There were two stories on the BBC Business News recently that provided a reminder of how deals generate news because they result from companies’ strategic decisions.
This news story covers a company going from Public to Private, and therefore delisting from a stock exchange, the reverse of an IPO (Initial Public Offering).
This illustrates why databases like Thomson One Banker and Bloomberg Professional track deals from when they are rumoured or announced (not just when they become effective). In Dell’s case there has been significant news coverage about the company’s strategic options now that PCs are seen to be in decline.
This news story covers an acquisition. The surprise for me was that this is one US company taking over another. Although when I checked on Bloomberg Professional Virgin Media has 100% of its turnover in the UK, it has chosen to be a US company Virgin Media Inc, listed on the NASDAQ exchange.
Using the FAME database of UK companies you can check that Virgin Media Limited (registered no 02591237) is a subsidiary of Virgin Media Inc.
Bloomberg‘s Mergers & Acquistions (MA) function highlights the current largest deals – on 20 Feb 2013 these are HJ Heinz Co, Virgin Media Inc, and Dell Inc. Bloomberg Industries (BI) can be used to investigate industry trends including the expected impact of large deals, e.g. BI CATVE (Cable and Satellite Europe) has the Feb 05 news item “Liberty Fortifying in Europe May Boost Broadband, TV Competition” and a range of related industry data.
On 20 Nov 2012 Hewlett Packard (HP) announced that it was taking a write off of $8.8 billion of the $11.1 billion that it paid to acquire Autonomy in October 2010. At the time Automony was a member of the FTSE 100 and seen as a UK technology success story.
There has been lots in the UK financial press since then as HP’s key argument is that they overpaid for Autonomy because of accounting manipulation. This is strongly denied by Automony founder Mike Lynch.
- Hewlett-Packard accountants sued over Autonomy purchase (BBC 29 Nov 2012)
- US to probe Autonomy sale to Hewlett-Packard (BBC 27 Dec 2012)
- Autonomy’s Lynch defends record as HP confirms Federal probe (Reuters 28 Dec 2012)
Aswath Damodaran’s Musings on Markets blog makes a strong case that even if HP is right this only accounts for $2.45 billion of the $8.8 billion write off – see HP’s Deal from Hell: The mark-it-up and write-it-down two-step.
The write off raises issues about the acquisition in terms of corporate strategy, leadership, corporate governance as well as the accuracy of Autonomy’s accounts.
Resources for more information:
Thomson One Banker - a deals module search will provide details of the deal: announced 18 Aug 2011, effective 3 Oct 2011, “UK – Hewlett-Packard Vision BV of the Netherlands, a unit of by Hewlett-Packard Co (HP), completed the tender offer to acquire the entire share capital of Autonomy Corp PLC (Autonomy), a
Cambridge-based developer of infrastructure and information management software, for GBP 25.5 (USD 42.09)” [SDC deal number 2337968040]
Thomson Research - analysts reports - For example, on 23 Aug 2011 Marc Geall of Deutsche Bank published a report on Autonomy Corp plc. This reported a change of recommendation to sell, since the shares were GDP 24.86 almost fully valuing the HP offer, and substantially higher that Deutsche Bank’s fundamental target price of GBP 17.50.
Business Source Premier (EBSCO): - several trade journals with articles on the HP aquisition of Autonomy. For example,
Forbes.com (2012) ‘With Autonomy, H-P Bought An Old-Fashioned Accounting Scandal. Here’s How It Worked’ Forbes.Com, (November 20, 2012):p. 39, Business Source Premier, EBSCOhost, viewed 11 January 2013.
When looking at the performance of a share (stock) or index for the year 2012 you will often see a graph that has the basic return and a higher total/cumulative return, which includes the reinvestment of dividends.
