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Markets Live: Thursday, 4th April 2019

Thu, 04/04/2019 - 6:07am  |  FT Alphaville

Live markets commentary from FT.com

Continue reading: Markets Live: Thursday, 4th April 2019

Tesla says it delivered about 63,000 vehicles in the first quarter of 2019, a 31% drop from Q4 2018 (TSLA)

Wed, 04/03/2019 - 8:56pm  |  Clusterstock

  • Tesla produced 77,100 vehicles in the first quarter of 2019, the company said on Wednesday.
  • Analysts polled by Bloomberg were expecting total production to be 64,400 vehicles.
  • Tesla's stock price sank $0.39, or slightly more than 0.1%, in after-hours trading following the announcement.

Tesla on Wednesday released total vehicle-production and delivery numbers for the first quarter of 2019, which ended on Sunday.

Here are the important figures:

  • Total production: 77,100
  • Total deliveries: 63,000
  • Model 3 deliveries: 50,900
  • Model S and Model X deliveries: 12,100.

Wall Street analysts' average estimate for total production was 64,400 cars, according to Bloomberg.

Tesla had previously warned in its fourth-quarter update to investors that first-quarter numbers for Model S and Model X would likely come in "slightly below" the prior year's figures for the same period. In the first quarter of 2018, the company produced 24,728 Model S and Model X vehicles.

Tesla cited challenges it encountered with deliveries overseas.

"We had only delivered half of the entire quarter’s numbers by March 21, ten days before end of quarter," Tesla said in a press release Wednesday night. "This caused a large number of vehicle deliveries to shift to the second quarter."

Like many other previous quarters, this deadline was also met with an all-hands-on-deck rush to meet internal targets by Tesla. Emails from CEO Elon Musk, which Business Insider obtained in March, to company employees highlighted how important this quarterly deadline was for the company.

Read more: Tesla is planning an exclusive event to show off its self-driving car tech — but Americans still have major fears about autonomy

Shares of the company fell $0.39, or slightly more than 0.1%, in after-hours trading following the production report, according to Markets Insider data.

Tesla is expected to report its first-quarter financials soon, but it has not yet confirmed a release date. Musk said in February that the company would likely dip back into the red for this quarter — a departure from his previous statements about the company's continued profitability — as it expanded into Europe and China.

The company did not provide an update on how many $35,000 Model 3 orders it received. The company began taking orders for the long-awaited base model in February.

More Tesla news:

SEE ALSO: Elon Musk just emailed all Tesla employees to address 'uncertainty' around the company's plan to close stores

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$10 billion identity startup Okta launches a $50 million venture capital fund to invest in startups using blockchain and AI (OKTA)

Wed, 04/03/2019 - 6:39pm  |  Clusterstock

  • At its customer conference Oktane, cloud identity manager Okta announced a $50 million fund to invest in the next generation of identity and authentication startups.
  • The fund will focus on early-stage investments in artificial intelligence, machine learning, and blockchain startups.
  • The fund’s first investment is in Trusted Key, a blockchain-based digital identity platform that had previously raised $3 million.

Today, cloud identity management provider Okta unveiled Okta Ventures, a $50 million in-house venture fund focusing on early-stage identity and authentication startups that use artificial intelligence, machine learning, and blockchain technology.

Announced on-stage at the company’s annual customer conference in San Francisco, Okta Ventures’ first investment is in Trusted Key, a blockchain-based digital identity company that had previously raised $3 million. While Okta isn't disclosing the amount, the investment speaks to the company's interest in using blockchain to improve its flagship tool, which helps customers log in to multiple work apps with just their corporate username and password.

Read More: Okta's cofounder explains why it's buying an automation startup for $52.5 million in its biggest deal yet

The company says that the fund will invest in existing Okta partners in addition to other identity management startups. Portfolio companies will have access to Okta’s products for the first year, in addition to the ability to build products that integrate with Okta’s technology.

“We expect the partnerships with our portfolio companies to extend our platform, and we’re committed to providing significant value to these early stage startups,” said Okta Cofounder and COO Frederic Kerrest in a prepared statement. “Trusted Key is a perfect example of a young company working on a big idea, and we look forward to collaborating to shape the future of identity.”

According to a TechCrunch report, Okta Ventures will invest between $250,000 and $2 million in eight to 10 early-stage businesses per year.

Okta went public in 2017 in one of the first pure-cloud subscription-based company IPOs. It raised $231 million from Sequoia, Andreessen Horowitz, Greylock, Khosla Ventures, and Floodgate before going public.

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Democratic lawmaker asks IRS for 6 years of Trump's tax returns

Wed, 04/03/2019 - 6:30pm  |  Clusterstock

  • The House Ways and Means Committee chairman has asked the Internal Revenue Service for six years of President Donald Trump's tax returns.
  • "We have completed the necessary groundwork for a request of this magnitude and I am certain we are within our legitimate legislative, legal, and oversight rights," Democratic Rep. Richard Neal of Massachusetts said.
  • The request spans a number of Trump's businesses, including a revocable trust, limited-liability companies he controls and his golf club in Bedminster, New Jersey.

