German Allianz SE gained at last from its US Pimco bond fund management arm. We bought to gain from AZSEY's recovery after bond king Bill Gross in 2014 walked away from the California sub. Pimco garnered net new assets under management for the third quarter in a row. Now Pimco is luring in money because of its good performance and has become the largest bond fund and the largest active fund in the US, according to Morningstar. It got euros 21 bn of new outside money in Q1 (about $23 bn), and another 21 bn from its own subs.

About 92% of the AUM at Pimco beat the benchmarks over the past 3 years. As I keep insisting you cannot use an index-tracking ETF in managing a bond fund, whatever the edge this gives to stock fund overheads.

AZSEY operating profit rose 9.4% to euros 2.9 bn and CFO Dieter Wemmel told the conference call that the full year operating profit target of euros 10.8 bn stands. The stock fell 0.375 in Frankfurt trading but has gained ~10% YTD.

Harry Geisel reports on Finnish Sampo insurance which reported its Q1 earnings yesterday. EPS rose modestly to 68 euro cents from 65 last year, while marking to market (revaluing marketable assets y/y) rose from 36 euro cents in 2016 to 99 euro cents this year. SAXPY also gained from a lower combined ratio of 87.4% from 89.8%, which is the combo of expenses and underwriting losses divided by premium revenue. While other insurers had poor combined ratios in the last quarter (including Berkshire Hathaway) because of bad weather and tornadoes, Sampo avoided this business by being smart or lucky. It also benefited from its largest investment in Swedish Nordea Bank, which has risen in the stock market because it may move to another jurisdiction as Stockholm tries to force it to boost its reserves.

All told, Sampo performed well in the current crummy P&C business.

Latinas

Ecopetrol of Colombia net Q1 income rose 144% y/y to COP 886 bn. Its cash flow (earnings before interest, taxes, depreciation and amortization) hit COP 5.8 bn, a 2 year high and its EBITDA margin topped 43.5%. This oil company also found a new large offshore gas deposit in Colombian Caribbean waters. The numbers were solid. Its sales rose 28% to 13.371 trillion pesos ($2.886 bn) on which operating profit rose 106% to COP 3,299 trillion ($1.7 bn). Consolidated net (including the government share) hit COP 1.073 trillion or $462 mn). It also has cash on hand of COP 17.5 trillion. These outstanding results benefited from improved public order after the deal with the FARC guerillas and the opening of new refining capacity.

EC continues to control costs and its structural savings hit COP 150 bn in the quarter on the way to its full year target of COP 740 bn. Its stock is up 5.7% on the Big Board.

Cosan Ltd reported a 1.6% decline in sales in Q1 vs prior year to 12,743 bn reals. But the impact was very negative on operating earnings which fell 19.7% to Rs 1.6426 bn and even more on net profit, which fell 83.8% to 21.1 mn. The main reason for the drop was lower production of sugar-cane and ethanol which cost-cutting failed to offset. Both demand and supply of cane fell.

However CZZ expects that a pickup in the Brazilian economy will boost growth (as presented in its guidance for later quarters.) It logistics arm (Rumo3) did very well with Rs 493 mn of sales, and an 11% rise in cashflow. As a cash-rich company in the Brazilian emerging market its logistics arm is being called upon to transport not just sugar cane, but also corn and other crops. Its CZZ cash flow was also boosted by its Comgaz network to distribute natural gas; its half-owned chain of gas stations, Raizen Combustiveis and its wholly owned Moove lube line; and Raizen Energia which is now gaining from a late-season sugar-cane harvest or Zafra. This well-managed company controlled by an offshore trust has a finger in every pie in Brazil and its diversification makes it a long-term buy despite this poor quarter. CZZ gained 0.62% in US trading.

Zacks slashed its rating for Copa Holdings, the Panama airline to hold from buy and the CPA stock crashed 4.4%. It reported lower passenger seat miles and hugely diminished cargo mail for Q1, down 38.5%, and also surprisingly high non-fuel costs. Eva Dimensions put a sell rating on CPA and only Ford Equity Research still rates it a buy. However, it actually beat consensus earnings forecasts today at $2.43/sh vs $2.33, and has beat every quarter since we bought CPA. The main negative is that its forward p/e ratio is a whopping 15.6x vs the airline average of 11.4x. My advice is to sell because the reason we bought CPA is its potential in Cuba which has not panned out yet, and may never do so. SELL.

Teva beat the consensus average on profits in Q1, cut its debt load by $1.2 bn, and named a new CFO, but failed to match revenue estimates. The market was confused about what this meant and the Israel stock has been both up and down from yesterday's closed. Earnings came in at $580 mn or 57¢/sh, vs 62¢ a year earlier. This was adjusted to $1.03/sh, 3¢ ahead of the middle-range forecast. But sales were below consensus at $5.6 bn, not so much because of lower revenues from its ex-patent Copaxone block-buster drug as from lagging generics business despite the acquisition of Activis.

