Frontrunning: November 26

  • M&A Mystery: Why Are Takeover Prices Plummeting? (WSJ)
  • Hedge-Fund Fight Club Traded Illegal Tips Not Punches (BBG)
  • Speed Traders Meet Nightmare on Elm Street With Nanex (BBG)
  • A new wave of U.S. mortgage trouble threatens (Reuters)
  • Penny Lane: Gitmo’s other secret CIA facility (AP)
  • US hardens threat to leave Afghanistan with no troops (WSJ)
  • Russian Prison Stuns Captain of Greenpeace’s Bombed Ship (BBG)
  • ECB’s Weidmann Warns Central Banks Might Be Too Dominated by Fiscal Concerns (WSJ)
  • China Air Move Splits Japan as Carriers Obey New Rules (BBG)
  • Inside the Breakup of the Pritzker Empire (WSJ)
  • Exports show growth fatigue after falling in September (Kathimerini)
  • Thai Protesters Urge Civil Servants to Join Anti-Government Push (BBG)
  • Fears Rise as China’s Yields Soar (WSJ)
  • Horse-Gambling Frenchman Parlays System Into Best U.S. Forecasts (BBG)
  • FDA Tells Google-Backed 23andMe to Halt DNA Test Service (BBG)


Overnight Media Digest


* The Obama administration is mounting an aggressive campaign to head off new congressional sanctions against Iran, arguing they would jeopardize the high-stakes deal sealed this past weekend to curb Tehran’s nuclear program.

* Wal-Mart named Douglas McMillon as its next chief executive, handing the job to a long-serving insider who, at just 47 years old, will be the youngest CEO since Sam Walton to helm the giant retailer.

* The U.S. Food and Drug Administration, in a U-turn from its position three years ago, removed restrictions on GlaxoSmithKline Plc’s diabetes drug Avandia and said it no longer had serious concerns over the drug’s heart-attack risk.

* The FDA ordered genetic-testing startup 23andMe to stop marketing its mail-order DNA kit, citing the risk that false results could cause consumers to undergo unnecessary health procedures such as breast-cancer surgery.

* Eric Noll, an executive vice president at Nasdaq OMX who was seen as the top internal contender to succeed CEO Robert Greifeld, has resigned from the market operator to lead brokerage firm ConvergEx.

* Qualcomm Inc said a Chinese government agency is investigating the chip maker under the country’s antimonopoly law, a probe that comes amid rising tensions affecting U.S. companies in China.

* Katie Couric became the latest high-profile journalist to join a digital outlet, striking a deal with Yahoo Inc, the company announced Monday.

* Carlyle Group LP said it will acquire Diversified Global Asset Management Corp, a Toronto-based investor in hedge funds, as the firm continues to expand from private equity. The deal is valued at $33 million, plus a possible $70 million if the hedge-fund firm achieves a certain level of performance.

* McGraw Hill Financial Inc said on Monday it hired Citigroup Inc executive Neeraj Sahai to run its Standard & Poor’s Ratings Services unit, the world’s largest ratings firm.



Brussels unveiled proposals on Monday to plug tax loopholes and force multinationals to pay more in corporate taxes to members of the European Union.

European Commission is set to warn the United States on Wednesday that its technology firms may lose exemption from privacy rules if Washington does not protect EU citizen’s data online.

Chancellor George Osborne will face renewed demands to put in place stringent banking regulations as pressure amounts over controversies plaguing Royal Bank of Scotland, the Co-operative Bank and payday lenders.

Authorities in China have launched an antitrust investigation into U.S. mobile chipmaker Qualcomm. The company however said it was not aware of any charge of breaking the law by the regulators.

Walmart appointed company veteran Doug McMillon as the fifth chief executive replacing Mike Duke. The announcement comes at a time when the company is struggling with falling U.S. sales and bribery allegation in Mexico.

Blackberry’s interim Chief Executive John Chen said the company’s finance and operating chief along with the chief marketing officer would leave the company in a management rejig.



* Security experts say they believe that government spies hit the big Internet companies at a weak spot – the fiber-optic cables that connect their data centers.

* As Walmart enters a fiercely competitive holiday season while still hampered by sluggish sales, the company’s board announced on Monday that Michael Duke, its chief executive, would retire early next year and a longtime executive, C. Douglas McMillon, would replace him.

* Orrick, Herrington & Sutcliffe and Pillsbury Winthrop Shaw Pittman were in advanced merger talks that would have created one of the country’s ten largest firms with about 1,700 lawyers. But on Monday, the firms issued a joint statement that the deal was off.

* Chrysler will not move forward with an initial public offering until next year at the earliest, giving its parent company, Fiat, more time to negotiate the purchase of a 41.5 percent stake held by a union health care trust.

