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Our briefing for Thursday January 14, 2021:
Jan 14, 2021 4:12:44 PM
- In the United States, President Elect Joe Biden is expected to address the nation Thursday evening to outline his vaccination and economic rescue legislative package. Multiple media reports have the price tag somewhere between $1.3 and $2 trillion. The proposal is expected to include sizeable direct payments to American families and significant state and local funding – two sticking points in the previous round of coronavirus stimulus talks. CNN is reporting that the Biden team is taking a “shoot for the moon” approach even if they only hold the slimmest of majorities in the House and the Senate as of next week and his own Democratic party wanting something big.
- In a news briefing on Thursday, the Canadian federal government outlined what phase two of the COVID-19 immunization process will look like. Major-General Dany Fortin, who is leading Canada’s logistical rollout of vaccine distributions, said as of April, the country is expecting to be receiving more than one million doses of approved vaccines every week. As of right now, it is expected that 20 million doses will be delivered in Canada between April and June. Canada’s immunization program has gotten off to a slow start with CBC reporting only 710,000 doses have been delivered to provinces and territories, with barely one percent of the population receiving their first dose of either the Pfizer or Moderna vaccines.
- A United Kingdom survey of British healthcare workers has found people who have been infected with COVID-19 are highly likely to have immunity for at least five months. There is also evidence that those with the antibodies may still be able to carry and spread the virus. Preliminary findings by scientists at Public Health England (PHE) showed that reinfections in people who have COVID-19 antibodies from a past infection are rare with only 44 cases found among the 6,600 + previously infected people in the study. However, experts cautioned the findings mean that people who contacted COVID-19 in the early stages of the first wave in early 2020 may be vulnerable to catching it again since their immunity is likely gone.
- Germany’s Robert Koch Institute (RKI) has called on its citizens to refrain from nonessential travel after the country detected new cases of the coronavirus variant. Germany has reported 16 cases of the coronavirus variant first detected in Britain and four other cases from variant found in South Africa. The country has approved tighter restrictions for people entering the country as of Thursday. Anyone coming to Germany from a high-risk area must provide proof of a negative COVID-19 test within 48 hours of arrival. As bad as things appear right now, the head of the RKI, Lothar Wieler said, “at the end of the year, we will have this pandemic under control”, and urged Germans to receive the COVID-19 vaccines as they become available.
- As countries struggle to vaccinate just one percent of its population, Israel has quickly emerged as the frontrunner on the inoculation front. Bloomberg is reporting Israel has already vaccinated 21% of its residents, or 1.9 million people since the country’s health ministry began offering the Pfizer vaccine on December 20th. Prime Minister Benjamin Netanyahu says almost everyone in the country (although not Palestinians in the adjacent West Bank) will be vaccinated by early spring. Israel’s success is thanks in large part to its central government, limited territory and relatively small population (9.3 million). However, the country does have strong universal health insurance and a digitized medical system with extensive records that allow providers to target at-risk populations and track progress. The early spring deadline also coincides with an election in the country, one that Prime Minister Netanyahu is desperate to win and has made vaccinations his top priority to gain favour with Israeli voters.
- The Financial Times is reporting health and technology groups are working together to create a digital vaccination passport in the expectation that governments, businesses and airlines will require proof of people having been vaccinated against COVID-19. The Vaccination Credential Initiative, a coalition of organizations including Microsoft, Oracle and United States healthcare non-profit Mayo Clinic are looking to build a system that establishes standards to verify whether a person has had their inoculation and prevent people falsely claiming that they did. However, there is already pushback against such a measure being put in place with Canadian Prime Minister Justin Trudeau making clear he is opposed to a vaccine passport claiming it could have divisive impacts on community and country.
Covid-19 – Due Diligence And Asset Management
BlackRock Results Beat Expectations as Assets Grow to $8.68 Trillion
Brief :BlackRock Inc’s, quarterly results topped analysts’ expectations on Thursday, buoyed by a rising stock market that boosted the firm’s assets under management to a record high $8.68 trillion, further widening its lead against peers. The firm drew $127 billion of total net inflows in the fourth quarter as investors poured money into its various business, including its exchange-traded funds, as well as active funds that aim to beat the market. “We begin 2021 well-positioned and intend to keep investing in our business to drive long-term growth and to lead the evolution of the asset management industry,” BlackRock’s chief executive, Larry Fink, said in a statement. Financial markets rallied in the fourth quarter, building on sharp gains of the prior two quarters, as accommodative global central bank policy and improving growth prospects helped lift investors’ risk appetite. While rallying stock markets provided a powerful boost to BlackRock’s results, the profit report showed outsized growth in inflows at a time when the rest of the industry is expected to struggle with redemptions.
Healthcare Hedge Fund Rhenman Gauges “Crucial” Impact of Biden Administration’s Planned Reforms
Brief: The incoming US administration led by Joe Biden will be a “crucial” factor looming large over the healthcare industry this year, with planned reforms heralding potentially far-reaching implications for healthcare stocks and drug prices, Rhenman & Partners Asset Management said this week. Rhenman’s flagship Healthcare Equity Long/Short hedge fund gained 17.1 per cent in its main euro-denominated IC1 share class last year, bolstered by a 4.8 per cent monthly return in December. The strategy – which trades a range of small, medium and large pharmaceuticals, biotechnology, medical technology and service company stocks – made profits in each of those sectors last month, with medical technology and biotechnology companies bringing in the biggest gains. In an update this week, the Stockholm-based global healthcare-focused hedge fund said once the fall-out from the coronavirus pandemic is brought under control, the Biden administration’s proposed healthcare reforms will come under closer re-examination this year. While the Senate is now controlled by the Democrats, Rhenman believes major new healthcare reforms may prove tricky to push through with a weak majority.
