Off the Charts! AMP spinoff, the fall and rise of Lithium, and staff steal €100 million using shopping bags

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G'day and welcome back to the latest instalment of Off the Charts! where we bring you the biggest headlines of the week on all things investing, and the odd item we just had to share. 

This week, our theme is market shake-ups, deals, busts and splits. Let's jump in.

#1 AMP TO SPIN OFF CAPITAL MARKETS BUSINESS & BOE PAHARI LEAVES

AMP Ltd (ASX: AMP) announced this morning that it will be spinning off its private markets business. AMP Capital may ring bells for readers as the subject of extended takeover negotiations with Ares Management. After six painful months, the pair couldn't come to an agreement.

The spun-off business will continue its core operations of investing in global private markets while simplifying the structure of AMP Ltd.

(Source: AMP ASX Release 23 April 2021)

Baked into the eight-page announcement was a small paragraph disclosing that former AMP Capital head, Boe Pahari, would be leaving the company. Pahari's exit comes after the AFR revealed he was penalised in 2017 for a sexual harassment claim brought by a female subordinate. His promotion to Chief Executive in light of this was controversial.

Hopefully, these changes will mark a positive change for the financial services group whose outlook has gone from bad to worse over the last five years, its share price falling 75% since 2017.

#2 AUSSIE COMPANIES FIGHT FOR LITHIUM DOMINANCE

It was announced to the market on Monday that a $4 billion merger would join lithium miners Orocobre (ASX: ORE) and Galaxy Resources (ASX: GXY) to form the world's fifth-largest lithium miner.

The new entity seeks to ramp up lithium production in the Americas and benefit from synergies and diverse mining assets to fight for lithium dominance.

Lithium supply may be a touchy subject for some, after a global ramp-up of supply in 2019 desperately overshot demand needs, sending the ore price crashing, a tale which can be tersely told by the following AFR headlines.

(Source: AFR)

With lithium prices on the rise again, we can't wait for the next instalment in the series.

#3 AFTERPAY PREPS FOR US LISTING

This week from the world of BNPL, Afterpay considers a Wall St listing as the group hits $1 billion in US sales over March. The move comes as US-based investment firms have begun backing the firm in a land-grab across the US.

The aptly named Land of the Free would allow the ASX darling some brevity from the BNPL saturation and deafening calls for regulation here in Australia.

(Source: Apple Stocks/Yahoo! Finance

#4 COVID WINNERS BECOME COVID LOSERS

This week was a shocker for some as many COVID-winners turned into COVID-losers.

On Wednesday Netflix (NASDAQ: NFLX) shares fell 7.5% as the streaming giant missed expectations. Netflix reported 4 million new subscribers this quarter, 75% less than Q1 2020. On Thursday, Redbubble (ASX: RBL) – up almost 400% since last year – was absolutely ravaged by investors. It fell 23% in a single day after reporting a surprise loss, missing analyst expectations by a long way. And today, online retailer Kogan (ASX: KGN) is down 12.5% after announcing that it too would miss earnings guidance. 

It marks a growing trend of COVID-winners being hung by their own lofty expectations. In what seems obvious to this writer, these firms have now admitted that the pandemic likely brought forward the demand for their products, they now expect a pull-back in growth as the recovery ensues. You don't say!

#5 "DIRECARD": STAFF WALKED OFF WITH €100 MILLION IN SHOPPING BAGS

Former employees of the German fin-tech turned sham Wirecard told investigators this week that it removed millions of dollars in cash out of the firm in plastic bags.

Once dubbed the PayPal of Germany, Wirecard turned out to be a web of lies held together by creative accounting and €1.9 billion of corporate cash that did not exist. The company came undone ultimately in its attempt to clean its books. It planned to take over investment bank Deutsche Bank, hoping the missing funds could be written off as M&A-related costs. Too bad auditing by KPMG alerted regulators to the scam before talks could even begin.

The Financial Times reports that during operation, the amounts of €200,000 - €700,000 in cash were removed frequently, sometimes several times per week to undisclosed locations, estimated to total more than €100 million. The location of these funds remains unknown but investigators suspect the cash has been hidden globally by executives attempting to siphon money out of the sinking ship. One executive admitted that he transferred €4.5m of Wirecard funds to a hidden personal foundation in Liechtenstein. Regulators are still investigating this issue and pressing charges against the executives. 

Top articles from the Livewire contributors this week

  1. Beware the Beauty contest: Charlie Aitken from AIM reminds us to focus on business fundamentals rather than attempting to profit from whatever narrative is driving the market.
  2. 5 lessons from a decade of growth stock performance: value manager Steve Johnson of Forager reflects on what we can learn from a decade of growth stock performance.
  3. The key to finding small-cap winners among a king tide: Spheria's Marcus Burns explores how to find winners as the Aussie small and micro-cap market experiences a king tide.
  4. A prized asset at distressed prices: Ramoun Lazar from Firetrail identifies one gaming stock on offer at a deep discount
  5. More upgrades, more potential for Aussie shares: In this wire FNArena's Rudi Filapek-Vandyck lays out why, despite calls of an impending pullback, there's more to run for Aussie equities. 

And coming up week beginning 19 April...

  • Coming up on Buy Hold Sell, you'll be treated to a Shorting 101 special on Monday and a global stock special on Friday. Subscribe to our YouTube channel to be the first to see it.
  • Plus, Medallion Financial Group's Michael Wayne, MaxCap's Wayne Lasky and Elanor Investors Group's Matt Healy share their insights on investment strategy and portfolio management, private debt, and opportunities within commercial real estate debt and retail property markets, respectively.

What did we miss?

Did you catch a story this week that you thought was Off the Charts? Let us know in the comment section below! Or email content@livewiremarkets.com.

Also, if you're enjoying Off the Charts or have any suggestions for the series let us know!

- Nicholas Plessas and Mia Kwok


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