US House Ways and Means Committee Chairman Richard Neal has asked the Internal Revenue Service to provide six years of President Donald Trump's personal and business tax returns.

"We have completed the necessary groundwork for a request of this magnitude and I am certain we are within our legitimate legislative, legal, and oversight rights," Neal said in a statement on Wednesday announcing the request.

Neal, who is the only House of Representatives member authorized by law to request Trump's returns, has been under pressure to act from some Democratic lawmakers and outside groups. He reportedly gave the IRS a deadline of April 10 to furnish the tax returns.

Read more: Trump says he deserves to lose in 2020 if the Green New Deal becomes reality, refers to Alexandria Ocasio-Cortez as a 'young bartender'

Asked about the Democrats' request for six years of tax returns, Trump replied to reporters on Wednesday: "Is that all?"

"Usually it's ten," Trump said. "So I guess they're giving up."

Trump defied decades of precedent as a presidential candidate by refusing to release the tax documents and has continued to keep them under wraps as president, saying his returns were under audit by the IRS.

Democrats hope that obtaining the returns will allow them to identify any conflicts of interest posed by Trump’s global business empire.

Republicans oppose the effort, saying such a move would set a dangerous precedent by turning the confidential tax documents of a US citizen into a political weapon.

SEE ALSO: Trump says he deserves to lose in 2020 if the Green New Deal becomes reality, refers to Alexandria Ocasio-Cortez as a 'young bartender'

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JPMorgan retakes the crown as Wall Street's top dealmaker

Wed, 04/03/2019 - 6:10pm  |  Clusterstock

  • JPMorgan reclaimed the crown from Goldman Sachs as the leading merger advisor during the first quarter of 2019.
  • The bank increased its merger-deal volume by 33% to overtake rival Goldman, whose volume was up 3.3% year-over-year.
  • JPMorgan was the top dealmaker in the US while Goldman headed the class in Europe.

JPMorgan led global mergers for the first quarter of 2019 with $322 billion of announced transactions globally, according to data compiled by MergerMarket. The banking giant has regularly been among the top merger advisers in recent years.

Over 3,500 mergers were announced globally worth a total of $802 billion in the first quarter, a 15% decrease from the prior year, according to MergerMarket. JPMorgan advised on over 40% of the deal volume over 56 transactions, while Goldman was second with a 35% share. JPMorgan's surge to the top of the table occurred thanks to a 33% year-over-year jump in deal volume.

The Jamie Dimon-led JPMorgan saw a big boost from its role as lead advisor to Celgene in its $74 billion sale to Bristol-Myers Squibb. Goldman was notably absent on the deal, a rare miss for the firm on a leading transaction. Morgan Stanley served as the lead adviser to Bristol-Myers Squibb. Overall, US deals comprised of more than half of the global deal volume for only the third quarter since 2007, MergerMarket said.

Both JPMorgan and Goldman advised on the largest deal outside the US, whereby the world's largest oil producer, Saudi Aramco, purchased the chemical firm Saudi Basic Industries for $69 billion.

Citi, Morgan Stanley, and Bank of America Merrill Lynch rounded out the top-five slots, showcasing the dominance of bulge-bracket firms. Boutique adviser Evercore leapt from 15th to sixth place in the rankings while rival Lazard fell from fourth to 13th.

 

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Roku drops after report says Amazon is turning up the heat on streaming (ROKU)

Wed, 04/03/2019 - 6:09pm  |  Clusterstock

  • Roku shares dropped Wednesday afternoon following a report that said Amazon was looking to expand its streaming offerings.
  • Amazon has "talked to executives at media companies and advertising agencies about its plans to include more ad-supported streaming channels to compete with Roku and Pluto TV," Cheddar reported.
  • Watch Roku trade live.

In what's become a familiar stock-market reaction to Amazon's plans to extend itself into an industry, shares of Roku fell as much as 3.2% Wednesday after it was reported that the e-commerce giant is looking to expand its streaming offerings.

Amazon is planning a "vast" expansion of its free streaming service on Amazon Fire TV devices, asking marketers to pledge millions of dollars to support the new offerings Cheddar reported, citing multiple people who held discussions with Amazon. Amazon declined to comment to Cheddar.

"Amazon has talked to executives at media companies and advertising agencies about its plans to include more ad-supported streaming channels to compete with Roku and Pluto TV, which offer free access to TV shows and movies with commercials," Cheddar's Michelle Castillo reported.

Advertisers are reportedly reluctant to pledge money before they know what content might be available on the new channels, and some buyers said Amazon is asking for "as much as a large cable network for advertising commitments."

Roku is the latest in a string of companies that have seen their share prices dip, if only briefly, following news that Amazon is expanding, or looking into expanding, into a given industry.

