|Bid||108.27 x 0|
|Ask||108.28 x 0|
|Day's Range||107.73 - 108.51|
|52 Week Range||90.10 - 108.78|
|Beta (3Y Monthly)||1.05|
|PE Ratio (TTM)||12.34|
|Forward Dividend & Yield||4.20 (3.88%)|
|1y Target Est||N/A|
A look at the shareholders of Royal Bank of Canada (TSE:RY) can tell us which group is most powerful. Institutions...
The U.S. is home to literally thousands of dividend payers, which would seem to eliminate the need to look elsewhere for income. But there's a convincing case to be made for at least a couple dozen Canadian dividend stocks.Newer income investors often look for the highest-yielding dividend stocks. They see a 7% yield as being better than 6%, 8% yields superior to 7%, and so on. But that's a much riskier proposition than it seems; sometimes, high yields are indicative of a troubled stock or company.A safer approach is selecting companies with more reasonable current yields that consistently grow their payouts over time. Here in America, many investors look to the Dividend Aristocrats - a group of 57 dividend stocks in the S&P; 500 that have improved their annual payouts for at least 25 consecutive years. But America isn't the only part of the world with Aristocrats. Canada, for instance, has 82.The Canadian Aristocrats' standards aren't as stringent as those of their U.S. counterpart. To qualify for the Canadian Dividend Aristocrats, a stock must be listed on the Toronto Stock Exchange, be a member of the S&P; Canada BMI (Broad Market Index), increase its annual payout for at least five consecutive years (it can maintain the same dividend for two consecutive years) and have a float-adjusted market cap of at least C$300 million.We've trimmed down that list to 25 Canadian dividend stocks that are best suited for American investors. The following 25 Canadian Dividend Aristocrats trade on either the New York Stock Exchange or Nasdaq, and have increased their dividends annually for at least seven years. SEE ALSO: 20 Dividend Stocks to Fund 20 Years of Retirement
(Bloomberg Opinion) -- Like expensive gems, luxury goods companies have scarcity value. If Bernard Arnault’s LVMH Moet Hennessy Louis Vuitton SE is allowed to get its hands on Tiffany & Co., the American jeweler is unlikely to come up for sale again. That’s something LVMH’s biggest rivals, Kering SA and Cie Financiere Richemont SA, might want to consider carefully.Financially they could both afford to make counterbids for Tiffany. An offer from either Cartier-owning Richemont or Gucci-owning Kering at the $120 per share price proposed by Arnault would lift their net debt to about 2.5 times Ebitda. That’s not too much of a stretch. Kering also has a 15.7% stake in sportswear maker Puma, worth about $1.8 billion, which it could reuse on something more promising.Both companies are no doubt extremely wary of taking on someone with such deep (and well-tailored) pockets as Arnault. But it’s a hard fight to sit out. Of the two, Richemont has most to lose from an LVMH-Tiffany tie up. The combined Franco-American group would take the Swiss giant’s position as the global leader in luxury jewelry, according to Bloomberg Intelligence.Arnault has a track record of turbocharging the brands he adds to his stable. Take the jeweler Bulgari, which has more than doubled its revenue since being bought by LVMH in 2011, according to analysts at Royal Bank of Canada. If LVMH repeated that trick with Tiffany, it would seriously challenge Richemont’s flagship Cartier brand.It would be a leap for Richemont to take on a lot more debt, especially when it’s still integrating the acquisition of online retailer Yoox Net-a-Porter and is developing a web joint venture with Alibaba Group Holdings Ltd. But these distractions might explain Arnault’s tactics in striking now for Tiffany.As for Francois-Henri Pinault’s Kering, it has lived with higher leverage in the past, although it tried to stick within a range of 1-2 times Ebitda. It certainly has room to expand in jewelry. Along with watches, the category accounted for just 6.8% of its sales in 2018. But many of Tiffany’s products are in the so-called “accessible” luxury segment (sometimes priced at about $1,000 or below), which Kering has been moving away from. The French group got rid of most of its stake in Puma last year to focus on the high-end stuff.Another problem for both rivals is that any counterbid would have to be above the $120 per share on the table, and would probably provoke a response from Arnault. The final purchase price would be even more of a stretch. LVMH has a “balance sheet war chest” of more than $20 billion, according to Deborah Aitken of Bloomberg Intelligence.Of course, a competing bid could be funded partly with shares, but Tiffany might well prefer cash.If Richemont and Kering can’t be enticed, the American company will have to persuade LVMH that it’s worth more without the help of an interloper bidding up the price. With its sales going in the wrong direction that looks difficult. But auction or not, it’s Tiffany’s job to make Arnault pay up.\--With assistance from Chris Hughes.To contact the author of this story: Andrea Felsted at firstname.lastname@example.orgTo contact the editor responsible for this story: James Boxell at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Investors in Uber Technologies Inc. are bracing themselves for the end of a lockup period on Wednesday that’s expected to flood the market with shares of the ride-hailing giant. Those worries -- following lackluster quarterly results -- sent the company’s stock to an all-time low on Tuesday, after months of downward movement.The lockup period expiry, which will allow early investors to sell stock to a skittish public market, comes on the heels of a rocky earnings report for the company on Monday. Uber’s food-delivery business and bookings growth underperformed investor expectations, overshadowing a pledge by the money-losing company to achieve profitability by 2021.But the stock’s mostly downward trajectory since its much-hyped initial public offering in May has some investors wondering if the deluge of new shares will mark a turning point.