Blackstone to Launch $40 Billion Investment Fund with Saudi Arabia

#Blackstone $BX to launch $40B infrastructure vehicle, new infrastructure business – Blackstone and the Public Investment Fund of Saudi Arabia announced the execution of a memorandum of understanding in relation to the launch of a new investment vehicle dedicated to infrastructure with an anchor $20B contribution by PIF. Blackstone anticipates that the program will have $40B in total equity commitments in a permanent capital vehicle, including $20B to be raised from other investors.

“The MOU is non-binding and the parties will continue their negotiation to agree definitive documentation… This collaboration between PIF and Blackstone is the culmination of a year’s discussions between the two institutions, which began in May 2016…

Blackstone’s new program will help the United States address its significant need for infrastructure improvement,” Blackstone noted. Overall, through the equity in this vehicle and additional debt financing, Blackstone expects to invest in more than $100B of infrastructure projects, principally in the United States, the company said.

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Nutraceutical Sold for $41.80 per share

NUTR sold for $446M#Nutraceutical $NUTR and HGGC, a leading middle-market private equity firm, announced that they have entered into a definitive agreement under which Nutraceutical will be acquired by an affiliate of HGGC in a transaction valued at approximately $446M, including debt to be refinanced.
Under the terms of the agreement, Nutraceutical stockholders will receive $41.80 in cash (without interest) for each outstanding share of Nutraceutical common stock they own, which represents a 49% premium to the company’s closing stock price on May 19, the last full trading day before today’s announcement, and a 15.6% premium to the company’s all-time high closing stock price.
The agreement has been unanimously approved by Nutraceutical’s board of directors, acting on the recommendation of a special committee of independent and disinterested directors. The special committee negotiated the terms of the agreement with the assistance of its financial and legal advisors.
The Company will undertake a 60-day “go-shop” period, commencing immediately, during which the special committee, with the assistance of its financial and legal advisors, will actively solicit, evaluate and potentially enter into negotiations with parties who offer alternative proposals.
 The transaction, which is expected to close in the second half of 2017, is subject to customary closing conditions, including Company stockholder approval and the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
There are no financing conditions associated with the transaction. Bill Gay and Jeff Hinrichs, COO and Executive Vice President of the company, who own approximately 7.9% and 2.5% of the company’s outstanding common stock, respectively, have entered into customary voting agreements pursuant to which they have agreed to vote all of their shares in favor of the transaction.

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Russell 2000 Maybe the Canary in the Mine

 

Russell 2000 Technical on Stockwinners.com

The Russell 2000 Index is a small-cap stock market index of the bottom 2,000 stocks in the Russell 3000 Index. The index is maintained by FTSE Russell, a subsidiary of the London Stock Exchange Group.

The Russell 2000 is by far the most common benchmark for mutual funds that identify themselves as “small-cap”, while the S&P 500 index is used primarily for large capitalization stocks. It is the most widely quoted measure of the overall performance of the small-cap to mid-cap company shares.

The #Russell2000 $RUT has been in a distinct downtrend since hitting a peak of price on April 26. It is in a technically more fragile state on a short time frame than the large-cap indexes.

Pulling back to a 1-year view shows a different perspective, notably on a closing price basis chart. In that case the index has been trapped in a range since late November/early December 2016.

Resistance is easy enough to spot at 1400, a level that has only been briefly breached before selling resumes.

For support on the 1-month time frame it is the 1380 area that is key. A breakdown below 1380 that does not produce a bounce would be a distinct negative technically on a multi-month basis, but not a yearly basis. Next significant support would be at the 1360 area.

If there was a breakdown below 1360, the 1340 area would be the next level of importance. While the index is in a more bearish state on a relatively short time frame, only a break below 1340 that persists below 1340 would break the longer-term uptrend. And even then, a break below 1300 would be needed to snap the multi-year uptrend.

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Coherus wins ruling against AbbVie patent

COHERUS BIOSCIENCES LOGO

#Coherus BioSciences $CHRS announced that the Patent Trial and Appeal Board of the U.S. Patent and Trademark Office ruled in favor of the company’s petitions for inter partes review of AbbVie’s $ABBV ‘135 patent.