* One of the top executives at Nasdaq OMX, Eric Noll, is leaving the company to lead the brokerage firm ConvergEx Group.

* Patients injured by a flawed hip implant sold by Johnson & Johnson have directed their anger at myriad places over the years. The regulatory system that allowed the product’s sale. The company that repeatedly denied problems with the device. Even the doctors who implanted the hips. Now, some patients have found a new target for their ire: the legal system and the lawyers they hired to sue Johnson & Johnson.




* Struggling Sears Canada Inc’s so-far unsuccessful attempt to find a buyer underscores a fast-changing domestic retail landscape. Just three years ago, Canada was considered a golden spot for expansion, with U.S. chains clamoring to find store locations from which they could launch.

* A prominent judge has found tha
t a Canadian spy service has not been forthcoming with Federal Court. In a highly unusual statement, the Federal Court said Justice Richard Mosley found last week that the Canadian Security Intelligence Service was not sufficiently open about all the surveillance alliances it planned to form.

Reports in the business section:

* New BlackBerry Ltd executive chairman and interim CEO John Chen has begun what is expected to be an extensive purge of the company’s top ranks. Gone are predecessor Thorsten Heins’s top lieutenants, chief operating officer Kristian Tear and chief marketing officer Frank Boulben, the company said Monday.

* Brighter job prospects in Alberta and more challenging ones in the eastern side of the country are altering the country’s population flows. Alberta saw another year of above-average population growth in 2012-13, driven by record levels of net international migration and interprovincial migration, Monday’s preliminary population estimate from Statistics Canada shows.


* The Harper government’s case for the defense in the Senate scandal has morphed from the lone gunman theory – that Nigel Wright acted alone – to a full-fledged cover-up by a number of rogue operatives.

* Mayor Rob Ford blames a 2.5 percent tax hike proposed by city staff on his effective demotion as chief magistrate and lashes out at the “embarrassing” return to “tax and spend” ways. Councillor Doug Ford says the “political will” to cut costs has evaporated at city hall.


* Canada’s banking regulator delivered a warning Monday about the state of the housing sector, reminding industry players to remain vigilant to the dangers of a correction in the market and what it would mean for borrowers.




– China plans to adopt measures to encourage direct financing, said Yao Gang, vice chairman of the China Securities Regulatory Commission on Monday at a forum. Plans include the development of the multi-level capital market, an increase in direct financing instruments and the regulation of information disclosure.


– China’s central government is planning to reduce by as much as 60 percent the range of corporate investment needing review and approval from the National Development and Reform Commission and other central government agencies, NDRC vice-minister Lian Weiliang, told a news conference on Monday.


– The China Securities Regulatory Commission has partnered with the Singapore Exchange (SGX) to build a direct listing framework to encourage Chinese companies to list in Singapore, SGX announced on Monday.

– The Shanghai Futures Exchange (SFX) plans to launch trading in non-ferrous metal futures for copper, aluminium, zinc and lead, on the evening of Dec. 20, the SFX said in a notice on Monday.


– In order to improve the education of the masses, China must look back to identify problems with its previous system, said a commentary in the paper that acts as the party’s mouthpiece.


Fly On The Wall 7:00 AM Market Snapshot



ASML (ASML) upgraded to Buy from Hold at Societe Generale
Agnico-Eagle (AEM) upgraded to Overweight from Equal Weight at Morgan Stanley
Autoliv (ALV) upgraded to Neutral from Sell at Citigroup
Danaher (DHR) upgraded to Buy from Neutral at Goldman
FireEye (FEYE) upgraded to Overweight from Equal Weight at Barclays
Forest Labs (FRX) upgraded to Neutral from Underweight at Piper Jaffray
Huntsman (HUN) upgraded to Buy from Neutral at Goldman
Kinross Gold (KGC) upgraded to Equal Weight from Underweight at Morgan Stanley
Peabody Energy (BTU) upgraded to Outperform from Neutral at Macquarie
Summit Hotel (INN) upgraded to Outperform from Market Perform at BMO Capital
Workday (WDAY) upgraded to Outperform from Neutral at RW Baird


