Amber Capital in electoral campaign against Lagardère
Joseph Oughourlian, founder of Amber Capital and Olivier Fortesa, Managing Partner, held a meeting this morning in order to explain a number of major requests to be made at the…
Equity risk premium gravitational pull confirmed
Two weeks ago we could see the surge of the European equity risk premium at 8.3% (21-year average at 6.8%). At the same minute, we were anticipating (sadly) a drop…
Do Banks Have to Pay the Bill?
The Covid-19 induced crisis is really unprecedented. Indeed, it does not follow the rationale of an economic crisis which consists in solving unbalances which have accumulated during a former period…
A snapshot 1 month into the Covid mess
We still hold the view that a second leg of price correction is likely, now that the extent of stimuli across the world is known/discounted while investors understand somewhat better…
Monitoring Credit Risk Downgrades
The Covid crisis puts listed issuers’ credit risk profile under pressure. AlphaValue has essentially completed the updating of the outlook of its 460 European stocks. We experienced a wave of…
Scor is still a long, long call
As expected, CIAM, an active investor, has renewed pressure on Scor via a new letter published last Friday. The activist fund criticised the remuneration policy of the reinsurer and said…
Family dividends may offer solace
We repeatedly wrote on dividends in a COVID context (20/02: Pay-out thoughts; 16/03: Dividends, Oops!; 27/03 Vanishing divs.) to describe what was bound to happen but escaped most observers. It…
Miners in the post-COVID-19 world
Given the aggravating COVID-19 disruption, the AlphaValue mining universe has witnessed a major sell-off. However, the base metal pricing correction continues to be less severe. One reason could be markets’…
The pension Leviathan, bound to stir
Pensions, as an accounting and possibly a cash issue, are best kept under the carpet. Two things can wake up that monster: lower risk-free rates that kick future obligations higher…
Nig’s darkening hours
Only three weeks ago we looked at Non-Investment Grade stocks (NIGs) with the obvious view that they would not fare well (FROM NIG TO VIRUSED ZOMBIES?). It is actually quite…
Covid: Screening Europe to identify investment opportunities by relative resilience
In this strategy product covering 36 pages, we screen the combined AlphaValue & Baader Helvea coverage universe to identify investment opportunities following the extreme volatilities European equities have lived through…
2020 earnings: -25% and falling
AlphaValue’s analysts rushed the earnings-cut exercise as businesses dislocate worldwide with the stay-at-home policy. The amazing thing is that some corporates refuse to see the second order impact of the…
Sonova’s hearing eclipsed
When we last teased about Sonova in September 2018, the world’s No.1 hearing aids manufacturer’s first generation Made-for-All/MFA product (offers iPhone and Android connectivity) was struggling to find traction. If…
From NIG to virused zombies
We count 77 stocks which are non-investment grades in the AlphaVaue coverage, excluding financials, property companies and holding companies. We seem to agree with the three main rating agencies except…
China & ESG, an oxymoron
Following is AlphaValue take regarding what Covid-19 reveals about current Corporate Social Responsability (CSR) practices. Most ESG ratings have been assigned on the basis of social and governance ‘standards’ across…
Will banks behave?
Who will be lending? It was clear from late January that the Coronavirus-induced mess was a supply-chain issue and an intercompany credit issue. In China, the true extent of the…
An ugly storm gathers steam
In our quick & dirty strategy review dated 06/02/2020, the title read that the Coronavirus had “Minsky moment” potential as the disruption of supply chains was bound to morph into…
ESG flows are fast diverging from true sustainability, unfortunately
Collecting £702m over a few weeks in Britain. Yes, it is possible: this is the amount of money that BlackRock’s £1.6bn World Low Carbon Equity Tracker fund has attracted since…
Covid-19: Liars by omission
Large European corporates are not fair with their shareholders. But for Pernod, which provided (13 February) a degree of granular sensitivity to the coronavirus impact on business, all large corporates…
Coronavirus: measuring the temperature of wind OEMs
So far the communication from wind OEMs has been to say that it is too early to measure the consequences of the coronavirus on the business. The full impact will…
Potential sale of PartnerRe to Covéa, what is the next move?
