Today - Wednesday, March 12, 2014
- Norway's sovereign wealth fund is examining the operations of oil firm Total (TOT) in Western Sahara to determine whether its activities there are unethical.
- The $850B fund, which invests Norway's revenues from oil and gas for future generations, invests only in companies it considers ethical, and has blacklisted 63 firms; it is one of the world's largest investors, with holdings in 8,200 companies, including a 2.06% stake in TOT worth ~$3B, which makes it the company's fourth-biggest investor.
- The fund also has been recommended by its ethics council to put Royal Dutch Shell (RDS.A, RDS.B) and Eni (E) on review for possible investment for up to four years over oil spills in Nigeria.
- SolarCity (SCTY +4.6%) will pitch its solar installation/electricity services to Best Buy (BBY -1.4%) customers at 60 stores in California, New York, Arizona, Oregon, and Hawaii.
- SolarCity, which already has a similar deal with Home Depot, will have onsite reps evaluate the feasibility of an installation with the help of satellite imagery, as well as discuss pricing and handle sign-ups.
- For Best Buy, the SolarCity deal is the latest in a string of store-within-a-store partnerships. Other partners include Apple, Microsoft, and Samsung.
- The release of 5M barrels is a test, says the government, to check for proper operations and infrastructure. Offers to buy are due by 2 ET on Friday.
- Oil was nicely lower today already and dipped further on the news, but has since returned to where it was before the release hit the wires, -1.4% to $98.66 per barrel.
- The latest EIA report released just minutes ago shows crude inventories up by 6.2M barrels last week.
- USO -1.2%
- ETFs: USO, OIL, UCO, SCO, DTO, DBO, CRUD, USL, UWTI, DNO, DWTI, SZO, OLO, OLEM, TWTI
- FuelCell Energy (FCEL -3.6%) is downgraded to Market Perform from Outperform but with a new $2.70 price target, up from $2, at Cowen, which says recently completed fuel cell parks in Connecticut and Korea should open a $12B opportunity, and H1 orders should drive FY 2014 and Q4 revenue and gross margins to EBITDA break-even.
- The firm is eyeing a back-half 2014 weighting to shipments, with a higher mix of full power plant projects vs. kit sales helping lift revenue to ~$68M in Q4 vs. $44M in Q1, and lift gross margin to 12% from 4.9%; in addition to volume, production cost improvements include process upgrades such as automated laser welding.
- However, fuel cell peers Plug Power (PLUG +18.1%) and Ballard Power (BLDP +8.5%) are bouncing from yesterday's huge losses.
- CEO of Banamex from 1996-2010, Manuel Medina-Mora remains tied to the business as Citigroup's (C -1.1%) chairman of Mexico (his full-time job is CEO of Citi's Global Consumer Bank). While it's unclear if Medina-Mora had any involvement with Oceanografia or the broader Mexican issues, the incident could create friction between him and Citi chief Michael Corbat, say sources close to the two.
- "If another preventable loss occurs ... I think Medina-Mora would likely be held accountable by Citi's board in some way or fashion," says KBW's Brian Kleinhanzl.
- After looking at 3D Systems' (DDD -1.2%) 2013 10-K, BofA/Merrill thinks the company's printer mix is shifting towards cheaper systems that tend to have lower materials attach rates.
- 3D states in its 10-K price/mix had a $397.7M impact on printer and other products revenue in 2013, up from just $109.1M in 2012, and that the "trend toward smaller, lower-priced printers has continued." At the same time, volume growth had a positive $498.9M impact.
- The company's big Q4/2014 warning was partly attributed to gross margin pressure resulting from an unfavorable mix.
- WSJ examines Chesapeake Energy's (CHK -0.7%) deepening dispute with Pennsylvanians over royalty payments to those with CHK wells on their land.
- Pennsylvania requires oil and gas drillers pay royalties of at least 12.5%, but lets drillers deduct costs for transporting, processing and marketing - and CHK appears to take a much more aggressive approach to those deductions than other energy companies operating there, including Anadarko (APC) and Statoil (STO).
- "I'm paying them to take my gas," says one landowner who claims his royalties don't cover the added taxes for owning commercial property.
- The public outcry has grown so loud that Pennsylvania Gov. Corbett, who has received campaign contributions from the company, wrote an open letter last month asking the state attorney general to investigate.
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- BG Medicine (BGMD) jumps 15.2% after saying late yesterday that it has received confirmation that it is in compliance with the listing requirements of the Nasdaq Capital Market.
- In November, when BG Medicine was traded on the Nasdaq Global Market, Nasdaq warned the firm that it was in breach of the exchange's requirements.
- BG asked to transfer to the Capital Market, which has less strict rules; Nasdaq approved, but the company still had to meet the new requirements.
- The $40-per-share offer for Safeway (SWY +0.2%) from Cerberus is the lowest valuation on a major food industry merger in the last ten years, according to Bloomberg. The deal price indicates low interest amongst major players for the struggling brand.
- The "go-shop" period of 21 days is expected to be quiet with Kroger (KR +0.5%) seemingly unwillingly to come in over the top with a bid for the whole company.
- Analyst take: Cantor Fitzgerald says the complicated Cerberus deal includes some risk for Safeway shareholders that the sale of property development centers won't generate the estimated returns. If that's the case, shareholders will earn less than the $40 bid price.
- The upward momentum continues for Capstone Turbine (CPST +6.4%) on news of orders for 50 Capstone C65 microturbines for oil and gas production in the U.S. to support the growing power needs of existing customers.
- CPST says the orders will bring the total fleet to more than 550 microturbines in operation in its area of responsibility and will serve various stages of oil and gas production including powering central processing stations, well-head operation, and flare reduction.
- The homebuilders are under pressure in early action amid another set of downgrades for individual names (Toll Bros., Pulte, Lyons today), and another slowdown in mortgage applications.
- The MBA Mortgage Application Index fell 2.1% last week, with the Purchase Index off 1% on the week and 17% from a year ago.
- Reporting on Credit Suisse's latest monthly agent survey, CNBC's Diana Olick says homebuyer traffic is falling and demand is "underwhelming," but the respondents cite higher rates and home prices, not the weather.
- XHB -1.3%, ITB -1.7%.
- Individual names: Hovnanian (HOV -1%), Lennar (LEN -1.2%) D.R. Horton (DHI -1.3%), Ryland (RYL -1.5%), KB Home (KBH -1.9%), Standard Pacific (SPF -1.5%), MDC Holdings (MDC -1.9%).