93.30 +0.02 (0.02%)
Pre-Market: 8:47AM EDT
|Bid||93.33 x 800|
|Ask||93.38 x 800|
|Day's Range||92.83 - 93.56|
|52 Week Range||64.55 - 102.70|
|Beta (3Y Monthly)||1.37|
|PE Ratio (TTM)||25.14|
|Forward Dividend & Yield||2.03 (2.20%)|
|1y Target Est||104.89|
AB InBev's (BUD) third-quarter sales are likely to reflect gains from improving trends in key markets and premiumization efforts. But currency woes and commodity cost inflation might hurt margins.
It was only a few years ago that Altria (NYSE:MO) stock was being feted as one of the best-performing stocks. With the Altria stock price down over 40% from 2017 peaks, today's story seems very different.Source: Kristi Blokhin / Shutterstock.com Indeed, as InvestorPlace's Will Ashworth noted on this site in 2016, $10,000 invested in Altria's predecessor in 1968 would have been worth a stunning $66 million. And at the time Ashworth wrote, there was little reason to see positive returns reversing. Altria had pressure on its business from lower smoking rates, but it was still printing cash -- and returning that cash to shareholders.Yet MO stock has been in a steady, if not entirely consistent, downtrend for over two years now. The big issue of late has been the company's stake in Juul, for which it paid $12.8 billion late last year. Increasing reports of lung diseases tied to "vaping" have led to negative press. And investors believe state-level regulation could significantly impact Juul's business.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut those risks seem potentially overblown, particularly in the context of an attractive valuation. Increased regulation usually benefits incumbent leaders, as Altria's own history shows. And the Altria stock price seems to incorporate something close to a worst-case scenario to begin with. It may take some fortitude, but MO stock looks like a buy here. MO Stock and the Vaping IssueMore than a few analysts have noted the irony of Altria stock selling off in response to political pressure. As an excellent article on Seeking Alpha noted, MO stock has been here before.In the late 1990s, stock of what was then Philip Morris fell over 60%. The catalyst was the enormous settlement with state attorneys general, which would cost over $200 billion. By early 2000, MO stock was at $5. * 10 Hot Stocks Staging Huge Reversals Of course, that price proved to be an enormous buying opportunity. By 2016, including dividends, MO had returned over 12,000%. The reason was relatively simple: Regulation was a positive for Philip Morris (Altria), not a negative. The end of advertising cemented the market share of a leading brand like Marlboro. Higher minimum prices did little to accelerate smoking declines.The broad argument for Juul is if vaping fears lead to increased regulation, the same basic outcome will hold. E-cigarettes are a massively fragmented business. But Juul has clearly dominant market share, well ahead of even a brand like blu from Imperial Brands (OTCMKTS:IMBBY). Higher regulations -- or higher taxes -- will push out smaller, sub-scale operators. They will leave Juul at the top of the market with vastly lower advertising spending needed to maintain that competitive position. Should Vapes Be Regulated?Of course, that all presumes regulation will arrive at the federal level. That's not guaranteed to be the case -- and likely shouldn't be the case.After all, e-cigarettes clearly have moved some adult smokers from more dangerous combustible versions. And the cases of lung disease reported so far seem to come from vaping THC, not nicotine. More specifically, they appear to be a result of vaping oils used in "black market" THC-based products.Common sense might suggest that established companies shouldn't be regulated based on the illnesses. After all, the existence of, say, Jack Daniel's manufacturer Brown-Forman (NYSE:BF.A, NYSE:BF.B) prevents the risk of deleterious effects from moonshine. The same should be true for nicotine vaping. Incidentally, this also should be true for a company like Cronos (NASDAQ:CRON), in which Altria has invested and which has developed a research and development center for safe THC vaping.Of course, given the traditional behavior of politicians and regulators, common sense well may not apply. But it does seem unlikely that e-cigarettes will be outright banned. There's a potential "Goldilocks" scenario here. Regulators do just enough to thin the market, but not enough to significantly depress demand. The Case for Altria StockAfter the selloff, Altria stock now trades at a