In March, shares of the grocery stores Kroger and Costco fell after The Wall Street Journal reported Amazon was planning to open its own grocery stores in the US at a lower price point than Whole Foods — the chain it bought two years ago.

And last year, pharmacy stocks like Walgreens Boots Alliance, CVS, and Rite Aid took a tumble after Amazon bought the startup PillPack.

Wednesday's slide did little to dent Roku's recent rally. Shares were still up 126% this year, trading at $68.40 apiece.

Now read more markets coverage from Markets Insider and Business Insider:

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A senior bond salesman is leaving Bank of America Merrill Lynch. The move comes on the heels of a shakeup in the firm's credit-trading division.

Wed, 04/03/2019 - 4:19pm  |  Clusterstock

 

  • A senior bond salesman is out at Bank of America Merrill Lynch.
  • Justin Adams, a managing director in credit sales, is joining Wells Fargo.
  • The move comes on the heels of a shakeup in the firm's fixed income, currencies, and commodities division. 

A senior bond salesman is out at Bank of America Merrill Lynch, a move that comes on the heels of a shakeup in the firm's fixed income, currencies, and commodities division. 

Justin Adams, a managing director in cross credit sales, is leaving to join Wells Fargo in New York, according to people familiar with the matter.

Adams spent nearly 15 years with the firm and specialized in cash and derivatives sales to hedge funds. 

Spokespeople for Bank of America and Wells Fargo declined to comment. 

Adams' departure follows a reshuffling last month in Bank of America's FICC division. Karen Fang, the head of sales and structuring for FICC in the Americas, left her post for a senior role in trading, and Gerry Walker, the global head of credit sales, took over Fang's role.

Walker's replacement wasn't immediately announced.

At Wells, Adams will be reunited with Steve Hollender, a former credit sales exec at BAML, who started at Wells Fargo at the beginning of this year as head of investment-grade credit sales. 

Bank of America is the third-ranked FICC business on Wall Street, behind JPMorgan Chase and Citigroup. Wells Fargo, known more for its consumer and retail business than its investment banking presence, doesn't crack the top-10, according to industry data and consulting firm Coalition. 

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A 17,000-bottle private wine collection including rare Burgundies and Bordeaux went on auction over the weekend and destroyed the previous record by $8 million

Wed, 04/03/2019 - 4:06pm  |  Clusterstock

  • A 17,000-bottle wine collection sold for nearly $30 million over the weekend at a Sotheby's auction, Bloomberg reported.
  • The collection exceeded its estimated sale price by almost $4 million.
  • The sale crushed the previous record for a private wine collection — a highly-anticipated 2016 sale totaling $22 million — by a whopping $8 million.

A recent Sotheby's auction exceeded all expectations: A 17,000-bottle collection spanning nearly five decades sold for almost $4 million more than its estimated sale price.

According to a recent report from Bloomberg, the collection sold for $29.8 million this past weekend at the Tran-scend-ent Wines auction. Estimates leading up to the auction put the collection's anticipated price around $26 million. The auction took place in Hong Kong; China is quickly becoming one of the world's largest wine markets.

The sale set a new record for the highest value private wine collection ever sold at auction, surpassing a record previously held by billionaire Bill Koch's collection. Koch's 20,000-bottle collection sold for almost $22 million at a New York auction in 2016.

This latest Sotheby's wine auction joins the ranks of other high-stakes wine auctions, where single cases have sold for as high as $363,000.

Read more: The top 10 most expensive wines and spirits sold by Christie's in 2018, ranked

This rare collection included "grand cru" — or first-class — Burgundies and Bordeaux from an anonymous owner. According to Bloomberg, Sotheby's has yet to disclose the seller, though he was described as a "fifth-generation property developer."

The past year has seen several record-shattering liquor sales, including a single bottle of 60-year-old Macallan that sold for $1.1 million at auction. The sale set the record for the most expensive bottle of whiskey ever sold, only to be surpassed a month later by another bottle of Macallan, which sold for $1.5 million.

SEE ALSO: There are 3 staples every wine cellar should have, according to an expert at Christie's

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Carl Icahn reportedly dumped his entire Lyft stake ahead of its IPO (LYFT)

Wed, 04/03/2019 - 3:04pm  |  Clusterstock

  • Carl Icahn sold his roughly 2.7% stake in Lyft ahead of its initial public offering, The Wall Street Journal says.
  • Lyft's share price has plunged more than 20% since debuting on the Nasdaq on Friday.
  • Icahn's stake was valued at roughly $550 million at the IPO price of $72.
  • Watch Lyft trade live.

Carl Icahn sold his roughly 2.7% stake in Lyft ahead of last week's initial public offering, The Wall Street Journal says, citing people familiar with the matter. No buyer was reported.

While the motivation of Icahn's sale was not announced, the activist investor may have been put off by Lyft's 2018 operating losses of nearly $1 billion and a dual class share structure which gives the founders Logan Green and John Zimmer de facto control of the company despite holding a minority of shares. Under the structure, the founders have 20 votes per share while other shareholders have one vote per share.