Following last Friday’s report by Insurance Insider citing a potential sale of PartnerRe to Covéa, Exor’s management has confirmed that it is in advanced talks with the French mutual insurer…
nCoV 2019: Minsky moment potential?
AlphaValue sees danger in the second order impacts of the 2019 nCoV virus. It is increasingly clear that the issue is less one of Chinese consumers postponing purchases but more…
Coronavirus: Inventory short, cash long
Only 2 days ago we ventured the following opinion that then looked far-fetched. It may soon become mainstream. Stop the virus means stop China which means stop the planet:“To combat…
ESG: whatever it takes to be (un)aligned
ESG data and ratings are now a huge industry. ESG has given a new impetus to financial institutions, while they were still dealing with public skepticism in the aftermath of…
Utilities already all greened up
We knew this could happen but we were certainly not anticipating such an early dash for Utilities on the back of green money chasing ‘brown to become green’ assets. European…
Amundi/Sabadell : A relevant agreement
Amundi and Banco Sabadell have announced an agreement whereby Amundi has purchased the Spanish bank’s AM division. They are also entering into a 10-year strategic partnership for the distribution of…
Identifying Governance Champs
Governance matters but sadly, mostly after the horse has bolted. Between good governance and a fast buck, investors made their choice long ago. The marketing talk claims that good governance…
Payment industry: 2020 will be exciting
2019 has been another buoyant year for the payment industry and the fintech industry as a whole. Consolidation or capital raisings have strongly contributed to the headlines while Facebook’s ambition…
Green means protectionism
When the most pro-trade area ever is increasingly turning bearish on globalisation and looking towards a degree of protectionism, one can rightly wonder whether the process kick-started by Trump’s election…
Aramco ticks all the red boxes
Saudi Aramco, the giant state-owned oil company, is now listed since 11/12 on the Riyadh’s Tadawul Exchange. With only 1.5% up for sale, the IPO raised a jaw-dropping $25.6bn and…
Ruling by taxonomy
The EU intends to tell the world what is green. This is a power grab that may work if the recent GDRP initiative is taken as an example. Here the…
FCA-PSA: 2 in bed, 4 to watch
FCA and PSA announced at the end of October that they are in serious negotiations to merge as equals. Since then, FCA’s shares have appreciated c. 11%. Simultaneously, PSA’s shares…
Independent Directors : the reality behind the numbers
The French regulator AMF just published its report on « Corporate Govenernance and Executive Compensation ». They operate and interact with companies according to the « comply or explain » principle, promoted by the…
Green brakes
Governments do not meet their obligations when it comes to a greener world essentially because they are afraid of the ballot boxes with financially-strapped households balking at higher taxes aimed…
Looming competition from the east
A number of initiatives taken by the Chinese government to strengthen its pharmaceutical sector have started to bear fruit – Beigene’s ‘zanubrutinib’ became the first innovative drug by a Chinese…
European big pharmas in big numbers
Roche is worth €233bn, only second to Nestlé in the European contest for the largest market caps. The six other big Pharma companies (including Bayer) will bring the total sector…
Renewed corporate action in telcos?
Iliad the French telco that moved from growth darling to staid also ran in a matter of five years is today launching a curious deal whereby it proposes to buy…
Française des Jeux : Dear bet
FDJ is a great firm. The French state is charging too high a price for the privilege of accessing a monopoly. The placing syndicate would do well to cut the…
Euronext/BME/Borsa Italiana: Is this really happening?
