☕️ The Ozempic effect

First it was ResMed, now CSL is suffering from side effects.

Good morning.

First it was ResMed. Now biotech colossus CSL is suffering some side effects from the relentless rise of weight-loss drug Ozempic. Who on the ASX is next?

*Stock data as of the market close. Commodities and crypto data in USD.

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MARKET MOVERS

Market News: Australian biotech success story CSL was the worst performing stock among the top 200 yesterday and sank to four year lows after chairman (and spiritual leader) Brian McNamee uttered words that no ASX punter ever wants to hear. The former CEO told attendees at the AGM that CSL is “never going to be a dividend stock” and that investors should look elsewhere if that’s what they want.

But as hinted above, the other factor in the stock’s poor performance was growing fears it could be the latest sharemarket victim of the Ozempic effect. Fresh trial data released by the product’s owner Novo Nordisk indicated the weight loss drug may be a viable treatment for kidney disease in patients with diabetes. That could pit it directly against CSL’s Vifor segment, which accounts for about 15% of the Australian company’s top line.

Together with Stake | Invest on Wall St and the ASX

THE QUICK SYNC

  • US inflation was stronger than expected in September. (CNN)

  • Comcast and Disney have appointed investment banks to value streaming platform Hulu ahead of a possible sale. (CNBC)

  • A former contender for the Glencore CEO role has set out to create a Chinese commodities trading giant. (Bloomberg)

  • Employment Hero's ambitious mission to get rid of payday. (Capital Brief)

  • Disney agonised about sports betting. Now it’s going all in. (Wall Street Journal)

TRADING FLOOR

M&A:

  • Online broker Stake is reportedly set to lob a non-binding takeover offer for rival Selfwealth pitched at 17.5 cents per share (AFR)

  • Michael Hill has reportedly received inquiries from five industry competitors looking to sell themselves in the past four months. (The Australian)

  • Woodside Energy may delay the sale of its $500m-plus Pyrenees and Macedon projects to entice Beach Energy as a potential buyer. (The Australian)

  • Doubts arise about the likelihood of the Allkem and Livent merger. (The Australian)

  • Liontown Resources has agreed to prolong the exclusive due diligence period for Albemarle. (Capital Brief)

  • Newmont Corp is closer to acquiring Newcrest as an overwhelming majority of its shareholders approved the deal. (Capital Brief)

Capital Markets:

  • Woolworths is preparing to issue $450m in fixed-rate bonds following significant interest from potential investors, totalling around $1.75bn. (Capital Brief)

  • JPMorgan's equities desk was seeking buyers for $165m worth of Ingenia Communities Group shares, which represents approximately 10% of the company. (AFR)

  • Fletcher Building's 5-year fixed bond deal is uncertain due to plumbing failures and faulty pipes in Western Australia. (AFR)

  • TrueGreen Mobility, recently rebranded as GoZero Group, has appointed MA Moelis Australia to lead a fundraising initiative of up to $100m, which may involve both debt and equity. (AFR)

  • AVJennings is raising $30.4m to speed up home construction in partnership with Pro9 technology. (BNA)

VC:

  • The Queensland Government's Venture Capital Fund received an oversubscription, with 55 firms vying for over $700m in commitments. (AFR)

  • Phasio has secured $3.8m in a seed round led by AirTree Ventures. (BNA | Startup Daily)

Others:

  • The Forager Australian Shares Fund saw an 8.2% increase after its CIO revealed intentions to delist the fund. (Capital Brief)

  • The ACCC has fined Tesla for reportedly not meeting mandatory safety standards for products powered by button batteries. (Capital Brief)

  • Morningstar data shows funds investing in "quality" companies outperformed the MSCI World Index in the past year. (AFR)

  • AustralianSuper is confronting additional losses on its US property assets as a lender gets ready to repossess a vacant office tower in Washington, DC. (SMH)

  • Australian Uber drivers embrace the economics of EVs. (Capital Brief)

INSIGHT OF THE WEEK BY STAKE

Numerai

If you get lots of data scientists to crunch numbers and fine-tune machine learning algorithms over stock market data, you could probably come out with a hedge fund that basically acts like a money printer, right?

Well, not so fast, Warren Jr. A crowdsourced fund called Numerai did exactly that and netted out +54% returns from September 2019 to March 2023. But, since then, the fund has gone under a -35% drawdown, and to make matters worse, the Aurum Quant Equity Market Neutral Index, the fund’s benchmark, hasn’t gone down anywhere near as much.

That indicates this isn’t systemic like 2007’s quant quake, but rather an issue of Numerai’s models. Goes to show that even a private army of maths wizards might not be enough to forecast the market’s behaviour.


This is not financial advice.

THE WATERCOOLER