Illustrating with the FTSE 100 and data from Thomson Reuters Datastream:
- FTSE100 on 31/12/2011 – Price Index (PI) is 5572.28 – Return Index (RI) is 3770.37
- FTSE100 on 31/12/2012 – Price Index (PI) is 5897.81 – Return Index (RI) is 4146.4
- FTSE100 percentage return for 2012 – basic return is 5.84% – total return is 9.97%
Return Formula: Retit = ( RIit – RIit-1 ) / RIit-1 (multiply by 100 for percentage return)
For Total Return FTSE 100 in 2012 : (4146.4 – 3770.37)/3770.37 = 0.099733 [ 9.97% to two significant digits]
You can get Datastream to calculate this directly using the formula PCH#(FTSE100(RI),1Y) for 31/12/2012 – see previous post Total shareholder return (July 2011)
Illustrating with the Sainsbury (J) and data from Thomson Reuters Datastream (screenshot from Bloomberg Total Return Analysis (TRA) function):
- SBRY on 31/12/2011 – Price adjusted (P) is 302.9 – Return Index (RI) is 11651.27
- SBRY on 31/12/2012 – Price adjusted (P) is 345.1 – Return Index (RI) is 13989.18
- Sainsbury (J) percentage return for 2012 – basic return is 13.93% – total return is 20.07%
For Total Return Sainsburys in 2012 : (13989.18 – 11651.27)/11651.27 = 0.200657 [ 20.07% to two significant digits]
You can get Datastream to calculate this directly using the formula PCH#(SBRY(RI),1Y) for 31/12/2012 – see previous post Total shareholder return (July 2011)
Bloomberg Professional‘s Total Return Analysis (TRA) function provides a number of additional features – for example whether the share dividends are reinvested in Sainsbury’s shares or reinvested for a fixed percentage return.
As part of Dissertation Research students often need to obtain large numbers of companies to analyse. This list of companies is then used in another database to do further research.
Thomson One Banker (Excel Add-In version) allows a large number of results from one database search to be imported into an Excel sheet using the ISIN (International Security Identification Number) company identifier code.
Copy and paste the list of ISINs into an Excel sheet and click on the ‘Upload Portfolio’ icon at the top left of the screen - hover the pointer over the icons on the screen to get a description of their function. Next, an ‘Upload Portfolio’ dialogue box appears – click on ‘Browse’ and type in a filename you wish to represent this list (portfolio) of companies and click ‘OK’ and ‘OK’ again at the next dialogue box. This Portfolio of companies is then available to use in a Report wizard search.
Select the ‘Report’ wizard icon at the top of the screen to begin a search.
Step 1 Select Items: Click on ‘Add/Edit Items’ button to identify a Data item. There is a useful search box which allows Keyword searches…for example, ‘Price’ to get a list of results, including ‘PriceClose’. Double click on this item to select it and click ‘OK’.
Step 2 Select Entities: Click on the ‘Add Entities’ and ‘Download’ buttons. Scroll down to locate the filename. Click on the filename to select it and click ‘OK’ to enter the companies into the ‘Selected’ pane and click ‘OK’ to insert into the ‘Selected Entities’ pane within Step 2 of the wizard search.
Step 3 Select Dates: Start and end period and frequency (e.g. monthly), then click on the ‘Next’ button.
Step 4 Set Worksheet Options: That is, set layout format of results in the sheet. It is only necessary to modify the default settings if you have many columns to ensure data is displayed in an effective manner.
Click Finish and ‘No’ when requested to save your search. Results then appear in an Excel sheet.
Note: If you get a ‘Thomson One Banker’ error message saying ‘Unable to retrieve Project Tracking information for the current user’, this means you have not logged in. Click on the padlock icon (top left) to do so.
Further tips – see Thomson One Banker Excel add-in (July 2010)
There have been several recent articles in the financial press on the impact of the Qatari stake in Xstrata on the outcome of the proposed merger of Glencore and Xstrata.
There have also been several questions about the resources that we have for ownership data (shareholders). We have updated the FAQ questions:
- Where can I find the institutional holdings of various stocks?
- Where do I find info on insider holdings and insider trading?
- Where can I find info on share ownership of UK stocks (shares)?
While some shareholder information is publicly available, since large shareholders and directors have to declare dealings to the markets it is not easily available in a research-friendly format.
The commercial providers of ownership data tend to provide data for users who are interested in the current ownership of a single company or a small portfolio. They also collect data from as many sources as possible: large shareholders who have to report their holdings, institutional owners who report the largest holdings in their funds, and director dealings that can be large or small. (The exception if the Thomson Reuters database in WRDS (Wharton Research Data Services) - this is more research-friendly but only covers US companies.)
With ownership data researchers need to carefully check what is available and how easily it can be collected.