historically low multiple of barely 10 times 2019 consensus earnings per share estimates. Its dividend yield touched an all-time high in recent weeks, clearing 8% before retreating to a current 7.9%.Both multiples suggest that the core business is flat-lining -- and that the investment in Juul has been essentially lit on fire. Neither seems to be the case. Operating income still is growing. And Juul shouldn't be written off just yet.It's not at all difficult to imagine more normalized trading moving MO to a mid-teen earnings multiple and a still-high 5% dividend yield. Both suggest Altria stock could trade back to the mid-$60 range, about 50% higher than current levels.All that said, it's too simplistic to believe that vaping alone has driven the selloff. Again, Altria stock was falling long before the Juul investment. High debt and an aggressive dividend policy have raised fears of a cut. That combination has wreaked havoc on stocks like Kraft Heinz (NASDAQ:KHC) and Anheuser-Busch (NYSE:BUD).But some of the selling pressure that began in 2017 was caused by vaping, based on fears that U.S. customers would start defecting from combustible cigarettes at a higher rate. If Juul indeed will see plunging sales, it stands to reason that Altria's owned business will benefit as well. As a result, the recent selloff seems somewhat illogical -- and likely to reverse as clarity returns to Altria and Juul.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Hot Stocks Staging Huge Reversals * 7 Under-The-Radar Growth Stocks That Could Benefit New Investors * 5 Excellent High-Yield Dividend Stocks to Buy The post Helping, Not Hurting: Regulation Would Be Good for Altria Stock appeared first on InvestorPlace.
The trading in Tilray (NASDAQ:TLRY) stock has been jaw-dropping. Tilray stock went public just last July -- the first cannabis company to list on a major U.S. exchange. The IPO price was $17. Within three months, the stock had closed at $214, with a brief intra-day run to $300.Source: Jarretera / Shutterstock.com Thirteen months later, those gains are nearly all gone. Tilray stock closed Monday just above $20. To be sure, cannabis stocks have seen volatility over the past year, and nearly all of them have declined sharply of late. But none have had quite the highs -- or the pullback -- of TLRY.The irony is that I still think Tilray stock is one of the more intriguing stocks in the category. The bubble last year -- and it was a bubble -- has given Tilray the reputation of a fly-by-night operator, or even something close to a "pump and dump." That's not the case.InvestorPlace - Stock Market News, Stock Advice & Trading TipsTilray's long-term strategy, which is to focus not on production, but on products, makes some sense. And as I wrote after Tilray earnings in August, investors' sudden interest in profitability is odd. Even Tilray CEO Brendan Kennedy noted it after the second-quarter release. * 10 Hot Stocks Staging Huge Reversals In fact, I called out TLRY as one of 10 mid-cap stocks to buy in late August. But as I noted at the time, patience was advised: The Tilray stock chart looked like a falling knife.It still does -- and that patience still is advised. TLRY, perhaps more than any other pot stock, shows just how much sentiment has changed and how much it will take to reverse it. What Will It Take for TLRY Stock to Rally?Over the last three months, TLRY stock has lost more than half of its value. And yet, in the context of cannabis investor expectations as recently as this summer, the news hardly seems all that grim.Q2 earnings were fine. Yes, Tilray missed analyst expectations for profitability. But profits are not the endgame right now -- positioning for cannabis growth is. Tilray's solid revenue growth is up 371% year-over-year and nicely ahead of analyst estimates. That seemed like a step in the right direction. Investors agreed with that at the start of the year, when pot stocks like TLRY, Canopy Growth (NYSE:CGC) and Aurora Cannabis (NYSE:ACB) were rallying. That's true no more.Indeed, off what was at worst a decent quarter, Tilray stock fell 35% in four sessions. A big whiff at Canopy, which pressured the sector, certainly didn't help. But in no way should the report have driven a 35% decline. And I'd argue that even six months earlier, the same report may well have been perceived as positive, not negative. Even Aphria (NYSE:APHA) has continued to decline despite what was clearly a blowout report. It's hard to imagine what kind of earnings beat it would take to truly change