Unibail: the battle begins
Leon BRESSLER and Xavier NIEL (Iliad’s CEO), with a 4.1% stake (value of €200m at the current share price, the breakdown being unavailable) want to avoid the €3.5bn recap and…
Goodwill impairment warranted
At €1.8tn, the goodwill inventory in the AlphaValue coverage is at an all-time high and accounts for a bit more than 20% of the same universe’s market cap. At 31%…
Shame on Suez’s board and Parisian inbreeding exposed
The Veolia bid for Suez has exposed again the French penchant for boards of the same feather. The irony is Suez’s poison pill relying on a Dutch stichting under the…
Wrong mix of volatility and downgrades
As US presidential elections near (mail votes start this week) and Trump feels under increased pressure so this multiplies silly postures (vaccine calendar, TikTok, WeChat, BLM), the common view is…
Miners digging for new bosses?
Yet another senior Frenchman lost his head to the populace. That Mr JS Jacques’ undoing came from the Australian outback reaction to corporate arrogance is merely a side reflection of…
The Veolia/Suez merger, finally?
Veolia has made an offer to acquire 29.9% of the Suez share held by Engie at €15.50/share, or a substantial 26% premium over last Friday closing price. The two companies…
Caixabank’s welcomed defensive profile
As part of an indiscriminate sell-off, CaixaBank’s share price moved in tandem with the rest of the sector until the summer, when it started to overperform (+7% ytd) ahead of the…
Higher than pre-Covid19 performers
The mood music stopped about six months ago on a pre-COVID-19 high (19/02). It pays to group stocks into: a) those which, six months later, outperform their pre-COVID-19 highs, and…
EV: Which automaker has the more convincing strategy ?
The next few years will be decisive for electrified vehicles, as new model roll-outs begin to accelerate in 2021-onward. In that sense, a proxy question could be which automaker has…
2020 kitchen sinking, think big
The Heidelbergcement write-down of goodwill generated in 2007 on the Hanson acquisition brings about the usual suspicion that the 2020 macro disaster will be a good opportunity to write down assets which…
3 month Long-Shorts that paid off
With central banks’ liquidity guns in action over the last three months, it is worth checking the successful long-short trades. This is obviously ex post work but it may give an extra…
The lesson in Hertz: Lost compasses
The Hertz recap while bankrupt thanks to free equity has become the poster child of what has gone nuts in markets, courtesy of central banks. In essence, dumb money would…
Aerospace goes SpaceX
The Airbus share gained 50% last week. Not bad for a €63bn stock accounting for a solid third of the sector’s market cap. It would need to gain another 50% for…
“Risk on” junk wise
AlphaValue tracks the universe of Non-Investment Grade issuers under its coverage. For that purpose, it relies on its proprietary risk metrics which are highly reactive to changes in cash flow…
Buy & Hold with all weather perfs?
AlphaValue’s Buy & Hold Portfolio continues to surprise on the positive side. The ytd outperformance is 15% so that it is down only 2% in absolute terms. Over the last…
MEDTECH: Separating the wheat from the chaff
MedTech, which has historically been a defensive sector, has once again stood its ground even as broader markets have been rattled by the pandemic. But, digging into the details throws…
Food retail, event without Ocado
The Tesco Board is in the middle of a governance crisis for having dropped Ocado from peer performance metrics designed to measure that of Tesco’s top brass and their bonuses….
Clipped wings
With a 4% fall over the last five trading days, the Aerospace sector retains the baton for the ytd worst performing sector at –48%. Even Banks do better. To put things…
European Insurance: Unclear skies
The COVID-19 was a costly event for investors in the insurance industry. The sector was among the most penalised sectors and many operators were encouraged by regulators to cut or,…
Earning trimming unabated
On March 23, we provided a sector review of earnings revisions pinpointing 2020 earnings down 32% on 2019 after a fast-forward 39% correction. The 2020 earnings expectations then were downgraded from €690bn…
Are utilities still a safe haven?
While the surge in ESG investment has pushed the sector to record valuation levels, the health crisis has broken this trend. Due to containment, the sector is now facing a…
Credit up
We look again at the list of 105 non-investment grade stocks that we highlighted back in late March as indicative of sorry news to come. That list was then expanding…
Telecom Operators: Still dividends safe?
April 30, 2020 – The European telecom sector should stay healthier than almost any industry in this COVID-19 pandemic crisis. Telcos are also defensive stocks par excellence as they proved…
End of bulls’ lull?
Fear is back in business as indicated by the rising number of stocks whose share price is in negative momentum territory (red line in chart below). Whilst the current proportion…
Aerospace : Entering a new paradigm
The COVID 19 epidemic is hitting the aviation industry, with an unprecedented violence and speed without comparison with previous crises. Its scale is expected to have a profound impact on…
French governance farce
We thought that French ‘capitalisme de copains’ would be part of an exotic past. The farce that a last-minute support to Arnaud Lagardère, a failed manager of Lagardère SCA, amounts…
Buying into quality pays
AlphaValue has maintained over the last 6 years a Buy & Hold list of 25 names which has consistently outperformed. There is hardly ever any change to that list as a quality…
ECB’s temporary capital relief implications
The ECB’s temporary capital relief illustrates perfectly the philosophy of the new bail-in regime. As long as it is only temporary, it is neutral from a valuation standpoint. On 12…
European Property: Historic reset on track?
2020 should be at least equivalent to the severe 2009. Macros deriving from Coronavirus will destabilize both voids and rents leading to values decreasing massively in FY20-21. None of the…
Pharmas, beyond expected
After a near 6% gain last week, the Pharma sector is actually in positive territory ytd. While the search for safe-havens will back up the performance, it is not a…
Renewables in times of economic downturn
As economic activity is sluggish, demand for electricity has fallen by about 15% in Europe, leading to a drop in electricity prices. However, not all producers are equal in the…
Over-ambitious markets
Of course, markets buy the direction of travel rather than the underlying assets and their spot valuations. That has been confirmed by the 18% gain of the Stoxx600NR since 23…
An anti-ESG transition, for better ESG
Since the beginning of the Coronavirus outbreak turned a pandemic, many parallels were drawn with Climate Change Risks. Most environmentalists have not resisted underlining that the world’s greenhouse gas (GHG)…
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…
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