Icahn invested roughly $150 million in Lyft in 2015 when the ride-hailing firm was valued at $2.5 billion. While the exact price at which the sale occurred is unknown, Icahn has likely realized a significant gain given Lyft's $24 billion valuation when it went public.

Lyft's pre-IPO investors, including the founders, are subject to a lock-up which prohibits the sale of shares for 180 days from the March 28 IPO date.

Lyft's early trading has been choppy as short sellers have mounted a massive bet against the company. Analysts have expressed concerns about the company's valuation despite the significant growth potential of the ride-sharing industry.

Shares were down 20% from the $87.24 where they debuted on Friday. 

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Patagonia mocks Wall Street on Twitter after revealing plans to cut financial companies off from their beloved branded fleece vests

Wed, 04/03/2019 - 2:50pm  |  Clusterstock

  • This week, news broke that Patagonia will no longer make new partnerships with financial companies to produce branded fleece vests and other clothing. 
  • On Wednesday, Patagonia mocked Wall Street on Twitter, implying that companies will soon try to improve their social and environmental policies to regain access to the beloved vests.
  • Patagonia fleece vests are a crucial part of bankers' and other finance workers' "Midtown Uniforms," which typically consist of slacks, a dress shirt, and a fleece vest. 

Patagonia isn't satisfied with simply cutting hedge funds and banks off from their beloved fleece vests. Now the American clothing retailer is trolling Wall Street on Twitter. 

This week, news broke that Patagonia decided that it would require new companies that it works with on branded apparel to align with Patagonia's values of being environmentally conscious and prioritizing the planet.

A spokesperson from Patagonia told Business Insider via email that the corporate sales program recently shifted its focus to work with "more mission-driven companies that prioritize the planet."

Read more: The Midtown Uniform is now in peril as Patagonia isn't accepting new finance clients for its ubiquitous fleece vests

Patagonia took to Twitter to mock Wall Street for the panic over the news. The tweet features a screenshot from "Silicon Valley," a show that satirizes the tech industry, including investors' well-documented obsession with Patagonia fleece vests.

 

B Corporations are companies that meet certain standards of social and environmental accountability, and 1% for the Planet is an organization that encourages people and businesses to donate 1% of sales toward environmental causes. Yvon Chouinard, Patagonia's founder, cofounded 1% for the Planet.

Patagonia fleece vests branded with companies' names have become a crucial part of the wardrobes of people who work in the finance industry. In New York City, these vests are part of the "Midtown Uniform" — typically slacks, a dress shirt, and a fleece vest. 

Binna Kim, president of the public-relations company Vested, first reported the news on Monday after she reached out to a certified reseller of Patagonia apparel to purchase branded clothing for a client. The reseller told Kim that Patagonia is now reluctant to partner with companies that they view to be "ecologically damaging," as well as religious groups, food groups, political-affiliated organizations, financial institutions, and more.

However, for financial-services companies that have already penned a deal with Patagonia, there is a silver lining. The change of focus affects only new customers, leaving existing clients with their deals, a Patagonia spokesperson said.

SEE ALSO: How the fleece vest became the unofficial uniform of Silicon Valley investors

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Peter Thiel-backed digital bank N26 is considering a cash back-type offering as it eyes US expansion

Wed, 04/03/2019 - 2:46pm  |  Clusterstock

  • N26, a European digital bank, is considering developing some type of earn-as-you-spend offering as part of its launch in the US scheduled for later this year. 
  • Nicolas Kopp, US CEO of N26, told Business Insider the fintech needs to address US consumers' desire to get something in return for using a specific card or banking product. 
  • The digital bank raised $300 million in Series D in January to value it at $2.6 billion, making it the most valuable fintech in Europe. 

N26 has built a successful digital banking business in Europe that's helped it nab over $500 million in funding and a $2.6 billion valuation

But as it prepares for a launch in the US later this year, the Peter Thiel-backed fintech is considering ways to better appeal to American clients. 

Nicolas Kopp, US CEO of N26, told Business Insider one nuance between the US and European markets is American customer's expectation of some type of points program with their banking products.

"Another thing that we need to address is this attitude of a lot of US consumers around earn as you spend," Kopp said. 

Read more: A Peter Thiel-backed fintech that aims to be 'a mixture of Venmo, Zelle, Mint and Chase' is launching in the US

N26's standard account in Europe currently doesn't have any points or cash-back programs, Kopp said. N26 Business, which is geared toward freelancers or the self-employed, does offer .1% cashback on purchases made with the account's Mastercard. 

Kopp declined to comment on how exactly how N26 would roll out the program beyond saying it would function slightly differently than a traditional points program typical of many credit cards. 

"We are thinking through an alternative to how we can allocate to that side of the US audience that is very aware of what they get in return for using a specific card or banking product," Kopp said. 