investor sentiment. Political Help, Right?The last time cannabis stocks rallied was late last year. And a key catalyst for the rally was the passage of the Farm Bill, which legalized hemp in the U.S.That new law was seen as a potential first step toward legalization in the U.S. -- an obviously enormous opportunity for legal cannabis producers. And so the rally, admittedly off lows driven in part by a market-wide selloff, seemed to make some sense.Late last month, the SAFE Banking Act passed the U.S. House of Representatives. The act allowed banks to legally work with cannabis companies in states where marijuana was legalized. The impact on cannabis stocks was minimal. TLRY stock gained 2.7% that day and the gains were erased in less than two sessions.To be sure, the SAFE Banking Act isn't necessarily going to become law. Indeed, it's unlikely to pass the Republican-controlled Senate. But, here too, it's not hard to imagine the reaction being very different last year or even earlier this year. It's a step in the right direction for the sector, seemingly. But investors don't care. Anheuser-Busch Can't Even Help Tilray StockTilray announced that its joint venture with Anheuser-Busch InBev (NYSE:BUD) would commercialize non-alcoholic CBD beverages in Canada.In 2018, such an announcement would have sent Tilray stock soaring. On Friday, the day following the after-close announcement, TLRY rose 1.5%. It had declined over 13% the day before.Perhaps nothing for Tilray stock this year -- and maybe nothing for the sector as a whole -- further shows what a shift in sentiment there's been in the past year or so. Tilray is taking a big step forward with a big-time partner toward a legitimate opportunity. And investors seemingly could not care less.That's a hugely dangerous problem for Tilray in the short term. But combined with the reputational impact of last year's TLRY bubble, it's also why the stock still seems intriguing -- at some point. But there's no need yet to try and figure out when that point might be.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Hot Stocks Staging Huge Reversals * 7 Under-The-Radar Growth Stocks That Could Benefit New Investors * 5 Excellent High-Yield Dividend Stocks to Buy The post Plunging Tilray Stock Shows Just How Much Sentiment Has Changed appeared first on InvestorPlace.
While some investors are already well versed in financial metrics (hat tip), this article is for those who would like...
In yet another week packed with cannabis news, we saw Aleafia Health Inc. (OTC: ALEAF) terminate a cannabis supply agreement with Aphria (NYSE: APHA) subsidiary Emblem Corp. after it said the latter failed to provide Aleafia with the equivalent of 175,000 kg in cannabis products. Aphria said it had "every intention" of fulfilling its obligations. MedMen Enterprises Inc (OTC: MMNFF) announced Tuesday it has terminated a deal to acquire multistate cannabis operator Pharmacann. The company is also terminating its Chief Financial Officer Michael Kramer.
(Bloomberg) -- Sign up to our Brexit Bulletin, follow us @Brexit and subscribe to our podcast.The Brexit negotiations have taken a step forward with detailed talks set to begin for the first time since Boris Johnson became U.K. prime minister. The pound and U.K. banking stocks surged.After months of war-like rhetoric and threats, Johnson made a vital breakthrough in talks with Irish leader Leo Varadkar on Thursday, paving the way for detailed negotiations to start in Brussels.The two negotiating teams now have a weekend of intensive work ahead of them, examining draft legal text as they try to thrash out a deal in time for the summit of EU leaders on Oct. 17-18.But while the mood has brightened dramatically, the deal is not yet done. For one thing, it’s not clear what concessions -- if any -- Johnson has promised the EU, and whether he can get any deal through Parliament in London. The critical issue remains how to avoid a “hard” border, with customs checkpoints, at the land frontier between Ireland and the U.K after Brexit.