Category: 3. Business

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Pick your poison: beer or cigarettes? Weak share prices are pushing cash yields on the biggest brewers closer to those of sin-bin stalwart, Big Tobacco. For investors with the bottle for a sector that seems to be sliding into pariah territory, that could spell opportunity. 

Recent news has contributed to investors’ sour mood. Shares in AB InBev, the world’s largest brewer and maker of Budweiser and Stella Artois beers, fell on Thursday despite an unexpectedly generous $6bn two-year share buyback. Numbers two and three, Heineken and Carlsberg, recently reported falls in quantity sold, and stuck with already-watered down profit forecasts.  

Over the past year, only shares in Carlsberg are in the black — and then, only barely. Its heftier rivals are each down roughly a tenth. Volumes have become a key metric for investors as brewers try to offset mature western markets with growth in less developed countries and in newer categories such as alcohol-free beer.

But key growth spots have gone flat, with Brazil hurt by bad weather and economic uncertainty — a factor in China too, which also this year banned alcohol from official events. Consumption in Vietnam, a market prized for its large, young population, has been slow to recover from the impact of a strict 2020 drink-driving law. 

Mega-brewers’ relegation from the premium to the bargain shelves has been a long process. From trading on at least 20 times expected earnings in 2020, the three brewers now trade on between 12 and 14 times 2026 forecasts. Investors appear to fear that consumption will flag under the influence of public health groups and a more alcohol-conscious younger generation. 

Investors gloomily peering into their half-empty glasses could choose to see things differently. Granted, neither Big Beer’s top nor bottom line have been effervescent of late. But managers have used a mix of price rises and cost cuts to boost free cash flow. AB Inbev, whose annual cash generation after investments is 9 per cent of its market capitalisation, is not far short of the 12 per cent yielded by tobacco stocks — a sector that has handsomely rewarded investors prepared to accept its sinful status.

Big Beer, for all its doubters, isn’t Big Tobacco. It still has growth potential if key markets steady. In the meantime, cash is a good consolation.

jennifer.hughes@ft.com

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Boots is being sued by a travel accessories company that claims travel pillows sold by the UK retailer imitate its “particularly ergonomic” design and breach its intellectual property rights.

Travel Blue has launched a lawsuit against Boots at the High Court in London, demanding the beauty and health retailer stop infringing its design. It has called for unquantified damages and wants Boots to destroy or hand over unsold pillows.

U-shaped pillows have existed since at least the 1920s, when Elizabeth Millson of New York patented one in the US for use in baths.

Together with noise-cancelling headphones, the modern version has become a fixture of long-haul economy class flights. The neck-supporting products offer a degree of comfort — and the promise of sleep — to passengers confronted with limited leg room and barely reclining seats.

Travel Blue’s lawsuit, which was filed in September, recognises that all travel pillows need to “fit around a person’s neck, to provide support for that person’s neck whilst travelling and to be transportable”.

However, the legal claim states that specific elements of some pillows sold by Boots mean they infringe on a design that Travel Blue has registered with the UK’s Intellectual Property Office.

Nicholas Caddick KC, representing the UK accessories company, said in court papers that Travel Blue’s design had “significant features” that created an “overall impression of a particularly ergonomic and comfortable travel pillow with flowing rather than rigid lines”.

He set out a range of similarities between Travel Blue’s design and Boots’, including legs that had “a bulbous appearance accentuating the support” to the sides of the user’s head.

Caddick continued: “When viewed from the rear, an undulating top profile with a concave centre section flanked by raised lateral support points, once again, giving the appearance of enhanced support for the wearer’s head and neck”.

A Boots spokesperson said “We don’t believe the claim has any merit and will be strongly defending our position.” According to court records the company has retained law firm Browne Jacobson to defend it in the case. Defence documents have yet to be filed with the court.

Boots operates stores in several UK airports among about 1,800 stores, selling travel essentials and health and beauty products.

The chain, formerly part of US-listed Walgreens Boots Alliance, became a standalone entity this year after private equity group Sycamore Partners took WBA private and split off the international health and beauty retailer and drug wholesaling business as The Boots Group.

Travel Blue, founded in 1987, is a family-owned business and sells its products through a wide range of airport duty free outlets as well as luggage and bag shops and department stores around the world, as well as online.

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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Gigaclear, a heavily indebted UK broadband provider, has launched a sale process as investors and creditors including NatWest, Lloyds and the National Wealth Fund try to resolve a £1bn debt pile. 

Potential buyers received teaser documents earlier this week, according to three people familiar with the matter. The process comes as Gigaclear’s creditors seek a solution to their investment, which soured after an expected equity injection from Equitix failed to fully materialise in 2023. 

Other options include writing down debt, a debt-for-equity swap or a further cash injection from investors that include main shareholder Infracapital and Railpen, according to a person familiar with the process. They added that Gigaclear’s operations would not be affected regardless of the outcome.

Gigaclear, which is available in more than 500,000 homes and has about 160,000 customers, could fetch between £500mn and £700mn, New Street Research has estimated. 