Wells Fargo CEO to Unveil Cost-Cutting Plan
Brief: Wells Fargo & Co Chief Executive Charlie Scharf will give investors more details on his long-awaited turnaround plan for the scandal-plagued bank this week. Although Wall Street expects Wells Fargo to report a 38% profit decline on Friday against the backdrop of the coronavirus pandemic, investors have become more bullish in anticipation of details about expansive cost-cutting plans. Wells Fargo shares have jumped 45% since Scharf teased a strategic update in October, outperforming JPMorgan Chase & Co and Bank of America Corp. Wells Fargo management has promised transformation since its 2016 fraudulent account scandal with little to show for the effort, but it feels different now, Raymond James analyst David Long said. Scharf’s “really changed the internal attitude to make improving the bank’s governance the number one priority,” Long said. Scharf started making changes shortly after taking the helm in October 2019, though he has not yet provided firm targets or timelines for progress. He installed a slew of external leaders, overhauled the reporting segments, and began to shed non-core businesses. He also implemented weekly and monthly reviews to increase oversight and address regulator concerns more efficiently.
London Resilient at Top of European Tech Investment Table Despite COVID
Brief: London retained its position as the top European destination for tech venture capital in 2020, with levels near the record amount of the year before despite the impact of COVID-19, according to research by Dealroom.co and London & Partners. Start-ups and growth companies attracted $10.5 billion worth of funding, accounting for more than a quarter of all investment into Europe and three times the level in Paris, Berlin and Stockholm, the research found. Some of the largest deals involving London companies included a $500 million funding round for London fintech firm Revolut, a $400 million deal for electric vehicle maker Arrival and two funding rounds totalling $527 million for renewable energy firm Octopus Energy. The British capital is also home to more unicorns - start-ups with a valuation exceeding $1 billion - than anywhere else in Europe. At 43, it has more than Paris, Berlin and Amsterdam combined, according to the research. Dealroom said it had identified 81 potential future unicorns headquartered in the city. Eileen Burbidge, partner at London VC firm Passion Capital, said activity quickly rebounded after the shock of the pandemic in the first half.
Startup Funding Touches New Records Amid Pandemic
Brief: What began as a desperate year for startups, characterized by mass layoffs as the pandemic took hold, has turned into a record venture capital funding haul. Despite the economic tumult wrought by the coronavirus, startup investing in the U.S. reached a record high of $130 billion in 2020, according to a new Money Tree report from PricewaterhouseCoopers/CB Insights. Companies like Instacart Inc. and Stripe Inc. helped drive the surge by raising hundreds of millions apiece, even though the total number of funding rounds was lower than in 2019. The year also saw an uptick in funding for several cities outside the Bay Area, long the center of the startup universe. Venture capital funding in 2020 rose 14% from 2019, according to the report, which includes private equity and debt investments as well. Last year also saw an increase in megarounds, meaning deals larger than $100 million, even as the number of funding rounds decreased, particularly for very young startups. The largest deals were a $1.9 billion infusion into Space Exploration Technologies Corp. and $1.5 billion in funding for Epic Games Inc., both giant funding rounds that were emblematic of the increasing muscle of private equity and mutual funds willing to write large checks to late-stage tech companies. In 2016, megarounds represented just 25% of the total money invested. That number increased to 49% in 2020—higher than ever—the report found. Large corporate players, including SoftBank Group Corp., Google Ventures and Uber Technologies Inc. also helped drive the rush to fund large startups.
Renaissance’s Medallion Fund Surged 76% in 2020. But Funds Open to Outsiders Tanked.
Brief: Renaissance Technologies’ famed Medallion fund, available only to current and former partners, had one of its best years ever, surging 76 percent, according to one of its investors. But it was a different story for outsiders who are only able to invest in other RenTec funds — two of which had their worst years ever. The Renaissance Institutional Equities Fund, which launched in July of 2005, lost 22.62 percent through December 25, according to HSBC’s weekly scoreboard of hedge fund performance. A newer fund, Renaissance Institutional Diversified Alpha, fell even more: It fell 33.58 percent through the same time period, HSBC reported. Those two funds’ performance was so poor that they made HSBC’s top 20 losers list for 2020. Renaissance launched RIDA in February of 2012, and 2020 was its worst year since then, the report said. Renaissance declined to comment. Last year wasn’t RIEF’s first bout with turbulence. The fund was launched as a way for outsiders to partake of RenTec’s special sauce, as Medallion had only been available to insiders for several years by then. But RIEF fared poorly during the financial crisis: The fund fell 16 percent in 2008 and 6.17 percent in 2009. Its longest drawdown was between May of 2007 and April of 2009, a period when it fell 35.73 percent, according to HSBC. But until last year RIEF had produced double-digit returns for most of the past decade. Still, the earlier losses dragged down its annualized return, which is now only 8.05 percent. That’s below the Standard & Poor’s 500 stock index’s annualized return of 9.6 percent during the same time period.