A quick list of our five most-used financial market databases, which I hope will make a little clearer the strengths of each from a research perspective.
WRDS – WRDS (Wharton Research Data Services) is the premier research database for business school academics worldwide. It provides a Web-query interface that is designed by researchers for researchers. At the University of Manchester, our subscriptions include: Compustat (North America), CRSP (stocks, indices, treasuries), CRSP/Compustat Merged (CCM), IBES (US and International), Thomson Reuters US Ownership (mutual funds, institutional-13f, insiders). For a fuller list see - Which databases are available through WRDS? In summary, if you are researching the US financial market then WRDS is well worth a look.
Datastream - Datastream from Thomson Reuters covers financial markets world wide. It is the most used database for quantitative research on UK equities. Licence and software restrictions mean that it is only available on specific PCs. Datastream’s coverage includes equities, equity indices, constituent lists, interest rates, economics. It includes Worldscope for company accounts, and IBES summary data.
Thomson One Banker – Thomson One Banker, also from Thomson Reuters, is a database that is aimed at financial market professionals rather than researchers. Compared with Datastream there is significant overlap, including Worldscope and IBES summary data, but it does not provide as much historical data, does not include most inactive (dead) companies, and does not cover interest rates and economics. However, it does have a Web-interface and this gives access to modules - Deals Analysis, Ownership and Private Equity – that are not part of Datastream.
SDC Platinum – SDC Platinum, again from Thomson Reuters is a database that covers deals: mergers, acquisitions, IPOs (initial public offerings), secondary offerings. There is significant overlap between SDC Platinum and the Deals Analysis module in Thomson One Banker, but researchers often prefer SDC Platuinum because it doe not have the same restrictions on downloading data. See SDC Platinum and TOB deals for more detail.
Bloomberg - Bloomberg Professional, from Bloomberg, covers financial markets worldwide. It is also aimed at financial market professionals – providing lots of functions that give users an overview of the current state of the market. Like Datastream Bloomberg is only available on specific PCs. Bloomberg provides descriptive information, research and financial statistics on public companies worldwide; financial market information on currencies, commodities, bonds, indices, interest rates, derivatives; economic statistics; and over 3,000 business news stories per day. Bloomberg does not provide as much historical data as more research-oriented databases like WRDS and Datastream.
Professional development perspective
If you are interesting in getting a job in the city then your priorities are different from a researcher- you would probably choose to look at Bloomberg first, then Thomson One Banker, Datastream, WRDS and SDC Platinum.
- FB US Equity – Bloomberg Ticker, US30303M1027 – ISIN, 30303M102 – CUSIP, B7TL820 US – SEDOL1, company identifiers from DES (Description)
- GIP (Tick Price Chart) – intra day price chart (at time of writing high $45.00, low $38.00, and average $39.93)
- SEC Form S-1 (Registration Statement) filed 1 Feb 2012 and other filings with the SEC (regulator) – Bloomberg function CF (Company Filings)
- Analysts research (BRC) and estimates (EE)
- and lots and lots of news on Facebook and its IPO
The Bloomberg IPO function shows that Facebook as by far the largest IPO this year.
If you want details of Mark Zuckerberg’s Facebook shares you need to look at the class-B shares – use Bloomberg’s MSH (Multiple Share Holdings) function.
Thomson One Banker has details of the Facebook IPO in its deals module (see Deals information from Thomson One Banker ) and financials and financial market info in its company analysis module. [FB-O -TOB Ticker, C901820175- TOB key, 30303M102 - CUSIP, B7TL820 - SEDOL]
For informed comment on the valuation of Facebook see Facebook and “Field of Dreams”: Hoodies, Hubris and Hoopla from Aswath Damodaran’s Musings on Markets blog.
Related FAQs on Manchester Business Answers 24/7:
Executive pay has been much in the news recently. For example, Robert Peston’s blog post – Is it curtains for big executive pay (8 May 2012).
Public companies provide details of their director’s pay in their annual reports, but this is not available in all databases providing company accounts data. Two of our specialist databases that do include information on executive pay are Thomson One Banker and Bloomberg.
Using the Thomson One Banker web interface, select the Thomson Overview report in the Company Analysis module.
Selecting the Key Executives link in the Thomson Overview Report will give a fuller list of executives with more detailed information.