“The one thing that is holding back Uber shares is the enormous lockup expiration that starts [Wednesday], and it is tough to get a lot of these long-only investors into the game ahead of such a mass supply hitting the market,” Evercore ISI analyst Benjamin Black said in a phone interview.There’s no consensus on the number of shares that will start trading on Wednesday. RBC Capital Markets analyst Mark Mahaney estimated that roughly 1.7 billion shares will become eligible for sale. Wedbush Securities’ Daniel Ives said he expected 763 million will hit the market. The company had about 1.7 billion shares outstanding as of Sept. 30, according to Bloomberg data.IPO specialist Renaissance Capital estimated that about 1.5 billion shares will be released for trading, which would make the expiration of Uber’s lockup the second-largest ever for a venture capital-backed company, the firm said, behind only Alibaba Group Holding Ltd.’s 1.6 billion shares.Black said it could take the market around 100 days to digest an additional supply of around 1 billion shares, based on current trading volumes.Uber’s earnings on Monday beat estimates on both revenue and loss, and could be encouraging for investors who look most closely at traditional metrics, Black said. Those investors could start taking positions once the market processes the new supply, he added.“It’s just that right now there is a buyers’ strike and the shorts can get pretty aggressive,” Black said.To contact the reporter on this story: Esha Dey in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Brad Olesen at email@example.com, ;Mark Milian at firstname.lastname@example.org, Anne VanderMey, Molly SchuetzFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Royal Bank of Canada is cutting as many as 40 jobs at its investment bank in London, according to people familiar with the changes.The reductions are across RBC Capital Markets and affect areas including investment banking, equity sales and trading, and research, according to the people, who asked not to be identified because the moves haven’t been publicly announced. The cuts represent about 2% of the division’s workforce in the British capital.“We consistently review our businesses to ensure that we are investing in areas which deliver greatest client value and position our business for growth,” Mark Hermitage, a spokesman for RBC Capital Markets, said Tuesday in an interview. “We are consulting with a small number of U.K.-based employees on the potential impact to their roles following a recent business review.”Royal Bank has more than 2,000 employees in RBC Capital Markets in London, and the firm has been adding to those ranks in recent years. To contact the reporters on this story: William Canny in Amsterdam at email@example.com;Doug Alexander in Toronto at firstname.lastname@example.orgTo contact the editors responsible for this story: Michael J. Moore at email@example.com, ;David Scanlan at firstname.lastname@example.org, Steve DicksonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Oil closed at a one-week high as investors digested signals that a U.S.-China trade deal is imminent.Futures advanced rose 0.6% in New York on Monday. Chinese government officials are considering locations in the U.S. where leader Xi Jinping would meet U.S. President Donald Trump to sign a trade accord, people familiar with the plans said. Prices erased some of the session’s gains as doubts crept in about the extent and duration of any truce that may emerge.“As the day went on we are getting the same opaqueness about what’s actually occurring in the trade talks,” said Gene McGillian, senior analyst and broker at Tradition Energy Group in Stamford, Conn. “The market is hunting for a driver.”Prices rose as much as 2.2% in earlier trading, spurred on by the trade talks, record stock gains, positive economic data and rising bullish sentiment among money managers.Yet futures remain down about 15% from a late April peak as the trade conflict between the world’s largest economies undermines demand for fuel to run trucks, cars, planes and trains.“We are revisiting optimism about a positive outcome for U.S.-China trade talks, amplified by speculative long positioning,” said Frances Hudson, global thematic strategist at Standard Life Investments in Edinburgh, Scotland. The more recent economic data suggests the threat of recession is receding, she said.West Texas Intermediate for December delivery rose 34 cents to settle at $56.54 a barrel on the New York Mercantile Exchange.Brent for January settlement added 44 cents to close at $62.13 on the London-based ICE Futures Europe Exchange. The global benchmark crude traded at a $5.53 premium to WTI for the same month.Meanwhile, Saudi Arabia is taking measures to help ensure a successful public offering of shares in the kingdom’s oil company. Taxes on the company have been reduced, incentives have been unveiled to entice investors to hold onto their shares, and dividends may be increased.\--With assistance from Alex Longley.To contact the reporter on this story: Jacquelyn Melinek in New York at email@example.comTo contact the editors responsible for this story: David Marino at firstname.lastname@example.org, Catherine Traywick, Joe CarrollFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.Pound traders looking forward to quiet before the U.K.’s December election could be in for a rude awakening.A gauge of swings in the currency over the next two months is hovering near six-week lows, following a delay to Brexit and signs that a Conservative Party victory could help to stabilize British politics. Yet if the 2017 snap election is anything to go by, a surge in the polls by the Tories’ opponents could still knock the currency off course and drive volatility back up.This time around, turbulence could return on any boost for the Labour party and its socialist agenda, the Brexit party and its no-deal strategy, or a hung Parliament that could prolong the stalemate in Westminster.Two-month volatility jumped when then-Prime Minister Theresa May announced in April 2017 that a snap poll would be held in June the same year. Yet it quickly reversed course and hit fresh cycle lows, before rising again as the election loomed into view.Jeremy Corbyn’s Labour did better than expected and May ultimately lost her parliamentary majority before failing to secure an exit from the EU.“All we can say at this point is, with the Tories no longer the party of no deal, Tories up in the polls is good and Labour up is bad,” said Adam Cole, head of currency strategy at RBC Europe. “We’re stuck in a $1.2750-$1.3000 range until we get a steer either from the polls starting to shift, or the major parties shifting policy.”Options currently show the market cooling off following the most turbulent month for the pound in nearly three years. Realized volatility surged as traders braced for a chaotic exit from the European Union in October, then saw the prospect vanish as Britain secured a third extension, this time until Jan. 31.Concerns about a no-deal Brexit sent the U.K. currency briefly below $1.22 on Oct. 8, only for the pound to enjoy its best two-day run in a decade days later when the potential for a divorce deal sent sterling flying.Short- and medium-term positioning turned more balanced after U.K. Prime Minister Boris Johnson won lawmakers’ backing for his Brexit deal. Appetite for longer term volatility eased further when he secured an election for Dec. 12.Demand for options trades that will pay off following a large swing in the pound before Nov. 31 currently stands near a two-month low. According to Bloomberg’s options-pricing model, there is a 70% probability that the pound will trade within a 1.2650-1.3250 range against the dollar in November.NOTE: Vassilis Karamanis is an FX and rates strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice(Rewrites from paragraph 1.)