Dark Side of the Street (Edition #38)
Cash is King Thoughts, $YI Situation, Micro Movers, Insider Buying and More!
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“Cash is king. Get every drop of cash you can get and hold onto it”
-Jack Welch
Thought of the Week
Why is cash king? Well as a prediction of a recession is coming many who can are starting to look for assets to buy. This is because of the obvious, when times get tough valuations of all assets decrease. This is a time to purchase these assets at relatively low prices and gain wealth. And this is why cash is king. Because in order to purchase anything, cash is necessary.
If you see some stocks that are cheap, well you better be liquid in that moment or you could miss the opportunity. See some real estate that is at all time lows? Your bank account better have at least 10% of the purchase price.
This is one of the genius’ of Warren Buffet. As others are riding the wave of the economy up, Buffett will trim his portfolio down and pundits will call him an idiot for losing out on so much upside or not taking on enough risk. But when times get tough again Buffett aggressively deploys this cash and wins when others aren’t liquid enough to purchase all of the investing opportunities.
So as we trend down, think about holding some cash or preparing to deploy it.
Special Situations to Watch
111, Inc. (NASDAQ: YI) - Going Private Transaction
YI is a Chinese micro-cap that has received an offer from its co-founders to purchase the remaining outstanding shares for $3.61/share. The stock closed this week at $2.61/share representing a potential upside of 38%.
Completed Special Situations
StarTek, Inc. (NYSE: SRT) - Risk Arbitrage/Going Private Transaction
The special committee that SRT organized has rejected the non-binding offer, and as a result, we will pull this situation off of our watchlist.
Twitter, Inc (NYSE: TWTR) - Risk Arbitrage/ Going Private
Elon Musk has completed the purchase of Twitter at ~$44B, which was a successful arbitrage opportunity for those who held through the large price volatility.
Recent Insider Buying
Large Micro Cap Purchases
Top News of the Week
“Elon Musk Takes Twitter Helm as Social Media Sputters” - By Salvador Rodriguez of WSJ
“Rising Shipping Costs Prompt Businesses to Get Creative With Deliveries” - By Ester Fung 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 ~30%.
AMMO, Inc. (NASDAQ: POWW) - Spinoff
No update
*See links for the situation summary from prior editions
The most interesting version of Michael Jackson’s Billie Jean that I have heard. Enjoy this week’s song of the week!
See you next week!
- Dark Side of the Street