Canada Pension Plan Investment Board scored across-the-board investment gains in its most recent quarter, matching returns from a benchmark that it uses to evaluate its performance.
CPPIB, the investment manager for the Canada Pension Plan, reported a 5-per-cent return, after investment costs, for the three months ended Sept. 30. CPPIB’s “reference portfolio” of global stocks and bonds, which it says represents a passive approach to investing, returned just over 5 per cent in the quarter in Canadian dollars.
CPPIB’s broad blend of investments – including stocks, bonds, real estate, private equity and infrastructure – helped as stock markets crashed in February and March owing to fears of the economic impact of COVID-19. CPPIB posted a loss of just 3.7 per cent in the quarter ended March 31 as global stock markets saw losses of 20 per cent or more.
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When equities roared back to life in the June 30 quarter, however, CPPIB lagged badly with a 5.6-per-cent return – a dozen percentage points behind many major stock indexes. The results for the quarter ended Sept. 30, announced on Monday, erased the wild dichotomies.
CPPIB said the fund’s 10-year and five-year annualized returns, net of costs, are 10.5 per cent and 9.5 per cent, respectively. CPPIB closed the quarter with $456.7-billion in assets.
Chief executive Mark Machin cited gains in public and private equity holdings as contributing to the latest quarter’s returns, noting they were tempered when stock markets retracted in September. Mr. Machin said in a statement that CPPIB is “cautious about the months ahead given the highly uncertain economic fallout of COVID-19 and its effect on markets.”
Separately, CPPIB filed documents with U.S. securities regulators showing it cut its holdings in Shopify Inc. by 74 per cent, leaving it with 99,978 shares, valued at US$102-million, according to an analysis by Bloomberg. (All numbers in the filings are as of Sept. 30.)
The board also cut holdings in the pharmaceutical and health sector, with its Amgen Inc. position down 99 per cent to US$1.99-million, AbbVie Inc. down 60 per cent to US$90.1-million and Johnson & Johnson down 33 per cent to US$392.1-million.
CPPIB loaded up on shares of Netflix Inc., adding 625,621 shares toreach a total of 693,575 shares, valued at US$346.8-million. The board also added significantly to its holdings of Mastercard Inc., Amazon.com Inc. and Akamai Technologies Inc.
Its top holdings on U.S. exchanges are Alibaba (US$4.68-billion); Mastercard (US$1.79-billion) IHS Markit Ltd. (US$1.73-billion); Alphabet Inc. ($1.67-billion) and Facebook Inc. (US$1.15-billion). All told, Bloomberg said, CPPIB had US$53.1-billion of U.S.-listed public equities at Sept. 30.
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In CPPIB’s own recap of the quarter, it noted a US$50-million investment in Perfect Day Inc., an animal-free dairy maker, its first in its Climate Change Opportunities strategy. It said it has made a commitment to acquire up to US$1-billion of home improvement consumer loans from ECN Capital Corp. The board’s private equity group invested in information technology, software and education companies in the quarter.
CPPIB also noted it lost its investment in Neiman Marcus Group LTD LLC when the luxury retailer exited Chapter 11 proceedings in U.S. Bankruptcy Court, but continued to be a majority investor in Mytheresa GmbH, an online ultraluxury fashion retailer. Bloomberg reported last week that Mytheresa is exploring a U.S. initial public offering with a valuation of about US$1-billion to US$1.5-billion, which would blunt the Neiman Marcus losses.
CPPIB also said Monday that Frank Ieraci will become a senior managing director and its global head of active equities. He was previously head of research and portfolio strategy. He replaces Deborah Orida, who moved over to become global head of real assets earlier this year.
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When the UK went into lockdown in mid-March, the small Verv team, surprising as it may sound, was well prepared for the turbulent time ahead of them. “In 2019, we had already made significant cost savings after reviewing our business strategy,” says Louanne Steyn, CFO of Verv, “so we had a good overview of all our costs. We knew what we could do to reduce them in the short term.”
For example, Verv canceled the lease of their London office. “We are a small team and now we all work from home. If necessary, we can rent a space to get together.”
Steyn herself works from Devon, southwest of London. “During this pandemic, it is important to cut costs wherever possible and to be intelligent with spending. This will make a difference later on.”
Better focus on product strategy
Verv already had plans to invest in 2020. At the same time, the start-up focused on the latest predictive maintenance technology currently being applied to household appliances such as washing machines, dishwashers and refrigerators. Verv’s technology measures and analyzes the energy consumption of appliances at very high speeds. By applying specialized algorithms to this data, it is able to detect behavioral anomalies that can signal a fault in the machinery. Due to the high resolution of the technology, errors can be detected and prevented in real time, right down to the level of parts of a device.
The solution is available in multiple forms, including built-in firmware on an integrated microchip and an online adapter. By remotely performing a thorough analysis, Verv can provide the manufacturer with a detailed diagnosis and recommendations that can be passed on to repair departments and engineers at the companies involved as well as to consumers who own the device.
With sustainability at its core, Verv wants to offer the market more opportunities to repair rather than replace so that devices and appliances last longer and result in less waste. Steyn thinks that the corona crisis may create new opportunities in the market. “People have less money to spend. They want their things to last longer. Maybe now they’ll start thinking more carefully about the use of raw materials.”
