News Archive

Ackman’s fund sells 5 million Valeant shares to generate tax loss

BOSTON Billionaire investor William Ackman said on Thursday he sold about 5 million shares in drug company Valeant International in order to generate a tax loss as investors in his Pershing Square Capital Management face the biggest loss in the company’s history.

Ackman’s hedge fund now owns 29.1 million shares in Valeant, or 8.5 percent of the company, down from 34.1 million shares, or 9.9 percent, according to a regulatory filing made after the market closed on Thursday, the last trading day of 2015.

Pershing Square sold shares in its two on-shore portfolios in order to generate a tax loss for investors while the two off-shore portfolios did not sell any shares, the filing said.

News that Ackman, one of Valeant’s biggest and most vocal backers, sold some of his shares comes at the tail end of a tumultuous year for the Canadian pharmaceutical company, whose share price had surged and then plummeted amid questions about its drug pricing and accounting practices.

The company, after disclosing last week that its chief executive officer, Michael Pearson, had been hospitalized with severe pneumonia, this week named a trio of company executives to take over until Pearson returns.

Ackman was not available to comment, and a company spokesman declined to say anything beyond the filing.

For Ackman, 2015 is sure to be one of his worst years ever, in part because of the heavy losses in Valeant. One of Ackman’s funds posted a 19.7 percent loss through Dec. 29. Final calculations for all of the firm’s funds have not been made.

The results mark a dramatic about face from last year’s 40 percent gain, which ranked Ackman among the hedge fund industry’s best performers. The 2014 gain was fueled mainly by an increase in drug company Allergan’s shares as Ackman pressured it to sell itself to Valeant.

Allergan sold itself to Actavis instead and in March of 2015, Ackman said he had made a sizable bet in Valeant.

But by late August, Valeant had gone from being one of Ackman’s biggest winners to being his largest loser, costing him and his investors, including state pension funds, billions in losses.

While Ackman criticized Valeant for having a public relations problem, the activist investor stuck by the company, upping his stake significantly.

Valeant’s shares closed the year down 22 percent, at $101.67, at less than half the year’s high of $260 reached in early August.

(Reporting by Svea Herbst-Bayliss; Editing by Leslie Adler and Dan Grebler)

Article source:

Wall Street suffers feeble end to turbulent 2015

Wall Street dropped on Thursday, leaving the SP 500 marginally lower for a year marked by record highs as well as a major selloff.

In a reversal of one of 2015’s major trends, oil shares moved higher, with the SP energy sector up 0.34 percent and alone among gainers.

Much of the blame for this year’s underwhelming stock market performance can be laid at the feet of crude oil prices, which lost a third of their value during an unprecedented global glut. The energy sector fell 24 percent, its worst annual performance since the global recession.

The SP 500 hit a record high in May only to slump 11 percent over eight days in August over fears of a China-led global economic slowdown. The CBOE Volatility index spiked to a seven-year high before the market recovered.

On the last trading day of 2015, the SP 500 fell 0.94 percent to 2,043.94 points, leaving it with a total loss of 0.71 percent for the year. The SP’s total return, including dividends, was about 1.40 percent, according to preliminary data.

“If you went to sleep on Dec. 31, 2014, and woke up today, you’d say what a dull year it’s been, and yet in between we’ve had these wild swings,” said Donald Selkin, chief market strategist at National Securities in New York.

“The lesson is that people should watch the extremes. On those big down days, hold your nose and buy – and don’t be afraid.”

The Dow Jones industrial average lost 2.23 percent for the year, its first annual decline since 2008. The Nasdaq Composite gained 5.73 percent after surpassing levels not seen since the dot-com bubble in 2000.

Eight of the 10 worst performers on the SP this year were energy companies, led by Chesapeake Energy’s 77-percent slump.

The consumer discretionary sector, on the other hand, was the SP’s best performer, rising 8.43 percent thanks to Netflix’s 134-percent increase and Amazon’s 118-percent surge.

Consumer stocks also took the top three spots on the Dow, led by Nike’s 30-percent increase in 2015.


With much of the day’s losses suffered in the last few minutes of trade, the Dow Jones industrial average fell 1.02 percent to end at 17,425.03. The Nasdaq Composite lost 1.15 percent to 5,007.41.

Nine of the 10 major SP sectors fell Thursday, led by a 1.43-percent fall in the technology sector.