“The #PTAB’s decision invalidates all claims of the patent that were directed to a method for treating rheumatoid arthritis by administering 40mg of #HUMIRA subcutaneously every 13 to 15 days,” the company noted.

“We believe this successful outcome validates Coherus’ leadership in biosimilar intellectual property and the effectiveness of our platform.

We will continue to aggressively press forward with the development and commercialization of our CHS-1420 adalimumab biosimilar consistent with our corporate strategy,” said CEO Denny Lanfear.

See our earlier blog about this company.

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Talk of Google PhotoBook sends shares of ShutterFly lower

sflyShares of #Shutterfly $SFLY fell Tuesday following a report that #Alphabet $GOOG plans to launch an AI-powered photo book service, potentially stepping into competition with the image publishing company.

GOOGLE COMPETITION: Bloomberg reported early Tuesday that, at its developer conference this week, Google plans to announce an AI-powered upgrade for its Photos app, allowing users to design and order physical coffee table photo books. The company plans to offer the photo books in several types of materials, including an option costing $10 per book, a source told #Bloomberg.

WHAT’S NOTABLE: Today’s report follows the introduction of #Amazon’s $AMZN photo printing service in September 2016, an event which saw Shutterfly stock fall over 12% in a day. At the time, Baird analyst Colin Sebastian reassured investors that Shutterfly’s strong brand loyalty “provides some competitive insulation” and that the quick selloff in Shutterfly was an “overreaction.” RBC Capital and Cantor echoed that sentiment in the following days, recommending investors buy that dip in Shutterfly.

PRICE ACTION: Shares of Shutterfly are down 4.2% to $49.66 in late Tuesday trading.

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Facebook Sanctioned by France

facebookFrance’s National Commission on Informatics and Liberty #CNIL says in a statement, “Following FACEBOOK statement regarding the amendment of its privacy policy in 2015, the CNIL performed on site and online inspections, as well as a documentary audit, in order to verify that #FACEBOOK $FB was acting in compliance with the French Data Protection Act.

These actions are part of a European approach which involves five data protection authorities having also decided to carry out investigations — France, Belgium, the Netherlands, Spain and Hamburg — on FACEBOOK.

The investigations conducted by the CNIL have revealed several failures. In particular it has been observed that FACEBOOK proceeded to a massive compilation of personal data of Internet users in order to display targeted advertising. It has also been noticed that FACEBOOK collected data on browsing activity of internet users on third-party websites, via the “datr” cookie, without their knowledge…

As a result the Restricted Committee has decided to pronounce a public sanction of 150,000 euros against FACEBOOK INC and FACEBOOK IRELAND. Considering the significant number of users in France, the seriousness and the numbers of infringements, the publicity and amount and of this sanction are justified. The decision of the Restricted Committee follows the work carried out with the data protection authorities of Belgium, Hamburg, Spain and the Netherlands in a collaborative manner.”

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Yahoo to buyback $3 billion of its own shares

yahoo #Yahoo! $YHOO announced the commencement of a modified “Dutch auction” self-tender offer to purchase for cash up to $3B of shares of its common stock at prices equal to the A) “Alibaba #VWAP”, multiplied by (B) multiples specified by tendering stockholders not greater than 0.420 nor less than 0.370, provided that in no event will the purchase price be less than $37.00 per share, less applicable withholding taxes and without interest.

The terms and conditions of the tender offer are set forth in an Offer to Purchase, Letter of Transmittal and related documentation that are being distributed to holders of the company’s shares and are being filed with the U.S. SEC. The tender offer will expire on June 13, 2017 at 11:59 p.m., New York City time, unless the tender offer is extended or withdrawn by the company.

Tenders of shares must be made prior to the expiration of the tender offer and may be withdrawn at any time prior to the expiration of the tender offer, in each case in accordance with the procedures described in the tender offer materials that are being distributed to stockholders.

The “Alibaba VWAP” means the daily volume-weighted average price for an American Depositary Share of #Alibaba Group $BABA on the New York Stock Exchange, on the second trading day prior to the expiration date; provided, that in no event shall the Alibaba VWAP be less than $100.00 for the purpose of computing the purchase price.

