The firebomb which hit Beirut yesterday may have been caused by a careless stockpile of fertilizer in the harbor area, not an attack at all. Sloppiness rather than terrorism may have caused the death of hundreds of people and destroyed property The NY Times says volatile material stored at the port was not removed by the officials responsible. I am not sure if this improves the outlook for the Levant or not.

The outlook for oil, however, is definitely positive as Brent crude is up 3.74% per barrel and WTI up 4.05%.

Today we have important results from 3 of our holdings, so I will focus on Q2 and not on Lebanon. I need some good news. We have insurance and drug reports.

*Pimco Q2 inflows for fund managed recovered to $27 mn. However, its parent, Allianz SE in Germany, lost money from coronavirus claims. ALIZY is up today but the data on the ADR, (1/10 of a German share) is not out. Its Q2 net was Euros 1.52 bn down from 2.14 bn in Q2 2019. CEO Aliver Baete in Munich said it will achieve “a solid financial performance” in H2.

*Sampo Oij of Finland, an insurance and financial firm, reported euros 469 mn in Q2 profits down from euros 509 in Q1, and from euros 825 mn a year ago. The Scandinavian firm gained $1,75 in European trading mainly because its key number—the combined ratio by which insurers are rated—remained well in the below-100% level. This shows the total losses incurred plus expenses divided by premiums earned. In general insurance the measure has to be low and SAXPY's in Q2 was 80.5% vs 83.7% in Q1 and 83% in the prior Q2.

In different countries where it operations, the IFC part of the group did best in Sweden, not too surprisingly since Sweden had the lowest lockdown of the region and of Europe. Here Saxpy also had bard results but not as bad as in other countries.

Despite this, being highly cautious, SAXPY greatly increased its reserves largely for fear that large claims were coming from its industrial clients which had bought insurance before the pandemic. Another risk is the Baltic countries where Sampo had operated earlier, where corruption rules. To handle the risks, Sampo took on at the parent holding company's equity level (the highest rated) the highest allocation since 2011, during the global financial crisis.

This will protect the businesses of its subs, but of course, chopped profits. The details are complex but mainly are precautionary, to cover industrial and corporate insurance written before 2020 by its companies.

So far claims are up but not disastrous, but insurance companies like to be prepared. So fir this year it had 20 large claims in Q1 and 27 in Q2. Premium income on newly-written insurance is up, technical results are fine, but investment returns from the safe stuff Sampo buys like covered bonds, money market funds, and above all long-term senior debt, is well below normal.

However, it had negative technical results at its major Danish arm, down 24% from a low level. The Danish sub had the worst combined ratio, at 98%. It also has modest equity risks outside Scandinavia where it owns stock: including the USA where this is about 9% of the small total stock portfolio and emerging markets, at 13%.

SAXPY's ADR stock fell ~3.2% today to $17.985 and it is down about 7.8% YTD from our basis. Its last (June) dividend at 85 cents (US) is likely to be cut.

*Israeli Teva (TEVA), now run by a Scandinavian, did much better. It reported Q2 revenues of $3.87 bn, down 7.3% from prior Q2, of which Generics accounted for $2.086 bn, down 8.5%, showing that its patented drugs are doing better. Its net income came in up 120.3% (that is not a misprint) at $140 mn, and eps at 13 US cents was up 120.6%. It also produced non-GAAP earnings of $605 mn including other goodies which was 55 cents, and down 8.3%, as a precaution from prior year's 60 cents.

Its cash flow rose 220.3% to $273 mn and it cut its debt to $23.9 bn, taking it to under 5x EBITDA.

CEO Kåre Schultz, a Dane, stated that the lower sales of generics “were in line with our expectations after the unusually high [Q1] demand due to the pandemic.”He stressed that “profitability and free cash flow were strong.” He also reaffirmed the 2020 outlook noting that two neurological patented lines had been authorized in the US, and the EU, for migraine drug Ajovy, with Japan coming, and China approving Austedo for Huntington's disease. That means EPS of $2.3-2.55 and EBITDA (cash flow) of $4.5-4.9 bn. TEVA rose 4.75% to $12.36

That was not all, Teva also revealed a deal with unlisted Alvotech of Iceland to gain exclusive marketing rights to 5 of the latter's bio-similar lines. Teva will pay upfront and milestones to Alvotech but amounts were not revealed. The Icelanders will do development, registration, and supply after which Teva will sell. The estimated market size is $35 bn. A Dane can speak to an Icelander.

*Genfit (GNFTF) which stopped its plan to develop NASH cures published a note on NiS4 biomarker diagnosis in The Lancet and the stork rose 2.8%. I sold too soon

Food

*JP Morgan took its stake in Irish Greencore to 5.5% Monday. It is no longer offering ADRs of GNCGY so it is profiting in its fund management side from its cut in brokerage operations.

*Grupo Bimbo rose 16% today to $1.96 in US trading. GRBMF is a global banking giant.

Tech

*CAE of Canada gained 4.44%. It trains pilots and medical personnel.

*Mercado Libre of Argentina gained 4.41% to $1225.7, a 12 mo high. MELI does Latin American on-line sales and finance.

*Recycling machine maker Tomra Systems (TMRAY) of Norway rose 5.51% on analyst enthusiasm, also hitting a year's high.

Energy

*Azure Powers (AZRE) which sells solar power plants to India named Surpiya Prakesh Sen to its board. She is a McKinsey's analyst.

*New Green stock BP plc (BP) gained 0.61% today after French Société générale raised it to buy from neutral and Morningstar of Chicago gave it 5 stars (from 4).

*Royal Dutch Shell (RDS-B) rose 0.56%.