Select an individual to get more detail including compensation (basic pay/salary, bonus, long-term incentives)
In Bloomberg the function MGMT will give you details of your selected companies management structure. Selecting one of the tabs (Executives, Board, Committees, Changes) and then selecting an individual will give their details including compensation (pay).
In Bloomberg you can also use the BIO function to search for an executive by name.
Overall Bloomberg has a better user interface for finding and browsing information about executives, but you do need to be at one of the Bloomberg PCs in the Eddie Davies Library or the Precinct Library.
(There is no current FAQ on Manchester Business Answers 24/7 that covers executive pay – a job to be done)
At 07.00 AM on Mon 16th Jan 2012 Carnival Corporation and plc issued a “Required Announcement on Financial Impact of Costa Cordia“.
“At this time, our priority is the safety of our passengers and crew,” said
Micky Arison, Carnival Corporation & plc chairman and CEO. “We are deeply
saddened by this tragic event and our hearts go out to everyone affected by the
grounding of the Costa Concordia and especially to the families and loved ones
of those who lost their lives. They will remain in our thoughts and prayers,”
The announcement then provided information in accordance with financial disclosure regulations. The full text of the announcement is available on Bloomberg and several other business databases.Bloomberg
If on Monday 16th you want to see how the market reacts to the Costa Concordia tragedy, then Bloomberg is the best database. It provides an integrated view covering the news and the Carnival share price (price down and an increase in trading volumes), and the news is the most read story of the day.
If you don’t have access to Bloomberg the announcement is also available on the business news database Factiva. Select Companies/Markets, lookup company Carnival Plc, and the select Press Releases from the news options. (You can also do a Factiva text search, but you either have to read through many results of spend some time constructing an effective search. Company = Carnival Plc AND Source = Publication: Wires AND Free Text = “announcement” worked for me.)
Thomson One Banker
Thomson One Banker has lots of financial market information but almost all numbers (at least in our subscription). However you can get the regulatory announcement so long as you know to lookup Carnival and goto Recent News at the foot of the Thomson Overview Report- see screencast http://screencast.com/t/STFffmOd
PI Navigator is the easiest database for going straight to the regulatory annoncement. You just lookup Carnival Plc and search. However, because PI Navigator only covers the regulatory news and regulatory filings of companies, you have to use another database for additional news or financial market information.
Previous post on business news: How Business News can enhance your Research
The FTSE 100 index declined just over 5% in 2011, starting the year at 5899.94 and finishing at 5572.82.
However FTSE 100 performance is not just based on the 102 shares that made up the index on 01 Jan 2011. There was several changes of the FTSE100 membership in 2011:
- March 2011 Quarterly Review -
Hargreraves Lansdown , ITV , Wood Group (John) promoted to FTSE 100
African Barrick Gold , Alliance Trust , Bunzl demoted to FTSE 250
- May 2011
Glencore International (new issue/IPO)
Ivensys is demoted to FTSE 250
- June 2011 Annual Review -
Tate & Lyle is promoted to FTSE 100
TUI Travel is demoted to FTSE 250
- September 2011 Quarterly Review -
Ashmore Group , Bunzl promoted to FTSE 100
3i Group , Wood Group (John) demoted to FTSE 250
- October 2011
Autonomy Corporation removed when takeover by Hewlett-Packard is declared wholly unconditional
Meggitt is promoted from FTSE 250
- December 2011 Quarterly Review -
CRH , Evraz , Polymetal International join FTSE 100, FTSE 350 and FTSE All Share [CRH - ammendment of primary listing to London : Evraz - new UK holding company acquiring 100% of old Evraz : Polymetal International - new issue/IPO ]
Lonmin, Investec, Inmarsat demoted to FTSE 250
In summary, we have shares entering and leaving the FTSE 100 due to natural growth or decline, new listings of large companies displacing others, and one company (Autonomy Corporation) leaving due to a takeover.
The FTSE UK Index Reviews are available online http://www.ftse.com/Indices/UK_Indices/Index_Reviews.jsp along with the changes related to specific companies http://www.ftse.com/Indices/UK_Indices/Index_Changes.jsp.
You can identify FTSE 100 index changes from the lists of members/constituents at different times using Thomson One Banker , Datastream or Bloomberg – see previous post Historical Index constituents for details.