Many of the risks that worried investors this year will remain front and center in 2016.

“Elevated valuations, modest earnings growth and muted economic activity. Of course, there is the additional variable of rising interest rates,” said David Joy, chief market strategist at Ameriprise Financial in Boston.

Apple dropped 1.92 percent and was the biggest drag on all three indexes. Its stock has been pressured by concerns about potentially weak iPhone sales and ended the year down 4.5 percent, its first annual loss since 2008.

“Apple is caught between being a growth stock and being a value stock and it’s caught in the abyss,” said John Augustine, chief investment officer at Huntington Wealth Investment Management.

Investors next week will watch for a potential “January effect,” when stocks that were sold in December for year-end tax purposes bounce back.

Volume on U.S. exchanges was 5.3 billion shares, below the 7.2 billion average over the last 20 trading days, according to Thomson Reuters data.

Advancing issues outnumbered decliners on the NYSE by 1,882 to 1,163. On the Nasdaq, 1,869 issues fell and 1,022 advanced.

The SP 500 index showed one new 52-week highs and two new lows, while the Nasdaq recorded 32 new highs and 72 new lows.

(Additional reporting by David Gaffen in New York and Abhiram Nandakumar in Bengaluru; Editing by Nick Zieminski and David Gregorio)

Article source:

Oil ends 2015 down 35 percent; long, painful hangover seen

NEW YORK/LONDON Oil prices rose on Thursday but fell as much as 35 percent for the year after a race to pump by Middle East crude producers and U.S. shale oil drillers created an unprecedented global glut that may take through 2016 to clear.

Global oil benchmark Brent and U.S. crude’s West Texas Intermediate (WTI) futures rose between 1 and 2 percent on the day on short-covering and buying support in a thinly traded market ahead of the New Year holiday.

But for 2015, both benchmarks fell double-digits for a second straight year as Saudi Arabia and other members of the once-powerful Organization of the Petroleum Exporting Countries (OPEC) again failed to boost oil prices.

The U.S. shale industry, meanwhile, surprised the world again with its ability to survive rock-bottom crude prices, churning out more supply than expected, even as the sell-off in oil slashed by two-thirds the number of drilling rigs in the country from a year ago.

The United States also took a historic move in repealing a 40-year ban on U.S. crude exports to countries outside Canada, acknowledging the industry’s growth.

“You do have to tip your hat to the U.S. shale industry and their ongoing ability to drive down costs and hang in there, albeit by their fingernails,” said John Kilduff, a partner at Again Capital, an energy hedge fund in New York.

Brent crude settled up 82 cents at $37.28 a barrel, rebounding from a near 11-year low of $36.10 hit earlier in the session. For the month, it was down 16 percent and for the year, it fell 35 percent. In 2014, Brent lost 48 percent.

WTI rose 44 cents to $37.04 a barrel. It slid 11 percent in December and 30 percent for the year, after a 46 percent loss in 2014.

The immediate outlook for oil prices remains bleak. Goldman Sachs has said prices as low as $20 per barrel might be necessary to push enough production out of business and allow a rebalancing of the market.

Adding to oil’s woes, floods across the Midwestern United States were threatening refineries and pipelines from Illinois to Louisiana, potentially swelling the glut of domestic crude at a time when stockpiles were already at record highs.

A mild winter so far in the Northern Hemisphere due to the El Niño weather phenomenon has also slashed demand for heating oil. U.S. heating oil prices fell 40 percent for a second year in a row.

“We have brimming oil inventories in Europe,” Bjarne Schieldrop, chief commodity analyst at SEB in Oslo, said. “And our predictions are that oil inventories in Asia are going to get closer to saturation in the first quarter.”

Morgan Stanley said in its outlook for next year that “headwinds (are) growing for 2016 oil.”

The bank cited ongoing increases in available global supplies, despite some cuts by U.S. shale drillers. “The hope for a rebalancing in 2016 continues to suffer serious setbacks,” it said.


Brent prices briefly hit a 2004 bottom below $36 a barrel last week, effectively wiping out gains from a decade-long commodity super-cycle sparked by China’s once-inexorable growth and energy demand boom.

The downturn in oil has caused pain across the energy supply chain, including to shippers, private oil drillers and oil-dependent countries from Venezuela and Russia to the Middle East.