Points and cash-back programs that incentivize spending have become almost table stakes among banks and credit cards in the US. JPMorgan Chase's Sapphire Reserve card, which launched in 2016, kicked off a fight amongst firms to tap into an industry that has $183 billion in fees and interest. 

Nowadays, seemingly any new banking product has some type of earn-as-you-spend feature. Apple's recently launched credit card will have 2% cash back. 

However, cash-back programs are a double-edge sword as so-called 'super users' of the card are able to rack up big rewards, cutting into credit card companies' profit margins

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Verizon's 5G service is here, but Apple could take over a year to build a compatible phone (AAPL)

Wed, 04/03/2019 - 2:46pm  |  Clusterstock

  • Apple likely won't have its 5G phone ready next year unless its ongoing legal battle with Qualcomm is settled in a few months, UBS analysts said in a report out Wednesday.
  • Verizon announced later on Wednesday that it was launching 5G coverage in Chicago and Minneapolis.
  • Apple competitors Samsung and LG have debuted their first 5G phones, while the Chinese telecommunications giant Huawei has announced plans to enter the space.
  • Watch Apple trade live.

As the race to get in on 5G intensifies, Apple may not have a phone with the new technology available anytime soon unless its legal battle with the chipmaker Qualcomm is quickly resolved, UBS analysts speculated in two reports to clients out Wednesday.

"Barring a settlement with Qualcomm in the next few months, field work suggests Apple is increasingly in jeopardy of being unable to ship a 5G iPhone in 2020," a team of analysts led by Timothy Arcuri wrote to clients on Wednesday.

The note was distributed just before Verizon announced on Wednesday that it had launched 5G coverage in Chicago and Minneapolis. The fledgling wireless technology has been touted for years as the better, faster "evolution" of 4G LTE technology we all rely on for streaming and browsing the web, and it's finally beginning to come to market — for some.

The company's inability to offer a 5G phone next year could be a near-term challenge as Apple is already grappling with slowing iPhone sales, the analysts said. Still, they believe an improving iPhone replacement cycle could cushion the blow of missing out on the 5G party.

"While it is possible/likely this continues to lengthen, AAPL remains steadfast in its estimate that actual upgrade rates are < 3 yrs which suggest we are now actually below full replacement rates — a factor which should soften any potential impact from the lack of a true 5G phone in 2020," they said. 

Apple competitor Samsung unveiled a foldable phone earlier this year that costs about $2,000 and can take advantage of the 5G mobile network. It is expected to arrive later this month. Additionally, LG also debuted a 5G phone back in February, and said it should hit the market in the first half of this year.

In a separate report out Wednesday, a different team of UBS analysts asked whether it even mattered that Apple might be falling behind.

"We already question the benefits of 5G for smartphones and believe signs of AAPL being willing to delay adoption to 2021 suggests it might share our concerns and is not very concerned about share loss from not having 5G," analysts led by Bill Lu said.

Earlier this week, Apple slashed the price of its iPhones in China amid stiff competition from local competitors Huawei and Xiaomi.

Apple shares were up 23% this year. However, they're still trading 17% below October's record high of $233.47. 

Read more Apple coverage from Markets Insider and Business Insider:

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Investors are hot on hedge funds again, but old-school stock pickers are getting left in the cold

Wed, 04/03/2019 - 2:35pm  |  Clusterstock

  • Despite coming off one of the worst performing years on record, hedge funds are enjoying renewed interest from investors, who believe there is a market slowdown coming, a JPMorgan survey finds.
  • But the one type of fund that hasn't seen a surge in interest is the one that the industry was built on: fundamental long-short equity. 
  • Investors prefer to get equity exposure in their hedge fund portfolios through quant strategies, the survey shows, and managers like Jana Partners and BlueMountain Capital have already cut back on their stock-picking products this year. 

The hedge fund industry's exponential growth over the last couple of decades can be at least partially be attributed to the near-mythological status that the early top stock-pickers enjoyed among investors.

Tens of billions poured into these funds and their spin-offs, as investors trusted investors like Tiger Management founder Julian Robertson to win big bets in the stock market.

Now, investors are turning to machines over people for their stock hit, and asking hedge funds still run by humans for strategies that can't be replicated by a computer. 

Despite bounce-back performances from well-known stock-pickers like David Einhorn and Bill Ackman this year, money has flowed out of these funds faster than any other category — bleeding more than $6 billion through February, while the overall industry is up $1.6 billion, according to eVestment. Last year, the category saw $10.7 billion leave in net redemptions. 

For the remainder of 2019, investors want to increase their investments in the hedge fund space, a survey of JPMorgan's institutional investor clients shows, but for equity strategies, quants are preferred, as investors favor the transparent and unemotional way they invest.

See more: A bunch of hedge fund managers featured in 'The Big Short' are among the casualties of Citadel's most recent cuts

Only 13% of investors in J.P. Morgan survey want to decrease their allocations to hedge funds this year, while 32% plan to increase — primarily because they see a slowdown coming in the markets, and want to build up a hedge against it in their portfolios. A new Preqin study similarly found that 61% of institutions believe equity markets are "at their peak." 

