Dark Side of the Street (Edition #54)
China Growth Thoughts, $ATVI Update, Top Movers, Micro Insider Buying and More!
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“Anyone who believes a growth rate in excess of 15% per annum over the long term is attainable should pursue a career in sales, but avoid one in mathematics.”
-Warren Buffett
Thought of the Week
China just lowered their growth target in 2023 to 5%. It doesn’t feel that long ago when every company in the world was begging to get into China due to their massive population and incredible growth rates. But since 2010 China’s growth rates have slid under 10% and continued to decline.
For me this is just another lesson in growth rates. In the long term, growth percentages have to come down. Its just basic math. In China’s case, as their GDP grows it becomes that much harder to find 10% more growth. China will even tell you this is the case as they artificially held up their real estate growth figures by building ghost towns. Cities that no one actually lived in (this is real, I saw it when I was in China in 2015).
So for everyone building their DCF models in their stock analysis, please don’t use a perpetuity rate of 10%. Practically, it’s impossible. Even China couldn’t make it happen.
Recent Insider Buying
Large Micro Cap Purchases
Top News of the Week
“Lions Gate To Spin-Off Its Studio Business In September 2023” - By Joe Cornell of Forbes
“Fed Might Be Winning Inflation Fight, Depending on Index Used” - Gwynn Guilford 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 ~20%.
News: “Europe is likely to approve Microsoft’s controversial takeover of Call of Duty developer, report claims” - By Andrew Griffin of Independent
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 24%
World Wrestling Entertainment, Inc ( WWE 0.00%↑ ) - Potential Sale
Current stock price: $83.58/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 ~35%.
News Articles:
No new updates
Madison Square Garden Entertainment ( MSGE 0.00%↑ ) - Spinoff
TravelCenters of America ( TA 0.00%↑ ) - Risk Arbitrage
The spread between the buyout price ($86/share) and the current trading price is now ~1.5%.
*See links for the situation summary from prior editions
I’m lovin’ the drop on this one. Here’s the song of the week.
See you next week!
- Dark Side of the Street