Analysts estimate global crude production exceeds demand anywhere between half a million and 2 million barrels a day. This means even the most aggressive estimates of expected U.S. production cuts of 500,000 bpd for 2016 would be unlikely to fully rebalance the market.

Oil began falling in mid-2014 as surging output from OPEC, Russia and U.S. shale producers outpaced demand. The downturn accelerated at the end of 2014 after a Saudi-led OPEC decision to keep production high to defend global market share rather than cut output to support prices.

OPEC failed to agree on any production targets at its Dec. 4 meeting in Vienna, cementing its decision to protect market share, as the world braces for the return of Iranian crude exports to the market after the lifting of Western sanctions against Tehran.

Russia is also showing no signs of reining in production, prompting traders, hedge fund managers and other speculators to establish record high active short positions in the market that would profit from further crude price falls.

(Additional reporting by Henning Gloystein in Singapore; Editing by Andrew Hay and Richard Chang)

Article source:

Swiss bank Lombard Odier to pay $100 million to resolve U.S. tax probe

ZURICH Swiss private bank Lombard Odier said it would pay $99.8 million under a non-prosecution agreement with U.S. authorities to settle an investigation into allegations it helped wealthy American clients evade taxes.

“This amount has been entirely provisioned and does not affect the capital ratios of the group or of the bank, which remains among the world’s best-capitalized banks,” Lombard Odier said in a statement on Thursday.

The U.S. Department of Justice confirmed the amount to be paid in a separate statement. It also said DZ Privatbank (Schweiz) AG [DGBGBS.UL] had agreed to pay $7.45 million.

U.S. authorities have conducted criminal investigations of several Swiss banks after the country’s biggest bank, UBS (UBSG.VX), agreed in 2009 to pay $780 million and identify certain U.S. clients to resolve criminal charges.

The second-biggest bank, Credit Suisse (CSGN.VX), was fined $2.5 billion last year for helping Americans evade taxes and pleaded guilty to a U.S. criminal charge.

This week, Julius Baer (BAER.VX) said it had reached an agreement in principle with U.S. authorities and set aside nearly $200 million in additional provisions to settle a similar investigation, bringing the total amount earmarked for potential penalties to $547.25 million.

Credit Agricole’s (CAGR.PA) Swiss division said on Thursday it had paid a $99.2 million penalty to avoid prosecution for helping American clients evade taxes under a deal with the U.S. Justice Department.

(Reporting by Silke Koltrowitz and Stephanie Nebehay; editing by Jason Neely)

Article source:

Apple shares to close year with worst performance since 2008

NEW YORK Shares of Apple Inc, the largest U.S. company by market value, are set to finish the year in the red on notable weakness for a stock that had largely been impervious to pain for several years.

* Apple Inc shares are on track to finish the year down 4 percent, its first down year since 2008.

* Shares have shed about a fifth of their value since touching a high of $134.54 on April 28, and are down 17.5 percent since the inclusion of the stock in the Dow Jones industrial average in March.

* Declines this year have wiped out about $57 billion in Apple’s market capitalization, about as much as fellow Dow component DuPont Co is worth. Apple is currently worth about $590 billion.

* Headed into the last day of trading, the SP 500 was up 0.22 percent for the year-to-date. Excluding Apple, the index would be up 0.31 percent, according to Howard Silverblatt, senior index analyst at SP Dow Jones Indices.

* Longer term, Apple remains a boost for the index. For 2014, the SP rose 11.39 percent. Without Apple? It would have risen only 10.59 percent. Since the bear market low on March 9, 2009, the SP is up 204.99 percent, but losing Apple would mean it would have gained just 197.63 percent, Silverblatt said.

* During its six-year run of gains, the stock has risen by at least 25 percent in five of those years.

* Billionaire activist investor Carl Icahn, who first disclosed a significant stake in Apple in August 2013, owned about 52.76 million shares as of Sept 30. On that day, the stake was worth $5.82 billion.

* Wall Street analysts’ still love the stock. Of 49 brokerages, 41 have a positive rating and none hold a “sell” rating. Analysts have a median price target of $145 – implying a gain of nearly 40 percent from current levels.

(Reporting by Saqib Iqbal Ahmed; Editing by Dan Grebler)

Article source:

Lockheed wins $5.3 billion contract for C-130J aircraft

U.S. weapons maker Lockheed Martin Corp said on Thursday it would deliver a total of 78 C-130J Super Hercules aircraft to the U.S. government as part of a multiyear contract, worth $5.3 billion.

