Market movers: Stocks that saw action on Monday - and why

A roundup of some of the North American equities making moves in both directions today

On the rise

Shares of Barrick Gold Corp. (ABX-T) soared over 11 per cent on Monday in response to Warren Buffett’s Berkshire Hathaway Inc. (BRK.B-N, BRK.A-N) disclosing n a regulatory filing a new 20.9 million share investment worth US$563.6-million in the Toronto-based miner.

Conversely, Wells Fargo & Co. (WFC-N) and JPMorgan Chase & Co. (JMP-N) slid 3.2 per cent and 2.6 per cent, respectively, after Berkshire reduced its stake in the banks.

See also: Big U.S. funds gorged on tech stocks and gold in second quarter

Oil and gas company Paramount Resources Ltd. (POU-T) jumped over 4 per cent after demanding a cash payout for its shares in Strath Resources Ltd. when it is merged with another private firm.

Calgary-based Paramount says neither the amalgamation nor the process followed were in the best interests of Strath and its shareholders and it is exercising its “right of dissent” under the Alberta Business Corporations Act to be bought out for fair value. It didn’t specify a price.

In 2018, Strath bought Paramount’s oil and gas producing assets in the Kakwa region of northwestern Alberta for $340 million, with half paid in cash and the rest by 85 million common shares at $2 each.

The deal gave Paramount 15.6 per cent ownership of Strath and a seat on its board of directors.

Analysts say it’s unlikely the fair value of the Strath shares would be the same $170 million today, given the global economic slowdown and resulting oil price retreat due to the COVID-19 pandemic.

Calfrac Well Services Ltd. (CFW-T) was flat after it announced that a special committee of independent directors has determined that the Wilks Brothers proposal is not a “superior proposal.”

The company said that, among other factors, the special committee concluded that the Wilks Brothers proposal "could not reasonably be expected to result in a transaction more favourable to the corporation and its stakeholders (including the senior unsecured noteholders) as it lacks the required level of support from senior unsecured noteholders."

Calfrac said the determination means it will be continuing to seek approval for the recapitalization transaction.

See also: Major Calfrac shareholder launches rival restructuring deal

Principia Biopharma Inc. (PRNB-Q) jumped 9.4 per cent after French healthcare firm Sanofi SA said it will buy the firm for about US$3.7-billion.

The deal will strengthen Sanofi’s research capabilities in areas such as autoimmune and allergic diseases, the companies said.

The merger also seals a record summer for European takeovers of U.S. healthcare targets, coming just two weeks after Germany’s Siemens Healthineers made a US$16.4-billion swoop on U.S. oncology firm Varian.

Sanofi is set to buy the outstanding shares of Principia for US$100 per share in cash, representing an aggregate equity value of around US$3.68-billion on a fully diluted basis and a premium of 10 per cent to Principia Biopharma’s closing price of US$90.74 on Aug. 14

JD.com Inc. (JD-Q) rose 7.8 per cent after it beat analysts’ estimates for quarterly sales on Monday, as the firm benefited from a shift in shopping habits of domestic consumers who have largely moved to online ever since the outset of the COVID-19 pandemic.

The results coincide with growing tensions between Beijing and Washington. Several Chinese companies are putting off plans for U.S. listings amid tensions between the world’s top two economies, while those listed in New York are seeking to return to exchanges closer to home. In June, JD raised about US$3.87-billion in its Hong Kong secondary listing.

JD executives did not offer any comments on U.S.-China tensions on a conference call with analysts on Monday.

China, which has under a thousand active COVID-19 cases currently, has largely emerged out of lockdowns but demand is still picking up in many sectors.

Retail sales in the world’s second-largest economy slipped in July, dashing expectations for a modest rise, as consumers failed to shake off wariness about the coronavirus, while the factory sector’s recovery struggled to pick up pace.

Chinese ecommerce website Alibaba Group Holding (BABA-N) rose 1.2 per cent after U.S. President Donald Trump said on Saturday he could exert pressure on more Chinese companies after he moved to ban TikTok earlier in the month

Asked at a news conference whether there were other particular China-owned companies he was considering a ban on, such as Alibaba, Mr. Trump replied: “Well, we’re looking at other things, yes.”

Mr. Trump has been piling pressure on Chinese-owned companies, such as by vowing to ban short-video app TikTok from the United States. The United States ordered its Chinese owner ByteDance on Friday to divest the U.S. operations of TikTok within 90 days, the latest effort to ramp up pressure over concerns about the safety of the personal data it handles.

On the decline

TMX Group Ltd. (X-T) was narrowly lower in the wake of naming John McKenzie as its new chief executive, effectively immediately.

McKenzie has been serving as interim chief executive of the company, which owns the Toronto Stock Exchange and other market operators, since the retirement of former CEO Lou Eccleston in January 2020.

See also: TMX profits weighed down by lawsuit settlement

Oklahoma shale driller Chaparral Energy Inc. (CHAP-N) was flat after it filed for Chapter 11 bankruptcy protection on Sunday, the latest U.S. energy sector casualty in recent months as COVID-19 crushes oil demand.

The company’s assets and liabilities were in the range of US$500-million to US$1-billion, according to a court filing in the U.S. Bankruptcy Court in Delaware. It had around US$421-million of debt outstanding at the end of 2019.

Chaparral said it will restructure its balance sheet by equitizing all US$300-million of its unsecured debt and will operate during the bankruptcy process with the help of $32 million in cash on hand as of Aug. 14 and operating cash flow.

Lenders have been reining in on credit for shale drillers and Chaparral’s borrowing limit was recently reduced to US$175-million from US$325-million. Reuters reported in March Chaparral was working with debt restructuring advisers to shore up its cash position.

With files from Brenda Bouw, staff and wires