Gold Boost Ahead?

Adrian Ash of our physical gold advertiser BullionVault.com writes about more festivals:

Yesterday was the last day of Shradh, the period of 'closed observance' on Hindu calendars when it is deemed 'inauspicious' to start new ventures or make new investments. Also known as Pitru Paksha, the shutdown has been used to delay nominations for upcoming elections.

This summer's delay to India's elecioral process angered many who want to reduce what they see as the stifling (and corrupting) effect of India's deep culture of religious observance.

Gold and politics are rarely apart in India's deep religious culture (as well as its huge bribery and corruption problems.) The peak demand season in the world's heaviest consumer [gold] market starts now, running until Diwali at the end of Oct.

Where India's younger citizens are breaking with tradition over gold, suggests a report today on Mineweb, isn't how Western observers might expect. Instead, some younger people have broken Shradh to buy gold at recent low prices.

The only thing to dim India's appetite for gold has been government anti-import rules imposed because 2013's demand was so huge [after a] price slump.

India's gold industry find[s] ways around that, smuggling gold through the backdoor. News today [is that] the old value-added-tax round trip scam, where the same metal is imported and then re-exported to earn sales tax regates illegally has a new use: helping get around [import controls.]

Keep a close eye on how India's demand develops as Diwali inveting, gift-giving, and temple offerings draws near.

More Numerology

Thanks to Financial Times writer Jennifer Hughes we have more numerology news today. She writes that Alibaba's NYSE ticker symbol, BABA, was chosen to sound like “88” which is a means double fortune. And even its issue price, at $68, was chosen for the lucky 8.

Citibank has been named depositary for the Alibaba ADR. The reason nobody talks about the 40 Thieves is now clear: 4 is a homonym for death. And of course we don't mention thieves when launching a massive IPO.

Today's blog is late because an update of Real Player Cloud gummed up my computer as it did not meet the systems requirements but could not be stopped from trying to install. Perhaps things will be organized better in 5775, a palindrome.

Here are some others. The first words spoken by man:

Madam, I'm Adam

Connecting the oceans:

A man, a plan, a canal: Panama

Napleon's lament:

Able was I ere I saw Elba.

Because I anticipated a US Treasury-IRS crackdown on tax inversions, we sold out of Mallinckrodt and its former parent Covidien in good time, to avoid a breakup of the deals.

More follows including a boardroom shuffle and an unexpected bonus plus news from Britain, Denmark, Ireland, India, Israel, Singapore, Canada, Brazil, and Portugal.

*We are no longer alone. Yesterday Portugal Telecom was upgraded by analysts at HSBC from “underweight” to “neutral”. PT

Musical Chairs

*GlaxoSmithKline under institutional shareholder pressure to reform its management, saved Sir Andrew Witty's role as CEO by prematurely replacing its chairman, Sir Christopher Gent, thrown under a bus. He will be replaced by Sir Philip Hampton, the current chairman of Royal Bank of Scotland.

*This reminds me of Teva which fired its CEO a bit less than a year ago. Valuenturn, an anonymous contributor to www.seekingalpha.com yesterday wrote that TEVA will become “either a target or a beneficiary from a merger-of-equals.”. The writer said it may be “on the auction block”.This is actually unlikely as there are still founder family shareholders loyal to Israel. Moreover, Teva gets tax breaks from Israel for being based there. With acquisitions by large US pharma company now under a cloud because of new rules on tax inversions, the deal would have to be done on merits. Frankly it is unlikely to ever happen.

But it reminds me also that GSK itself is the product of a merger decades ago, between New Jersey's SmithKline and British Beecham and then gobbled up by Glaxo.

*Mr Hampton's current firm, RBS, raised only $2.9 bn from the sale of 25% of its stock in Citizens Financial Group in the USA because the ipo was at $21.50/sh, below the expected $23-25 range. But the NYSE-CFG launch was still the 2^nd largest ipo this year on Wall Street, next after double-8 BABA.

We own the preferreds of the parent Scottish bank, 82% for now owned by Her Majesty's government. The proceeds of the sale will go to the Queen as will those from the sale of the international arm of the GSK Coutts & Co. sub of the UK bank where the Queen has her cheque (check in British) account.

It is being eyed by of all things the most Jewish of the Swiss private banks, Julius Baer.

I think JBPCF was not among the Swiss banks which kept Holocaust survivors and their heirs from getting back deposits (the first Swiss banking scandal). But it was among the Swiss banks helping Americans hide their loot from the US taxman and was fined $2.5 bn. It also bought another Jewish Swiss bank being investigated for helping US depositors hide their wealth, the Swiss sub of Bank Leumi of Israel.

Citizens traded flat from its disappointing ipo level in opening trading.