“There is a joint feeling that there is a way forward that we can see a pathway to a deal,” Johnson told broadcasters on Friday. “That doesn’t mean it’s a done deal. There’s work to be done.”Key developments:Michel Barnier briefs EU ambassadors, but won’t reveal details of the U.K. concessionsEU agrees for detailed talks to intensify as negotiators aim for a dealBarnier hosted U.K. Brexit Secretary Steve Barclay for “constructive” meeting in BrusselsJohnson is keeping his Northern Irish Allies in the Democratic Unionist Party informed of his negotiations as they are key to ensuring any deal can pass a vote in ParliamentPound surges; RBS and Lloyds shares jumpThe DUP Responds (4:40 p.m.)Democratic Unionist Party leader Arlene Foster has finally given her reaction to Johnson’s latest offer. She reiterated her requirement that any deal must have the consent of the unionist community and fired a warning shot against any attempt to keep Northern Ireland in the EU’s single market. But, crucially, she didn’t go as far as to explicitly rule out supporting the prime minister. She said the party will use its “pivotal role” and “considerable influence” in Parliament to influence the outcome. “There will need to be a clear acceptance that the economic and constitutional integrity of the whole of the United Kingdom will have to be respected as we leave,” she said. “As a consequence of the mandate given to us by voters in 2017 the DUP is very relevant in the Parliamentary arithmetic and regardless of the ups and downs of the Brexit discussions that has not changed.”The DUP is in a formal arrangement to support Boris Johnson’s minority Conservative government and keep it in power. While it only has 10 votes in the House of Commons, some hardline Conservative MPs have indicated they will only back a Brexit deal if the DUP supports it too.U.K. Welcomes EU Talks Decision (3:45 p.m.)Boris Johnson’s office issued a statement welcoming the decision by the 27 other EU member states and saying his government is looking forward to negotiations “in the coming days.”“We welcome this decision, following the constructive meeting between the Brexit Secretary Stephen Barclay and Michel Barnier this morning, and building on the meeting between the prime minister and the Taoiseach yesterday,” Johnson’s team said in the statement. “We look forward to these intensified discussions in the coming days.”Industry Groups Raise Fears About Johnson’s Plan (3:40 p.m.)The U.K.’s aerospace, automotive, chemicals, food and drink and pharmaceutical sectors are concerned about Johnson’s plans for post-Brexit trading arrangements, the BBC reported, citing a letter sent by the group to the government. The plans can pose “serious risk to manufacturing competitiveness,” the letter said.In the letter, the industry representatives express their “growing concern” that British negotiators have dropped existing commitments to maintain regulatory alignment with the EU in relevant sectors. They also demanded reassurances that industry interests will be prioritized.Boris Johnson Is Elusive (2:57 p.m.)Johnson struck a cautious, yet optimistic note, in his first public comments since his meeting with Varadkar.“There is a joint feeling that there is a way forward that we can see a pathway to a deal,” the British prime minister told broadcasters in a pooled interview on Friday. “That doesn’t mean it’s a done deal. There’s work to be done.”He went on to say it “would be wrong of me to giving a running commentary on the negotiations. With the greatest possible respect I think, look at everything I’ve said previously. I think you can draw your own conclusions from that. But let’s our negotiators get on.”Pressed on what solutions he had proposed for the contentious Irish border question, Johnson said: “I can certainly tell you that under no circumstances will we see anything that damages the ability of the whole of the United Kingdom to take full advantage of Brexit, and I think that’s what people would expect, and that’s what I think we can achieve.”The pound, in the meantime, keeps rising. It’s now up 2%.The Devil Is in the Detail (2:06 p.m.)Barnier told the ambassadors that the U.K. had made concessions on both customs and consent without going into detail, an official said. Several ambassadors told him that the only thing that would work would be if the U.K. accepted the need for a Northern Ireland-only backstop, similar to the one thrashed out by the two sides last year, but Barnier refused to confirm that this was the plan, the official said.The issue about consent revolves around how the people of Northern Ireland should give their democratic consent to any agreement. It would involve some kind of regular sign-of from the region’s assembly.Question Is What Might the U.K. Have Given Up (1:47 p.m.)The U.K. conceded on some key issues that were standing in the way, an EU diplomat said following the debrief with Barnier. We are now looking to weekend negotiations, the diplomat representing one of the bloc’s member states, added.A second