A survey of North American equities heading in both directions
On the rise
TC Energy Corp. (TRP-T) finished narrowly higher on Monday after announcing the U.S. Federal Energy Regulatory Commission (FERC) has approved its Virginia Reliability Project, adding that it will work to place it into service as soon as possible.
It is estimated to add over US$500-million of economic value, while creating more than 3,500 jobs in the state, TC Energy said in the statement.
Columbia Gas Transmission’s Virginia Reliability Project (VRP) is an expansion project that would replace two existing segments of the pipeline system to continue reliable and abundant natural gas supply.
Owned by TC Energy, the Columbia Gas Transmission system extends from New York to the Midwest and Southeast, serving as a link between major natural gas basins and major markets.
The Virginia Reliability Project involves replacing approximately 48 miles of 1950′s 12-inch diameter pipeline with 24-inch diameter pipeline with state-of-the-art steel pipe and technology, according to the company website.
The construction is expected to begin by the second quarter of 2024 with a projected in-service date of Nov. 1, 2025, the company website said.
When completed, this project will make energy more reliable and affordable in the Hampton Roads region, it added.
Shares of Microsoft Corp. (MSFT-Q) rose after emerging on Monday as the big winner of the upheaval at OpenAI, hiring ousted CEO Sam Altman and other key staff of the startup to avert a potential flight to rivals and help deepen its lead in the artificial intelligence race.
The turmoil at OpenAI since Friday had raised fears about the fallout for Microsoft, which has pumped in billions of dollars and uses the pioneer’s technology for most of its AI offerings.
The move ensured “the golden child of AI” will stay with Microsoft, analysts said, as the company competes with Alphabet-owned Google (GOOGL-Q) to dominate the nascent industry.
Microsoft’s shares rose 2.2 per cent to a record high. The company was on track to add nearly US$30-billion to its market value at current levels. That was close to the valuation OpenAI commanded in its last fundraise.
“If Microsoft lost Altman, he could have gone to Amazon, Google, Apple, or a host of other tech companies,” said Wedbush Securities analyst Dan Ives.
“Instead he is safely in Microsoft’s HQ now. We view Microsoft now even in a stronger position with Altman and Brockman at Microsoft running AI.”
Mr. Altman will lead a new research team at the software giant following his surprise ouster by OpenAI that shocked the tech industry. He will be joined by Greg Brockman, another OpenAI cofounder, as well as other researchers including Szymon Sidor.
Analysts also said more employees could jump ship to Microsoft as the turmoil could impact what was expected to be a share sale at an US$86-billion valuation by the startup, potentially affecting staff payouts at OpenAI.
“The OpenAI for-profit subsidiary was about to conduct a secondary at a $80 billion+ valuation. These ‘Profit Participation Units’ were going to be worth $10 million+ for key employees. Suffice it to say this is not going to happen now,” chip industry newsletter SemiAnalysis said.
Several employees of the startup, including former interim CEO Mira Murati, said in posts on the X social media platform on Monday that “OpenAI is nothing without its people”.
At Microsoft, the Altman-led team will also likely have more access to the computing power necessary as the company is the second-biggest U.S. cloud player and has committed to spending billions to expand its datacenter capacity.
“If the team went down the startup path, they would have had to spend significant time rebuilding GPT-4. Instead, at Microsoft they will have access to much of the IP they require for future products,” SemiAnalysis said.
Airbnb Inc. (ABNB-Q) was up 2.2 per cent on Monday after naming Ron Klain, former White House Chief of Staff for President Joe Biden, as its chief legal officer.
Mr. Klain was President Biden’s chief of staff during his first two years in office. He was previously chief of staff to then-Vice President Biden. He held the same position under Vice President Al Gore at 34 years old, making him the youngest chief of staff to a vice president in American history.
Mr. Klain was also chief legal officer at venture capital firm Revolution, which was started by AOL founder Steve Case.
Mr. Klain’s appointment takes effect at the start of the year. He will report to Airbnb CEO and co-founder Brian Chesky.
McDonald’s Corp. (MCD-N) increased 1.4 per cent after it said on Monday it would acquire investment firm Carlyle’s (CG-Q) 28-per-cent stake in a partnership that manages its business in mainland China, Hong Kong and Macau, as the burger chain looks to simplify its structure in the region.
The deal will help McDonald’s raise its holdings to 48 per cent, while a consortium led by state-backed conglomerate CITIC Ltd will maintain its controlling ownership with a 52-per-cent stake in the business.
Reuters reported in April that Carlyle was discussing various options with financial advisers for its stake in McDonald’s China, including setting up a continuation fund for the asset.
