My first horror tale has hit with the Schwabians who are now my main brokerage. I received from San Francisco in an envelope marked “Personal and Confidential”. It contained a letter saying that there was something I needed to know followed by a colon and a blank line and nothing more. Then Schwab thanked me for being their customer and gave a number for more information.

I naturally called the number on the letter to find out what that was all about and after being on hold for 45 minutes got a human. He named a Canadian stock I and my readers had tendered which was being taken over. Asked what about this new, he said he would look into it and call me back. I explained that he needed to call my home rather than my office and thanked him.

Nobody called after that until my bedtime. Naturally nobody called before I went to work (from the west coast). So I called again. The message was trivial. The tender offer had been extended until Sept. 6. As I had already accepted and opted for cash or stock in the acquiring firm there was absolutely no reason to write.

If the company felt the need to do so, the news was not that private or confidential and required no action of my part. All these people keep saying “great” and promising to “reach out to you” which sets my teeth on edge.

But just to be safe I called Schwab again this morning and they looked into it and just called back. After all that effort it turned out that the stock in question was a totally different one, from Germany, and there really was an important change. However I had already learned about it by reading the FAZ.com website and then checking in with Reuters.

The previous week, PM Theresa May told journalists she had no plans to resign, and would fight the next parliamentary election on behalf of her Tory Party. This is what the French call “un pari stupide”. On Thursday, also the Sinn Fein of UK-run Northern Ireland, the local arm of the same movement in Ireland itself, said Ireland should block talks about future ties between the two bits of the Emerald Isle between Britain and the European Union. They cited not only the open border between Ulster and Ireland but also the need for continued jurisdiction of the European Court of Justice on the human rights clauses of the treaty.

After she lost her Parliamentary majority in the June election, Mrs May was able to stay at 10 Downing Street only thanks to the support of the Protestant Democratic Unionist Party's seven Members of Parliament in Westminster.

*Magal Security reported a Q2 loss of 14 cents/sh vs a loss of 12 c/sh a year ago on revenues which fell 3% (adjusted to 2.2%) to $13.3 mn and cash flow (EBITDA) which came to minus $1.2 mn. The number of shares out was raised by nearly 50% in the prior year with a secondary issue.

MAGS, an Israeli maker of smart walls patrolled by robots, gained from the y/o/y comparison as it actually had meager earnings later last year. Its share plummeted at the opening by nearly 20% reflecting the panic in tel Aviv before recovering to be down only 10.46% now. It is rather widely held by institutions for a small cap (capitalization is $111 mn) and Israel is now full of bears.

The poor showing was in part from non-cash financial expenses of $1.3 mn based on the strength of the shekel and because of two acquisitions completed in Q2 in Canada, for Aimetis and Senstar. Both these factors are unlikely to repeat in H2. Gross margins at MAGS are over 50%. Dollar weakness also hurt the the MAGS cash pile which closed Q2 still at a whopping $47.9 mn or $2.21/sh. So it is trading at barely 2x its cash on hand at $4.3337.

*Australian Orocobre reports on its first full year of operations in US$s. Its net profit after tax came in at $19.1 mn boosted by some one-off asset sales but mainly because of rising production of lithium at its mines in Argentina. OROCF is also traded as ORL in Canada.

Sales were down 0.4% from last year at $17.44 mn on which its net profit after tax came in at $4.6 mn vs a loss of $21.9 mn in FY 2016-7. Add in the discontinued operations in boron to find the difference. The OROCF report from Down Under included no few than 3 versions of cashflow to boost its bottom line: EBITDAUX which is earnings before interest, taxes, depreciation, amortization, impairment, and the impact of currency changes; EBITIX which is earnings before interest, taxes, impairment, and forex; and EBTIX which is the previous number minus impairment.

While all these kangaroo pouches sound somewhat fishy they are justified, perhaps, because of the way Orocobre is structured. The Australian firm owns 72.68% of a Singapore holding company which owns the site in Argentina's Jujuy province and Toyota Tsusho of Japan, a sub of the auto company, owns 27.32%. However the government of Jujuy owns class B shares accounting for 8.5% of the mine while the Singapore holding company owns only 91.5% so the Australian shares we own ultimately only own 66.5% of the mines. The debt for developing the mines is issued by Mizuho, another Japanese biggie. Meanwhile Jujuy state guarantees the 8.5% which is in Argentina.

