Thanksgiving Eve
It turns out that the difficulties I am facing with a check received in sterling which I am attempting to deposit to my US bank is not unique. The International IBAN (International Bank Account Number) numbering system which is supposed to enable people to transfer money within the Single European Payments Area (SEPA) often takes as long as two to three months to make a payment. This causes problems for people who are paying from Germany bills for insurance, telephones, local taxes, or utilities outside Germany but still within the EU. Foreign workers in Germany are being forced to buy German insurance policies because banks will not make the payments to an insurer in eastern European EC countries. Only German insurance may be paid for from within Germany despite the EU directive.
On-line orders can only be accepted for German addresses using German euros on German websites.
As a result, the Frankfurter Allgemeine Zeitung reports, a case is being brought against German banks in a Frankfurt court. The EU directive covers all the members of the EU, currently including Britain, plus Iceland, Liechtenstein, Norway, Switzerland, Monaco, and San Marino, all of which use a common IBAN number for any foreign account. The IBAN number is also used by US banks making transfer to Europe.
With the US crackdown on foreign bank accounts under the FATCA law Americans owning property abroad, like me, have to carefully manage their overseas accounts to make sure there is no more than $10,000 in them at any time. We thereby incur hefty charges from our friendly local USA banks because transfers have to be done more often. And forget about buying gifts for delivery to relatives outside the US.
The worst of it is the case of a stock we own whose IR refuses to send news about the company to me because I do not have a UK telephone number; details revealed to paid subscribers below.
On the eve of le Jour de Merci-Donnant even markets run by lesser breeds who don't have Turkey Day are pretty quiet. Pres. Trump took great personal satisfaction from pardoning one of the two turkeys at the White House, but from my local daily newspaper which he hates, I learn that wild turkeys are pests not only in the Boston area where my son's family live but even in areas where turkeys were not around before the Puritans arrived, like the Pacific Northwest.
Among the things I will be thankful for tomorrow is the beginning of a recovery of General Electric stock which was one of the first I bought some 60 years ago when I opened my first brokerage account, at an age which nowadays would be illegal, and without a social security number. Since then I never could afford the capital gains tax I would have incurred had I sold GE since my gains were in 6 figures the last time I looked. I am perfectly aware that one is not supposed to let tax considerations keep one from managing a portfolio, but this tax would have been hard to bear.
GE rallied because of a $1 mn+ buy by board member Francisco D'Souza of Cognizant Technology.
Taxes also stop my selling AT&T and a few other portfolio stalwarts like Thermo-Fisher Scientific which is less common.
One of our stocks has a key symbolic role in the NY Thanksgiving Day Parade.
Ironically.
As we head for our feasts, note that Turkey is having problems with its lira hitting a new low of 3.96 to the dollar, and local bond yields soaring to 13.52% on fears that the government cannot or will not tame inflation.
Internets
*After selling half my Tencent Holdings stock yesterday I note that the Hong Kong share has fallen back a bit—although TCTZF still is among the highest valued tech companies on earth, ahead of Facebook. TCTZF is one reason the Hong Kong index is a global out-performer. Today the Hang Seng index smashed through 30,000.
The news today from Reuters underscores why I took profits. Tencent has launched Playerunknown's Battleground game for Chinese players, but with a difference from the global version developed by the South Korean developers.
Because Beijing regulators expressed disgust at the “violence” of the game which “deviates from Socialist core values”, the Chinese version of Battleground has been bowdlerized and edited to make it acceptable to the Chinese censors. Tencent has the exclusive license for Chinese distribution. It will also launch a virtual reality gaming app, Justice League, on QQ.
The Chinese net giants are battling for non-Chinese markets, so Tencent is heading for Malaysia, and every outfit has plans for the USA. But censorship and the Great Internet Wall operated by China will limit these global forays, and ultimately limit TCTZF's stock rise.
Separately, TCTZF will create another 50 mn ADRs according to a filing with the SEC, and I am converting the remainder of my holdings to the US ADR at a price of a nickel per share.
*Meanwhile Facebook has had to apologize to the family of the late nephew of the capo de capos of the Mafia in Italy for removing the condolence messages posted after the death of Salvatore Riina who today was buried privately in Corleone, Sicily, site of The Godfather.
Now the messages have been restored in time for the burial today. That was wise of Mark Zuckerberg. He doesn't want to find a beheaded horse in his bed.
Industrials
The Budweiser Clydesdale horses will pull a great beer barrel down Broadway for the Thanksgiving Day Parade. BUD now stands for Anheuser-Busch-AmBev which is Belgian.