According to the media, Euronext is exploring a bid on European stock exchanges, among which BME and Borsa Italiana. This has been in the air for a long time but…
Limitless reinsurers
While we harbour serious worries about the impact of negative rates on the good health of life insurers, we have no such qualms when it comes to Reinsurers. Their high-quality portfolios…
Credit Agricole SA, simpler and possibly better
CASA has long been lagging its peers due to a wobbly business model. It was once offering every sort of banking and financial service (asset management, insurance or specialised financial…
Shareholding staff, an oxymoron
Every now and then we like to twist the neck of that most fashionable idea that shareholding staff is the future, as the romantic result of “aligned” stakeholders. In the…
The G in ESG…
… is the only thing that matters. Providing any investment proposition with an ESG shine has become a ridiculous scramble, with qualitative data being tortured into a modelling of sorts…
Generali, Mediobanca, Bolloré, now del Vecchio
After the recent €580m investment made by the Italian veteran entrepreneur Leonardo Del Vecchio in Mediobanca, speculation about the capital of Generali has re-surfaced. As ever, the shadow of Bolloré…
5G: Players Overview
AlphaValue has conducted this study to highlight the main challenges and opportunities faced by the 5G initiators, ahead of a global adoption cycle. Key findings: -5G will bring about a…
Can the monetarist helicopter fly?
We do not see the monetarist helicopter flying. In our view, the helicopter money concept has two caveats. Firstly, money would not be created against nothing meaning that the expected…
Some lessons from WeWork?
Some news about the Cities of Paris and London’s Office markets, following the aborted WeWork’s IPO and the release of end market figures (Immostat, Paris, and Savills, London). City of…
Maersk, trade mess but promises of blockchained TFEs
AP Möller Maersk is about maritime transportation and logistics. Its Ocean division, which combines container shipping and the strategic transshipment hubs, is by far the main contributor to group revenue…
New targets for French power mix
The French parliament adopted last week new energy commitments for the next decade. France is now on board; it has joined the increasing list of European countries targeting to be…
Scor vs. CIAM, no signs of pressures letting up
Yet again, CIAM has hit out against the governance quality of Scor and urged the Board members to protect the interest of its shareholders from the practices of Mr Denis…
Upsides commented upon
Last month’s powerful rotation away from defensives into risk/ value/ cyclicals has shaken up sectors’ upside potentials quite substantially. Here is a summary view of where the upside potential by…
ECB’s last shot ?
In our view, the ECB has fired its last shot. This should remove any obstacle to the continuation of the sector’s recovery. As expected, the ECB deployed all the promised…
SSAB, high strength stock
SSAB, the leading Nordic steel manufacturer, has long decided to focus on specific areas (high strength and special steels) with a view to addressing the higher value-added market segments and…
Ferrari’s surge pushes NAV into high gear
After a stellar run over H1 19, Ferrari has now become Exor’s second largest holding. This, coupled with €1bn in capital gains from the disposal of Magneti Marelli, serve as…
Cevian’s rough patch continues….
In May, we had a look at Cevian’s exposure to European equities and the dismal performance of its key holdings, at least those which are tracked by AlphaValue.We update the…
Pension risks still lurk
Low rates increase the actuarial value of pension obligations. The good news is that hardly any “sponsor” (the industry’s wording to speak of the corporate which has pension risks in…
Concessions pay, again and again
Ever since construction groups have been tackling infrastructure, they have contemplated themselves as operators. Hence, the Vinci type of success stories. Those construction groups that failed to make that pivot…
Nestle’s very problematic weight
With a market cap about to overtake the €300bn mark, Nestle has become an issue for European equity markets. Nestle trades at 25.5x, presumably still an acceptable P/E. The issue…
AMS/OSRAM: Accretive deal, but stretched balance sheet at ST
AMS has reiterated its bid offer on OSRAM at €38.5/share (all cash), now being backed by two banks and having reshaped its industrial offer to satisfy the board. Obviously, this…
Pirelli’s bigger is better
Pirelli is a simple proposition in terms of both marketing and the equity story: high value tyres with superior margins are selling like hotcakes, including and notably for those placid…
Spanish regional banks: from reflation to deflation trade
In early 2018, we warned investors (see our presentation “_Reflation trade and other myths_”) that the reflation trade behind the banking sector’s recovery was misplaced and that Spanish banks were…
LSEG/Refinitiv: Into a new dimension?
