The Wall Street Journal - USA (2020-12-07)

THE WALL STREET JOURNAL. **** Monday, December 7, 2020 |B9

THE TICKER|Market events coming this week

Costco is expected to post earnings on Thursday of $2.09 a share, compared with $1.73 a year earlier.

DAVID ZALUBOWSKI/ASSOCIATED PRESS

Monday

Consumer Credit
Sept., previous
up $16.2 billion
Oct., expected
up $17.5 billion

Earningsexpected*
Estimate/YearAgo($)
Casey’s General Stores
2.82/2.21
HealthEquity
0.36/0.47
Smartsheet
(0.22)/(0.15)
Toll Brothers
1.23/1.41

Tuesday

Productivity
2nd qtr., prev. up 4.9%
3rd qtr. prel., exp.
up 5.0%

Unit labor costs
2ndqtr.,prev.
down8.9%
3rdqtr.prel.,exp.
down8.9%

Earnings expected*

Estimate/YearAgo($)

AutoZone

17.82/14.30

Brown-Forman

0.51/0.59

Chewy (0.14)/(0.20)

Guidewire Software

(0.05)/0.13

MongoDB

(0.44)/(0.26)

Thor Industries

1.58/0.92

Wednesday

Short-selling reports

Ratio,daysof tradingvolumeof

currentposition,at Nov.13

NYSE 2.7

Nasdaq 2.4

EIAstatusreport

Previouschangeinstocksin

millionsofbarrels

Crude-oil stocks

down 0.7%

Gasoline stocks up 3.5

Distillates up 3.2

Mort. bankers indexes

Purch.,previous up9%

Refinan.,prev. down5%

Wholesaleinventories

Sept., previous up 0.4%

Oct., expected up 0.2%

Earnings expected*

Estimate/YearAgo($)

Adobe 2.67/2.29

Campbell Soup

0.91/0.78

nCino (0.09)/n.a.

RH 5.25/2.79

Thursday

Consumer-price index

All items, Oct. unch.

Nov., expected up 0.1%

Core, Oct. unch

Nov., expected up 0.1%

EIAreport:natural-gas

Previouschangeinstocksinbillions

ofcubicfeet

down 1

Initial jobless claims

Previous 712000

Expected 728000

Treasury budget

Nov.,’19

$209billiondeficit

Nov.,’20,exp. n.a.

Earnings expected*

Estimate/YearAgo($)

Broadcom 6.24/5.39

Ciena 0.63/0.58

Costco Wholesale

2.09/1.73

Lululemon Athletica

0.86/0.96

Oracle 1.00/0.90

VailResorts

(3.63)/(2.64)

Friday

U.Mich. consumer index

Nov., final 76.9

Dec., prelim. 75.8

Producer-price index

All items, Oct. up 0.3%

Nov., expected up 0.2%

Core, Oct. up 0.1%

Nov., expected up 0.2%

• FACTSET ESTIMATES EARNINGS-PER-SHARE ESTIMATES DON’T INCLUDE EXTRAORDINARY ITEMS (LOSSES IN PARENTHESES)  ADJUSTED FOR
  STOCK SPLIT NOTE: FORECASTS ARE FROM DOW JONES WEEKLY SURVEY OF ECONOMISTS

MARKETS

the reaction from larger share-
holders, especially Vanguard
Group, BlackRock Inc. and State
Street Corp., which together
control nearly 20% of Exxon’s
shares.
BlackRock and State Street
are part of Climate Action
100+, an investor group that
pushes for companies to take
swifter action to combat cli-
mate change. BlackRock, in
particular, has a history of sin-
gling out Exxon for not moving
quickly enough to address cli-
mate risks, and it cited those
concerns earlier this year when
it voted against two Exxon di-
rectors and in favor of separat-
ing the chairman and CEO
roles. The directors were
elected and the roles weren’t
separated.
Exxon, which just seven
years ago was America’s most
valuable company, today has a

Continued from page B1

market value of around $176

billion after the pandemic

crushed demand for fossil fu-

els and laid bare prior strate-

gic missteps.

With its shares down 40%

so far this year, there has been

speculation Exxon could attract

an activist investor seeking to

harness frustration among

shareholders.

Engine No. 1’s letter calls

on Exxon to make four pri-

mary changes: 1) add indepen-

dent directors with diversified

energy-industry experience;

2) reduce capital expendi-

tures, particularly on projects

that are unlikely to break

even with sustained low oil

and gas prices; 3) formulate a

plan to invest in growth areas

such as renewable clean en-

ergy; and 4) realign manage-

ment incentives.

“We believe that for Exxon-

Mobil to avoid the fate of

other once-iconic American

companies, it must better po-

sition itself for long-term, sus-

tainable value creation,” the

firm writes.