The dozens of small broadband companies or alternative network providers set up to challenge BT’s Openreach and Virgin Media O2 are now grappling with a collective £8bn debt pile, according to estimates from Enders Analysis, as well as fewer customers than hoped. 

Gigaclear’s restructuring process may involve the first major writedown of debt in the “altnet” sector, and would come after lenders including NatWest and Lloyds set aside provisions to account for losses in the sector. TMT Finance first reported the restructuring.

Taxpayers stand to take a hit in any writedown as the National Wealth Fund gave a £240mn guarantee as part of a wider £1.5bn debt package in 2023. The fund has committed more than £1bn to altnets, according to a person familiar with the matter.

The fund said it continued “to be supportive of the business in exploring ways to raise capital and deliver a sustainable capital structure for the company in order to grow value”.

Potential buyers for Gigaclear could include the industry’s largest player, CityFibre, according to a person familiar with the matter. Any buyer is likely to want a reduction of the altnet’s debt levels before any deal, they added.

The Financial Times reported earlier this week that Virgin Media O2 was in talks about acquiring the UK’s fourth-largest broadband network, Netomnia, in a potential £2bn deal. CityFibre has also expressed interest in the business.

New Street analyst James Ratzer said the “combination of high build costs and low customer take-up” meant the business was unlikely to have any equity value.

“Trying to sell a business with no equity value when equity backers and creditors both want a share of any proceeds is very challenging to complete,” he added.

Gigaclear said it continued to deliver “strong operational performance” and was “delivering on all key financial metrics”.

“Our existing stakeholders remain supportive of the business, and we continue to work constructively with them to explore a range of options that support the long-term success of Gigaclear and deliver the best outcome for all parties,” it added.

Equitix said it had invested £50mn in Gigaclear in late 2023 that had “unlocked £1bn in senior debt” and was disappointed that the “financial performance of the investment did not meet the targets that Gigaclear set itself”.

Infracapital, Railpen, Lloyds, NatWest and CityFibre declined to comment.

Microsoft CEO Satya Nadella emphasized that the tech giant must “earn our permission to operate every day, in every country, every community, and every customer interaction” in his annual shareholder letter, as the company navigates what he calls a generational AI platform shift.The message comes as Microsoft reported record financial performance with revenue reaching $281.7 billion, up 15 percent, and Azure cloud revenue surpassing $75 billion for the first time with 34 percent growth. Despite these achievements, Nadella stressed the company cannot take customer trust for granted.

“We take neither for granted,” Nadella wrote about the company’s performance and customer trust. “That’s why we remain grounded in our mission: to empower every person and every organisation on the planet to achieve more.”

Security and quality drive Microsoft‘s AI strategy

Nadella outlined three core priorities for Microsoft: security, quality, and AI innovation. The company dedicated resources equivalent to 34,000 full-time engineers to its Secure Future Initiative, strengthening identity protections and embedding security-by-design practices across all products.Microsoft’s AI infrastructure expansion included opening datacenters across six continents, now operating more than 400 facilities in 70 regions. The company announced Fairwater, positioned as the world’s most powerful AI datacenter in Wisconsin, delivering ten times the performance of today’s fastest supercomputer.Microsoft 365 Copilot surpassed 100 million monthly active users across commercial and consumer segments, while GitHub Copilot reached 20 million users. The company introduced Agent Mode, allowing users to orchestrate multistep tasks through simple prompts.

Microsoft commits $4 billion to AI education and skills

Looking beyond technology, Nadella announced Microsoft Elevate, a five-year initiative investing $4 billion in cash and AI cloud technology to schools and nonprofit organisations. The program aims to help 20 million people earn AI credentials over the next two years.“People want technology they can trust,” Nadella wrote, committing to responsible AI innovation guided by values of respect, integrity, and accountability.The CEO challenged employees to think long-term: “What are you working on today that, 15 years from now, you will look back on and say, ‘we got it right’?”

Story Continues

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• Significant insider control over Oxley Holdings implies vested interests in company growth

• The top 2 shareholders own 73% of the company

• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

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Every investor in Oxley Holdings Limited (SGX:5UX) should be aware of the most powerful shareholder groups. We can see that individual insiders own the lion’s share in the company with 85% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

So it follows, every decision made by insiders of Oxley Holdings regarding the company’s future would be crucial to them.

Let’s delve deeper into each type of owner of Oxley Holdings, beginning with the chart below.

See our latest analysis for Oxley Holdings

Small companies that are not very actively traded often lack institutional investors, but it’s less common to see large companies without them.

There are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. Alternatively, there might be something about the company that has kept institutional investors away. Oxley Holdings might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

Oxley Holdings is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is the CEO Chiat Kwong Ching with 44% of shares outstanding. See Ching Low is the second largest shareholder owning 29% of common stock, and Wee Sien Tee holds about 11% of the company stock. Interestingly, the second-largest shareholder, See Ching Low is also Top Key Executive, again, pointing towards strong insider ownership amongst the company’s top shareholders.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company’s shares, implying that they have considerable power to influence the company’s decisions.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock’s expected performance. We’re not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our information suggests that insiders own more than half of Oxley Holdings Limited. This gives them effective control of the company. So they have a S$356m stake in this S$418m business. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.