Teva named Michael McClellan to serve as interim CFO replacing Eyal Desheh. McClellan had been CFO of TEVA's global specialty medicine division, and before that was with Sanofi. 

Teva interim CEO, Dr Isaac Peterburg, indicated that Teva is considering sale of its women's health and European oncology and pain divisions to further cut its debt.

Royal Bank of Scotland defended its generous executive pay plan against an investor rebellion led by ISS and a UK Pension research body, including the Norwegian sovereign wealth fund. RBS, whose non-cumulative US$ preferreds we own, along with those of its sub NatWest, is also targeted because it is spending too much defending its former management over the £12 bn rights issue of 2008 which failed to save the bank. RBS is now pricing two $1.5 bn notes due in 2023, one fixed and one floating. Unlike our prefs, these are for institutional markets. The RBS common share was downrated to hold from overweight last week by Eva Dimensions. Just hold those preferreds.

Bank of Nova Scotia was named Latin American Bank of the Year by Retail Banker International; last year BNS was recognized for having the best digital strategy by RBI. Eduardo Garcia reports from Mexico City that Scotiabank has increased its planned investment in Mexico by 4 bn pesos $211 mn) and plans to improve branches and go digital. This adds MPN 500 mn to the earlier budget for spending south of the border. Its client base there rose 14% in the last year to 3.4 mn customers and its credit card business by 25.6% in Q1 alone, he writes in www.sentidocomun.com.mx, which he edits.

Heavy Industry

Delek Group soared 7.1% today on news that it plans a compulsory mop up of the remaining shares traded in Ithaca Energy, the North Sea developer, at C$1.95/sh. IACAF is Canadian and will be delisted. Israeli DLGRY is rumored to be planning a UK ipo. Its listed Israeli subs will withdraw from the first round of development of the Leviathan offshore gasfield using funds raised from an international consortium

Cameco will replace retiring COO Bob Steane with its former Australian MD Brian Reilly, a Canadian geologist who formerly worked for Areva (ARVCF, sold). CCJ.

Fiat Chrysler will next month recall 1.25 mn pickup trucks, over 1 mn RAM 1500, 2500, and 3500 in the USA because an error code disables the side air bag and seat belt when the truck hits an underbody obstacle and rolls over. The modules have to be reprogrammed after two injuries and one death were reported from the software error. We sold FCAU last year.

Healthcare

A major hack attack hit 16 British National Health Service facilities and patient files could not be accessed. People were being turned away from the emergency room.

After Teva reported reasonably good results yesterday the stock gained over 2% hitting $32.

Bavarian Nordic was up 3.5% on no news that I can find yesterday so today it fell back by 3.67%. BVNRY is a Danish developer of inoculations based on smallpox vectors.

Fellow-Dane Novo Nordisk gained 4% today. It is an insulin specialist rumored to be interested in buying Global Blood Therapeutics, GBT, a US firm, if they can agree on the price according to Reuters.

GlaxoSmithKline reported on two studies of mepolizumab in controlling exacerbations by reducing eosinophils (white blood cells) in chronic obstructive pulmonary disease. One of the randomized studies showed benefit to COPD patients and the other did not. GSK says the injectible is an anti-IL humanized lgG1 moncoloanl antibody which binds to the signalling IL-5 protein and now is only approved for treating asthma. It also is being investigated for Churg-Strauss syndrome, severe hypereosinophilic syndrome, nasal polyposis, and severe atopic dermatitis. GSK is up.

IT and Telecom

Tencent Holdings of Hong Kong gained 3.2% today. TCTZF,part parent Naspers of South Africa, gained 2%.

As Chris advised, I bought NTT Docomo DCM but I cannot find out what I paid with Fidelity so I am waiting to call and ask where this information is to be found.

Funds

Ascendas India Trust, a Singapore REIT invested in Indian commercial and office property, rose 9.88% yesterday to hit 89 cents a share. It is benefiting from the likely blockage of US visas for Indian techies as many IT firms lease its offices in Mumbai, Chennai, and Bangalore. It did fall back fractionally today. We paid US$0.73.

New Ireland Fund will pay $14.70/sh for 1.6 mn shares tendered for its buyback which closed May 5, at 98% of the NAV. Because too many shares were tendered, shareholders will only be able to cash out 64.75% of the tendered shares in IRL.

JP Morgan China Region Fund (JFC, sold) will liquidate it after a vote to do so at the AGM of the fund. Trading will cease sometime in the next 3 months.

Mexican Equity & Income Fund, MXE, gained another 0.27% today. I assume there is a gain in NAV which the weekend will reveal at this quirky female-headed closed-end fund.

Kennedy Wilson Europe REIT is up 0.7% today. KWEIF is overcoming the sale of its fund shares by institutional rivals who do not want to own its parent, NYSE-KW, with which it is merging.