There was “no better time to simplify our structure” given the benefits of China’s long-term potential, McDonald’s CEO Chris Kempczinski said.
The move comes nearly six years after the burger chain agreed to sell 80 per cent of its China and Hong Kong businesses to CITIC Ltd, its investment arm CITIC Capital and Carlyle for up to US$2.1-billion.
McDonald’s, which currently has 5,500 stores in China, has been increasing the market share in its fastest-growing region by banking on promotions to drive demand higher in a weak consumer spending environment.
On the decline
First Quantum Minerals (FM-T) was down 3.7 per cent after it said it has further reduced ore processing at its mine in Panama, as blockades at a local port have disrupted shipments of supplies needed to power operations.
Without shipments arriving at the mine’s Punta Rincon port, the company expects to run out of supplies for the on-site power plant this week.
The port blockade is part of ongoing protests which began after the Panamanian government and First Quantum signed a new contract on Oct. 20 for Cobre Panama, a major copper mine operated by the company’s local unit Minera Panama (MPSA). The mine contributes 1 per cent to global copper production and 5 per cent to Panama’s gross domestic product.
The demonstrators say the new terms are too generous to First Quantum and allege corrupt practices in the approval of the contract. The company has denied the allegations.
If the “illegal actions” continue to prevent the delivery of supplies necessary to operate the power plant, MPSA will ramp down the remaining processing train this week and temporarily halt production, the company said in a statement.
The company, which had reached a deal on wages with the labor union earlier this month, said MPSA has made a tax and royalty payment of $567-million for the period from December 2021 to October 2023 to the Republic of Panama.
First Quantum’s market capitalization has fallen about 45 per cent since the protests started in late October.
Panama’s top court will, possibly as soon as mid-December, decide whether to revoke the contract. A Reuters survey earlier in November found that a majority of lawyers believe that the court would likely revoke the contract.
Franco-Nevada Corp. (FNV-T), which holds a stake in the Cobre mine, was also lower by 2.2 per cent on Monday after it lowered its production outlook for the current year, hit by reduced operations in Panama.
The Toronto-based miner is now projecting 480,000 to 500,000 Precious Metal GEOs and 620,000 to 640,000 Total GEOs for fiscal 2023, down from its original guidance of 490,000 to 530,000 Precious Metal GEOs and 640,000 to 700,000 Total GEOs.
Primaris Real Estate Investment Trust (PMZ.UN-T) fell 1.6 per cent with the premarket announcement of the acquisition of Halifax Shopping Centre and the adjacent Annex open-air mall for $370-million.
“This high quality asset acquisition builds Primaris’ track record of successfully executing on its well defined growth strategy focused on market leading shopping centres,” it said in a release.
“Similar to the Trust’s existing owned portfolio, Halifax Shopping Centre and the Annex offer significant NOI growth potential over the next few years, as operating and financial performance normalizes, and as Primaris’ full-service management platform integrates and operates the properties.”
The transaction, which is expected to be neutral to funds from operations per average diluted unit, is comprised of $200-million of cash, $45-million of series A units of the Trust and $125-million of 6.0-per-cent exchangeable preferred units in a new formed subsidiary limited partnership. It is expected to close on Nov. 30.
Bristol Myers Squibb Co. (BMY-N) fell 3.6 per cent as Germany’s Bayer on Sunday stopped a late-stage trial testing a new anti-clotting drug, hurting investor confidence in all firms developing similar class of drugs.
Bayer has aborted a large testing due to lack of efficacy, dealing a fresh blow to the embattled drugmaker and throwing its most promising medium-term development project in doubt.
It said in a statement late on Sunday that experimental anticoagulant asundexian, which it had hoped would generate annual sales of more than 5 billion euros ($5.5 billion), was shown to be inferior to Bristol-Myers Squibb and Pfizer’s established Eliquis in preventing strokes in high-risk patients part-way into a Phase III trial.
The trial halt, which followed recommendation of independent trial supervisors, marks another setback for a company burdened by a weak herbicide business, high debt and by U.S. lawsuits over the alleged carcinogenic effect of its commonly used Roundup weedkiller.
New Bayer CEO Bill Anderson is weighing options to break apart the maker of prescription drugs, consumer health products, crop chemicals and seeds, in a bid to revive a battered share price. He is also seeking to simplify management decision-making, cutting management positions.
Bayer said it will further analyse the data of the discontinued trial, known as OCEANIC-AF, which was initiated in August 2022. The trial’s safety data was consistent with previous studies, it added.
With files from staff and wires