Dark Side of the Street (Edition #18)
Micro Market Thoughts, $CMLS Odd Lot, Special Sit Updates 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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“In my experience, there is no such thing as luck”
-Obi-Wan Kenobi
Thought of the Week
If you track stocks to any degree, you know that markets have rapidly declined. Micro-Caps have performed even worse. The iShares Micro-Cap ETF is down 22% year-to-date. Stocks are finally starting to get cheap! Many stocks that I thought were fairly valued in December are now down 50% on the year. Those who have been holding cash in their portfolios are likely very happy and likely hoping stocks go down another 50%.
Why has this happened? So much macro uncertainty has killed investors’ optimism in all stocks. And micro caps get hit hard because the largest are most likely to survive when all else fails. This is true, but only as a generalization; there are companies in niche markets that will do well or survive even in difficult environments.
I’m getting really excited about all these declines and can’t wait to dig into more financial statements. There’s a lot to do when companies go on sale. To anyone else that gets excited about market declines, happy hunting!
Upcoming Special Situations
Cumulus Media Inc. (NASDAQ: CMLS) - Odd Lot Tender
The company has agreed to purchase up to $25,000,000 of its stock back from shareholders at a price between $14.50 - $16.50 per share. The current stock price is $12.82/share, implying a minimum gain of $1.68/share. The offer will expire on June 3, 2022.
Recent Insider Buying
Insider Buying on Recently Completed Spinoffs
Large Micro Cap Purchases
Top News of the Week
“Activist Investor Seeks Ryder Buyout in $4.4 Billion Deal” - By Dean Seal and Lydia O’Neal of WSJ
“Don’t Panic. It’s Time to Be Bold and Buy Stocks” - By Jack Hough of Barron’s
“XPO Logistics Names CEO for New Freight Spinoff” - By Lydia O’Neal of WSJ
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 ~25%.
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 ~74%.
Last week the spread was 34%. According to the earnings call, the special committee is still evaluating the current offer.
Zynga Inc. (NASDAQ: ZNGA) - Risk Arbitrage
The spread between the buyout price ($9.86/share) and ZNGA’s current trading price is now ~25%.
Twitter, Inc (NYSE: TWTR) - Risk Arbitrage/ Going Private
The spread between the buyout price ($54.20/share) and TWTR’s current trading price is now ~46%.
Elon Musk tweeted the below tweet which sent the stock down about $5/share.
*See links for the situation summary from prior editions
I recently began reading the John D. Rockefeller biography, so now this song is constantly in my head (ya know cause Rock-A-Fella y’all!)
See you next week!
- Dark Side of the Street