LSEG would acquire the company for a $27bn enterprise value. We have been very positive on LSEG for more than four years, as we have branded it as the sole…
Better value in listed equities
Institutional money’s latest fad after a crowded drive for infrastructure assets is to pile up again into private equity. There is ever more money flowing in on dubious TRI promises…
AB Inbev: The plan B money raiser
The market applauded ABI’s Australian divestment ($11.3bn), and rightly so. AB Inbev reacted quickly after it failed to IPO its Asian unit as a way to contract its immense debt…
New entrant puts pressure on European gas markets
Additional gas supply coming from the US distorts an already tight summer market. Norway and Russia are not inclined to let go market share, leading gas spot prices to reach…
Accor, geographic winner
Four reasons to be positive on Accor: Balanced geographical presence, avoiding all the problematic areasStrong balance sheet after adopting a pure assetLight business modelComplex capital structure with shareholders from three…
Factories 4.0 is green
We reiterate our positive opinion on the stock. As part of its CMD, Schneider confirmed its medium-term financial targets, with an adjusted EBITA margin expected to improve by c.+200bp by…
A hard blow to Natixis’ multi-boutique model?
Natixis is down about 6% today (Stoxx600 banks is down 0.7%). This follows the FT’s article on Tuesday regarding one of Natixis’ flagship asset managers (H2O). Yesterday, Morningstar has suspended…
Can stable-coins shake banks?
The Blockchain’s latest invention, namely stable-coins, have attracted several comments notably on the disruption risk for the banking industry. We believe that these comments are largely misplaced. According to well-informed…
Eurofins struggles with cyber-attack
Eurofins reported a cyber-attack on its IT systems a few days back. The recovery work is ongoing and no unauthorised theft or loss of confidential client data has been reported…
Norsk Hydro’s road to recovery
For the past many years, aluminium has been an exception amongst base metals, thanks to material capacity cuts (in 2013-14) and sustained growth in demand (+4% p.a. since 2013). Hence,…
Exor: the best way to play the FCA Renault merger?
FCA has unveiled a proposal for an all-share merger with Groupe Renault. The ‘transformative’ deal, which would see both FCA and Renault owning 50% of the merged entity and would…
Casino survives the Bear trap, yet again!
Casino’s parent Rallye has announced the commencement of a debt re-profiling process under the protection of French courts. Casino is not included in this process (there is no cross default…
Cevian’s rough patch
As a long-term investor with the right credentials, Cevian is big and increasingly visible in the AlphaValue European equities coverage … due to its exposure to difficult assets. The tribulations…
Liquidity call, to be continued…
The relative strength in European equity indices must be taken with a large pinch of salt. On both 15 and 16/05, we marvelled about the extreme concentration of market performance…
Vallourec: a half-full glass
– Q1 19 results were decent on the P&L front – Volumes, prices and savings have helped – However, cash consumption thus net debt still a worry – Management reaffirmed…
Vodafone: Is the dividend cut a buy signal?
Vodafone has released its annual results. Although there was not much new on the operational side, the dividend was cut to €0.09, as was unfortunately expected (but it was probably…
Turmoil in iron ore markets
Since the beginning of 2019, global iron ore markets have been rattled by oneafter-another supply-side issues. As a result, the key steel-making input is inching close to five-year highs. While…
SOCGEN: Focus on CET1 ratio…sustainable or not?
Societe Generale’s profit before loan losses was below expectations with quite a disappointing mix as revenues in French retail banking were below expectations (offset by better than expected numbers in…
Diageo converts premiumisation into cash
Around four years have passed since our last teasing story on Diageo, when we were broadly negative following a succession of unprofitable reported results. That hangover seems to be well…
Alcon valuation: $45 per share
Alcon will be listed on the SIX Swiss Exchange and the NYSE on 9 April 2019. All Novartis shareholders will get one Alcon share for the five Novartis shares held….