AutoZone (AZO) downgraded to Neutral from Buy at Goldman
Cardiovascular Systems (CSII) downgraded to Hold from Speculative Buy at Benchmark Co.
DealerTrack (TRAK) downgraded to Underweight from Equal Weight at Barclays
Eldorado Gold (EGO) downgraded to Equal Weight from Overweight at Morgan Stanley
Francesca’s (FRAN) downgraded to Neutral from Buy at Janney Capital
Freeport McMoRan (FCX) downgraded to Neutral from Buy at Goldman
IAMGOLD (IAG) downgraded to Underweight from Equal Weight at Morgan Stanley
Lionbridge (LIOX) downgraded to Neutral from Buy at B. Riley
Omega Protein (OME) downgraded to In-Line from Outperform at Imperial Capital
The Fresh Market (TFM) downgraded to Neutral from Buy at Goldman
Waters (WAT) downgraded to Neutral from Buy at Goldman
Weingarten Realty (WRI) downgraded to Market Perform from Outperform at Wells Fargo

Initiations (WUBA) initiated with a Buy at Citigroup
Container Store (TCS) initiated with a Hold at Jefferies
Container Store (TCS) initiated with a Market Perform at Wells Fargo
Container Store (TCS) initiated with a Neutral at Guggenheim
Container Store (TCS) initiated with an Outperform at Credit Suisse
Container Store (TCS) initiated with an Overweight at JPMorgan
Costamare (CMRE) initiated with a Neutral at Credit Suisse
Galena Biopharma (GALE) initiated with an Outperform at Oppenheimer
Gulfport Energy (GPOR) initiated with a Buy at KeyBanc
Haemonetics (HAE) initiated with a Buy at Jefferies
Integrys Energy (TEG) initiated with an Equal Weight at Barclays
Mallinckrodt (MNK) initiated with a Buy at Jefferies
Marcus & Millichap (MMI) initiated with a Buy at Citigroup
Marine Products (MPX) initiated with a Neutral at B. Riley
Prospect Capital (PSEC) initiated with an Outperform at BMO Capital
Sapiens (SPNS) initiated with an Overweight at Barclays
Surgical Care Affiliates (SCAI) initiated with a Buy at BofA/Merrill
Tuesday Morning (TUES) initiated with an Outperform at Credit Suisse
Veracyte (VCYT) initiated with an Overweight at Morgan Stanley
West Marine (WMAR) initiated with a Buy at B. Riley


Gabelli said Superior Industries (SUP) should be repurchasing stock
Philip Morris (PM) sees continued currency headwinds in 2014
Justice Department moved to intervene in H&R Block (HRB) lawsuit alleging disability discrimination
FDA to review efficacy of Plan B contraception in overweight women (TEVA), DJ reports
Laredo Petroleum (LPI) announced corporate reorganization, merger with subsidiary
Signet Jewelers (SIG) expects to open 75-85 new Kay, Jared stores in FY14


Companies that beat consensus earnings expectations last night and today include:
Hormel Foods (HRL), LDK Solar (LDK), Dycom (DY), Perfect World (PWRD), Nuance (NUAN), Palo Alto (PANW), Workday (WDAY)

Companies that missed consensus earnings expectations include:
Copart (CPRT), Hillenbrand (HI), Fifth Street Finance (FSC)

Companies that matched consensus earnings expectations include:
21Vianet (VNET), Culp (CFI)


  • Soon after Microsoft’s (MSFT) Xbox One went on sale  Friday morning, some customers were taking to Twitter (TWTR) to complain that their new devices were malfunctioning.Microsoft has acknowledged a problem, but said it isn’t widespread, the Wall Street Journal reports
  • For M&A’s this year, U.S. companies are paying just 19% more, on average, than their acquisition target’s trading price one week before the deal was announced. That’s the lowest takeover premium since at least 1995, as far back as records go at Dealogic, the Wall Street Journal reports
  • The FAA is set to direct airlines to avoid flying Boeing (BA) 787 Dreamliners and 747-8 jumbo jets with GE (
    GE) engines near thunderstorms after some planes experienced ice buildup in their engines, Reuters reports
  • Singapore’s DBS Group Holdings (DBSDY) and ABN AMRO are among the suitors to place final bids for Societe Generale’s (SCGLY) Asia private bank, in a $400M deal. Credit Suisse (CS) is also submitting a final bid, sources say, Reuters reports
  • Since its IPO, Twitter (TWTR) has been targeting retailers to advertise on its service, especially important during the most lucrative shopping season of the year. The company has met with Best Buy (BBY), Target (TGT) and others, as it lags behind Facebook (FB) in dollars flowing from retailers, Bloomberg reports
  • U.S. corporations are changing CEOs at the fastest pace in five years as companies from Wal-Mart Stores (WMT) to Microsoft (MSFT) deal with shifting customer tastes, competition from upstarts and restive shareholders, Bloomberg reports


America First Tax Exempt Investors (ATAX) files to sell 6M shares for limited partners
BitAuto (BITA) files to sell $100M in common stock
Sprouts Farmers Markets (SFM) 17M share Secondary priced at $37.00


via Zero Hedge Tyler Durden

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