Engine No. 1 launched with

$250 million under manage-

ment and primarily manages

Mr. James’ own fortune, from

technology investing. Its focus

is on so-called impact invest-

ing, which seeks to push com-

panies to make changes that

are beneficial in the long run

to stakeholders such as work-

ers and shareholders alike.

Its team includes Charlie

Penner, a former partner at

activist hedge fund Jana Part-

ners LLC, where he helped

run campaigns at companies

including Whole Foods Mar-

ket. He also led Jana’s suc-

cessful joint effort with Cal-

strs in 2018 to push Apple

Inc. to add features to help

parents limit their children’s

screen time.

Companies of all kinds are

facing pressure to reduce their

impact on the environment. As

rivals such as BP PLC and

Royal Dutch Shell PLC have

begun investing in renewable

energy—a strategy that their

investors haven’t rewarded so

far—Exxon was seen as some-

what of a holdout, with Chief

Executive Darren Woods vow-

ing instead to spend more on

oil exploration to increase pro-

duction.

But recently Exxon has been

taking actions to address

shareholder concerns. Last

week, it retreated from Mr.

Woods’ ambitious plan and

said it would cut billions of

dollars from its capital spend-

ing every year through 2025

and focus on investing in only

the most promising assets. It

also signaled it planned to

take a write-down of as much

as $20 billion on the value of

natural-gas assets—a move it

had long resisted—mostly

stemming from the disastrous

purchase of XTO Energy Inc. a

decade ago.

Mr. Woods said the moves

would help the company focus

on improving earnings and

strengthening its balance

sheet to maintain the divi-

dend.The dividend currently

yields a whopping 9% and

costs the company about $15

billion a year.

Exxon shares have risen

about 9% since the announce-

ment.

The window to officially

nominate directors to Exxon’s

board doesn’t open until later

this month, and Engine No. 1

says in the letter it hopes

Exxon will consider its nomi-

nees before that.

The nominees are: Gregory

Goff, the former CEO of refiner

Andeavor, which was sold to

Marathon Petroleum Corp.;

Kaisa Hietala, who previously

led the renewables business of

Finnish refiner Neste Oyj; Al-

exander Karsner, an executive

of Alphabet Inc.’s innovation

lab who served in the Energy

Department under President

George W. Bush; and Anders

Runevad, former CEO of Ves-

tas Wind Systems AS.

—Christopher M. Matthews

contributed to this article.

Investor

Sets Exxon

Proxy Fight

Bitcoin is surging to records,
a rally driven in part by the
emergence of new investors
from passionate individuals to
return-starved hedge funds
looking to profit from the digi-
tal currency’s momentum.
The cryptocurrency rose as
high as $19,834.93 on Monday,
according to CoinDesk, topping
the previous intraday record of
$19,783.21 set on Dec. 18, 2017.
After trading as low as $3,867
in March, bitcoin has nearly tri-
pled in 2020 and is up 90%
since early September. It set-
tled Friday at $18,832.76.
The move is the latest res-
urrection for the upstart digi-
tal currency, which is known
for bouts of speculative fervor
and equally violent crashes.
So far this year, there have
been more than 11.9 million
transfers of less than $1,000 of
bitcoin into personal wallets,
according to Chainanalysis,
which tracks cryptocurrency
transactions. That is up from
about 9.1 million in 2017 and
suggests more investors are
taking part in this year’s rally.
Here are some of bitcoin’s
most recent winners:

Marcel Rodgers
The 28-year-old police offi-
cer from Atlanta says he bought
$100 of bitcoin for the first
time in May using Square Inc.’s
Cash App, an investment that
more than doubled since then.
He first heard about the crypto-
currency years ago when hip-
hop artist 50 Cent was accept-
ing payment for his 2014 album
“Animal Ambition” in bitcoin.
Square’s Cash App has al-
lowed customers to buy and
sell bitcoin since 2018. In the
third quarter, the app’s bitcoin
revenue soared to $1.6 billion
from $148 million a year earlier.
“The trick about bitcoin is
that the cost of bitcoin is
pretty much directly corre-
lated to how many people ac-
cept it as a form of currency,”
Mr. Rodgers said. “So when
people accept it as a form of

currency, that’s when the

money starts moving. If [Jeff]

Bezos put a bitcoin button on

Amazon and people were to

start using it when buying on

Amazon, that would drive the

price of bitcoin up.”

Bitcoin has been slow to

catch on as a form of payment.

A number of companies in-

cluding Dell Inc. Microsoft

Corp. and Expedia Group Inc.

experimented with bitcoin for

payments but have stopped.

Trey Harnden

The 25-year-old software

salesman from Seattle says he

started taking bitcoin seri-

ously after watching the price

rally back in 2017. Since then,

he invested about a third of

his portfolio, more than

$3,000, in the digital currency

and says he plans to buy more.