The purpose of the tender offer is to provide liquidity to a potentially significant number of stockholders that will be forced to sell their shares at or prior to the closing of the pending sale of Yahoo’s operating business to #Verizon $VZ as a result of the fact that, upon completion of the Sale Transaction, the company will be required to register as a closed-end investment company under the Investment Company of 1940 and its shares are expected to be removed from the Standard and Poor’s 500 Composite Index and other indices.

The tender offer also enables the company to potentially return a significant amount of cash to its stockholders by repurchasing shares. The company believes that the tender offer provides a mechanism for completing a sizable repurchase of its shares more rapidly than would be possible through open market purchases.

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Target to Focus on High Margin Products

target #Target $TGT appears to be taking a “less is more” strategy with ecommerce, choosing to revamp some online projects, cut relationships with digital partners, and walk away from prospective acquisitions, the Wall Street Journal reported earlier, citing sources.

“We’re not trying to be the catalog of everything. We aren’t going to add products to our website and stores just because they exist,” Target digital head Mike McNamara commented, according to the report.

Under McNamara, the company is pursuing select online projects, and is working on a curbside-pickup service, a source said. The Journal noted that Target stayed on the sidelines when #Wal-Mart $WMT acquired #Jet.com last year, considering the deal overpriced and a poor fit with Target chief Brian Cornell’s emphasis on high-margin product categories, according to sources.

Additionally, the report noted that Target was in advanced discussions last summer to potentially acquire #Sprouts Farmers Market $SFM but ultimately walked away, according to sources. More recently, Target explored acquiring an ecommerce name, including #Boxed.com, though those talks didn’t lead anywhere, sources told the Journal.

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$2 Billion Investment in Beer

AB #Anheuser-Busch $BUD announced a major capital expenditure program across the United States. The company will invest close to $500M in 2017, and $2B through 2020.

Such investments include over $200M for brewery and distribution projects, $180M for product packaging and innovation initiatives, and $58M to improve and increase sustainability at the company’s facilities.

Today’s announcement is the next phase in a period of extensive, ongoing investment by Anheuser-Busch, with investments totaling $4.5B from 2011 to 2020.

The new capital expenditure program will expand Anheuser-Busch’s U.S. operations, bolster local and state economies, and support over 17,000 jobs in the United States.

“Since Anheuser-Busch was founded 165 years ago, our company has been deeply rooted in America’s economic and cultural life. Our love of great beer and bringing people together is part of the American story,” said Joao Castro Neves, President and CEO of Anheuser-Busch. “We are making these investments in our business, and the communities where we live and work, for the next 165 years.”

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Coherus Biosciences Could Skyrocket

COHERUS BIOSCIENCES LOGOCoherus Biosciences $CHRS could skyrocket in the next few weeks if it receives FDA’s approval, research firms Credit Suisse and Maxim argue.

BACKGROUND: Coherus Biosciences is a developer of #biosimilars — nearly identical copies of original biologic drugs — whose product pipeline includes #CHS-1701, a biosimilar of Amgen’s $AMGN #Neulasta, and CHS-1420, a biosimilar of #AbbVie’s $ABBV #Humira.

The FDA has set an action date of June 9 for its review of CHS-1701, and while CHS-1420 is further out, #Coherus said in its earnings report last week that it expects a May 17 decision in part of its patent battle with AbbVie.

CREDIT SUISSE SAYS COHERUS COULD DOUBLE OR MORE: Last week, Credit Suisse’s Alethia Young highlighted two “major” catalysts for Coherus over the next two months: The possible invalidation of AbbVie’s “135” patent for Humira — which Young calls the “key dosing patent” that would allow Coherus to launch CHS-1420 before 2022 — and the FDA’s decision on CHS-1701. The analyst thinks the “bigger mover” is the 1701 event and she expects “on-time approval” of the product on June 9, though Young cautions that the lack of an Advisory Committee meeting “lowers the visibility” into the agency’s ultimate decision. The analyst reiterates her Outperform rating on the stock and says it could jump 110%-200% or fall 40%-65% as the above mentioned events play out over the next month. Young’s report builds on an April 19 note in which she forecast a 90% chance of CHS-1701 launching in 2018 and a 75% chance of CHS-1420 launching in the U.S. in 2020, adding that Coherus becomes a likely takeover target if those regulatory and patent decisions are settled in its favor.