IAG unbeatable were it not for Brexit
Although the best-in-class airline group has beaten cost inflation (both fuel and non-fuel costs) and the stiffer competition that resulted in lower fares, the lingering unsolved Brexit threat has kept…
High gearing in negative rate context
More than two years ago when the 10y Bund had plunged below zero signalling deflation fears, we looked at the behaviour of highly geared corporates to conclude that extra cheap…
Offshore propelled Gamesa
Siemens Gamesa (SGRE) outlook appears brighter and presumably at sea as the industry is now offshore driven. Wind turbine manufacturers declined sharply in 2017 due to the introduction of the…
Firms with too-old-in-the-job board members
There are governance principles that make good sense: relying on independent board members and relying on reasonably young experts. Reality rarely meet principles however. We highlight below firms under the…
Amundi can pay the high price…
In the frame of formal talks between Commerzbank and Deutsche Bank, DWS might potentially be sold. DWS’s share price was up 10% yesterday on rumours that Allianz is interested in…
Governance risks
The French side of the EssilorLuxottica management seems to have discovered that there is a dominant shareholder, Mr del Vecchio, who wants to exercise his rights to decide with a…
Vallourec: Walking dead or Phoenix
After three disastrous years (FY15-17) and a rather disappointing FY18, shoots of life seem to be visible at last. Before jumping in, there are quite a few ifs: restored management…
MiFID2 is a gift for European research houses (1/2)
Euro IRP (of which we are a proud member) hosted a meeting with FCA’s boss Andrew Bailey who made a surprising comment: no shrinkage of equity research 14 months into…
State intervention is not limited to AF-KLM
The French government attempting to explain to the Dutch administration why the latter acted unfairly in daring to buy 14% of Air France-KLM is a disgrace. Not only is there…
Shorts reviewed
We looked at the largest short positions on stocks currently covered by AlphaValue and wondered to what extent we would agree. Here is the list as captured from European exchanges,…
AlphaValue brings together valuation and governance
Institutional investors are gradually unifying their financial and non-financial approaches, we now offer a unique and disciplined solution to support them. In Europe : the rate of independent directors per…
Getlink sees no channel fog
Getlink, 15.6% owned by Atlantia and 5% by Eiffage, may well have speculative appeal as the two companies indeed have a history of fully acquiring the corporates they invest in….
Barclays: An open letter to Mr Bramson
We do not know each other but I am taking the liberty of writing to you to wish you all the best in your attempt to boost Barclays’ valuation. Even…
Partner Re should tie the knot with Scor anyway
Scor needs scale. Internal discussions led to the obvious conclusion that Partner Re (100% owned by Exor) would be an ideal short-cut to size. This information was made public after…
Exor with Scor?
Exor is one of those large family-type holding companies that does not hesitate to poke its nose in the management of its key assets. Minorities enjoy the luxury of a…
Oslo Børs: Euronext still in a position of strength
Nasdaq AB (indirect subsidiary of Nasdaq Inc.) announced this morning it will make a public offer to acquire all of the issued shares of Oslo Bors VPS (OBV). The price…
CIB is dead, longlive commercial banking
JP Mustier (Unicredit) held a short conference about “the future of banking in Europe” organised by the Centre of Financial Professions. He did not draw a rosy portrait of this…
Aachen vs. Aix La Chapelle
With Angie on her way out and Emmanuel challenged at home, Germany and France had a low-key confirmation in Aachen of both countries’ willingness to get ever closer, if slowly….