One result of this complex structure is that the moves to expand production have been slow. Scoping studies on doubling output which we first reported late last year have been revised by removing a purification cycle cutting costs to about $160 mn from the initial estimate of $190 mn but a contingency sum of $25 mn remains in place. New and better solar ponds will be built after some technical issues with the present Jujuy solar evaporation process were agreed.

All this is being done by an outside consultant and a study manager, not by the shareholders who have different axes to grind. The new facilities to double output will not duplicate what is already in place in Jujuy province but will improve the pond sequence at a cost of about $85 mn to the existing installations. The new facility will use lithium carbonate as a feedstock to produce lithium hydroxide which commands a much higher price. The gang are now trying to agree on a contractor. The whole deal depends on agreement by the joint venture with Toyota, the state of Jujuy, the board, and finding the money. So this kangaroo may never hop.

Meanwhile YTD the Argentine installations have suffered because heavy snow in the Andes stopped its chemical supplies coming in from Chile and its lithium exports going out (to Japan via Chile.) The good news is that the price of lithium has more or less doubled last year to $10,000 per metric ton and demand is growing steadily. More heavy industry news below.

*My Veresen share was up on the remaining market on Thursday, at $14.0042 on huge volumes which may be a sign that the mopping up of US shares by Pembina Pipeline is proving difficult. It was the stock the guy last night said I had been contacted about. It is in fact going to extend its offer period to Sept. 6 which is not important and doesn't require a personal and confidential letter. But read on.

*Meanwhile another bid, for Stada Artzneimittel, is reportedly under attack by hedge funds led by Elliott Associates who on Thursday, said it wants minority shareholders to be paid at least euros 74.40/sh whereas we accepted euros 66.25/sh. That is the reason why the STDAF board meeting on Wednesday denied “quittance”, accepting the actions of the previous board.

Elliott is holding out for more money from Bain Capital (of the US) and Cinven of Britain because its 10.9% of the shares out would allow the pair to gain 75% of the shares outstanding which would allow a “domination agreement” mop-up of the shares not tendered at the offer price, allowed under German law.

Reuters calls the move “cheeky but not irrational”. Other shareholders—like us—would have to also get the premium if Elliott gets its ransom within a year from the original offer. We could get another euros 1.6 bn over and above the euros 4.1 bn paid so far for our shares, and Reuters thinks the acquirers could still make money if Stada grows its cash flow by 10%/year as the internal rate of return at current interest rates would still be at levels to appeal to private equity owners. More drug news below.

Bancos

*Our Banco Santander is one of the founder members of the two year old digital cash payments and settlement system using the blockchain. The system is being run by Clearmatics, a UK firm, and its other founder members are UBS, BNY Mellon, Deutsche Bank, and ICAP, a currency brokerage we used to own. The previous week, Barclays, Credit Suisse, CIBC, Mitsubishi UFJ Bank and State Street (whose shares I own) plus my personal bank HSBC have come on board. The horrors of trying to pay our builder in Portugal for work he is doing on our house there make me keen on a better system. The system uses a utility settlement coin, or digital cash equivalent, for all major currencies backed by a central bank, like the euro or the dollar. This DCE will only go live in another year by which time Alfredo will have finished the work on our casita. A USC will be convertible at parity with a deposit in the receiving bank in the same currency, so it would be backed by CB assets.

A blockchain is a tamper-proof shared ledger which can use computer-generated codes to settle transactions without any need for third-party verification. So transfers will be faster, more reliable, and more easily audited.

*Bank of Nova Scotia confirmed that it is in talks with Banco Bilbao Vizcaya Americano to purchase the Spanish bank's retail operations in Chile. The BBVA complex in Chile is valued at about $1.4 bn but also includes consumer finance and credit cards which may not be in the deal. BBVA has a local partner owning 29% of its Chilean arm, the Said family, and another 3% in the hands of the Chilean public. Analysts were happy about the deal as it will boost BBVH's capital adequacy ratio by nearly 1% BBVA stock rose more than the Spanish index on Thursday and BNS rose 0.97% as well.