MAXIM SEES TRANSFORMATIVE DECISIONS: Maxim’s Jason McCarthy argues today that “the best is ahead” as Coherus approaches the inflection points for 1420 and 1701, either of which he says could be “transformative” for the company. The analyst argues that Amgen’s recent lawsuit to protect a Neulasta patent has a low probability of delaying 1701 commercialization, as Coherus doesn’t use the purification process described by that “707” patent. McCarthy also contends that the AbbVie 135 patent fight chances are “in favor of Coherus” due to the latter’s strong focus on intellectual property.

PRICE ACTION: After gaining nearly 11% since its May 8 earnings report, Coherus is down 2% to $21.90 in Monday’s session.

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Morgan Stanley Turns Bearish on Tesla

model3Morgan Stanley’s Adam Jonas who was a bull on Tesla downgraded the name, worried by #Apple, #Alphabet competition – $TSLA was downgraded to Equal Weight by the analyst, citing signs that the company will face stiffer competition from tech heavyweights like  Apple $AAPL and Alphabet $GOOG, $GOOGL .

Additionally, Wall Street appears to be overestimating the number of Model 3 vehicles that the company can sell in the near to medium term, Jonas warned.

COMPETITION: There are indications that “large tech firms” are preparing to compete in the electric vehicle market, said Jonas, who noted that Alphabet is looking to increase the size of its autonomous vehicle fleet by 600%, while Apple recently obtained an autonomous driving permit from California. Ultimately, “much larger and more well capitalized competitors” will become involved in Telsa’s core market, Jonas believes.

MODEL 3’s IRRATIONAL EXUBERANCE: In the last four months, the market’s expectations for sales of Tesla’s upcoming Model 3 vehicle have increased significantly, Jonas stated. The analyst thinks that the market expects Model 3 deliveries to far exceed his estimates of 2,000 and 90,0000 in 2017 and 2018, respectively.

OTHER FACTORS: China will probably not be a large market for Tesla, since #Beijing may limit the number of foreign made, high-tech electric vehicles that can be sold in the country, Jonas wrote. Meanwhile, Tesla’s newer businesses – solar, electric storage and electric trucks – probably won’t be worth more than a cumulative 15% of its current market cap, #Jonas believes.

PRICE TARGET: Jonas kept a $305 price target on Tesla shares.

PRICE ACTION: In morning trading, Tesla fell 2.4% to $317 per share. Over the last three months, the stock has advanced about 13.5%.

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Ransomware Fears Send Security Stocks Higher

ransomRansomware is a type of malicious software that carries out the extortion attack from cryptovirology that blocks access to data until a ransom is paid and displays a message requesting payment to unlock it. Simple ransomware may lock the system in a way which is not difficult for a knowledgeable person to reverse. More advanced malware encrypts the victim’s files, making them inaccessible, and demands a ransom payment to decrypt them. A total of 150 countries have been affected in the past 72 hours.

Oppenheimer notes that according to media reports, a global ransomware attack was launched and infected up to 200,000 computers in at least 150 countries on Friday.

The analyst believes the “biggest ransomware outbreak ever” could serve as a wake-up call for many organizations and countries delaying a review of their cybersecurity hygiene.

In that regard, the analyst believes all cybersecurity vendors under his coverage, namely #Check Point $CHKP , CyberArk $CYBR , Fortinet $FTNT , Imperva  $IMPV , Mimecast $MIME , Palo Alto Networks $PANW , #Splunk $SPLK , #Symantec $SYMC , #Verint $VRNT , but most notably #FireEye $FEYE , are poised for increased demand, particularly in the Europe, Mideast and Africa region where the attacks were largely focused.

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Crude Oil Higher as Saudis and Russians Call for Extending OPEC Production Cut

crude-oil-trades-up-as-japanese-economic-data-impressesCrude oil jumped nearly 2% in electronic trading on Sunday evening to reach $48.68 per barrel, its highest price since May 1. Russian and Saudi Arabia’s oil ministers meeting in Beijing said they see the oil-cut deal working, and inventories are decreasing. They are in favor of extending OPEC’s output-cut deal for nine months.