official, who was present in the debrief, said Barnier didn’t clarify what these U.K concessions might be. It’s an important question given how the U.K. depends on a Northern Ireland unionist party for backing in parliament.The EU Commission’s negotiator hinted that they are related to customs, and that we are heading toward a solution almost identical to the original Northern Ireland-only backstop, the ambassador said, asking not to be named, as the debrief wasn’t public.The bad scenario for this weekend is a backtracking from the U.K, in which case Barnier said he ’d discontinue the talks, the ambassador said. The good scenario is to bring a deal which resembles the original Northern Ireland-only backstop proposal of February 2018.In the latter case, a short technical extension may be required, the diplomat said.The meeting with Barnier was tense, with the French ambassador getting annoyed at one point because of the leaks to the media.Nothing Has Changed on Irish Border (1:38 p.m.)Let’s stay cautious. That is the message that resonated from the EU as speculation amped up on whether or not the divorce talks were headed into the final sprint.After meeting with his U.K. counterpart Stephen Barclay on Friday, Barnier told ambassadors from the 27 member states that there has been enough progress for talks to intensify.That isn’t quite the same as entering the so-called “tunnel” -- the formal Brussels process by which the actual legal text of an agreement is thrashed out in secret -- but it’s a sign both sides recognize a deal is still possible.Is It All Headed Into Secret Talks? (1:30 p.m.)So, EU envoys were briefed about a “possible convergence” between Ireland and the U.K, but a lot remains to be negotiated, a participant in the debrief with Barnier said. Ambassadors will reconvene either Sunday or Monday to take stock of the situation, the official said. The gist is to steer clear of using the word, tunnel, which implies a secretive process.What is obvious is that enough progress has been made to keep negotiating through the weekend with the aim of reaching a deal, instead of declaring talks dead today as Tusk said the plan was.Johnson Keeping Foster in Brexit Loop (12:30 p.m.)Boris Johnson has spoken to Arlene Foster, leader of the Democratic Unionist Party, about his Brexit proposals, according to a U.K. official.His office is keeping the DUP informed of the status of talks, aware that the party’s support for any deal could be crucial to it passing though The House of Commons.Pound Optimism Continues as Banks Surge (11:55 a.m.)The pound is now headed for its biggest two-day rally since before the Brexit vote in June 2016. The latest step higher came after a European Commission spokeswoman labeled the talks “constructive” (see 11:20 a.m.).Its not just the currency where optimism is mounting. Shares in Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc are up more than 9 %.Barclay-Barnier Meeting ‘Constructive,’ EU Says (11:20 a.m.)The European Commission was tight-lipped about the outcome of Friday morning’s meeting between EU chief Brexit negotiator Michel Barnier and U.K. Brexit Secretary Stephen Barclay, with a spokeswoman saying only that the talks were “constructive.”“You can assume they exchanged ideas, discussed many different angles,” Mina Andreeva told reporters in Brussels. “If there’s a will then of course there’s a way, otherwise people wouldn’t be working on this.”A U.K. spokesman used the same word to describe the talks.Brexit Talks May Enter Tunnel, Varadkar Says (11 a.m.)U.K. and EU negotiators may now enter the so-called tunnel for Brexit talks, Irish Prime Minister Leo Varadkar told reporters in Dublin.The focus is now on Brussels, he said, adding that he expects the U.K. will make more detailed proposals. The less said publicly about the talks the better, he said.DUP Lawmaker Warns on Stormont Veto (10.35 a.m.)Removing the so-called Stormont lock from any Brexit deal would leave Northern Ireland’s unionists “marooned,” Democratic Unionist Party lawmaker Jim Wells warned in an RTE radio interview.Northern Ireland Secretary Julian Smith’s suggestion that no one party in the region would have a veto through a vote in the Northern Ireland Assembly “does worry me,” Wells said, adding that “nothing will work unless unionism is signed up to it.”Acknowledging there had been a change of mood in the talks after Varadkar and Johnson’s meeting on Thursday, Wells, who is a member of the suspended Assembly, made clear that any plan which would force Northern Ireland