\--With assistance from Charlotte Ryan.To contact the reporter on this story: Vassilis Karamanis in Athens at email@example.comTo contact the editors responsible for this story: Paul Dobson at firstname.lastname@example.org, William Shaw, Michael HunterFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Royal Bank of Canada’s biggest bail-in bond on record saw spreads tighten in secondary trading after the deal was oversubscribed by investors when first sold on Monday.RBC’s C$2.5 billion ($1.91 billion) of five-year notes were quoted at a spread of 96.8 basis points over Canada’s 1.5% bonds due 2024 compared to 97.8 basis points yesterday, according to Bloomberg Valuation bid prices. The deal’s order book was oversubscribed around 1.5 times, people familiar with the transaction said on Monday.The lender’s 2.609% bonds saw this increased demand amid a mixed tone in the global financial markets ahead of the Federal Reserve and Bank of Canada monetary policy meetings on Wednesday.“A benchmark deal of that size will dictate how the bail-in sector trades,” Andrew Torres, chief executive officer at Toronto-based Lawrence Park Asset Management, which manages over C$500 million of assets. “The lead syndicate got the balance right.”Canadian systemic banks began building their buffers of senior bail-in eligible securities in September 2018, and RBC was the first to sell the debt with a C$2 billion dollar deal. The bonds are designed to help prevent a repeat of the 2008 financial crisis when taxpayers worldwide had to rescue banks. Bail-in bonds are riskier than deposit notes because they may be converted to equity in the event a bank runs into trouble.The biggest Canadian banks, including RBC, may together issue at least C$108 billion more of bail-in eligible senior bonds to comply with total loss-absorbing capacity (TLAC) requirements by Nov. 1, 2021, according to latest Bloomberg Intelligence estimates released Sept. 14.RBC last priced a benchmark-size, senior bail-in deal in loonies in July when it sold C$2 billion of five-year securities at a spread of 97.1 basis points over Canada’s 2.5% bonds due 2024, according to data compiled by Bloomberg. A representative for RBC hasn’t replied to a request for comment.To contact the reporter on this story: Esteban Duarte in Toronto at email@example.comTo contact the editors responsible for this story: Nikolaj Gammeltoft at firstname.lastname@example.org, Christopher DeReza, Allan LopezFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Gold futures pared their weekly gain on Friday as progress in the U.S.-Chinese trade talks weighed against weaker-than-expected U.S. data that reinforced expectations the Federal Reserve will cut borrowing costs next week.The U.S. and China are close to finishing some sections of phase one of the trade agreement, officials said in a statement. Trump has said he wants to sign the first phase of a trade deal with China in November. The progress caused a pullback in demand for gold as a haven, sending the metal for immediate delivery as much as 0.2% lower.Still, bullion futures are up 0.7% this week, trading above $1,500 an ounce, as attention shifted to the Fed’s Oct. 29-30 gathering, when officials are expected to reduce interest rates by a quarter percentage point. Lower borrowing costs increase the appeal of non-interest bearing precious metals.U.S. reports this week showing slower home sales and a drop in key measures of business investment fueled demand for the commodities as havens.“The gold rally continues, along with palladium and silver as price breakouts make news and attract momentum traders following worried investors globally,” George Gero, a managing director at RBC Wealth Management, said in an emailed note Friday.Bullion has gained about 17% this year as many central banks adopt looser monetary policy in efforts to support their economies hurt by trade wars.Geopolitical uncertainty around the globe has also supported haven demand for gold. French President Emmanuel Macron blocked the European Union’s attempt to delay Brexit for three months. Concerns over a U.S. presidential impeachment and the nation’s trade war with China could also mean more gains for the metal, Richard Hayes, chief executive officer of the Perth Mint, said Friday in a Bloomberg TV interview.Gold futures settled less than 1% higher to $1,505.30 an ounce at 1:30 p.m. on the Comex in New York, after reaching the highest in two weeks.Silver futures also advanced on Friday. On the New York Mercantile Exchange platinum posted a fourth straight gain, and palladium slipped, but managed a 1.5% weekly increase.\--With assistance from Ranjeetha Pakiam.To contact the reporters on this story: Justina Vasquez in New York at email@example.com;Elena Mazneva in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Lynn Thomasson at email@example.com, Will Wade, Christine BuurmaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Venezuela’s opposition scored a last-minute victory Thursday as the Trump administration stepped in with a measure to protect the nation’s most prized asset abroad from creditors before a key debt payment.The U.S. Treasury Department updated its sanctions guidelines to temporarily put transactions pertaining to Petroleos de Venezuela’s 2020 bonds, backed by 50.1% of Citgo Holding Inc.’s shares, on the same footing as other financial deals that are prohibited. Timing was of the essence: Advisers to National Assembly President Juan Guaido said they lacked the funds to make a $913 million debt payment due Monday.Washington’s decision to block holders of PDVSA’s 2020 bonds from seizing their collateral for 90 days followed months of lobbying by Venezuelan opposition leaders. They warned that losing Citgo would be a political catastrophe for Guaido, whom the U.S. and almost 60 other countries recognize as the nation’s rightful leader. With the Trump administration’s support, Guaido and his allies effectively run Houston-based Citgo, yet have little operational control over its parent PDVSA.Citgo said in a statement that it’s “gratified” by the decision, while Guaido’s office said it “welcomes” the move.