Old-school stockpickers, who are supposed to protect against market downturns with their short positions, will not have nearly as many investors fighting to invest more with them this year, according to JPMorgan. Nearly a third of investors, on an asset-weighted basis, plan to decrease their stock-picking allocations this year, compared to only 10% that plan to increase it. 

“Beta has been cheap and effective for the past decade," said Michael Monforth, global head of JPMorgan's capital introductory group, about why investors no longer want many large funds' bread-and-butter strategy. The challenge many funds have had in making money on their shorts has also convinced investors to either move their hedge fund money out of equities entirely or into quant funds. 

Managers have responded already in 2019. Jana Partners closed its stock-picking fund to focus on its activism efforts, and BlueMountain Capital Management cut its long-short fund after just two years of trading

Quant equity funds are still a hot commodity in investors' eyes, and 21% plan to increase their allocation to computer-controlled funds compared to just 6% decreasing. Strategies that are "agnostic to the markets" can also expect to pick up assets from people leaving stock-picking funds, said Monforth. 

See more: The explosive growth of quant investing is paving the way for 'super managers' in the hedge-fund industry

At Aberdeen Standard Investments, the firm's clients have interest in more complex hedge fund strategies, such as private debt, because it is hard to replicate with an algorithm or factors, said Darren Wolf, head of alternative investment strategies for the Americas at Aberdeen. 

"There’s a high barrier to entry in those fields, unlike long-short equity, because in alternative credit you need higher starting capital, trading relationships, infrastructure, and more to pull off these types of securities and investments," he said. 

Multi-strategy behemoths like Point72 or Citadel built around their long-short strategies can take solace in the fact that investors are interested in staying with managers they have already been working with, according to Monforth. Investors are not leaving the hedge fund industry because they are frustrated with a stock-picking strategy, he said.

"You don’t sell your car if you have a flat tire, you fix the flat tire," he said. “It’s like going with the manager you know, because there’s already a relationship there, and investors can potentially push for more transparency or a better fee structure by staying at the same manager.”

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It's 'inevitable' that a self-driving car will kill someone. Here's why a VC thinks we should be investing in them anyway. (BA, GOOGL, TSLA)

Tue, 04/02/2019 - 11:57pm  |  Clusterstock

  • Failures in emerging autonomous transportation systems have already led to people's deaths.
  • We should expect more such tragedies in the future, said Shahin Farshchi, a partner with venture firm Lux Capital, which has backed numerous startups in the self-driving car space.
  • But such incidents haven't dissuaded Farshchi about the industry's potential.
  • Autonomous vehicles could transform the way people get around and save lots of lives in the process, he said.
  • He's concerned, though, that high-profile accidents could warp people's perception of the risks and benefits of the technology.

People have already died as a result of failures in transportation-related autonomous systems and more will likely die in the future.

While incidents such as the crash of an Uber self-driving car last year and that of two Boeing 737 Max airplanes in the last six months concern Shahin Farshchi, they haven't dissuaded him about the potential for autonomy, particularly when it comes to vehicles. Farshchi's firm, Lux Capital, has made numerous bets on self-driving cars and related technologies, including in high-profile startup Zoox, and he's open to more such investments in the future.

Deaths that result from failures in autonomous systems are tragedies, Farshchi, a partner at Lux, said in an interview with Business Insider on Monday. But accidents like those involving Uber and Boeing "would not dissuade us or scare us or make us less interested in investing in these kinds of technologies."

Part of the reason why Farshchi remains optimistic about the industry is because he believes autonomous systems have the potential to revolutionize the way people get around. He expects that within about five years ride-sharing services such as Uber and Lyft will account for roughly one third of all miles traveled. Of those ride-sharing miles, about 10% by then will be driven by autonomous vehicles, he predicts. And that amount will only increase over time.

The basic technical challenges have been solved

His bullishness also stems from his belief that the fundamental technical challenges of creating autonomous cars are largely solved. What's left, in terms of technology obstacles, is developing the autonomous systems so that they go from being mostly reliable to almost always working and being reliably predictable when they won't work.

"All of the individual components of this problem have been solved," said Farshchi, who worked as an engineer at General Motors earlier in his career. "It's a matter of how you bring it together and harden it to make it reliable and roll it out in a way that's ultimately going to be profitable."

Read this: AI could soon be all around us — here's how that could upend 8 different industries

Part of that roll out process is going to have to involve educating the public and regulators about the potential safety benefits of autonomous cars. More than 37,000 people died in US traffic fatalities in 2017 alone, according to the National Highway Traffic Safety Administration. And the leading causes of accidents are related to driver errors — something autonomous systems promise to eliminate.

"With the problem being big enough and the thousands of people that are killed every year in the United States ... I think that motivation is large enough to get this technology out there for everyone to benefit from safer, more reliable, more available transportation," Farshchi said.

