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Saudi Crown prince to meet Lockheed Martin CEO Hewson

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Saudi Arabia’s powerful Crown Prince Mohammed bin Salman will meet with Lockheed Martin CEO Marillyn Hewson and tour the defense giant’s complex in the heart of Silicon Valley this week.

The 32-year-old prince is slated to meet with executives representing various programs in the company’s portfolio and participate in facility tours in Sunnyvale, Calif., a senior Lockheed Martin official said on the condition of anonymity.

The Kingdom of Saudi Arabia is one of the top clients of the Bethesda, Md.-based defense contractor. Last year, the Saudis expressed intent to procure more than $28 billion worth of Lockheed Martin combat ships, aircraft and missile defense systems over the next 10 years.

“This week, we will continue our dialogue on the procurement opportunities and discuss how Lockheed Martin is helping the Saudi government realize His Majesty’s Vision 2030 objective of building its domestic technology capabilities and skilled workforce,” the senior Lockheed Martin official said without confirming the exact date of the prince’s visit.

What’s more, the upcoming visit will be the third time in the past two weeks that the crown prince has met with Hewson.

During his time at Lockheed Martin’s Sunnyvale complex, the young Saudi prince will be given a briefing on the Terminal High Altitude Area Defense, or THAAD, missile defense system.

THAAD is one of the key elements in the U.S. military’s layered ballistic missile defense. It is one of most advanced missile systems on the planet and can hunt and blast incoming missiles right out of the sky from its truck-based launcher.

The interceptors fired from THAAD’s launcher do not carry warheads and instead use pure kinetic energy to deliver “hit to kill” strikes to ballistic threats.

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Morgan Stanley had $911 million loss in Q1 tied to Archegos meltdown

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Bill Hwang in 2012

Emile Warnsteker | Bloomberg | Getty Images

Morgan Stanley posted blockbuster results for the first quarter, but a single prime brokerage client cost the firm nearly $1 billion.

In its earnings results, Morgan Stanley said Friday it had a $644 million loss from a “credit event” for that client, as well as $267 million in related trading losses.

That client was Bill Hwang’s Archegos, Morgan Stanley CEO James Gorman said during a conference call with analysts, confirming what a person with knowledge of the situation told CNBC earlier.

While Morgan Stanley was the biggest prime broker to Archegos, other banks suffered larger losses. Credit Suisse, which CNBC has reported was the No. 2 broker to Archegos, took a $4.7 billion hit to unwind the losing bets and shuffled top managers because of the meltdown. Nomura said it could face $2 billion in losses.  

During his scheduled call with analysts to discuss the quarter, Gorman said Archegos owed it $644 million after its meltdown in late March.

“We liquidated some very large single stock positions through a series of block sales culminating on Sunday night, March 28,” Gorman said. “That resulted in a net loss of $644 million which represents the amount the client owed us under the transactions that they failed to pay us.”

He added: “Subsequently, we made a management decision to completely de-risk the remaining smaller long and short positions,” Gorman said. “We decided we would be out of the risk as rapidly as possible, and in so doing, incurred an incremental loss of $267 million. I regard that decision as necessary and money well spent.”

Morgan Stanley may have been misled by the family office, CFO Jon Pruzan said during the call. The bank held collateral for Archegos based on facts that turned out to be untrue, he said.

Archegos representatives could not immediately be located for comment. Its previous communications firm said it no longer represented the family office.

At least part of the Archegos loss was driven by the fact that Morgan Stanley had been an underwriter on ViacomCBS shares the previous week, so it held off selling a block of the company’s stock until Sunday, which caused the bank to be later in selling than others, Gorman said.

During the call, an analyst asked Gorman if the episode would change the firm’s approach to risk management in the prime brokerage business.

“I think we’ll certainly be looking hard at family office-type relationships where they are very concentrated and you have multiple prime brokers and frankly, the transparency and lack of disclosure relating to those institutions is just different” from hedge funds, Gorman said. “That’s something I’m sure the SEC is going to be looking at and that’s probably good for the whole industry.”

— CNBC’s Dawn Giel contributed to this report.

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‘Roaring Kitty’ stands to rake in millions on his GameStop options bet Friday

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The Reddit logo is seen on a smartphone in front of a displayed Wall Street Bets logo in this illustration taken January 28, 2021.