OPEC and Russia have openly discussed a potential production cut extension. Other Non-OPEC producers, such as Turkmenistan and Azerbaijan have also expressed support for an extension. Around 1.8 million bpd will be removed from the market, making enough room on the market to counter the expected 1 million bpd of additional shale oil from the U.S., combined with possible additional volumes from Canada and Brazil, there is still a drawdown of stocks in place. World oil demand growth for 2017 has been left unchanged by OPEC at 1.27 million bpd.

This week’s EIA report surprised the market, as the it reported a much higher than expected stock draw of U.S. storage volumes than expected. On 10 May the EIA said U.S. inventories fell by 5.2 million barrels last week vs. the 1.8 million barrel decline analysts expected.

OPEC and major non-OPEC producers, such as Russia, should be bracing themselves for a continuation of the current production cut strategy for a pro-longed period of time, for sure into 2018. There has however been a major change in risks for both sides. U.S. Shales production increase has offset most of upward price pressure on prices due to OPEC productions.

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Rig Count Rise Weighs on Crude Oil

oil_rig#BakerHughes $BHI reports that the U.S. rig count is up 8 rigs from last week to 885, with oil rigs up 9 to 712, gas rigs down 1 to 172, and miscellaneous rigs unchanged at 1.

The U.S. Rig Count is up 479 rigs from last year’s count of 406, with oil rigs up 394, gas rigs up 85, and miscellaneous rigs unchanged.

The U.S. Offshore Rig Count is up 2 rigs from last week to 21 and down 1 rig year over year.

The Canadian Rig Count is down 2 rigs from last week to 80, with oil rigs up 2 to 29 and gas rigs down 4 to 51. The Canadian Rig Count is up 37 rigs from last year’s count of 43, with oil rigs up 13, gas rigs up 25, and miscellaneous rigs down 1 to 0.

On the news, Crude oil prices (WTI) dropped to $47.35 per barrel before rebounding to its current price of $47.35 per barrel.

#WTI – West Texas Intermediate

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Apple $AAPL Stock Reaches its All Time High on $1000+ iPhone 8

apple-cash#Merrill Lynch and Goldman Sachs upped their price targets on #Apple $AAPL , while reiterating their Buy ratings on the shares, citing the potential for new products and “significant upside” in iPhone Average Selling Price, or ASPs.

NEW CATEGORIES: In a research note to investors, Bank of America Merrill Lynch raised its price target for Apple to $180 from $155. While noting that last year Apple accounted for 10% of global consumer spending, the analyst told investors that he believes the markets that the company currently addresses can be about $550B in 2020 and close adjacencies can be $300B. This excludes potential Total Available Market, or #TAM, from healthcare and automotive, he pointed out. He also noted that given the iPhone maker’s “immense” net cash, Apple can easily enter most markets through M&A.

Moreover, the analyst argued that new products and categories add to its already “significant” growth opportunity in its existing areas, and that ignoring the “shadow TAM” of new product opportunities understates Apple’s true potential. The analyst believes the tech giant still has room to grow and gain share in the traditional areas of smartphones, tablets, wearables and desktops/laptops, while new areas to explore include game consoles/handheld games, cameras/camcorders, DVD players/Blu-ray players, set-top boxes, streaming audio and video services, wearables, TVs/HDTVs and Virtual Reality.

HIGHER IPHONE PRICES: Meanwhile, Goldman Sachs was also bullish on Apple this morning, raising her price target on the shares to $170 from $164 ahead of the upcoming iPhone 8 product cycle. The analyst told investors in a research note of her own that she sees “significant upside” in iPhone ASPs, expecting the 128GB model to be priced at $999 and the 256GB at $1,099. Given the analyst iPhone SKU analysis, the analyst believes the iPhone 8 will drive well over 50% of total new iPhone shipments in the first four quarters.

Based on the higher mix and ASP of the iPhone 8, the analyst also estimates blended iPhone ASPs to be up 16% year over year in FY18, and sees a relatively modest 40bp headwind to iPhone gross margins in 2018 as additions to the bill of materials and higher memory costs are largely offset by the expected $130 ASP increase in the iPhone 8.

PRICE ACTION: Since start of the month, shares of Apple more than $11. They last traded at $156.10. Earlier in the session the stock hit an all time high of $156.42 per share.

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The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.