Accidents could warp public perception

Accidents such as those involving the 737 Max airplanes and the Uber car represent a tragic reality that could ultimately make the world safer and a danger, he said. The industry has an opportunity and responsibility to better understand how these kinds of systems work in the real world and to develop better ways to deploy and test autonomous systems, he said.

But there is a risk that such incidents warp the public perception of autonomous vehicles. These systems aren't perfect and accidents will happen, he said. The big question is whether the public and regulators will keep such incidents in perspective.

"It's going to be inevitable that you're going to have a driverless car who hits the child or the pet, that caused a catastrophic and a tragic loss, and so it's a question of how the public perception will change as a result," he said.

What people are going to have to keep in mind is that "business as usual, which is human drivers ... cause a lot of death and injuries already as it is today."

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Video appears to show a Tesla Model S traveling on the road at speed with no one in the driver's seat (TSLA)

Tue, 04/02/2019 - 11:43pm  |  Clusterstock

  • Video showing a Tesla Model S driving at speed on a road with no one in the driver's seat circulated on social media Tuesday night.
  • The luxury electric car appeared to be operating on Autopilot, Tesla's semi-autonomous-driving technology that allows its vehicles equipped with the feature to steer, accelerate, brake, and change lanes with driver supervision.
  • At one point, a camera pans around the cabin to reveal a person lying down in the back seat.
  • Videos showing Tesla drivers asleep or otherwise preoccupied behind the steering wheel are fairly common, even as the carmaker implores its customers to remain in control of their vehicles while operating them on Autopilot.

Video showing a Tesla Model S driving at speed on a road with no one in the driver's seat circulated on social media Tuesday night.

The luxury electric car appeared to be operating on Autopilot, Tesla's semi-autonomous-driving technology that allows its vehicles equipped with the feature to steer, accelerate, brake, and change lanes with driver supervision.

At one point in the video, the camera pans toward the windshield to show the car is traveling at speed down a two-lane road. The digital instrument cluster can be seen with "115" displayed, but it was not immediately clear whether that number represented miles-per-hour, or kilometers-per-hour.

People are really stupid / this is why we can’t have nice things / WTF?! / Darwin at work pic.twitter.com/wU91HENOQH

The Midtown Uniform is now in peril as Patagonia isn't accepting new finance clients for its ubiquitous fleece vests

Tue, 04/02/2019 - 5:10pm  |  Clusterstock

  • Patagonia is limiting the number of new customers it is branding its apparel for, choosing to work only with companies that align with environmentally-conscious values.
  • A Patagonia spokesperson said while the company has recently shifted its focus to target companies that prioritize the planet, current customers of all industries will be able to continue to work with them. 

Business bros be warned: A key part your workplace attire is in jeopardy of going extinct. 

Patagonia, which has become a staple of the "Midtown Uniform" (slacks, a dress shirt and a fleece vest), is no longer in the business of branding Wall Street. 

The American clothing company recently decided a requirement of new companies it works with will be that they align with Patagonia's values of being environmentally conscious and prioritizing the planet. 

The company's decision came to light Monday when Binna Kim, president of public relations company Vested, tweeted that Patagonia had informed her it was no longer producing branded vests for financial services companies.

Kim told Business Insider she had reached out to a certified reseller of Patagonia apparel making branded clothing for a client. The reseller, which is required to get approval from Patagonia, told Kim it couldn't fulfill the order because Patagonia was focusing on co-branding with "a small collection of like-minded and brand aligned areas".

"Due to their environmental activism, they are reluctant to co-brand with oil, drilling, mining, dam construction, etc. companies that they view to be ecologically damaging," the reseller told Kim via email, which she posted to Twitter. "This also includes any religious group/Churches, food groups, political affiliated companies/groups, financial institutions, and more." 

The end of the #fintech uniform?! Farewell #patagonia vests. pic.twitter.com/3PpykELkZb

— Binna Kim (@binnaskim) April 1, 2019

A spokesperson from Patagonia told Business Insider via email the corporate sales program recently shifted its focus to work with "more mission-driven companies that prioritize the planet." The change of focus only impacts new customers, as existing clients would not be impacted, the spokesperson added. 

Fleece zip-up vests have become staple of the corporate world in recent years. The outfit has become so popular it spawned its own Instagram account — dubbed Midtown Uniform — that has over 112,000 followers.

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Blue Apron is soaring after its CEO steps down (APRN)

Tue, 04/02/2019 - 4:52pm  |  Clusterstock

  • Blue Apron CEO Brad Dickerson has left the company to pursue other opportunities.
  • He will be replaced by Linda Findley Kozlowski, Etsy's former chief operating officer.
  • Blue Apron shares were up more than 15% after the announcement.
  • Watch Blue Apron trade live.

Blue Apron was soaring on Tuesday evening, up more than 15% to $1.12 a share, after the company announced CEO Brad Dickerson has left the meal-kit maker to pursue new opportunities. He will be replaced by Linda Findley Kozlowski, who was most recently the chief operating officer at Etsy.