The U.S. Department of Defense said on Wednesday that it had already awarded $1 billion in funding for the first 32 aircraft.

The company said it would deliver the planes between 2016 and 2020.

Lockheed said in October it had reached a verbal agreement with the U.S. Air Force for a five-year contract to build up to 83 C-130J transport planes for the Air Force, Coast Guard and Marine Corps.

The Super Hercules planes can touch down on austere landing zones – essentially makeshift runways – and are often used for humanitarian relief missions and special operations.

Lockheed has delivered 60 Super Hercules aircraft to the U.S. Air Force and U.S Marine Corps from 2003-2008 under a previous contract.

Lockheed shares were little changed at $218.10 in afternoon trading on Thursday. Up to Wednesday’s close, the stock had risen about 14 percent this year, compared with 4.3 percent rise in Dow Jones U.S. Aerospace Defense Index.

(Reporting by Ankit Ajmera in Bengaluru; Editing by Anil D’Silva)

Article source:

Global stocks slip to close year mixed; oil up modestly to end ugly 2015

NEW YORK Stock and bond markets in major economies closed 2015 with a mixed performance, while oil prices and emerging markets cemented big losses during a year that provided few safe places for investors.

While equity markets in Japan and Western Europe gained strongly amid ongoing ultra-easy monetary policy, concerns about global growth and a robust U.S. dollar crushed petroleum prices and took down emerging markets, copper and other metals.

Fixed-income posted a middling performance, as riskier high-yield securities fell, largely due to exposure to weakened energy credits. Short-dated U.S. Treasury yields rose.

The MSCI All-World Index was down 0.7 percent, and closed the year with a loss of 4.2 percent.

For Wall Street’s most widely followed average, the Standard Poor’s 500 Index, it was down to the last day of trading to determine whether the year would end negative or not. The benchmark index lost nearly 1 percent for the day, giving its price a 0.7 percent loss for 2015. Including dividends, it posted a positive total return for a seventh straight year.

The market’s ups and downs this year were triggered by worries about oil, global growth and the Federal Reserve. The uncertainty surrounding the U.S. central bank’s plans dominated the last several months of trading, and some were glad to see it finally begin raising rates.

“I think that now that the Fed finally did something it will calm the intraday jitters a bit at least for the first six months, and hopefully see investors more committed to positions rather than nervous to hold anything,” said J.J. Kinahan, chief strategist at TD Ameritrade.

The Dow Jones industrial average fell 1 percent to 17,425.03, the SP 500 lost 0.94 percent to 2,043.92 and the Nasdaq Composite fell 1.15 percent to 5,007.41.

Brent crude gained 3.1 percent to $37.60 on Thursday, after a 3.5 percent drop in the previous session. For the year, Brent slid 34 percent after shedding 48 percent the previous year, and a global supply glut shows no sign of abating. U.S. crude lost 30 percent in 2015, after falling 47 percent in 2014. [O/R]

Some analysts like Goldman Sachs say prices as low as $20 per barrel might be necessary to push enough production out of business and allow the market to rebalance.

Europe’s Eurostoxx 50 index ended the year with gains of 3.5 percent, after losing a bit of ground Thursday.

In Asia, Tokyo’s Nikkei index, which was closed on Thursday, finished the year up around 9 percent. Other Asian markets have been hit by worries about China, the world’s second largest economy, and by oil prices near 11-year lows.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up slightly on Thursday but shed nearly 12 percent this year. Broader emerging market stocks lost 17 percent in 2015.

The outperformance in European and Japanese equities has a lot to do with a strengthening dollar, which has weakened their currencies over the last few years and made their exports more competitive.

The euro was down 0.6 percent on Thursday, and fell 10 percent against the dollar in 2015. Against a basket of major currencies in 2016, the greenback gained 9 percent, with a rebounding jobs market convincing the Federal Reserve to ‘lift off’ on interest rates earlier this month.

“The Fed could come back with a second hike in March, which is not fully priced in, and the dollar should draw fresh support from that,” said Richard Franulovich, senior currency strategist at Westpac in New York.

Currency strategists predict the dollar will add another 4 percent next year.

The dollar was particularly strong in 2015 against commodity currencies: It hit a more than one-year high against Russia’s rouble on Thursday, and its highest in at least 13 years against the Norwegian crown the previous day.

