Dark Side of the Street (Edition #53)
Riding Waves Thoughts, NEW $TA - Risk Arb Situation, Top 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 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.
Disclaimer: Nothing on this newsletter or on this blog is investing or financial advice; please see our full disclaimer here.
“Don’t make a permanent decision for your temporary emotion”
-Unknown
Thought of the Week
Stocks boomed in 2020 and 2021 but have leveled off since. Retail investors entered the market in droves in 2020 but began to leave the market when stocks turned negative.
Isn’t it funny that most people enter the market as stocks get more expensive and leave when they become cheaper? There are many contributors to this phenomenon. But I would describe it as people tend to ride the emotional momentum wave. This is why the stock market is so volatile. People have a tough time seeing past the current earnings report and tend to overreact.
We see this show up a lot in sports. After a win, fans think their team is awesome will be able to continue winning. After a loss, their team is terrible and will never make it to the playoffs. And after a chain of wins… many fans show up. The bandwagoners, who will only stay as long as the team keeps winning. Rarely do fans look under the hood of the team and decide if today’s performance matched the overall quality of the team.
In investing, we can take advantage of these waves. As long as we learn not to ride the them ourselves.
New Special Situation
TravelCenters of America (NASDAQ: TA 0.00%↑) - Risk Arbitrage
TravelCenters of America is being bought out by BP at $86/share in an all cash deal. The stock is currently trading just over $84/share representing a potential gain of ~2%. Shareholder approval is still required.
Here is the BusinessWire Announcement
Recent Insider Buying
Large Micro Cap Purchases
Top News of the Week
“Warren Buffett’s Berkshire Hathaway Posts Big 2022 Loss in Rocky Market” - Akane Otani of WSJ
“Investors Are Bracing for Spike in Market Volatility” - Eric Wallerstein of WSJ
Top Micro Cap Movers this Week
Top 10 Gainers
Top 10 Losers
Special Situation Watchlist
Activision Blizzard ( ATVI 0.00%↑ ) - Risk Arbitrage
The spread between the buyout price ($95/share) and ATVI’s current trading price is now ~24%.
No news updates
AMMO, Inc. (POWW 0.00%↑) - Spinoff
News Updates: No updates
111, Inc. (YI 0.00%↑ ) - Going Private Transaction
The non-binding offer has been upgraded from $3.61 to $3.66/share (see link for SEC filing)
The spread between the offer price and the current stock price is 30%
World Wrestling Entertainment, Inc ( WWE 0.00%↑ ) - Potential Sale
Current stock price: $85.79/share.
News Updates:
“Vince McMahon’s asking price for WWE is $9 billion, report says” - By MarketWatch
This would value the company near $121/share.
Albertsons Companies, Inc (ACI 0.00%↑) - Merger Arbitrage
The spread between the buyout price ($27.25/share) and the current trading price is now ~33%.
News Articles:
No new updates
Madison Square Garden Entertainment (MSGE) - Spinoff
The company has filed the long anticipated Form 10 with the SEC
*See links for the situation summary from prior editions
A great cover that I found in the Pop Goes Classical Spotfiy playlist. Enjoy.
See you next week!
- Dark Side of the Street