His bitcoin investment is up

more than 190% this year, he

says, while returns on his

401(k) and Roth IRA are nearly

flat. Mr. Harnden, who heard

about bitcoin from his high-

school English teacher, says he

isn’t buying the digital cur-

rency to make a quick buck.

The endorsement of hedge-

fund managers such as Paul

Tudor Jones only reaffirmed

his conviction. “I don’t think

the Paul Tudor Joneses of the

world are going to move away

from bitcoin,” he said. “I am in

it for the long run.”

Mr. Jones told CNBC in May

that he put about 1% to 2% of

his assets in bitcoin, calling it

a“greatspeculation”thathe

believes will emerge as a new

asset class. Other prominent

investors including Stanley

Druckenmiller, founder of

Duquesne Capital Manage-

ment, and mutual-fund vet-

eran Bill Miller, now chief in-

vestment officer of Miller

Value Partners, have said they

are betting big on bitcoin.

Adam Nunn

Mr. Nunn’s investing focus

used to be value stocks. Now it

is bitcoin. The 30-year-old in-

surance underwriter from Rich-

mond, Va., says he initially dis-

regarded the currency. But

after hearing more about it

from investors he followed on-

line, he started to buy bitcoin

consistently at the start of the

year. Now, his retirement port-

folio is made up of just 10%

stocks and 90% bitcoin.

So far that bitcoin invest-

ment is up 120%, he says, and

he has added to his position

over the past month, buying

about half of one bitcoin for

around $9,000.

“I haven’t approached it like

this speculative investment. I

think of it more for the long

term,” he said. “We’re just at

the starting gate right now.”

Before bitcoin, Mr. Nunn in-

vested in stocks such as Ulta

Beauty Inc. and Micron Tech-

nologies. Now, the small per-

centage of Mr. Nunn’s portfo-

lio dedicated to stocks is used

mostly to trade put options,

which let the owner sell a

share at an agreed-upon price.

All the extra proceeds from

successful options bets are be-

ing funneled back into bitcoin

purchases, he says.

Hugo Rios

The 19-year-old community-

college student from Bayonne,

N.J., says he bought $100 of

bitcoin at the peak in 2017, not

knowing much about the digi-

tal currency. He sold it soon

after at a loss of more than

50%. Now Mr. Rios has re-

turned to the market with a

plan.

Three months ago, Mr. Rios

started buying more than $600

in shares of the Grayscale Bit-

coin Trust, along with about

$300 of shares in Riot Block-

chain Inc., which focuses on

“mining” bitcoin, or running

software that verifies transac-

tions to win newly minted bit-

coins. Those investments are

up more than 22% and 51%, re-

spectively, since then.

Grayscale InvestmentsLLC

is a private asset manager that

offers nine over-the-counter

trust funds focused on bitcoin

and cryptocurrencies and an-

other more diversified fund.

Those funds, along with popu-

lar apps like Robinhood that

allow investors to buy and sell

bitcoin, have made the market

more accessible to new play-

ers.

Mr. Rios says he has consis-

tently been buying shares of

Grayscale when the price dips,

a strategy he expects to con-

tinue while buying actual bit-

coin as well. “Even though I

also invest in stocks, bitcoin is

the only thing I’m going long

on,” he said.

Vera Krahmal

A 41-year-old university

professor from London, Ms.

Krahmal founded Times Three,

a hedge fund that invests in

bitcoin and other cryptocur-

rencies, with her brother An-

drey Krahmal in January. She

currently manages about $10

million, raised from high-net-

worth individuals and family

offices.

So far, their bitcoin invest-

ments have a return of 173%

this year and the fund as a

whole has risen 215%.

The cryptocurrency’s vola-

tility is a positive because it

creates opportunities for trad-

ing, Ms. Krahmal said. The

fund most recently bought bit-

coin when its price was

around $18,600. It has since

risen about 1.3%.

“We’re really betting on

adoption. Bitcoin has a lot of

attraction as a store of value

and for diversification for

portfolios,” she said. “We also

believe that it can play an im-

portant role in protecting in-

vestments against long-term

rising inflationary risks, such

as loose monetary policy from

central banks.”

—Caitlin Ostroff

and Anna Hirtenstein

contributed to this article.

BYSEBASTIANPELLEJERO

Investors Ride Bitcoin Wave to New Highs

Marcel Rodgers

Sources: CoinDesk (bitcoin); FactSet (share price)

Bitcoinprice,daily

$20,000

0

5,000

10,000

15,000

2017 ’18 ’19 ’20

GrayscaleBitcoinTrustshareprice,weekly

$30

0

10

20

2017 ’18 ’19 ’20

Trey Harnden Vera Krahmal

Adam Nunn

JAMES RIVER INSURANCE

The oil company has lost 40% of its stock value this year amid the crash in energy prices.

FAN PEISHEN/XINHUA/ZUMA PRESS

Hugo Rios