Technology for all electrical products
Manufacturers can integrate the microchip into their devices or devices. But owners of existing devices can also benefit from the predictive maintenance solution. The concept is simple: It uses an online adapter with technology to collect the required data and send it to the platform.
The technology can be applied to any electronic device. “Think of chargers for electric cars where it is important to be able to quickly detect anomalies,” says Steyn. This market is expected to grow due to the need for sustainable transportation.
At one point, Verv was looking for new investments to further develop the technology and prepare for a commercial rollout. “This was a lot harder because investors were first looking at their existing portfolios and were reluctant to invest in new start-ups.”
Re-screened by InnoEnergy
In March, one of the owners of Verv, EIT InnoEnergy, investigated the possibility of reinvesting in some of the start-ups it has in its portfolio. “The process of applying for this was very tough,” says Steyn looking back. “We already knew in 2019 that 2020 would be a challenging year. But corona made that even more difficult.”
Verv further increased its focus on business strategy and product development. At the same time, the company went through the selection procedure set up by the EIT InnoEnergy start-up team. “Now that they have made additional investments, we are in a position to much more easily attract other investors.”
Product delivery likely in 2022
Steyn is happy that Verv is experiencing good traction this year and expects the company to survive the corona crisis. “I have worked for other companies within the circular economy before. I think it’s important to contribute to a more sustainable world with Verv.”
Verv’s business objectives and business strategy will not be greatly influenced by corona, Steyn thinks. Its technology remains on track for mass production, which is likely to start in 2022.
MONTREAL — The Montreal Impact have elected to hang on to some of the club’s top talent, including striker Romell Quioto and goalkeeper Clement Diop, but may soon be parting ways with midfielder Bojan Krkic. The club announced Friday that it has exercised options for 10 players on its roster and opted not to pick up options for another four. Deals on five other players are set to expire at the end of 2020.“All of these decisions are about the financial and sporting sides, and we need to be better,” Impact sporting director Olivier Renard said on a video call. “We need to make the jump.”Some of the options weren’t picked because the club is looking to make space for new players, he added.“We have space to make movement and we will make that as soon as possible,” Renard said.In addition to Quioto and Diop, Montreal is keeping goalies James Pantemis and Jonathan Sirois, defender Karifa Yao, midfielders Clement Bayiha, Mathiew Choiniere, Tomas Giraldo and Amar Sejdic, and forward Mason Toye. The club previously extended loans for defender Luis Binks and midfielder Lassi Lappalainen through 2021.The club did not exercise options on four players, including Krkic, midfielders Steeven Saba and Shamit Shome, and forward Anthony Jackson-Hamel. The decision doesn’t necessarily mean Krkic won’t wear an Impact jersey next season, however. Renard said the club is interested in bringing the 30-year-old Spanish midfielder back, but decided not to pick up his option “for many reasons.” He said the Impact have made Krkic an offer, and the decision is now up to him.Krkic played in 17 regular-season games for Montreal this year, tallying four goals and two assists.Four other players will be out of contract at the end of December, including defenders Rod Fanni, Jukka Raitala and Jorge Corrales. A loan agreement for midfielder Orji Okwonkwo is also set to expire at the end of the year.Raitala, Montreal’s captain, and Corrales will not return next season, Renard confirmed, but the club is still waiting to see if Fanni, 38, wants to continue playing professionally. The moves come after the Impact finished ninth in Major League Soccer’s Eastern Conference (8-13-2). Montreal was eliminated from the post-season with a 2-1 loss to the New England Revolution in the play-in round. The Impact still have at least one game to play in 2020. The team is set to face Honduran club Olimpia in CONCACAF Champions League action on Dec. 15. Players who did not have their options picked up are not required by MLS to play in the game, but Renard said he is hopeful they will join anyway. This report by The Canadian Press was first published Nov. 27, 2020. The Canadian Press
Brazil’s state energy giant Petrobras has cut its five-year investment plan by 27 percent to $55 billion, driven by the effects of the coronavirus pandemic.Reuters reported, citing a regulatory filing, that the company will focus its efforts on developing deepwater oilfields in the pre-salt zone that is estimated to contain billions of untapped barrels of oil. The pre-salt fields are Brazil’s main point of attraction for foreign energy firms, too.
Of the $55 billion Petrobras plans to spend over the next five years, most will go towards exploration and production. Still, at $46 billion, the sum to be allocated for exploration and production until 2025 is down from $64 billion planned a year ago.
The company also said it will only develop fields where it could break even at international oil prices of $35 per barrel.
As a result of the spending revision, Petrobras will produce less oil and gas next year, the company said, aiming for a daily average of 2.75 million barrels of oil equivalent. This is down from 2.84 million bpd this year.Related: EIA Sees WTI Crude Averaging $44 In 2021
However, going forward, production will increase, reaching 3.3 million barrels of oil equivalent in 2024. The boost will come from the pre-salt zone, which will also drive the company’s output this year. Petrobras said at the release of its third-quarter results in September that it had originally expected an output of 2.7 million bpd of oil equivalent for this year.
Crude oil production from the pre-salt fields marked a quarterly increase of 8.1 percent to 1.651 million bpd in the third quarter of this year, mainly due to higher operational efficiency of the platforms in the Búzios field and the ramp-up of production platforms in the Tupi and Atapu oilfields. Compared to the third quarter of 2019, Petrobras’ crude oil output in the pre-salt area jumped by 20.8 percent.
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