“We will continue working in all legal ways to achieve the irrefutable protection of this and all the assets of the Venezuelan people,” Guaido’s office said. “This amendment from the U.S. Treasury Department recognizes the strategic value of Citgo for the present and future of Venezuela.”Guaido’s team also faces a cash crunch. While the U.S. froze accounts linked to Nicolas Maduro’s regime, it has refrained from handing them to the Venezuelan opposition out of fear that it would prompt litigation from creditors. Even if that money was available, Guaido would’ve needed approval from the National Assembly. Last week, the legislature passed an accord calling the PDVSA 2020 bonds unconstitutional because they weren’t approved in the first place.“The Treasury Department is giving a strong signal that it wants creditors and the Guaido administration to reach a refinancing agreement,” said Francisco Rodriguez, director of Oil for Venezuela. “What Treasury has essentially done here is grant the Guaido team the 90-day truce they requested.”The PDVSA 2020 bonds rallied Thursday by the most since December 2017 as investors took some relief that the Trump administration left room for a deal in the coming months. The notes now trade at 34 cents on the dollar from about 90 cents in June.London-based Ashmore Group Plc holds about half of the bonds, according to data compiled by Bloomberg. BlackRock Inc., T Rowe Price Group Inc. and the Royal Bank of Canada are among the other largest reported holders.Right-wing groups, including Grover Norquist’s Americans for Tax Reform, had argued that the Trump administration should refrain from intervening because that would interfere with property rights. But a bipartisan bloc of U.S. senators and representatives including Marco Rubio, Ted Cruz and Lizzie Fletcher urged the president to take action.They argued that a PDVSA default would open the door for Russia’s state oil giant Rosneft to take control of Citgo shares. PDVSA pledged a 49.9% stake in the Houston-based refiner to Rosneft as collateral on a loan in late 2016. Rosneft said earlier this month that it “has no intentions to enter into real ownership and management of the company.”U.S. Treasury Secretary Steven Mnuchin has previously said that, in the event of a PDVSA default, Citgo’s loan from Russia would be reviewed by the department’s Committee on Foreign Investment in the U.S., which can derail deals on national security concerns.(Adds Citgo and Guaido statements in fourth and fifth paragraphs.)To contact the reporter on this story: Ben Bartenstein in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Carolina Wilson at email@example.com, Alec D.B. McCabe, Robert JamesonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- The best way to avoid owning a stranded asset is to not have that asset in the first place. Kuwait is considering cutting expansion plans for its oil production, as reported by Bloomberg News. This is apparently due to expectations that mounting concern about climate change will curb demand. Yet there are also more prosaic considerations of cost and competition at play here.State-owned Kuwait Petroleum Corp. had a goal of getting production to 4 million barrels a day by 2020 and 4.75 million a day by 2040. As of now, capacity is pegged by the International Energy Agency at slightly below 3 million barrels a day. And production so far this year, which is subject to ongoing OPEC+ restrictions, has averaged about 2.7 million barrels a day.The 2020 target is obviously redundant regardless of the Greta Thunbergs of this world. OPEC’s own projections imply demand for its crude oil will drop another 1.2 million barrels a day in 2020. A year ago, in its most recent medium-term outlook, OPEC wrote that demand for its oil wouldn’t recover to 2018 levels until the late 2020s. Incidentally, OPEC now pegs demand for its crude oil next year at 29.6 million barrels a day, fully 3.1 million barrels less than what it projected only last November, which is equivalent to all of Kuwait’s output and then some.All this is more a function of rising U.S. supply rather than expectations of imminent peak demand; OPEC doesn’t foresee that happening this side of 2040, at least. Kuwait’s 2020 target was set almost two decades ago, when Pets.com was still a thing but neither fracking nor renewable energy were expected to take off. Delaying it by another 20 years is merely a belated recognition of reality.The new 2040 target is also somewhat redundant, but in a different way. The revision to the 2020 target reflects a global energy business that has become unpredictable across multiple dimensions, encompassing not just climate change, but technological and geopolitical changes too. To predict the world’s energy mix, or one country’s production, with any degree of exactitude 20 years out is is to get it wrong these days.What is important about Kuwait’s new target is the trend. The long-standing position of enormous expansion has given way to caution. Scenarios where oil demand peaks play a critical role in that. More pertinent is the sheer range of outcomes and what they imply for oil demand and prices. Oil has entered a period of greater competition, both between suppliers and with other fuels, meaning the range of pricing outcomes is very wide.Kuwait, like its much larger neighbor Saudi Arabia, is technically a low-cost producer. But its reliance on oil rents to fund its social contract means it actually requires a higher price: north of $50 a barrel, according to estimates from RBC Capital Markets (Saudi Arabia’s are higher still). Regardless of whether global oil demand peaks in the 2020s, ‘30s or whenever, the strategy for both countries boils down to one thing: Keep production costs as low as possible, both to be the last producers standing and to preserve as much rent as possible to ease an economic transition as and when oil demand does peak and decline.One thing we know, even if we don’t have exact numbers, is that the future barrels Kuwait and Saudi Arabia are developing today will be more expensive than those produced in the past (something any investor in any eventual IPO of Saudi Arabian Oil Co. should ponder). There’s a lesson here from the recent experience of the western oil majors. They invested vast sums in new projects in the decade leading up to 2014 on the premise of $100 oil being the new normal. The subsequent crash and realization of structural changes centered on shale and climate change exposed the fallacy of this, and those companies have paid a heavy price in the stock market. Their new mantra — most of them anyway — is to be cautious on spending, prioritizing payouts to shareholders and profits over sheer volume.Think of Kuwait’s new 2040 target in those terms. It sees the world is changing, but getting a handle on what that will mean in 2040 (or even 2030) is essentially impossible, as today’s surprising reality attests. When the path ahead is that dark and prone to pitfalls, it’s better to take incremental steps rather than big strides — or, in this case, set smaller capex budgets and stay flexible. In that sense, the climate for this industry has changed fundamentally already.To contact the author of this story: Liam Denning at firstname.lastname@example.orgTo contact the editor responsible for this story: Mark Gongloff at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Royal Bank of Canada set a goal nine years ago to become a Top 10 investment bank in the U.S. -- but cracking Wall Street’s upper echelons for advising on takeovers had proved elusive. Until now.RBC Capital Markets has risen to the No. 10 ranking for advising on announced U.S. mergers and acquisitions this year, its highest standing ever, according to data compiled by Bloomberg. The firm has 9.9% market share, with 72 deals valued at about $179 billion as of Oct. 21. Its U.S. investment banking co-head, Matthew Stopnik, anticipates more gains ahead.