An Unexpected Bonus

*Alkermes plc, via its US sub, will receive ~$60 mn from the Acorda acquisition of Civitas Therapeutics where it held certain rights and a 6% stake. ACOR is paying $525 mn to get control of CVT301, a self-administrable fast acting levodopa inhaler for Parkinson's disease which may grab $500 mn in US sales. Civitas dropped plans for an ipo after more winning $55 mn in series C private finance from ALKS and others in late August when, it appears, Acorda came into the picture.

Acorda during the abandoned roadshow said that Alkermes provided facilities for Civitas to produce the drug for phase III trials of CVT301 and another neuro drug, Plumiaz spray for epilepsy, which the US FDA refused to approve because of problems with trials. ALKS has a plant in Waltham down the road from Chelsea Mass where Civitas hangs out.

Dublin-HQ'd ALKS is doing crucial phase II trials of a new oral antipsycotic schizophrenia treatmen using a sanidorpha, a potent mu-opioid antagonist in combo with olanzapine, an establishes anti-psychotic medicine. We bought if because of this as well as because it looked like a potential target for a US tax inversion takeover, now unlikely because of its central nervous system pipeline of ~20 novel drugs.

*Bavarian Nordic nailing the option by the US government for more freeze-dried Imvamune smallpox jabs for people with compromised immune systems or dematitis resulted in a moderately higher recommendation by UK brokers Edison Research. It also cited Canadian orders plus the Danish biotech's research into Ebola virus and its Prostvac jab against prostate cancer. These orders are for 2016 delivery by BAVA of Denmark which trades here as BVNKF and BVNRY. BAVA us at just under DKK 110/sh today and the broker values the stock at DKK 135 “with upside potential”. The upside could come if Prosvac works (its phase III trials end only in 2016) or if other phase II trials for breast, bladder, and colo-rectal cancers for its genetic checkpoint drug CV-301 work out. If European countries also buy its Imvamune injection for at-risk populations it would also help. The broker confirmed that before-tax earnings at BVNKF will break even this year on revenues of DKK 1.2 bn and have DKK 480 in cash on hand plus an undrawn credit line of DKK 120 mn.

Its Ebola filovirus contract with the US Natl Insittute of Allergy and Infectious Diseases (part of the NIH) will only hit trains next year unless somebody notices.

BAVA reports on Q3 Nov. 13.

The broker cited the usual biotech risks but worked out a sum-of the parts valuation for BAVA of DKK 3.5 bn, up from prior estimae of 2.9 bn. It said 2015 will be a transition year for BAVA because of a gap in US orders creating revenue uncertainties.

*Dilma Rousseff pulling ahead of Marina Silva in the latest Brazilian polls hurt thebolsa (stock market). Among the victims is Cosan, off 2.6%. CZZ is also suffering from indications that sugar is in surplus in Europe.

*Logistics is one of my key sector picks for 2015. Global Logistics Properties of Singapore today closed the major 2 tranches of its $2.5 bn accord with state-owned Chinese firms which own a 33.8% stake in a new jv, China Holdco, a consortium created by HOPU Invesments. Hopu invested $1.6 bn in June and another $875 mn today via Hong Kong on behalf of China Life, China Development Bank Intl, Bank of China sub China Infrastructure Partners, China Post Insurance, and Boyu Capital. GBTZF CEO Ms Ming Mei said that the current logistics platform in China is worth $8.2 bn but the potential is worth in excess of $2.5 trilllion because China lacks quality logistics sites. The good partner names will help it find sites and secure them to accelerate development in China according to GBTZF Chairman Jeffrey Schwartz. (Source: JOC.com, a website.) We got into GBTZF thanks to a write-up by Harry Geisel, once and future contributor.

*Fitch's ratings for Veresen may be upgraded because of the acquisition of 50% of the Ruby Pipeline, contrary to the market's negative reaction yesterday which slashed our FCGYF stock price. It will finance the deal with a secondary share issue hurting shareholders. Veresen's Coos Bay (Oregon) Jordan Cove gas liquefaction project will be linked by Ruby to natural gas from Opal Hub in Wyoming. Jordan Cove has got an LNG export license from the US Dept of Energy and is now awaiting a ruling on the construction from the Federal Energy Regulatory Commission, which also regulates Ruby.

*Australia's Macquarie Bank cut Infosys to neutral from outperform today. INFY rose.

Today I sold Electrovaya, a quirky Canadian maker of batteries, mainly because the stock was sinking for no discernable reason. EFLVF is family controlled because its key shareholders are members of the Indo-Canadian family of the inventor of the stackable battery system which avoids use of harmful chemicals in production. I sold at $0.78 US shares that had cost me $1.04, a short-term loss. We all can use a few losses this year of great profits for our picks.