GlobalFoundries finds unexpected success - even if it was expected. Shell plans to move to the UK - and this is rather a plus for investors.
Disclaimer: when we talk about, that something has grown, we mean a comparison with the same quarter a year earlier. Since all issuers are from the USA, then all results in dollars. When creating the material, sources were used, inaccessible to users from the Russian Federation. We hope, Do you know, what to do.
"Why yes why? To make ham": How is GlobalFoundries doing?
In October, we reviewed the business of the semiconductor company GlobalFoundries (NASDAQ: GFS) ahead of its IPO. More than three weeks have passed since the company went public, so we can draw some intermediate conclusions about the present and future of GFS.
Solid guessing. Among stock market analysts, there is a common habit of guessing about the future of issuers' quotations based on the results of their IPO. If during the day the placement of shares ends with the growth of their price above the initial, then the near future of these shares will be positive - so, investors showed significant interest in the stock, which will be preserved and, may be, even grow for a while. But if the share price by the end of the trading session will fall below the placement price, this means, that strong growth should not be expected, because investors showed no interest.
well, In general, sort of like marmots, garuspitsia and augurs. GFS started trading on 47 $ per share and by the end of the day was cheaper, than when placed — 46,4 $. So by all indications it was a sluggish IPO., did not portend much success for the shares subsequently. But in the week following the IPO, GFS shares rose from 46.4 to 63,83 $ - that is, almost on 34% just, without any significant news!
This tells us about, that the exchange is always a guessing game and asking about, why is the target price in the investment idea for shares such and such, pointless. Such an increase in GFS quotes after such an IPO cannot be explained in terms of technical analysis, complex formulas and other dances with tambourines. It just happened..
Tricks and tricks. Success of GFS shares, albeit belated, confirms, that the assumption we made in the review that, that the company's shares are waiting for artificial pumping in order to attract capital into the semiconductor industry in developed countries, was right.
GFS has too many problems, to attract investors "naturally": it is unprofitable even in conditions of wild demand for semiconductors, while its competitors have huge bottom line margins. Actually, lack of growth on the day of the IPO and indicates the lack of natural investor interest in these shares. Such an increase in shares shows, that interested investors pumped up the company's quotes for political reasons - to attract private capital into the semiconductor manufacturing industry and create such production in developed countries far from China, reducing the dependence of the developed economies of the West on the situation in East Asia.
Why do Western countries need all this?, already seen on the news: Ford (NYSE: F) yesterday entered into a strategic agreement with GFS to cooperate in domestic semiconductor manufacturing. After all, now it is a big problem to get new chips for the production of cars.. GFS will help solve this problem — and, probably, cheap - because it is a loss-making company, as we remember. To make there more such GFS, and needed to pump up its shares.. Building a new chip factory is very expensive — and if you don't do it in China or its dangerous proximity., the cost will be very high.. It could happen, that there will be no profit within a reasonable time. Shares of GFS from the news about Ford rose slightly - only by 3%.
But in general, the success of GFS on the stock exchange allows us to hope for pumping up quotations of already existing manufacturers of semiconductor products and equipment from developed countries..
Your registration is at risk: Shell wants to move to London
Anglo-Dutch oil and gas company Royal Dutch Shell (NYSE: RDS.A) decided to become less Dutch and move its headquarters from Amsterdam to London. Shell's announced relocation plans have the following objectives:.
Simplify the ownership structure of the company – the company intends to create one class of shares instead of the current two. The company now has Dutch shares (RDS.A) and English (RDS. B).
Facilitate share buybacks. The Dutch shares of the company are subject to a special tax 15% for dividends. This tax does not apply to English shares of the company., which means, the company will have more money, which she can use to buy back shares. Now, for example, regulators forbid Shell to buy more 25% the average daily trading volume of the company's shares per quarter is approximately $2.5 billion per quarter., - and after the move, the ban will disappear. In theory, the move will help increase Shell's share buybacks to $5 billion a quarter — almost in the 2 Times. Some particularly brazen shareholders believe, that the volume of buybacks may grow to 6 billion per quarter.
Strengthen the competitiveness of the company. This is the most mysterious moment., left without specifics. There is a theory, that the company is moving to the UK, to avoid more stringent oversight by environmental regulators from the continent. But I doubt it.
Firstly, Shell is one of the leaders in the oil and gas industry in terms of investment in clean energy. It is in second place behind Total and by a wide margin from the next company on the list, Equinor..
Secondly, it has emission reduction plans in line with the wishes of green investors far more than other oil and gas companies. By the way,, Shell's ESG rating from MSCI is higher, than her colleagues in the oil and gas department.
And, judging by the news from the environmental summit in Glasgow, the UK government will adhere to an agenda no less progressive than its former EU neighbors. Moving the company to London will not solve the problem with its ongoing environmental lawsuits..
To a large extent, the decision to move was dictated by the launch of the Third Point investment fund campaign.. Let me remind you, that Third Point proposed splitting the company in two in the hope, that two different issuers separately will grow more vigorously. Then we spoke, that Shell, probably, "will understand the hint" correctly. After all, shareholders are dissatisfied with the stagnation of quotations in the presence of objectively good business., and Shell will do something for them, why the stock will rise. Actually, this is what happened.
And one moment: Shell to remove 'Royal Dutch' from name when moving to London. For trading in Dutch, the move will not affect the American and English stock exchanges - they will remain there. Only now there won't be two classes each., and one.
Shareholders vote on moving to London will take place 10 December. The move may not take place., if a 75% investors will vote against. But, considering all of the above, I think, that among investors, most will welcome the relocation of the company. Anyway, no reason to think otherwise: moving the company is beneficial to investors.
Another thing, that the Government of the Netherlands is extremely dissatisfied with the situation. There is a risk, that it will decide to punish Shell with a large relocation tax. At one time, Unilever left the Netherlands for the UK and was also threatened with such a tax - the amount was about 11 billion euros. Truth, then the threat never materialised., because the Dutch have not adopted a law on such a tax on changing corporate registration. But for the sake of Shell, such a law can be adopted on an emergency basis.. Or maybe, the Dutch government will make concessions to the company with a tax on dividends, because of which Shell, in fact, and moves. Anything is possible.
For Shell shareholders, the company's move to London is considered rather positive.. I do not approve of share buybacks – it would be better if the company spent more on business development, - but it reduces its P / E and makes stocks more attractive to third-party investors. All this artificially creates demand for its shares., which contributes to the growth of quotations.