“We’re scratching the surface,” Stopnik said in an interview at the firm’s Lower Manhattan office. “We see an opportunity to continue to chip away and do higher quality, more meaningful transactions and build market share.”RBC Capital Markets in 2010 targeted a Top 10 U.S. ranking within three years. It expanded New York operations by hiring star bankers, and boosted lending to win bigger clients. While the efforts paid off years ago in equity financings and debt deals, the Top 10 for M&A remained out of reach.The firm has the biggest U.S. investment-banking operations of its Canadian peers including Toronto-Dominion Bank, after taking advantage of the financial crisis a decade ago to expand and recruit talent while other firms scaled back. Bank of Montreal is now aiming to take advantage of the more-recent retreat by European firms to expand its U.S. investment bank.RBC Capital Markets today has about 560 investment bankers in the U.S. -- more than double from a decade earlier, and almost three times more than in Canada. That’s helped the firm move up the league tables.“We feel like we’re gaining greater traction working on larger deals,” said Stopnik, 47. “A lot of it has to do with the hires and investments we’ve made over the years.”RBC advised Raytheon Co. this year on a $90 billion takeover by United Technologies Corp. It also was BB&T Corp.’s sole adviser on its $27.9 billion merger with SunTrust Banks Inc. and advised Broadcom Inc. on the $10.7 billion acquisition of Symantec Corp.’s enterprise security business.The firm was sole adviser and provided debt financing to Permira Holdings LLP for its $2.5 billion takeover of life-sciences company Cambrex Corp., and is advising Apollo Global Management Inc and leading financing for a purchase of radio stations owned by Cox Enterprises Inc.“In a difficult fee environment overall, we’ve made significant progress on the M&A side,” said Jim Wolfe, RBC’s other co-head of U.S. investment banking. “We’re going to be up roughly 20% year-over-year in terms of U.S. advisory fees.”This year isn’t a one-off, according to Wolfe.Since becoming co-heads in June 2018, Wolfe and Stopnik have expanded the advisory business and leveraged-finance platform. They’re pushing to build equity capital markets and gain expertise in technology and health care. They plan to add about three senior bankers to the 40-person health care group.“As we come into 2020 we’ve got the best pipeline that we’ve had in quite some time across all products, but particularly M&A,” Wolfe, 54, said in an interview. “We feel good about the ability to keep the momentum we achieved in 2019 as it relates to our advisory business.”To contact the reporter on this story: Doug Alexander in Toronto at firstname.lastname@example.orgTo contact the editors responsible for this story: David Scanlan at email@example.com, ;Michael J. Moore at firstname.lastname@example.org, Dan Reichl, Josh FriedmanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Oil fell for a second session amid concern that a fragile economic outlook will weigh on fuel demand.Futures declined 0.9% in New York. Policymakers in China, the world’s second-biggest oil consumer, are preparing for two key meetings with fresh evidence that economic growth already at its lowest in almost three decades will continue to slip. Speculators have almost tripled short positions in U.S. crude futures since mid-September as Washington and Beijing struggled to strike a trade deal, according to data on Friday.“The driving point behind the market has been ‘demand destruction’,” said Gene McGillian, a senior analyst and broker at Tradition Energy in Stamford, Conn. “I think we are seeing return of that to the front burner.”Oil has declined almost 20% from an April peak despite the world’s biggest-ever crude-supply incident with last month’s missile strike on Saudi Arabian infrastructure. Separate supply crises from Iran to Venezuela and Iraq are being drowned out by the increasingly bleak economic outlook.“Demand fears regained the narrative and concerns about the broad macro economy continue to be in the driver’s seat,” said Michael Tran, head oil strategist at RBC Capital Markets in New York.West Texas Intermediate for November delivery fell 47 cents to settle at $53.31 a barrel on the New York Mercantile Exchange.Brent for December settlement fell 46 cents to settle at $58.96 on the London-based ICE Futures Europe Exchange. The global benchmark crude traded at a $5.45 premium to WTI for the same month.To contact the reporter on this story: Jacquelyn Melinek in New York at email@example.comTo contact the editors responsible for this story: David Marino at firstname.lastname@example.org, Joe Carroll, Reg GaleFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Russian billionaire Oleg Deripaska says that U.S. prosecutors’ efforts to gain access to records seized from a U.K. company associated with him are motivated by American political “infighting.”British authorities raided a storage unit last December owned by Terra Services Ltd., a real estate firm that until last year was controlled by Deripaska, as part of a possible offshoot of U.S. Special Counsel Robert Mueller’s investigation of Russian election interference. The aluminum magnate’s business dealings with convicted former Trump campaign chairman Paul Manafort were a subject of Mueller’s inquiry.Terra Services is challenging the lawfulness of the search warrant, which seized at least 25,000 electronic documents, and has asked a London judge to prevent the documents from being handed over to the Americans.