Friday26 July 2019 ★ 11© The Financial Times Limited 2019 Week 30Sephora’s La Défense branch in Paris
has recently reopened after a big
refurbishment. In an FT interview, the
head of the LVMH-owned beauty
retailer explains why it is betting that
‘experiential’ bricks-and-mortar stores
have a future in a digital world.
InterviewiPAGE 14Sephora boss bets on a
bricks-and-mortar futureLAURENCE FLETCHER— LONDONCaxton Associates, one of the world’s
oldest and best known hedge funds,
has told investors its headquarters is
now in London rather than New York,
in a symbolic boost to the UK’s finan-
cial services industry as Brexit looms.Founded byUS billionaire investor
Bruce Kovnerin 1983, Caxton, which
manages $3.7bn in assets, has histori-
cally been based in New York. That
remained the case when Mr Kovner
retired as chief executive in 2011, suc-
ceeded by London-based Andrew Law.
The largely symbolic shift to the UK,
not previouslyreported, reflects a burst
of hiring in Caxton’s London office, a
process accelerated by a weak pound inthe wake of the Brexit vote in 2016. Its
office inMayfair, London, is set to reach
about 85 people by the end of this year, a
doubling over the past 18 months,
according to a person familiar with the
staffing structure. Its New York office
houses just a fraction of that number.
“Investors do now generally consider
us to be London-headquartered,” the
firm said in a letter to investors yester-
d ay,seen by the Financial Times.
The macro-focused firm — making
bets on moves in global bonds, curren-
cies and stock markets — has been
recruiting operations, technology and
finance staff in London to be close to the
bulk of its fixed income and other trad-
ing teams, it added. Its back-office oper-
ation in New Jersey is set to close.Hedge funds with a London base have
received a boostby the depreciation in
sterling, which has fallen to $1.24 from
close to $1.50 before the UK referendum
on EU membership. The fact that funds
manage money and earn fees in dollars
has allowed them to recruit staff and
rent offices in London more cheaply.
Caxton’s shift will be viewed as a fillip
to the UK’s financial services industry,
which has been overshadowed by
uncertainty over Britain’s exit from the
bloc. Last year, New York overtook Lon-
don as the world’s top financial centre,
according to research group Z/Yen.
In 2017, billionaire investor Alan
Howard, co-founder of hedge fund
Brevan Howard, moved back to the UK
from Geneva.Caxton’s HQ shift to London boosts
financial services as Brexit looms
from a DC law firm cautioned that the
move may signal that federal investiga-
tors have simply completed their evi-
dence gathering process and no longer
believe the class action case would inter-
fere with their work.
The investigation wasrevealed last
November, when Snap said that it had
responded to subpoenas from the SEC
and the DoJ. It came after investors filed
a class-action lawsuit against the com-
pany in the wake of its March 2017 ini-
tial public offering, alleging that the
company had failed to make adequate
disclosures in its prospectus, including
how competition from Instagram was
already hampering its growth.happens for two months, three months,
the chances of seeing an indictment
come through decrease every day,” said
a former DoJ prosecutor andlawyer who
specialises in US antitrust litigation. “If I
were them [Snap], I would be very
pleased with that development, it is gen-
erally a pretty good sign that the DoJ is
not moving forward.”
The reason the DoJ might apply a judi-
cial stay, or temporary pause, on a civil
case isto limit any interference in its
own case. If witness depositions, docu-
ments and other evidence in a civil case
become public, you “lose the element of
confidentiality”, the lawyer added.
Another senior antitrust litigatorties involved, both the Department of
Justice and the Securities and Exchange
Commission, are no longer proceeding
with their case.
“In May 2019, the government
decided not to seek an extension of a
judicial stay that it had previously
requested in our federal securities class
action,” the Snap filing said.
While Snap said in the filing it did not
have “complete visibility” into the fed-
eral investigations, it said it understood
that it was focused on their IPO disclo-
sures in relation to competition from
Instagram, adding that the claims of the
class-action lawsuit were “meritless”.
“Once the stay is lifted, and nothingHANNAH MURPHY— SAN FRANCISCO
MADHUMITA MURGIA— LONDON
Snap, owner of messaging app Snap-
chat, has signalled that US authorities
may have dropped a probe into the com-
pany over whether it misled investors
on the threat of competition fromFace-
book-owned rivalInstagram.
In regulatory filings published on
Wednesday, the Los Angeles-based
company said that the government had
decided in May not to renew a request to
halt a separate class-action lawsuit
against Snap while it undertook its own
investigations into the company.