"We are incredibly excited to have an executive of Linda's caliber as Blue Apron's next CEO," Matt Salzberg, the chairman of Blue Apron's board of directors, said.

"Linda’s exceptional leadership and marketing expertise, as well as her understanding of Blue Apron customers as a long-time customer herself, will help her advance the company towards sustainable, profitable growth," he added.

Blue Apron has had a difficult time as a publicly traded company since its June 2017 initial public offering. First, Amazon announced plans to buy Whole Foods, causing Blue Apron to slash its IPO range to between $10 and $11 a share, down from $15 to $17, as investors worried about the competition such a deal would bring. Then, less than a month later, Amazon rolled out its own meal-kit business

More recently, the meal-kit maker has had trouble holding onto customers. Last August, Blue Apron said its total number of customers plunged by 24% year-over-year in the second quarter and that revenue per customer was down by $1 to $250. At that time, the stock was trading near $2 a share.

And in December, Blue Apron tumbled to a low of $0.65 before a partnership with Weight Watchers ignited a rally to more than $1.60. After giving up some of those gains, shares hovered near the $1 level for much of the past month before Tuesday evening's news sent them to their best level since the end of February.

Blue Apron was down 5.3% this year through Tuesday's closing bell. 

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Andreessen Horowitz, one of Silicon Valley's most prominent tech investors, is renouncing its status as a venture-capital firm

Tue, 04/02/2019 - 4:30pm  |  Clusterstock

  • The Silicon Valley stalwart Andreessen Horowitz is renouncing its status as a venture-capital firm as it moves closer to the world of financial services, cofounder Marc Andreessen told Forbes. 
  • All 150 firm employees and partners will register as financial advisers.
  • The differentiation allows the firm to make higher-risk investments in areas that the Securities and Exchange Commission says requires more oversight, such as cryptocurrency or token sales.

Andreessen Horowitz, one of Silicon Valley’s flagship institutional tech investors, has renounced its status as a venture-capital firm and is in the process of registering as a financial adviser. 

Cofounder Marc Andreessen told Forbes that the entire firm will register as financial advisers. The new approach allows the firm to take larger, riskier bets in the markets for emerging technologies that the Securities and Exchange Commission (SEC) says requires more oversight, including cryptocurrency.

Read more: Andreessen Horowitz is launching a $300 million fund to invest in crypto — and it hired its first-ever female general partner to lead the effort

Traditionally, venture-capital firms are allowed to invest in shares of private startups — generally considered to be high-risk assets — because of a special exemption to SEC regulations that doesn’t require it to play by quite the same rules as a traditional financial-services firm. By waiving that exemption and getting its employees certified as financial advisers, Andreessen Horowitz is able to broaden the types of investments it can make.

That means that Andreessen Horowitz will be allowed under SEC rules to do things such as hold a portfolio of cryptocurrencies or take a position in a public company, neither of which it was allowed to do previously. In short, it makes Andreessen Horowitz a little bit more like a financial-services company. 

According to Forbes, the firm is also in the process of closing a new growth fund that will add $2 billion to $2.5 billion for David George, the firm’s newest partner, to invest across its existing portfolio and other high-growth startups.

Andreessen founded the firm in 2009 with his former colleague Ben Horowitz after selling Opsware to HP in 2007. Since its founding, the namesake firm has generated an estimated $10 billion in profits for investors. The firm was an early investor in Lyft, which went public in March, and expects no fewer than four additional portfolio companies to go public over the next year, including Airbnb, PagerDuty, Pinterest, and Slack. Andreessen himself was also an early investor in Facebook and sits on the company's board.

Read the full interview with Marc Andreessen in Forbes here>>

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GameStop is sinking after the company said it won't issue annual earnings guidance (GME)

Tue, 04/02/2019 - 4:28pm  |  Clusterstock

GameStop shares plunged more than 7% in after-hours trading on Tuesday after earnings results fell short of analysts' estimates. The company also said it will not offer earnings per share guidance to investors.

"Given the planned cost savings and profit improvement initiative and the announcement of a new CEO starting on April 15, 2019, the company is not providing annual earnings per share guidance at this time," the company said in a release.

Here's what GameStop reported, compared with what analysts surveyed by Bloomberg expected.

  • Adjusted earnings per share (EPS): $1.45 versus $1.58.
  • Revenue: $3.1 billion versus $3.27 billion.
  • Comparable sales: +1.4% versus -2.1%.

On Monday, GameStop announced an agreement with two activist investors, Hestia Capital Partners and Permit Capital Enterprise Fund, that would add two new independent investors to its board.

The report comes as the company's shares trade near the lowest level since 2005, having crashed earlier after GameStop's board earlier this year terminated plans to sell the company. The Texas-based consumer electronics chain has struggled to stay relevant in a changing gamer landscape

GameStop has fallen 20% this year through Tuesday's market close.

Read more markets coverage from Markets Insider and Business Insider:

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