Dark Side of the Street (Edition #31)
$BBBY Story Thoughts ,$POWW Spinoff, Recent Insider Buying 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 below for weekly updates. 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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“Luck is what happens when preparation meets opportunity”
-Seneca
Thought of the Week
This week I saw the news of Bed Bath and Beyond tanking because Ryan Cohen sold his stake. But it wasn’t until I looked at the chart that I noticed BBBY was trading near $4 about a month ago; it spiked to almost $30, and now it’s down to $9. I saw this chart and thought, wow, someone could have had a legendary ride if they somehow timed this right. Well, apparently, a 20 year old college student did!
I can’t tell you how a 20 year old amassed 27 million dollars; but he put that amount into BBBY and sold near the top of the spike to profit about $110 million!
I’m not sure if the moral of the story is that this college student this super lucky or that BBBY should have been day trading their own stock to save their company. Either way, this is an incredible story that had me laughing and baffled this week.
Upcoming Special Situations
Spinoff
AMMO, Inc (NASDAQ: POWW) announced that it would separate its firearms marketplace (Outdoor Online Inc.) from its ammunition and components business (Action Outdoor Sports Inc.) and form 2 publicly traded companies. The company stated that the reason for the transaction is to provide two investment opportunities with separate valuations and for each business to have separate capital allocation strategies. The transaction is expected to be completed in 2023.
Recent Insider Buying
Large Micro Cap Purchases
Top News of the Week
“Bed Bath & Beyond shares tank after billionaire Ryan Cohen dumps stake” - By Khristopher J. Brooks of CBS News
“Regal Owner Cineworld Nears Bankruptcy as Theater Comeback Lags” - By Alexander Gladstone 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 ~18%.
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 ~31%.
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 ~23%.
*See links for the situation summary from prior editions
Here’s a solid chill song for the song of the week.
See you next week!
- Dark Side of the Street