According to legal experts, such a
move could suggest that the US authori-Snap signals end to federal inquiry
3 Probe into IPO disclosures appears stalled 3 Washington drops opposition to lawsuit
Investors
allege Snapmisled
them onthe threat of
competitionfrom rival
InstagramCompanies / Sectors / People
Companies
Advent International.......................10,
Airtel............................................................... 14
Alibaba........................................................... 13
Align Technology................................... 20
Amazon..................................................13,
Anglo American........................................ 12
Anadarko...................................................... 14
Anheuser-Busch....................................... 13
Apple............................................................... 15
Asahi................................................................ 13
BAE.................................................................. 10
Beyond Meat................................................ 8
Booking Holdings Inc............................ 12
BNP Paribas............................................... 19
Breakthrough Energy Ventures.......
Caxton Associates................................... 11
China Aerospace Sci/Tech Corp....
Cobham...................................................10,
Colony Capital........................................... 12
DNB................................................................. 19Digital Bridge............................................. 12
Dior.................................................................. 14
Equinor.......................................................... 14
Facebook........................................8,10,11,
Fenty............................................................... 14
Ford................................................................ 20
GKN................................................................. 10
Goldman Sachs......................................... 10
Google.............................................................. 8
Huawei.......................................................3,
ING................................................................... 19
Impossible Foods...................................... 8
InBev............................................................... 13
Instagram................................................10,
iSpace............................................................. 12
JBS................................................................... 19
Kleiner Perkins............................................ 8
LG Display................................................... 14
LVMH............................................................. 14
LandSpace................................................... 12
Maersk Oil................................................... 14Mail.ru............................................................. 13
Masco............................................................ 20
McKinsey..................................................... 15
MegaFon....................................................... 13
Melrose.......................................................... 10
Nissan............................................................. 12
Nokia............................................................... 10
OneSpace..................................................... 12
PayPal.............................................................. 8
Pochta Rossii.............................................. 13
Procter & Gamble................................... 14
Reef Knots................................................... 19
Reliance Jio................................................. 14
SABMiller...................................................... 13
SK Hynix....................................................... 14
Samsung..................................................14,
Sberbank....................................................... 13
Sephora......................................................... 14
Silchester International........................ 15
Slack................................................................ 19SmileDirectClub....................................... 20
Snap...........................................................10,
Southwest................................................... 20
SpaceX........................................................... 12
Spirit Airlines............................................ 20
SquareBook................................................. 19
Tencent......................................................... 13
Tesla...........................................................8,
The Olive Oil Co...................................... 19
Total................................................................ 14
Twitter........................................................... 10
Unilever.......................................................... 11
Union Development Group................. 4
Vodafone Idea........................................... 14
WeChat.......................................................... 14
Yahoo............................................................ 15
Yandex........................................................... 13
Sectors
Aerospace & Defence.....................10,
Airlines.......................................................... 20Automobiles.........................................12,
Banks.............................................................. 19
Construction.............................................. 20
Energy.............................................................. 8
Financial Services................................8,
Financials................................................12,
Food & Beverage...............................13,
Healthcare.................................................. 20
Retail....................................................13,14,
Retail & Consumer................................. 14
Tesla................................................................ 12
Technology......................8,10,13,14,15,
Telecoms.............................................3,10,
People
Agarwal, Anil.............................................. 12
Balarkas, Richard..................................... 19
Barrack, Tom.............................................. 12
Brito, Carlos................................................ 13
Cai, Jingqi..................................................... 12
Dobrodeyev, Boris.................................. 13Doerr, John................................................... 8
Dudley-Williams, Patrick..................... 19
Ganzi, Marc................................................. 12
Gates, Bill....................................................... 8
Ghosn, Carlos............................................. 12
Jackson, Lisa................................................ 8
Jope, Alan..................................................... 11
Kovner, Bruce............................................. 11
Lapuente, Chris de................................. 14
Lockwood, David..................................... 15
Manco, Danilo............................................ 19
Musk, Elon...............................................8,
Perboyre Cavalcanti, Guilherme.....
Pichai, Sundar............................................. 8
Pouyanné, Patrick................................... 14
Protti, Michel.............................................. 15
Saikawa, Hiroto......................................... 12
Suri, Rajeev................................................. 10
Thiel, Peter................................................... 8
Wehner, David.......................................... 10
Zuckerberg, Mark................................8,Unileverchose one of the hottest days in
history in Europe yesterday to blame
poor weather in early summer for a drop
in ice-cream sales as it revealed it had
missed profit estimates in the first half.