“The Terra raid that happened around a year ago and the recent publicity in relation to it is yet another hopeless attempt to drag me into never-ending U.S. political infighting,” Deripaska said in a written statement on Monday. “Washington bureaucrats are desperate to link me to Manafort, who I haven’t dealt with for years as I have repeatedly stated. They are chasing a ghost.”READ: Deripaska-Linked Firm Was Raided for Undisclosed U.S. ProbeU.S. authorities are seeking evidence of “money laundering, tax offenses and fraud offenses” from 18 individuals and companies including Terra Services, Bloomberg News reported last Friday, citing documents filed in a London court.Deripaska handed control of Terra Services in January 2018 to an individual named Pavel Ezubov, whose name matches that of the billionaire’s cousin, Russian media group RBC reported last year. The firm owns several properties in San Tropez and Paris, RBC said. It has just six employees, according to a U.K. corporate registry.To contact the reporters on this story: Yuliya Fedorinova in Moscow at email@example.com;Jonathan Browning in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Lynn Thomasson at email@example.com, David S. Joachim, Christopher ElserFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- U.S. prosecutors aren’t done with Oleg Deripaska, the Russian billionaire who figured prominently in Special Counsel Robert Mueller’s case against Donald Trump’s campaign chairman.In what could be an offshoot of Mueller’s work, federal authorities are seeking records seized from a U.K. company associated with Deripaska, according to documents filed in a London court this week. As part of the previously undisclosed inquiry, U.S. authorities are seeking evidence of “money laundering, tax offenses and fraud offenses” from 18 individuals and companies including Terra Services Ltd., a real estate firm that until last year was controlled by Deripaska, the filings say.The inquiry is “live and ongoing,” according to a U.K. government filing Thursday. Terra, in another filing, said the search request appears to have been made “in connection with the special counsel investigation being conducted in the U.S.” into Russian election interference.The investigation came to light because Terra is challenging a search warrant that led to the December 2018 seizure of at least 25,000 electronic documents from a British storage unit it owned. Terra asked a London judge to prevent the documents from being handed over to the Americans.Redacted ReportThe presiding U.K. judge who granted the search warrant in December 2018 said that any seized materials could be helpful “in an ongoing U.S. investigation into a number of criminal offenses committed by two U.S. subjects, Paul Manafort and Rick Gates,” according to court documents. But by that time Manafort had been convicted and was awaiting sentencing. Gates had already pleaded guilty and was cooperating with prosecutors.Mueller’s team ended its work earlier this year, referring several matters to other U.S. prosecutors. Many of those haven’t been made public. Parts of Mueller’s report dealing with Manafort and Gates are redacted to avoid interfering with unspecified ongoing investigations.According to Mueller’s report, one-time Trump campaign chairman Manafort had a business dispute with Deripaska that he was looking to resolve, and he offered Deripaska briefings and internal polling data. Manafort was convicted of multiple crimes and is serving a sentence of more than seven years; Deripaska wasn’t accused of wrongdoing.U.S. RequestThe U.S. request named 18 entities including Terra Services and two U.K.-based lawyers. The documents available in the London case don’t include the U.S. request for a search, or the corresponding U.K. search warrant, but quote from parts of the warrant. The filings don’t say which U.S. authorities are currently handling the matter.The U.K. National Crime Agency, which carried on the search, and the U.S. Department of Justice declined to comment.Judges have so far denied requests by Terra and others to see the U.S. letter.‘Degree of Confusion’“There is a degree of confusion as to what exactly is being investigated,” Terra’s lawyer, Monica Carss-Frisk, said in court.Deripaska’s office in Moscow referred queries to Terra Services. A lawyer for the U.K. firm declined to comment.Deripaska, who grew rich in Russia’s aluminum business, is one of the highest-profile Russians caught up in waves of U.S. sanctions against the country since its 2014 annexation of Crimea and support for separatists in eastern Ukraine. Some companies formerly controlled by Deripaska were removed from the blacklist in January, following an administration effort to lift the sanctions that was supported by Senate Majority Leader Mitch McConnell.One of Deripaska’s companies subsequently committed funds to a new aluminum plant to be built in McConnell’s home state, Kentucky.The billionaire himself remains under U.S. sanction, which means American citizens and entities are prohibited from dealing with him.The British warrant said that the owners would seek to destroy or conceal evidence if it wasn’t issued, according to filings in the London case.Just days before the warrant was issued, the NCA conducted its own search of the storage unit to “assist a money laundering investigation.” The British search, authorized under legislation that allows for covert surveillance, should have been approved by a judge, Terra said in its filing. It’s unclear if the investigations are related.Cable DealManafort and Deripaska fell out in 2008 over a deal to buy a cable company in Ukraine. Lawsuits filed by Deripaska in 2014 describe how Gates, Manafort’s deputy, failed to respond to requests for information on the investment around the same time. In September 2010, Deripaska asked Gates to account for the $18.9 million he’d invested, but the report was never delivered, according to court documents.Documents unsealed in June 2018 showed that Manafort and his wife acknowledged on a 2010 tax return that they owed $10 million to Deripaska.Deripaska handed control of Terra Services in January 2018 to an individual named Pavel Ezubov, whose name matches that of the billionaire’s cousin, Russian media group RBC reported last year. The firm owns several properties in San Tropez and Paris, RBC said. It has just six employees, according to a U.K. corporate registry.(Releads and updates with Deripaska firm’s commitment to Kentucky aluminum plant.)\--With assistance from David Voreacos and Yuliya Fedorinova.To contact the reporter on this story: Jonathan Browning in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Anthony Aarons at email@example.com, ;Jeffrey D Grocott at firstname.lastname@example.org, David S. JoachimFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Some institutional investors remain increasingly unconvinced that responsible investing will boost their returns.
