From the Securities Lending Trading Desk

thermometer

We’ve seen increased demand for TherapeuticsMD following Lakewood Capitals’s Anthony Bozza announcing a short postion. Macau casinos have seen a 14.4% rise in gaming revenues since  November.  In Europe, we see demand for Outotec increasing as earnings pressures continue to mount amid spending cuts and all eyes were on Europe for key votes in Austria and Italy this week.

Below please find the December 6 edition of From the Trading Desk, which provides timely commentary about top security earners, revenue drivers and other factors influencing the securities lending market from the BBH Securities Lending Trading Team.

Americas

There was increased demand for TherapeuticsMD after Lakewood Capital’s, Anthony Bozza, announced a short position. TherapeuticsMD fell nearly 18% following the news. However, other analysts think the decline was greatly overdone and see the stock as a “buy” at the current prices based on strengths in the companies upcoming products. Despite the decline this week, TherapeuticsMD is still trading roughly 25% above the 52-week low of $4.72 reached at the beginning of November. It went public via reverse merger, a method which has been considered a back-door entry and has resulted in periods of bearish sentiment on the stock since 2014.

WebMD Health Corp. was actively located this week as brokers look for Take No Action elections. WBMD announced in mid-November plans to purchase up to 2,000,000 shares of its common stock at a price of $55.00 per share. This was a more than $1.00 per share premium to the stock price at the time of the announcement and the spread has remained in that range since that time. The tender offer will expire on Thursday, December 15, 2016, unless extended by WebMD.

Asia Pacific

China’s largest property developer ignored a recent warning from one of the country’s main stock exchanges over its investment activities as it stepped up a buying spree of one of its rivals. China Evergrande Group boosted its stake in China Vanke Co’s A-shares to 14.1 percent, according to a regulatory filing made public last week, bringing its total expenditure to date to 36.3 billion yuan ($5.3 billion). China Evergrande has been funding a significant portion of its recent acquisitions through debt, which has drawn the attention of the Shenzhen Stock Exchange who in turn have increased their monitoring over the company’s trading accounts. We have seen long-term securities lending interest for China Evergrande, whose debt to equity ratio had surged to as much as 600% this year.

Macau casinos fortunes are beginning to change after reporting rising gaming revenues in November. The Chinese enclave posted the strongest growth in almost three years. Gross gaming revenue rose 14.4% amid a rise in visitation and average stay durations. Macau revenues have slumped for the past two years as Chinese President Xi Jinping tried to curb official corruption and limit capital outflow. We have seen long-term lending demand for Wynn Macau Ltd, Galaxy Entertainment Group Ltd and Macau Legend Development Ltd.

Europe

Demand for Outotec is increasing this week, as earnings pressures continue to mount amid spending cuts. The mining company cut its full year guidance by over 2%. Analysts do not project mining spending to grow until 2018; however Outotec is calling for a 5-15% gain to meet its growth targets for 2017. Outotec will be once to watch as we go into the New Year.

All eyes were on Europe for key votes in Austria and Italy this week. Most European Banks are receiving a lot of attention from investors and UBI is no exception. The Italian referendum vote on constitutional reform has brought attention to Italian Banks. As a result the demand to borrow UBI has grown.