to follow EU rules would be “unacceptable.”Pound Rises Again on Brexit Optimism (10:25 a.m.)The pound has surged 2.5% since Wednesday’s close, with traders jumping on the signs of Brexit optimism.It gained 0.6% to $1.2511 Friday, with Donald Tusk’s comments (see 10 a.m.) adding to the momentum. Deutsche Bank said Thursday evening it was no longer negative on the U.K. currency following a “pivotal moment” in Brexit talks.Options show sentiment on the pound over the next month is now the most positive since Bloomberg began compiling the data in 2003.Ireland: Detailed Talks Will Start (10:05 a.m.)While Thursday’s meeting between Johnson and Varadkar was positive, the “real detailed negotiation and technical work now will begin and that will be in Brussels,” Irish Finance Minister Paschal Donohoe said.Speaking on Newstalk radio, Donohoe pointed to the issue of allowing the region of Northern Ireland to give or withhold “consent” for any new customs system as a crucial area for discussion in the talks. There are differing views in the region on the issue, he said.EU’s Tusk Says ‘Promising’ Signals for a Deal (10 a.m.)EU Council President Donald Tusk gave some mixed messages over the chances of a Brexit deal, saying the U.K.’s proposals aren’t yet realistic but there are “promising signals.”“Unfortunately we are still in a situation in which the U.K. has not come forward with a workable, realistic proposal,” Tusk said in a televised statement in Cyprus. “A week ago I told Prime Minister Johnson that if there was no such proposal by today I would announce publicly there are no more chances” of a deal at next week’s summit of EU leaders.But Tusk said there was some positive news out of Thursday’s meeting between Johnson and Irish Prime Minister Leo Varadkar.“I have received promising signals from the Taoiseach that a deal is still possible,” he said. “Technical talks are taking place in Brussels as we speak. Of course there’s no guarantee of success and the time is practically up, but even the slightest chance must be used.”AB InBev Shelves U.K. Expansion On Brexit Fears (9:40 a.m.)Brewing giant Anheuser-Busch InBev SA put on hold plans to roughly double the size of its U.K. headquarters amid growing uncertainty over Brexit.The Belgian owner of Budweiser and Corona had been in talks to lease additional space in London’s Bureau building, where it already occupies the top four floors, two people with knowledge of the matter said.Fianna Fail Expects Talks to Resume (9.15 a.m.)The leader of Ireland’s main opposition party expects U.K. and EU negotiators to resume formal Brexit talks after Irish PM Leo Varadkar and U.K. leader Boris Johnson met on Thursday.Micheal Martin, who leads the Fianna Fail party, said he would be disappointed if talks don’t restart. “In good diplomacy there has to be accommodation and you can’t have one side losing face against the other,” he told RTE radio.Martin’s party is in a confidence and supply arrangement with the government, so is consulted on most major government decisions. He is likely to have been briefed on Thursday’s meeting.Barclay and Barnier Meet in Brussels (8:30 a.m.)U.K. Brexit Secretary Steve Barclay has arrived at the European Commission in Brussels for talks with the EU’s chief negotiator, Michel Barnier. The two will explore where things stand after Thursday’s meeting between the prime ministers of the U.K. and Ireland and discuss whether to restart more intensive talks.There’s no scheduled time for the meeting to end but Barnier is due to address EU ambassadors at 12:30 p.m. Brussels time.Earlier:Brexit Hopes Rise as U.K. and EU Take a Step Closer to a DealBoris Johnson’s Irish ’Pathway’ Is Full of Holes: Lionel LaurentImagine Brexit Heaven. It Isn’t Easy, I’ve Tried: John Authers\--With assistance from Tim Ross, Charlotte Ryan and Peter Flanagan.To contact the reporters on this story: Ian Wishart in Brussels at email@example.com;Nikos Chrysoloras in Brussels at firstname.lastname@example.org;Tiago Ramos Alfaro in London at email@example.comTo contact the editors responsible for this story: Flavia Krause-Jackson at firstname.lastname@example.org, Thomas Penny, Raymond ColittFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Fluent Beverage Company, a joint venture between both companies, said it plans to commercialize non-alcoholic, CBD-infused beverages in Canada. "Leading Fluent in my return to Canada has been very exciting. Fluent Beverages' announcement is a major step in the proliferation of CBD-infused beverages on a bigger scale.
Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility. The last 12 months is one of those periods, as the Russell 2000 […]
Molson Coors (TAP) gains from the solid brand portfolio and premiumization efforts as well as cost-saving initiatives and innovations. But soft beer demand and higher input costs remain deterrents.
Though summer has ended, our love for spiked seltzer has not. Boston Beer Co.'s President and CEO Dave Burwick joins The Final Round to discuss his expectations for the beverage industry now that spiked seltzer is here to stay.
(Bloomberg) -- They’re the big dogs of modern mergers and acquisitions—rapacious dealmakers that have devoured mighty corporations, bankrolled young disrupters and upended entire industries. And they’re not looking so tough anymore.Since 2014, when the latest wave of mergers and acquisitions began to build, three names have inspired fear and envy in the M&A world. In doing so, each has been totemic of a particular vogue in the capital markets:3G Capital, the Brazilian investment firm that has picked off some of America’s most famous brands and aggressively squeezed out costs and jobs Valeant Pharmaceuticals, the ill-fated Canadian company that gobbled up drugmakers, drove up prices and fueled outrage over high prescription costs And SoftBank, the big-dreaming—and big-spending—Japanese conglomerate that has backed the likes of Uber and WeWork and remains one of the most powerful forces in Silicon ValleyFrom the start, the three M&A powerhouses adopted wildly different strategies. But for any investor, the similarities deserve attention. Wall Street believed them and their many imitators to be exceptional. Turns out, they weren’t, and aren’t.(4)That’s worth remembering at a moment when the financial world is struggling to come to grips with the yawning gap between what the pros think companies are worth and what those companies actually fetch on public markets. (See WeWork’s botched initial public offering).Not long ago, 3G, co-founded by billionaire Jorge Paulo Lemann, seemed unstoppable. Lemann became a global name by cobbling together the world’s biggest beermaker, Anheuser-Busch InBev; picking up brands like Burger King and Tim Hortons; and driving the 2015 merger between Kraft and Heinz to create one of world’s largest food companies.3G has since stumbled—hard. Mixing Kraft and Heinz turned out to be a disastrous idea, and not just for those two companies.The investment firm’s usual combine-and-cut formula failed miserably at Kraft Heinz. Since Lemann teamed up with none other than Warren Buffett to do the deal, sales and profits have tanked. 3G’s dream of turning Kraft Heinz into the savior of Big Food ended when Unilever rebuffed its $143 billion takeover offer in 2017. This February, Kraft Heinz took a staggering $15.4 billion writedown. The company’s stock has plunged more than 70% from its peak, helping to drag down rivals like Kellogg, Campbell Soup and General Mills.Former management consultant Michael Pearson had a similarly radical idea at Valeant: that drugmakers like itself had no business actually making drugs.Instead, it would borrow money to acquire rivals, dramatically increase the price of their treatments and fire almost everyone. Rinse, repeat. Valeant’s ambition peaked in 2014 when it teamed up with activist investor Bill Ackman to mount an audacious $54 billion takeover offer for Allergan, the maker of Botox.The bid was spurned, but Ackman and Pearson were undimmed and, as if to prove their theory, took the company on a buying spree that included gastrointestinal drugmaker Salix ($11.1 billion) and Sprout, a developer of female libido stimulants ($1 billion). For a while investors approved, sending Valeant’s market value to $90 billion in August 2015. Then things went spectacularly wrong.Accounting irregularities, mounting debts and political angst over surging drug prices destroyed not only the Valeant dream, but those of the entire specialty pharmaceuticals industry. Among those that followed Valeant to that 2015 peak, Perrigo, Endo International, and Mallinckrodt have since lost, respectively, 74%, 96%, and 98% of their market values. For its part, Valeant is 93% lower, with a new management, board and shareholder base, and has renamed itself Bausch Health.There is no nice way to bring SoftBank into this part of the story.By almost any conceivable measure, it is having a diabolical 2019. The quixotic Masayoshi Son, a startup kingmaker of undoubted brilliance, has staked SoftBank’s billions—and its reputation—on three companies: Uber, the ride-hailing app which has lost about a third of its value, or $19 billion, since its May IPO; Slack, a messaging platform which debuted in June and is down 35% from where it ended its first trading day; and WeWork.