*The car cartel is under attack by the European Community and one of our shares, Autoliv, has been fined euros 8.1 mn, the only EU company in the cartel, and hit by the second largest fine, about $9.5 mn. Most of the others in the “specific part of the ongoing investigation” (ALV's term) were from Asia. The cartel set the prices of airbags and seat-belts. The stock fell 0.4% in Swedish trading. ALV has the money to hand having known this was coming, and it was accrued in Q3. There may be more coming.
*Now for some more things to be thankful for. BP plc got a spate of good news. First US crude hit a new high last seen in June 2015 because of production cuts so the AP stockpile fell by 6.4 mn bbls (barrels) last week. Then the UK budget included North Sea drillers being able to transfer their tax history to new buyers of the field to fund dismantling them. BP is a big seller of fields for decommissioning. Moreover, BP will cut pollution from methane emissions in natural gas production, transport, and consumption, in cooperation with other majors including former hold-out Exxon and Shell. BP was upgraded to strong buy from hold today by Zacks
*Ecopetrol's Colombia Business Group will grow its oil production 715,00 to 725,000 bbls of oil/day in 2018 by investment in exploration and production, almost all of it in Colombia where refineries will be brought to 350,000-375,00 of boe/day (barrels of oil equivalent) with a new Cartagena refinery. The numbers do not include global operations which are done through offshore subs. EC says this will bring its cash flow (earnings before interest, taxes, depreciation, and amortization) to COP 500 bn, about $16 mn. The investment will be self-financed from internal cash. EC gained 2.6%.
*Renaissance Technologies LLC, a fund, bought nearly 11 mn shares of Cosan Ltd to take part in the buyback reported earlier, about 6.25% of the shares outstanding, CZZ reported to the Brazilian SEC, A Commissão de Valores Mobiliarios.
*Cowen reiterated its outperform rating for Agrium and its target price was up to $120 from $109. AGU is due to merge with Potash of Saskatchewan.
Pharma
GlaxoSmithKline and its minority partners in ViiV are launching a 2-drug HIV regimen with FDA permission, which will cut the side effects which can build up with the current use of 3 drugs as standard. Juluca will combine dolutegravir with rilipivirine (from Johnson & Johnson), which will also give them a first mover advantage. Pfizer and Shionongi are minority owners of ViiV.
*I worked out the data that BioLine RX was so anxious to suppress yesterday that it buried it in the back of a verbose report on clinical trials. The big hole is $333,000 for non-operating expenses for fair value adjustments on warrants on the balance sheet. This produced a drop in Q3 results from teh July 17 issue of shares with a private placement which only yield $200,000. Another hidden horror is that this Israeli firm which has essentially no sales in current SGM & costs of $1.534 mn, up 10% y/y as a result of which it fell into deficit. Its Q3 loss hit $7.1 mn from prior year's $4.5 mn and its 9 mo level negative 17.6 mn from prior year's negative $12.1 mn. Its operating loss topped at $7.057 mn from $4,488 mn. BLRX is running on empty. The numbers were all calculated by me, and may not meet accounting standards but then again, neither did the Q3 report. There will be an investor day Dec. 5 and I will attend but my view is pretty negative. To join in write to vivian@pcqadvisory.com--no relation.
*Teva is on a roll, up another 2%+ today as the Israeli-American community gets set for Yom ha-Tarnegal shel Hodu. It gained 1.9% yesterday.
*Benitec published a corporate brochure Down Under stressing its “permanent gene-splicing” tech using a single dose of RNA interference and its backing by Nant Capital. First, up for phase II trials is its head and neck squamous cell antisense BB-401 to target overexpressed epidermal growth factor receptor (EGFR) in the confined area where the cancer grows. It aced phase I trials by complete or partial responses in patients with advanced refactory HNSCC, working in 41% of cases and stopping tumors for 6 ½ months. Other candidates for trials are BB-201 against age-related macular degeneration, BB-301 against rare disease oculaopharyngal muscular dystrophy, and BB-103 against hepatitis B. There is nothing new except that the BB-401 target to go to global trials in Jan. 2018 will include EGFR plus DNA-directed RNA interference. While I sold my BNTC I recommend buying its warrants, BNTCW , which are like US options.
*Galapagos (sold) initiated a phase I trial of cystic fibrosis correction GLPG 3221 which may help with the disease, and won a $10 mn milestone from AbbVie for this.
Financials
*Standard Life Aberdeen plc was upgraded by Numis Securities Ltd to an add from with a GBX 505 target price, about $6.65. This is the company which refuses to send me IR notices because I am not located in Scotland or maybe Britain. We owned SLFPY before it merged with Aberdeen, the US fund manager, but now the situation is even more ridiculous.
*Our closed-end Central and Eastern Europe fund exited Turkish shares during the summer after getting permission. CEE is up 0.73% today.
*Zacks put a sell on Banco Latino-Americano de Comercio, BLX of Panama, previously a hold.
Disclosure: None.