In debt markets, the U.S. 10-year Treasury yield was at 2.275 percent; it rose modestly in 2015 from 2.17 percent at the beginning of the year.

Much of the year’s rise in yields was in short-dated securities on expectations of higher rates from the U.S. Federal Reserve. The two-year yield rose to 1.05 percent, compared with 0.68 percent at the beginning of the year.

German bonds ended their most volatile year since 2011 with yields higher than they were at the end of 2014, showing the limitations of ultra-easy monetary policy with global disinflationary forces at work.

Ten-year yields closed at 0.63 percent on Wednesday, up 9 bps on the year and far from record lows of 0.05 percent touched in mid-April.

High yield debt was the worst performer among fixed income in 2015. The Bank of America-Merrill Lynch U.S. High Yield index fell more than 4.6 percent for the year; its U.S. Treasury index gained about 0.65 percent.

Metals were broadly weaker in 2015. Copper futures lost 25 percent on the year, while spot gold fell 10.5 percent.

(Additional reporting by Nichola Saminather in Singapore, Wayne Cole in Sydney and John Geddie, Marius Zaharia and Sudip Kar-Gupta in London; Editing by Bernadette Baum)

Article source:

American Airlines merges operations of unit U.S. Airways

American Airlines Group Inc (AAL.O) said its unit U.S. Airways Group merged with the company, as part of efforts to integrate operations of the businesses following a merger in 2013.

American Airlines Group, the owner of American Airlines, said U.S. Airways Group and its airline U.S. Airways ceased to exist as a separate entity effective Dec. 30, 2015.

The companies have already been using a single booking system and operating as a single brand since October. (

The change is merely an administrative step and does not affect the company’s employees or customers, American Airlines spokesman Matt Miller told Reuters.

“With US Airways merged into American Airlines and U.S. Airways Group merged into American Airlines Group, all of their obligations (including debts and liabilities) become the obligations of American Airlines and American Airlines Group, respectively,” Miller said.

American’s shares were down about 2 percent at $42.00 in morning trading on Thursday.

(Reporting by Ankit Ajmera in Bengaluru; Editing by Shounak Dasgupta)

Article source:

Champagne sales set for record year

PARIS Champagne sales are set for a record year, driven by solid demand from export markets, favorable currencies and stabilizing sales in France, the fizzy drink’s home market.

Industry estimates gathered by Reuters showed that about 312 million bottles of the prestige sparkling wine will have been dispatched in 2015, a rise of between 2 and 3 percent from 2014.

Revenue has risen 4.4 percent to 4.7 billion euros in 2015.

In 2007, the record year so far, revenues reached 4.56 billion euros, before the global economic and financial crisis began weighing on the market a year later.

The 2015 sales estimates reflected efforts to promote higher-priced products such as special blends and fine vintages, as well as growing demand for Rose Champagnes in Japan and the United States, Champagne’s second export market after Britain.

In Britain, a solid economy underpinned buoyant demand while austerity-hit Italy and Spain were starting to see signs of an upturn.

Economic woes in Champagne’s home market of France have taken the fizz out of global sales since 2010, but sales were stabilizing in volume and value this year and could even show a slight rise.

“France is on a recovery path. Consumption stabilized,” said Bruno Paillard, CEO of Lanson BCC (LAN.PA), the number two Champagne house behind luxury group LVMH (LVMH.PA).

Sales were improving in French hypermarkets as well as in specialized stores.

“Consumers need to enjoy life,” said Paillard, adding lower energy prices and interest rates may have helped improve consumer purchasing power.

The Champagne market is dominated by LVMH, which owns the Dom Perignon, Moet Chandon, Veuve Clicquot, Ruinart and Krug brands. Specialist makers include Lanson-BCC, Vranken (VRKP.PA) or Laurent Perrier (LPER.PA) as well as drinks group Pernod Ricard (PERP.PA) with its Mumm and Perrier-Jouet brands.

Official figures for 2015 will be published next month.

Champagne, which can be produced only in the region of the same name, is facing tougher competition from Spain’s cava and Italy’s prosecco, sold for as little as a third of the price.

Industry professionals say the Champagne sector is fighting back by stepping up efforts to enhance the quality of its own product.

(Writing by Dominique Vidalon; Editing by Ingrid Melander and Janet Lawrence)

Article source: