Week of September 28: COVID-19 Corporate Event Impact Report

Executive Summary

• COVID-19’s second wave strikes Europe, the economic recovery is on shaky ground.
• Many students are back to school in-person around the world – could that be cause for concern heading into autumn and winter across the Northern Hemisphere?
• Key shareholder meetings and investor days are on tap this week ahead of earnings season and the crucial Q4 shopping period.

As Goes COVID, So Goes The Economy

In Europe, a pronounced second wave is on the move. Portfolio managers must pay attention to the trends in COVID in the developed world. September has seen a spike in equity market volatility as the “work from home” and “quarantine” trade has been back on. Online and virtual business related stocks have outperformed brick & mortar and travel & leisure stocks even with the selloff among the big technology equities. Further deterioration in the markets could lead to more pressure on Congress to enact another round of stimulus. More lockdown measures, like the ones issued in the UK last week, could also force central banks around the world to turn more aggressive in easing monetary policy. The economic recovery is on shaky ground, to say the least. We are only a few weeks from earnings season, and the all-important Q4 retail period is on the doorstep, too.

International School Attendance

A new dataset we are pleased to feature is a look at school attendance trends around the world. We have been focusing on the back-to-school season in the USA, but with October already in view, we wanted to take a broader approach. A few highlights include the trend of in-person learning in Asia – Shanghai, Singapore, and Tokyo which have a combined population of 40 million, began classes from May through June. Hong Kong reopened for face-to-face classes as of late September. London, a current COVID hot spot, also has in-person classes. So, the rest of the world is taking a chance on in-person learning. International school trends will be something to watch if the global second wave grows more dire.

Conference and Corporate Meeting Season in Full Swing, in a Virtual Sense

Alibaba, China’s online retail giant, will host its Annual General Meeting on Wednesday evening (7am EDT in the states). Investors will want to monitor developments at the event to get a gauge of the Chinese and global consumer considering the recent COVID-19 outbreaks in Europe. Perhaps there will be an update on the much-anticipated Singles Day which is usually scheduled for November 11. Alibaba (NYSE:BABA) has performed quite well since March, rallying about 50%, so expectations are somewhat high heading into the Q4 shopping season. Alibaba also holds an Analyst Day on Monday this week – the stock could be in-play as Q3 wraps up.

Volkswagen AG hosts its 60th Annual General Shareholder Meeting on Wednesday at 10:00 CEST. The German-based automaker recently announced plans to build an all-electric SUV for the masses at the price tag of around $40,000. VW is getting in the game of electric vehicles as the pushes toward renewable energy, strong ESG scores, and a more friendly attitude to the environment has gained steam in the last few months. Just last week, California announced plans to transition away from gasoline vehicles by 2035.

If 2020 has taught us one thing, it’s that we could all use a drink every now and then! Diageo AG meets this week for its annual shareholder meeting. The stock has been hurt by softer commercial alcohol sales trends despite some strength at the retail level. Perhaps we will get insights into the latest consumer preferences at the meeting.

Investor Conference Notables

The global energy market is in shambles right now with oil & gas firms going bankrupt left and right. The market will get some color into the European landscape from Total SE on Wednesday at its Investor Day 2020. The French oil giant (at least it was a giant at one time) has seen its stock fall about 40% in the last two years amid global oil demand turmoil.

As energy has experienced its challenges, home improvement spending has done well during ‘the new normal’ of life during COVID-19. Sherwin Williams, the big US paint seller, hosts its Financial Community Presentation 2020 on Tuesday. SHW stock has surged from $325 at the low in March to $726 earlier this month. The pandemic has certainly made for a sharp contrast between the winning and losing firms.

Companies have had to beef up their internal security protocols as the work-from-home trend has stuck. FireEye is among the leading cybersecurity plays. While the stock performance has not been stellar in 2020, you never know when the next major international cyber-attack is on the way – especially with an important election 5 weeks out. Tuesday will be FireEye’s “Texas Teams Up with FireEye to Tackle Ransomware” event.

All eyes continue to be on major Health Care names for insights into the fight against COVID. Humana, the major health insurance company, and Sanofi, the French pharmaceutical firm, will each host an event next week. The former has its meeting with Piper Sandler clients on Wednesday while the latter takes part in a CEO Call Series with JPMorgan on Friday.

Earnings-Related Red Flags

Finally, Wall Street Horizon tracks companies that have an earnings date that exceeds their filing due date. These are firms that have taken advantage of SEC guidance on delayed filings. A slew of companies will finally report on Monday and Tuesday. A few of the firms that are on our radar are Centaurus Energy Inc, GTT Communications, Inc., MGT Capital Investments Inc, and Radiant Logistics, Inc. Portfolio managers should take note of said companies for possible weak news announcements.