Dark Side of the Street (Edition #17)
Market Drop Thoughts, $TWTR, Top Micro Gainers/Losers and More!
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“Be fearful when others are greedy, and greedy when others are fearful”
-Warren Buffett
Thought of the Week
How’s everyone feeling this week? I saw a headline the other day stating that the stock markets were entering panic mode. Funny enough, the market was actually flat this week. But with a 1,000-point drop in one day this week and the market down 14% since the start of the year, I can see how it can feel worse.
The markets are just dealing with a lot of uncertainty these days. We have rising inflation (leading to rising interest rates), supply chain concerns, and a potential recession looming in the background. There is a commonality here; it’s all macro concerns that are highly difficult to predict. My solution to all of these problems? Think longer term than normal. Which companies will outlast these problems? Because eventually inflation will be reigned in, some companies will be able to solve their supply chain issues, and any recession won’t last forever.
And if you don’t believe these macro problems will resolve themselves (first off, you have a very bleak outlook), then we will have much bigger issues than which stock to add or subtract from our portfolio.
Upcoming Special Situations
Twitter (TWTR) Risk Arbitrage Opportunity
This has been a very public opportunity, but I think it is worth putting on the watchlist as the current spread is fairly large (~15%). Elon Musk has agreed with Twitter to purchase the company for $54.20/share. Records indicate that if the deal falls through, either Twitter or Musk will be on the hook for approximately $1 billion. SEC filings also show that Mr. Musk has sold ~$8 billion in Tesla stock to help fund the deal.
Recent Insider Buying
Large Micro Cap Purchases
Top News of the Week
“Musk's $44 billion buyout of Twitter faces U.S. antitrust review -report” - By Reuters
“Warner Bros Discovery Stock Has Been Hit Too Hard” (Stock Analysis Article) - By Mark R. Hake, CFA of Barchart
“Spirit will continue to pursue a merger with Frontier instead of JetBlue” - By Emma Roth of The Verge
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 ~22%.
A Barron’s article noted that Berkshire Hathaway has purchased ATVI as a merger arbitrage play and now owns 9.5% of the company.
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 ~34%.
Zynga Inc. (NASDAQ: ZNGA) - Risk Arbitrage
The spread between the buyout price ($9.86/share) and ZNGA’s current trading price is now ~22%.
*See links for the situation summary from prior editions
Maybe it’s because I've been logging a solid amount of miles running trails this week, but here is my song of the week.
See you next week!
- Dark Side of the Street