*Nordea Bank was tipped despite its poor Q2 results by Renaissance Capital via www.seekingalpha.com. We already own the pink sheet-traded Swedish bank which may move to Finland or Denmark if Stockholm continues to try to charge it higher taxes and fees through our Finnish insurance firm Sampo Oij which is a large Nordea shareholder and which has some shares board members.

Pharma

*Buying start-up biotech companies is how drug firms grow, and EP Vantage on Thursday reported that Roche is gaining in this strategy against its crosstown rival Novartis, particularly in oncology. Now NVS is barely ahead of Novo Nordisk for third place. But NVO is a one-track pony working on diabetes while Novartis is a full-service pharmaceutical firm. RHHBY invests both through its Genentech US arm as well as with a “venture fund” like other Swiss firms. NVS is planning on charging as much as $475,000 for its new CAR-T drug Kyriah against B-cell acute lymphoblastic leukemia (ALL) which did not respond to other treatment in children and adults under age 25. It may not make money from the treatment with a patient's own genes even at that price.

*My big worry as GlaxoSmithKline cuts back on in-house R&D is what will happen when the big Brits (with Astra Zeneca) get into buying start-ups. Will they be smart enough to avoid overpaying?

*Teva meanwhile has broken its downtrend with stale news, as our FDA allowed its drug for chorea from Huntington's disease to also be used for people suffering from tardive dyskinesia from central nervous system medications or gastro-intestinal diseases. The drug, Austedo, was approved for Huntington's chorea in April. Tardive dyskinesia is a movement disorder where the person's tongue, lips, face, body, and limbs move repeatedly and uncontrollable and affects about a half million Americans. The drug worked well in reducing the symptoms in phase 3 trials and was a major focus by TEVA's chief scientific office Michael Hayden, MD, PhD, who has worked on Huntington's for decades. Unlike his colleague Dr Jeremy Levin who was fired as CEO at Teva nearly 3 years ago for suggesting that the Israeli firm spend money on R&D like a normal drug company rather than trying to buy into other generics-makers, Hayden held on to his job. Movement disorders are part of the central nervous system specialization which TEVA won with its Copaxone against multiple sclerosis, its first non-generic blockbuster success.

Teva after falling nearly 2% Weds. The previous week was up 2.94% after briefly hitting $16.28 on very heavy volume here.

Techies

*Infosys of India which is now in the process of trying to find a new CEO to replace its temporary one,on Thursday announced a partnership with main-frame back-up service MongoDB of New York which operates out of the former NYTimes building on 43^rd St. to get security, power, and heavy floors formerly needed by the printing presses. INFY will help enterprises modernize and migrate their data to other sites.

Industrials

*Autoliv of Sweden wants to be left alone, It was reported the previous week that its 77 gigaHertz high-resolution radar system for autonomous driving was selected by a leading global automaker—but did not name the company. The 4 ALV radars will be fitted onto the corners of the mystery makers' cars which will improve the intuitive ability for the driver and will better separate objects and cut down on the blind spot and rear cross traffic gaps in handling the car because the radars will better detect oncoming vehicles and lane changers. The front radars will support detection of objects and free space.

*Mexico's Cemex is contributing $500,000 to the relief effort in Houston and stresses that it has operations, employees, and its US HQ there. It will also send funds on behalf of its employees worldwide to the hurricane-devastated city and said that all its employees in Houston are safe and sound.

*Vale of Brazil rose 2.6% on Thursday, the previous week.

*Schlumberger Ltd of the Dutch Antilles went ex-dividend on Friday. SLB.

*Deutsche Bank raised BAE Systems' target price to GBX 670 from 645. BAESY.

*DryShips, sold ages ago, is now under SEC subpoena because of stock offerings made in the past year for the benefit of Gorgeous George Economou, its sailor CEO who took control of $700 mn of new shares issued probably at the expense of existing holders and used to them buy a mysterious BVI company which bought 17 vessels on behalf of Gorgeous and his sidekicks. DRYS was incorporated in American Samoa but Mr Economou is Greek and his sidekick appears to have been Canadian. We were tipped off about George by an employee of a Norwegian shipping company as he had done similar things in the past.