares from Feb. 10 to March 31 at prices from $8.66 to $9.11 apiece.
o REGN Regeneron Pharmaceuticals: Sanofi (SNY) increased its holdings to 20,018,090 shares (20.5%) after it purchased 613,890 on March 27 and March 28 for $299.72 to $316.49 apiece. At Sanofi's request, Regeneron named Robert A. Ingram to its board of directors as an independent designee.
o Decreases in Holdings
o XLRN Acceleron Pharma: Polaris Venture Partners said it signed an April 2 agreement with Celgene (CELG). Based on the agreement, it will sell 313,491 shares to Celgene at $42.86 each.
o DRTX Durata Therapeutics: Sofinnova Venture Partners decreased its holdings to 1,777,856 shares (6.7%) after it sold 493,474 from March 21 to March 31 at prices from $13.61 to $15.14 each.
o RGDX Response Genetics: Becker Drapkin cut its stake to 1,530,926 shares (4%) by selling 673,643 from April 3 to April 4 for $1.46 to $1.48 per share.
TOP STOCK AND SECTOR MOVING STORIES
o Aviva to sell its 47% stake in Woori Aviva Life Insurace to NongHyup Financial Group; terms undisclosed
o TIAA-CREF to buy Nuveen Investments for $6.25B - Dow Jones
o TBOW Trunkbow announces stockholders' approval of merger agreement
o ENOC EnerNOC acquiring EnTech; terms not disclosed
o NBS NeoStem announces definitive agreement to acquire California Stem Cell, Inc
o Brooks MacDonald Group to acquire DPZ Capital Ltd for ~£13M in cash and shares
o NPBC National Penn Bancshares participates in bidding process to acquire First Mariner Bank
o JOY Joy Global to acquire certain assets of Mining Technologies International for C$51M
o VNO Vornado Realty Trust to spin off Shopping Center unit-- Bloomberg
o CRDC Cardica files amended S-1; to offer 28M common shares and 185K share of convertible preferred through Wedbush
o JMEI Jumei International files $400M IPO through Goldman, Credit Suisse and JPMorgan
o PE Parsley Energy files $400M IPO through Credit Suisse, Goldman Sachs, JPMorgan and Wells Fargo
o ROIAK Radio One Cl D files $100M Class D common stock shelf
o DQ Daqo New Energy files $150M mixed shelf
o CGG launches €360M notes offering; proceeds to be used to buy back €360M of OCEANE convertible bonds dur 2016
o CVM CEL-SCI files secondary consisting of shares and warrants of indeterminate amount through Dawson James and Laidlaw
o AUDC Audiocodes initiated buy at Needham
o PCTY Paylocity initiated neutral at Bank of America Merrill Lynch
o ST Sensata Technologies upgraded to buy from neutral at Citi
o FLDM Fluidigm upgraded to outperform from market perform at Leerink Partners
o QTWO Q2 Holdings initiated buy at Canaccord Genuity
o TBOW Trunkbow announces stockholders' approval of merger agreement
o LNKD LinkedIn initiated overweight at Atlantic Equities
o TIAA-CREF to buy Nuveen Investments for $6.25B - Dow Jones
o ADXS Advaxis receives notice of allowance for two patent applications from Japan patent office
o ACOR Acorda Therapeutics upgraded to outperform from market perform at FBR Capital
o MDWD MediWound Ltd. initiated outperform at BMO Capital
o NBS NeoStem announces definitive agreement to acquire California Stem Cell, Inc.
o ALIM Alimera Sciences announces new PDUFA date for ILUVIEN
o ONCY Oncolytics Biotech notes collaborators' presentation of preclinical research on liver cancer
o CTIX Cellceutix notes results of preclinical study evaluating its novel antibiotic compounds against Klebsiella Pneumoniae
o DVA DaVita Clinical Research presents research results at ANNA symposium
o LXRX LX4211 reports results of Phase 2 trial of LX4211 in Type 1 diabetes; achieves primary endpoint
o GDP Goodrich Petroleum announces Tuscaloosa Marine Shale ("TMS") well result and operational update
o YGE Yingli, United PV sign framework agreement for acquisition of 300 MW solar PV plants
o OPTT Ocean Power Technologies initiated buy at H.C. Wainwright
o NBR Nabors Industries to separate chairman and CEO roles; other corporate governance changes
o ENOC EnerNOC acquiring EnTech; terms not disclosed
o SRE Sempra Energy initiated buy at UBS
o Royal Bafokeng Platinum announces rights offer results: 99.7% of the rights offer shares were subscribed for
o Saes Getters denies share capital operation currently in progress
o Glencore Xstrata (GLEN.LN) agrees to acquire Caracal Energy for 550p per share in cash
o Peugeot Citroen chairman presents 2014-2018 plan; targets 2% margin in Automotive Division by 2018
o Symrise confirms in exclusive talks to acquire Diana Group; deal expected to close in Q3 of 2014 - slides
o MIC Macquarie Infrastructure discloses no performance fee payable for Q1 of 2014
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