As Paris recorded its highest ever
temperature, above 42C, and the UK saw
its highest ever July temperatures, the
consumer goods group said relatively
poor early summer weather in Europe
was behind disappointing sales of its ice
cream, which includes the Magnum and
Ben & Jerry’s brands.
It reported operating profit of €4.6bn
for the first six months of 2019, 1.3 per
cent higher than the same period last year
but behind analyst expectations of €5bn,
raising the pressure onAlan Jope, chief
executive since January.
Underlying sales growthrose 3.5 per
cent in the quarter, thanks to the
company’s performance in emerging
markets and in its home care business.
This was slightly behind analysts’ forecast
of 3.7 per cent.
The producer of Dove soap and
Hellmann’s mayonnaise confirmed that
underlying sales growth for the year
would come in at the low end of its 3-5 per
cent target. But it reiterated its ambition
for profit margins to reach 20 per cent by
2020, set by former chief Paul Polman.
Other consumer goods groups have also
launched “margin resets” this year as new
chief executives have taken over,
including PepsiCo, Beiersdorf, Henkel
and Colgate-Palmolive.
Alice HancockSun screamUnilever feels the heat on ice cream sales
Cross-borderAlibaba takes Russia’s
online shopping market by storm— PAGE 13
WhiplashTesla investors braced for more
of the same bumpy ride— RICHARD WATERS, PAGE 12
Laurence
Fletcher
Tail
Risk
Equity investors should probably not get too carried away
by the latest dovish noises coming from the European Cen-
tral Bank. In its seemingly endless quest to push inflation
higher, the ECB hinted again yesterday at further stimulus,
through some mixture of interest rate cuts and an expan-
sion of its €2.6tn “quantitative easing” programme.
In theory, that should mean more support for stocks
across the eurozone, as liquidity flows into financial mar-
kets. But investors could be set for disappointment.
For starters, the effects of yet more stimulus are hard to
judge. European stocks received a big boost in 2015 when
the ECB began its QE programme. The Stoxx 600, a broad,
region-wide index, hit 415 by mid-April, a gain of more
than 20 per cent since the start of that year.
But that was about as good as it got. Since then stocks
have done little — in fact, they are still 6 per cent lower than
that level. Indeed, the index is only 14 per cent higher than
it was at the end of 2014, on the eve of QE.
In the short term, the likely effect of another dose of QE
is a “sugar rush” for markets,
says Ian Heslop, head of glo-
bal equities at Merian Global
Investors. Beyond that, the
effect on asset prices “isn’t
obvious”.
Another key question is
what another shot of stimu-
lus would tell investors about
the health of the underlying
economy. Mario Draghi, the
ECB president, said yesterday that the picture was mixed
but deteriorating, noting a hit to manufacturing from the
US-China trade war. Services and construction were
robust, he added, while employment was relatively strong.
But another round of bond buying, so soon afternew
purchases stoppedin December, would indicate that con-
ditions are getting worse. Perhaps the most fundamental
question: what impact can QE have on economic growth,
beyond giving a shortlived boost to stocks? Mr Draghi was
adamant that previous monetary stimulus “did the trick”,
pointing to higher inflation and job creation.
But there is a strong argument that changes to monetary
policy cannot, in aggregate, create more economic growth.
While companies’ borrowing costs can be lowered, there
will also be a greater misallocation of capital to less
profitable projects.
“For every unit of credit or debt produced, the ability to
create... growth continues to fall,” says Graham Neilson,
investment director at Fulcrum Asset Management in
London. European stocks are “in no man’s land”, he says.
“Stimulus is a positive but growth is a negative”. That is
why many fund managers are tempted to look elsewhere.
“In the US, earnings are growing more,” says George
Cooper, chief investment officer at Equitile Investments,
who has just a few per cent of his fund in Europe. “Valua-
tions [in Europe] are not screamingly cheap.”[email protected]Some will argue
that changes to
monetary policy
cannot, inaggregate, create
economic growth
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China Aerospace Sci/Tech CorpChina Aerospace Sci/Tech CorpПCaxton AssociatesCaxton AssociatesПП...................................П...................................А©©"What's "What's "What's "What's The Financial Times Limited 2019The Financial Times Limited 2019................................................................."What's.................................................................News"Colony Capital
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