Global stocks fell and the euro remained under pressure as a string of economic reports in the US failed to offset the gloom sparked late on Monday by Moody’s, which downgraded six European countries and put the UK, France and Austria on negative outlook, the FT reports. The FTSE All-World equity index fell 0.4 per cent and commodities were mostly weak, with copper shedding 0.7 per cent to $3.81 a pound. On Wall Street, the S&P 500 closed 0.1 per cent lower and the FTSE Eurofirst 300 was off 0.3 per cent. The dollar index was up 0.6 per cent and yields on 10-year Treasuries fell 3 basis points to 1.94 per cent. Gold prices were volatile and the precious metal closed 0.4 per cent at $1,714 an ounce. The credit rating agency’s move reminded traders that a bail-out agreement for Greece, which bolstered sentiment at the start of the week, does not remove sovereign debt risks in the region and might leave many growth assets vulnerable to profit-taking, given their recent good run. French and UK bonds saw sellers, nudging yields higher by several basis points. After initial gains, the single currency traded lower for most of the session and closed down 0.5 per cent at $1.3119. Demand for the euro fell as a meeting of eurozone finance ministers set for Wednesday has been postponed.
From the FT:
Bank stocks are seen as a “dumb” place for investors to put their money, according to the head of part-nationalised Royal Bank of Scotland. Read more
Nelson Peltz, the activist investor, has renewed his interest in Kraft Foods, the FT reports, taking a $420m stake in the company nearly a year after selling off his shares. Mr Peltz acquired 12.2m shares of Kraft through his Trian Fund Management, according to a filing with the US Securities and Exchange Commission released late on Monday. Although the stake represents a small share of Kraft, which has a market capitalisation of more than $60bn, it marks a return by Mr Peltz to the company he tried to shake up in 2007.
Paul Myners, the UK’s former City minister who urged institutional shareholders to engage more with corporate boards, is to become UK chairman of Cevian Capital, Europe’s largest activist fund manager, reports the FT. Lord Myners will help Cevian identify investment targets, work with boards and build alliances with other investors. The manager usually takes stakes of 5% to 15% in 10 to 12 public companies for an average of three to five years, working closely with managements and boards. The Cevian role will enable Lord Myners, former chairman of asset manager Gartmore, to push his view that institutional shareholders should be more engaged. “It is ‘put your money where your mouth is’ time,” he told the FT. Lord Myners has led several reviews of institutional investors and as financial services secretary in the 2008-10 financial crisis, criticised the performance of bank boards and shareholders.
Alliance Trust will make radical changes to its shareholder voting system in an attempt to fend off mounting pressure from activist investors, the Scotland-based company will say on Tuesday, reports the FT. The £2.4bn investment company, which last month fell out of the FTSE 100, is expected to introduce a “one share, one vote” regime to avoid accusations that it benefits from a block voting system. The move comes as Alliance unveils its annual results. It faces tough questions from shareholders on its lack of a formal agreement regularly to buy back stock, which has seen its shares fall to a 16% discount to net asset value. The value gap has encouraged activist investors to buy into Alliance Trust in the hope of forcing the board to change its position on the discount.
Remember the just-who-is-a-sophisticated-investor debate around the Abacus case against Goldman Sachs earlier this year?
Here’s a strange UK coda. Read more
A once in a life time offer. Unlikely to be repeated.
Do you day trade? Read more
Large activist US pension funds are planning a campaign to shake up underperforming US companies, using new rules due to be agreed on Wednesday that allow shareholders to directly nominate board directors, reports the FT. The proposal, to allow investors to put their own nominees for board seats alongside the company’s nominees, is expected to be approved by the SEC regulator on a party-line vote, with three Democratic commissioners voting in favour and two Republicans voting against.
The number of hedge funds and sophisticated investors using exchange traded funds to execute their strategies in Europe rose substantially in the first quarter, industry experts have told FT Alphaville.
The trend was also seen contributing to uplifted trading volumes and liquidity in the products in the period. Read more
Private equity is in rude health.
In the past two days, buyout groups have spent more than €5bn on healthcare and related firms. Investor, the vehicle controlled by the billionaire Wallenbergs of Sweden, said today it would pay €2.85bn for Mölnlycke Health Care, trumping offers by Blackstone and Clayton Dubilier & Rice. Blackstone probably didn’t blink, given that it just bought Ohio-based Cardinal Health for €3.3bn. Read more
German truckmaker MAN has withdrawn its €10.3bn hostile bid for Scania, handing Sweden’s Wallenberg family victory in one of Europe’s most bitter recent takeover battles. All parties to the bid saga said they now hoped to conduct friendly discussions to see if a tie-up would be possible between the two truckmakers, as well as the truck assets of carmaker Volkswagen, the biggest shareholder of both MAN and Scania. Several people on the German side said they now expected a new company to be established into which all the groups would be merged. Both VW and Investor would hold large stakes in such a group, according to people briefed on the plans.
Blackstone has emerged as one of the three leading bidders for Mölnlycke Health Care, the Swedish surgical and wound care equipment company that could be sold for as much as €3bn. The two other bidders understood to have reached the final stages of the auction are Clayton Dubilier & Rice and Investor, the main investment vehicle of Sweden’s powerful Wallenberg family.
Investor, the holding company of Sweden’s Wallenberg family, is seeking to double its total investments in unlisted companies, private equity and venture capital over the next five years, according to Jacob Wallenberg, chairman. The company would like to have around 25 per cent of Investor’s assets in these areas compared to about 13 per cent now and 4 per cent in 1999. The move forms part of a plan started in the mid-1990s to diversify Investor’s portfolio away from its core holdings in Sweden’s largest and most international listed blue chip companies. The decision to double exposure to non-core investments in unlisted companies indicates a series of acquisitions are in the offing with healthcare, engineering and the environment as areas of interest.