David Fuller and Eoin Treacy's Comment of the Day
Category - Autonomies

    Why Google Is Issuing a New Kind of Toothless Stock

    This article by Nick Summers for BusinessWeek may be of interest to subscribers. Here is a section: 

    A new "C" class of Google shares will begin trading on Thursday under the familiar GOOG ticker. This stock gives its owners zero votes at the annual shareholder meeting. That sounds bad. In practice, however, the nonvoting shares won't be so different from holders of Google's "A" class shares, which get one vote apiece. Both groups are dominated by holders of the only shares that matter: class "B" shares with 10 votes each. Most of those are owned by Google's founders, Sergey Brin and Larry Page.

    Page and Brin aren't satisfied with the 55.7 percent majority of votes they already control today. As Google issues less-potent "A" shares to compensate employees or to finance acquisitions, the company's founders have seen their voting power diluted. Now that the company is issuing the neutered "C" shares to ensure Page and Brin retain control far into the future, they're free to create as many shares as they like without giving up an iota of their grip on Google's direction.

     

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    China Fines Nu Skin $540,000 for Illegal Sales and Claims

    This article by Ricardo Lopez for The Los Angeles Times may be of interest to subscribers. Here is a section:  

    The regulatory action ends a probe that began in January, when China's State Administration for Industry & Commerce began investigating the company following media reports.

    "We continue to believe in the potential of China's large and growing market," said Dan Chard, Nu Skin's president of global sales and operations, in a statement. "We remain committed to working cooperatively with the Chinese government to ensure the healthy, long-term growth of our business."

    Nu Skin was fined $524,00 for illegally conducting direct sales. The company was fined an additional $16,000 for product claims that Chinese regulators said did not have enough evidence. Six Nu Skin sales employees were fined a combined $241,000 for "unauthorized promotional activities."

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    Ten countries scour sea for Malaysia jet lost in 'unprecedented mystery'

    This article by Eveline Danubrata and Nyugen Phoung Linh for Reuters may be of interest to subscribers. Here is a section: 

    The disappearance of a Malaysian airliner about an hour into a flight to Beijing is an "unprecedented mystery", the civil aviation chief said on Monday, as a massive air and sea search now in its third day failed to find any trace of the plane or 239 people on board.

    Dozens of ships and aircraft from 10 countries scoured the seas around Malaysia and south of Vietnam as questions mounted over possible security lapses and whether a bomb or hijacking attempt could have brought down the Boeing 777-200ER which took off from the Malaysian capital, Kuala Lumpur.

    The area of the search would be widened from Tuesday, Azharuddin Abdul Rahman, the head of Malaysia's Civil Aviation Authority, told reporters.

     

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    hiquita to Acquire Fyffes Creating Biggest Banana Supplier

    This article by Paul Jarvis and Donal Griffin for Bloomberg may be of interest to subscribers. Here is a section: 

    Chiquita Brands International Inc., owner of the namesake banana label, agreed to buy Ireland’s Fyffes Plc to create the world’s biggest supplier of the fruit for about 407 million euros ($565 million).

    The combined company will be called ChiquitaFyffes Plc, Chiquita and Fyffes said today in a joint statement. The all- stock offer represents a bid premium of 35 percent, data compiled by Bloomberg show. Shares of Chiquita and Fyffes rose.

    The deal brings together two of the world’s oldest fruit importers, who between them have operations spanning the Americas, Europe and Asia. Chiquita Chief Executive Officer Ed Lonergan, who will become chairman of ChiquitaFyffes, has sought to reshape his Charlotte, North Carolina-based company as a high-volume seller of bananas and salads while winding down and abandoning other product lines.

    “The deal is logical and will be a good fit going forward for both parties,” said David Holohan, an analyst at Merrion Capital in Dublin. “This is an excellent result for Fyffes.”

    Investors will get 0.1567 of a share in ChiquitaFyffes for each Fyffes share, while Chiquita holders will receive one share in the new company for each one of the existing company.

    Fyffes Chairman David McCann will become CEO of the combined company, which will be domiciled in Ireland, trade in New York and have annual sales of about $4.6 billion. The transaction is expected to close this year, pending approval by shareholders and the Irish High Court.

     

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    Email of the day on European shares with low valuations

    “I was wondering if you agree that Porsche looks interesting isin DE000PAH0038”

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    Small investors can make gains by going against the grain - so is now the time to pick up Rolls-Royce shares?

    This article by Ian Lyall for the Daily Mail quotes Crowd Money but also makes some interesting points on Rolls Royce. Here is a section: 

    It will be interesting to see whether the Dreman screens pick up Rolls-Royce, which has gone from stock market hero to zero in the space of little over a week. 

    The share price has tumbled over 16 per cent since February 13, when it said 2014 would see a ‘pause’ in revenue and profit growth in 2014. The warning wiped £3.5billion off the value of the jet engine maker. 

    The movement out of the stock was pronounced and supported by heavy trading volumes up until Wednesday when the buyers returned. The analysts who cover Rolls reckon the sell-off has been overdone. 

    The Broker Forecasts site monitors stock recommendations and price targets attached to shares. On the figures it has collated the average valuation for Rolls is 1,287p a share, or around 28 per cent above the current market price.

    If that consensus target is correct then the investors who sold have pushed the price too far down, providing a buying opportunity. Most analysts (67 per cent) are positive on Rolls, according to Broker Forecasts. So Rolls looks, on the face of it, to be ‘oversold’. 

    But there are several reasons why this may not be a slam dunk ‘buy’. It is worth remembering analysts are sometimes slow to recognise the magnitude of problems at companies they are paid to follow. It should also be noted the profit warning is just one reason sentiment has turned. 

    There are also concerns about a Serious Fraud Office investigation into bribery allegations, potential accounting issues and fears Rolls might make an expensive and rash acquisition.

     

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    Email of the day on a potential Autonomy:

    “I was wondering if you would consider Luxottica Spa as a possible autonomy? It is a leader in Asia, I believe and it has become a dominant player, could you take a look at this? Thank you in advance”

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    Amazon Traders Trapped in Bullish Option Bets as Stock Sinks

    This article by Sofia Horta e Costa and Trista Kelley for Bloomberg may be of interest to subscribers. Here is a section: 

    Options traders who piled into bullish bets on Amazon.com Inc. this week stand to lose their money today after profit at the world¡¯s largest Web retailer missed estimates by 26 percent.

    The volume of calls rose to 113,681 contracts yesterday, the most since October and almost double the trading in puts, data compiled by Bloomberg show. The eight most-traded options were bullish. Calls giving the right to buy the shares at $430 changed hands the most, more than tripling their price to $6.20.

    The contracts, which expire today, had an exercise price 12 percent above the Jan. 29 close. Amazon shares slumped 7.4 percent to $373.08 at 9:55 a.m. in New York today.

    “Everybody got it wrong, seriously wrong,¡± said Jiban Nath, an equity-derivatives strategist at Solo Capital Partners LLP in London. “A lot of people were going by what the analysts say. Amazon all these years had been doing amazingly well. The analysts all got the direction wrong and no one saw it coming.”

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