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Will Tesla’s 2018 Rough Ride Get Rockier in 2019?

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With iPhone maker Apple getting hammered in markets on lowering its first quarter revenue guidance on reasons such as a weakening Chinese economy, other Silicon valley companies are experiencing levels of pain in equity markets. In late 2018, two senior executives resigned from Tesla over Elon Musk’s antics on a comedy podcast. Musk, who smoked marijuana during the show, spoke a bit too candidly, and may have also publicly violated Tesla’s conduct policy on The Joe Rogan Experience. Musk discussed the importance of regulating artificial intelligence, and the need to transition away from oil-based fuels. He mentioned new developments in the works, but drew back before offering any specific details. Musk also told Rogan, “It’s very difficult to keep a car company alive.”

Departure of Key Executives

In the wake of the Rogan interview, Chief Accounting Officer Dave Morton, who had been CFO for Seagate Technology (STX), resigned. Then, Gabrielle Toledano, the head of human resources, opted not to return from her leave of absence. The loss of senior leadership is always a concerning element for shareholders. In fact, Tesla has lost several key leaders in the past few years, including Eric Branderiz, Susan Repo, Deepak Ahuja, and Jason Wheeler.

SEC Settlement and New Board Members

The comedy podcast appearance couldn’t have come at a worse time back in 2018. Musk was still recovering from public comments he had made about taking the company private. The resulting bump in shares drew the ire of the SEC, who launched an investigation. The SEC found Musk’s statement on Twitter, that he had funding in place to take the company private, “false and misleading.” Musk had apparently never arranged a deal with Saudi Arabia’s Public Investment Fund (PIF), and those inside and outside the organization were baffled by his Tweet. To settle the matter of allegedly committing securities fraud, the SEC accepted Tesla and Musk’s payment of US$ 40 million, and Musk was forced to step down as Tesla’s Chairman of the Board. He will not be eligible to serve as Chairman for at least three years. Investors who were impacted by the statement will be compensated from the funds. As part of the settlement terms with the SEC, Oracle’s Larry Ellison and Walgreens’ Kathleen Wilson-Thompson joined Tesla’s board, effective December 27, 2018.

Onward 2019

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Biogen and Eisai Battered by Markets Over Alzheimer’s Trial Fail

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Cambridge, Massachusetts-based Biogen Inc. (BIIB) took a tumble of 28% in the morning of March 21st after it announced that it would cease its Phase 3 trials of Aducanumab. The therapy was intended to slow cognitive decline in patients with early onset Alzheimer’s. Biogen continued falling on March 22, 2019. Biogen and its Japanese development partner Eisai Co., Ltd. (ESALY) shared that the decision was based on results from an analysis conducted by an independent committee. The analysis determined that the trials were not going to demonstrate that Aducanumab could slow cognitive impairment. Eisai also fell 28% on the day, though it staged a relatively modest recovery on March 22nd. Some large institutional holders of Biogen include APG Asset Management (manager of Stichting Pensioenfonds ABP), Norges Bank Investment Management (manager of Norway Government Pension Fund Global), and Swiss National Bank.

The last time a treatment for Alzheimer’s made it to market was in 2003. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Italy’s CDP Inks Deals with Silk Road Fund and Bank of China

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China is building out its Belt Road Initiative (BRI) to continental Europe. On March 23, 2019, in Rome, Cassa depositi e prestiti Spa (CDP), Snam Spa (Snam) and Silk Road Fund Co., Ltd signed a Memorandum of Understanding (MoU) aiming at exploring and evaluating common business opportunities. Under the MoU, CDP and the Silk Road Fund will facilitate cooperation by focusing on the potential investment opportunities in the following sectors: financial services, agriculture, food, technology, manufacturing, infrastructure and transportation, energy and white economy (healthcare and personal care assistance).

Originally part of ENI, Snam S.p.A. is an Italian natural gas infrastructure company. The Silk Road Fund and Snam will analyze possible collaboration initiatives in the area of natural gas infrastructure (pipelines, storage facilities, LNG infrastructure and biomethane plants) in support of the growth of the natural gas and biomethane sectors in China from a decarbonisation perspective. In its capacity of a national promotion institutions, CDP will look at co-financing initiatives that are consistent with its mission also in the fields of energy and sustainability.

Bank of China

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Angolan Government Recovers Assets from Quantum Global Investment Management

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The State Prosecutor’s Office of Angola said that the country has control of all financial and non-financial assets. The Angolan government claims it recovered US$ 3.35 billion of assets that were under the management of Swiss-based Quantum Global Investment Management AG. Quantum Global Investment Management was essentially the sole manager of assets for the Fundo Soberano de Angola (FSDEA).[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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