Safran free to fly higher
The ramp-up risks induced by the LEAP and the Zodiac integration hiccups are something of the past. This matters a lot and frees up Safran to move on to the next…
Robots are not cup-cakes, even in China
Chinese-dominated KUKA has adjusted the already lowered FY 2018 guidance (sales: €3.3bn, adjusted EBIT margin: around 4.5%) once again. Management now expects sales of c.€3.2bn and an adjusted EBIT margin…
Prada, a brand made smaller by its owners
As the Luxury tide of last summer lifted all boats, Prada reached a three years’ high. Courtesy of trade war risks and an economic slow-down in China, the Prada share…
H1 2019: Downgrades
European equities trade at 12.4x their 2019 earnings. These are still seen up 10% … because 2018 earnings have been downgraded by c. 4% over the last 12 months. 2019…
2050 decarbonised Shell?
Shell thought its efforts to become greener were enough when it announced its ambition to reduce its relative Net Carbon Footprint (NCF) by 50% within three decades (2050). Activists pressed for…
ACS and its Abertis bet
The three-party acquisition of Abertis was a clever move from ACS and Atlantia, as it did away with the risk of overbidding for Abertis’ assets, allowed ACS partly to replicate…
EDF is more than a commodity call option
EDF is a complex story one could resume as a commodity call option in a sea of regulatory, technical and political uncertainties. The share price spent last year outperforming the…
Euronext, desperately looking for growth
Last time we wrote a teaser on Euronext was nearly four years ago in March 2015. At that time, we were very enthusiastic about Euronext as many stars were aligned for…
Natixis : Time to offload the banking licence
Recent events lead us to bet that Natixis is considering a move to become a financial services supplier rather than a bank and go for turbo charged returns. Keeping a…
Vestas : The best Green Chip stock
Very good perspectives delivered by Vestas at its Capital Market Day. The group is still the best-in-class in the industry, and its strong backlog provides visibility for the coming years….
Exor : the cash collector
We initiate coverage of Exor with a Buy recommendation (30.6% upside potential). Exor is a leading investment holding company controlled by the Agnelli/Elkann family, it is quite transparent as it…
Willian Demant’s dream run over
As we always say, a hearing aids stock is as good as the next product and William Demant Holding’s/WDH share price has clearly mirrored this. The launch of the ‘novel’ 2.4GHz…
Investors want better disclosure of potential conflicts of interests (survey)
We raised simple questions to asset managers, asset owners and listed companies about research integrity/potential conflicts of interests in a MiFID2 environment. Key findings • Overall Asset Managers (35%) and…
Altice : A call option with all the risks that this entails
The group is currently succeeding in acquiring new customers in France on both Fixed and Mobile, but at the expense of revenue and margins. We remain at Buy on Altice…
Time for Nissan to bid for Renault ?
Governance matters, more than ever and it has long been an issue at Renault. When a company, or in this instance a group of companies, is dominated by one individual,…
Can Covéa afford Scor ?
Since the announcement by Covéa ( a mutual insurer/”mutualist”) of its proposition to the board of Scor to acquire the reinsurer for €43/share, the latter has gained 23%. The offer…
Investor vs. GBL ? Go for Brussels
Over the last 10 years, 5 years or 6 months, Investor has left GBL for dead, performance-wise. This is worth exploring briefly as both firms share similar features: family control with an indisputable long-term…
Pharmas in October 2018
Pharmas were resilient amid the October cliff in the market, with the fear-driven interest being well supported by the steady earnings, especially by the “Biggies’ in Q3. This was also…
From Bolloré to Generali
The moving parts to a change of control of Generali seem about to fall in place. The trigger may well be Bolloré exiting Mediobanca. Generali can only benefit from a…
Unilever tripped by its owners
Unilever has been known for its shareholder-friendly attitudes and timely delivery on its plans. Step by step, task after task, the company has been fulfilling its strategic plan until the…
Debt above 5x EBITDA
The financial newspapers are making big titles about the private equity bubble. Bubble means that the average acquisition price is 10.2x EBITDA and gearing is 5.2x EBITDA. These are indeed…
Stay connected