Reconsidered Boom

Today US markets reconsidered the boom which raised almost all boats Monday. One reason was that the dollar surge reversed. Another was that US oil demand rose and it looks like there won't be a federal tax to cut consumption despite global warming risks. The US markets tried to repeat the big rise from yesterday, and appears to have succeeded.

The Nikkei which lost 3% or more yesterday today reversed back up 3.112%. We finally seem to have gotten our Japan correspondent to realize that he has to cover this stuff. He was not aware that the website has been down for months and thought it was simply his computer. That may be because Japan seems to be so much better at tech than the USA.

Bank of America-Merrill strategists today called upon US investors to look for opportunities up north, in Canada. Our S&P 500 is trading at 1.4x earnings while the Toronto Stock Index is at 17x earnings, a two standard deviation discount, the greatest since the tech bubble. The thundering herd also cites the stability of the C$ compared to more distant currencies.

Israel has developed a new system for stopping rockets, drones, and aerial threat using lasers. This will cut its risk from Gaza without having to bomb the enclave.

Photo by Annie Spratt on Unsplash

Reporting Companies

*Naspers of South Africa and Prosus of Europe reported jointly today because they are proposing another move away from NPSNY to PROSY later this year. The idea is to cut the size of Naspers to 40.3% of the combo and up that of PROSY to 59.7% via another transfer of asseets. The Jo'berg remainder will keep South Africa from losing any revenues. The combo also tried to explain how the businesses of the two arms will be differentiated more. This follows an earlier move to cut the size of Naspers by 2% in April.

Now the idea is to double the size of Prosus to a euros 20 bn company. Naspers reported net trading profit of 5.03 bn for the 2020-21 fiscal year and an eps of $12.04, well up from prior year's $3.1 bn. Both are based on its Hong Kong Tencent stake and huge increases in the Naspers e-commerce businesses which doubled to $39.3 bn. It also did well in food distribution, up 127% because of covid-19 but it is uncertain how well this will do once the pandemic ends. Another winner was fin-tech, which saw a 38% increase in transactions but a 51% increase in volume to $35 bn, another gain at risk post-pandemic.Ads were less profitable because of the virus as people didn't shop. A SPAC was used to get into education technology with Skillsoft, while Eruditus was nabbed by Prosus. PROSY acquired Stack and a majority of the shares of Goodhabitz, workplace sites. At issue here is whether these acquisitions will be able to handle increased competition when covid-19 infections drop.

Then NPSNY also reported an operating loss of $439 mn, about half of the prior-year level of $823 mn to be collected by PROSY for its shareholders by Nov. NPSNY will pay a terminal distribution to shareholders it the planned further exchange offer doesn't get done. The idea is to double the size of PROSY to make it a euros 20 bn company.

The red ink came from the partial PROSUS volumes and it getting stuck with India business as well as that of Europe and Latin America. India did badly. The attempt to identify differences in the holdings of the 2 entities was confusing but the market was negative on both. NPSNY fell 3.73% to $41.43 while smaller PROSY fell 3.6% to $19.5. Its profit at $2.99 was smack in the middle of forecasts of $2.92-3.06. Spun off MCHOY, Mulitchoice, which offers Africans contact, fell 1.2%. The market doesn't like this group because of asset shifts past and future.

*After a delay PLUGPlug Power, reported its Q1 results. The delay was over a deal with GM. The revenue numbers beat, up 76% from prior year mostly from fuel cell systems. PLUG sold 1308 genDrive unites for 6 hydrogen infrasture systems, compared to only 825 a year ago. While freight costs to deliver rose, the gross market on the sales was 38% vs 32% a year earlier. However, it missed its target 8¢/sh loss with a 12¢ loss, exactly the same as a year ago. The share opened up 1.5% but now is up 12% because of a buy rating from James West of Evercore ISI who noted that PLUG has $4.3 bn of cash on its balance sheet to cover eventualities. The PLUG share went ballistic, at one point up 13.18% at $33.66. It settled at $33 and change, but now is up about 13.45% at $33.9.

*Canada's Nutrien increased its H1 EPS guidance from $2-2.20/sh (US) to $2.30-2.50 because of greater demand for potash than expected. Potash is a key exports by Belarus now in the world's bad list. NTR shares rose 2.77% on the news to $61.26.

Drug Dealers

*Glaxo reports tomorrow at 11 am UK time. I will not attend the briefing. I need my beauty sleep. GSK.

*Foreign drug stocks are in some disarray because the US NIH is being proposed as a site for fighting cancer as we know it by Biden advisor Eric Lander and NIH director Francis Collins. The President lost a son to brain cancer and is listening. Congress also appears to be in favor of funding it.

*AbCellera which has a covid-19 drug bamlanvinimab, revealed that it has been given a Good Manufacturing Practice site in Vancouver which will be the first one in Canada. There it will develop antibodies research by 2024. Dual The news hurt the shares of Spanish Grifols. GRFS, which works on antibodies in blood. It fell 4% but now is only down 2.74%. It was given a strong buy early last week by Deutsche BankABCL fell about 2%. Its path to antibodies will be complicated and slow.