(5)The scale of these blowups, so starkly at odds with SoftBank’s recent esteemed status, has dislocated the U.S. IPO markets as investors and would-be public companies look skeptically at one another across a widening gulf of value perception.In hindsight, the impermanence of the three dealmakers’ strategies is easy to skewer. But the success of 3G and Valeant was fueled by some of the most well-known names in finance. SoftBank, meanwhile, tapped entire nations to bankroll its ambitions of creating a future of robot-human harmony.These failures could end up restricting Son’s access to future funding, but it’s unlikely to diminish his vision for what he has said is a 300-year plan to grow the company he started 38 years ago.Nor, probably, will it dampen his enthusiasm for what he has called the gold rush of investing in nascent technology. “It’s just a money thing. It’s not important, it’s just a process. What is more important is humans’ happiness. How do we help ourselves, humans, become happier?” Son said in 2017, calling himself a “super optimist.” “There’s always a solution.”What’s more likely is the end of the burgeoning trend of taking loss-making companies public in the hope the future will come to them. Perhaps, too, some doubt will attach itself to the idea that pumping a young business with money and expecting it to succeed isn’t an idea of wheel-inventing novelty.Either way, there will be something else to worship soon enough. There always is.(1) Another area of commonality is a tolerance for bad corporate governance. In the case of Kraft Heinz and (to be very charitable) Valeant, there was sloppy accounting. For SoftBank, it was willing to put up with the various untraditional practices of Travis Kalanick and Adam Neumann.(2) I can’t add anything revelatory to the mass that has been written about SoftBank and WeWork, the fact that it valued it at $47 billion, whether or not Messrs. Son and Neumann met for 10, 30, or 60 minutes, etc. So I won’t. But it’s hard to feel not a little sad for Adam Neumann. The Disney prince/founder/ex-CEO of WeWork, who just weeks ago was gallantly riding toward his public market destiny, has been banished from the kingdom, leaving a regency of lesser mortals to seize the reins.To contact the author of this story: Ed Hammond in New York at email@example.comTo contact the editor responsible for this story: Daniel Hauck at firstname.lastname@example.org, David GillenBen ScentFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
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Anheuser-Busch InBev (NYSE: BUD), one of the biggest customers in line for hydrogen-powered fuel cell electric trucks from Nikola Corp., is jumping into California's electric truck demonstration race with 21 BYD battery-electric beer delivery trucks. BYD is partnering with the non-profit Center for Transportation and the Environment (CTE), and ENGIE Services U.S. for what BYD said is the largest Class 8 electric truck deployment in North America. Volvo Trucks North America said September 12 that it plans to deliver the first five of 23 Class 8 VNR trucks as part of its Volvo LIGHTS demonstration project before the end of the year.
AB InBev (BUD) gains from the solid brand portfolio and geographic reach, with strength in global brands that are aiding the top line. But currency headwinds and commodity cost inflation are deterrents.
The Zacks Analyst Blog Highlights: AbbVie, Starbucks, Phillips 66, Anheuser-Busch InBev and Square
If you consider hard seltzer a fad, like the wine coolers of the 1980s or Coors’ gone-but-not-lamented Zima, you better take another sip. Domestic sales will grow between 150 percent and 175 percent in 2019, as a category still unknown to around half of U.S. consumers reaches $1 billion in sales. Many now see spiked seltzer’s emergence as industry redefining.