(Bloomberg Opinion) -- The activist investors are on the tarmac at Emerson Electric Co.D.E. Shaw Group on Tuesday released a letter calling for the $42 billion industrial company to spin off its climate division and make productivity and corporate-governance improvements, including culling its fleet of eight corporate jets and a helicopter. The public pressure follows reports late last month that D.E. Shaw was seeking a breakup of the company and Emerson’s subsequent announcement that it would review its operations.In its letter, D.E. Shaw takes issue with the lack of tangible commitments and deadlines for Emerson’s strategic review and stresses that some of its recommendations – such as making all board directors subject to annual elections – shouldn’t require that much deliberation in this day and age.D.E. Shaw is justified in its wariness of Emerson kicking the can down the road. CEO David Farr has been in his role for 19 years and, according to analysts, he’s signaled he will retire in fiscal 2021 or 2022 and would prefer to leave any decision on a breakup to his successor. RBC analyst Deane Dray speculated earlier this month that a preliminary update on the outcome of Emerson’s strategic review may not come until the company’s annual analyst meeting in February. Emerson is 129 years old and on track to generate $18.5 billion in revenue this year; change doesn’t happen quickly at companies like that. But in a way, that reinforces the activist investor’s argument.Emerson needs to reckon with its remaining vestiges of crusty corporate habits and old-school sprawl. Examples include the high personal usage by the CEO of that corporate jet fleet (which is managed by 40-plus employees and an intern, apparently), guaranteed three-year and staggered terms for board directors, and a jaw-dropping 18 separate office and factory buildings in the Houston area. Let's hope none of those corporate jets fly empty behind Farr’s plane, in the vein of the reported practices of former General Electric Co. CEO Jeff Immelt.Calling attention to those practices is a smart tactic that will resonate with fellow shareholders irked by Emerson’s lackluster returns, and should ramp up pressure on management to make changes more quickly. I would add to D.E. Shaw’s list of grievances a bias toward less transparency: Emerson is the only major industrial company I cover that declines to routinely webcast its presentations at major conferences.The biggest change advocated by D.E. Shaw is a breakup of Emerson. It’s an idea that’s long been bandied about because the Emerson division that sells air-conditioner controls and food-disposal systems has little to do with the unit purveying automation equipment. The company has slimmed down already, divesting about $6 billion of revenue, including the network power business it cobbled together through billions of dollars worth of disappointing acquisitions. Analysts aren’t convinced that a bigger split would pay off in the stock price.Emerson should be valued at about $73 a share based on the sum of its parts, according to the average of three analysts’ estimates. That’s just 3% higher than where Wall Street on average expected Emerson’s stock to rise over the next year before reports of D.E. Shaw’s involvement. The hedge fund, for its part, estimates Emerson could be valued at $77 if its parts were valued comparably to the average of its peers, a meaningful improvement but not a knock-your-socks-off game-changer. The real value comes through the combination of a breakup with the cost-cutting initiatives. In that scenario, D.E. Shaw sees the potential for Emerson’s valuation to rise to $101 a share. Analysts have long recognized that typical sum-of-the-parts estimates tend to underestimate the efficiency gains that come from more focused management teams, so there may be something to this kind of analysis. The prospect of a deepening downturn in the industrial sector should add to the sense of urgency for the cost-cutting opportunities D.E. Shaw has identified. Emerson in August warned that $350 million of projects planned for 2019 had been pushed to next year, while $450 million of 2020 projects had been delayed to 2021. Analysts are bracing for those numbers to get worse when the company reports its fiscal-fourth-quarter results in November, and for its 2021 earnings goals to slip out of reach. D.E. Shaw estimates Emerson can cut more than $1 billion of costs by streamlining corporate functions and improving margins in its automation division. In response to the activist investor’s letter, Farr pointed out that Emerson was “one of the first industrial companies to address the concerning trends in the macroeconomic environment.” That’s true to an extent, but its own plan calls for $100 million in restructuring spending this year, less drastic than what D.E. Shaw is proposing.I remain concerned that the industrial breakup craze is going too far and we don’t properly understand the longer-term implications of it. But the corporate-governance and cost-management shortcomings highlighted by D.E. Shaw will make it harder for Emerson’s management team to resist it.To contact the author of this story: Brooke Sutherland at email@example.comTo contact the editor responsible for this story: Beth Williams at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brooke Sutherland is a Bloomberg Opinion columnist covering deals and industrial companies. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg Opinion) -- Just 24 hours after LVMH reported knockout sales growth, Hugo Boss AG has provided a sober reminder that the luxury sector’s spoils will not be spread evenly.The maker of smart suits on Thursday issued a warning on full-year sales and profits, the second time it’s pared its outlook in two months, blaming the problems in Hong Kong and ongoing weakness in the U.S. The shares fell as much as 14% to the lowest level in nine years.Chief Executive Officer Mark Langer made a mistake by being too optimistic about the outlook. What’s far less clear now is whether his plan of boosting online sales, focusing on a slimmed-down portfolio of brands and embracing faster fashion is enough to weather the shocks on the horizon on top of the enduring shift toward casual office attire.Hugo Boss gets just 2-3% of its sales from Hong Kong, compared with about 6-7% in China, so it should have been more cushioned. But it struggled to offset a 50% plunge in third-quarter sales in Hong Kong, which remains a popular shopping destination for mainland Chinese. By contrast, LVMH said its Hong Kong sales fell 40% in August and September, but much of that was recouped elsewhere.Workwear, unlike handbags, isn’t the sort of thing you naturally buy on your holidays, so lost sales of suits, say because stores are closed, are less likely to be transferred to another shopping location.That highlights one of Boss’s two big weaknesses: It generates 90% of its sales from clothing. These are proving more vulnerable than leather goods, which remain highly desirable, particularly for middle class and younger Chinese consumers.The other is that Boss also operates in the upper premium segment of the market, rather than super-luxury part. The very wealthy tend to be more resilient spenders than the merely comfortably off who have greater cause to fear political and economic uncertainty. Hugo Boss’s professional customers are more likely to fret about instability, which seems to be popping up everywhere, as well as the possibility of a U.S downturn next year.Boss blamed its last downgrade to forecasts, in early August, on problems in the U.S. It generates about 15% of its sales in that market, where it has been hurt by heavy discounting by rivals and fewer tourists, given the strength of the dollar. With U.S. consumer confidence posting the biggest drop since the start of the year in September, that doesn’t bode well for a quick recovery in this crucial market.All this raises serious questions about the ambitious targets that Langer set less than a year ago. Expanding sales growth from 4% in 2018 to 5-7% by 2022 always looked ambitious. Now the trajectory looks even more challenging, given that the company’s new forecast is for sales growth in the low single digits in 2019. Lifting the margin to 15% of earnings before interest and tax looks equally unrealistic. Analysts at RBC estimate the EBIT margin at 11.7% in 2019.The shares have fallen 37% over the past year, and trade on a forward price-earnings ratio of just 10 times, about half the other clothing-focused luxury groups, indicating that investors have little faith in the group meeting its medium-term goals.Langer’s strategy of moving to just two brands – Boss, catering to core customers, and Hugo for the younger crowd – looks sensible. Bolstering online sales, getting the latest looks into stores more quickly and increasing personalization are logical moves, too. But all of this is increasingly being undermined by weak markets and consumers continuing to turn off clothing.Like an ill-fitting suit, Langer’s aspirations need some careful alterations.To contact the author of this story: Andrea Felsted at email@example.comTo contact the editor responsible for this story: Melissa Pozsgay at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at […]
In a bygone era, employees followed a fairly standard path to retirement using a combination of Social Security benefits and company pension plans. Today, a type of equity compensation called restricted stock units (RSUs) offers a new building block toward retirement, while also opening doors for investments, experiences and major purchases throughout the course of your life. In addition to possibly providing valuable assets for a retirement portfolio, RSUs can also play a role in how you manage your cash flow and credit liabilities, and even help in hitting financial milestones that you might have thought would be out of reach until much later.
(Bloomberg) -- India is emerging as the testing and acquisition playground for global consumer technology companies, especially the so-called FAANGs, according to a veteran internet analyst.RBC Capital Markets’ Mark Mahaney, who calls himself Wall Street’s “oldest internet analyst” after covering the sector for more than two decades, said India is now more popular than markets like China because it has the same growth dynamics but with fewer regulations.As one of the largest economies and most populous countries in the world, India has turned into a testing ground for companies such as Facebook Inc., which has used it to beta-test a payments feature for WhatsApp. Netflix Inc. rolled out a mobile plan in India at 199 rupees ($2.80), much cheaper than what it charges for a basic plan elsewhere, and has created original content to capture more market share.“India does have regulations but it doesn’t seem to be as protectionist as China,” said the 53-year-old analyst. India has been considering a new law that would require personal data to be stored locally, which could impair the operations of the Internet giants but Mahaney remains confident they can still penetrate the market.Besides organic growth, acquisitions are another strategy for these companies in India, especially since they are facing more scrutiny back home and in western Europe. “There’s an opportunity to build growth” in Asia, particularly in India, Mahaney said.Amazon.com Inc. has already tried its hand at deals in the South Asian nation by attempting to acquire Indian e-commerce pioneer Flipkart Online Services Pvt., before it was snapped up by Walmart Inc. last year.Facebook, Netflix, Amazon and Alphabet Inc. can all win big in India, said Mahaney, who has a buy rating on the stocks. “India is less than 5% of the Amazon’s total revenues but it has the potential” to get to that level within five years, Mahaney said.To contact the reporters on this story: Ishika Mookerjee in Singapore at email@example.com;Abhishek Vishnoi in Singapore at firstname.lastname@example.orgTo contact the editors responsible for this story: Lianting Tu at email@example.com, Teo Chian Wei, Naoto HosodaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.