*Astra-Zeneca dropped another 1% despite it being one of the makers of dual antibody jabs to cut the risk of new mutants of covid-19 in lab mice and hamsters. Eli Lilly, another dual maker, also fell. azn.

*Aurinia Pharma continues to gain from its improved board, up another 4.55% today. AUPH is Canadian too.

*Zymeworks of Canada fell 1.5% today to 6.24. ZYME.

*A steady Eddie Canada drug firm is in the dog house after a rotten eps, Bausch Health Cos, BHC. My favorite Canada stock is not in drugs.

*BiolineRX rose 0.41% after falling 2.5%. BLRX.

*Compugen of Israel dropped another 3.89% today hitting a new low. I have no idea why CGEN is falling but it may be because another cancer drug developer, KAHR did an ipo in Tel Aviv.

*Japanese good guy Eisai rose nother 1.82% to $112.15. EISAI is the acceptable face of Alzheimer drug Aduhelm. esaly.

*Novartis fell 0.7%. Fellow Swiss Roche fell 1.28%. NVS; RHHBY.

*Danish Novo Nordisk fell 0.6%. NVO.

*Channel Islands-Israeli Novocure rose 1.6% to $224.01. NVCR.

*Spun off Organon & Co dropped at the opening but now is in the plus column, if barely. OGN.

*Dr. Reddy's of India fell from its recent peak but we are still way ahead with RDY.

*Israeli large cap TEVA rose 0.4% to $10.15, a rare winner in this sector.

Tech & Tel

*Korean Coupang is up 2% because a rival there, Ebay, may be selling 80% of its Korean operation for $3.1 bn to physical retailer E-mart and the Naver internet portal according to the Financial Times. CPNG.

*Mercado Libre, the Amazon clone which really works on the Amazon, is up 1.72% after MELI was tipped on Fast Money TV by Tiffany McGhee. We told you first.

*Qualcomm is up 0.85% on concern over chip shortages. QCOM.

*Ericsson gained 1.3% while Nokia only rose 0.3%. ERIC beat NOK in signing up Vodafone, VOD.

*BCE of Canada rose fractionally on no news.

Cement

*CRH of Ireland gained 1.22%. Cemex, CX of Mexico gained 1.55%.

Gold

*Gold-miner Kirkland Lake of Canada gained 0.55%. KL is a cheap producer of the yellow ore.

Energy

*Pembina Pipeline has just joined with Inter-Pipeline Ltd, IPL, to remedy lack of disclosure and coercion by Brookfield Infrastructure Partners, a part of the Canadian fund management empire, with the Alberta Securities Commision. Canada markets are regulated by province. I had a bad experience with Brookfield decades ago and have avoided its funds ever since. PBA is attempting to merge with IPL which favors the move which will boost its dividend. That is the stock I like best. Apart from the Brookfield misuse of short sells of IPL, the attraction of PBA is obious: it is the leading North American midstream tranport group beloved of every Canadian analyst covering it, a rare bit of unanimity, according to Investor's Digest of Canada. It will gain west coast markets with IPL. It also trades up north as PPL in Toronto but I use the NYSE.

*Stock of the year Cosan, CSAN, is up 1.26% today and 35.5% over its basis.

*BP plc is up 1.17% while Royal Dutch Shell B gained 2.02%, on tight Europe supplies.BP; RDS-B.

*Earthstone Energy lost 3.95%. ESTE just bought Texas assets near its current basin.

*Canadian Solar is down another 1.5%. CSIQ is suffering from a US plan to ban polysilicon from China's Xinjiang region in imported solar panels. It makes its panels in China for export.

*E.on, EONGY, the German ute, was rated buy by Wolf Report but fell 2.62% today.

*Carmaker NIO was among the Chinese electric vehicle makers negatively rated vs Tesla and fell.

Funds

*Correction. I have been writing that Algonquin owns 20% of Atlantica Sustainable Infrastructure PLC, AY, the UK dollar-denominated green fund. AQN owns over 46% and under its charter can own as much as 48.5%. It uses AY as a hedge against lenders holding AQN 3-yr preferred shares issued in Nov. 2018. I only discovered this in the printed Q1 2021 results, not the internet one. Apologies.

*Macquarie First Trust Global Infrastructure Fund, MFD, fell 0.86% today after an anonymous writer on seekingalpha.com wrote that it is not earning its dividends. It pays 20¢ per quarter. Part may come from return of capital. I await an explanation by the fund manager. It is now $9.83.

*Taiwan Fund, TWN, gained after a deal with Japan on chip-making.

*Investor A/B of Sweden gained 2.63% after it dropped its IVSBY listing for IVSBF. It is the closest thing we have to a Swedish Fund, a pot of investments held by the Wallenberg clan. Last week it sold the Sotckholm Grand Hotel Group for $462 mn.

*SPDR Gold, GLD, has been very volatile today, up to $166.95 and now down to $166.26. It closed yesterday at the high price. Gold may be a store of value but the store prices vary. Bitcoin is up 0.26% despite the SEC again delaying authorizing its trading.

I will give some Canada ideas to paid subscribers after today's news which is more global. Because I was able to vote early this morning the blog will be split again between paid and unpaid ...

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William K. 1 year ago Member's comment

As thorough as always, and interesting as well.