Dark Side of the Street (Edition #14)
Easter and Investing? Special Sit Updates, Top Micro Movers and More!
Welcome to the Dark Side of the Street! Here we shed light on the dark corners of the market. If you haven’t already, sign up here for weekly updates or share with your friends and family. If you’re new to special situations, see some of my learning resources on my substack home page to learn more! Feel free to reach out with any feedback.
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“No company was too small, no detail too obsecure, to pass through his sieve”
-Alice Schroeder on Warren Buffet
Thought of the Week
What is similar between Easter and investing? Easter egg hunts. On Easter, many kids go out to find hidden eggs. But this is every day for an active investor. We scour the NYSE, NASDAQ, OTC Markets, Pink Sheets, wherever to find a good investment or an undervalued company. Look through every stat line or detail of a company and its future prospects and we light up when we find something that most investors have overlooked. Easter egg hunts are the same; kids learn to look through every nook and cranny of a house in search of the greatest thing of all, candy.
Okay maybe this isn’t the best analogy but let’s keep this one short because if you’re reading this and it’s Sunday (and you celebrate Easter), you really should be spending time with your family. Go hide some candy for kids or something! And who knows maybe an Easter egg hunt will show them how to become a great investor someday.
Completed Special Situations
The Warner Bros. and Discovery (NASDAQ: WBD) Spinoff/Merger has officially been completed as Warner has separated from AT&T (NYSE: T) and has now merged with Discovery.
The aftermath is that $WBD has traded flat this week, ending up where it began trading near $25/share while $T has traded up about 7% to $19.54/share.
Recent Insider Buying
Large Micro Cap Purchases
*Apparently Lyra Therapeutics had some kinda week!
Top News of the Week
“AT&T’s Spinoff Was a Long Time Coming. For Investors, It Was Worth the Wait.” - By Nicholas Jasinksi of Barron’s
“Investors now have a pair of inexpensive stocks to consider: The leaner AT&T (ticker: T), focused on competing in the U.S. wireless and home broadband markets, and the streaming-centered entertainment company Warner Bros. Discovery (WBD). The two stocks will appeal to different investor bases, and both could be reinvigorated by their independence.”
“Twitter Adopts Poison Pill Plan to Block Elon Musk From Increasing Stake” - Cara Lombardo
“Mr. Musk, the billionaire founder of Tesla and privately held rocket company SpaceX, offered to pay $54.20 a share for Twitter and said that was his “best and final” bid. He has been criticizing how Twitter moderates content, among other things, and briefly agreed this month to join its board before backing out.”
Top Micro Cap Movers this Week
Top 10 Gainers
Top 10 Losers
Special Situation Watchlist
Activision Blizzard (NASDAQ: ATVI) - Risk Arbitrage
The spread between the buyout price ($95/share) and ATVI’s current trading price is now ~20%.
Warner Bros. Discovery (NASDAQ: WBD) - Spinoff Merger
Warner Bros Discovery will begin trading on the NASDAQ on Monday, April 11th, 2022.
StarTek, Inc. (NYSE: SRT) - Risk Arbitrage/Going Private Transaction
The spread between the buyout price ($5.40/share) and SRT’s current trading price is now ~23%.
Zynga Inc. (NASDAQ: ZNGA) - Risk Arbitrage
The spread between the buyout price ($9.86/share) and ZNGA’s current trading price is now ~10%.
*See links for the situation summary from prior editions
In conjunction with all the candy talk, here’s the song of the week!
See you next week!
- Dark Side of the Street