With a 14% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Oxley Holdings. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

It’s always worth thinking about the different groups who own shares in a company. But to understand Oxley Holdings better, we need to consider many other factors. Be aware that Oxley Holdings is showing 1 warning sign in our investment analysis , you should know about…

If you would prefer check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, backed by strong financial data.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

A new report from the financial publication Hunterbrook alleges Phil Mickelson received inside information on an investment in an offshore oil company and distributed that information to a private group of company shareholders.

On Friday, Hunterbrook released a story that included a series of private messages shared by Mickelson with a group of investors for the Houston-based oil startup Sable Offshore. In the messages, Mickelson appears to share material non-public information gleaned from interactions with Sable Offshore CEO Jim Flores – a decision that could have legal ramifications for Mickelson, the company’s chief executive, or both.

The three-bylined story centers on the latest actions of the embattled oil company Sable Offshore, which paid $988 million to assume control of a troubled oil field from Exxon off the coast of Santa Barbara, Calif., and quickly attracted investors seeking a potential moonshot.

From the beginning, the Sable business was predicated on a calculated gamble: If Flores could restart production from the Santa Ynez offshore oil infrastructure – a collection of three offshore platforms, a processing facility and a pipeline system that were shuttered after an environmental disaster in 2015 – the near-billion-dollar investment would look like a steal.

But the 20 months since the company’s creation have been far rockier than investors hoped. Sable Offshore’s efforts to protect against future environmental disasters have hit a series of regulatory snags in the last year and a half. To date, the company has failed to restart production on the oil infrastructure, causing Sable Offshore’s stock price to tumble more than 53 percent over the last 12 months.

Mickelson’s involvement in the company has been highly publicized. The LIV Golf star has tweeted more than 100 times about Sable Offshore over the 20 months, many of them aimed at California legislators and regulators involved in keeping oil production shuttered.

Mickelson’s own past with insider trading is well-documented. In 2016, he paid more than $1 million to the Securities and Exchange Commission to settle allegations that he had traded on inside information gleaned from the legendary gambler Billy Walters.

News

The Hunterbrook story alleges Mickelson was more than just a disgruntled investor, revealing the contents of an X group (previously Twitter) that appears to show the six-time major champ sharing information taken from Flores before it was made public.

“I spoke to Jim this morning. An announcement is coming today after market closes. It could be an 8K or press release,” Mickelson wrote to a group of Sable investors on X on Sept. 29, hours before an announcement from the company indicating it had submitted paperwork to the state of California seeking permission to restart oil production. This was one of a handful of examples of non-public material information discovered in Hunterbrook‘s reporting.

The Hunterbook story also appeared to show Mickelson involved in a coordinated effort to drum up federal support for the Sable Offshore project, a “prayer” that could reverse stalled oil production and rebound some of Sable’s sunken stock price. A leaked phone call quoted in the Hunterbrook story appears to show Sable Offshore CEO Jim Flores discussing a “west coast game” between “a certain left-handed golfer” and current U.S. Commerce Secretary Howard Lutnick. (Lutnick refuted that he had plans to play with Mickelson, and said he’d never heard of Sable Offshore.)

The legal implications of Mickelson’s involvement in the story remain uncertain. U.S. insider trading law stipulates that the transfer of material non-public information is not itself illegal, so long as the information is not traded upon. On Friday afternoon, Mickelson replied to several tweets about the story with a similar defense, arguing that he did not trade on the information he received, and that his actions in the story did not “insinuate wrongdoing.”

If Mickelson’s X counterparts traded on material non-public information gleaned from him, Mickelson could still be found legally liable under U.S. insider trading laws surrounding “tipping” – though authorities would have to prove he benefited in some way from those trades.

“So a company says I can’t say anything to you but we will announce something at the close,” Mickelson said, in one X reply. “I don’t know if it’s a dilution and the stock goes down or a deal for the stock to go up. I have to wait to see what the info is [sic], I make no trades whatsoever and am ultra ultra careful given past history. I don’t even share that information is coming til after the close.”

Mickelson also included an accusation of his own aimed at Hunterbrook, a financial journalism outfit whose unusual business orientation allows it to trade on information gleaned by its reporters, so long as it is not material non-public information. Hunterbrook disclosed on social media that it had not made any trades based on the findings of the Sable Offshore story.

“This looks like stock manipulation on your part and slanderous,” Mickelson wrote. “Did you make any trades today?”

The story, which also suggested that Sable Offshore would soon have to raise $200 million in dilutive equity, sent stock prices plunging on Friday afternoon. At closing time, Sable Offshore was selling for $10.47 per share, down 18.47 percent from the day’s start.

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