Dado Ruvic | Reuters

It could be a big payday for Keith Gill, the Reddit trading crowd’s favorite and the man who inspired the epic GameStop short squeeze.

Friday is the expiration date of Gill’s 500 call options contracts he bought at the beginning of 2021. Gill — who goes by DeepF——Value on Reddit and Roaring Kitty on YouTube — attracted an army of day traders who piled into the brick-and-mortar video game stock and call options, pushing the shares up 400% in a single week in January.

GameStop closed at $156.44 a share on Thursday, up 730% for the year. Assuming Gill still holds the contracts and sells them Friday, at a $12 strike price, he will make more than $7 million on his position (The options cost the buyer $10,000 in total.)

It’s unclear if Gill has already closed his position at a profit. His last update on Reddit’s r/WallStreetBets forum was on April 1, which showed 500 outstanding call options in a position worth more than $8 million at the time. (The post was not independently verified by CNBC so we are assuming that it is his actual account.)

Gill has also been holding 100,000 shares of GameStop, which he bought earlier this year at around $27 apiece, according to the screenshots he posts on Reddit. As of April 1, the stake gained more than $16 million. It wasn’t clear if he sold the shares this month.

The investor was a former marketer for Massachusetts Mutual Life Insurance. Through YouTube videos and Reddit posts, Gill encouraged a band of retail traders to squeeze out short selling hedge funds in GameStop.

The action got so wild at one point that brokerages including Robinhood had to restrict trading in the stock as it blew up their clearinghouse margin. The mania also led to a series of congressional hearings featuring Gill around brokers’ practice, and gamifying retail trading.

Gill owned 10,000 shares of GameStop at the end of 2020 and increased his holding to 50,000 shares in January and to 100,000 in mid-February. Judging from the updates he posted on Reddit, he never sold his GameStop stakes amid the monstrous short squeeze or in the aftermath.

The GameStop story is still far from over. Besides the scrutiny the saga brought on around retail trading, the company itself is in the middle of a transformation, hoping to capitalize on the massive rally in the stock price.

GameStop announced a $1 billion stock sale at the beginning of April to accelerate its e-commerce transition led by activist investor and board member Ryan Cohen, who is Chewy’s co-founder. The company also hired former Amazon and Google executive Jenna Owens as its new chief operating officer.

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Danish energy giant Orsted pivots to onshore wind in $684 million deal

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Closeup of a wind turbine nacelle on blue sky.

lupmotion | iStock | Getty Images

Orsted said Friday it had reached an agreement with Brookfield Renewable to purchase a 100% equity interest in the latter’s Irish and U.K. onshore wind business, Brookfield Renewable Ireland.

Orsted said the deal would see it enter Europe’s onshore market. In 2014 the company, which was then known as DONG Energy, divested its last activities in onshore wind to focus on the offshore sector.

According to Orsted, the agreement has an enterprise valuation of 571 million euros ($684 million), although this figure is subject to adjustments. The deal is slated to close in the second quarter of 2021.

Brookfield Renewable Ireland, or BRI, is headquartered in the Irish city of Cork and specializes in the development and operation of onshore wind farms.

Orsted described BRI as having “an attractive portfolio” which includes 389 megawatts (MW) in operation and under construction as well as a development pipeline of over 1 gigawatt (GW).

“In the US, we’ve built a strong onshore business with 4 GW in operation and under construction,” Orsted CEO, Mads Nipper, said in a statement.

“The European market for onshore wind power is expected to grow significantly in the coming years,” Nipper added.

He went on to state his firm’s acquisition of BRI would provide it with “a strong platform that expands our presence in onshore renewables to Europe.”

Europe is home to a well-developed wind energy industry. According to figures from WindEurope, 2020 saw 14.7 GW of wind energy capacity installed there.

The industry body says 80% of these installations were in the onshore sector, with total onshore capacity amounting to 194 GW.

In the U.S., onshore capacity stands at more than 122 GW, according to the American Clean Power Association. China, a dominant force in wind energy, boasts over 278 GW of onshore capacity, the Global Wind Energy Council says.

Capacity refers to the maximum amount that installations can produce, not what they are necessarily generating.

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